In Retreat: Academe

Topeak at Carnegie:

Employee Dilemma — Stay or Flee?

Corrections or additions?

This article by Barbara Fox was prepared for the June 4, 2003 edition of U.S. 1 Newspaper. All rights reserved.

SARS in Princeton: Prevention & Possible Cures

Just when we might think the SARS news has dwindled,

this mysterious disease infects the headlines again. Not just one,

but two or three SARS stories are in the national news every day.

The World Health Organization reports more than 8,360 cases of SARS,

and though more than half of those patients have recovered, 764 people

worldwide had died of the disease as of May 31. On Monday, June 2,

eight new cases were reported in Asia (four each in Taiwan and Hong

Kong) and 5,200 people were finishing a 10-day quarantine in Toronto,

where the death toll is up to 32.

Most cases of Severe Acute Respiratory Syndrome (SARS) seem to be

reported by people who have had direct close contact with an infected

person, such as those sharing a household with a SARS patient and

those who work in hospitals. But a general and pervading anxiety remains.

A newly recognized coronavirus seems responsible for SARS. To defend

against it, one uses the same strategy as for any infection —

keep hands clean. Apparently SARS can be spread when an infected person

sneezes, coughs, or spits, and another person comes in contact with

the wet skin or object — then touches his own eyes, nose, and

mouth. According to the Center for Disease Control, SARS usually begins

with a fever over 100.4 degrees, plus headache, an overall feeling

of discomfort, and body aches. Some people also experience mild respiratory

symptoms, and within a week SARS patients may develop a dry cough

and have trouble breathing.

The anxiety of SARS is not going away, and until scientists figure

out the cause and how to deal with it, Severe Acute Respiratory Syndrome

— and its companion worry, biotech terrorism — could adversely

affect business expansion around the world. The Beijing desk of the

Wall Street Journal reports, for instance, that SARS forced Motorola

to shut its headquarters for a week, Matsushita to close a 5,600-worker

plant for at least 10 days, and Honda to delay its new model in China

for one or two months. "Many companies are discovering that low

cost doesn’t equal low risk," says the Journal.

SARS is not yet a big threat in the United States, where no one has

died of the disease. Of the four reported cases in New Jersey, just

one has been definitely identified as SARS. Pennsylvania has 16 cases,

with one proven case, and New York has 39 cases with 9 definites.

But experts who testified before Congress predicted that if global

authorities don’t tame this virus by September’s flu season, it could

run rampant in the United States and Europe. (The day-by-day update

of SARS cases is available at www.who.int/csr/sars/country/.

The Center for Disease Control has statistics and information at www.cdc.gov/ncidod/sars/).

Even though the disease may seem remote, companies in Princeton have

also been affected by SARS. Some are merely retreating, such as by

postponing trips. Others — including Derma Sciences, Medarex,

and i-Stat — are stepping into the breach to help.

Derma Sciences

Don Your Masks

Given lemons, Edward J. Quilty has been busy making

lemonade. His company, Derma Sciences at 214 Carnegie Center, recently

bought a Toronto-based manufacturer and distributor of medical products,

Dumex, and that subsidiary’s surgical masks are now a very hot item.

"Our suppliers have been told to make nothing but masks,"

says Quilty. "There is a great demand for masks, and we have been

discussing what orders will be late. Hand sanitizer — an alcohol

based product, Mysotrol — is another of our products in great

demand."

All of the Toronto subsidiary’s wound dressings, sponges, and masks

are made and packaged in China, source of the SARS problem, but when

they get to North America they are sterilized, using either a steam

sterilizer or radiation. "We have thought about building a steam

sterilizer in China, like the one in Toronto," says Quilty, "but

it would cost $700,000 to $800,000."

The Dumex brand currently enjoys 50 percent of the market share in

Canada, says Quilty. Since he bought the company at the end of last

year, Quilty has been making aggressive plans to enter the U.S. market.

"We’re just introducing in the U.S. now. The dollar is great.

We’re competitive," he says, noting that the Medical Center of

Princeton has bought his line of basic wound care. "They are in

the process of switching them out now."

Dermagran, for advanced wound care, is the company’s flagship product.

It was patented by Mary Clark, the founder of Derma Sciences, and

contains lanolin, zinc, and vitamins; it can be used for anything

from skin care to stage 2 ulcers.

