Digital 5 Inc., a 70-person firm based at the Quakerbridge Executive Center, vacated its offices last month and an announcement on April 21 explained why: the company’s assets were bought by a major competitor, Mediabolic. Digital 5 offers networking software for streaming multimedia content, and with 40 employees at Grovers Mill Road, it was the subject of a U.S. 1 cover story last year (August 17, 2005).

At that time Digital 5 offered “middleware” software that could distribute and play audio, video, and photo content among networked consumer electronics devices throughout the connected home. For instance, it could route movies downloaded from a PC to the television screen. A Digital 5 spokesperson claimed the firm had a “tremendous opportunity to help content providers and device manufacturers. They can securely take content, bring it into the home, and manage and redistribute it throughout the home, so that it is seamlessly accessible for the consumer.”

But by the beginning of this month, the Digital 5 offices appeared empty. Now phones are not being answered; they ring a busy signal.

The only statement available from Digital 5’s CEO Gary Hughes is from a press release announcing the sale: “This acquisition takes the digital home to the next level. Mediabolic is the perfect home for Digital 5’s technologies.”

Founded in 1999 in San Mateo, California, Mediabolic develops entertainment software that can be enhanced by Digital 5’s technology. Its clients are global original equipment manufacturer and original design manufacturer customers. Like Digital 5, it helps PCs and other devices to interoperate with one another, so consumers can access all of their music, photos, videos, and premium content anywhere in the home, at any time, according to a press release.

Perhaps most important, Mediabolic is turning a profit. Digital 5 is backed by Intel and Texas Instruments, among others, but it took on additional investors last September. No information is available about Digital 5’s finances.

Digital 5 was founded in 1993 by Ari Naim as Sycom Technologies. Then it developed, manufactured, and distributed digital voice recorders and MP3 players (U.S. 1, May 27, 1998). Last August the Quakerbridge Executive Center office housed some 35 people, including the core development group and corporate staff, along with quality assurance and technical support. It had small sales and marketing groups in Santa Clara, California, and Japan and in 2004 it had started a development group in India that had 20 people doing customization and quality assurance.

Mediabolic is keeping mum about how much it paid, whether Digital 5 workers will keep their jobs, and whether the whole company will move to California. Its only comment: that Digital 5’s intellectual property will be folded into the Mediabolic brand.

“Mediabolic has made noteworthy year-over-year growth and was profitable in 2005,” said Daniel Putterman, president and CEO of Mediabolic in a press release. “This acquisition demonstrates our ongoing commitment to expanding our offering of multimedia technologies to next-generation connected entertainment devices.”

Digital 5 Inc., 101 Grovers Mill Road, Quakerbridge Executive Center, Suite 200, Lawrenceville 08648; 609-243-0015; fax, 609-243-9231. Gary Hughes, CEO. www.digital5.com

NexMed Enters the Fungi Arena

NexMed seems to specialize in sensitive problems that evoke a smirk. It started with erectile dysfunction, surely one of the most sensitive of medical topics, and it produced Alprox-TD, a therapeutic cream. Then it moved to female sexual arousal disorder and produced Femprox. Now it aims to treat nail fungus. You have seen the television ads, the ones with ugly, disgusting microscopic creatures dancing around, supposedly menacing hard-to-reach spots under the nails.

The drug, an oral tablet, is called Lamisil, and the maker is Novartis. NexMed signed a deal with Novartis to make a topical version — not a cream to put under the nail, but a bottle with a brush for stroking the medication on top of the nail. NexMed’s patented “enhancer” technology will push the drug through the nail where it can attack the fungus.

All three products — Alprox-TD, Femprox, and the new Lamisil version — use NexMed’s patented skin-permeation technology, which allows a high concentration of drug absorption in a particular part of the body. “The transdermal enhancer takes the drug and pushes it through,” says CFO Mark Westgate. “But it doesn’t work with all drugs. There are chemical reasons why it works with some and not others.”

Lamisil has more than a billion dollar market, says Westgate, but many people would rather not take a pill that could have some side effects. Topical medication has fewer side effects. Competitors include Penlac, which also goes on top of the nail. Westgate says the company believes that Penlac, marketed by Sanofi-Aventis, works only on mild cases.

“Novartis will name it, manufacture, market it, and pay us a royalty,” says Westgate.

If Lamisil rescues peoples’ nails from fungi, Novartis rescued NexMed from short-term cash flow problems. Last fall Novartis gave NexMed $4 million to license a topical version of its oral drug. Thanks to this deal, and to a $10 million round of financing in January, NexMed has 17 or 18 months of cash on hand, says Westgate. It is burning through cash at the rate of $500,000 a month. NexMed can also look forward to some milestone payments — $2 million when the patent is issued and maximum of $45 million more if and when the product is approved by the FDA. The nine-year-old company also dealt with its cash problems by consolidating three locations into one and getting out of the manufacturing business. The new headquarters is 89 Twin Rivers Drive, formerly its manufacturing center. Including the cost of the real estate and conformance with all the Food and Drug Administration regulations, it had paid $8 million to set up a manufacturing line. The manufacturing equipment has been taken away and NexMed will outsource its manufacturing needs. It will also contract with an outside source to run its clinical trials.

NexMed has had previous downsizings. It went from 70 people to just under 40 people in November, 2002, when the company suffered a setback in its efforts to get Alprox-TD on the shelves. What happened: the clinical trials were put on hold because of a perceived negative result from a toxicology study that suggested that the highest dose level might be toxic in animals. Now NexMed is partnering with Germany-based Schering AG to bring Alprox-TD to market in Europe.

