Hartford Business Journal

20 Hartford Business Journal • September 25, 2017 • www.HartfordBusiness.com Opinion & Commentary OTHER VOICES Alexion should reconsider HQs move By Bijan Almassian A lexion's planned headquarters move to Boston shows a lack of vision and business sense. The claim by Alexion's recently named CEO Lud- wig Hantson that Connecticut lacks talent could not be further from the truth. Yale, Wesleyan and UConn train many top-notch scientists every year. Moreover, the downsizing of Pfizer, Bristol- Myers Squibb, Boehringer-Ingelheim and Bayer over the last decade has left the state with an enor- mous pool of biotech talent just waiting to be tapped by other growing companies. With financial support from the state, Alexion began in a New Haven area dubbed the "com- bat zone" because it was such a dangerous part of town. At the time, I worked at Vion Pharmaceuticals in the same building, so I can attest to how we often heard drive-by shootings and saw the cracks in our win- dows from errant bullets as witness to how miserable an area it was in which to work. But despite the many difficulties of working in a small company and unsafe environment, the founders and scientists at Alexion persisted, developing and commercializing Soliris, which treats two incurable blood diseases and brings in upwards of $3 bil- lion a year in sales and has helped drive Alexion's market cap to more than $30 billion. Alexion's success gave lots of hope to smaller biotechs in the state. That's why Alexion's move to Boston is such a selfish and short-sighted act by its new management team, appointed in the wake of news that Alexion had launched an internal investigation into improper sales practices by senior management. After my initial shock at Alexion's head- quarters announcement, I became curious and did a bit of research to find out more about Hantson, who was hired in March. I learned that he worked at many large European companies, mostly in sales and marketing, staying with some of them for just a few years. Impressively, he was president of Novar- tis North America, though its stock price didn't perform well during his tenure. In 2012, when Hantson was CEO of Synovis Life Sciences, Baxter bought it for $325 mil- lion. Hantson was also CEO of Baxalta for only six months in 2016, after the company was bought by Shire for $32 billion, leaving him with a $15 million severance package and hundreds of people out of work. As a veteran biotechnologist working for over 30 years for seven private and public companies and familiar with the history of many biotechnology companies, I strongly believe Hantson's and his board's decision to move Alexion to Boston is wrong and self-centered. In my opinion, Hantson is looking for another quick financial gain at the expense of hundreds of employees who gave their youth and provided the best expertise to build Alexion. Instead of moving to Boston to find talent and build a pipeline, Alexion should look to the talent and technologies being developed by Connecticut universities and start-up companies. I have been in a similar situation to the one Alexion employees are now in, and I know how they feel. They have lost trust in their leaders. I am confident many of those employees are now less likely to stay around and are looking for the first opportunity to run out the door. They know that Alexion's 20 percent workforce reduc- tion is likely only the beginning. As a fellow biotech colleague, I urge Alexion to reconsider its headquarters move. Many of the biggest biotechs were built by their original founders, such as Am- gen, Biogen, Genentech, Genzyme, Celgene, and so many others that built pipelines of the most innovative drugs and biologics and generated wealth for their investors without moving to other states, instead helping create and anchor biotech hubs where they were. Alexion staying put would be the right thing to do. Connecticut's biotech industry will be stronger for it. With Alexion at the center, our biotech community has a bet- ter chance of growing and thriving. What Alexion could do for New Haven is what Genentech did for South San Francisco in 1976, making the Bay Area the second largest biotech hub in the world. This decision is ill-conceived and we must do everything in our power to reverse it. Bijan Almassian is president and CEO of Farmington-based CaroGen Corp., which is developing a vaccine platform. Bijan Almassian "I strongly believe Hantson's and his board's decision to move Alexion to Boston is wrong and self-centered." RULE OF LAW Time to address CT's billionaire shortage By John Horak T he economic distress facing Hartford (and the entire state) has been attracting national media attention and analysis. For example, the Aug. 15th regional edition of the New York Times featured a piece entitled "Hartford, with its Finances in Disarray, Veers Towards Bankruptcy." Reuters picked up the same theme with an Aug. 23rd story entitled "Drowning in debt, Connecticut faces budget crunch." As far as analysis is concerned, nei- ther story had anything new to say about the facts on the ground (we are out of money), but both took time to repeat a meme that has re- verberated around Connecticut for decades: the Con- stitution State is a land of great wealth disparities. The Times story noted the "gulf between the affluent enclaves that drive Connecticut's wealth and its larger cities that have long grappled with high crime, underperforming schools and unsure financial footing." Reuters, in turn, noted that our state is "home to hedge fund billion - aires alongside cities mired in poverty." My question is what, if anything, does a discussion of the wealth disparities (which undeniably exist) add to the debate about our dire circumstances? My answer is that the disparities, as such, have nothing to do with the state's insolvency (which is the result of inept governance), and are being raised only because they are a convenient smokescreen for the interests that caused the mess in the first place (while allowing them to advocate for higher tax rates). Finally, if we were serious about this issue we would recognize that as a matter of simple tax return arithmetic we would be far better off if there were more tax- paying billionaires living in those "affluent enclaves" than there are at present. My analysis is as follows. First, the focus on disparities suggests falsely that we really don't have a fiscal prob- lem because there is plenty of wealth in the state, and all we need to do is take more of it from the wealthy and give it to government officials to pay the bills. The idea that we can fix things simply by increasing taxes at the upper income level is misguided. It will not only enable the same bad spending behavior that caused the problem, but give billionaires more reason to leave (just like General Electric, Aetna and now Alexion). Second, there is in the state a strain of radical thinkers who use the disparities ar- gument to cast the problem as one of greed and injustice, as if wealth creation is a zero- sum game, that there is wealth in Greenwich only because there is poverty in Bridgeport. If we were living in 18th-century France I would be a militant too. Prior to the French Revolution (1789) the privileged classes (the monarchy, nobles and clergy) were exempt from taxation and were supported by taxes on the lower classes (peasants, artisans and merchants). But today, state and federal income tax rates are progressive — the rates go up with the amount of income earned. If people in the state are earning more, the amount paid to the state in absolute dollars increases even if the tax rate does not change. Third, there are myriad governmental, trade association and private analyses of the budget that are a click away on the internet; and, to be sure, people with an agenda will often try to spin the numbers to suit their needs. But the base numbers from 1991 (the year the income tax was enacted) and those from the 2017 fiscal year (that ended June 30) say it all. In 1991 the population was 3.3 million and the state's annual budget was approxi- mately $7.5 billion; in 2017 the numbers are 3.6 million people with spending of approx- imately $20 billion. What did we get for the money? The plight of the "cities mired in poverty" (which should concern us all be- cause they portend an economic dead end for people living there) has not improved; and the state-funded, community-based nonprofits (which maintain the safety net in those same cities and elsewhere) have been starved for well over a decade. As I see it, the wealth disparities are owned by the interests in the state that taxed and spent us into a corner over the last 30 years — the same interests that have vaporized the value of the Connecticut brand (as a place to do business and live) on both the international and national stage. Finally, I want to add a sincere com- ment about a somewhat relevant story in the August 25th Hartford Courant: "Group of Millionaires Pushes For Higher Taxes On The Wealthy." Members of the group apparently feel they "can afford to pay more and should." There is an easier way for them to help. They can write tax deductible checks to the many state-funded, social-service agencies (many of which operate in the poor cities) that are starving because the state has cut them off. A direct contribution to these nonprofits cuts out the middleman (the state), ensuring that the money will be well spent assisting those most in need. John M. Horak is the director of TANGO Nonprofit Education and Consulting. The opinions expressed are his own. John Horak

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