In 1998 DermaSciences bought a Minnesota firm, Genetic Wound Care

Laboratories, which makes wound closure strips and adhesive devices

for holding catheters in place. It also bought a line of Sunshine

skin care products in St. Louis and opened an E-commerce site (www.ewoundcare.com).

Now it has wound and skin care products from gauze to advanced treatments,

burn dressings and dressings for diabetic ulcers, plus ointments and

shampoos and lotions for nursing homes. Including workers in Toronto,

Minnesota, St. Louis, and China, Derma Sciences has 153 employees,

and 12 of those are at the Carnegie Center.

DermaSciences is not Quilty’s first experience with surgical products.

A Yonkers native with an undergraduate degree from Southern Missouri

University and an MBA from Ohio University, Quilty worked at Baxter,

a large diversified health products company, and at an infusion therapy

company called McGaw before coming to Princeton to oversee the IPO

of Life Medical Sciences in 1992. Then he joined MedChem and brought

along a wound-care product called SureClosure from Life Medical, and

he promptly sold the company to CR Bard. Quilty then branched out

into Palatin Technologies (formerly Rhomed) and Derma Sciences. He

divested himself of Palatin in June, 2000.

Even though the company is trading only over the counter (DSCI), Quilty

says has big plans. "We bought companies worth $9 million, and

Derma Sciences is about $20 million now. We expect to be a $100 million

company in three or four years."

Derma Sciences Inc. (DSCI-OB), 214 Carnegie Center,

Suite 100, Princeton 08540. Edward J. Quilty, CEO. 609-514-4744; fax,

609-514-0502. Home page: www.dermasciences.com

Medarex Mice Make

Potential Therapies

Maybe the mice will help. Medarex, which uses genetically

engineered mice and other patented technology to develop antibody

treatments for cancer and other illnesses, has begun working on a

SARS treatment, trying to grow an antibody for the coronavirus that

has been found in patients with SARS. Medarex is splitting the costs,

the work, and all eventual revenues from the SARS treatment with a

research agency at the University of Massachusetts.

In April Medarex joined with Massachusetts Biologic Laboratories (MBL),

the only non-profit FDA-licensed manufacturer of vaccines and other

biologic products in the United States, to co-develop fully human

antibodies generated by Medarex’s UltiMAb technology to SARS. "We

wanted a partner that was expert in infectious diseases, and MBL had

both the expertise and the special facilities to deal with the virus,"

says Donald Drakeman, founder and CEO in a telephone interview.

"A collaborative effort using appropriate technologies and experience

will be necessary to successfully respond to this urgent public health

need," says Donna Ambrosino, MBL director and professor of pediatrics

at the University of Massachusetts Medical School. "MBL is well

suited to address the critical need for an effective SARS agent, as

we are experienced at developing and manufacturing monoclonal antibodies

for clinical use."

"Our contribution is not people but mice," says Drakeman.

"We will ship from 5 to 20 mice to MBL and they will create the

antibodies in our mice."

"To create an antibody, we immunize the mouse and the mouse’s

immune system creates the antibody. We take the antibody producing

cells and from those isolate the cell that makes the antibody we have

chosen as the best one. The antibody would be used as a treatment,"

says Drakeman.

It will take several months for MBL to identify an antibody to test

and study, says Drakeman. "Then it needs to go through preclinical

and animal testing, and the time before it gets to be used on people

will be measured in years."

The announcement of the MBL collaboration spiked a sharp increase

in trading volume of company stock on Nasdaq, and the price has risen

from $3 in March to around $6.75.

Founded in 1987, Medarex is based on State Road, has laboratories

in Annandale, and had revenues of $39.5 million last year. It uses

its genetically engineered mice to find and develop therapies for

life-threatening and debilitating diseases. With the UltiMAb Human

Antibody Development System, which has a unique combination of human

antibody technologies, Medarex is currently working on treatments

for cancer, inflammation, autoimmune, and infectious diseases.

In the area of anti-terror medicine, Medarex announced on May 28 that

it successfully completed pre-clinical studies of its fully human

antibody against anthrax. The antibody protected rabbits that were

exposed to lethal doses of anthrax spores by inhalation, and the unprotected

rabbits died within days of exposure. Inhalation anthrax is the most

lethal form of illness in humans caused by the Bacillus anthracis

bacterium. The study, done under an R&D agreement with Dartmouth Medical

School and the Maryland-based U.S. Army Medical Research Institute

of Infectious Diseases, was conducted at a separate, specially equipped

facility.

What about competition in the SARS endeavor? "I have not seen

any antibody companies talking about it," says Drakeman. "Obviously

any number of companies that work on viruses are hoping that something

in their freezers will work."

Medarex Inc. (MEDX), 707 State Road, Princeton

08540. Donald L. Drakeman, CEO. 609-430-2880; fax, 609-430-2850. Home

page: www.medarex.com

Speedy Diagnosis

Before the outbreak of SARS, China was already i-Stat’s

fastest growing international market for hand-held point-of-care diagnostic

systems. Because of the SARS outbreak, i-Stat has increased its quarterly

manufacturing output by 40 percent, says CEO William P. Moffitt. With

115 workers on Windsor Center Drive, the company is filling an emergency

order for 395 portable clinical analyzers. These devices will help

monitor critical pulmonary function changes in ICU patients who may

be progressing to acute respiratory failure.

Founded in 1984 and traded on NASDAQ as STAT, the company used advanced

semiconductor manufacturing technology, established principles of

electrochemistry, and state-of-the-art computer electronics to develop

the world’s first hand-held automated blood analyzer capable of performing

a panel of commonly ordered blood tests in just two minutes.

Roughly the size of a portable phone, the analyzer uses disposable

test cartridges that perform the tests on two or three drops of blood

at the patient’s bedside. The 13 different cartridges perform between

one and eight different blood tests on the same sample. Frequent and

rapid blood gas analysis is critical in monitoring SARS patients in

pulmonary distress, many of whom need mechanical ventilation.

Each device costs about $5,000, and the single use disposable cartridges

that complete the system cost from $2.50 to $8, depending on the number

of tests that the cartridge can run. Generally the company ships about

1,000 of the devices per quarter, says Jeff Randall, the chief financial

officer, in a telephone interview. "So 350 additional systems

was a significant order."

If all the parts are available, assembling the devices requires several

weeks. The cartridges are made in Kanata, a suburb of Ottawa known

as the Silicon Valley of Canada, and are shipped to Windsor Center

Drive for worldwide distribution to hospitals. I-Stat has been doing

business in China for six years.

Major pharmaceutical firms, such as Bayer and Roche, offer bigger

units that are located further from the patient, perhaps at a nurses’

station. Randall cites the obvious bedside-use advantage and points

out that the larger units require more training than i-Stat’s. "Our

unit is quite easy to use and very intuitive — even easier than

a personal computer," says Randall. The only other company with

a hand-held bedside unit is Minneapolis-based Diametrix (DMED). Randall

says his device has the advantage of requiring less blood, which is

particularly important for neonatal intensive care where the patient

weighs only a couple of pounds.

Randall estimates his firm has delivered about 30,000 analyzers over

the last 10 years and last year worldwide sales of single cartridges

were $12.6 million, which amounted to 70 percent of revenues. He is

leery of claiming market share, but he does refer to an Economics

Associates study: "It seemed to indicate that in at least one

area, blood gas and electrolytes, that we had somewhat over 50 percent

market share, and our closest competitor had an eight percent market

share. We are generally perceived to be the leader in this particular

area."

At the end of this year i-Stat will end the five-year distribution

arrangement it has had with Abbott Laboratories and launch its own

marketing and sales network. "We have been hiring salespeople,

mostly near where the hospitals are, and are hiring a few marketing

people," says Randall.

The company’s latest product — a test for Troponin I, a cardiac

marker to determine if someone has had a cardiac infarction or heart

attack — has completed clinical trials. "Soon we hope to submit

the 510k to the FDA application for permission to market it,"

says Randall. This test should be run and read within 30 minutes after

a patient with chest pain comes to an emergency room, according to

American College of Cardiologist guidelines. "Several other tests

would also be given, and the results combined, but the initial test

can be very helpful in letting the cardiologist know what should be

done right away."

