It's hard to imagine that many pharma companies experienced more plain old good news this summer than Kos Pharmaceuticals. First, there were the second-quarter financials. Revenues for the quarter were $120.3 million, almost double last year's figure. Net income for the quarter grew 245 percent to $38.5 million. The company raised its guidance for the year, predicting that full-year sales would be $480 million, 60 percent over last year—and CEO Adrian Adams boasted that Kos was the fastest-growing specialty pharma company in the United States.
Billion-dollar Vision Kos CEO Adrian Adams (seated) and his executive team (from left) Ralf Rosskamp, EVP-R&D; Mark McGovern, EVP and chief medical officer; Christopher Kiritsy, EVP and CFO; and Richard King, EVP-commercial operations; have ambitious goals for their company.
A few weeks later came encouraging results from a Phase II trial of Kos' new inhalable insulin product for diabetes, and recruitment began for pivotal trials of a new combination product to consolidate Kos' position in the burgeoning cholesterol market. Kos' flagship product, Niaspan, is an extended-release formulation of niacin, used to raise high-density lipoproteins (HDL)—"good" cholesterol. A second product, Advicor, combines Niaspan with the statin lovastatin. The one under development extends the concept, combining Niaspan with simvastatin, the active ingredient of Zocor, the second-highest selling statin worldwide.
Another few weeks later, the company's new headquarters in Cranbury, New Jersey—a wasteland of boxes and boards in August—was finished and occupied by the company's commercial and business personnel, and the respiratory research and development team.
Behind it all is the story of a company to watch:
Learning the lessons Kos Chairman Daniel Bell (left) and founder and chairman emeritus Michael Jaharis worked together to turn around Key Pharmaceuticals in the 1980s. Their strategy of reformulation and focused marketing became the core of Kos.
- By pursuing a low-to-the-ground reformulation strategy, and seizing on a neglected molecule whose benefits have been known for half a century, a tiny startup was able to beat Big Pharma to the soon-to-be-major HDL market. Today, tiny no more, Kos is riding the expansion of the overall cholesterol market—and preparing the ground for a wave of HDL products expected to emerge from other companies.
- This is a sequel of a sort. Kos is the second effort at company building by the same team who turned an almost bankruptKey Pharmaceuticals into a surprise success in the 1980s—and this time around they're aiming even higher.
- And Kos is a kind of clinical trial for an important pharma business model. At a time when many smaller companies are experimenting with outsourcing and new business models, Kos is unabashedly devoted to the traditional fully integrated model.
Designed for growth, Kos aims to become a billion-dollar company by 2007. The latest numbers show the company halfway to the mark, but there's still plenty to do: new products to develop (Kos currently has only three on the market); deals to make; perhaps a merger or acquisition to accelerate growth. But if the leaders of the fastest-growing specialty pharma company pause to savor their success, who's to say they're wrong?