OPTIMER

PHARMACEUTICALS,INC.
………An Odyssey

By
Michael N. Chang, Ph.D
Chairman of the Board,
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
investment.
 Managing risks – intrinsic, global market condition, focus
vs hedging
vs. hedging, etc
etc.
 Managing cash burn vs. milestones
 Managing growth and expansion
 Most common causes of biotech
startup failures

 Key personnel not functioning as a team

 Pipeline product/technology failure
 Run out of money before key milestones, poor
funding
 Adverse market environment
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
g ba approach
app oac – take
a e a product
p oduc from
o concept
co cep to
o
commercialization
 Other complications – Taiwan element
Once upon a time, in
P
Pennsylvania………..
l i
In October1993,
October1993 I quit my job
as the head of discovery at
Rhone-Poulenc Rorer (now
Aventis)………
)
 What is the most important
p
element in a Start up company?
People!

Our dream team:

Professor Chi Huey Wong, Scripps

Professor K.C. Nicolaou, Scripps
P f
Professor B
Barry Sharpless,
Sh l MIT (2001 Nobel
N b l in
i
Chemistry)
Michael N. Chang
 “FP Pharmaceutical,Inc.”
 Chemistry driven
 Strong IP from Scripps and MIT
 Strong team
 Focus on Combinatorial Chemistry
 Timing is everything!
FP Ph
Pharmaceutical,
ti l IInc. cannott gett funding
f di
with reasonable valuation, and failed.

1. 1Q1994, bottom fell out in biotech.

2
2. There are at least 4 combinatorial start-
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”
competitive is your business plan?
 Is the timing right?
 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 p
pack up
p and g
go
home…

1. Shelf the business plan.

2. Look for other opportunity – go to
p
“plan B” ?

The important thing is…..

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 Inc
Pharmaceutical, Inc.

 US based biotechnology corporation

established in 1999 - A Delaware Corp.
 Technology licensed from Scripps
Research Institute and Memorial Sloan
Kettering Institute
 Focus on new drug discovery in infectious
diseases cancer vaccine and arthritis
diseases,

 Raised 3.4
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,
Kettering
K i Ch
Chair
i off Bioorganic
Bi i Chemistry,
Ch i
Memorial Sloan Kettering Institute
 Michael N.
N Chang
 Optimer Ambition

To become a premier pharmaceutical company,

di
driven by
b innovative
i ti chemistry
h it
 Optimer’s Platform
Technologies

OPopSTM System -
Optimer one-pot synthesis
technology

Raised 34 million Series B in 2002

 By late 2003, Optimer has created an exciting Pipeline

 OPT-822 – Metastatic breast cancer, other tumors

 OPT 88 – Osteoarthritis
OPT- O t th iti
 OPT-80 (Fidaxomicin) – C. difficile infection
 OPT-1068 – CAP and other infection
 OPT-99 – diarrhea
 OPT-11 – gram-negative resistance

 Still h
have 25 million
illi d
dollars
ll iin th
the b
bank
k
 Fidaxomicin focus and big push

Finished phase 1 trial in the US in 2004

Entered directly into phase 2 dose ranging study, but w
ithout the comparator
p – Vancocin

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 Optimer.
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 2

1. There
h are many ways to skin k a cat, only
l time
will tell if the right choice was made.
2
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
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
biotech industry, global capital market
 $$$,, most importantly,
p y, a more correct attitude
towards it.
Key lesson on start up
 “There are many ways to skin a cat”.
 Story of anaconda – not for the faint heart.
 Managing
a ag g money
o ey vs.
s milestones.
es o es
 Share of a big pie/small pie – economy of scale.
 Deliver your promise to investors – you only have one
chance.
chance
 Manage/en-power talent.
 Understand your own limitations, timing on enter/exit.
 Formula for the successful
entrepreneur
People is the most important element.
 Drive and determination
 Family support,
support and participation is crucial.
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,
Persevere be prepared for a long journey.
journey