What's next for ResMed's Gary Pace?
"The thing I think America’s still got, that I don’t see elsewhere, is the ability to have
someone like me go to graduate school and have an idea and be able to go big with it," says Aussie
Two hundred wannabe entrepreneurs roam the tide-pool deck at the Birch Aquarium as a killer egg-and-blood sun slides below the waves.
Gary Pace, 64, is not a wannabe, however. He’s about to launch his next company, Sova, the first biotech to address issues of sleep and sleep apnea from a pharmaceutical rather than a device perspective, although, as a longtime director of ResMed, the $4 billion medical device company in Kearny Mesa, Pace is steeped in the mechanical approach, too.
For several years, he had been looking for the relevant biochemistry for why people interrupt their sleep and stop breathing — sleep apnea — a very dangerous condition contributing to heart attacks and post-surgery death, and in less extreme cases, disturbing the good night’s rest of some 20 million Americans (and their spouses). Over breakfast, he was chatting with his friend Solomon Snyder, winner of the Lasker Prize for discovering opiate receptors in the brain, essentially the whole way pleasure and pain work.
Snyder was about to publish a paper in the Proceedings of the National Academy of Sciences on the curious little carotid body in our necks that he had shown regulated the release of the hydrogen sulfide gas carried through the blood stream that triggers a nerve in the brain that regulates sleep.
Pace suggested that Snyder hold off publishing the paper a little bit until they could form a company around the idea. Jay Lichter at Avalon Ventures over on Kline Street in La Jolla put up around $8 million, and Pace and Snyder had another company going.
Pace is co-inventor of the way dissolved hydrocarbons are removed from processed water on oil rigs in the North Sea. He’s a pioneer of nanotechnology, and more recently co-founder of pharma companies large and small specializing in pain relief (QRxPharma, Pacira), diabetes and Alzheimer’s (Transition Therapeutics), and cancer treatments. He is simply one of those genially disruptive people always on the lookout for ways to connect one piece of technology to another and come up with a third: “That’s what invention is all about.”
He searches for that ability in other people, too.
But as a disarmingly underdressed Australian, rarely seen out of faded cargo shorts, he at first goes unrecognized by the hungry venture capital hunters swirling around us at the Birch. Also, he’s holding two beers in his big hands, and smiling a smile of wonder beyond mere business. Three days before, he became the somewhat unexpected father of a newborn boy, and like all new dads, he seems a bit incredulous with what life hath wrought. Soon, though, he is recognized, and you can’t help but laugh as it dawns on the younger set. They have the chance to meet the real thing, in a highly unguarded moment.
A young Chinese woman with a degree from Oxford, new to San Diego, comes up to talk.
“Here’s my pitch —”
“I’m interested in that,” Pace politely interrupts.
“Do you have a Ph.D.?” she asks, a bit rudely.
“I do,” says Pace.
“MIT,” smiles Pace.
The woman lays out her plan in detail, something about wireless facial recognition of patients who take smartphone pictures of themselves and phone them in to their doctors.
“That way, the doctor could tell if they had been taking their meds,” muses Pace, “and your idea also has security implications. Do you own the patent?”
The entrepreneur — it turns out she has a Ph.D. from Harvard, as well — checks out Pace with quick serious interest.
“Do you have any source of money?” she asks.
“I do,” says Pace, cheerfully, “and I am interested in your idea. Please, here’s my card. Call me. Maybe I can’t fund you myself. But I can put you in a room with people who can. Then you’ll be on your own.”
“Hi,” says another supplicant, this woman, from Singapore, “I have an idea for —”
“The problem with San Diego,” says Pace after the Singaporean MD/Ph.D. departs, “is that the real money is still in Boston or San Francisco. People don’t realize that life sciences have only been part of San Diego for 35 years. Biotech is only a handful of companies. We are beyond fetus and embryo but still a relatively young adult. We need to be nurtured as one of the three traded industries in town,” he says.
