optimer pharmaceuticals: an odyssey in entrepreneurship
DESCRIPTION
Serial entrepreneur, Dr. Michael Chang, gave a talk at our December meeting. Dr. Chang shares his wisdom and experience gained through his biotechnology journey.TRANSCRIPT
OPTIMER PHARMACEUTICALS,INC.PHARMACEUTICALS,INC.
………An Odyssey
ByByMichael N. Chang, Ph.DChairman of the Board, Optimer Pharmaceuticals, Inc.Optimer Pharmaceuticals, Inc.www.optimerpharma.com
A story Starting a biotech company is never easy and is becoming increasingly
more difficult. Venture capitals and strategic/corporate partners are demanding more risk sharing, and moving more towards “later-stage” prospects. Optimer is a 10-year–old public biotech company. Through sharing the experience of Optimer on starting, fund raising, project selection, product development, IPO, and commercialization, we try to highlight some of the challenges, what it takes, the key elements for success, characteristics of entrepreneur, positioning, timing and other earning.
Defining Goal & Success Positioning of the Company – which segment is your
playfield in the “pharmaceutical value chain?” Steady stream of revenue, preferable from sales Being best in what you do – competitive advantage? Defining your “battle field” – where is your market? Value building – bench marking the efficiency of Value building bench marking the efficiency of
investment. Managing risks – intrinsic, global market condition, focus
vs hedging etcvs. hedging, etc. Managing cash burn vs. milestones Managing growth and expansion
Most common causes of biotech Most common causes of biotech startup failures
Key personnel not functioning as a team Pipeline product/technology failurePipeline product/technology failure Run out of money before key milestones, poor
fundingAdverse market environment can’t raise more Adverse market environment, can’t raise more
money Mismanagement, diminishing credibility Poor selection of targets (artificial, forced by
circumstances)
Uniqueness of Optimer
Rise from the ashes Started by two inexperienced Taiwanese High-bar approach – take a product from concept to g ba app oac a e a p oduc o co cep o
commercialization Other complications – Taiwan element
Once upon a time, in P l iPennsylvania………..
In October1993 I quit my job In October1993, I quit my job as the head of discovery at Rhone-Poulenc Rorer (now Aventis)………)
What is the most important pelement in a Start up company?
People!
Our dream team:
Professor Chi Huey Wong, ScrippsProfessor K.C. Nicolaou, ScrippsP f B Sh l MIT (2001 N b l i Professor Barry Sharpless, MIT (2001 Nobel in
Chemistry)Michael N. ChangMichael N. Chang
“FP Pharmaceutical,Inc.” Chemistry driven Strong IP from Scripps and MITStrong IP from Scripps and MIT Strong team Focus on Combinatorial Chemistry Focus on Combinatorial Chemistry
Timing is everything!FP Ph ti l I t t f di FP Pharmaceutical, Inc. cannot get funding
with reasonable valuation, and failed.
1. 1Q1994, bottom fell out in biotech.2 There are at least 4 combinatorial start-2. There are at least 4 combinatorial start
up out there already (Pharmacopea, ArQule, Combichem,…)
3. Michael Chang has no start up experience!
Lesson Number one It is difficult to start a biotech company in the
US. It is particularly difficult for Asian. How “competitive” is your business plan? How competitive is your business plan? Is the timing right? If the timing is right, are you ready? If the timing is right, are you ready? Do you have a “plan B”? A thorough inventory of strength & weakness Identify your own deficiencies and how to
compensate for it
It’s time to pack up and go p p ghome…
1. Shelf the business plan.2. Look for other opportunity – go to
“plan B” ?p
The important thing isThe important thing is…..……….Never give up!
Second encounter
In Nov. 1998, I sold Pharmanex to Nu Skin, and stayed on as CSO, Senior VP R&D…..
CHW approached me for a new idea…..
Stanford incident
In early 1999, I was invited to give a presentation to Stanford in-coming MBA class class……..
