In the dog-eat-dog world of biotech startups, success can be fleeting — even with the most promising of scientific concepts, endless enthusiasm for potential breakthroughs and backing from one of the world’s largest pharma companies.
But for Armon Sharei, founder and former CEO of SQZ Biotech, the road will go on even after a devastating few months. At the end of last year, SQZ cut 60% of its workforce and Sharei transitioned out of the lead role. Then in July, under new executive management, the company lost the backing of pharma partner Roche, which opted not to continue with the biotech’s HPV-positive solid tumor program that had become the new priority during the reorganization.
Through it all, the former CEO, who launched SQZ a decade ago when he was 27 years old with the cell therapy tool he developed while at MIT, hasn’t lost hope. In fact, his optimism for the future of cell therapy and for the broader biotech sector is infectious.
Since his departure from SQZ, Sharei, a 2022 PharmaVoice 100 honoree, is working on “something new in cell therapy” that he’s holding close to the vest. Perhaps most importantly, he carries a wealth of knowledge about the ins and outs of biotech investment, the needs of a growing company and the personal priorities in science and life that intersect with those of a successful organization.
And Sharei is very open about the lessons he’s learned along the way — the same ones he plans to take into his next venture.
"If you’re not wearing a suit and you don’t have the pharma credentials, investors want to be sure you’re not going to just crash the car."
Armon Sharei
Founder and former CEO, SQZ Biotech
Humble beginnings
Sharei started SQZ as a cell therapy tool company developed straight from his graduate work at MIT. The idea was that cells could be squeezed through small tubes to rupture their cell membranes enough so that payloads such as genetic material could enter through the openings. The concept held potential in a field that is often bottlenecked by a complex manufacturing process, Sharei said.
“We bootstrapped it to get it going, and the biotech community isn’t normally used to or set up for students coming straight out of school and running anything,” Sharei said. “It’s more for the gray-haired, suit-wearing type, so it was hard to be taken seriously when we were trying to get going.”
Investments from MIT professors and even Sharei’s parents got the company off the ground, but the biotech world still wasn’t accustomed to seeing a 27-year-old scientist at the helm.
“There are the typical pains of a first-time CEO growing a team, and then there was a little bit of age and perception at play in biotech,” Sharei said. “As you continue to make progress, it continues to be pretty rare for someone of that age to be in those positions, and it causes a question mark of whether you’re going to screw up the next step.”
In the beginning, even small factors made a difference.
“It’s a lot just to get me to wear a sport coat, and if you’re not wearing a suit and you don’t have the pharma credentials, investors want to be sure you’re not going to just crash the car,” Sharei said.
Soon enough, though, Big Pharma came knocking. Switzerland’s Roche, like many companies its size, was making big moves in cell therapy, and saw potential in SQZ’s platform for immuno-oncology. In 2015, Roche partnered with the biotech in a collaboration worth more than $500 million in future milestones. And SQZ, still private, was gaining the interest of VC firms like Polaris Partners, which backed early funding rounds.
“As these institutions got more engaged, it helped to have the validation of, ‘Oh, someone else thinks this is cool,’” Sharei said. “And as far as getting Roche involved, it felt like, ‘Now an adult thinks this is a good idea,’ and more people were paying attention.”
Making it big
With Roche on their team, the upstarts at SQZ were off to the races, and they decided to expand their tool’s capacity in internal programs as well — but the decision about whether to bring Roche on board with the new program or take it through development on their own led to some contention at SQZ, Sharei said. Ultimately it fed into an even bigger deal with the pharma giant, adding up to more than $1 billion in potential milestones.
“It’s a tradeoff — do you want to do it with a partner that can bring experience and firepower to the table, or do you want to optimize for your long-term economics?,” Sharei said. “In the end, we figured it’s better to do it together.”
In 2020, SQZ went public with a $71 million IPO, a move that Sharei said was a tough decision.
“You get to a stage where the private markets can’t support you anymore — you’re beyond the scope of what a VC can do, and the incentives for VCs change in the later rounds,” Sharei said. “So, with a few exceptions, you have to go public or get bought.”
The IPO turned out to be a blessing, but new challenges for the young entrepreneur were lurking around the corner.
"For scientists, I say be careful what they wish for, because it’s painful at times — it’s not all rainbows and unicorns.”
Armon Sharei
Founder and former CEO, SQZ Biotech
Growing tension
For a first-time CEO, some of the tension of running a biotech started to become apparent when one of the founder’s vision for the company fell victim to near-term profits, Sharei said.
“We always had this tension within SQZ to be more platform or more therapeutic, and obviously we made the choice of being primarily therapeutic,” Sharei said about the company’s focus on clinical programs over the platform approach of collaborating with other companies bringing cell therapies through development. “There was this debate of reopening the platform side given the broad potential of SQZ — I was very pro opening up the technology side even though it would have had its challenges.”
Ultimately, as the disparate visions combined with a cash runway that extended only into the fourth quarter of this year. In the end, SQZ was forced to layoff more than half of its workforce and Sharei was out as well. The company also prioritized its program to develop a cell therapy for HPV 16 positive solid tumors using SQZ technology.
In July, SQZ delisted from the New York Stock Exchange just ahead of Roche’s decision not to continue their partnership around the newly prioritized program. The biotech said in a statement that programs for antigen presenting cells would continue in early stage trials, but without the pharma’s backing, the cash-strapped biotech was left with full responsibility for development and commercialization.
Sharei doesn’t regret the journey from scientist to CEO — even those last parts. But he said anyone considering the same path needs to love what they’re doing.
“It’s not an easy thing to learn that quickly, and that’s part of why I think so many don’t make it,” Sharei said. “And for scientists, I say be careful what they wish for, because it’s painful at times — it’s not all rainbows and unicorns.”
The sobering experience hasn’t dimmed Sharei’s enthusiasm for the biotech world and the future of cell therapy, which is the field in which he intends to continue his path. Most of all, he encourages younger entrepreneurs to take a chance, because he believes they have what it takes to bring important change and progress in the field.
“I think cell therapies can be so huge — cells are like little machines that can do so much more than any small molecule or biologic ever can, and what we really need to do is get some therapies to that next generation,” Sharei said. “Right now, they’re in the stone age — they’re clunky, expensive and take forever to create. But none of that has to be true.”
