Logic Puzzles

June 7, 2013

http://arthurjohnkyriazisgoogleblog.blogspot.com/2013/06/logic-puzzles.html


1. The Missing PieceBelow the four parts have been reorganized. The four partitions are exactly the same in both arrangements. Why is there a hole?
Where does this hole come from?
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2. Four GallonsYou have a three gallon and a five gallon measuring device. You wish to measure out four gallons.
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3. The IslandersThere are two beautiful yet remote islands in the south pacific. The Islanders born on one island always tell the truth, and the Islanders from the other island always lie.
You are on one of the islands, and meet three Islanders. You ask the first which island they are from in the most appropriate Polynesian tongue, and he indicates that the other two Islanders are from the same Island. You ask the second Islander the same question, and he also indicates that the other two Islanders are from the same island.
Can you guess what the third Islander will answer to the same question?
Show Solution


4. Five GallonsYou are mixing cement and the recipe calls for five gallons of water. You have a garden hose giving you all the water you need. The problem is that you only have a four gallon bucket and a seven gallon bucket and nether has graduation marks. Find a method to measure five gallons.
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5. Two StringsYou have two strings whose only known property is that when you light one end of either string it takes exactly one hour to burn. The rate at which the strings will burn is completely random and each string is different.
How do you measure 45 minutes?
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6. The CubesA corporate businessman has two cubes on his office desk. Every day he arranges both cubes so that the front faces show the current day of the month.
What numbers are on the faces of the cubes to allow this?
Note: You can’t represent the day “7” with a single cube with a side that says 7 on it. You have to use both cubes all the time. So the 7th day would be “07”.
Show Hint Show Solution


7. The Pot of BeansA pot contains 75 white beans and 150 black ones. Next to the pot is a large pile of black beans.
A somewhat demented cook removes the beans from the pot, one at a time, according to the following strange rule: He removes two beans from the pot at random. If at least one of the beans is black, he places it on the bean-pile and drops the other bean, no matter what color, back in the pot. If both beans are white, on the other hand, he discards both of them and removes one black bean from the pile and drops it in the pot.
At each turn of this procedure, the pot has one less bean in it. Eventually, just one bean is left in the pot. What color is it?
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8. The PigeonTwo friends decide to get together; so they start riding bikes towards each other. They plan to meet halfway. Each is riding at 6 MPH. They live 36 miles apart. One of them has a pet carrier pigeon and it starts flying the instant the friends start traveling. The pigeon flies back and forth at 18 MPH between the 2 friends until the friends meet.
How many miles does the pigeon travel?
Guess:  Guess | Show Hint Show Solution


9. The SocksThere is a lightbulb (incandescent, it’s currently off) in an upstairs room. You are downstairs, standing next to a panel of three light switches (all of them in the off position). One of them controls the lightbulb. The other two don’t do anything. You must figure out which switch controls the bulb, with some restrictions.
1) You can do whatever you want to the lightswitches, as long as it’s either turning them on or turning them off.
2) After fiddling with the lightswitches, you can go upstairs and check the bulb.
3) You cannot see the bulb nor any light shining from it from where you’re initially standing.
4) You cannot make multiple trips up and down the stairs.
5) The lamp is in the ceiling and you don’t have a ladder.
6) You are a mutant with 15-foot-long arms, so #5 is moot.
So, you fiddle with the switches, you walk upstairs and check the bulb, and then you immediately decide which switch controls the bulb.
How do you do it?
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1. The CamelsFour tasmanian camels traveling on a very narrow ledge encounter four tasmanian camels coming the other way.
As everyone knows, tasmanian camels never go backwards, especially when on a precarious ledge. The camels will climb over each other, but only if there is a camel sized space on the other side.
The camels didn’t see each other until there was only exactly one camel’s width between the two groups.
How can all camels pass, allowing both groups to go on their way, without any camel reversing?Show Hint Show Solution


2. The WaiterThree men in a cafe order a meal the total cost of which is $15. They each contribute $5. The waiter takes the money to the chef who recognizes the three as friends and asks the waiter to return $5 to the men.
The waiter is not only poor at mathematics but dishonest and instead of going to the trouble of splitting the $5 between the three he simply gives them $1 each and pockets the remaining $2 for himself.
Now, each of the men effectively paid $4, the total paid is therefore $12. Add the $2 in the waiters pocket and this comes to $14…..where has the other $1 gone from the original $15?
Show Solution


3. The Boxes

There are three boxes. One is labeled “APPLES” another is labeled “ORANGES”. The last one is labeled “APPLES AND ORANGES”. You know that each is labeled incorrectly. You may ask me to pick one fruit from one box which you choose.

