On the Block: Interlink’s Treasure
Nasshorn’s New Job: Vanda Pharmaceuticals
Linguagen Takes Epigenesis’ Space
Corrections or additions?
These articles by Barbara Fox were prepared for the September 10,
2003 issue of U.S. 1 Newspaper. All rights reserved.
Tale of Two Companies: Epigenesis and Interlink
It’s a tale of two biotechs, in different fields but
with the same problem — finding capital in a tight market where
the big pharmas are cutting back and the private investors are feeling
poor.
One company, Interlink Biotechnologies LLC at Montgomery Commons,
had to resort to selling all its valuable assets.
The other company, Epigenesis, at Cedar Brook Corporate Center,
attracted
the eye of a group of venture capitalists — including Jan Leschly,
who has plenty of clout in the pharmaceutical arena. These investors
restructured and refocused the firm, and they also replaced most of
the management team, including the founder.
“The economics of Epigenesis did not work out for the prior
investors
as they had hoped, which is a recurring story in this market,”
says David Ramsay, a partner at Care Capital LLC, a life sciences
venture capital group on Hulfish Street that led the $23 million
financing
to reconstitute Epigenesis. “In a different time the former team
could have raised money both to support the development of the
compounds
and the development of the platform. In this environment investors
are very conservative.”
Epigenesis was founded by Jonathan Nyce, who moved the company from
North Carolina to Princeton (U.S. 1, March 17, 1997). Nyce has left
the company and could not be contacted. He reportedly decided that
the new business plan, which focuses on developing one or two clinical
assets, would offer few opportunities for his skills and interests.
“He is more of a scientist and a discoverer,” says Ramsay.
Though Nyce retains some ownership in the company, Ramsey says the
investors in the new $23 million financing round own the controlling
interest.
Two presidents who served under Nyce — Karen Giroux and Jim Manion
— have also left. Epigenesis is currently paying rent on 21,000
square feet of laboratory and office space and hopes to sublease part
of that and retain 7,000 square feet of office space, or lease it
all and move, according to Gerald Fennelly of NAI Fennelly.
To attract institutional investors, the company installed a new
management
team, and there are 11 employees now. Care Capital’s Jan Leschly named
his former GlaxoSmithKline colleague, Daniel Soland, as CEO, and
Joanne
Leonard as CFO. Cynthia Robinson, who had also been with
GlaxoSmithKline,
remains as vice president of clinical development. Dennis Segota,
at Morgan Lewis Bockius in the Carnegie Center, is the corporate
attorney.
Jan Leschly chairs the board, and Jerry Karabelas, who left a position
as CEO of Worldwide Pharmaceuticals at Novartis AG to join Leschly
at Care Capital, heads the scientific advisory board.
Soland, a graduate of the University of Iowa, was most recently a
vice president at GlaxoSmithKline in charge of the US pharmaceuticals
biological business unit and also of worldwide marketing for
biologicals.
He had also worked at Connaught Laboratories and Eli Lilly.
Leonard, an alumna of Montclair State, had worked for a biotech
company
co-founded by Mark Leschly, Jan Leschly’s son. She has more than 15
years of experience with emerging biopharmas. She took New York-based
VI Technologies public, and was CFO and treasurer of Memory
Pharmaceuticals
in Montvale. She raised a total of $270 million for those firms.
Cynthia Robinson MD, vice president of clinical
development,
is also a GlaxoSmithKline alumna. She had been in charge of clinical
drug discovery for respiratory and inflammation drug development at
that firm. On the faculty at the University of Pennsylvania, she is
associate director of its adult cystic fibrosis program, and she
joined
Epigenesis in January, 2002.
Leonard explains that Epigenesis had the misfortune to need money
in a difficult market. When it ran out of funds to pursue its drug
discovery work on respiratory vaccines and cancer, it had only a small
investor base — because most of its money was coming from a key
collaboration with a Japanese firm. Potential new investors were
unimpressed
with early stage drugs. “In this market place, investors want
to control the burn rate. They are looking for compounds in a later
stage of clinical development and with a narrow focus,” she says.
