Corrections or additions?
These articles by Barbara Fox were prepared for the September 10,
2003 issue of U.S. 1 Newspaper. All rights reserved.
Tale of Two Companies: Epigenesis and Interlink
It’s a tale of two biotechs, in different fields but
with the same problem — finding capital in a tight market where
the big pharmas are cutting back and the private investors are feeling
One company, Interlink Biotechnologies LLC at Montgomery Commons,
had to resort to selling all its valuable assets.
The other company, Epigenesis, at Cedar Brook Corporate Center,
the eye of a group of venture capitalists — including Jan Leschly,
who has plenty of clout in the pharmaceutical arena. These investors
restructured and refocused the firm, and they also replaced most of
the management team, including the founder.
"The economics of Epigenesis did not work out for the prior
as they had hoped, which is a recurring story in this market,"
says David Ramsay, a partner at Care Capital LLC, a life sciences
venture capital group on Hulfish Street that led the $23 million
to reconstitute Epigenesis. "In a different time the former team
could have raised money both to support the development of the
and the development of the platform. In this environment investors
are very conservative."
Epigenesis was founded by Jonathan Nyce, who moved the company from
North Carolina to Princeton (U.S. 1, March 17, 1997). Nyce has left
the company and could not be contacted. He reportedly decided that
the new business plan, which focuses on developing one or two clinical
assets, would offer few opportunities for his skills and interests.
"He is more of a scientist and a discoverer," says Ramsay.
Though Nyce retains some ownership in the company, Ramsey says the
investors in the new $23 million financing round own the controlling
Two presidents who served under Nyce — Karen Giroux and Jim Manion
— have also left. Epigenesis is currently paying rent on 21,000
square feet of laboratory and office space and hopes to sublease part
of that and retain 7,000 square feet of office space, or lease it
all and move, according to Gerald Fennelly of NAI Fennelly.
To attract institutional investors, the company installed a new
team, and there are 11 employees now. Care Capital’s Jan Leschly named
his former GlaxoSmithKline colleague, Daniel Soland, as CEO, and
Leonard as CFO. Cynthia Robinson, who had also been with
remains as vice president of clinical development. Dennis Segota,
at Morgan Lewis Bockius in the Carnegie Center, is the corporate
Jan Leschly chairs the board, and Jerry Karabelas, who left a position
as CEO of Worldwide Pharmaceuticals at Novartis AG to join Leschly
at Care Capital, heads the scientific advisory board.
Soland, a graduate of the University of Iowa, was most recently a
vice president at GlaxoSmithKline in charge of the US pharmaceuticals
biological business unit and also of worldwide marketing for
He had also worked at Connaught Laboratories and Eli Lilly.
Leonard, an alumna of Montclair State, had worked for a biotech
co-founded by Mark Leschly, Jan Leschly’s son. She has more than 15
years of experience with emerging biopharmas. She took New York-based
VI Technologies public, and was CFO and treasurer of Memory
in Montvale. She raised a total of $270 million for those firms.
Cynthia Robinson MD, vice president of clinical
is also a GlaxoSmithKline alumna. She had been in charge of clinical
drug discovery for respiratory and inflammation drug development at
that firm. On the faculty at the University of Pennsylvania, she is
associate director of its adult cystic fibrosis program, and she
Epigenesis in January, 2002.
Leonard explains that Epigenesis had the misfortune to need money
in a difficult market. When it ran out of funds to pursue its drug
discovery work on respiratory vaccines and cancer, it had only a small
investor base — because most of its money was coming from a key
collaboration with a Japanese firm. Potential new investors were
with early stage drugs. "In this market place, investors want
to control the burn rate. They are looking for compounds in a later
stage of clinical development and with a narrow focus," she says.