How can you label the boxes correctly?
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4. The CannibalsThree cannibals and three anthropologists have to cross a river.
The boat they have is only big enough for two people. The cannibals will do as requested, even if they are on the other side of the river, with one exception. If at any point in time there are more cannibals on one side of the river than anthropologists, the cannibals will eat them.
What plan can the anthropologists use for crossing the river so they don’t get eaten?
Note: One anthropologist can not control two cannibals on land, nor can one anthropologist on land control two cannibals on the boat if they are all on the same side of the river. This means an anthropologist will not survive being rowed across the river by a cannibal if there is one cannibal on the other side.
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5. The FatherA mother is 21 years older than her child. In exactly 6 years from now, the mother will be exactly 5 times as old as the child.
Where’s the father?
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6. The Double Jeopardy DoorsYou are trapped in a room with two doors. One leads to certain death and the other leads to freedom. You don’t know which is which.
There are two robots guarding the doors. They will let you choose one door but upon doing so you must go through it.
You can, however, ask one robot one question. The problem is one robot always tells the truth ,the other always lies and you don’t know which is which.
What is the question you ask?
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7. The FrogA frog is at the bottom of a 30 meter well. Each day he summons enough energy for one 3 meter leap up the well. Exhausted, he then hangs there for the rest of the day. At night, while he is asleep, he slips 2 meters backwards. How many days does it take him to escape from the well?
Note: Assume after the first leap that his hind legs are exactly three meters up the well. His hind legs must clear the well for him to escape.
Guess:  Guess | Show Hint Show Solution


8. The BobberYou can paddle your canoe seven miles per hour through any placid lake. The stream flows at three miles per hour. The moment you start to paddle up stream a fisherman looses one of his bobbers in the water fourteen miles up stream of you.
How many hours does it take for you and the bobber to meet?
Guess:  Guess | Show Hint Show Solution


9. The SocksCathy has twelve black socks and twelve white socks in her drawer.
In complete darkness, and without looking, how many socks must she take from the drawer in order to be sure to get a pair that match?
Guess:  Guess | Show Solution


10. There is something about MaryMary’s mum has four children.
The first child is called April.
The second May.
The third June.
What is the name of the fourth child?
Show Solution


11. Petals around the roseThe name of the game is Petals Around the Rose, and that name is significant. Newcomers to the game can be told that much. They can also be told that every answer is zero or an even number. They can also be told the answer for every throw of the dice that are used in the game. And that’s all the information they get.
The person who has the dice and knows the game, rolls five dice and remarks almost instantly on the answer. For example: in Roll #1 the answer is two.
Roll #1. 4 1 6 3 6
“The answer is what?” says the new player.
“Two.”
“On that roll?”
“Yes.”
“Would it still be two if I moved the dice without turning any of them over, just rearranging the pattern?”
“I can tell you only three things: the name of the game, the fact that the answer is always even, and the answer for any particular throw. In this case the answer is two.”
“So that’s how it is. What am I supposed to do?”
“You’re supposed to tell me the answer before I tell you. I’ll give you all the time you want, but don’t tell me your theory, just the answer. If you figure it out, you don’t want to give the idea away to these other jokers around you. Make them work for the answers, too. If you get the answer right on six successive rolls, I’ll take that as prima facie evidence that you understand the game.”
“OK, roll again.”
Roll #2. 5 6 5 4 4
“I give up. What’s the answer?”
“The answer is eight.”
“Roll again.”
Roll #3. 3 5 5 5 6
The answer is fourteen.
Roll #4. 2 6 2 1 4
The answer is zero.
Roll #5. 4 3 2 1 3
The answer is four.
Roll #6. 6 5 6 2 2
The answer is…  Guess |
An integral part of the puzzle is that those who have solved it are urged to keep the solution a secret, so there is no solution posted here. It is not a hard puzzle to figure out however.
A claim that often accompanies these instructions is that the smarter an individual, the greater amount of difficulty the individual will have in solving it. If such a statement is true, it may be attributed to the fact that “smarter” people tend to be more knowledgeable in a wide range of information which they may unnecessarily attempt to draw upon to solve the puzzle.

With great fanfare, the organizers of the new MLS Soccer Franchise for Philadelphia unveiled their team logo on Monday of this week, an event which was duly reported in the various sports pages of the local newspapers.

The organization which is promoting the new soccer franchise appears to be a group of overweight, entirely male surburban white men, who have absolutely nothing to do, and who have organized themselves into an organization for the promotion of professional soccer in the Delaware Valley/Philadelphia/South Jersey area, known as the “Sons of Ben.”

I only mention this parenthetically, because as it well known, most people who attend soccer games are world/ethnic—they are Latino, Italian, Greek, Caribe’, whatever—anything but white suburbanites.

