|
This is the start of the new TM Bioscience Corporation thread.
I attended the AGM yesterday in Toronto and met with the President
Mr. Don MacAdam. He has kindly given me a copy of his speech which he gave at the AGM. The text follows:
By Mr. Don MacAdam; President & CEO
TM Bioscience Corporation; TMC.V
------------------------------------------------------------------------------------------------
Any one of the top 100 drugs represents sales of more than one
million dollars per day. There are new drugs on the horizon which will put
every one of these top 100 drugs at risk of obsolescence.
In the near future, new, more efficacious medicines will take over
existing markets worth tens of billions of dollars.
Where will these new drugs come from? The top twenty
pharmaceutical companies are together working on only a few hundred new
drugs, but the two thousand biotech companies are working on perhaps five
thousand new drugs. Its a numbers game.
The medicines of tomorrow are being discovered by smaller
companies. And, the medicines of tomorrow will be worth a great deal of
money.
Therefore, I state the following as a fact: in the near future,
some biotech companies, and their investors, will do very well.
Which ones? How can we predict which companies will do very well?
How do we compare a large number of companies and technologies beyond the
grasp of non-specialists?
The way it is done is through use of a model. For biotechnology
companies, there is a model and it is well known. The model helps
investors understand something about the relative strengths of companies.
For most companies, the model is a good thing. It helps explain who you
are. However, as an aid to understand Tm Bioscience, the model is a
problem.
If this were a typical biotechnology company, there would be a
thumb-nail description something like this:
"Company X, the X stands for expertise in thrombosis, has an drug
for heart disease in phase 2 clinicals. Their pharmaceutical partner is
Merck. The company has $16 million in cash and a $2 million quarterly
burn."
Even with these few facts, we begin to understand the company.
Why? Because the business model is well understood and Company X fits the
model. Company X has expertise in a medical specialty and its products are
for that medical specialty.
Specialized knowledge is converted into specialized products
Expertise in thrombosis is converted into drugs to treat heart
disease
Expertise in osteoporosis is converted into drugs to treat bone
loss
Expertise in hemoglobin is converted into blood substitutes
Specialized knowledge is converted into specialized products
Most biotech companies fit this model.
Tm Bioscience does not fit.
Tm does have an area of specialized knowledge - DNA - but the
application of our expertise is not for a particular medical condition. We
do not have expertise in any disease. We do not have a therapeutic drug in
clinical trials. In fact, we do not have any consumer products. What we
do have are products which stem from the same core science, which can be
embedded into a broad range of diagnostic and therapeutic products. Our
products are not sold to the consumer. Our products are sold to companies
which sell to the consumer.
Think of it this way, there is probably a button on your home
stereo system with the word "Dolby". Dolby Systems do not sell to
consumers. Yet their products are sold by every major consumer electronics
company in the world.
Or, closer to home, consider bioinformatics companies.
Bioinformatics companies sell data to help pharmaceutical companies
target, design and develop better drugs. Companies such as Incyte
Pharmaceuticals and Human Genome Sciences do not manufacture drugs, yet
their products will be embedded in many future pharmaceutical products, in
return for royalty payments.
Perhaps Tm Bioscience is not a bioinformatics company, maybe we
are, I leave the distinction to the analysts, but the model fits pretty
well. The model makes our company easier to understand, and to value.
Tm Bioscience has one area of expertise - DNA - and a large number
of potential customers. Our customers manufacture drugs and diagnostics
and other application specific products into which our products can be
embedded. We do not sell to the consumer. Our customer is another
company. Our customer never owns our product. We get paid first for the
application and then again: each quarter, each year, or each time our
customer sells its product.
What is it that we have to sell? What DNA products do we have
which can be embedded into drugs and diagnostics and other application
specific products?
We have a DNA product which can detect - at low cost - any gene or
gene mutation from a drop of blood. Some of our customers are diagnostic
companies with knowledge of disease targets. Other customers have a
proprietary position in a gene - breast cancer gene, heart attack gene,
obesity gene - which they need to convert into products. This is a $300
million high growth market.