Those would be R&D, tourism and the military. “A great deal of money is spent here on the idea-creation stage but that can be quickly lost to San Diego as people swoop in and take the intellectual property back to Silicon Valley or Boston.”
Pace has a theory of why he’s good at what he does.
“Inherent in my makeup is probably a sense of curiosity and drive,” he explains over another non-Foster’s. He was the first person on either side of his family to graduate from high school. His father was a longshoreman on Sydney’s waterfront (“not the trendy district it is today”), but in Australia, a smart kid could work during the day and go to college at night. “I liked that,” says Pace, “I deliberately tread the line between industry and academia, biology and engineering.”
He believes academics too often live in silos and seldom apply ideas in a multidisciplinary way. They don’t know what commercially relevant R&D is about. “But if I can’t visualize the product at the end of the line, it doesn’t get on my radar screen.”
Pace would show up at university in his lab clothes, but he was uncommonly smart, the kind of kid with X-ray vision who doesn’t get that others see him as special. Professor Arthur J. Humphrey, an MIT alum, was visiting Australia, doing a book, what became a very famous book, “Biochemical Engineering,” and he liked Pace. Pace was about 22, and he had been offered a scholarship from the Australian dairy industry.
“Don’t do that,” said Humphrey. “You should come to MIT and get your Ph.D., and I’m going to help you.”
“OK,” said Pace. And he went back to the lab bench at the university, and asked his labmate, a fellow named Chris, “Chris, what’s M-I-T?”
A couple of years later, on a Fulbright to MIT, he’s in the basement of Building 16, using university facilities to manufacture a particular enzyme, a booming business until a professor calls him in. “Mr. Pace, do you want to graduate or continue with your business? You’ve got a choice to make.”
“We thought it probably wise to get our Ph.D’s, at that time,” says Pace.
Along with ResMed founder Peter Farrell, Damien Perriman of Genomatica, and others, Pace belongs to that jolly high-powered Aussie-San Diego scientific mob, which imports fresh pharma and intellectual capital from universities Down Under, builds tasty companies around it, and IPOs in San Diego, New York, and London, celebrating afterward at the Beaumont Cafe in Bird Rock — wearing shorts, of course. They correctly believe Americans view Australia as a tourist zoo of kangaroos and didgeridoos, not cutting-edge technology.
I ask Pace for some fair dinkum tips for the budding biotech entrepreneur in us all:
• “If you’re really chasing dreams, be mobile. I don’t understand young entrepreneurs who want everything to come to them. Go where the money is. I formed one company in North Carolina, then went to Canada because they had money. I knew they wanted companies to move up there, and I looked the VC guy right in the eye very early on in the presentation and I said, ‘I’ll tell you what. If you fund this, then we’ll move the company.’ I knew immediately we had the deal.”
• “If you can run it with your own money, you should do that, but as you get into these bigger problems, the worse thing is to be underfinanced. Be prepared to give up some equity, and it may be wise to do that proactively, so you don’t get pressed.”
• “More-complex projects require a team. This is a multidisciplined industry, from the biochemistry through the financing to the engineering. I’m sure there are individuals that have it all in one package, but there are only 168 hours in a week and a lot of this stuff is time-based competition. Be aware that other people will probably be focusing on the same things.”
• “Know when it’s not going to work, when to walk away and not fall in love, and make sure you spend your money wisely. You can only go back to the well so many times.”
If he were younger, what would he do? “I’d move to China and learn Chinese, at least for a while. They’re taking back their graduates and building up their infrastructure, and they are going to be a force to be reckoned with. Yet, the thing I think America’s still got, that I don’t see elsewhere, is the ability to have someone like me go to graduate school and have an idea and be able to go big with it.
“I couldn’t do that in Australia. Not Europe. America’s a tremendous place for entrepreneurs and I hope the government doesn’t screw that up because that spirit is something nobody else really has.”
fair use from: