Fariba Fischel Ghodsian: Pushing the Scientific and Financial Frontiers of Biotechnology

With the goal of harnessing the untapped potential of Iranian-Americans, and to build the capacity of the Iranian diaspora in effecting positive change in the U.S. and around the world, the Iranian Americans’ Contributions Project (IACP) has launched a series of interviews that explore the personal and professional backgrounds of prominent Iranian-Americans who have made seminal contributions to their fields of endeavour. We examine lives and journeys that have led to significant achievements in the worlds of science, technology, finance, medicine, law, the arts and numerous other endeavors. Our latest interviewee is Fariba Fischel Ghodsian.

Dr. Fariba Fischel Ghodsian is the Chief Investment Officer of DAFNA Capital Management, an SEC-registered long/short investment fund that focuses on publicly-traded biotechnology and medical device companies. Dr. Ghodsian completed a postdoctoral fellowship in protein modeling at Harvard Medical School, Ph.D. in Biomedical Engineering at Oxford University in England, M.S. in Chemical Engineering at Massachusetts Institute of Technology, M.B.A. at the University of California at Los Angeles, and B.S. in Chemical Engineering at Technion, Israel Institute of Technology. Prior to joining the firm in 2002, Dr. Ghodsian was Managing Director of Healthcare Research at Roth Capital Partners in Los Angeles. Before this, she was a senior biotechnology analyst at Lehman Brothers, Hancock Institutional, and Wedbush Morgan Securities, as well as Director of Business Development at Medclone and a research scientist at Allergan Pharmaceuticals. In 2002, Dr. Ghodsian received the Wall Street Journal’s “Best on the Street” award, as one of the top five biotechnology analysts. In 2015, she was profiled in the book “Women of the Street: Why Female Money Managers Generate Higher Returns”. She has been a frequent guest speaker at conferences and on television, has authored multiple scientific publications, holds several patents, and has served on the NIH’s Scientific Grant Review Board. She is involved with several non-profit organizations and currently serves on the board and investment committee of the American Technion Society.

Tell our readers where you grew up and walk us through your background. How did your family and surroundings influence you in your formative years?

I was born in Tehran, Iran and lived there until I was 19. I grew up in a warm and supportive family with loving parents and three sisters. My father, who couldn’t finish school because he had to work from a young age to help his parents, always encouraged us to study, and my mother always gave us the courage to go forward. From a young age, I developed an interest in math and science and after high school, decided to combine my interests and study chemical engineering at Tehran University. Frankly, I was also drawn to this field because I wanted to prove myself in a male-dominated environment. From 1977–78 at Tehran University, however, was an eye opening period of time as I witnessed student demonstrations and the unfolding of the Islamic revolution. In the Fall of 1978, the government closed Tehran University and I decided to leave Iran to continue my studies in Israel, at the Technion-Israel Institute of Technology. I met my future husband, Nathan Fischel, at the Technion and after finishing my BSc, we moved to Boston. There I received my MSc in chemical engineering from MIT, Massachusetts Institute of Technology, working on an artificial pancreas for diabetes patients. I did mathematical modeling and computer simulation of this system at Oxford University, where I received my DPhil. At Oxford, we also welcomed our first son. We returned to Boston, where I did post-doctoral research at Harvard Medical School on the mathematical modeling of protein structure and function. In 1988, Nathan and I decided to move to Los Angeles, where my parents had settled after leaving Iran. There we were blessed with two daughters. I worked in the pharmaceutical and biotechnology industry, first in research and after completing my MBA at UCLA I moved to the business side. The inflection point in my career was in 1994 when I started working in Wall Street as a biotechnology analyst. At that time, biotech was a new field and I truly enjoyed my broad exposure to new technologies and treatments. I was very fortunate that my husband was fully supportive and encouraged me in this endeavor.

Has there been a particular person, place or event that you count among your key influences to date?

There have been many events and people that have shaped who I am today. My father-in-law, who lost his entire family during the Holocaust, showed me human dignity and optimism after most devastating life experiences. When I was in my early 20s, I worked in a Kibbutz in Israel for one summer, and this experience taught me how to enjoy the simplicity of life and that financial metrics are not the only measure of success. I took that time and what I learned from it to Wall Street, where I was fortunate to have a first boss at Wedbush Morgan Securities who was honest and caring. He solidified the idea for me that money is just a byproduct of being a successful analyst — his guidance definitely helped me find my path in Wall Street. Finally, from childhood I enjoyed the curiosity that is encouraged in the Jewish tradition, and learned not to be afraid to ask questions. I believe having a curious mind was instrumental in becoming a successful engineer, scientist, and analyst.

Can you share the highlights of your work?

