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Allelix: Probing the Mysteries of the Brain
This article by Tricia Fagan was published in U.S. 1 Newspaper on May 12, 1999. All rights reserved.
Arguably, one of the last great frontiers challenging
humanity today is the vast mystery of the brain. When the brain’s
chemical factory stops functioning efficiently, brain cells don’t
send the right messages, opening the body to variety of ailments such
as schizophrenia, depression, anxiety, and pain.
Allelix Neuroscience Inc. (ANI) hopes to mitigate the pain and begin
to treat the ailments. Allelix — formerly known as Trophix Pharmaceuticals
— has a 25-person laboratory at Exit 8A specializing in therapies
for the central nervous system and the brain. Recently purchased by
a Canadian firm, it moved from South Plainfield to the Cedar Brook
Corporate Center off of Route 130.
Schizophrenia is a major target for Allelix. As many as 1 percent
of the world’s population, 3 million people in the United States alone,
are affected by schizophrenia, and their care costs more than $40
billion annually. Current therapies do only a partial job of restoring
patients to their normal functions in society.
Allelix is also working on how to reduce neuropathic pain that occurs
when nerves are injured by cancer tumors, viral infections, or surgery.
Both the schizophrenia and neuropathic pain products are being developed
jointly with Janssen Pharmaceutica N.V. A third area of research:
Trying to reduce abnormal contractions that cause muscle spasms in
those suffering from spinal cord injury, multiple sclerosis, stroke,
or cerebral palsy.
"We’re a young company making strides in our area. We’re shooting
for dominance in the neuroscience field," says Bill O’Connor,
ANI’s vice president of finance.
How it works: brain cells (neurons) communicate with each other by
releasing chemical messengers called "neurotransmitters."
Some disorders of the brain are apparently caused when too few neurotransmitters
are present in the brain. "At Allelix, we design drugs that block
the removal of neurotransmitters from the brain," says Stanley
Bell, director of chemistry. "By increasing the number of neurotransmitters
we can help patients who have schizophrenia or who suffer from neuropathic
In today’s fast-changing competitive market, small companies
can often get products to market faster than the mega pharmaceuticals,
but because they need money, they sometimes sell off too many of the
product rights. Allelix hopes to survive in the R&D marketplace without
selling the company store or selling too many of the research treasures
on the shelves.
This firm had the good fortune to be backed by deep-pocketed venture
capitalists, who spotted its potential early and engineered its buyout
at a crucial moment. Healthcare Ventures, based on Nassau Street,
was the early funder for Trophix Pharmaceuticals aka Allelix. "The
central nervous system operations within Allelix are clearly doing
cutting edge research and development," says William W. Crouse,
general partner of Healthcare Ventures. "That is pretty obvious
by the blue ribbon panel of corporate partnerships that we have been
able to do, even though the company is young."
The company has accomplished an amazing amount in a short lifespan.
"Trophix was originally formed around the work coming out of the
laboratory of Ira Black, a scientist at the University of Medicine
and Dentistry of New Jersey," says O’Connor, the finance v.p.
"It was a significant agreement, a five-year deal, with the University
of Medicine & Dentistry of New Jersey. Significant support money for
the research was being paid to Ira and his lab."
"As things progressed, though, it seemed that Black’s research
was at such an early stage that it could not attract commercial partners.
There was a parting of the ways in 1996. We moved away from Black’s
lab to our own internal research, and that’s worked out for us."
Although the transition made sense for Trophix, market support for
biotech companies had significantly changed by 1996, says O’Connor:
"You had a period of euphoria for the start up of biotech companies
in the later ’80s, early ’90s. You could literally go out there with
just a story about something you wanted to develop, and raise money
at the drop of the hat — because the field was new, and people
didn’t understand the risks involved." The market learned quickly,
and by the mid to late ’90s it became very difficult to get public
"At Trophix we were looking at raising public money, getting additional
investors, or the possibility of merger and acquisition. In 1997,
we started conversations with Allelix Biopharmaceuticals, a Toronto-based
Healthcare Ventures was in the middle of arranging private financing
for Trophix when the opportunity to sell it to Allelix came up. Combining
the two companies could increase the critical mass and be good for
both firms: "We thought we would have the possibility of one plus
one equaling three," says Crouse of Healthcare Ventures. Allelix
acquired the financial expertise of Crouse and the scientific resources
of Trophix, and Trophix got to be a publicly traded firm.
Allelix Biopharmaceuticals, an older firm formed in the early ’80s,
had been focusing on agricultural biotech. That focus changed significantly
in 1990. Today, Allelix Biopharmaceuticals has two divisions: protein
therapeutics, which has two programs (the osteoporosis treatment now
ready to go into phase three clinical trials and GLP-2, a therapy
for short bowel syndrome and other gastrointestinal disorders) and
the neuroscience division. Trophix’s emphasis was in neuroscience.
O’Connor says, "The synergy was pretty good, the fit was pretty
good. They were looking for a larger presence in the U.S."
