Earlier this month the drug testing industry scored a big win in its struggle with animal rights activists; a Trenton court sent six people to jail for terrorism and interstate stalking against Huntington Life Sciences, which tests new drugs in its Somerset County laboratory.

Then on March 15 pharmaceutical companies around the world gave a collective shudder: In London a test on humans went badly awry. Six men participating in an early stage (Phase I) clinical trial ended up in the hospital in critical condition. (Phase I trials are supposed to establish that the drug is not harmful before the next trials, Phase II and III trials, discover whether the drug works and what the dosage should be.) When a drug gets to the Phase I stage it has been through animal tests and is supposed to be virtually danger-free.

But Howard Goldberg, president of ClinPhone Inc., a pharmaceutical services firm expanding its Princeton area operations, says this incident is extremely rare. “This is one of the most regulated industries in the world. Absolutely every precaution is taken to prevent this. There are thousands of professionals out there who stake their lives and reputations on delivering good healthcare.”

Though ClinPhone is involved in clinical trials around the world, it has nothing to do with the administration of drugs and everything to do with logistics: It offers electronic trial management services to support pharmaceutical and biotechnology companies, and this work represents just one or two percent of the clinical trials business. With its clinical interactive voice response (IVR) system, ClinPhone takes data directly from doctors and patients and manages it electronically to cut down on paperwork. It also does more traditional services, such as supporting randomization (selection of trial participants) and managing drug inventory.

“We have a seamless way of collecting and managing data and providing timely data for critical decisions,” says Goldberg. “When the information goes in our system, it is reportable right away.”

This fast-growing subsidiary of United Kingdom-based ClinPhone Group doubled its space in January with a move from 9 Roszel Road to Windsor Corporate Park (the former GE Astro property), where it has 110 employees and 42,136 square feet. In the six years it has been in Princeton, it has expanded at least four times, going from Emmons Drive to Lenox Drive to Roszel Road and now to Millstone Road.

“We see a strong demand for our services,” says Goldberg. “Pharmaceutical companies are looking to get out of the paper mode.”

Goldberg grew up in Queens, where his father was an accountant and his mother worked in a dental office. He majored in biology at the State University of New York, Class of 1977, and went to work in a pharmaceutical lab. His interest in clinical trials was piqued, one year out of college, when he heard about a Phase I study. “You had to take a couple of pills and come back and get some blood work done. I started asking questions, and it went from there.” He earned his PharmD degree from the University of the Pacific and spent four years at Covance, the Carnegie Center-based clinical research organization (CRO) before joining ClinPhone. He and his wife Eva, who has a home-based business (www.Sew Many Gifts.com), live in West Windsor with their two teenaged children.

Six years ago there were 16 workers in Princeton, and only 10 to 15 percent of all clinical trial firms used telephone or web-based services. The company has 540 employees globally and is privately owned. Goldberg opened his sixth United States office, in California, on March 1. Here he has 110 people.

Goldberg plans to expand coverage of the “postmarketing phase,” which represents less than 10 percent of his business now. In the postmarketing phase, the drug has been approved by the FDA but must conduct continuing safety studies. “Sometimes you don’t see side effects until millions of people take it,” says Goldberg, citing the Vioxx experience.

In another postmarketing area, called “disease management,” patients are given incentives to keep taking their prescriptions. They would use ClinPhone’s systems to report by phone or via the Web.

The competition has grown. “It’s not about the technology,” says Goldberg. “We have the service and the expertise that others don’t, but that is not an easy message to get across. We are dealing with intangibles — knowledge and ability. It is our reputation that we are promoting.”

“There was an instance several years ago with a competitor where the randomization was done improperly,” he says, referring to Intrabiotics in California. It was a crucial trial, almost a “bet the company” effort, and the trial failed, says Goldberg, probably because the selection of patients was done incorrectly. Intrabiotics sued the CRO but has essentially gone out of business itself.

Goldberg is hiring project managers and assistants for ClinPhone. For a division of ClinPhone, TrialWorks, he is hiring dotnet programmers. ClinPhone bought this division, founded under a different name by a Brooklyn-based husband and wife team, Larry Linsey and Maggie Furlong. It develops software to manage clinical trials — to pull data from the clinical sites and report that back to the project manager. In particular, it connects the trial manager to the doctors — streamlining the paperwork, including the payment to the doctors.

TrialWorks has grown to 20 people and plans to launch a new product in the next couple of months.

“Competing products are older,” says Goldberg, citing a product marketed by Massachusetts-based Parexel. “For other companies, it is a small piece of their business, so they don’t develop it, whereas we see it as a major driver of our business.”

