BIO's new CEO takes a pa­tri­ot­ic piv­ot to win back Con­gress, push­ing in­dus­try to re­think Chi­na re­la­tion­ship

SAN DIEGO — Fac­ing an ex­is­ten­tial mo­ment in how drugs are de­vel­oped and sold, biotech’s key lob­by­ing group has en­trust­ed a new leader, who is wrap­ping him­self in the US flag to re­gain a seat at the ta­ble on Capi­tol Hill.

As John Crow­ley nears 100 days as CEO of the Biotech­nol­o­gy In­no­va­tion Or­ga­ni­za­tion, he has re­struc­tured the group with lay­offs of 30 staffers, zoomed in on na­tion­al se­cu­ri­ty, and, most dra­mat­i­cal­ly, cham­pi­oned an or­ga­ni­za­tion­al about-face in sup­port­ing con­tro­ver­sial US leg­is­la­tion tak­ing aim at Chi­nese con­trac­tors like WuXi AppTec.

Crow­ley, a for­mer biotech CEO and Navy vet­er­an who com­plet­ed mul­ti­ple tours of du­ty af­ter 9/11 said in an in­ter­view with End­points News that he sees the Biose­cure Act as a “Sput­nik mo­ment” for the US to wake up and re­gain con­trol of its abil­i­ty to man­u­fac­ture med­i­cines. His strat­e­gy is a bold bet that back­ing the bill could open the door for fu­ture wins with Con­gress, es­pe­cial­ly in get­ting mon­ey to boost do­mes­tic man­u­fac­tur­ing.

He’s walk­ing a fine line in his ap­proach, as many in­dus­try lead­ers see Biose­cure as a law that, at least in the near term, will harm the biotech in­dus­try. He risks alien­at­ing the trade group’s in­ter­na­tion­al mem­bers and the many US drug de­vel­op­ers that re­ly on Chi­nese part­ners that of­fer a low-cost, high-qual­i­ty back­bone of be­hind-the-scenes re­search and de­vel­op­ment work.

James Sapirstein

“Biose­cure does not help the in­ter­na­tion­al en­vi­ron­ment or the US pub­lic,” said James Sapirstein, the CEO of En­tero Ther­a­peu­tics and a long­time friend of Crow­ley, who sits on a gov­ern­ing board of BIO. “It does not help. It hurts it. But we re­al­ize why we had to do it, again, to live to fight an­oth­er day.”

Crow­ley said the goal is not to shut out Chi­na from mak­ing and de­vel­op­ing drugs but to en­sure that Amer­i­ca keeps its edge on sci­ence. And BIO’s sup­port has al­ready helped push for changes to the bill, like cut­ting ties with WuXi by 2032, rather than im­me­di­ate­ly.

“This is not a de­cou­pling from Chi­na,” Crow­ley said in the in­ter­view. “This is be­ing re­spon­sive to the con­cerns of Con­gress around spe­cif­ic com­pa­nies, even where there could be the per­cep­tion of any po­ten­tial con­flicts.”

Broad­ly, Crow­ley is hop­ing to bring sta­bil­i­ty to the in­flu­en­tial trade group of 130 em­ploy­ees that has en­dured some rocky years and em­bar­rass­ing de­feats since long­time CEO Jim Green­wood stepped down in 2020. Green­wood’s re­place­ment, Michelle Mc­Mur­ry-Heath, last­ed two years be­fore an abrupt de­par­ture amid ten­sion with BIO’s board over a range of is­sues from drug pric­ing to how vo­cal to be about so­cial jus­tice is­sues. And the in­dus­try is still reel­ing from the pas­sage of the In­fla­tion Re­duc­tion Act that forced drug price ne­go­ti­a­tions.

But the Chi­na is­sue has been on Crow­ley’s desk since day one. Up un­til his ar­rival, BIO had vo­cal­ly op­posed the leg­is­la­tion. Then, in what Crow­ley said was his first day on the job, a BIO staffer walked in­to his of­fice and hand­ed him a let­ter from a mem­ber of Con­gress who ac­cused BIO of lob­by­ing on be­half of the Chi­nese Com­mu­nist Par­ty.

“All of our mem­bers were call­ing,” Crow­ley said. “CEOs of some of our largest com­pa­nies were say­ing, ‘Wel­come to Wash­ing­ton. You’ve got about three days to fig­ure this out.’”

‘Lost con­trol’

A few days lat­er, Crow­ley said, BIO’s ex­ec­u­tive board vot­ed 20-0 to sup­port his po­si­tion, re­vers­ing the group’s stance and back­ing the Biose­cure Act. WuXi, one of the tar­gets of the pro­posed bill, sub­se­quent­ly left BIO.

The vote was unan­i­mous, but the sen­ti­ment in the in­dus­try wasn’t. Sev­er­al com­pa­nies rep­re­sent­ed on BIO’s board back-chan­neled their frus­tra­tions with the bill to se­nior staff at the trade group, a source fa­mil­iar with the dis­cus­sions said.

Reuters re­port­ed lat­er in March that WuXi AppTec shared a client’s in­tel­lec­tu­al prop­er­ty with the Chi­nese gov­ern­ment with­out per­mis­sion, a se­ri­ous but vague al­le­ga­tion that WuXi de­nied. Asked about hard ev­i­dence, Crow­ley said that his se­cu­ri­ty clear­ances have lapsed and he wasn’t part of brief­in­gs over the mat­ter.

“I’m not privy to that, nor should I be,” Crow­ley said. “The larg­er con­cern, though, that’s been ex­pressed, par­tic­u­lar­ly with the con­tract man­u­fac­tur­ers, is the re­al­iza­tion that we have lost con­trol of the ca­pac­i­ty and the ca­pa­bil­i­ties to man­u­fac­ture med­i­cines.”

Crow­ley’s work on Biose­cure is both pro­fes­sion­al and per­son­al. He has two chil­dren with Pompe dis­ease, a rare mus­cle-weak­en­ing ail­ment. And he is the co-founder of Am­i­cus Ther­a­peu­tics, which has de­vel­oped a treat­ment for the dis­ease. In Feb­ru­ary, Am­i­cus dis­closed in a reg­u­la­to­ry fil­ing that Biose­cure could im­per­il its abil­i­ty to meet de­mand for the drug. But last month, com­pa­ny lead­er­ship dur­ing an earn­ings call said the ex­ten­sion to 2032 to make changes would pro­vide enough time to tran­si­tion to a new man­u­fac­tur­er.

Ro­han Palekar

De­spite that ex­tend­ed grace pe­ri­od, drug­mak­ers still face high costs and un­cer­tain­ty in switch­ing from WuXi. Such chal­lenges are start­ing to show up in in­vestor meet­ings.

“Need­less to say, it’s al­so much cheap­er to make ma­te­ri­als in Chi­na than in oth­er parts of the world,” Ro­han Palekar, the CEO of 89Bio, told in­vestors last month.

In a state­ment to End­points, Palekar said the com­pa­ny has a “ro­bust” back­up sup­pli­er if need­ed. Across the in­dus­try, com­pa­nies have dis­closed that WuXi is an im­por­tant part of their op­er­a­tions and not­ed the con­se­quences of dis­en­tan­gling from the com­pa­ny.

‘Serv­ing too many mas­ters’

BIO’s rev­enue is pow­ered by mem­ber dues and events like the San Diego con­ven­tion. Those lines of busi­ness made up near­ly two-thirds of the non­prof­it’s $103 mil­lion in 2022 rev­enue, ac­cord­ing to BIO’s lat­est fi­nan­cial state­ment. It re­port­ed about $17 mil­lion in net in­come.

A look around the con­fer­ence’s ex­hibitor floor showed just how much BIO re­lies on in­ter­na­tion­al mem­bers. More than 40% of the at­ten­dees at the 2022 an­nu­al con­fer­ence were in­ter­na­tion­al.

