Did Robert Foster ever contemplate quitting during the early, lean years of Isotechnika’s 10-year history?

Nope. Not a chance, says the company founder and CEO. Foster literally couldn’t afford to.

“I was so deeply in debt personally. It wasn’t even an option,” muses the professor-turned-entrepreneur. Foster’s perseverance has paid off in spades for the Edmonton life-sciences company.

Last April, Isotechnika struck paydirt with the largest drug development deal in Canadian history.

The blockbuster deal with Swiss pharmaceutical giant Roche is potentially worth $215 million US in upfront and milestone payments.

Bray, Michaels and Jorgensen photo
Isotechnika CEO Robert Foster saw the company struggle in its early years.

Isotechnika’s meal ticket has been a drug known as ISATX247 that was developed by Foster and another former University of Alberta professor, Randall Yatscoff, the company president.

The drug, currently in Phase II clinical testing, is a modified version of cyclosporin, typically given to transplant patients to suppress the body’s immune reaction to new organs.

In an industry with an alarming rate of failure, some CEOs might be satisfied with the prospect of bringing one drug to market.

But it seems the success the company has experienced with just one drug has only whet the appetite of the iron-willed son of a Stony Plain sawmill operator. 1. How do you think working at your father’s sawmill during your youth help shape your future?

“The single biggest thing was learning the work ethic. That hard work experience gives you a certain appreciation for what it takes to get things going.”

2. As a teenager, did you see a future in that business?

“I did, but it wasn’t necessarily a job that I wanted to be involved in because it was just such an unbelievably difficult way of making a living. You not only had the anxiety of the business, but it’s also so physically demanding. One of the reasons that I went to university was so that I could have a job that was inside – a job that wasn’t physically exhausting so you could still be doing it when you were 60 years old.”

3. What did your father teach you about work and life?

“My dad (Fred Foster) didn’t cut me a lot of slack. He probably worked me harder than pretty much anybody. But I think he was hoping to train me for taking over the business. I had no desire to do that. He had to sell the business, but I think he would have liked to have the legacy to continue. One of the advantages of a public company like ours is that there is an opportunity for an exit in the end.”

4. What initially sparked your interest in medicine and pharmaceutical sciences?

“I really liked chemistry. It just made sense to me and it’s something that just clicked with me. I wanted to go into more of an applied research, because it’s more applicable to everyday life. As long as there are people, there will be drugs.”

5. How do you reflect on your years as a professor at the University of Alberta?

“It’s probably something I could never do again after experiencing a different side of life that I like. On the other hand, I couldn’t have done what I’m doing now if I didn’t have that tenured academic track record. Those years were critical . . . because when we struck out into the world and said we were going to develop this drug for treatment for organ-transplant patients and other patients with autoimmune diseases, we didn’t have people rolling their eyes and saying: ‘Yeah right, wouldn’t we all like to be doing that?’ We had some credibility because (partner Yatscoff) and I were professors.”

6. How does one make the transition from prof to CEO?

“Actually, it was a lot of fun. I think a lot of people would be fearful of going from total certainty to total uncertainty. I wasn’t too worried about whether I could make it on the outside, so to speak. Maybe I was just too naive. Every day was a different day and life became fairly unpredictable whereas at the university it was fairly predictable. I think the way my mind works is more in line with flying by the seat of your pants.”

7. What was the direction of Isotechnika when it was first launched?

“In 1993, we were doing a lot of contract work for other pharmaceutical companies and I soon realized that if you want to build big value in a company, you probably had to offer proprietary or intellectual property as opposed to offering a service. We first started working with several drugs in 1994 and 1995 but, when Randy (Yatscoff) joined the company in 1995, we put our heads together and by 1996 we came up with our main drug, ISATX247. When that drug started showing promise, being limited in time, money and resources, we decided to drop the other drugs we were working on.”

8. What are the chances of this drug becoming a commercial success?

“We feel that this drug will go the whole distance. We have no reason to think that it won’t. My own personal feeling is that this thing will be on the market, and I’m 100-per-cent sure it will be. We’re looking at the drug being on the market by 2007. I’m extremely confident. Now, I want to do more than just one of these (drugs). I think there’s no reason to think that we shouldn’t be able to do this again, and I think we’ve got a jump start on that.”

9. Besides the lead drug, what else do you have in the pipeline?

“We’ve got a couple of very interesting molecules that are at a very early stage right now, but it looks like they’re reasonably promising. We hope to have those moved into clinical trials within 18 months or so. They’re also immuno- suppressive drugs and would work in conjunction with ISATX247. When you’re treating (organ-transplant) patients, you use more than one drug.”

10. When do you expect to have an update on clinical trials?

“We’re telling the Street basically that we can expect some clinical results coming out at the end of this quarter and following it up reasonably soon with a second set of results some time in the second quarter.”

11. Your company is generally regarded as a biotech company, but is that technically correct?

“Although the investment world lumps us in with biotech companies, we’re actually a specialty pharmaceutical company because the technology we use to develop drugs is chemistry. Biotechnology is purely defined as using processes like fermentation and genetic engineering to build new therapeutic entities. The reason I point this out is that the risk for a drug developed by a chemical means as opposed to biotechnology means is much, much reduced. So our risk profile is a lot lower than a pure biotechnology play.”

12. What’s your view of seeing your stock price essentially cut in half since it spiked to $6 in April on news of the deal with Roche?

“In the context of the overall market and in the context specifically of biotechs, it’s not all that disappointing. The reason I say that is that if you plot our performance over the past year against the performance of the biotech index, we’re way above the performance of the biotech index.