We have a DNA product which can increase the sensitivity and the
throughput of any standard immunoassay. Some of our customers are
diagnostic companies with knowledge of disease targets. Other customers
may have a proprietary position in a disease marker which they need to
convert into products. This market is growing slowly, but it is worth $8
billion.
We have a DNA product which reduces the cost and increases the
efficiency of many automated drug discovery systems. Some of our customers
are large pharmaceutical companies which need to screen large compound
libraries for biological activity. Other customers are biotechnology
companies with a proprietary position in an enzyme or a metabolic process
which they need to convert into products. This is a $100 million high
growth market.
We have a DNA product which significantly improves the performance
of biochips. Our customers are biochip companies and major users of
biochip technology. This is an important application for Tm because it
provides credibility at the cutting edge of biotechnology.
These four DNA products - gene test, immunoassay, drug discovery,
biochip - are proven and available now. We are focusing on these products
because they are relatively uncomplicated, require no additional technology
development, and can have relatively short sales cycles.
We also have a number of DNA products with relatively longer sales
cycles. These higher level products are either somewhat more complicated or
require additional technology development. In many cases, we do not at
present have the resources to pursue some of these opportunities. I
mention these products to give you a flavor for the many applications and
potential value of our DNA technology.
We have a DNA product for therametrics. Therametrics combines
diagnostics and therapeutics. For most diseases, there exist a large
number of potential treatments. Some patients respond better to one drug,
some to another. Researchers are now beginning to assemble the list of
genetic markers which in the future will be linked to prescription of a
particular drug for a particular patient. This will require hospitals to
perform a large number of low-cost, automated genetic tests. We believe
our technology is, without doubt, the best available technology for this
application.
We have a DNA product for blood screening. Each year, 30 million
units of blood are screened in the United States alone. The specific tests
used are mandated by regulatory agencies which are responsible for the
safety of the blood supply. Our technology can increase the sensitivity of
these screens, thereby increasing the safety of the blood supply.
We have a DNA product for viral load tests. One of the fastest
growing areas of diagnostics is viral load tests. These are the tests, for
example, that monitor the response of HIV patients to protease inhibitors.
In 1996, this market grew by 80% to more than $50 million. The market is
dominated by one company. Existing tests sell for $80-100, that's what the
hospital pays, and cost about $35 to perform. We can do much better.
We have a DNA product for gene therapy. The goal of gene therapy
is to change the genetic make-up of an individual, thereby curing a genetic
disease. When a cure is found for cystic fibrosis, for example, it will be
gene therapy. A large number of gene therapy clinical trials are underway
today. However, there are a number of barriers to making gene therapy a
reality. We believe our DNA products will make important contributions in
overcoming some of these barriers.
We have a DNA product for vaccines. Vaccines prevent the
occurrence of disease by priming our immune system against the disease.
Many companies are attempting to develop vaccines which target the DNA of
diseases such as cancer and AIDS. One issue is selecting an appropriate
target. Our product will define, for a given disease, the best DNA targets
for vaccines.
We have a DNA product for antisense. Antisense drugs interact
directly with part of a cell's genetic material. We have designed a new
class of antisense drugs for diseases characterized by specific mutations,
for example certain cancers. We are now beginning cell culture experiments
as the first level of validation.
OK, you say. So you've got some products. Now what?
July 10th, 1997, today, is the first day in the life of Tm
Bioscience Corporation.
The new company retains its most valuable asset - the scientific
staff including the three founding scientists, Mike Lane, Steve Benight and
Brian Faldasz.
The new company has the backing of Canada's premier health care
venture capitalist. MDS Health Ventures have provided more than money and
credibility: Richard Lockie and his team have helped with market and
technical research, have provided introductions, and have participated in
drawing up the business plan which we have been executing for the past
month.
Today, our focus is commercial and our strategy is customer-driven.
We are qualifying customers based on our ability to satisfy their
urgent needs. We are most actively pursuing opportunities where the sales
cycle is short. We are seeking to complete commercial agreements with
important customers. Important customers have names with impact.
We believe the best way to validate our technology is to sell it.
And that's exactly what we are doing.
My purpose was to get you interested in this company. If I have
succeeded, perhaps you will agree with my conclusion:
"Tm Bioscience is not the greatest company in the world...
but you can see it from here."
Thank you |
|
