An array of high-profile leadership positions, from the Pentagon to Teledyne, have led Donald Rice to his smallest big role yet running a fledgling Santa Monica biotech firm

The offices of Agensys Inc. in Santa Monica are just about a mile from the compound near the beach where Donald B. Rice reigned for 17 years as president of Rand Corp.

They're also less than a half-hour drive from the high-rise executive suite in Century City where Rice applied his vaunted management skills to the task of rescuing a foundering Teledyne Inc. during the mid 1990s.

But for Rice, the undistinguished brick building on Colorado Avenue might as well be a world away from the circles he mixed with at the country's leading defense think tank or in Henry Singleton's boardroom.

Here, amid the laminated furniture and industrial-grade carpet, the former Air Force Secretary, accustomed to nine-figure budgets, has spent the last five years toiling in the relative obscurity of a biotech startup.

A man who always has found himself, one way or another, where the action is has found another home. This time in an industry that has vowed to vanquish our tumors, grow us new organs and, ultimately, extend our lives.

To figure out how a man who never had to work again is putting in 60-hour weeks leading a startup like Agensys, seeking treatments for prostate and other solid tumor cancers, you just have to take one look at the man the thin spectacles, the black comfort shoes, the conservative pale blue shirt with two black plastic pens peeking out of the pocket. The Donald Rice that shakes your hand is all business.

Rice is no biologist, but he's been around science his whole life, starting with a chemical engineering degree earned at Notre Dame on a full four-year scholarship. And he liked what he heard from Singleton, and the legendary Simon Ramo, developer of the electron microscope.

Testing grounds for cancers

A group of doctors at UCLA medical school wanted to start a company to find new treatments for prostate cancer and had some exciting technology: a special strain of immune deficient mice.

When implanted with human prostate cancer cells, the mice grew tumors that mimic the cancer's various stages in humans. The result is an ample quantity of tumor cells, no small problem in the study of prostate cancer since human tumors tend to be small and difficult to grow in the lab. The mice also are perfect testing grounds for cancer therapies.

The scientists also had a gene linked to prostate cancer, presenting an opportunity to create an antibody treatment that zeroes in on the tumor, without harming other cells.

For his part, Rice decided to become chief executive and help found the company after realizing that, unlike many biotech start-ups, this one would have some real money behind it.

Singleton, Ramo and other angels poured in the cash, allowing the scientists to incorporate in 1996 as UroGenesys Inc. with an initial $8 million in capital. The company raised another $11.3 million two years ago, from the same group of investors, as well as some others.

Singleton and Ramo thought it was a promising opportunity, but none of the founding scientists knew much, if anything, about running a business. The pair thought Rice might be the man, but the scientists were skeptical until the first meeting.

"I was very impressed with his knowledge, although he was not talking in the language of biotech," recalls Dr. Arie Belldegrun, a professor of urology and now the company's chairman. "I thought 'We will teach him, and he will teach us. Hopefully, it won't be the blind leading the blind.'"

It turned out was far from that.

Rice says he's had to endure a fair amount of "drinking water from the fire hose," but the company's chief scientist, Aya Jakobovits, says she now can have "scientific" conversations with him.

"I would say it's amazing," notes Jakobovits, a renowned scientist in her own right before coming to Agensys. "He truly understands the science."

Washington experience

In 1972 Rice was into his second year as assistant director of the newly created Office of Management and Budget, after four years of cost analysis at the Pentagon. At 32, he received an unexpected offer to assume the presidency of Rand.

The choice may seem odd, given his age, but Rice was well grounded in systems analysis, a theory Rand developed combining rigorous mathematical and cross-disciplinary qualitative analysis to solve complex problems such as choosing a new weapons system.

He learned the theory at Purdue, where he got a masters degree in industrial engineering and, in 1965, a doctorate in economics. He practiced it at defense. More importantly, he had ties to the Nixon Administration during what was the think tank's darkest hour the Pentagon Papers debacle, in which former researcher Daniel Ellsberg copied secret government files on the Vietnam War and made them public.

Rice's top priority was to restore the government's confidence in Rand, something the current president, James Thomson, says he was able to do while at the same time prodding the think tank to move into broader public policy research not dependent on government funding.

"He's just a superb manager and leader," says Thomson. "He knows how to pick people. He knows how to pick directions."