“If you look at biotechs with about the same market cap as us, they’ve come off about 80 per cent from their highs.”

13. How difficult was it keeping the company afloat in the early years?

“It was day-to-day for some time and we’d be wondering which one of us would be covering the next payroll. We used a lot of our own personal money and took out loans on top of loans. I think at one point I was about $800,000 in the hole personally, and I thought if I ever had to go back to the university to work, it’d take me about six lifetimes to work this thing off. So there was no chance that this could fail. It wasn’t an option.”

14. What lessons have your learned from this business?

“Dogged determination, resiliency and optimism. If you ever start looking backwards, not forward, then you may as well turn the lights off and go home. “If you look back at your past failures, they’ll wear you down to a point where you either don’t want to move ahead, or you’re too scared to move ahead. We focus on the many successes that we’ve had, such as the Roche deal. I wouldn’t say that we’re cocky and arrogant, but we’re close to it, because we really believe in our abilities.”

15. How do you and Randy Yatscoff complement each other as partners?

“Randy’s a real task master. He can (recite) names and dates until he’s blue in the face and he’s got a real eye for detail. I see myself as more of a generalist looking at the overall vision and strategy. I think Randy knows where he wants to be in five years, too, but he can pinpoint the steps we have to take over the next 12 months, whereas I could provide the general steps of where want to be in four or five years. I picture where we want to be and we just kind of steer the ship in that direction.”

16. Do you think much about the impact your company can make in the future?

“There are two things that push me forward. First, I think of the economic benefit that this company will bring people who work in our company as well as the city of Edmonton, the university and maybe the province. If we hit all our milestones, the deal with Roche should bring in more than $400 million US into this province from Switzerland. Apart from the business aspects, there’s the human element that often gets missed. We’re also hopefully going to have a significant positive impact on patients and, ultimately, that’s what it’s all about.”

17. Will you be able to rest easy if the lead drug is successful?

“I think, personally, I’d like to see at least one more drug because people will say: ‘Aw, it’s just one, it’s a fluke.’ Even if it were a fluke, it’s a pretty good fluke to have. As the old saying goes, opportunity doesn’t just knock once, it knocks several times. You just have to know which door to answer. We knew which door to answer, and we pulled it off. We’d be able to say we did it again. If you look at a lot of the large pharmaceutical companies, they’ve really got only two drugs and then you’ve got a multi-billion- dollar drug company. If we could do it twice, we’d be up in that league.”

18. Do you consider Isotechnika a takeover target?

“I think that possibility always exists. With technology like this, it’s probably a reasonable possibility, especially in view of the stock price. It’s just such a good bargain at these prices for somebody to come in and take the whole thing. They (Roche) could be interested, although I have no idea whether or not this is the case or would be the case. Anybody could speculate that it could happen. I certainly have no knowledge of anything like that happening. My preference is not to let it happen. I’d like us to become a full-scale drug company ourselves. As I say, go big, or go home.”

19. Have you been able to strike a balance between business and personal life?

“Not really. I think I’m getting better at it, but in the past I think I’ve recognized that my professional life has completely consumed me. But I didn’t feel I had much choice. In order to make this thing fly, I had to basically waive any right to a personal life. I’ve probably had to do that for 10 years at least, not going on holidays, working long hours, weekends and holidays. I can’t believe I still am (married) but give my wife (Caroline) credit. She has been a rock. She has given me the opportunity to do these things. I guess she saw this was important to me, and maybe important to our future, so she gave me the freedom to be able to do that. I don’t think a lot of spouses would do that. Hopefully, in the end, it will all be worthwhile but, in the mean time, I’ve given up a lot, having (four) young kids.”

20. What’s the best advice you'd offer a young entrepreneur starting out in this business, as you did 10 years ago?

“I’d tell them to get as much cash as they can get their hands on. As the old saying goes, none of the biotechs will die of dilution, but they’ll die of a lack of cash. Take whatever cash you can, whenever you can, and keep pushing hard.”

IN PROFILE: Robert Foster
* Born/raised/age: Stony Plain, AB; Stony Plain, Edmonton; 44.
* Title: Chairman/CEO, Isotechnika Inc.
* Education: PhD (pharmaceutical sciences), University of Alberta.
* Career: Foster founded Isotechnika in 1993 and left a career as medical science professor at the U of A in 1995 to focus full time on the company. He has published more than 100 papers, articles and book chapters on drug analysis and development.
* Moonlighting: Foster serves on the Alberta Science and Research Authority technology commercialization task force.
* Passions: Reading, solitude.

THE COMPANY: Isotechnika Inc.
* Brass: Robert Foster, chairman/CEO; Randall Yatscoff, president; Dennis Bourgeault, chief financial officer.
* Profile: Isotechnika is a therapeutic drug research and development company that is pursuing the advancement of immunosuppressive drugs.
* Lead drug: ISATX247 is designed for the prevention of organ rejection following transplantation surgery and for treatment of autoimmune diseases such as rheumatoid arthritis and psoriasis.
* Milestone: Last April, Isotechnika reached an agreement with Swiss pharmaceutical giant Roche that is potentially worth $215 million US, a Canadian record.
* Recent Stock Price (ISA-TSX): $2.95 (52-week range, $2.50-$6.12).
* Website: www.isotechnika.com
* Address: 2100 College Plaza, 8215 112th St., Edmonton, T6G 2C8.
* Phone/Fax: 780-487-1600, 780-484-4105.