EntreMed, Inc. University topic

Change strategy:

• New management model is needed to handle new stage of growth;
• Adopt business strategy that would allow to survive financially;
• Experienced management is needed;
• Refocus efforts away from expensive, unpredictable “biologic” products towards economically feasible & predictable chemical entities;
• Change corporate structure & culture (from “scientific” to “entrepreneurial”, academically oriented to commercial )

HR:

• Hire appropriate technical personnel unique to this industry;
• Hire most talented individuals, offer competitive salaries, reduce turnover.

QUESTIONS?

Patent issues

Data Gathering + SWOT

Strength Weaknesses Opportunities Threats

Partnering with “big pharma” companies

Strategy

Finance

Capital markets as source of financing

Venture capitalists

Unsustainable rate on debt

Costly regulatory phases

Heavy investments to protect products

• Several million dollars in debt ($11mln – 2002)
• No FDA-approved products to generate revenues
• Limited financial rewards
• Cost of developing a product candidate: ≈ $800 mln

High employee turnover

Human

Resource

Talented individuals

employed

Hiring strong technical personnel unique to the industry

Competitive salaries offered by rivals

Technology

Obsolete technology

State-of-the-art technology

(to accelerate discovery

& reduce costs)

R&D

Regulatory path:

12-15 years

pre-clinical testing 8-10% chance of reaching market

Expensive researches

R&D: $177 mln (2001/02)

Unpredictable results of

researches

Legal

Strong patent claims

Intellectual property infringement

Lawsuits with Celgene

Competition

Many existing and potential competitors have substantially greater financial, technical and human resources

Possible solutions

1

• Capital markets as source of financing;
• Venture capitalists;
• Partner with “big pharma” companies;

Developing more than one product candidate to create greater opportunity for

success;

3

Insufficient capital

Causes:

• Several million dollars in debt ($11mln – 2002)
• Unsustainable rate on debt
• No FDA-approved products to generate revenues
• Limited financial rewards

Patent issues

Causes:

• Intellectual property infringement
• Heavy investments to protect products
• Invalidation of issued patents
• Failure to provide sufficient protection

Problems

&

underlying

causes

Costly regulatory phases

Causes:

• conducting pre-clinical testing, clinical trials, checking safety, dosage & side effects
• cost of developing a product candidate: ≈ $800 mln
• regulatory path: 12-15 years

Huge expenditures

Causes:

• Expensive researches
• Securing patents
• Lawsuits with Celgene
• R&D: $177 mln (2001/02)
• Net loss: $174 mln (2001/02)

Uncertain future regarding products

Causes:

• Unpredictable researches
• After decade of pre-clinical testing 8-10% chance of reaching market
• High-risk investment

2

4

• Licensing late-stage product candidates from “big pharma” (to avoid internal research component);
• State-of-the-art technology (to accelerate discovery & reduce costs);
• Technology that enables to develop new products quickly and cheaply (delivering products to market sooner);

Redirect business & scientific development strategies toward commercialization of

best drug candidates;

- Defend

- License

- Sell

5

RECOMMENDATIONS

Corporate profile/Goals

EntreMed, Inc. is a clinical-stage pharmaceutical company

- Founded 1991, Maryland;

- Publicly traded since 1996(NASDAQ);

angiogenesis – induction of blood-vessel growth

Goals:

- conduct research into angiogenesis;

- focused on oncology therapeutics;

- develop therapeutics for the treatments of inflammatory diseases and cancer;

Finances

- IPO 1996

- FYR 2005

• Revenue: 5.92M
• Net Income: -16.3M
• Total Assets: 36.43M (30.1M cash)

Will increase research and development spending in 2006

www.entremed.com

questions@entremed.com

Case#5: EntreMed, Inc.

Strategy and Business Policy, MGT 4201

Presenter:

Sabyrova Aliya

Thank you for attention!