In July, 1997, Trophix became a fully owned subsidiary of Allelix
Biopharmaceuticals and its name was officially changed to Allelix
Neuroscience Inc. Allelix acquired Trophix in exchange for common
shares of the company valued at $24.45 million paid to Trophix shareholders,
plus additional cash payments of $3.22 million that were used to extinguish
outstanding debt. Trophix shareholders have received the first million
of up to $4 million in Allelix common shares to be distributed by
July, 2001. (Allelix’s common stock is traded on the Toronto Stock
Exchange and the Montreal Exchange under the symbol AXB. No dividends
have been paid on the common stock to date.)
"Merging companies with synergistic programs builds interest in
the marketplace and builds analyst support, so it becomes easier to
go to the market and raise capital," says O’Connor.
Discussing company finances O’Connor explains, "As a biotech company,
we don’t have much in the way of income. We certainly don’t have any
product that we’re out there selling. We do have corporate relationships
whereby we’re getting reimbursed for work that we’re doing on their
behalf." Partnerships such as the two with Janssen Pharmaceutica
and others with Eli Lilly and Hoechst Marion Roussel typically provide
significant revenue from licensing fees, milestone payments, and reimbursement
of research and development expenditures. Additional revenues may
also be generated through royalty payments.
Last year, with its South Plainfield lease due to expire, ANI began
looking for new quarters and hoped to move into the new Technology
Center, built by the New Jersey Economic Development Authority (EDA)
at the intersection of Routes 1 and 130 in North Brunswick. But like
other smaller companies it was squeezed out by Merial, a joint venture
between Rhone Merieux and Merck. The EDA made a controversial decision
to lease to Merial rather than to several smaller tenants, and the
smaller ones were very disappointed.
"We were excited about the space and the location. We understood
from the original mandate for the Center that it was intended for
our type of company — start-up, biotech companies," says O’Connor.
"We had actually begun negotiating with the state, but then they
leased out the entire space to a joint venture of two major pharmaceutical
companies, rather than leasing out pieces of the space to smaller
companies. From a financial perspective I could see their point, but
we were pretty upset, because it was ideal for our purposes."
When the Tech Center fell through, ANI had a difficult
time locating an alternate site until O’Connor heard about Cedar Brook
Corporate Center. He has nothing but praise for it. "In central
New Jersey, aside from the Technology Center, this was the only facility
willing to contribute to the fit out. The owners, Eastern Properties,
were willing to fund a fairly significant piece of the building, so
it worked out for us. It’s a terrific location, it’s right off the
Turnpike." ANI shares its building with Enamelon, a toothpaste
company, and Systech, a computer systems company.
O’Connor, a Fairleigh Dickinson alumnus, Class of ’80, has lived in
West Windsor with his wife and four children for five years. "Tremendous
school districts are right near by, so getting people to relocate
was pretty easy. Plus we’re equidistant now between Rutgers and Princeton,
which is good for us because there’s a science-based talent pool for
us to draw upon. Plus, we’re still in New Jersey, the capital of pharmaceutical
development." ANI moved its operations to Cranbury in late December,
and the entire staff from South Plainfield moved also.
ANI currently employs 26 people (there are about 160 employees at
the Toronto headquarters). O’Connor anticipates a gradual expansion
of the staff , particularly on the science side. "We could go
as far as doubling our staff. I don’t see it happening this year,
but I do see us growing." Presently it has fitted out 17,000 square
feet of space, with an option to fit out an additional 4,000 feet.
About two thirds of the facility is used for laboratories.
Heading up the research on the biology side is Vivian Albert (Stanford,
Class of 1980, and Cornell) and on the chemistry side is Stanley Bell.
Bell is a quietly enthusiastic man who clearly loves the creativity
and experimentation involved in his job. "We try to keep him out
of the lab," laughs O’Connor as he makes the introductions. "If
we don’t watch him he’s always back there mixing up one thing or another."
Bell admits that, even as a child, he enjoyed mixing things, creating
something new. "Yes, I had a chemistry set when I was a kid. I
enjoyed that. As a matter of fact, I’ve always really enjoyed working
in the lab. I enjoy creating new things. That’s what we do in our
business. We create new things all the time. It’s a challenge, and
it’s interesting. You’re doing something different all the time."
Bell grew up in Philadelphia with his parents and one younger brother.
His parents had migrated to the United States from Russia — his
mother from the Ukraine, his father from Odessa. His father was in
the dry goods business, selling "all sorts of fabrics, laces,
things like that." Bell lives with his wife in Penn Valley, just
northwest of Philadelphia, and they have two grown daughters.
After graduating from the University of Pennsylvania and earning his
master’s degree in organic chemistry at Temple, Bell worked full time
at was then known as Merck, Sharp, and Dohme and simultaneously took
night classes, completing his doctorate in five years.