If these fat white suburban guys driving SUVs buy season tickets to professional soccer, I’d be greatly surprised—and if they do show up, they’ll find a league composed almost entirely of foreign players, for the most part, with a few Americans sprinkled in for show.

Not to mention a stadium full of ethnic segments waving various flags of different countries for their favorite players from those countries, whether it’s Brazil, Germany, Greece, Holland or wherever.

It won’t be the U.S. Flag, I know that.

The Beckham experiment in LA is pretty much par for the course, except that it proved that MLS soccer is so far below the standards of English Premier League, that a guy like Beckham isn’t worth having on your team—it’s like playing Alex Rodriguez in sandlot ball. He doesn’t really help you because people just pitch around him, since all your other players are awful.

Let’s get to the awful LATIN. The logo for the new team is as follows:

PHILADELPHIA UNION
(Picture of Snake)
Jungite aut Perite

see also, the team’s new website,

http://www.philadelphiaunion.com/

which also displays the mistaken latin phrase “Jungite et Perite.”

The organizers assured the press conference that the snake and the latin phrase “Jungite aut Perite” were taken directly from the Newspapers of Benjamin Franklin, and that the phrase means “Join or Die,” and the snake represents the Join or Die emblem employed during the times of the American Revolution.

Ok, except for one huge problem. As Henry Beard, author of “Latin for Even More Occasions” (Villard Books, NY, 1991), states at p. 111 of his very humorous book,

“CONSONANTS….”

“J, W AND Y don’t exist in Latin.”

Beard, Id. at p. 111.

There is no letter “J” in the Latin language.

I believe what the Sons of Ben meant to say was the following:

“IUNGITE AUT PERITE.”

Latin for All Occasions by Henry Beard

Latin for All Occasions by Henry Beard

As is well known to those of us who have either studied the arcana of the Latin language for several years (I won the Latin Prize at Haverford School) (twice, actually) (now I’m just showing off) (thanks to Steve Dall, by the way, a great Latin teacher), or have gone to Catholic School and been forced to take Latin,

THERE IS NO J W OR Y in the Latin alphabet.

The letter J is approximated by the vowel combination “IU” as in “Iuno,” “Iuvenal,” and so forth.

Thus, there actually was no “Julius Caesar.” His name was “Caius Iulius Caii filius Caii nepos Caesar Imperator” (see wikipedia article on “Julius Caesar”) meaning “Gaius Julius Caesar, son of Gaius, grandson of Gaius, Imperator”. See? No “J”.

Gaius Iuilius Caesar

Gaius Iuilius Caesar

Thus, in Latin, there would be no “Dr. J”, only a Dr. “Iulius”

And you couldn’t jam the ball, you could only “iuam” the ball.

anyway, I think you get the fundamental point–there is no “j” in latin, either in the alphabet or in the everyday usage of the language. All of the “J”s you see in modern day latin (as when you see “Julius Caesar”) are added as approximations to the ancient lation usage of “Iu” for “J” which is the proper latin.

Now let’s see if the “Sons of Ben” (none of whom claim any actual lineage from Ben Franklin) actually know their Latin:

Iungite, “Join!”, is the plural imperative form of iungo, with principal parts iungere, iunxi, iunctum, “I join” (from which we get many english cognate words such as “conjunction” or “injunction”). The imperatives are “iunge”, join!, singular, addressed to one person, and “iungite”, join!, addressed to two or more persons. (See J. Wohlberb, 201 Latin Verbs, Barrons, NY, 1964, at pp. 94 & 63, the verbs “iungo” and “eo”) (see infra).

See? No “J” in “Iungite”. “Jungite” is just plain WRONG. The proper word is “IUNGITE”. That would be RIGHT.

Are these guys morons or what? Maybe they should try speaking latin in a Latin American soccer league! (I shudder to think what their spanish or italian is like).

Clearly, no matter how much money the Sons of Ben spent on their advertising, logo and presentation budget, it wasn’t enough.

I, along with numerous others like Victor Davis Hanson, have been lamenting the deconstruction and utter loss of the classics, e.g. the loss of the required learning of Latin and Greek for many years now; here is a pertinent example of WHY everyone should known Latin and Greek.

End of Sparta by Victor Davis Hanson

End of Sparta by Victor Davis Hanson

It is completely embarrassing that a major sports team should hold a press conference, insert a logo on their press team that draws from the Latin language, and then GET IT WRONG, when simple fact checking with a high school latin teacher could have straightened them out.

Here was an opportunity to show lots of schoolchildren that latin still matters–but the growups get it wrong. how embarassing.

On the rest of the slogan, they’re ok—aut means “or,” and “perite” is the plural imperative of “per-eo”—I kill—the root verb being “eo, ire, ii or ivi, itum,” with imperatives “I and ite” singular and plural—you just add per- in front of those to get “per-ite.” (201 Latin Verbs, id., cited supra, p. 63).

