Editor’s note: Local Tech Wire’s initial Top 25 Companies List will focus on emerging firms in North Carolina – those selected to present at CED’s Venture 2002. Who are they? What are their products? Why should investors put money into their firms? LTW is surveying the presenters to get the skinny about each. LTW will feature another company each day — and some days two — leading up to the April 30-May 1 showcase.At first glance, TEAMM Pharmaceuticals appears to lack some of the strengths that venture capitalists consider crucial to secure financing in this tough investment climate.

At second glance, TEAMM (Together Everyone Achieves Medical Management) offers intriguing possibilities.

So when Martin Baum, the chief executive officer and president of the 20-month-old firm, makes his pitch to VCs at the Venture 2002 Conference, he just may arouse as much interest as questions.

After all, Baum freely admits the company doesn’t own any patents and says, “There are no proprietary technologies at the hear of TEAMM’s success.” TEAMM isn’t on the fast track to discovering a cure for a disease or a multi-million-dollar treatment for a common ailment.

But TEAMM does have several other strengths — including a growing revenue stream, an experienced team of managers, and a business plan tightly focused on leveraging drugs that they believe have been under promoted by other companies. TEAMM gains the rights to license or co-promote drugs (as it has to three so far) from other companies then uses its own aggressive sales organization to promote those sales to primary care practitioners.

That’s their niche. And after producing north of $1 million in revenue its first full year, TEAMM projects revenues of $14 million this year.

“TEAMM’s focus on primary care practitioners is somewhat unique since many pharmaceutical companies are migrating away from primary care to focus on specialty prescribers,” Baum tells Local Tech Wire in its survey of firms presenting at Venture 2002.

The company’s sale force utilizes what he labels “high call frequency” to acquaint doctors with their product line and to drive sales. TEAMM’s three products reflect its philosophy of low profile but needed products:

One is for obesity; another is for diarrhea; and the third is a cough medicine prescribed to diabetics who have to avoid sugar, alcohol, fructose, sorbital or dyes.

Doctors that “are high prescribers” of those kinds of products are the ones who hear from TEAMM. And if TEAMM gets the $10 million it’s looking to raise, Baum says additional products will be acquired. He has his eyes on what he calls “a stable asset line of products” to purchase as well as one other. “These acquisitions along with the currently promoted products would yield annual net sales of $25 million,” Baum adds.

TEAMM already has partnerships with Hi-Tech Pharmacal and Amarin.

Baum, who came up with the idea for the company, and his management team have more than 75 years combined experience in the pharmaceutical industry. With 13 years in the business at other firms, including Glaxo, Baum launched TEAMM out of his kitchen along with William Thomas, who is the company’s general counsel, Jon Stone, a PhD., who heads up sales, and Nicholas Leb, who is vice president and chief financial officer.

Collectively, they have set their sights high. Baum says he believes TEAMM offers two possibilities as a profitable exit strategy to potential investors: either be sold to a larger company or pursue an initial public offering in the net two or three years.

Q&A with TEAMM:

Answers provided by Gaum.

Times are tough. If you had only one chance and one paragraph to convince an investor, how would you answer this question: “Why should an investor choose your company?”

TEAMM boasts significant advantages over prototypical start-up companies. First, TEAMM has established strategic partnerships for its “building block” products that are currently producing revenues for the company. Since August, 2001, TEAMM has had professional sales representatives in key markets promoting these three products to its highly targeted prescriber population. Second, the management team is highly experienced and successful in the specialty pharmaceutical model and has already been involved with five start-up companies, three of which were pharmaceutical start-ups. Third, through aggressive business development activities TEAMM has established a strong pipeline of new product opportunities that will fuel the company’s aggressive growth plan. In total, TEAMM is a well-established specialty pharmaceutical company in start-up clothing.

What makes your company unique? Do you have a proprietary and/or a patented technology? Please explain why it is unique and what the status is of any patent filings.

There are no proprietary technologies at the heart of TEAMM’s successes. TEAMM’s unique quality is founded in its management team’s ability to execute its business strategy. With more than 75 years of combined experience managing pharmaceutical businesses in more than 20 therapeutic areas, TEAMM’s management has successfully built a robust infrastructure flexible enough to support a variety of pharmaceutical sales and marketing foci. More importantly, the ability to develop strategic relationships that result in products to acquire or license is key to a specialty pharmaceutical company’s viability. Accordingly, TEAMM’s management was able to garner products for sales and marketing at a time that it had no professional sales representatives employed. Now that it has a sales force actively promoting products, TEAMM has been able to develop a strong pipeline of future product opportunities. Finally, an extensive network of pharmaceutical industry suppliers has been established through TEAMM’s management’s past experiences. Such a network is critical for building a high quality specialty pharmaceutical model.

