Matt Witte\'s CBI Presentation on Building "Hybrid" CSO Sales Forces

$: Matt Witte\'s CBI Presentation on Building "Hybrid" CSO Sales Forces$
» MatthewWitte • DesignPharma • Pharmaceutical Sales Operations & Analytics Consultants

Creating “Hybrid” CSO Models for Start-Up Operations

2 Case Studies

prepared by Matthew WitteMatthewWitte • DesignPharma • Pharmaceutical Sales Operations & Analytics Consultants

Forum on Contract Sales Strategies for Bio/Pharmaceutical Companies

Flexible Sales and Promotional Models for Enhanced Business Profitability

June 21, 2011


Creating “Hybrid” CSO Models for Start-Up Operations

- Presentation overview

» “Hybrid” Model Definition

» My Experience with “Hybrid” Models

» Why Pair Company Field Managers with CSO representatives?

» Case Study One – Ligand Pharmaceuticals

» Case Study Two – Somaxon Pharmaceuticals


“Hybrid” Contract Sales Model

Definition

A sales force build where the front line

sales management are employed by the

pharmaceutical company and the sales

representatives are CSO employees.

Note: In this model, the back office CSO support services

can either be completely CSO managed or priced ala carte.

My Sales Teams “Construction” Bio


» Somaxon Pharmaceuticals

Designed & staffed CNS “hybrid” CSO sales force

» Ligand Pharmaceuticals

Designed & staffed Pain “hybrid” CSO sales force

» Roche Pharmaceuticals (Midwest Region)

Built 3X3 “mirrored” primary care sales forces

Initial build was designed as a “hybrid” CSO sales force model

Multiple specialty team builds as Roche employees

» Novo Nordisk Pharmaceuticals

Multiple specialty divisions from 1983-2004, all company employees


Outsourcing Trends

» “…analysts see several trends continuing... with a

move to reduce additional fixed costs through

outsourcing.”– — The Pharma Agenda: Hard Days Ahead, MedAdNews, January

2010

» “…Companies are now looking to take sales force

outsourcing to the next step.”— The New Sales Force, Pharmaceutical Executive, March 2009

» The first movers have changed their selling model…

and the traditional selling and promotion model is

being redesigned.”— Tearing Up the Rule Book, Pharmaceutical Executive, February 2010


Trend Toward Outsourced Sales

- Fewer Company Reps, More Contract Specialty Reps

110,000

Total

Reps

100%

Increase

-

2,000

4,000

6,000

8,000

10,000

12,000

2004-2005 2015 Proj

~75,000

Total

Reps

Total Number of

Field Representatives

Decreasing

Total Number of Outsourced

Field Reps Increasing

6,000

(5% of total)

12,000(16% of total)


Strategic Outsourcing

- Why the Change to CSO Managed representatives?

» Efficiency Companies can focus on core

competencies

Outsource the rest

» Flexibility Quickly ramp up and/or down as the

market demands

Adjust the sales mix as needed

» Risk Mitigation Uncertainty, in today’s world, is the

norm

Strategic outsourcing helps mitigate risk


Strategic Outsourcing

- Why Pair Company Managers with CSO representatives?

» Commitment to corporate results

Company managers are tied tighter to corporate goals & objectives

Typically incented with stock options

» Management talent

Salaried at industry standards – increases recruitment pool

More experienced, tenured specialty managers available

» Recruiting, screening and hiring

Committed, enthusiastic managers pull in better sales candidates

» Strategic Management

Focused on strategic & tactical issues, not sales bureaucracy

Sales management “without the mess”


Case Study One

Ligand Pharmaceuticals Inc.


