But Hawkins is best known for his 4 years as CEO of Medtronic, where he served in the corner office from 2007 to 2011. His time at the helm of the world’s largest pure-play medical device company was not without drama: His first major decision as CEO was cancelling shipment on the company’s top product, the Sprint Fidelis pacemaker lead that was already implanted in some 268,000 patients, rather than stand pat and keep the potentially lethal products on the market. That decision, which he calls the toughest of his career, was a telling start to a tenure that spanned the Great Recession and the enacting of the medical device tax.
In this interview from our recent DeviceTalks Raleigh show, Hawkins opens up to Publisher Brian Johnson about the worst and best deals he ever made, trying the window if the door won’t open, and why he hopes his latest venture in regenerative medicine will help treat end-stage renal disease.
Brian Johnson: I knew you went to school here in North Carolina, but I didn’t know how much this area was home to you. Your father was the mayor of Durham for four years. What did your dad’s experience in politics teach you about leadership?
Bill Hawkins: I always admired his ability to connect with people in all sort of walks of life. As a mayor, he had a diverse population, and his responsible to set the tone. I used to marvel at how he would give talks and connect with people on a one-on-one basis. He taught me really just to be yourself, to be a good person and recognize that we all have something to contribute.
I think he actually had hoped to be reelected, but it didn’t work out, but he didn’t stop. That was the thing that I think about even when I parallel my career at Medtronic, when I stepped down. I was in no way ready to retire, and he was no way ready to stop being a good citizen.
Brian Johnson:You’ve made a lot of deals over the years. What’s one that you really hold up with pride, and what’s the one that you sort of say, “I wish I had that one back”?
Bill Hawkins: I can start with the one I wish I had back, which was when I was president of Medtronic, not yet the CEO. We acquired a company called Kyphon, which was a kyphoplasty business, and it was a company that had acquired a company.
We were really interested in the company they acquired, and I learned a big lesson, that you really need to do a lot of due diligence when you do a big deal. We didn’t have the opportunity to really do much due diligence, particularly on the company that we were really interested in, because they were now buried in the public company.
It was a disaster.
Brian Johnson: At least they never beat you over the head with that.
Brian Johnson: Let’s talk about the good one.
Bill Hawkins: My best friend is here, Kim Westmoreland; I share his company, a company called Keranetics. I’ve done a lot of different things in my career, and this is what I love about what I do, because there’s always something else that you find that you never thought you would be doing.
About a year ago, there was a company in Winston-Salem, N.C., called Tengion. Some of you may have known it. It’s a regenerative medicine company. I first came across Tengion when I was at Medtronic, when I was CEO. We put $20 million into a program they had for chronic kidney disease, which is really kind of fascinating. For patients who have late-stage kidney failure, they essentially had developed a technique for biopsying that patient’s kidney, essentially taking that biopsy and isolating certain progenitor cells, and then putting them into a bio-reactor and then putting them back into the patient.
Fast-forward, I’d left Medtronic. [Tengion] was doing another program in tandem with that, and at the end of the day, it was not well-managed, and they ran out of money. They ultimately went bankrupt, but this program for the chronic kidney disease had actually just completed their Phase I clinical study, and even though we didn’t have the results, everything looked like it was going to be really good. Kim came to me and said, “Look, this company’s just gone bankrupt,” and I said, “I know them very well.”
Anyway, we put together a group of North Carolina investors, and we bought the company out of bankruptcy, with the intent of raising $25 million to do the Phase II clinical study. We bought the company, and we were able to then harvest the Phase I data, and the Phase I data was just off-the-charts good. This looked like it could be a dramatic therapy for patients with chronic kidney disease.
By the way, there was $400 million of capital in this company, all put into a lot of basic research, and they had built a $15 million, Class I manufacturing operation. We bought all of this for $1.5 million, but with the idea of spending $25 million to do the Phase II study.
We had to then fund the operation while we were trying to find investors, so it wasn’t just $1.5 million. It turned out to be about $4 million or $5 million. I was shocked at how hard it was to get capital. In fact, we didn’t get capital, and at the end of last year, I had to go to the investors one more time to just try to keep this thing on life support. And lo and behold, one of the groups that we were looking to lead the financing came out of the woodwork and said, “We don’t want to lead it. We want to buy it.”
At 6:15 tonight, we closed the deal. That’s a true story. Kim, we’re going to have a glass of champagne after this. I can tell you that. The good news is, this trial’s going to get done, which is the most important thing.
Brian Johnson: I read that you really wanted to attend the [University of Virginia’s] Darden School of Business for your MBA, and you didn’t get in, but you wanted to get in so badly that you called the director of admissions on the to say they a mistake.
Bill Hawkins: That’s true. After I graduated from Duke, I ended up going to work for a small medical device firm, great experience. But then decided after being a salesperson for three years in the field, I didn’t want to necessarily continue in my career as a salesperson.
At that point, Harvard had a reputation for the case management program; Darden, University of Virginia was the other program. I really liked Charlottesville, so I applied to Duke, Carolina and to UVA. You’re right. I sent them my application and by full admission, I have never really done that well on the standardized test, and I knew that was going to be an issue. Sure enough, I get this nice letter telling me that I was not being admitted.
I said, “I’m not just going to let that go.” I called the director of admissions, and I politely told the lady, “I think you’ve made a mistake. I think I got the wrong letter.” I said, “I’d like to come down and tell you why I think you made a mistake,” and I guess, given the fact that I had the courage to do that, she said, “We won’t turn you away if you come down. You could talk to us.” I did, and lo and behold, they got the letter right.
It’s a blessing, because I’ve always told people throughout my career that the analogy is, when the door is closed, you’ve got to find a window, and you never, never give up.