Connetics and Relaxin

Essay by bruce.terrorUniversity, Master'sA, April 2009

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Founded in 1993, Connetics is a pharmaceutical company, developing and marketing products in the areas of rheumatology and dermatology. The company persuaded Genentech to spinout both Relaxin and Interferon Gamma, both developed for the treatment of Scleroderma. After having acquired the rights to sell Ridaura from SmithKline Beecham Croporation, its first product to be in-licensed, the company set foot on the commercial market of rheumatology. Even though tough market conditions prevailed, the company managed to do decent business with Ridaura. The company spun out Interferon gamma to form a company called Intermune which helped it to gain $20.5 million on its 7 percent stake in the company. The company entered the dermatology market with its first product Luxiq, which it had in-licensed from an Australian firm, and another product called Olux is in the pipeline. After Relaxin failed in its Phase III trial, the company doesn't have much option left but to in-license a few more products to commercialize them and to continue its funding on researching more on relaxin.

Connetics is a promising company, both for the investors, its founders and the stakeholders. The information derived from the analysis gives direction to the strategy. The company can have a development paradigm as a '4:2:1 model,' in which case, they must strive in any given year to have four product candidates in product formulation, two product candidates in late-stage clinical trials, and one product or new indication launched commercially.

OverviewIn 1993, when Genentech's Edward Amento, who had championed relaxin development at Genentech got frustrated by the company's change in priority over the relaxin program, had recruited Brian Seed and Eugene Bauer to persuade Genentech to proceed with the spinout to form a new company called Connetics, headquartered in Palo Alto. The Company acquires, develops and markets products in the...