What makes your product(s) and/or services unique vs. your competition? (Who is your competition, and what do they offer?) If you have no competition, why not?

Our competition consists of those pharmaceutical and biotechnology companies with products that are promoted to the primary care prescriber audience, and companies with products within the same therapeutic areas as our products.

TEAMM’s focus on primary care practitioners is somewhat unique since many pharmaceutical companies are migrating away from primary care to focus on specialty prescribers. Accordingly, TEAMM is specializing in meeting the needs of the primary care practitioner population and the nurse practitioners and physician assistants practicing there within. By focusing on the features, benefits and efficacy of our products that help primary care prescribers in their everyday practices, and by maintaining high call frequency on the small number of high-prescribing practitioners, TEAMM has already been able to demonstrate its effectiveness in increasing the market shares of its products.

Does your company already generate revenue? If so, how much? Are you cash flow positive?

Our company is currently generating revenue. For the year ended Dec. 31, 2001, TEAMM recorded $1.15 million in revenue and is continuing to generate revenue by promoting pharmaceutical products through its sales force. The company is not currently cash flow positive.

What is your target market? What is the size of that market in terms of dollars? What share of that market do you believe you can win?

Our current target markets include primary care practitioners who are high prescribers of cough/cold products, anti-obesity products, and anti-diarrhea products. These markets have aggregate annual sales of approximately $1 billion in the United States. Second year sales are estimated to generate aggregate market share of approximately 1.5 percent to 2 percent.

What will you do with the invested funds? What is the timeline for product delivery? If you have existing products and services, how will additional funding help you expand your company, if that is the intention, or will you develop new products?

Invested funds will be used for working capital to expand current operations including sales representatives and support infrastructure. Additionally, a stable asset line of products will be purchased along with one additional product. These acquisitions along with the currently promoted products would yield annual net sales of $25 million.

What do you want from an investor other than money?

We would hope to gain strategic and business advice, networking opportunities, and business development opportunities from our investors.

Why will investors be impressed with your management team?

Our management team has more than 75 years of combined pharmaceutical sales, marketing and business development experience. We have managed products in more than 20 therapeutic areas and have been involved with more than 40 business development deals of varying types. Before building TEAMM, the management team has been involved in building 5 start-up companies, three of which were pharmaceutical companies. Finally, the management team possesses the necessary external network necessary to build a specialty pharmaceutical company.

What is the exit strategy for the investor from your company? Are there potential strategic alliances with larger companies? Do you wish to take the company public? Or do you wish to grow the company and either sell it or acquire other companies?

The two most plausible exit strategies include an IPO or sale to a larger pharmaceutical entity. Either strategy is anticipated to occur within 24 to 36 months.

What do you want to see in a term sheet? What would you consider “fair”?

From prior experiences we recognize that term sheets presented by venture investors have standard terms and conditions. We would expect that no unique terms be included in the term sheet that would be detrimental to our company. In terms of what is “fair”, we would expect that the valuation of the company in relation to the investment be negotiated in a “good faith” manner.

TEAMM Pharmaceuticals Fact Box

TYPE OF COMPANY: Specialty pharmaceutical company

ADDRESS: 3000 Aerial Center Parkway, Suite 110, Morrisville, NC 27560

PHONE NUMBER: (919) 481-9020

WEB SITE: www.teampharma.com

MANAGEMENT TEAM MEMBERS:

Martin G. Baum, CEO & President
Gary V. Cantrell, VP, Business Development
Nicholas J. Leb, VP & CFO
Jon T. Stone, Ph.D., VP, Sales & Marketing
William J. Thomas, II, Esq., VP & General Counsel

BOARD MEMBERS:

Martin G. Baum, Chairman
Rick Stewart, CEO & President, Amarin Pharmaceuticals, plc
Steve Stefano, Sr.VP, GlaxoSmithKline
Ross Johnson, Ph.D., CEO, CyFi, Inc.
Nicholas J. Leb
Jon T. Stone, Ph.D.
William J. Thomas, II

INVESTORS (if any):

The Hopkins Capital Group
Angel Investors

COMPANY MISSION STATEMENT:To: (i) focus branded pharmaceutical marketing and sales efforts on the primary care prescriber population; (ii) acquire additional products that can be effectively marketed within this population; and (iii) develop relationships that provide access to late stage pharmaceutical entities that meet the needs of our targeted patient and physician populations.

REVENUES: For the year ended December 31, 2001, TEAMM recorded $1.15 million in revenue.

YEAR ESTABLISHED: August, 2000

NUMBER OF EMPLOYEES: 34