“Now, with new financing, new management team, new board members,
and new scientific advisors, we are excited about the new direction
of the company,” says Leonard. “We have a tight focus on
bringing
respiratory drugs to the marketplace. We are outsourcing a lot of
clinical development, and internal experts are managing that
process.”
The new team eliminated any work on cancer and put the development
of Nyce’s platform technology on hold. For instance, an early product
that addressed the problem of too much adenosine in asthmatic lungs
had had disappointing results in Phase II clinical trials. It seemed
to be effective only in patients who were not already receiving doses
of inhaled steroids. And since most of the asthma population does
use the inhaled steroids, the product was shelved.
Instead, the company is developing a product unconnected with Nyce,
one that had been licensed from academe. EPI 12323, an inhaled
non-glucocorticoid
steroid for asthma and chronic obstructive pulmonary disease, is
expecting
to get the results of Phase IIA trials in October.
Leonard, who is consistently “on message,” declines to discuss
methods and technologies: “We are not doing basic research. We
have a compound. We are in clinical development. Compounds do a
variety
of things and we are not going to talk about mechanisms of action
or pathways — we are not getting into that level of detail.”
Nearly everyone in biotech has made the shift from platform
technologies
to specific products, says Ramsay. “There is a realization that
the promise from the genomics revolution is a longer term promise.
People who were raising capital to put into genomic or bioinformatic
tools have converted their business plans into `Here are some products
using those tools and these can make it to market.’ This
transformation
has been going on in the whole biotech area.”
EpiGenesis Pharmaceuticals Inc., 7 Clarke Drive,Cedar Brook Corporate Center, Cranbury 08512. Dan Soland, CEO.609-409-6080;fax, 609-409-6126. Home page: www.epigene.comTop Of PageOn the Block: Interlink’s TreasureWhen Interlink Biotechnologies went out looking formoney, the cupboard was bare. Unlike Epigenesis, which has a coupleof products, Interlink represents a much earlier stage in a biotech’slifecycle. Instead of products, it has a trousseau of raw materialsthat could develop many new therapies.But what a treasure chest it is — a library of natural-productsextracts and a supporting collection of 65,000 microbial isolatesand 33,000 environmental samples used as sources for the isolates.This library has provided sources of new, interesting metabolites,antibiotics, and anticancers.To understand just how valuable these samples are, one must considerthe biotech convention in Rio De Janeiro, where nations promised topay licensing fees to developing nations where such samples werefound.If a multimillion dollar drug were developed from a substance foundin the rainforests of Bolivia, for instance, Bolivia would get partof the profits. Interlink’s samples, in contrast, were gathered fromall over the world before the Rio convention and are therefore exemptfrom those rules.Interlink’s initial strength, that it was self-funding, turned outto be a detriment. It had investment from just one company, DesMoines-basedKemin Industries. “We were a real company with real revenues —we didn’t work with other people’s money. But that model was notsuccessful,”says Garcia. When pharmaceutical revenues decreased, it didn’t haveestablished relationships with other funding sources.”We were in the process of raising more money and had aninvestmentbanker help us,” says Garcia. “We were thinking a couple ofyears of working capital, less than $5 million, would allow us togrow the platform and go public.””For venture capital money, $5 million is not a lot. We talkedto the venture group at New Jersey Technology Council, and they werenot interested in companies that could not identify products. Weidentifypotential molecules that could be interesting drugs.But now they are looking for companies almost in clinical trials,whereas we do it all with collaborations.”Also, says Garcia, “any available venture capital money is goingto support the original investments that the venture capitalists hadmade.”Interlink made plans to liquidate by August 31. The five-personMontgomeryCommons office had already closed. A research facility in Auburn,California is keeping the microbial samples in a deep freezer andthe environmental samples in a special heat-controlled room, andthese assets were to be auctioned to the highest bidders.”We were very sad and disappointed,” says Garcia. “Itwas