IPOs Are a Gateway to More Diverse Biotech Boards

Eric Kleiman
October 23, 2019

As more biotechnology executives begin to focus on strategies to diversify their boards to avoid groupthink and strengthen corporate governance, an emerging consensus is forming that initial public offerings are a key gateway to assembling higher-performing leadership teams.

That was the unanimous consensus of a panel of experts who explored the topic at the BIO Investor Forum on Tuesday in San Francisco. The topic is especially timely for biotech companies headquartered in California, which last year became the first state to require that publicly traded corporations include at least one woman on their boards.

“Where you are in the evolution of your company is going to affect some of the things you are able to do, even if you want to do them and see the value,” said William Newell, CEO of Sutro Biopharma based in South San Francisco. “My company was private until about a year ago, and many of my board members were also our funders. That’s very common in our capital-intensive industry. As a result, I ended up with an all-white male board because our investors just wouldn’t get off the board. It was certainly less than ideal.”

“I found that my real opportunity to make a change was in the run-up to our initial public offering,” he added. “It gave us a chance to ask who we should have on the board for who we are today – and for who we want to be in five years. So, in my first six months, I was able to add two women to our board, including our board chair.”

Matt Fust, a former biotech CEO and current biotech board advisor, said Newell’s insight is a critical one.

“Companies should make a statement in the governance process about diverse representation,” he said. “What are the set of skills and experiences you want around a board table? If you are envisioning a corporate IPO, you should think about your board’s composition as a public company well before you get there. With pre-IPO companies, boards often aren’t even formally established. Going public becomes an important opportunity to look at skills gaps. It really helps to create a robust nomination and governance process upfront.”

KT Moortgat, a director at AbbVie Ventures, said that investment firms like hers are championing the need to “open the aperture” for private companies to consider more diverse board candidates.

“Usually, the person who has been leading the deal for the venture firm will be on the board,” she acknowledged. “But if there are multiple people involved in the deal, you can mention who would be most beneficial and make a request of who you’d like to have on your board. We sometimes prefer to have larger boards to create the possibility for independence fairly early on.”

Moortgat said that when it comes to diverse representation, it’s important for biotech companies to do more than add one woman to comply with California law. Such box-checking does not change entrenched cultures, she said.


“With one woman, you are a ‘representative.’ At two, you are compared with each other,” she said. “At three, it’s no longer an issue anymore. It takes the gender factor off the table, and that’s what you want.”

Amanda Packel, managing director of the Rock Center for Corporate Governance at Stanford University, said biotech companies should avoid falling into the trap of focusing too heavily on job titles alone when filling board seats.

“Ninety percent of boards draw on their existing board networks to fill open seats,” she said. “If you look at experience and skills more than past C-suite titles, you might find the people who can helps facilitate better discussions at the highest level. That helps management be better prepared and not miss important issues. Only five percent of CEOs are women, so you won’t get to gender diversity if that title is a requirement for your board. You can get those same CEO type experiences in senior candidates from larger companies.”

To learn more about the biotechnology industry’s efforts to diverse leaderships teams and promote a more inclusive workplace culture, visit