» San Diego based, drug development company whose current business

model is specializing in royalty revenue generating assets

» Commercially marketed specialty pharmaceuticals from 1999 to 2007

» Ligand pre-commercial chronology:

1987 - Progenx is formed

1989 – The company name is changed to Ligand Pharmaceuticals

1992 – The company goes public

1995 – Glycomed is acquired

1998 – Seragen is acquired

Situation: Classic biotech R&D focused start-up without any commercial

infrastructure


- Company Overview



- Commercial History

1999 - 2 products are FDA approved in the same week (Panretin gel

and ONTAK)

2000 - Commercial sales ramp up

2001 - Targretin caps and gel are FDA approved and launched

2002 - Avinza is acquired from Elan

2002 - Avinza is FDA approved and launched

2003 - Organon begins co-promoting Avinza

2006 - Eisai acquires oncology products & personnel for $205MM

2007 – King acquires pain product & personnel for $313MM

2007-date – Ligand continues as a royalty revenue company


Ligand Pharmaceuticals

- Multiple Roads to Commercial Products

» Acquires ligand retiniod R&D projects from Allergan in 1997 Targretin – caps and gel

Panretin – gel

» Acquires the company Seragen and assumes Interleukin 2-based

targeted combination oncology projects ONTAK

» Acquires late stage product IND and marketing rights from Elan

in 2002 Avinza

» Ligand achieves FDA approval for all 5 products in 4 years



- Product Portfolio

» ONTAK (denileukin diftitox) Targeted oncologic, combination of IL 2 and diphtheria toxin

Indicated for a rare indolent lymphoma - CTCL

Deep frozen product

Administered IV, similar to chemotherapy

Price approx. $20K per cycle (2006)

» Targretin caps and gel (bexarotene) Retinoid, selectively targeting only X retinoid receptors

Indicated also for CTCL

Cost >$1K/month, depending on dosage formulation (2006)

» Avinza (morphine sulfate extended release capsules) CII Once-a-day formulation

Flat PK profile



- “Hybrid” CSO model

» CSO provider – Innovex

» Ligand’s CSO goal – add scalable sales strength at the lowest

possible cost per representative using existing internal sales

support

» Contract details

2001 – initiated a CSO agreement for 20 full time dermatology contract sales

representatives (managed by 4 existing Ligand oncology RSMs)

2002 – redirected these 20 reps to support the launch on Avinza

2002 – expanded the pain sales team to 50 reps, adding 30 additional full time

CSO reps (managed by 5 Ligand Pain RSMs and a National Sales Director)

2004 – expanded the pain sales team to approx.100, by adding an additional

50 CSO reps (expanding the Ligand RSMs to 10)




» Innovex provided a National Field Director and Regional

Field Coordinator allocated 50% to the Ligand contract

» Ligand RSMs were relieved of all traditional HR

responsibilities due to co-employment rules

» All CSO back office services were ala carte (and virtually

unused)

$0

$20

$40

$60

$80

$100

$120

$140

$160

1999 2000 2001 2002 2003 2004 2005 2006 2007

Pro

du

ct S

ales

($M

)

Year

Ligand Product Sales

Avinza Ontak Targretin Caps T gel and Panretin

Organon

Co-promotion

700 reps

Avinza

launches with

70 ―hybrid‖

CSO Specialty

reps

Ligand expands to

106 Specialty reps

Eisai

Deal

Oncology

20 reps

Oncology

40 reps

King

Deal

20 ―hybrid‖ CSO

reps hired to

launch T gel in

dermatology

12 17

70

113

150

8 1324

2724

32

31

32

7

15

12 12

15

19

20

2

3

7

4 3

4

4

3

$0

$25

$50

$75

$100

$125

$150

$175

$200

$225

1999 2000 2001 2002 2003 2004 2005 2006

Pro

du

ct S

ales

($M

)

Year

Ligand Sales

Targretin gel

Targretin caps

Ontak

Avinza



- “Hybrid” CSO Model Conclusions

» Goal: Scalable sales force

Ability to shift deployment from Dermatology/Oncology to Pain, when needed

Low cost per representative

Use existing internal sales support

Strong control of control, training, messaging, field activity, commitment through

company employed RSMs

» Results: Sales force grew easily from 20 original reps and no additional RSMs to 106 reps in 10

regions

20 Derm reps formed the core of the initial 50 rep Pain sales team

Cost per rep was minimized by using Ligand’s fledging sales support infrastructure

Pain reps successfully launched Avinza into stiff competition, w/o a co-promotion

partner, due in part to excellent field sales management


Case Study Two

Somaxon Pharmaceuticals Inc.


