Syntonix Pharmaceuticals Harvard Case Solution & Analysis


Syntonix Pharmaceuticals, a Boston biopharmaceutical startup company, was seeking additional financing for growth. An improved delivery platform had been developed and patented by the company to be used in the production of their biopharmaceuticals and enablethem to develop new therapies to treat chronic diseases.The Transceptor® technology utilized a unique biological pathway to allow efficient delivery of SynFusion™ drug therapies. These technologies were licensed by a number of companies for addressing several different conditions such as Hemophilia B, autoimmune disorders, infertility, as well as for use in enhanced peptide inhalation.

Problem Diagnosis

The Angel money had been used by the company and the Rounds A and B of financing had been complete. Now the management was looking for additional financing of about $ 80 to $ 100 million for growth purposes. The company has been in VC negotiations for gaining the C round of funding. Biogen Idec, which was also one of the members of the syndicate that had indicated interest in buying Syntonix outright. Now a decision needs to be made by the management that whether they should proceed with this buyout or not and at what price.

Syntonix Pharmaceuticals Harvard Case Solution & Analysis

Case Analysis

Technology At Syntonix

Long before the development of the Syntonix technology for drug delivery, there were severalcomplex traditional methods for performing drug delivery. These methods included oral medication, transdermal patches, injections and pulmonary delivery. However, with the development of innovative Transceptor technology bySyntonix, a naturally occurring system was made through which it was possibleto transport antibodies from a mother to her unborn child and utilize it for the drug delivery.

By utilizing the Fc-Fusion technology as the delivery system, Syntonix had developed biopharmaceutical applications, which were called SynFusion drugs. The company then developed the long acting bio pharmaceuticals, which may be inhaled or injected, less and less frequently with passing time. By late 2006, the technology was built in house of Syntonix and all the employees worked on R&D, in-house. The market for this technology was growing at 6.7% and it was expected to exceed $ 35 billion by 2008.

Industry and Economic Analysis

The pharmaceutical and biotechnology industry was composed of companies, which developed, researched and manufactured the pharmaceuticals. All the firms were engaged in development and discovery of new technologies to develop and discover new drugs and manufacturing processes. The economic environment of the country and the complex nature of the industry made it difficult for new startup companies like Syntonix to access new capital for continued operations. It was highly critical to access new capital because of the length of time required to get a product approved and the high costs of drug development.

The barriers to entry were high as well asthe threat of substitution. The competitive rivalry within the industry was intense. The small players in the market were dependent on the funds from the venture capitals, strategic alliance and the public equity markets. The new drug development process was also quite lengthy with costs in excess of $ 800 million. Lastly, the failure rate was extremely high in the market as only 21.5% chemical entities achieved final clinical success and got approval from FDA...................

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