Ja­son Kel­ly

But even as it re­lies on in­ter­na­tion­al mem­bers and events for rev­enue, BIO’s em­brace of the forces of de­glob­al­iza­tion and pa­tri­o­tism that have risen in US pol­i­tics was ev­i­dent at the group’s an­nu­al con­fer­ence in San Diego last week. In one of his main ad­dress­es to the 19,000 at­ten­dees at the con­fer­ence, Crow­ley dis­cussed geopo­lit­i­cal threats with re­tired US Navy four-star ad­mi­ral William McRaven and Gink­go Bioworks CEO Ja­son Kel­ly, who chairs a biotech group ad­vis­ing Con­gress on na­tion­al se­cu­ri­ty.

“It is shock­ing to me how much peo­ple just sort of take for grant­ed the in­trin­sic pow­er of bi­ol­o­gy,” Kel­ly said.

The group’s lay­offs and re­or­ga­ni­za­tion last month al­so re­flect that new stance. As part of those changes, BIO’s in­ter­na­tion­al re­la­tions team was fold­ed in­to na­tion­al se­cu­ri­ty. The move, and the cuts, have left two peo­ple fo­cused on ex-US ad­vo­ca­cy work, End­points has learned.

Among the ex­its are Chief Pol­i­cy Of­fi­cer John Mur­phy III, Head of In­ter­na­tion­al Af­fairs Nan­cy Travis and Se­nior Man­ag­er of In­ter­na­tion­al Re­la­tions Mar­cel Kamin­stein, a source fa­mil­iar with the cuts said. Mur­phy con­firmed his de­par­ture to End­points, while Travis and Kamin­stein did not re­spond to a re­quest for com­ment by the time of pub­li­ca­tion. Phyl­lis Arthur was pro­mot­ed to lead health­care poli­cies and pro­grams across the or­ga­ni­za­tion.

Crow­ley said that in­ter­na­tion­al af­fairs are “still a very im­por­tant part of what we do.” Com­bin­ing these func­tions “is to en­sure that we ad­vance poli­cies and pro­grams that main­tain and ad­vance our na­tion’s lead­ing role in biotech­nol­o­gy, in con­junc­tion with our in­ter­na­tion­al al­lies,” he added.

But out­side of BIO’s board­room, there’s un­cer­tain­ty over the ap­proach. Tim Opler, a man­ag­ing di­rec­tor for the bank­ing firm Stifel, said Mon­day dur­ing an End­points event that Con­gress’ tone is “re­mark­ably Mc­Carthy­is­tic.”

“The no­tion of de­cou­pling is bizarre. It’s un­re­al­is­tic, and is re­flec­tive of mem­bers of Con­gress who are look­ing at every­thing through a na­tion­al se­cu­ri­ty lens,” Opler said.

Oren Livne, a trans­ac­tion lawyer at Bak­er McKen­zie, said drug­mak­ers who re­ly on com­pa­nies named in Biose­cure are in an un­cer­tain po­si­tion as the leg­is­la­tion makes its way through Con­gress: Do they stand pat or switch to an­oth­er man­u­fac­tur­er? The bill’s lan­guage doesn’t give com­pa­nies an easy way to scrap con­tracts.

“Di­gest­ing that un­cer­tain­ty is prob­lem­at­ic,” Livne said.

To ease the tran­si­tion, Crow­ley and oth­er BIO lead­ers see an op­por­tu­ni­ty to build out US bio­man­u­fac­tur­ing with gov­ern­ment sup­port, much like the 2022 CHIPS and Sci­ence Act boost­ed do­mes­tic chip­mak­ers. Grace Colón, a BIO board mem­ber, al­so men­tioned a push for ad­di­tion­al women’s health re­search from the Na­tion­al In­sti­tutes of Health.

Fel­low board mem­ber Bill Newell echoed the ur­gency for BIO to cap­i­tal­ize on a rare glim­mer of bi­par­ti­san­ship, hop­ing Crow­ley’s strat­e­gy will de­liv­er a big­ger win for Amer­i­can in­dus­try.

“When those op­por­tu­ni­ties for bi­par­ti­san­ship show up, and there’s good pol­i­cy that can be made, you bet­ter darn well lean in on those things and you bet­ter darn well be suc­cess­ful,” Newell said in an in­ter­view. “Be­cause those op­por­tu­ni­ties are ephemer­al. They are there one mo­ment, and if you don’t get it done, they’re gone.”

— Am­ber Tong con­tributed re­port­ing