Influential investor leaves Vulcan, had built biotech holdings

Ruth Kunath, the no-nonsense banker who built Paul Allen's biotech portfolio into a $500 million machine over the past decade, has left Vulcan as it continues to reinvent itself with new blood.

Kunath could not be reached for comment, and Vulcan would not say a word, but multiple sources confirmed that she left under mutual agreement two weeks ago. Kunath's exit came a few weeks after former Immunex president Michael Kranda was hired to run Vulcan's biotech investing.

Kunath, 52, was among the first five employees at Vulcan when she joined in 1992 to manage biotech investing. In a male-dominated field of brainy medical doctors and scientists aggressively chasing hot new things, she had an unusual profile. A conservative financial analyst by training, she learned the nuances of the biotech world as a fund manager for Seafirst Bank.

Through the money, prestige and patience of Vulcan, she was able to cultivate close connections with biotech's key players. She parlayed them into a portfolio that is a who's who of Seattle biotech of the past decade — such companies as Dendreon, Seattle Genetics, ZymoGenetics, Rosetta Inpharmatics and Pathogenesis.

Her investment performance is a closely held secret within Vulcan, and biotech has extreme ups and downs, but sources said it historically has outperformed Vulcan's technology investments under Bill Savoy, who recently left.

What she will do next is uncertain, but she may be in the formative stages of starting a Seattle-based biotech venture fund on par with Vulcan, sources said, or she may join another venture firm.

For Vulcan, its biotech investing is in transition. Kranda has experience Kunath did not have — building successful biotech businesses from the inside at Immunex and as chief executive of U.K-based Oxford GlycoScience. Another recent hire, Patricia Beckmann, has scientific credentials from a long career at Immunex, and her name is one of three on the patent for the billion-dollar rheumatoid arthritis drug Enbrel.

Some believe that combination of specialized skills could be used to vet more early-stage companies that offer bigger potential risks and returns — an area where Kunath has tread cautiously.

Vulcan has traditionally been secretive about its strategies, but those hires have sent a clear signal in Seattle biotech that Allen's company is serious about building more companies locally and nationally.

Some could be future tenants in South Lake Union. Kunath's investments helped make ambitious plans for the neighborhood realistic.

"She's been instrumental in building biotech in Seattle and around the country," said Dendreon Chief Executive Mitchell Gold. "She is someone who stays the course and knows what it takes to build good biotech companies."

John King, chief operating officer of Rosetta Inpharmatics, said Kunath was a lead investor from its founding days in 1996 and 1997. Vulcan made millions off Rosetta when it was sold to Merck for more than $600 million in 2001.

"She bet on what she considered to be smart people and hung on in the tough times," King said.

Bruce Montgomery, chief executive of the startup Corus Pharma, said he recalls when Seattle-based Pathogenesis missed Wall Street sales expectations of its inhaled cystic fibrosis drug in 1998 by overstocking pharmacies. A sell-off drove the stock down from around $30 to around $12.

Kunath bought Vulcan more than 5 percent of the company. Two years later, she cashed out when Chiron bought Pathogenesis for $38 a share.

"She's a good general biotech investor," Montgomery said. "She made money when other people didn't have confidence. She's a successful contrarian. No one can take that away from her."

Luke Timmerman: 206-515-5644 or

Vulcan's biotech portfolio

Cell Therapeutics, Seattle
Darwin Molecular, Bothell
Dendreon, Seattle
Pathogenesis, Seattle
Regulome, Seattle
Rosetta Inpharmatics, Kirkland
Seattle Genetics, Bothell
Xcyte Therapies, Seattle
ZymoGenetics, Seattle
ActivX Biosciences, San Diego
Cell Pathways, Horsham, Pa.
Curis, Cambridge, Mass.
CV Therapeutics, Palo Alto, Calif.
CytoKinetics, South San Francisco, Calif.
Exact Sciences, Maynard, Mass.
InControl, Redmond
Infinity Pharmaceuticals, Cambridge, Mass.
Nanogen, San Diego
Ontogeny, Cambridge, Mass.
Praecis Pharmaceuticals, Cambridge, Mass.
PTC Therapeutics, South Plainfield, N.J.
Structural GenomiX, San Diego
VaxGen, Brisbane, Calif.

— Source, Securities and Exchange Commission, Seattle Times research