Suven/Synthon:

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This article by Barbara Fox was prepared for the June 25, 2003 edition of U.S. 1 Newspaper. All rights reserved.

Chiral Quest

Efficient people do the most with the least, and nature

is good at that. When a backup plan is needed, nature uses redundant

pairs. Lose one kidney, for instance, and you still have a backup.

But sometimes each part of a pair has a separate mission — right

brain and left brain, for example.

On a molecular level this dual mission is important to drug development.

Paired mirror image molecules, called chiral molecules, are highly

prized by drug developers because when one of the pairs is separated

out it can deliver a bigger payload with fewer side effects.

A new company at Princeton Corporate Plaza, Chiral Quest Inc., focuses

on helping pharmaceuticals and biotechs make the much-desired chiral

drugs. The firm has an impressive advisory board, is listed on the

over the counter bulletin board and expects to double its size from

four to eight employees here this year. It has an initial contract

with a fine chemical drug manufacturer, Clariant AG.

What makes chiral molecules so valuable? Their mirror image pairs,

called isomers, look almost the same. These isomers may have the same

boiling points, smoothness, and solvent properties, but they may differ

in another important way. Eliminate one of the isomers, and the single

isomer version of the drug does more with less. It is more powerful

and more cost effective. When delivered, it is safer, because it carries

less excess baggage.

An often recited example of how excess baggage can cause harm is thalidomide.

The active isomer of this chiral drug was an effective sedative, but

the mirror image isomer had poisonous effects on fetuses, which produced

the thalidomide babies of the ’60s. The safe active isomer of thalidomide

eventually was developed into a safe drug, once the poisonous mirror

image had been removed. For an example of a successful single isomer

drug one need look only to the oncology drug Taxol.

The two scientists that head Chiral Quest — Alan

D. Roth and Xumu Zhang — configure a chiral pair. Both are 42

and both studied with eminent chiral scientists, but one (Zhang) is

the university professor who devised the technology and the other

(Roth) is the finance expert who serves as CEO.

Chiral Quest provides asymmetric products, technology, and services

to pharmaceutical and biotech firms, and also to the agrochemical

and fine chemical industries. With proprietary catalytic expertise

it can help develop chiral molecules, which are used in more than

one-third of all drugs on the market. And if a pharmaceutical company

can use chiral technology to improve a drug currently in use, it can

extend the patent life and make more money.

"We are specialists in controlling the right orientation in space,"

says Roth. "We are the only quoted firm worldwide dedicated to

this significant area. We have the broadest proprietary platform in

chiral induction in the market."

Roth says Chiral Quest can introduce right handed or left handed isomers

as desired. "We work with chiral catalysts, and throw them into

a cooking pot, so the desired isomers come out. No one has the breadth

of different chiro hydrogenation catalysts that we have. Hydrogenation

is the most pervasive form of inducing chirality in the industry."

The company was an academic spinoff at Penn State in 2000, was restructured

last year, and launched as a listed company in February on the OTC

bulletin board. It moved in June to 5,000 square feet at Harold Kent’s

technology incubator, Princeton Corporate Plaza, at 7 Deer Park Drive.

The new facility has a laboratory capable of making multi-kilo quantities

of large compounds; it has 50-liter reactors and the latest in analytical

instruments.

"The choice of where to locate was very clear, of anywhere in

the world." says Roth. "New Jersey is the pharmaceutical capital

of the world, and the Princeton area combines pharma proximity with

the academic proximity that a company like ours requires. We did extensive

due diligence in Pennsylvania, Delaware, and New Jersey, and a number

of parks offered us space. We chose this based on location and Harold

Kent’s experience in the biotech industry." Kent is both the park’s

owner and its architect. "He made an extraordinary architectural

effort, and our lab has become as a showpiece for the park."

Zhang spent a sabbatical with a Nobel laureate from California, K.

Barry Sharpless, who is now chairman of the scientific advisory board,

which also includes his Stanford professor, James Collman.

Xumu Zhang (pronounced Shang), who has been in this country since

the mid 1980s, lives in State College, Pennsylvania, and will continue

to teach three or four months a year plus hold down the post of chief

technology officer. He went to Wuhan University in the People’s Republic

of China, has a master’s degree from the University of California

at San Diego, and did doctoral and post doctoral work at Stanford.