I guess I conclude here with a translation of the title of this piece, which was supplied by Mr. Beard—”avaritia bona est” can roughly be translated as “greed is good.” (The slogan from “Wall Street”, 1980s, Charlie Sheen, Michael Douglas). (see Beard, id. at p. 14).

Here some other great latin sayings from Beard (id. at p. 24):

Tu, rattus turpis! –
You dirty rat! (Jimmy Cagney)

Ei fer condicionem quam non potest repudiare –
Make him an offer he can’t refuse – Vito Corleone, the Godfather (Marlon Brando)

Age. Fac ut gaudeam. –
Go ahead. Make my day. Dirty Harry (Clint Eastwood).

Fuit mulier quae me potare egit. Nunquam steti gradum ad ei gratias agendas. –
It was a woman who drove me to drink. I never stopped to thank her. (W.C. Fields).

Fasciculum nicotianum fumificum meum quoque amo, sed aliquando eum de ore extraho. –
I like my cigar too, but I take it out of my mouth once in a while. (Groucho Marx).

See you all in remedial Latin class!

Art Kyriazis, philly/south jersey
Home of the World Champion Philadelphia Phillies

It probably isn’t news to anyone currently breathing that every newspaper owning corporation in the United States is currently in bankruptcy Chapter 11 proceedings. Here in Philadelphia, after sinking more that 500 million bucks to take the Philadelphia Inquirer and the Philly Daily News off the hands of the guys who bought them from Knight Ridder, the purchasing group headed by Brian Tierney et al. ended more than eleven months of negotiations with creditors by filing for Chapter 11 protection with the United States Bankruptcy Court, meaning reorganization and possible liquidation. There are serious rumors that only one of the two newspapers will survive, probably the Inquirer.

In a way, this is strange, because there was a time in Philadelphia, and I don’t mean going back to Ben Franklin, when it was obvious that the Inquirer was the worst and most pitiful newspaper in town. The Philadelphia Public Ledger was the newspaper of record (its building still stands at 6th & Chestnut) for many decades, while the Philadelphia Bulletin was clearly the better of the two papers while the Bulletin and Inquirer were the two main papers in the second half of the 20th century.

Of course, the Public Ledger went under in the Great Depression; it died in a court-ordered liquidation in 1941 or 1942. This may just be history repeating itself. The Public Ledger was owned jointly by the owners of the NY Times, incidentally.

For a complete list of ALL newspapers ever printed in Philadelphia, go to this website pdf of newspapers held by the free library of philadelphia;

http://libwww.freelibrary.org/faq/guides/FLP-NEWSPAPER-HOLDINGS-BY-DECADE.pdf

you’ll be shocked and amazed how many newspapers there have been and how many small ones there still are other than the inquirer and daily news even now.

But then again, the Philadelphia Athletics won five world series and too many pennants to count between 1901 and 1953, and were the main baseball team in Philadelphia for more than fifty years. No one gave a fig about the Phillies. It was only after Connie Mack died and the A’s moved away that the Phillies finally developed a fan base, and even then not really until the 1964 pennant run with Dick Allen and Jim Bunning did they really draw any fans. But who remembers the A’s today in Philly? Where are they today? No one in Philadelphia remembers them at all.

There’s a small museum in one of the counties, and a small bronze plaque at the new ballpark. That’s about it for the team that in the first half of the 20th century was the second best ballclub in the American League, and by far the best professional sports team in Philadelphia.

Getting back to newspapers, the point is that you can’t understand history by looking at it now. If you looked around now and saw humans, you’d never know that dinosaurs once ruled the earth. Likewise, looking around and seeing the Inquirer being the main newspaper, you’d never know that once there was a Public Ledger, a Bulletin, and probably a dozen other papers. Even the Saturday Evening Post, the nation’s number one women’s magazine, was published right here in Philadelphia, but it died too. That building is still around also. We have seen the end of magazines like Life, the Saturday Evening Post, and most recently, U.S. News & World Report, in the past forty years. Now newspapers are dying as well.

There were a lot of great movies about newspapers. The best movie of all time is about newspapers. Here I refer to Citizen Kane (1941), which is a thinly veiled biopic of William Randolph Hearst and his media empire.

There’s also Meet John Doe (1936) and let’s not forget All the President’s Men (1974).

I’d throw in Broadcast News (1980s) as well, even though it’s really a TV movie, just because it’s flat out hysterically funny and not at all dated, and because Brooks is one of my favorite comics in the world other than Mike Reiss. Just looking at Brooks makes you laugh.