a good 13-year run. We had a very good group of people inCaliforniaand Princeton, very committed, and it is exciting work.”Garcia got on the phone and frantically began networking with everyonehe knew. An alumnus of Catholic University in Chile, he came to theUnited States in 1970 to earn master’s and PhD degrees from IowaState,and worked for Allied Signal and Enichem before starting Interlinkwith researcher Nicholas P. Everett.Literally at the 11th hour, an offer to buy all the assets and hirethe staff in California came through. Garcia put a hold on the bids.He has a letter of intent with September 30 as the deal’s deadlineand is the final negotiation stage. If the deal gets signed, thetechnologywill have a home in a large company that will have the research andwill continue to develop it.But Garcia has not told the bidders of a final decision “becausesomething might happen,” he says. “I have been there before.A letter of intent is a very good thing. Working on a contract isa very good thing. But until we sign on the dotted line, we don’thave anything.”Interlink Biotechnologies LLC, 11930 Heritage OakPlace, Suite 4 Auburn, CA 95603. 530-889-8833; fax, 530-889-8824.In Princeton, 609-252-0446. Ramon L. Garcia, president. Home page:www.interlinkbiotech.comTop Of PageNasshorn’s New Job: Vanda PharmaceuticalsA Hulfish Street venture capital firm, Care CapitalLLC, is incubating Vanda Pharmaceuticals, a company that hopes touse genomic profiling to reposition drugs that have run into troublein late stage development. Founded this year, Vanda is a 50/50 jointventure between Care Capital (www.carecapital.com) with the SingaporeEconomic Development Board.”Singapore has an enormous fund to build an infrastructure forbiotechnology,” says David Ramsay, a partner at Care Capital LLC.The city is trying to compensate for the loss of jobs to China bybuilding Biopolis, a $286 million biomedical R&D complex and hasearmarked$2.3 billion in biotech incentives. “They invested in our fundas a window to biotech in the United States and Europe,”Jerry Karabelas, the board chairman, tapped Pat Nasshorn as Vanda’svice president for business development. Nasshorn had worked in thesame Hulfish Street building for Unipath marketing, an innovativewoman’s pregnancy testing firm that was sold and moved toMassachusetts.Vanda has research centers in the United States and Singapore.Nasshorn grew up in the Philadelphia suburbs, the second daughterof three of an entrepreneur (U.S. 1, November 17, 1999). She majoredin business at Temple, Class of 1976, and earned a marketing andfinanceMBA at Temple. First she worked at Johnson & Johnson, then moved toBristol-Myers Squibb. In 1991 she joined Merck and did a deal —a copromotion of Zocor — with Karabelas, then head of the U.S.business of SmithKline Beecham.She returned to J&J in 1994 as a vice president of marketing, whereshe oversaw the development and marketing of Confide, the firsthome-basedHIV testing service, and J&J’s pregnancy test kits. UnileverapproachedJ&J about a partnership for its fertility monitor, but decided togo it alone, and hired Nasshorn to create the U.S. division forUnilever.In 2002 that division was divested to Inverness Medical Innovations.Then Nasshorn, who had worked for Leschly at Squibb, was hired asthe first employee of Vanda. She is in charge of business development.She and her husband, a district justice, live in Newtownand have twodaughters.Nasshorn says her company hopes to turn shelved or niche compoundsinto marketable products, and also to find new indications forexistingproducts. In particular it seeks drugs that passed Phase II clinicaltests, but not with flying colors. “That’s where we would putour genomic engine behind it, to find the optimal patient populationsor disease areas on which the drug could have a positive impact,”says Nasshorn.Vanda pays to gain access to a compound. At a minimum the originatorof the compound gets the opportunity to opt back in — share inthe improved compound with Vanda. Otherwise Vanda takes it to marketalone.Vanda has less than 20 employees, and most of them are in Rockville,Maryland, where Mihael Polymeropoulos (pronounced Po-ly-mer-OP-a-los)conducts a research team. “We use genomic, genetic, and proteomicanalysis along with knowledge management for the purpose ofredirectingthe development of pharmaceutical products and conduct the clinicaldevelopment programs,” he says. “Our vision is to use advancesin biological sciences to develop more effective and safe drugs.”Polymeropoulos had worked for the National Institutes of Health andNovartis and was involved with identifying the gene for Parkinson’sdisease.”Vanda could be a potential employment opportunity for Rockvilleand Princeton,” Nasshorn says. “Our CEO will be based in NewJersey, and so will our CFO. We will stay on Hulfish Street for thenear term.””This will be a novel addition to the pharmaceutical industry.We are not just going after a segment, we are doing productdevelopmentand enhancement,” says Nasshorn. “We feel we will carve outour niche.”Vanda Pharmaceuticals Inc., 47 Hulfish Street,Suite 310, Princeton 08542. Patricia Nasshorn, vice president businessdevelopment. 