He has consulted for Pfizer and Catalytica, holds several patents,

and has received numerous awards.

Roth’s family has both entrepreneurial and scientific credentials.

The late father of his uncle, Elias Stein, professor of mathematics at Princeton University

and National Medal of Science winner, helped Roth’s father escape from

Germany and get to South America, where he worked in the mining and

diamond industry — rough diamond exploration.

Roth graduated from Cornell in 1982, was a research chemist at Merck,

earned his PhD from Columbia, did a postdoc at Oxford, and then joined

McKinsey & Company. Roth describes how he began his three years with

the consulting organization: "When McKinsey takes people from

the ivory tower, they lock you up in a Swiss village for four weeks,

and cram one or two years of business school into you, and throw you

into the field."

Then for five years at Commerzbank Roth was both director

of biopharmaceutical investment research and head of the international

research team. He has recently relocated from London to New York.

His fiancee works for a London publishing group that has offices in

New York, and she hopes to relocate soon.

Zhang met Roth at a large biopharm symposium in China in Xandong province

in August 2001.

"I am a professional chiral chemist," says Roth, "who

had worked with one of the leaders in the field, Professor Gilbert

Stork at Columbia. He had worked with another leader in the field,

James Collman at Stanford. I gave a presentation on the financial

side of investing in biopharm. He came to me and said `You have a

tremendous background plus you know the financial side.’ I read through

his papers, wrote the business plan, reestablished the company, got

it financed, and took it public."

The venture capital firm, Paramount Capital, has been incubating the

administrative functions of this company in Manhattan. Paramount,

which provided the first round of venture capital funding, bought

out the angel investor and Penn State benefactor, Wally Snipes. Paramount

mediated a reverse buyout with a listed company that traded as SURG,

The co-founders retain about 30 percent of the company, and Penn State

remains an important shareholder.

Some of Chiral Quest’s potential competitors are consolidating.

For instance, the company next door to Chiral Quest, Synthon, was

a major contributor to chiral efforts but has been bought and is changing

its business plan to have a wider focus (see story below).

Synthon developed chiral drugs from fragments derived from carbohydrates,

and its technology was useful for that. But if a drug did not have

anything in common with a carbohydrate-derived building block, the

application of Synthon’s technology was relatively limited, explains

Roth.

The agricultural division of Celgene, Celgro Corporation at the Technology

Center of New Jersey, also focuses on chiral products, specifically

for environmentally friendly herbicides (www.celgro.com, U.S. 1, January

19, 2000). But the major competitors for Chiral Quest are the in-house

chemistry departments of big pharmas and fine chemical firms. Roth

claims, nevertheless, that the rate of outsourcing this type of chemistry

services is growing at a rate of 17 percent, and that outsourced drug

manufacturing in general is estimated to show an increase of from

60 to 70 percent in the next five years.

He also thinks his company has an advantage because it is the sole

inventor, manager, and licensee of all its products. This means that

Chiral Quest is never involved in a conflict of interest between a

client, a licensee distributor, and the original owner of the technology.

"We can negotiate directly and freely without having to address

strategic or financial impositions from a third-part owner of the

technology. This flexibility and freedom means that any client company

can derive value from the transparent and strictly independent business

relationship we offer."

Chiral Quest’s revenues for the first quarter were more than $72,000,

and the net loss was $338,290. As of March 31 the company had enough

cash to fund operations for 12 months even if there were no revenues.

Roth says the chiral drug market of $160 billion in 2002 is gradually

increasing in its ratio to the $410 billion therapeutic market worldwide.

Says Roth: "I believe chirality is an under-used concept in science

and industry."

Chiral Quest Inc. (CQST), 7 Deer Park Drive, Suite

E, Monmouth Junction 08852. Alan D. Roth, CEO. 732-274-0399; fax,

734-274-0403. Home page: www.chiralquest.com

Top Of Page
Suven/Synthon:

A Chiral Neighbor

For want of a nail, the shoe was lost. For want of timely

FDA approval, a company was almost lost.

Synthon Chiragenics, which uses technology similar to Chiral Quest

(see story above), was founded on research from the University of

Michigan but had moved to Princeton Corporate Plaza to be closer to

potential clients.

It supplied raw materials for a drug that was expected to be approved

by the Food and Drug Administration, but the approval did not come

through on time. Then a search for investors came up dry. The company

was able to avoid dissolution only by selling itself to India-based

Suven Pharmaceuticals Ltd.