But history does repeat itself. The Hearst media empire was bankrupted by the Great Depression—so much so that Hearst himself, so rich that he could build the Heart mansion—the famous “Xanadu” in the Kane movie—in San Simeon, California—now a famous museum—actually lost all his money to his creditors in bankruptcy proceedings and lost control of his newspaper holdings. No one today has heard of the New York newspapers that Hearst made his fortune from.

Now, we are going through another serious economic dislocation which is again severely affecting media badly. As badly as Hearst was affected by the Depression and War years, that’s how badly newspapers and old media will be affected this time around. Add to that the free news which is available on the internet, and on every persons’ telephone, and one would be silly to expend money for a newspaper.

It’s quite obvious that within another twenty years, there will be no more magazines or newspapers in print at all, that everything will be delivered right to your computer, tv or phone via internet. Maybe (and I often futurize about this) the convergence of nanotechnology and biotechnology will eventuate in a chip being implanted in your brain or neural net, so that you can visualize the images yourself without a machine mediating at all. Perhaps we’ll all be connected to the internet and to each other one day in such a fashion. It’s difficult to make radical predictions, but then again, in 1910, no one could have predicted that baseball, then a deadball sport based on bunting, stealing and pitching, would in the 1920s and thereafter become a sport of sitting around waiting for someone to hit a three run home run.

I will miss the Philadelphia Daily News. For the last forty years, it’s been the best sports paper in the country, and I’ve read all the other papers around, including the Boston Globe, the Chicago, the LA, the NY and SF papers. NY has tabloids basically and no good writing at all; the Boston Globe for a long time had great writers, but they’ve all gone to ESPN or national outlets where the money really is; and no other city really had good sports writing. Philly might be the last town in which there’s been good beat writing and sports writing for a long time now.

If the Daily News goes, that will probably be the end of it, though it may survive on line since there’s an online edition of the daily news that’s pretty good, and even better, available nationally to all former philly residents who follow their teams. So when they throw the last daily news into the fire and you see the sled burning with the name “rosebud,” remember you read it here—this was all a story about Charley Foster Kane, who wanted to be the world’s greatest newspaperman, and succeeded all too well.

By the way, I mentioned in a prior post that GE was way off about Jimmy Fallon? GE stock is now trading at five dollars a share. That’s right, five dollars a share. they made a big deal about this on one of the network news shows while i was working out on the elliptical at the gym. whoa nellie! The stock apparently has completely crashed.

Jack and Suzy Welch, would you buy this company’s stock? It was trading at $40 just last year. And now it’s down to $5 a share and dropping like a rock. Pretty soon it will be worth, say, 1923 German deutsche marks, which is to say, nothing.

Oh yes I would says the Wizard of OZ. You can get a thousand shares in this company now for the price of a song. Heck, the only place the stock can go is a little down, or a lot up.

I said they should have bumped Leno three years ago. While I recognize most of their problems are with GE Capital, entertainment is the division that’s always recession proof.

If you’re not sure about that, check out the fact that 1930s and 1970s are the greatest eras of film history.

Jimmy Fallon had another great show–Jon Bon Jovi did a duet with one of his fans, while Tina Fey sat and rooted the two of them on. I think it was the girls’ dream moment of her life, all caught on camera. You can bet that will be on youtube.

Art Kyriazis
Philly/South Jersey
Home of the World Champion Philadelphia Phillies
You can

Time Magazine just did a cover story on stem cell research, which is commendable. They also entitled the story “The Quest Resumes,” which is commendable, focusing on the fact that the Federal Government, under the Obama Administration, may finally allow (this may already have been approved by executive order) federal funds for stem-cell research at federally funded research institutions.

However, the subtitle of the article is “After eight years of political ostracism, stem-cell scientists like Harvard’s Douglas Melton are coming back into the light—and making discoveries that may soon bring lifesaving breakthroughs.” Time Feb 9, 2009 at p. 36.

Now, let’s examine that for a second—In Massachusetts, where Prof. Melton plies his craft, the Commonwealth and State of Massachusetts, like the State of California, has voted state support of stem-cell research at institutions of higher education. Therefore in Massachusetts, like California a bastion of biotechnology, the biotech lobby was able to secure state support for stem-cell research during the eight-year long federal ban on such research. So compared to the other 48 states, Prof. Melton was actually at an advantage because his lab was in Massachusetts.

Because of the federal funds ban, a great deal of stem cell-research has begun to spring up in places like Southeast Asia, as the Time Magazine article correctly notes, and as it well-known in the biotech industry. But a lot of it is also staying put in Cali and Mass due to those states putting up seed money for biotech research that is stem cell oriented.

Next, Prof. Melton works as co-director of the Harvard Stem Cell Institute (HSCI), which Harvard has committed substantial resources to supporting over the past eight years and well into the future. According to their 2008 report, their annual spending has grown in the past two years from just over $5 million to over $16 million in fiscal year 2008, most of that culled from private and corporate donations. HSCI currently has no less than eight ongoing challenge grant research projects sponsored for $75,000 each, all of them stem cell oriented.