Optimer Pharmaceutical IncPharmaceutical, Inc.
US based biotechnology corporation established in 1999 - A Delaware Corp.
Technology licensed from Scripps Research Institute and Memorial Sloan Kettering InstituteKettering Institute
Focus on new drug discovery in infectious diseases cancer vaccine and arthritisdiseases, cancer vaccine and arthritis
Raised 3 4 million seed fund in 2001 Raised 3.4 million seed fund in 2001
Optimer Founders Professor Chi Huey Wong,
Ernest Hahn Chair of Chemistry, Scripps Research Institute
Professor Samuel J. Danishefsky, K i Ch i f Bi i Ch i Kettering Chair of Bioorganic Chemistry, Memorial Sloan Kettering Institute
Michael N Chang Michael N. Chang
Optimer AmbitionOptimer Ambition
To become a premier pharmaceutical company, d i b i ti h i tdriven by innovative chemistry
Optimer’s Platform Technologies
OPopSTM System -OPopS SystemOptimer one-pot synthesis
technologytechnology
Raised 34 million Series B in 2002
By late 2003, Optimer has created an exciting Pipeline
OPT-822 – Metastatic breast cancer, other tumorsOPT 88 O t th iti OPT- 88 – Osteoarthritis
OPT-80 (Fidaxomicin) – C. difficile infection OPT-1068 – CAP and other infection OPT-99 – diarrhea OPT-11 – gram-negative resistance
Still h 25 illi d ll i th b k Still have 25 million dollars in the bank
Fidaxomicin focus and big push
Finished phase 1 trial in the US in 2004Entered directly into phase 2 dose ranging study, but without the comparator – Vancocinp
Optimer now has 17 million in the bank
This aggressive development strategy appeared sound giving the potency and safety of the drug, however……
Cash is burning fast and financial market is bleak
Finished Phase 2a with positive results Big pharmaceutical firms and late-stage ventures wants
phase 2b with vanco VC /private equity market slowed to a halt
Optimer has only 7 million in the bank
The darkest day in Optimer history
In April 2005, we signed a US exclusive license agreement with Par Pharmaceutical on Fidaxomicin. The terms are detrimental to Optimerterms are detrimental to Optimer.Par made a 12 million investment in Optimer.
Optimer has only .67 million in the bank before signing this agreement. We went on to raise additional 30 million in Series D before IPO
Lessen number 2Lessen number 2
h k l1. There are many ways to skin a cat, only time will tell if the right choice was made.
2 Dicipline and focus are most important 2. Dicipline and focus are most important elements for startups.
3. Correct strategy, faced with wrong macro-environment and timing, may have davastating outcome
Optimer went IPO in March, 2007
Barely squeezed in at closing of the IPO window Phase 2b or Phase 3 – Optimer’s decision to
jump in Phaase 3 directly saved 18 months jump in Phaase 3 directly saved 18 months development time, but costed approx. 30% in valuation
Optimer raised 56 million at IPO
Key learning from this experience
Become a better person – more sympathetic, considerate, modest.
Greater understanding on entrepreneurship and Greater understanding on entrepreneurship and biotech industry, global capital market
$$$, most importantly, a more correct attitude , p y,towards it.
Key lesson on start up “There are many ways to skin a cat”. Story of anaconda – not for the faint heart. Managing money vs. milestones.a ag g o ey s es o es Share of a big pie/small pie – economy of scale. Deliver your promise to investors – you only have one
chancechance. Manage/en-power talent. Understand your own limitations, timing on enter/exit.
Formula for the successful Formula for the successful entrepreneur
People is the most important element. Drive and determination Family support and participation is crucial Family support, and participation is crucial. Timing is critical, be patient, don’t give up. Constantly improve and prepare yourself, be
ready when opportunity strikes. Be flexible, not too greedy. Persevere be prepared for a long journey Persevere, be prepared for a long journey.