Minimally acceptable deal (your resistance point) I Are there any other issues that you could add to expand the pie? I Could you develop a hybrid structure for this partnership? | Looking at the different structures, which one would you advocate\"? Why? | Question of Value - Case Part A reer he knew about Washington DC, traffic and how to leave enough time so that he was ever late. He hoped the guy he was meeting - Charlie Peters - was equally conscientious. Chris was founder and Chief Executive Officer (CEO) of two companies that dealt in respiratory lucrative for a business partnership. Chris was on his way to meet Charlie to structure a deal. Chris Angelis had originally practiced and taught in the field of Respiratory Care and 985. From 1985-1990, Chris held six positions of successive responsibility wherein he oversaw launch of three new products in the US, and the development of the global tention of a Maryland-based pharmaceutical start-up that recruited him as the company's misingly, he quickly became concerned when management's demands started to call his to question. In April 1991, Chris, who was a new homeowner, the father of a 3-year-old in a position that was certain to tarnish his reputation or worse implicate him in activities that were unethical and possibly thegal. this president rejected his resignation and fired him on the experience and offer this heroines ihate mis cues bomber, he founded the ther company, Strategic pany. Strategic healthcare organizations . SII quickly became phenomenally successful through organic growth . eting support to mergers, and acquisitions before it was acquired in 1998 by a company which is now a division In 1992, Chris met physicians Dr. Mike Kale and Dr. Bill Sager - they had served as armaceuticalsiant Glaxo Inc. (now GSK). Mike and Bill believed, based on their experience, eneficial for pharmaceutical products. Such education had to appeal to doctors - it could not keting, it had to illustrate the way these solutions helped patients, be inclusive of ent using novel vet appropriate formats delivered by and to a network of doct Mike and Bill Sager were specialists in allergy and asthma, and they started to implement their "needed a busin had sought Chris out based on his repu they "needed a business guy" to run the operation. In late 2005 as Chris was finishing his now Chris would serve as the new company's CEO, SMA was incorporated in 2004 and were the organization now encompasses multiple therapeutic specialties and an ever-expanding network of physician advisors spanning the globe. Chris Angelis continues to serve as the CEO of SMA and oversees this continued growth while Mike Kale and Bill Sager maintain their strong link to cal practice and serve as independent consultants to SMLA The owned the patent to a promising compound with many possible applications in the was a chemical compound that was designed to provide more effective delivery of medicines to mucous membrane surfaces (e.g., nose and mouth). Their product, MuAdTM, is a patented muco- adhesive printrice ancil composting, developed on the basis of synthetic polymer. Muco- eanances the effect of drugs dissolved in them, Unlike omer bleachcalve drug delivery system fluidity, which enables them to cover maximal MuddTM offers a mer idity ratio for whatever drug or substance is being delivered using MuAds. This is done in production using the patented rocessing methods of PharmaSciences The Companies SALA SMA was in the business of knowledge and education. In the highly regulated and highly opinion leaders across a variety of medical coming These were people who understood what bout the pressures and values of clinicians, and could therefore "speak to them in the inguage." This enhanced the message credibility, and as such the impact of any educational programs SMA created. - cycle, SMA also had knowledge that sent begged the mends of variants at a specific point ; time. Products have different marketing needs from pre-launch planning to mature product life- and for each stakeholder. For example, for newer products SMA had in-house experts and clinical advisors to help with the design of the actual clinical development programs. As a particularly nuanced issue, and so SMA's clinical advisors also had to be knowledgeable abo regulatory strategy. They provided guidance for New Drug Application and Investigational Nev Drug submissions, and could deliver expert testimony as necessary for the US Food and Drug critical that members of the SMA advisory team be made up of highly respected , practicing en effective as a medicine delivery vehicle using clinical trials. Their product, MuddTM had ffectiveness. It was found to qualify for a Class I designation, Which means that it is well bolstered by the rigorous research behind it. Another important finding was that MyAdTM increased the potency of certain drugs. This finding was important for drugs where the efficacy were effects overthe and continual use. By