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Entrepreneur Files
Halsa Pharmaceuticals
UT Connection: Philip Speros, Kristen Etheredge, Denise Bynum, Mark Roppolo, Option II MBAs 01
Location: Bethesda, MD
The officers of Halsa Pharmaceuticals believe that with the help of a naturally occuring substance found in the body, obesity will become a condition of the past. They foresee a time in the near future when a simple course of injections by a family physician will generate a rapid, safe, and substantial loss of body fat.
In a country where over 55 percent of all adults are considered overweight—half of those classified as obese—and current spending on weight-loss products nears $34 million, such a drug would have an immense and immediate market. “If this product works,” joked one MOOT CORP® judge following Halsa’s winning presentation, “your marketing plan could be lousy and you’d still make a ton of money!”
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Indeed, weight-loss treatments currently on the market—such as diet food, appetite suppressants, and supervised weight-loss programs like Jenny Craig™—are largely ineffective and fraught with nasty side-effects, yet people continue to buy them. “Our product is better because it is expected to have no side effects as it’s completely natural; and it does not require a significant initial lifestyle change, which is the primary reason many other weight-loss plans fail,” says Phil Speros, company co-founder.
Lest you think this is some kind of infomercial, the officers of the company are for real—Option II MBA candidates with biotech backgrounds—as is their patentable product, which they call Valenex.
But if you’re interested in signing up, you’ll have to wait while the substance goes through rigorous clinical trials and FDA approvals over the next five or six years. And once approved for the market, it will at first be available only to the clinically obese under the supervision of a physician. Speros also points out, once a patient has achieved a healthy weight using Valenex, he can’t just sit on the couch and eat potato chips. In order to maintain his new weight, he must adopt a healthy lifestyle.
Speros, who holds a PhD in biochemistry, says that his colleague Dr. Ken Laderman realized the potential for the substance after piecing together evidence from a variety of unrelated sources. While the substance itself, a naturally occurring material, is within the public domain, the specific pathways to produce it for commercial use have yet to be developed. “By conducting robust research and development,” explains Kristen Etheredge, vice president of operations, “we can ensure that our intellectual property remains protected.”
The company incorporated in September 2000 and just closed on a $5 million venture capital round to begin the R&D. For now, Halsa will operate as a virtual company, the officers retaining their day jobs while the capital they raise goes toward outsourcing the product development activities. As proof of the product’s viability builds through each phase of development, Halsa expects to be acquired by a pharmaceutical firm that would take it through to company, the officers retaining their day jobs while the capital they raise goes toward outsourcing the product development activities. As proof of the product’s viability builds through each phase of development, Halsa expects to be acquired by a pharmaceutical firm that would take it through to commercialization. But even if it doesn’t find a suitable buyer or partner, the company is prepared to take Valenex to market by means of an IPO.
Having won the Texas MOOT CORP competition in December, Halsa qualified to compete in the International Competition to be held at the McCombs School in May and has another opportunity to capture the attention of potential investors. The team has been very pleased with the MOOT CORP process. “The advice we’ve received from competition judges so far has really refined our thinking,” says Denise Bynum, vice president of marketing. “And winning the Texas round gave us an instant stamp of credibility.” Priceless are the VC contacts they are making.
Also priceless would be the byproduct of a healthier, lighter populace: obesity is highly correlated with many diseases, including type II diabetes, cancer, gallstones, respiratory disorders, cardiovascular disease, high blood pressure, and stroke. As Etheredge pointedly observed in her opening statement before the MOOT CORP judges, “Obesity is deadly, expensive, and dangerous.”
For information on specific programs at the McCombs School, consult our contacts page. For media information, contact the Communications Director by phone at 512-471-3314 or by email at CommunicationsDirector@mccombs.utexas.edu.
