An analysis of two companies with different business models

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Human Therapeutic Product
Discovery and Development
Company
Montserrat Capdevila

2. +
What is the Business Model?
 Discovery of therapeutics products that will treat, cure or
prevent a particular disease or illness.
 Focus on scientific discovery and innovation to advance the
practice of medicine.
 Same premise as pharma but using bio-molecular
techniques.
 Initial IP is usually spin-out from academic or federal
research. ( or other small biotech companies)
 Licensed
 Or self developed ( rights of to the technology are given back to
lead scientist)

3. +
MedImmune
 1988-89: Founded in by Wayne T. Hockmeyer as Molecular
Vaccines Inc.
 Technology spin-out from Walter Reed Army Institute of Research (?).
 Main technology: Production of antibodies using DNA recombinant
technologies.
 1990: Name changed to MedImmune.
 1991: MedImmune completes its initial public offering:
 2,875,000 shares of common stock at $9.25 per resulting in net
proceeds of $23,987,000 in proceeds to the company.
 1992: David Mott joins Medimmune as VP of Business
Development. ( Main success point)

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Medimmune
 1993: Acquired rights for distribution of CytoGam
(Cytomegalovirus Immune Globulin Intravenous (human))
from Connaught Laboratories and becomes the sole
distributor of the product.
 1995: RespiGam (respiratory syncytial virus immune globulin
intravenous (Human) (RSV-IGIV). A sterile liquid
immunoglobulin G containing neutralizing antibody to
Respiratory Syncytial Virus (RSV). Approved by FDA in 1995.
 1995: MedImmune acquires exclusive worldwide rights to
human papillomavirus technology developed at the
University of Rochester.

5. +
Medimmune
 1997: Medimmune forms with GlaxoSmithKline (formerly
SmithKline Beecham) a worldwide human papillomavirus
vaccine alliance.
 1998: Receive FDA approval for Synagis
 A monoclonal antibody produced by recombinant DNA
technology used in the prevention of Respiratory Syncytial Virus
( RSV) infections.
 Medimmune has three products in the market.
 2000: David Mott becomes CEO

6. +
Medimmune
 2003: FDA approves FluMist® (Influenza Virus Vaccine Live,
Intranasal), the first influenza vaccine delivered as a nasal
mist available in the United States for healthy people.
 2004: MedImmune has 4 products on the market
 Synagis is their biggest seller ( $1.06 billion in revenue in 2005)
 2007: AstraZeneca acquires MedImmune drug development
pipeline for $15.2 billion.
 2008: David Mott leaves MedImmune and Becomes a General
Partner in NEA.

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MedImmune: Strengths & Weaknesses
 Weaknesses:
 Unproven CEO (????)
 First four products failed
 Strengths:
 Good management team: David Mott
 Founder did not wear so many hats
 Clear technology focus
 Very good at raising capital
 Excellent project management

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Panacea
 Founded in 1999 by a father and a son.
 Hossein A. Ghanbari, PhD
Chairman, CEO & Chief Scientific Officer
 Diagnostics and Therapeutics
 Focused on targeting Cancer and CNS disorders.
 2000: Series A financing
 2002: Named Maryland Incubator Company of the Year
 2002: Series B financing $3 Million
 2002: Panacea Pharmaceuticals, Inc. and MedImmune Sign Collaboration and License
Agreement to Discover, Develop, and Commercialize Cancer Therapeutics.
 Exclusive, worldwide agreement covers development of drugs using Panacea's HAAH
Oncology Technology

9. +
Panacea
 2003:Signs License Agreement with Massachusetts General
Hospital/Harvard University for SF-25 Oncology Program
 2004:Collaboration with Walter Reed Army Institute of
Research for Pre-Clinical Studies on Drug Candidates for
Stroke and Other Neurodegenerative Conditions.
 2005: Raises $7 Million in Series C Round of Financing
 2006: New President & Chief Operating Officer ( Stephen
Keith MD). Raises $8.9 Million in Series D Round of Financing.
 2008: Panacea Pharmaceuticals Announces Issuance of a U.S.
Patent Covering Anti-HAAH Antibodies

10. +
Panacea
 2009:
 COO & President resigns
 Company is cash deficient
 Sued for unpaid wages by former employees
 In 10 years they have 3 products: All in pre-clinical!
 Survival seems bleak
 Ghanbari is in denial

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Panacea: Strengths & Weaknesses
 Weaknesses:
 Inefficient Management Team: Founder was too involved, too
many hats
 Technology focus was to broad
 Too many collaborations, no results
 Not good at raising capital
 All in-house technologies in pre-clinical for 10 yrs…questionable
project management.
 Strengths:
 Rapid initial growth
 Good at forging collaborations

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Main Challenges For This Model
 Securing IP
 Important to have IP patented and “legally” licensed .
 Monitoring to avoid infringements
 Identifying your niche in the market
 Choosing the right market and avoiding being too broad
 Securing your capital
 Capital requirements are high:
 Seed: 1-5 million
 Venture Capitals will demand high amount of equity to offset high risk.
 Turning your company from science to a business.
 Key Success Factor: Let a scientists do the science and a CEO do the business.

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Summing-up
 Average Cost of a therapeutic: $800-1 billion
 40-60% of your pipeline will fail i.e. FDA approval
 Very long regulatory process 9-12 yrs…and counting…
 Why Invest in bio-therapeutics?
 Pharma’s patents are running out. New Business Opportunities.
 Average yearly revenue from a blockbuster therapeutic:
$700million - $12 billion per year
 David Mott made $150 million from Medimmune-AstraZeneca
acquisition….if you are smart, you cash out.

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Any questions???