Retooled MiddleBrook Gears Up for Big Pitch

Rudnic's Successor Faces Hurdles With Pricey Strep Drug

As a senior executive at Adams Respiratory Therapeutics, John S. Thievon tackled the challenge of launching a pricey decongestant in a marketplace filled with cheap generics. Ultimately that drug, Mucinex, trampled its competition.

Thievon now faces a similarly daunting task as the chief executive of MiddleBrook Pharmaceuticals, a struggling Germantown biotech that's about to launch its once-daily amoxicillin treatment for strep throat.

Yesterday MiddleBrook shareholders voted to accept an outside investment of $100 million from Equity Group Investments, a deal that came with a required change in management. Founder Edward M. Rudnic stepped down as chief executive in favor of Thievon -- an event that took all of 10 minutes, as three of the largest stockholders voted in favor of the arrangement.

MiddleBrook's stock dropped 16 cents, or about 7 percent, to close at $2.06 yesterday.

MiddleBrook, which had been openly seeking a buyer over the past year in a search for more cash and a partner with a stronger sales background, settled on the Equity Group deal two months ago in an effort to rescue Moxatag, its strep throat treatment.

"Ed is an entrepreneur," said Bill Pate, managing director of Equity Group, which was founded by Chicago billionaire Sam Zell. "He really served his role, if you will."

Pate, a longtime member of Adams's board, approached Thievon and David Becker, another Adams executive who replaces Robert C. Low as chief financial officer, about joining MiddleBrook in late April. The duo had left Adams, based in Fort Worth, earlier this year after its merger with British household cleaning and personal-care products maker Reckitt Benckiser.

Both executives are based in Texas and will work in MiddleBrook's new facility for finance and administration being built near the Dallas-Fort Worth International Airport. They plan on commuting to the company's Germantown research and development facilities, which will continue to be the company's main campus.

Thievon wants to get Moxatag on pharmacy shelves next year.

"Everything else is secondary to the success of Moxatag as we start on this journey," Thievon said.

Moxatag is aimed at getting into the market by offering convenience through a once-daily dose that delivers strep throat treatment in time-released bursts.

"When medicine is taken three or four times a day, it's cumbersome," said Ian Paul, a pediatrician at Penn State Children's Hospital. "Kids go to school, they go to day care. And parents might not be there to administer the medicine. It's a challenge."

But some analysts are skeptical about the prospects for a new amoxicillin treatment in a weakened economy. A co-pay for a 10-day Moxatag treatment will run $30 to $50, said Robert Bannon, MiddleBrook's spokesman. Cash-paying customers spend about $10 to $14 for a comparable multiple-dose amoxicillin treatment, and depending on the insurance, a co-pay can drop to $5 for generics.

"They're trying to convince physicians and patients to take a more convenient, but more expensive option at a time when folks have less discretionary income," said analyst Gregory R. Wade of Pacific Growth Equities. "It's a challenging choice to make."

Last year U.S. pharmacists filled nearly 55 million prescriptions for drugs in the amoxicillin family, ringing up about $195 million in sales, according to IMS Health, a health-care information and consulting company. About a quarter of those prescriptions treated strep throat.

In January Moxatag was approved for patients over 12. With Equity Group's investment, MiddleBrook will be able to pursue pediatric approval, a key demographic for its time-release technology.

At Adams, Thievon launched the Mucinex brand and built the decongestant franchise into more than $350 million in annual revenue. Joining the company in 1999 as its northeast regional business director, Thievon worked his way up through marketing and sales to become executive vice president of sales and corporate accounts.

The Food and Drug Administration effectively killed Mucinex's competition by pulling its old, unapproved generic versions off store shelves.

Since then, Thievon has thrived on the popularity of its ubiquitous television pitchman Mr. Mucus, an animated ball of green phlegm. In commercials, Mr. Mucus and his disgusting family set up residence in someone's lungs, only to be evicted by Mucinex.

In addition to the commercials, Thievon had a team of 125 people across the country calling physicians and pharmacists to sell the benefits of Mucinex.

"He went out to people who had excellent selling skills, not necessarily in the pharmaceutical arena," said M'lou Arnett, who formerly worked on Adams's marketing, particularly Mr. Mucus. "He knew we had to get bright people on board. We had phenomenal success in physicians' offices because of his approach."

For MiddleBrook, Thievon is building a team of 200 to 250 sales representatives to launch Moxatag. They will try to persuade doctors to try it and attempt to get pharmacies to carry the once-daily treatment.

"If you talk to a lot of physicians, especially regarding antibiotics, the most expensive product is the one that doesn't work," he said. "If you don't take it three to four times a day, you'll be sick and back at the physician's office."