» San Diego based, commercially-focused company

» Formed in 2003, acquiring the marketing rights to low-dose doxepine (trade

name Silenor) for sleep disorders

» Successfully executed an IPO in 2005

» Initial planned launch in 2008 abandoned after a FDA approvable letter

Internal CommOps employees were released

Plans to launch a 300+ sales force scrapped

» Final FDA division appeal resulted in Silenor approval in March 2010

Internal staff down to 5 Executive Officers

» Silenor commercially launched in September 2010

Situation: Specialty pharmaceutical start-up based on a re-purposed

molecule and without any commercial infrastructure

Somaxon Pharmaceuticals Inc.- Company Overview



- Product Portfolio

» Silenor (doxepine) Indicated for the treatment of insomnia characterized by difficulty with sleep

maintenance

Silenor is approved for the treatment of both transient (short term) and chronic (long

term) insomnia in both adults and elderly patients

Silenor demonstrated maintenance of sleep into the 7th and 8th hours of the night, with

no meaningful evidence of next day residual effects in clinical trials

Silenor is not designated as a controlled substance by the U.S. DEA because of its

demonstrated lack of abuse potential

Price approx. $1 per day, with copay assistance the price to the consumer can be as

low as $0.50

Available as 3mg and 6mg dosage forms

» Sales Challenge Doxepin, originally launched as Sinequan by Pfizer in 1969, available as10mg generic


Analyst’s Perspective

“We think Silenor has the best chance to become what many have tried

and failed to achieve – the ideal insomnia drug. According to the FDA-

approved label, Silenor carries no liability for dependence, addiction,

tolerance, withdrawal, rebound, or next day residual effects yet still

provides ideal efficacy for 8 hours. It is not DEA scheduled and works

within the body's natural sleep-wake cycle; therefore it has a shot to

finally shake the "sleeping pill" stigma.”

– Jeffries & Company, Inc.; April, 2010

“Silenor carries what we find to be one of the most compelling labels

among its competitors and will be the first insomnia drug to offer both

real efficacy and a lack of DEA scheduling.”

– Jeffries & Company, Inc.; April, 2010




» CSO provider – Publicis Touchpoint

» Somaxon’s CSO goal – scalable sales force at premium per rep to

build a medium-sized, fully supported specialty sales team

» Contract details

March 2010 – FDA approves Silenor

April 2010 – Somaxon raises approx. $100MM to begin commercial scale-up

May 2010 – “Hybrid” CSO sales force model designed

July 2010 – 10 Somaxon RSMs are hired, marketing team deployed

August 2010 – 110 Publicis reps are hired

August 2010 – P&G co-promotion with 105 reps announced

September 2010 - Silenor launched after 300+ national launch meeting

March 2012 – 35 Publicis reps and 3 Somaxon RSMs added


Somaxon Pharmaceuticals


» Publicis initially provided a National Field Director and

Regional Field Coordinator (RFC), allocated 100% to the

Somaxon contract

» For the expansion, 2 additional RFCs were added

» Somaxon RSMs were relieved of all traditional HR

responsibilities due to co-employment rules

» All CSO back office services were purchased


Somaxon Pharmaceuticals

- “Hybrid” CSO Model Conclusions

» Goal: Scalable sales force, quick deployment

Ability to shift deploy 110 initially and then build to approx. 250, when needed

Premium cost per representative, competitive specialty base salaries

Use full CSO back office sales support

Strong control of control of sales training, messaging, field activity, rep commitment

through company employed RSMs

» Results: Sales force grew easily from 110 original reps and 10 RSMs to 145 reps in 13 regions

Premium cost per rep was justifiable considering no internal sales support

infrastructure was required

Sales reps average 6 years of specialty sales experience (90% CNS & 60% sleep)

Publicis Touchpoint reps successfully launched Silenor in less than 4 months, also due

in part to excellence field sales management


American Psychiatric Association MeetingSilenor 20’X20’ Booth

Honolulu, Hawaii – May 2011

Matt Witte\'s CBI Presentation on Building "Hybrid" CSO Sales Forces

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