"Overall, our system provides the clinicians with the answers

to their diagnostic questions in two or three minutes, compared to

40 to 60 minutes when similar tests are done in the central laboratory,"

says Randall. "Our challenge is to see point of care testing continue

to grow as opposed to central laboratory testing."

i-STAT Corporation (STAT), 104 Windsor Center Drive,

East Windsor 08520. William P. Moffitt, president and CEO. 609-443-9300;

fax, 609-443-9310. Home page: www.i-stat.com

Top Of Page
In Retreat: Academe

Many business schools canceled trips planned for the

spring semester, not only to Asia because of SARS fears, but also

to other parts of the world because of the war in Iraq. The cancellations

were made more disappointing by the fact that the cost of the trips

is often factored into the annual tuition fee.

Drexel University, for instance, canceled its Executive MBA trip to

China. "We would have left on day that Iraq war began," says

George Tsetsekos, dean of Drexel’s LeBow College of Business. "Regardless

of the cost involved, and it was costly, we developed a local program

to complete the academic component of the trip and made the commitment

that next year we would have an intercultural experience. Next year

those students will be invited to join us on that experience."

Though Princeton University did not cancel its summer program in Japan,

it did scratch the one for China, reconfiguring the "Princeton

In Beijing" session so that it will take place on the Princeton

campus. Overall, Princeton University has a moratorium on University-sponsored

travel to China, Hong Kong, and Taiwan, based on advice from the Centers

for Disease Control and Prevention (CDC) and the World Health Organization.

Those who travel on their own — and those who expect guests from

those areas — are expected to get medical clearance.

In April Educational Testing Service temporarily suspended administrations

of the Test of English as a Foreign Language (TOEFL), the Test of

Spoken English (TSE), Test of Professional English (TOPE), Graduate

Record Examination (GRE), and Graduate Management Admission Test (GMAT)

in China, due to continuing health concerns related to SARS.

This suspension includes all paper-based and computer-based testing,

and it affects 47 paper-based testing sites at universities and institutes

across China. It also affects 14 computer-based testing centers operated

by Thomson Prometric for ETS. The postponement involves 30,000 TOEFL

test takers, 500 TSE test takers and 1,000 GMAT registrants scheduled

to test through July 31. August 23 is the next possible date for these

tests, but some of the computer-based testing could begin as early

as July 1.

"We want students to do their best on these important tests and

given the current concerns of Chinese university officials and the

Ministry of Education we felt it best to implement the request that

testing be delayed a few months," says John Yopp, VP of graduate

and professional education at ETS.

"The Chinese government has placed the highest priority on measures

to prevent the spread of SARS," says Zhang Jin, spokesperson of

the NEEA, Ministry of Education of the People’s Republic of China.

"We believe that the postponement of these tests is a necessary

measure to protect students, test center staff, and all people. We

appreciate the prompt cooperation and support from ETS."

"We did have a representative in Beijing, Susan Chyn, the business

developer for Asia in ETS international division," says Tom Ewing,

ETS spokesperson. "She came back to the states a month ago, and

though she was not quarantined, she took a couple of weeks off before

she came back to work." (See page 45.)

Travel Cutbacks:

CJ Pharma

The most obvious effect of the SARS outbreak is the

curtailment of physical travel, says Andrew Gorman, chief business

development officer of CJ Pharma, the pharmaceutical division

of the largest food manufacture in Korea. He has a 10-person office

at Carnegie Center (www.cj.net, U.S. 1, December 4, 2002).

"We are relying more on our branch offices in areas such as Hong

Kong and Beijing to directly conduct business on our behalf. The opportunity

to identify one of CJ Pharma’s current products as a SARS therapy

has not been forgotten. And," says Gorman, "since we are in

the antiinfective and infectious disease arena, we are exploring the

possibility of identifying the treatment of SARS."

Hydrocarbon Tech

To make money, Hydrocarbon Technologies (HDWR) needs to make

licensing deals, and the progress of least two deals has been dramatically

slowed by the SARS epidemic. One was a license for plant design, another

a project to help market something designed in China.

HTI has proprietary technology for manufacturing various products

for enhanced oil recovery. Owned by Utah-based Headwaters Inc., with

38 employees on New York Avenue, it does process and catalyst R&D,

process licensing, and pilot plant design and construction (U.S. 1,

October 16, 2001, www.htinj.com).