609-683-3678; fax, 609-683-5787.Www.vandapharmaceuticals.comTop Of PageLinguagen Takes Epigenesis’ SpaceWhen Epigenesis closed its labs, it vacated space thatwas perfect for another company, Linguagen, which does research inmolecular biology of taste signaling for the flavor industries.”Why we ended up here is because this space was fitted out,”says Richard Lufkin, the vice president and CFO who may soon departto start yet another firm. The 10-person company moved from a subleasein Paramus to 5,000 square feet at Eastpark at 8A.Linguagen also has another Princeton connection — Bob Johnston,the biotech venture capitalist. One of his associates, RobertStockman,introduced Lufkin to Robert Margolskee in 1991, and together theyfounded Linguagen, incorporating in 1995. “At first we subsistedon SBIR grants and modest corporate sponsorship,” says Lufkin.When we felt the intellectual property had reached critical mass webrought in a CEO.”Their first patent is for the first molecular compound that can blockbitter tastes in food and beverages. Called a “bitterblocker,”it will address just one of the 30 bitter taste receptors on thetongue.Linguagen has 20 bitter blockers so far and has patents for four ofthem. Because all of them are found in foods, no approvals need besought from the Food and Drug Administration. Masking the bittertastescould also let manufacturers cut fats and salt in processed foods,or make a sugar substitute without a bitter after taste.”Any number of foods, ranging from coffee to canned products tointernational culinary dishes might benefit from ending the bitterend,” writes Donald E. Pszczola, senior associate editor of FoodTechnology (July, 2003). He points to nutraceutical products”whichmay have off-notes caused by or associated with vitamins, mineral,and other such components,” and cancer-fighting vegetables, suchas broccoli, cauliflower, and brussel sprouts.The R&D operations of Fortune 500 firms are potential competitors,but Kraft Foods and a soy-food company owned by DuPont have said theyare interested in Linguagen’s research. Another free-standingcompetitor,San Diego-based Semonyx, has a similar approach to Linguagen’sinvestigationof the commercial potential for taste signals, and Semonyx has aresearchcontract with Coca Cola.Linguagen’s corporate counsel is David Sorin at Hale & Dorr. ChrisOlsen of CB Richard Ellis helped Linguagen locate to the park ownedby Eastern Properties.Lufkin went to MIT, Class of 1968, and earned a Wharton MBA. Afterserving in the Navy, he worked for Corning and Johnson & Johnsonbeforestarting a string of new companies, 10 so far, with two or three morein the offing.”Now that Linguagen has the level of maturity that professionalmanagement can handle,I will probably start another one. I am moreof the serial entrepreneur,” says Lufkin.It takes confidence to always start over. Lufkin attributes that tothe MIT experience (“You work very very hard and you come out of itwith a sense of I can handle just about anything”) and to drivingan aircraft carrier. “Also I have a high tolerance foruncertainty.I don’t need to know what is happening tomorrow.” His wife, towhom he has been married for 30 years, supports these endeavors.”My sense is we are close to the stage at which professionalmanagementcan and should take over,” says Lufkin. “Beyond that I believewe are truly offering a new set of tools to the flavor industry. Theindustry represents an incredibly sophisticated art, and we thinkwe are delivering a new type of science that has the potential tosignificantly change the way it delivers products.”Whether the company will succeed as an IPO or an acquisition— darned if I know,” he says. “I think we have atremendouschance and am excited at the long term potential. But I have otherideas percolating in my head. I will let others realize the Linguagendream.”Linguagen, 2005 Eastpark Boulevard, Eastpark atExit 8A, Cranbury 08512. Shawn Marcell, acting CEO and COO.609-860-1500;fax, 609-860-5900. Home page: www.linguagen.comNext StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