Rice says he expected to stay at Rand for 8 or 10 years, but once there he found it an "intellectual candy store." So it wasn't until he got a call 17 years later, in 1989, that he found a new challenge. This time, Dick Cheney, just tapped to head the defense department in the administration of George Bush, told him that the senior Bush wanted him to be Secretary of the Air Force.

Of course, no one expected the Berlin Wall, and communism, to come tumbling down as rapidly as they did. Rice scrambled to find "smarter rather than dumber" ways to take down the Air Force budget.

In four years, Rice cut the Air Force by a third. Fighter wings were lost, but cuts were made at the top, where an entire layer of the command structure was jettisoned.

"It's easy to cut fighter wings. What's hard is to find ways to bring overhead down commensurate with force reductions," he says. "We put the Air Force through a major corporate restructuring."

Teledyne overhaul

It's understandable how Rice landed at Teledyne in 1993, within months of his departure as Air Force secretary. He wanted to come back home to L.A, and the task was similar: a restructuring, though this time of a 1970s-era conglomerate that had fallen on hard times.

The brainchild of Singleton, Teledyne was a massive company with businesses ranging from guidance systems to showerheads. But the former Wall Street darling had become unwieldy, and was facing government allegations of doing shoddy defense work to boot.

When Rice arrived, he found 65 corporate subsidiary presidents reporting to 13 group executives, reporting to 3 segment presidents, reporting to his position as president and chief operating officer.

By the time he left in 1996, after a $1.9 billion merger with Allegheny Ludlum Corp., the 65 subsidiaries had been consolidated into 16 operating divisions, and 1,100 management jobs had been eliminated.

Rice was offered a job at the newly merged corporation but declined, not wanting to relocate to Pittsburgh or take what he felt was a lesser position. Moreover, Teledyne had been lucrative, and by Rice's own admission he never had to work again if he didn't want to.

But that's not Don Rice.

He was shaped as much by his formative years in the small town of Frederick, Md. as he was by the years with the intellectual elite. His father, Donald Sr., operated a service station and later started a tire business to support a wife and three sons. Along the way, his father became mayor, while his mother, Mary, who kept the books for the family business, stressed the need for a good education, frustrated over her own inability to attend college.

"In those days, it was study hard, follow the rules and serve your country," recalls Rice, who says his father as one of the hardest working people he has ever known. "It was what we all grew up with."

His younger brothers learned the lesson as well. James is a chaired professor of engineering at Harvard; Kenneth runs the family business.

So when Singleton and Ramo called in 1996 about some promising research being conducted at UCLA's School of Medicine, Rice gave them his ear.

Therapy that shrinks tumors

The name UroGenesys reflected its original focus: to employ its technology finding genes either highly or uniquely associated with prostate and other cancers of the urological system, such as the bladder.

The company claimed to have identified 40 such genes, but along the way began to discover others linked to solid tumors elsewhere in the body, prompting the name change this past June.

The researchers have been looking for genes that create proteins that exist on the exterior of a cancer cell, so-called antigens. When you pump them into the kind of mice Jakobovits helped create, the mice produce antibodies that can form the basis for a therapy that can shrink tumors or even make disappear.

The antigens can also be used to create a vaccine, or can be form the basis of "small molecule" drugs, i.e., the pills Rice noted "big pharma really loves."

Indeed, that's what's occupying the former Air Force secretary's time these days, finding ways to market the company's promising technology and keeping the scientists and others on task as he attempts to move Agensys from a start up to a money-maker.

"I know a little something about organizing work, following through on objectives, allocating resources, keeping track of progress and seeing to it we change course if we hit a brick wall," he says.

Agensys inked a key deal last year with biotech powerhouse Genentech Inc., licensing its original gene associated with prostate cancer. The Bay Area company will use the patented gene to create an antibody therapy that could earn Agensys $33 million if approved by the FDA. Once approved and on the market, a hit drug could be a billion-dollar revenue earner for Genentech, with Agensys getting an undisclosed share of the proceeds.

That's the market Agensys is really aiming at as it moves down the road, seeking to develop its own other cancer therapeutics.

"We want to move farther up the value chain," is how Rice puts it.

That's could be five to seven years away, and for many companies it never happens in the crowded and technologically daunting field. But Rice said the company is moving along, and he is content to not even draw the highest salary in the company.

But make no mistake, he has taken a substantial stock position.-

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