“The difference between participating in the Moot Corp Competition and the real world of investing is kind of like playing touch football versus real football. They are very closely related, but there are also very significant differences. It is certainly easier to learn football without the immediate full contact.” – Phil Speros, MBA ’01
Suggestion for a Class Project
As a class assignment, Phil Speros needed to find a technology to build a business plan around. He asked for ideas from a former classmate from John Hopkins who suggested a compound called ZAG for the treatment of obesity and diabetes. This suggestion started off Speros’ years-long project to assemble patent rights and was the foundation for Halsa Pharmaceuticals.
Speros earned his Ph.D. in biochemistry at John Hopkins University and then became involved in a series of technology startups. He knew he didn’t want to always be the technology expert on a startup team, so he decided to rebrand himself as a “business person who knows technology” and enrolled in the Texas Executive MBA Program (then the Option II MBA). Speros took the core MBA courses but also two electives: New Venture Creation with Gary Cadenhead and International Marketing with John Doggett.
Speros and his teammates set out to plan the launch of a biotech for their project in New Venture Creation. “We initially treated the business plan as an academic exercise,” said Speros, “yet we won our in-class competition and then the 2001 Texas Moot Corp contest.”
In the 2001 Global Moot Corp Competition, Halsa lost in the preliminary round. During a debriefing one judge, Charles Tate, summarized, “We just didn’t know how to judge the risk.” “Mr. Tate actually gave us, in those few words, everything we needed to know to move forward,” Speros said.
The $100,000 Texas Moot Corp prize money turned the Halsa academic business plan into a real venture. Halsa used the award as seed money to do more research towards capturing a patent for ZAG as a treatment for obesity. After a long series of events around patent rights it emerged in 2004 that the rights were split in two, held by two international entities, one of which was in the process of divestiture. By 2006 it was evident that the rights could be reassembled and this process was complete by 2007. The length of the process had an odd benefit however – a number of researchers worldwide had conducted experiments with ZAG that helped independently validate the technology.
Speros said the New Venture Creation and Moot Corp experience taught him how the investment world looks at things. “We learned a framework with a self-consistent set of goals to present our ideas. Just knowing the approaches investors use and how these approaches work together was hugely valuable. I’m still using these approaches for presenting ideas to potential investors today,” he said.
By 2006, Speros knew they were finally going to get the patent rights and expected to receive financing from the Texas Emerging Technology Fund. He raised additional funds from private investors and officially launched Halsa Pharmaceuticals in early 2007. Speros used the TETF funds, awarded in late 2007 and again in late 2008, to move the development of ZAG as a medicine forward in a number of areas, including the development of a new manufacturing source of ZAG, the performance of a series of proof-of-concept experiments in animals and the creation of new patent filings around the treatment of type 2 diabetes.
Speros is now raising a next round of funds to support the full set of preclinical trials required for FDA IND submission, the first step in the three phase FDA clinical trial process for new pharmaceutical products. “The pharmaceutical development process is long and full of uncertainties, but it has the potential to be very rewarding. Early results promise that our technology will benefit patients with obesity and diabetes,” said Speros.
“Halsa has the greatest potential, both in terms of benefiting the health of humans around the world and in becoming a major economic success of any of the ventures launched during my tenure as director.” – Gary Cadenhead, Ph.D., Former director of Moot Corp