Analyzing the medical and financial aspects of biotechnology companies, and making investment decisions based on this analysis, is fascinating and multifaceted work. You see more and more companies with innovative ideas, new technologies, new drugs for unmet medical needs, and you are an integral part of this progress. When I did my MBA I was often asked if I would do anything else apart from biotech and I always said, “No way. I don’t want to do anything apart from this industry.” Over the years, I have invested in many exciting companies, but the highlight is always when we invest in a company and see firsthand how their drug is making a difference for the patients. Some of the new cancer drugs are truly remarkable and it is very gratifying to feel that we have contributed to their development. I think at the end of it, that is really what inspires me to be in this business. Obviously our success is measured in financial returns-both for ourselves who have all of our liquid assets in the fund and for our investors- but the nice thing is that there is no conflict of interest. If you invest in a good company with a good drug, you can also make money and the two are totally congruent.

What originally generated your interest in biotech?

Chemical engineering is a very broad field but during my undergraduate studies I became more and more interested in the medical applications. It was a perfect time to get involved in biotechnology as it was an industry that had just been born in the 1970s, a time when it became possible to manipulate genes. Mainly, I pursued biomedical engineering and biotechnology because these industries truly make a difference and it is gratifying to feel you are helping patients.

What made you decide to leave the analyst side and come to hedge funds?

It is a natural career path to go from the sell-side to the buy-side. Back in 1996, I was offered to work at Lehman Brothers and we planned to move to New York. Meanwhile, my husband took a Sabbatical from his work as a physician and Professor of Medicine, and subsequently received some seed money to start a hedge fund focused on publicly traded biotechnology and medical device companies. During the first few years, the fund grew substantially and vastly outperformed the biotech indices. Nathan, who was still working full time at his hospital, asked me to join him. At first I was hesitant, but the idea of managing our own fund was exciting. The fund was growing well and Nathan needed someone to manage the research team and the analysts. Also, there was some complexity to a husband and wife working on the two sides of Wall Street (buy side and sell side) — we had to have a “Chinese wall” at home! In 2002, I received the Wall Street Journal’s “Best on the Street” analyst award for biotech and thought I had achieved all I wanted on the sell-side, so this was the best time to leave.

What’s your typical process for researching a company?

We take a very fundamental approach in analyzing our companies, as we look at the drug structure and its molecular target, as well as the design of the clinical trials and assess probability of success. Obviously we look at the scientific data and the potential value of the drug, in the framework of the management and the valuation of the company. Drug development is a very long process as companies typically go through three phases of clinical trials and then it takes more time for regulatory approval. We try to find “windows of opportunity” to invest in part of that process, but of course this is case by case- in some companies we remain long term investors but some investments are short term. We have a database of all of the biotech companies and record all of our work and scientific information. Ideas can come through many different ways, such as by meeting with the management from companies or reading publications about an interesting drug.

What is the biggest challenge you have faced in your career?

Probably the biggest challenge was making the transition from being a scientist to a Wall Street analyst. Essentially you go from being a mile deep and a foot wide to being a foot deep and a mile wide! My MBA helped me greatly in this transition to the investment world. As a biotech analyst, it was also challenging to educate investors that many biotech companies are not driven by the usual metrics of sales and profit and rather are valued based on the early promise of their drugs which may still be years away from being on the market. Interestingly, I did not feel that being a woman or an immigrant had any negative impact on my career. I think if you ignore it and remain professional, others ignore it too.

What achievement are you the proudest of?

We just celebrated the 20th year anniversary of our firm, DAFNA Capital Management. Looking back, I could not have asked for a more exciting and rewarding career path from science to business and investment in a field that is both intellectually challenging and personally gratifying. However, what I am most proud of is the fact that I was able to achieve this, while maintaining a balanced life and building a loving family. I am very proud of my three children and feel that they are my biggest achievements in life. Lastly, after 35 years of a happy marriage, I am very fortunate that my husband is not only my life partner but also my partner at work.

How do you see your field changing? What excites you most about the future of it?

Biotechnology is still a young industry but it has made great strides over the last 40 years. The initial promise of the industry was to develop biological drugs that can replace missing or inadequate amounts of proteins in the body. However, later other classes of drugs such as monoclonal antibodies were developed to inhibit unwanted targets. More recently, there have been tremendous advancements in the areas of gene and cell therapy with the aim of turning our body into a host that makes the missing proteins. There are also major developments in the treatment of cancer by developing individualized therapies based on the genetic make-up of the patient’s tumor and immunotherapies that elicit the immune system to fight the cancer. It is very exciting to be part of this journey to try and eradicate diseases one by one.

Can you share your thoughts on your Iranian-American identity? What does being an Iranian-American mean to you?

By now, I have lived most of my life in the US, but of course my roots and foundations are from Iran. I think each country has given me something very valuable. Iran has taught me the importance of family values and keeping our traditions, while America has taught me the importance of individuality and pursuing my own path. I am very happy that I could find my own balance between these wonderful cultures and be able to represent the Iranian-American community in a positive light.