The reorganization called for closing two leased properties: the 24,000 square-foot headquarters building in Robbinsville and a 7,000-foot laboratory at Deer Park Drive. It owns the Twin Rivers real estate. From just under 50 people, Nexmed went to a staff size of 25. “It costs a lot to be a commercial manufacturer, and it is not profitable for one product. Assuming that everything had worked out splendidly, it would have been a great idea,” says Westgate. “As it turned out, it is risky to put your eggs in one basket.”

Says Westgate: “It’s just a roller coaster ride with any biotech.”

NexMed (USA) Inc. (NEXM), 89 Twin Rivers Drive, Hightstown 08520; 609-208-9688; fax, 609-208-1868. Joseph Mo, chairman, CEO, and president. Home page: www.nexmed.com

Credit Union Moves

Princeton University Federal Credit Union, 104 Carnegie Center, Princeton 08540; 609-258-5038; fax, 609-258-2333. Sam Paulicelli, CEO. Home page: www.princetonfcu.org

The Princeton University Federal Credit Union has begun a move from its longtime home in the armory to Carnegie Center 104. When the credit union learned about two years ago that the armory would be razed to build a new chemistry building, it began a search throughout Princeton for a building with retail zoning — a requirement because the credit union is a cash institution. At the same time, the credit union has been growing, and two years ago its financial department moved to separate offices on Emmons Drive near MarketFair.

The credit union finally settled on a two-location solution, the new Carnegie Center office combined with a kiosk and ATM at the Frist Center. The kiosk will be accessible to core customers — university staff and students — without cars; they can use it to make check (but not cash) deposits, and many other services. Cash withdrawals will be available from the ATM.

The new office will offer the full array of cash and banking services, including certified checks and personal, auto, home equity, and first mortgage loans. The credit union will also have ample parking, in contrast to the campus where parking has been “very challenging,” according to Annelie Mullen, HR manager.

The $109 million credit union has 10,000 members, serving both the Princeton University community and “selective employee groups,” such as McCarter Theater, Rider University, the Borough of Princeton, Princeton Plasma Physics Laboratory, the Waldorf School, Chapin School, and Recording for the Blind and Dyslexic.

Restructured

Planners

The Event House, 6 Gordon Avenue, Lawrenceville 08648; 609-896-4848; fax, 609-896-4850. Mary Harrison. www.euphorbiashop.com

Mary Harrison, founder of an event-planning and invitation firm called Euphorbia, has restructured her business by inviting four other event-related businesses to join her in Lawrenceville.

The Event House now offers custom bridal couture by Kathryn Conover, jewelry and handbags by Stylism, photos by Kassel Photography, and entertainment by the Franklin & Allison Orchestra. They see clients on an appointment-only basis, but the grand opening is Thursday, April 27, at 5 p.m.

Vending Firm

Expands

Protein bars are the hot items for office vending machines, says Donna Cannie, president of Advanced Vending Services. Low-fat items are plentiful, but Cannie says that sugar-free items are hard to find.

Her company has expanded by buying the accounts of CS Vending and Coffee Company and closing that company’s site at Windsor Industrial Park. “We are running it out of our office on Everett Drive and are hiring additional staff,” says Cannie. Though the family-run business started 14 years ago, it incorporated as Wall Mount Beverages on April 17. It offers corporate or industry snack and drink vending, office coffee services, brewers, pantry supplies, and case delivery of drinks and snacks. It has the Mercer County franchise for Flavia single cup brewer coffee.

Donna’s husband, Jay, and their son, Christopher, also work in the firm. Jay was a chemistry major at Rutgers graduate who worked for Johnson & Johnson for 20 years and then marketed a four-finger grip baby bottle, the KinderGrip, that was sold to Playtex. Donna Cannie entered the workforce as a broker with Coldwell Banker in Princeton. “After nine years, I was ready for a change,” she says, explaining why both Cannies quit their jobs to be entrepreneurs.

Among her clients are the Washington Group, several large pharmaceutical firms, the Carnegie Center’s public spaces, buildings on Independence Way, and two-thirds of the accounts on College Road. She attributes part of her success to intensive networking, chiefly with the Princeton Council, which meets biweekly at the Princeton Overlook cafe, and which she co-chairs.

“We have a very large variety of healthy snacks and, because we sold off the smaller accounts in the outlying areas, we can service our accounts on a daily basis,” says Cannie. “Also, we control what goes into the machines as opposed to having a driver make that decision.” An industry-specific software program lets the owners preplan deliveries, based on what sells quickly.

One item she does not stock is fruit. “Too much waste,” says Cannie.

Advanced Vending Services, 45 Everett Drive, Building C, Princeton Junction 08550; 609-275-5099; fax, 609-275-5935. Donna Cannie, president.

Management Moves

H. Vincent Poor will succeed Maria Klawe as dean of the Princeton University School of Engineering and Applied Science on June 1. Klawe is leaving to be president of Harvey Mudd College in California. Last year she appointed Poor to be founding director of the Center for Innovation in Engineering Education, which focuses on developing leaders in a technology-driven society.

Poor has bachelor’s and master’s degrees in electrical engineering from Auburn University and earned his PhD at Princeton in 1977. He has been teaching at Princeton since 1990.

Deaths

Timothy J. Baker, 58, on April 21 of pancreatic cancer. He was a senior research scientist in aerodynamics at Princeton University. A funeral service will be Friday, April 28, at 2 p.m. at Nassau Presbyterian Church.

Margaret E. Livingstone, 58, on April 16. She was a charge nurse at the Carrier Clinic Adolescent Unit in Belle Mead.

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