Now I am a powerful supporter of stem-cell research, and I strongly advocate that the federal government support stem cell research. The question I have for Time Magazine is, and maybe perhaps for the Federal Government, is HSCI the most needy recipient for federal funds for stem cell research? The article omits that HSCI is well-funded by private donors, and omits that Massachusetts provides state support (it is not clear if HSCI accepts Massachusetts money) and therefore the article in Time is somewhat misleading.

The argument for funding HSCI federally has to be this; we, e.g. HSCI, made a good faith effort to get the ball rolling the past three years through private financing, we have already a lab in motion with research projects, so if you fund us, we will be three years closer to getting results than any other academic lab you choose to fun. Consequently, their NIH grant requests will carry a certain heft.

On the other hand, they are not as dramatically in need of the money as some other labs who don’t have any private funding at all.

A more useful article would have been to depict the overall situation in the rest of the United States, and some of the labs outside CA & MA.

This is an interesting issue and one on which arguments on both sides would and could be marshalled.

It should be pointed out that I strongly support the work of Prof. Melton and the work of HSCI. Those initiatives were put into place by then President Lawrence Summers, along with the Broad Institute initiative, a few years back, and clearly they have had the effect of putting Harvard back on the map in terms of genetics and molecular biology research.

The good news about the Time article is that the words “Stem Cells” made the cover, along with a nice bio-photo. If nothing else, Americans this week can forget about the economy and the war for a moment and realize that stem cell research is an answer to many of our problems that don’t involve boundaries and account balances and fumes spewing out of our cars.

–art kyriazis philly/south jersey
home of the world champion phillies

this is an actual case study I did at Wharton about fifteen years ago for Steve Sammut’s class on advanced patent portfolio management theory. This case is of interest because it concerns a biotech company, and because, re-reading it after a long time, it actually reads very well. Even before I had all the experience I do now, I actually had a good feel for what to do with the management of a biotech company even back then, so here it is. And yes, I did get an “A” in the class, of course. Dr. Sammut used to run the tech transfer office for Penn during the 1990s.

–art k

ps enjoy!

T-CELL SCIENCES, INC. CASE

by Arthur J. Kyriazis

MGMT 898 – PROF. SAMMUT

Wharton School (WEMBA)
University of Pennsylvania

April 22, 1994

Issues

T-Cell Sciences, Inc. (“T-Cell”) is a 1983 Cambridge, MA biotech/pharmaceutical startup sired by Patrick Kung, a “recognized pioneer in immunological research.” The main issue appears to be defining T-Cell’s ultimate market niche even as it undergoes the process of transition from a venture-funded start-up to a more mature publicly held corporation. Specifically, in the coming months and years, should T-Cell (1) concentrate upon basic across the board immunological R&D; (2) concentrate upon basic immunological R&D with a focus on diagnostic drugs and product(s); or (3) focus upon strategic alliances with large pharmaceutical companies with an eye cast towards the development and delivery of therapeutic pharmaceutical drugs?

It would appear that until the arrival of James D. Grant as CEO in November of 1986, the main issue might well have been a different one altogether, namely whether T-Cell would reorganize or liquidate. In early 1986, T-Cell was a company in trouble and one which was not being particularly well-run or well-managed, even though it had brilliant scientists and innovative technologies full of commercial promise. Even though startups might be expected to lose money at the outset, T-Cell’s losses in 1985 and 1986 totalled nearly $2 million, compared with $5.5 million capitalization from December of 1983 throught January of 1986. This apparently necessitated a public offering in May of 1986, which raised $11.1 million, followed by the hiring of Mr. Grant in November of 1986, and his hiring of a well-heeled financial CFO immediately thereafter.

In addition, up through Grant’s arrival, T-Cell had only developed two products of any consequence, ACT-T-SET, and CELLFREE, and only two joint venture/research alliances/R&D contracts of any consequence, the Syntex USA contract and the Pfizer contract, and had failed to show any revenue from product sales through 1986, and only $13 million in revenue from contracts in 1986.

In brief, one may surmise from the case study that a great deal of money was spent at T-Cell, until Grant’s arrival, on basic immunological research, without a very well defined sense of where the research was going, or how it would be profitable or generate a return to the company and to the investors. This might have been a result of Dr. Kung’s diffuse vision of the company’s market niche as somehow doing R&D better or faster, and perhaps a touch of the academic fondness for the intrinsic value of broad based academic research as opposed to targeted research and strategic alliances directed to product development and ultimate profit.