"Some deals we are not able to close, because people do have to

meet," says CEO Theo Lee. "We are delaying planned trips to

both Taiwan and China, and both of those places are affected by SARS."

One HTI employee left for Asia in April. "We knew SARS was going

on, but after the employee was there, then China opened up and told

the truth." That worker is holed up in Shanghai, which is fairly

safe, and is trying to do business by phone and fax.

"These are long term deals that could have a very big impact on

our business," says Lee. When will travel begin? When the World

Health Organization declares it safe, says Lee. "Even then people

will want to wait a little."

Argyle Capital

"We’re not affected very much, says Arthur Gillman, the

president of Argyle International, a Research Park-based company

with a factory in Hangzhou, China, that makes optical components for

fiberoptic communications (www.argyleoptics.com, U.S. 1, November

6, 2002).

"Travel is restricted inside the country so if our workers want

to go home to see their family, they may have a problem. But we communicate

by E-mail and fax, and we have postponed any trips that we might have

scheduled."

Drianna China

Don McLane, founder of Drianna China USA, was

all prepared for this crisis. He has a 10-person office on Princess

Road (www.driannachina.com, U.S. 1, November 6, 2002) and owns two

factories in Qingdoa, China, the city that will play host to outdoor

events at the 2008 summer Olympics. His 2,000 workers there produce

$7 million worth of jewelry and accessories for discount stores. Formerly

he traveled to China once a month and stayed seven to ten days each

time, but now he sees his factories on a 42-inch screen instead.

"I positioned myself a year ago," says McLane, "Last year

we set up a video conferencing system with our factories, and we talk

to the factories every night. We have not had to be fumigated or quarantined."

Top Of Page
Topeak at Carnegie:

Stymied for Now

The SARS epidemic was in full swing in March when Ralph

Olmo traveled to China with the president of a major United States-based

university. "We now know in retrospect that SARS hit last November,

and while we were there, they first started reporting it on BBC,"

says Olmo.

Don’t ask Olmo which university president, because he can’t tell you

yet. Olmo represents the subsidiary of an Asian-based conglomerate,

Topeak, that exports American higher education to China.

Beijing Topeak Education Investment Management Co. Ltd. was founded

two years ago as a subsidiary of Beijing Topeak Group and dedicated

to the promotion of international education cooperation and exchange.

It is known as the sole distributor of ETS’ new English examination,

Test of Professional English (TOPE).

Beyond that, Topeak has a contract with the city of Beijing to develop

a university park in the south of Beijing. On a tract of six square

miles, the park will have satellite campuses from major Beijing-based

universities. It also hopes to attract at least one American university.

Just which will be the first American university is a big secret.

"We are working with the Chinese government to establish the standards

necessary to attract an independent American university," says

Olmo. "I am excited about this venture. It is a great honor to

contribute in a small way to an effort that could have such historical

significance. Bringing American education programs to China could

help to draw the nations and people closer together."

In addition Topeak is developing a campus in Beijing’s north sector

that will offer professional training — perhaps using corporate

models — plus a range of non-degree programs, to include continuing

education programs sponsored by American universities. Now that China

is a member of the World Trade Organization, the government is calling

for vocational training, particularly in the English language, and

this campus could be an important source.

Olmo went to California State at Long Beach, Class of 1972, and worked

as a CPA in California, and then as the chief auditor for state board

of regents in Utah. He followed T.H. Bell, the state commissioner

of higher education, when he became Reagan’s head of education, to

Washington. Olmo stayed to work for Bell’s successor, William Bennett.

He later helped transform Southern Virginia College into a four-year

coeducational institution, Southern Virginia University.

Topeak’s office at the Carnegie Center will facilitate its arrangement

with ETS. Colleagues from Beijing will spend U.S. time here. Olmo

still lives in Virginia.

Olmo reveals that on the trip in March the "major university president"

was scheduled to go to Hong Kong but cut his trip and went only to

Shanghai. "When we got on the plane to come home in March, no

one was wearing masks," says Olmo. "We received a card when

we arrived telling us that if we showed any symptoms over the next

seven days to take the card to our doctors."