ClinPhone Inc., 50 Millstone Road, Windsor Corporate Park, East Windsor 08520; 609-524-4100; fax, 609-448-8790. Howard Goldberg, president. www.clinphone.com

Johnston Sells Vela

Vela Pharmaceuticals, a biotech that was incubated at Johnston Associates, has been sold for $29.7 million in cash and stock to Pharmos, an Iselin-based firm.

Vela was founded in 1998 by Robert F. Johnston, president of the Cherry Valley Road-based venture capital firm. Johnston sold the firm to someone he has known for 25 years: Aviv Haim, CEO of Pharmos, who had done consulting work for Johnston’s first biotech, Genex.

Until five years ago, Vela operated from Johnston’s office. At its peak it had 25 workers on Bear Tavern Road, and now it has just over a dozen. Pharmos has therapeutics for neurological, inflammatory, and other disorders, while Vela focuses on drugs for psychiatric, neurological, and behavioral disorders.

In a deal announced on March 15, Pharmos will pay $5 million in stock and issue $24.7 million worth of its common stock. If Vela’s products meet certain clinical milestones, Vela shareholders will get up to 8 million additional Pharmos shares. The deal is expected to close by September.

“Vela had raised over $50 million,” says Johnston in a phone interview, “and we had good backers, but there was a logic to the sale.” Pharmos was selling “below cash,” he notes, because it had a drug that failed in clinical trials. “But they have a good pipeline, a big market for applications in pain and other areas. The combination is good and complementary in strategy: Vela had been looking for therapies in the area of pain.”

Vela had an unusual business model. It planned to derive most of its revenue not from drug discovery, but rather from acquiring licenses to drugs that were abandoned by other pharmaceuticals, typically during late stage testing, Phase II or Phase III trials.

Yet its most successful drug so far, Dextofisopam, for the treatment of irritable bowel syndrome (IBS), was discovered in Europe at an early stage. Soon Vela will begin Phase 2 B clinical trials of this drug. Last year Phase 2 A trials showed that Dextofisopam provided relief in both women and men with either diarrhea-predominant or alternating-type IBS.

Kevin Keim, Vela’s president, will consult to Pharmos for a while. Steven M. Leventer, head of R&D at Vela, will work directly for Pharmos along with three other Vela researchers. After a transition period, Johnston says, the firm may consolidate either in Iselin or the Princeton area.

Vela had raised a total of $50 million in venture capital funding. Three investors in Vela (representatives from Venrock Associates, New Enterprise Associates, and JP Morgan), will join the Pharmos board.

Johnston is known for helping to found Cytogen, a 25-year-old College Road-based company focusing on drug development with monoclonal antibodies. One of Johnston’s newest portfolio firms, Targent Inc., is now in an incubation stage on Cherry Valley Road but has just announced that all of its oncology drugs are being acquired by Spectrum Pharmaceuticals in Irvine, California.

Johnston also founded and sold Praelux, Sonomed, Envirogen (now Shaw Environmental on Princess Road), and i-Stat (now Abbott Point of Care on Windsor Center Drive). Current portfolio companies include ExSar at Princeton Corporate Plaza, Pennsylvania-based Immunicon, PharmaStem, and Massachusetts-based Sepracor.

“When you start a company,” says Johnston, “you don’t know what is going to happen. We had raised a fair amount of money and had a good team, and in the best of all worlds we would have continued as an independent company. But money is expensive, and we hope the synergy will be equivalent to ‘two plus two equals six’.”

Vela Pharmaceuticals Inc., 820 Bear Tavern Road, Suite 300, Ewing 08618; 609-771-8660; fax, 609-771-8661. Kevin L. Keim, Home page: www.velapharm.com

Stock News

Voxware Inc. (VOXW), 168 Franklin Corner Road, Suite 3, Lawrenceville 08648; 609-514-4100; fax, 609-514-4101. Tom Drury, CEO. www.voxware.com

Once more, Voxware is listed on Nasdaq. Less than 10 years ago it went public on Nasdaq, and when it encountered some hard times, the stock went to the Over The Counter (OTC) bulletin board. With a product named Voice Logistics, Voxware offers integrated voice-based solutions for distribution and logistics operations.

The re-listing “follows the August equity financing, conversion of all preferred stock into common stock, and the reverse stock split accomplished during the second half of 2005,” said Tom Drury, Voxware CEO, in a press release. The company also has offices in Massachusetts and the UK.

Death

Gail Stern, 55, on March 20, of pancreatic cancer. She was director of the Historical Society of Princeton at Bainbridge House.

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