Grant’s arrival placed T-Cell on a radically different footing and he appears to have turned the company around. Losses were reduced by nearly a million dolars from 1986 to 1987, and for the year ending in April of 1987, T-Cell reported positive product sales revenue of nearly $400,000 together with contract revenues of nearly $2 million. In addition, Grant apparently negotiated the deal with Yamanouchi Parmaceutical, which as he characterizes it places T-Cell on a sound cash flow footing for the foreseeable future. In addition, Grant has introduced a sound line of command and professionalized the management of the company by hiring a financial officer and a regulatory affairs officer, paying attention to patent management issues, and spending time painting a sound, attractive picture to shareholders, potential investors and to regulators. Finally, Grant’s status an a former FDA head bodes well for the regulatory hurdles awaiting T-Cell’s products.

T-Cell’s Strengths

T-Cell’s strengths are many. First, it has a distinguished corps of researchers led off by Dr. Kung, who appears to be a leader in the field of T cell research. It is situated in Cambridge, MA, in the heart of the Harvard-MIT research community, and can be expected to easily draw upon an outstanding technical scientific staff for its research needs. Also, the scientific advisory board includes people like Dr. Mark Davis and others who are world-recognized scientific leaders.

Second, T-Cell has introduced two product lines in 1986, the ACT-T-SET and CELLFREE technologies, which assuming patent protection and FDA approval, are potentially product mainstays for the company. These two products are expected to have applicability in the diagnosis of various stages of immune system stimulation and white blood cell activity. Dr. Kung and Mr. Grant expect R&D to eventually identify other new products in the same T cell related vein with applicability in the diagnostic field.

Third, T-Cell has two joint ventures, with Syntex and Pfizer, and now a third, with Yamanouchi, which promise to focus on specific product development, with the obvious potential of delivering a drug to market which can be of wide therapeutic applicability and therefore be a cash mainstay for the company. The Syntex and Pfizer ventures aim to produce therapeutic drugs targeted at common medical ailments, including breast cancer, type 1 diabetes, rheumatoid arthritis and cytomegalovirus. The Yamanouchi venture aims to develop products to diagnose rheumatoid arthritis and lung cancer. An added benefit is the global ability to develop and market products and drugs in Japan and the rest of the world while awaiting FDA approval for their sale in the United States.

Fourth, T-Cell now has James D. Grant, who must be reckoned as an important asset of the company at this juncture. His management skills have put T-Cell on a sound business footing; his contacts have resulted in new joint venture(s); and his FDA expertise should translate into FDA product approvals.

Which Fields or Options are Most Attractive for T-Cell?

The basic R&D approach is wrong for this size company. What the company needs to do is ultimately make a decision between developing diagnostic products/drugs on its own, or on developing them with partners. Grant appears to be committed to a strategy of hedging his bets by pursuing both options. He is willing to commit some money to R&D and to diagnostics, while courting and signing deals with large pharmaceuticals for strategic alliance(s) aimed at delivering specific types of therapeutic products/drugs. Grant also feels that the diagnostic(s) division, once profitable, should be spun off because of the competition in that field.

Recommendations

Grant probably has it right. The therapeutic emphasis is the best way for T-Cell to go right now. The joint venture/strategic alliance approach is a sound one. If successful, the development of even one drug marketed to a patient population as widespread as the breast cancer or lung cancer populations promises immediate payoff for T-Cell’s efforts and a handsome reward for its investors.

With diagnostic drugs on the other hand, even if approved and even if proprietary, it is hard to see how T-Cell will be able to exploit the discoveries, so that Grant is probably correct when he surmises that this division or these proprietary discoveries will ultimately be spun off. Of course, licensing and franchising are options we have discussed which absent from Grant’s discussion(s).

The best way for T-Cell to go would be to continue to solicity these contracts and joint ventures. T-Cell has recognized, proven scientific talent and recognized expertise in this very specific area of immunological research.

One specific recommendation is that the company hire a patent portfolio manager and begin to concentrate on patenting more of its discoveries, as well as concentrate on getting products to FDA submission stage. This manager must also concentrate on getting the researchers to recognize when a discovery may or might be patentable or commerciable in some respect. These two steps will make the company attractive to investors and a steady stream of patent application(s) and FDA approval applications are evidence that a company has been doing its homework.

These steps, if followed, should result in a successful new round of equity financing and/or an invitation to buy the company out altogether. In either event, the company will have attained a substantial goal. Finally, T-Cell should keep Grant around. Given the company’s history, investors could get extremely nervous if he were to depart suddenly or unexpectedly.

–Arthur J Kyriazis, 1994

THIS WAS AN ACTUAL CASE STUDY I WROTE FOR THE WHARTON SCHOOL IN THE SPRING OF 1994.