"While we were there, people in China were not hearing anything

about it at all. After the cases in Beijing were reported, the fear

escalated, which led to a number of businesses being shut down,"

he says. At the height of the epidemic the Topeak headquarters in

Beijing were closed for a couple of weeks.

"SARS seems to be slowing things down, and to have an effect on

people even being interested in this great economic frontier. But

insightful people will want to put themselves in a position for the

time in the not too far distant future that this worry is behind us,

and they will have their people lined up and ready to go," says

Olmo. "I’ve got to believe that a year from now SARS will be a

memory."

Topeak USA LLC, 103 Carnegie Center, Princeton

08540. Ralph Olmo, co-CEO. 540-261-9540. Www.topeakedu.com.cn.

Top Of Page
Employee Dilemma — Stay or Flee?

You’re in an Asia with a six-month assignment to develop

major new business for your company. You’ve been there just one month,

and you feel like you are doing good work but you realize you are

just getting started. Relationships are made slowly here.

Rumors of a new kind of flu have been floating around, but no one

seems to be too worried. A few people are wearing masks, but that’s

all.

Then you get a call from your boss: Leave the country immediately.

What? But I’ve just begun!

That’s what happened to Susan Chyn, right, who is the business developer

in charge of international development for the Asia and Pacific markets

for Educational Testing Service. She was in Beijing in the midst of

the — as yet unannounced — SARS epidemic.

"At that time there were a couple of people wandering around with

masks, and Beijing was supposed to have only three to four cases,"

says Chyn. "Everyone was saying, take vitamin C and avoid crowds

and hospitals, and there wasn’t a lot of fear. I was tracking the

progress of the disease through E-mails that came through the U.S.

Citizens’ Service of the U.S. Embassy in Beijing, and I was receiving

E-mail from my friends saying, `Get out, get out.’ But on an emotional

level I wanted to keep working. In the first month of a six month

assignment I had set up a network. I knew if I left I wouldn’t be

able to continue that work."

"When I got my orders, my initial reaction was I didn’t want to

come back home. Maybe an hour later, myself and everyone else said,

`You’re crazy, go back.’"

She left Beijing to go to Japan on April 19, a day when no one was

flying into Beijing. "It was clear the U.S. media was spending

a lot of time on this, and the China media was not, at that time."

On April 20, says Chyn, the city government admitted culpability in

hiding the number of SARS cases and the real information began to

pour out. The announcement was pivotal for anyone in Beijing, she

says, because the people had never seen their top officials humiliated.

"The shock was scary and out of control."

Susan Chyn grew up in Indiana and majored in German literature and

Chinese at Indiana University, Class of 1974. She taught English in

Taiwan, where she met her future husband, James Chyn. He went to Tsinghua

University, Class of 1977, and has an MBA from New York University.

Currently he consults for real estate and logistics clients, and he

and his wife have two grown daughters.

Chyn left Beijing at about the same time his wife did, but he was

in that city the week of May 19, when the scare had died down. "You

wouldn’t know that the city had been affected," says James Chyn.

Nobody, including himself, was wearing masks on the street, though

he did wear one on the plane. "Life is becoming more and more

normal," he says. "You can’t be nervous for a long time no matter

how scary a disease is. Plus the numbers have come down."

Interviewed at a foreign student conference in Salt Lake City, Susan

Chyn says she is confident that China will recover from SARS, and

probably more efficiently than Taiwan or Toronto.

Compared to Taiwan, which she points out is democratic and has more

Western influences, China has better control structures to deal with

SARS. The Communist party infrastructure formerly used for political

surveillance can now be used for SARS inspections. Retired older women

have been mobilized to go door to door in their neighbors, checking

temperatures and enforcing quarantines. They are also handing out

"spit bags" to forestall expectorations on the street. And

she believes that the nation is so focused on hosting the Summer Olympics,

it will be willing to make any sacrifice.

"My sense is that Chinese are really not wanting to blow it. That

holding back the SARS numbers not only affected their credibility

but their traction on globalization. My instinct is that if they have

to find a cure for SARS, they will will this disease down.

They will use every network available to be sure than no one has the

disease. I would be shocked if the Chinese aren’t very proactive."

Says Susan Chyn: "I have been proud of the way the China has reacted

in the wake of harsh criticism. I get asked every five minutes, when

I will go back. I am very eager to go back."

— Barbara Fox


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