Disaster is defined by Merriam-Webster as a sudden or great misfortune or failure.
In 2006, NPS Pharmaceuticals had certainly experienced its own “disaster.” With much of the company’s resources dedicated to building a commercial infrastructure in anticipation of FDA approval of its lead product for osteoporosis, the company was thrown a curve ball. NPS received an approvable letter requiring an additional clinical trial, with the consequence of delaying a potential approval by at least four years.
NPS’s stock fell nearly 40 percent on news of the FDA’s action, cash reserves were running out, and the company was faced with a significant debt burden of $191 million that was due in 2007.
Sadly, this scenario is all too familiar to many development-stage company executives.
I joined NPS to help deal with the aftermath of the corporate setback. Before we could evaluate our long-term options, the company needed to stop the bleeding by dramatically reducing cash burn, while maintaining a functional organization. This drove the painful, but necessary, first step of reducing headcount by 53 percent (230 full-time employees) by eliminating the commercial and medical affairs organizations and closing one of the company’s sites.
Then we had to ask ourselves “what next?” Was there a path forward for NPS as an innovative biotechnology company, or were we fated to take a safer route at the cost of creating value? While we evaluated and later implemented our long-term strategy, we learned many valuable lessons, some of which I share with you here.
1. Choosing a company mission based on a “the road less traveled” can ultimately be more rewarding and create greater value for investors and patients.
We shifted our focus from the primary care setting to rare disorders with high unmet medical needs, limited competition, and treatment by physician specialists. This focus created a path forward in which
