Career at Genentech
Because of the Kleiner and Perkins investment, Swanson and Boyer dissolved their partnership and created the legal entity Genentech.[6] Kleiner and Perkins provided $100,000 on the May closing, and acquired 20,000 shares of preferred stock from Genentech.[6] Swanson was made the president and treasurer of Genentech, and received a $2,500 per month salary, along with 25,000 shares.[6] This marked the end of Swanson's unemployment, and the beginning of his career at Genentech.[5][6]
With funding secured, and the organizational structure formed, the first logical step forward was to begin experimenting with the procedure for the synthesis of insulin.[5][6] Since Genentech lacked any laboratories of its own, the Boyer lab, as well as two other labs in the San Francisco area, were to be subcontracted to carry out the experiments.[5][6]
However, the scientists quickly realized that a step wise approach would be more practical; rather than immediately engineer a bacterium that synthesized insulin, they would engineer a bacterium that could synthesize somatostatin, a smaller hormone.[6] Swanson resisted at first, since he believed that “If you are going to go for something, go for the real thing.” the "real thing" being insulin, in this case.[5][6] He eventually agreed, albeit grudgingly.[5][6]
With a new research goal set up, Swanson proceeded to establish official research agreements with the institutions.[5][6] He set up research agreements with the University of California and the City of Hope.[5][6] Then, in early 1977, Swanson began a second round of funding, to jumpstart the somatostatin research. He raised approximately $850,000 by February, enough money to fund the somatostatin research projects.[5][6] By August 1977, the research teams managed to create the first bacterium capable of synthesizing somatostatin.[5][6]
Following their success with the proof of concept, Swanson then directed the scientists to pursue the creation of a bacterium that synthesized human insulin.[5][6] Two other scientific teams were already attempting to carry out such a project, but Swanson moved quickly to ensure that they synthesized it first.[5][6] By early 1978, his priorities were to obtain a lab space for the scientists, corporate contracts, and more funding for Genentech.[5][6]
In order to attract the best scientists, Swanson, with the assistance of Boyer, tried to create an attractive environment for academic scientists. It was because of this that scientists at Genentech were allowed to publish their findings in scientific journals.[5][6] The restriction was that they could publish only after the appropriate patents had already been filed.[5][6]
By February 1978, Swanson leased a 10,000-square-foot section of an airfreight warehouse, which would serve as Genentech's first lab space.[5][6] Later that year, Swanson also secured a partnership with Eli Lilly; Genentech would receive $50,000 a month to pursue the human insulin project.[5][6] By August 1978, the Genentech scientists were able to synthesize human insulin, and in that same month, Swanson and colleagues negotiated a multimillion-dollar contract with Eli Lilly.[5][6] The big company-small company relationship they developed became the eventual template for other biotechnology start ups.[6] While there was still plenty of work to be done on the human insulin synthesis, the new stream of revenues and the significant amount of media coverage meant that Genentech could pursue other research projects.
By 1980, Swanson decided that they should raise money by making Genentech public.[5][6] This was due to a variety of factors. Genentech needed more money to continue its development, and Swanson believed that the public interest in the technology should be capitalized on.[5][6] The initial public offering took place on October 14, 1980, and it was the largest IPO ever, at that moment in history, with Genentech raising 35 million dollars.[5][6] A trip to Europe in September 1980 to raise interest from European investors before the IPO also served as his honeymoon.[9]
From here on, Swanson would focus on pursuing his vision of Genentech as a self sustainable biotechnology company, not a contract research operation.[5][6] He believed that recombinant growth hormones had a large market in the United States, and that they would be key for Genentech's corporate evolution.[5][6] By October 18, 1985, the FDA approved the human growth hormone, developed almost entirely by Genentech, for sale in the United States, under the commercial name Protropin.[5][6] In just two decades, Protropin sales exceeded $2 billion.[6] Genentech had been able to manufacture, receive federal approval for, and market its own product, marking the successful execution of Swanson's plan to form out of Genentech a self sustainable biotech firm.[5]