By 1962, Bell was well into his explorations of the mysteries of the
central nervous system and the human brain at Wyeth Labs in Radnor,
Pennsylvania. "While at Wyeth I worked primarily on anti-anxiety
agents," says Bell. "In fact, a few compounds I discovered
there are marketed now. Probably the most familiar in use today are
the anti-anxiety medications sold under the names Ativan and Serax,
and Restoril, a sleeping pill. As a matter of fact," he adds,
"my mother takes that. She says it works really well."
In 1982, after 23 years at Wyeth, Bell went to Ortho (later renamed
Johnson Pharmaceutical Research Institute) and headed up a chemistry
group that was involved in many different types of areas, including
the central nervous system, antibiotics, anti-inflammatory drugs.
In 1995, as Ortho underwent a major management reorganization. Bell
took advantage of a generous early retirement package, but quickly
realized that retirement was not for him. "I actually only retired
for a few months," he says, "I’m not a guy who likes to sit
Bell joined ANI (still Trophix) in early 1996 — about the same
time as his colleague Vivian Albert, ANI director of biology, came
on board. Bell knew at once that he was at the right place. "Trophix
was an ideal opportunity. It’s a very nice company. Everyone here
interacts well together. Coming from Johnson & Johnson — just
a massive place with 80,000-90,000 employees — where I had been
the head of a group of about 100 people, what I really enjoy here
is the opportunity to work with a small group of chemists. I’m so
much closer to the science and I’m not involved with as much bureaucracy.
I had looked forward to that for quite a while."
Bell also enjoys the opportunity to work collaboratively on some cutting
edge treatments that address daunting problems and diseases affecting
the central nervous system. "Here we’re concentrating mostly in
the neuroscience area. There’s always something new."
A new treatment of schizophrenia would improve on drugs that have
bad side effects. "We use a new model (glycine transport or re-uptake
inhibitors) that potentially has less side effects and hopefully will
be more effective than some of the other drugs. We also have a similar
program using a different glycine transport inhibitors in the spine
which will block pain. We expect that the GRI-1 compound for schizophrenia
should be in Phase I testing within the year," says Bell.
When Bell compares how the glycine re-uptake inhibitors
work to how Prozac blocks the re-uptake of serotonin, he uses the
metaphor of a plug blocking a sink drain. "We have the plug for
the glycine sink, so more glycine is available to activate more neurons
in the brain. With schizophrenia, more glycine may be needed. Our
glycine re-uptake inhibitor (our sink plug if you will) helps to accumulate
"Overall," says Bell, "we study ways to block the removal
of neurotransmitters from synapses. We look for plugs for different
sinks. I’m very excited about the schizophrenia drugs and the drugs
for pain. I think we’re working on really interesting compounds that
have a great deal of potential. It’s always exciting to come up with
things that will eventually go to market." Bell explains that
in addition to the three major program areas, ANI also has the capacity
to explore by testing compounds randomly against established targets
using ANI’s extensive library of "maybe a hundred thousand"
compounds discovered at ANI or purchased from other firms. More than
125 people in Canada plus the workers in New Jersey work to synthesize
and evaluate the compounds.
"Many of the compounds were prepared by combinatorial chemistry.
but we also prepare them in the traditional way," says Bell. "Our
competitive advantage is the way we can create cell systems for testing
our compound library." ANI can combine the chemistry (their novel
compounds) with the in vitro tests to rapidly screen these compounds.
"Our success will be due to a combination not only of the chemistry
but our ability to test compounds quickly," says Mike DeVivo,
group leader of molecular pharmacology at Allelix. Besides some of
the major pharmaceuticals, other companies already working in the
field include Cephalon in West Chester, Pennsylvania, and Neurocrine
and SIBIA Neuroscience, both based in San Diego, California.
Bell also interacts with the Canadian-based Allelix management team.
This requires relatively frequent trips to Toronto. "We want to
make certain that we’re all on the same wavelength — not going
in opposite directions, and not duplicating things," says Bell.
"They have a lot of expertise and capabilities that we don’t have,
and we have a lot that they’re lacking."
Both Bell and O’Connor indicate that although ANI is interested in
and aware of the work being done by other biotech companies working
in the neuroscience and central nervous system areas, the company
is confident about the novel treatments they are developing. Asked
about their competition, Bell says, "It’s certainly something
you think about, but it doesn’t affect or drive our work."
Even as ANI is still settling in to its new facility, it is looking
ahead to expanding. While tactful painters continue to wander the
building doing final touchups, and missing furniture is located, the
atmosphere is upbeat, professional, and the staff all seem excited
about their work, genuinely involved.
O’Connor explains: "It’s stimulating to watch the scientific process,
to work with such a diverse group of people. One of the things that’s
compelling about ANI is that — since we’re so small — people
end up doing a lot of different things. Here everyone has expertise
in a specific discipline, but they can do things in other disciplines
as well. It makes getting a project done a whole lot easier. And it
makes it a fun place."
"I think we work harder here," Bell agrees. "We work more
closely together, and each person feels that their individual contribution
is more important to the work we do. At many large pharmaceutical
companies you are just one of thousands of people. Here each employee
is an important person who very realistically could have a significant
impact on how things progress. It’s a good place to be."
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