Corrections or additions?

Author: Barbara Figge Fox. Published in U.S. 1 Newspaper on

January 19, 2000. All rights reserved.

Celgene’s Celgro: Better Pesticides

Thanks to consumer resistance to genetically modified

raw materials, almost all agrochemical companies are in some kind

of upheaval. Celgro Inc., a wholly owned subsidiary of Celgene

(Nasdaq:

CELG), is in a fortunate position. It has a technology that will help

farmers to grow a crop but will not genetically affect the crop.

Celgro produces more potent, less harmful herbicides and pesticides.

"We do gene engineering to improve the quality of the

enzymes,"

says George Matcham, senior vice president of Celgro. "We use

the discriminating power of biology in the form of enzymes to make

the right chemicals. This cuts in half the amount of chemical that

is released into the environment. You get to use less."

Celgene grew so fast in 1997 that Celgro had to move into space at

Exxon in North Jersey. Celgene’s work on thalidomide — once a

pariah in the drug industry, now one of the hottest new compounds

— was coming to fruition at this time. "As the separate

division

at this time of explosive growth, we were squeezed out like a piece

of wet soap," says Matcham.

Last October, squeezed out once again, Celgro moved 20 people to the

Technology Center of New Jersey on Route 1 South in North Brunswick,

where the New Jersey Economic Development Authority (EDA)

(http://www.njeda.com) advanced

the $2 million fit-out costs for 18,000 square feet of lab and office

space. Typically start ups in biotech are rich in ideas and poor in

cash. "We asked other landlords if they would finance the buildout

and nobody was prepared to do it. But the EDA was looking for tenants

for their Tech Center that would bring to — and keep jobs in —

New Jersey, and that would set a technology profile and emphasize

the closeness of Rutgers and the possibility for collaboration. Our

profile was an exact fit." Celgro will pay back the $2 million

as rent over a 10-year period.

"It is a vast improvement over what we had at Exxon and it suits

our multidisciplinary research," says Matcham, who retained 3,000

to 4,000 feet for expansion in a high bay area that could accommodate

a fermentation pilot plant. "This is a great deal. It provides

a platform for success."

Celgro is trying to develop both compounds and the technology to use

enzymes to make "chirally pure" chemicals at less cost.

Farmers

are more cost conscious than sick patients, so the agrobusiness has

to be more thrifty than the pharmaceutical business. Says Matcham:

"Our competition is first and foremost the internal R&D groups

of the large corporations, but we are the only boutique firm with

an exclusive focus on the agrochemical industry and chiral

manufacturing."

Here’s how the "chiral" principle works: Imagine trucks,

loaded

with fuel oil and headed for a port. Some unload their fuel into the

tank of a freighter. But half the truckloads are rejected and are

dumped into the ocean.

The truck analogy illustrates conventional methods for making

agrochemicals,

which come in two versions, D and L, each a mirror image of the other,

as if right and left handed. The D and L forms are chemically similar

but biologically different. "With conventional chemistry, a random

process, you will typically get 50 percent of each form, D and L,"

says Matcham. "Yet the power of an agrochemical generally resides

in only one of the forms, D or L."

"Three dimensional molecules and receptors discriminate between

these mirror image forms of the same chemical," says Matcham.

Send only the type of chemical that these cells will accept (unload

all your trucks in the right place) and you reduce the chemical damage

to the environment.

For instance, a Celgro patent on a rice herbicide — esprocarb

— is used in Japanese paddy fields, where the introduction of

chemicals into water is a serious concern. Farmers are able to use

half the amount of the Celgro herbicide product normally needed.

"This doesn’t apply to all agrochemicals out there. Far from

it,"

says Matcham. "This phenomena exists in some important herbicides,

insecticides. and fungicides. We try to develop our technology on

behalf of the manufacturer and owner of the product so they can use

it to produce a purer product and perhaps provide extended patent

coverage for that product. We also do research of our own on compounds

— like esprocarb — that fall into this category but have not

been studied."

One of six children, Matcham’s father was a British Air Force

navigator,

so he spent his childhood at various overseas posts but from age 11

attended a 400-year-old boarding school near London, Christ’s

Hospital.

He earned his undergraduate degree at the University of Wales, Class

of 1973, stayed for his PhD, did postdoctoral work at the University

of Miami, took a junior faculty position at Cambridge University,

and then went to Shell’s agrochemical research center.

Matcham credits Kenneth S. Dodgson, a professor at the University

of Wales, with being his mentor. "He showed confidence in me.

When I went into the undergraduate program at the University of Wales

I was an average student and when I came out I had a first class

honors

degree. Everything about this man — the way he did science and

the way he interacted with other people — enhanced his

reputation,"

says Matcham. "Wall Street would have loved him."

"I came to the states in 1988," says Matcham, "when Celgene

was a company with about 30 people yet without a good idea of what

it was going to be. But at Celgene I knew that I could make a

difference.

In the next couple of years we saw the potential of agrochemical

products

and saw the potential of enzyme engineering to impact manufacturing

costs dramatically."

CUH2A, represented by Beth Weisenberg, designed Celgro’s new home.

"We put the greatest emphasis on the labs and the geographical

arrangement of the scientific offices to maximize creativity,"

says Matcham. Instead of sticking the offices in the corners of the

labs, they are clustered around an 800-foot "huddle area"

with sofas, coffee tables, bookshelves, a white board, and access

to the library. "When the scientists come out of their offices

they come into the interaction area, and this opens onto the research

corridor," says Matcham. "I like to think that we transferred

the typical layout for a creative business like advertising into the

layout of our building."

Celgro Corporation, 661 Route 1 South, Technology

Center II, North Brunswick 08902. George Matcham, senior vice

president. http://www.celgen.com

732-509-2020; fax, 732-509-2022.


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