Synthon’s former CEO Scott Coleridge has left, and a couple of employees

remain, including Padma Kumar Kaimal, the director of process R&D.

"Clinical trials need a lot of money, and we were not able to

raise enough money for the drug discovery, so we sold our assets to

Suven," says Kaimal.

There are a lot of "ifs" in this story, and each "if"

points to the next one. Synthon had been supplying the first intermediate

for a statin drug made by AstraZeneca that has been approved in the

United Kingdom but not in the United States.

"If the statin drugs had taken off at the right time, we would

have been successful," says Kaimal.

"Our other option would have been to expand in other areas rather

than put all the eggs in one basket, but we started in drug discovery

a little late, when the money was dried up. But not many VCs want

to invest in early stage drug discovery," says Kaimal.

Yet another possible way to have saved the company would have been

to get cash at a time when the revenue stream was still healthy. "We

had an offer of $35 million, but we didn’t take it because we had

good revenue," says Kaimal. "If we had taken the investment

in between, we wouldn’t be in this situation. We didn’t anticipate

that the FDA would delay the drug."

Meanwhile the company had geared up to be ready for success. "We

were there at the wrong time with a lot of people," he says. At

one point Synthon had 35 people in 11,000 square feet. Now it now

has six employees in 7,000 square feet.

Synthon disposed of its assets three ways. A company

in the United Kingdom, Avecia, had been making the advanced intermediate

for the statin drug in question. When Synthon began to go under, Avecia

bought the early stage intermediate-making business from Synthon and

now makes both kinds. Meanwhile Synthon returned the drug discovery

technology that had originated at Michigan State University to the

university. The carbohydrate technology that Synthon had developed

in-house was bought by Suven along with other assets, such as the

trade marks and the trade name.

Intending to expand this acquisition’s business plan, Suven is loading

in equipment to do a broad array of services, and in neighborly fashion

is making this equipment available to other companies at Princeton

Corporate Plaza.

Rawle Hollingsworth, Synthon’s founder and scientific director, had

commercialized a carbohydrate-based chiral technology platform to

develop a new class of pharmaceuticals that might help treat autoimmune

diseases and cancer. The technology lets researchers inhibit the activity

of the enzyme PNP (U.S. 1, May 24, 2000).

Kaimal, director of process R&D, joined Synthon five years ago. He

has his undergraduate degree from IIT in Bombay, class of 1984, earned

a doctorate there, and did post graduate work at both Michigan State

(where he met Hollingsworth) and Brown University. He and his wife,

a financial planner, live in Dayton and have two school-aged children.

Jasti Venkat is the buyer. As CEO of Suven Life Sciences USA, and

of its wholly owned subsidiary, Suven Pharmaceuticals, Venkat aims

for his company to be a leading full spectrum provider of drug discovery

related services — from screening to phase 3 clinical trials —

by 2005. Suven also does custom synthesis and is a full spectrum service

company on the manufacturing side.

Venkat completed his undergraduate degree in 1970 at Andhera University

in south India and his master’s degree in pharmacy at St. John’s in

New York. Starting in 1977 he bought a half-dozen pharmacies in New

Jersey, then sold them to found Suven in Hyderabad, India, in 1989.

He is the president of the Bulk Drug Manufacturers Association and

advises the Indian government on pharma-related issues.

With more than 400 employees, Suven does contract research and manufacturing

services and supplies intermediates for drugs under development. Suven

has developed more than 130 intermediates for new chemical entities

worldwide, and three are being manufactured. At least eight more products

are in advanced stages of clinical trials. Among its clients have

been Abbott, Du Pont, Hoechst, Kodak, and Degussa. Borregaard, the

second largest company on the Norwegian Stock Exchange, has been outsourcing

products from Suven Pharmaceuticals since 1995.

Chiral drug technology is still in demand, which means that two former

Synthon employees, Yuan Wei and Greg Guadagno, were able to find jobs

at the new company, Chiral Quest. They did not have to travel far

— it’s just next door.

— Barbara Fox

Suven Pharmaceuticals, formerly Synthon Chiragenics,

7 Deer Park Drive, Monmouth Junction 08852. 732-274-0037; fax, 732-274-0501.

Home page: www.synthoncorp.com and www.suven.com.


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