Jim Kauer came to Kendal in 2016, after retiring from a long career at DuPont and then co-founding a very successful startup. In a sense, his history is a bit like that of Charles Robertson, who also left a long DuPont career to get involved in a startup company.

While Charles left DuPont to pursue a product developed at DuPont that the company wasn’t interested in, Jim left without a clear product plan. In his case, it was just a team of three scientists with an idea for a new class of pharmaceuticals. After a long development phase, the new company, Cephalon, was to become a multi-billion-dollar pharmaceutical powerhouse. But before we get to Cephalon’s history, here is some background about Jim.

Budding scientist. Jim’s interest in science and technology blossomed early. Growing up in Cleveland, he scavenged electrical parts from discarded radios and was eventually able to build his own shortwave receiver. That project won a prize in a Westinghouse-sponsored science contest and led to a trip to Washington, DC, where (alongside the winning projects of other young scientists) he was able to show off his receiver.

While still in high school, Jim got a job helping the chemistry teacher clean up after experiments and keep the stockroom in order. The job paid 32 cents an hour. In his free time, he was permitted to conduct his own experiments using supplies from the stockroom.  

Jim’s interests in chemistry and radio would stay with him throughout his career and beyond.

The Navy: not the experience Jim expected. By the time Jim turned 18, the US had entered WWII. Jim signed up for the Navy’s electronics program, based in Chicago, a 9-month program that sounded like a perfect fit.

The Navy required recruits to learn to swim, so every morning at 7 a.m. Jim and a bunch of other recruits headed out to Lake Michigan for lessons. Jim developed a bad cold, and it got steadily worse, until one day he collapsed. His buddies got him to the doctor, who found he had rheumatic fever. He was sent to a Navy hospital in Georgia that specialized in rheumatic fever, with thousands of cases at any given time. The treatment in those days was 24 aspirins per day for three months. Jim gradually got better, but developed a heart murmur that lasted the rest of his life.

While in the hospital, Jim got a job teaching workers how to do blood chemistry. He already knew a lot about chemistry, but he didn’t know anything about blood chemistry. Fortunately, the Navy provided a thick instruction manual. However, there was yet another health setback: Jim contracted hepatitis when he was pipetting contaminated blood. For his final half year in the Navy, he had the job of editing the base newspaper.

When Jim’s tour was over, he headed back home to Cleveland. He was released from the Navy with a 50% disability (later reduced to 10%). He still receives (very small) disability payments from the Navy.

Getting deeper into chemistry. In Cleveland, Jim took chemistry classes at what is now Case Western Reserve. He got top honors in Chemical Engineering in a state-wide exam (a result that made the Cleveland newspaper). During this time, he began to get into ham radio, contacting other radio amateurs around the world.

His first job as a chemical engineer involved the design of gas burners for a Cleveland company. He quickly realized that this type of job was not for him. He applied to the University of Illinois, where he went on to get a PhD in Organic Chemistry.

DuPont and beyond. After leaving the university, Jim landed a job at DuPont Central Research, one of the top corporate research facilities in the country. He worked there for many years before ultimately being transferred to DuPont’s Biology department. There he met Frank Baldino, a neurobiologist with big ideas.

Jim had been worried about DuPont’s direction and had been thinking of leaving. He had even had several discussions with a California startup that needed a chemist with his expertise. But Baldino nabbed him first. Baldino had been having discussions with a venture capital (VC) firm about the potential for neurological drugs, and the VC firm was ready to back Baldino. Baldino (who “could talk anybody into anything”, according to Jim) got Jim and Michael Lewis (another DuPont researcher) to join him in founding a new company.

The company was founded in August of 1987. Jim was 60 by then, and eligible to retire from DuPont, which he did on January 1, 1988.

The founding trio decided to start the company in West Chester rather than California (which the VC firm would have preferred). They found space in an office park on the edge of West Chester. They went through a list of possible names and settled on “Cephalon”, based on the Greek word for “brain”. The VC firm arranged for visits by consultants, including a Nobel-winning scientist, to discuss possible drug targets for the new company. They considered possible treatments for a range of neurological diseases, including Alzheimer’s, Parkinson’s, narcolepsy, and others.

One of the first targets was narcolepsy, a disease which can cause overwhelming daytime drowsiness and sudden-onset episodes of sleep. It is not common (only one person in 2,000 is afflicted) but it can be very debilitating. The team knew of a drug already developed in France for heart disease which had the unexpected side effect of causing laboratory rats to stay awake and active when they would be expected to sleep. It turned out to be helpful for narcolepsy and had very few side effects. They developed it under the name “Provigil” and, after several years of testing, it became a success for Cephalon.

Provigil developed an off-label following among truck drivers, who used it as an alertness aid. It spread to other groups of users: a 2009 article in The New Yorker (“Brain Gain: The underground world of ‘neuroenhancing’ drugs”) described its spread to students, wall street brokers, professional poker players, and many others who did not suffer from narcolepsy but who valued long periods of alertness.

Like many venture-funded companies, Cephalon lost money for several years after its founding. Its funding depended on investors. Jim paid little attention to the business side of Cephalon, preferring to focus on the work of his chemistry lab. Profits eventually came, and the company grew rapidly. By 2000, Cephalon had over $100 million in annual sales.

During the mid-2000s, Cephalon’s sales division continued its flirtation with off-label promotion of its pharmaceuticals. Cephalon ultimately had to pay a $425 million settlement to the FDA for its off-label promotion and sales of three drugs, including Provigil.

During this period, Jim was running the lab, unaware of what the salespeople were doing. By 2010, when Kauer retired at 83, sales exceeded $2.7 billion/yr. The following year, Cephalon was sold to Teva, an Israeli pharmaceutical company.

At Kendal. Jim and his wife Else came to Kendal in 2016; Else died about two years later. Jim continues his interest in ham radio, and his station (call sign W3FFU) is set up in his three-season room, with antenna wires running up the roof.

Jim Kauer with his ham radio transmitter.

Another of Jim’s long-term interests is astronomy. He was charter member of the Delaware Astronomical Society, founded in 1956. He was involved in the creation of an observatory and a planetarium at the Mt. Cuba Center in northern Delaware, and gave astronomy talks there.  

Jim, now 98, is an avid reader and can often be found in the library after dinner, reading the newspaper. He is still vigorous and enjoys conversation. Jim is modest and friendly and doesn’t talk much about his career. Most of the people he talks with have no idea he was the cofounder of one of the world’s top pharmaceutical companies.