–art kyriazis
Philly/South Jersey
Home of the World Champion Philadelphia Phillies
Home of the Incredible Philadelphia Eagles
Home of the Arena Football League Champion Philadelphia Soul
Making the Playoffs in 2008: The Sixers, the Flyers, the Phillies and the Eagles!
Happy New Year 2009

The clash between Eagles head coach Andy Reid and his former assistant coach (and now Minnesota Head Coach) and good friend Brad Childress in the playoffs yesterday highlights a new trend in the NFL—the Philadelphia Eagles family of coaches in the NFL. First, there are the Buddy Ryan assistant coaches—Jon Gruden, formerly of Oakland (where he went to the Super Bowl) and now of Tampa Bay (where he also went to the Super Bowl, and narrowly missed the playoffs this year) and Jeff Fischer of Tennessee, the NFL’s longest tenured coach, who is the AFC’s top seeded team this year, a regular playoff contender, and a former Super Bowl coach and AFC champion. Former Eagles head coach and Buddy Ryan assistant coach Ray Rhodes continues to work as an assistant coach in the league. Buddy Ryan’s two sons now are assistant coaches in the league. Second, there are the ex-Eagles—such as Herm Edwards of Kansas City, and former head coach Dick Vermeil, who used to coach at St. Louis, and won a Super Bowl there. Ex-Eagle John Bunting was a college head coach at North Carolina. And then you have the Andy Reid connections–Harbaugh at Baltimore, who used to coach special teams with the Eagles, and all the connections of Reid through Green Bay as well as Philly like Childress at Minnesota and Holmgren in Seattle.

There are probably many more connections to the Eagles that could be found, but it certainly is illuminating how many coaches and assistant coaches in the NFL (and in the college ranks) now have philly ties. And we used to think this was a college hoops town with a lot of college and pro hoops coaches everywhere. Who knew we were a spawning ground for college coaches. Guess it’s a spawning ground of football coaches as well for the NFL.

–art kyriazis philly/south jersey
home of the world champion phillies
Happy New Year 2009

The Economic Crisis unfortunately heralds an enormous economic crisis in 2009 for Biotechnology, the major sector I work in, in at least three major facets, all of which are inter-related:

1) The collapse of the investment banks, and indeed, of the banking and lending industries generally, means that the major sources of capital for most biotechnology companies that are currently operating at a loss or “burn” rate while continuing to research or develop pipeline products, drugs or devices that are still several years away from FDA approval (or approval in any market here or abroad), in turn will collectively lead to a major liquidity crunch for biotechnology companies coming due shortly.

BIO, the major lobbying group for the Biotechnology Industry, currently estimates that there may be as many as one hundred publicly traded biotechnology companies that have nine months or less of cash left on hand with which to operate, and very few sources of liquidity to draw upon for operations thereafter, due to the fact that they currently do not have drugs in the pipeline or are not currently operating profitably, e.g. they are currently on a burn rate and are losing money.

We may therefore see the end or termination of operations of many publicly traded biotechnology companies in the next six to nine months. In addition, pharmaceutical companies (or other buyers) will be able to purchase these companies at fire sale prices if they simply wait a little while longer.

2) Venture Capital money is down at least fifty per cent, and whatever VC money is left is very, very picky right now. IPOs have come to a complete standstill, and numerous biotechs have canceled their planned IPOs. Consequently, infusions of cash from investment banks, regular banks, VCs or IPOs are currently not as viable as they were six months ago.

3) Angel investors are being besieged with three times the requests for much more money than usual as a consequence of all this top down need for liquidity, and they (reasonably so) are seeking to be more picky as well in what they invest in.

The consequence of all three of these factors is that we will see a massive shakeout of the Biotechnology Sector in 2009. Many existing companies will be bought up by existing Pharmaceutical companies or biotechnology companies that are currently cash rich or have mortar and brick assets. Companies that want to diversify into biotechnology, this is your chance to buy up patent portfolios and intangible assets on the cheap. Biotech companies will look to be acquired, look to get cash at all costs, and look to accelerate their timetables to get products to market.

It may be at the end, that only thirty to forty per cent of the existing privately and publicly held biotech companies will be standing at the end of 2009. There will be massive consolidation.

Driving this at the other end is the fact that big pharma has expiring patents, is facing increasing competition from generics, is looking to invest in biologics, which cannot be imitated by generics, and finally big pharma is facing the possibility of increased regulation and lower profit margins under the Obama Administration. This will drive and accelerate the consolidation of biotech assets and companies into the hands of big pharma, which will increasingly resemble biotech companies in terms of their R & D and patent portfolios.

These will be troubled and difficult times for Biotechnology and in some related sense, also for Big Pharma.

–dr. arthur kyriazis, m.sc.e., molecular biologist,
consultant to the biotechnology industry