pairing these medicines with Mudd, patients and less frequent doses would yield a similar ilar clinical effect, equent doses worth vico studies have shown that MyAdTS was a useful and usable product. But there were two additional advantages of the MuAdTM compound . The company' patented technology includes the methodology and devices required to assess and adjust the at MuddTh fame whing of drug delivery. In addition, the significant advantage to licensees is that MuAdTN has been developed for existing with expired or expiring patents, helping them with their life-cycle management strategies. sically a mixture of hot peppers that was minimally irritating but very effective for sinus target and headache. It was one of two homeopathic products with similar ingredients Nose-Clear had launch aunched in 2005, and had been praised for its effect commercial radio advertising campaigns. But by 2008 the sales had fallen below $100,000 for that year. There was no advertising or promotion, and a minimal retail presence. Most sales came from on-line purchases. Clearly this was a company in need of help. Nose-Clear was effectively a mom and pop shop running on a shoestring budget that attract partners and/or capital to fund the operation, but so far had been unable my to Deal or No deal? The way Chris saw it, investment in Nose-Clear had a lot of potential. Seventy-two in the LIS and $20 billion market worldwide Right now Nose- Class was one add in the US and $20 billion market worldwide. Right now, Nose-Clear was one of hundreds of branded and generic over-the-counter products for relief of sinus congestion and headache. Bu minor medicinal treatment. This trait also made it cheaper and easier to manufacture, and free of regulatory entanglements. However, this strength was also a liability. The first problem had to do with the nature and strength of the claims one could make about Nose-Clear's effectiveness. People are naturally (and legitimately) suspicious of inflated The second is that because Nose- Clear was homeopathic, it was not patentable. Nothing that you But Made was patented. By combining Nose-Clear with MuAdest you would have a compound, the entire formulation is now patentable. As Chris liked to say, it was like traffic suddenly they are subject to those laws. Strategic BioSciences had the bus, Nose-ClearNose- Clear had the people. SMA knew how to drive the bus and where to go. the song and or send should be structured there were tiny of For the fo done with it. It would require some market analysis to figure out what a reasonable valuation of this product could be. At the same time, Chris already had two companies; did he want to run a Charlie was just in it for the money. This was his grandmother's recipe, and so maybe he was tached to the idea of makers irmin a Product himself. Or maybe he wanted to be CEO. In If charlie really wanted to be in control, then they could set up his company as a wholly would be in a position to extract all the value from this product. Again, there was risk. Both of nies had reputations to uphold, and Charlie was a bit of an unknown in terms of and maybe Charlie could be groomed. Or maybe Charlie was not looking to the never one with being to junior." re. This would almost certainly be more attractive to Charlie as it would ng to the table? Chris had the contacts, the know-how, and the capital is venture work. With a joint venture, he would almost surely get less of the how good the establish a buyer-supplier relationship. Chris provide ng, clinical tests, and production services, and Charlie pays for it. This could red, but the upfront work was daunting How was Charlie going to pay for old Charlie get Analytical Questions Based on the case, what are the identified risks and rewards for Chris in terms of What are the risks and rewards for Charlie in terms of working with Chris? se the below is a list of possible negotiable issues that can be used to structure a deal. buyout, wholly owned subsidiary, joint venture, and buyer-supplier). re to articulate an ideal but realistic deal (your goal) and a minimally b. Are there any other issues that you could add to expand the pie? C. Having looked at the different business structures, which one would you advocate and why? Negotiable issues (although each could potentially break down into sub-issues as well): Ownership percentage of any jointly owned organization Profit sharing on sale of product Licensing fee for services (marketing, clinical, and production) Marketing support in terms of advertisement nding support in terms of product duction management of Product sivity in terms of markets and products, as well as subsequent deals duction to key opinion Discussion Given your choice of business deal, what information should you be looking for as the deal is executed in order to minimize your risk and maximize your return? Put differently, how will you identify whether your original business deal is optimal once you begin to work with Charlie