"Now, with new financing, new management team, new board members,
and new scientific advisors, we are excited about the new direction
of the company," says Leonard. "We have a tight focus on
respiratory drugs to the marketplace. We are outsourcing a lot of
clinical development, and internal experts are managing that
The new team eliminated any work on cancer and put the development
of Nyce’s platform technology on hold. For instance, an early product
that addressed the problem of too much adenosine in asthmatic lungs
had had disappointing results in Phase II clinical trials. It seemed
to be effective only in patients who were not already receiving doses
of inhaled steroids. And since most of the asthma population does
use the inhaled steroids, the product was shelved.
Instead, the company is developing a product unconnected with Nyce,
one that had been licensed from academe. EPI 12323, an inhaled
steroid for asthma and chronic obstructive pulmonary disease, is
to get the results of Phase IIA trials in October.
Leonard, who is consistently "on message," declines to discuss
methods and technologies: "We are not doing basic research. We
have a compound. We are in clinical development. Compounds do a
of things and we are not going to talk about mechanisms of action
or pathways — we are not getting into that level of detail."
Nearly everyone in biotech has made the shift from platform
to specific products, says Ramsay. "There is a realization that
the promise from the genomics revolution is a longer term promise.
People who were raising capital to put into genomic or bioinformatic
tools have converted their business plans into `Here are some products
using those tools and these can make it to market.’ This
has been going on in the whole biotech area."
Cedar Brook Corporate Center, Cranbury 08512. Dan Soland, CEO.
fax, 609-409-6126. Home page: www.epigene.com
When Interlink Biotechnologies went out looking for
money, the cupboard was bare. Unlike Epigenesis, which has a couple
of products, Interlink represents a much earlier stage in a biotech’s
lifecycle. Instead of products, it has a trousseau of raw materials
that could develop many new therapies.
But what a treasure chest it is — a library of natural-products
extracts and a supporting collection of 65,000 microbial isolates
and 33,000 environmental samples used as sources for the isolates.
This library has provided sources of new, interesting metabolites,
antibiotics, and anticancers.
To understand just how valuable these samples are, one must consider
the biotech convention in Rio De Janeiro, where nations promised to
pay licensing fees to developing nations where such samples were
If a multimillion dollar drug were developed from a substance found
in the rainforests of Bolivia, for instance, Bolivia would get part
of the profits. Interlink’s samples, in contrast, were gathered from
all over the world before the Rio convention and are therefore exempt
from those rules.
Interlink’s initial strength, that it was self-funding, turned out
to be a detriment. It had investment from just one company, Des
Kemin Industries. "We were a real company with real revenues —
we didn’t work with other people’s money. But that model was not
says Garcia. When pharmaceutical revenues decreased, it didn’t have
established relationships with other funding sources.
"We were in the process of raising more money and had an
banker help us," says Garcia. "We were thinking a couple of
years of working capital, less than $5 million, would allow us to
grow the platform and go public."
"For venture capital money, $5 million is not a lot. We talked
to the venture group at New Jersey Technology Council, and they were
not interested in companies that could not identify products. We
potential molecules that could be interesting drugs.
But now they are looking for companies almost in clinical trials,
whereas we do it all with collaborations."
Also, says Garcia, "any available venture capital money is going
to support the original investments that the venture capitalists had
Interlink made plans to liquidate by August 31. The five-person
Commons office had already closed. A research facility in Auburn,
California is keeping the microbial samples in a deep freezer and
the environmental samples in a special heat-controlled room, and
these assets were to be auctioned to the highest bidders.
"We were very sad and disappointed," says Garcia. "It
was a good 13-year run. We had a very good group of people in
and Princeton, very committed, and it is exciting work."
Garcia got on the phone and frantically began networking with everyone
he knew. An alumnus of Catholic University in Chile, he came to the
United States in 1970 to earn master’s and PhD degrees from Iowa
and worked for Allied Signal and Enichem before starting Interlink
with researcher Nicholas P. Everett.
Literally at the 11th hour, an offer to buy all the assets and hire
the staff in California came through. Garcia put a hold on the bids.
He has a letter of intent with September 30 as the deal’s deadline
and is the final negotiation stage. If the deal gets signed, the
will have a home in a large company that will have the research and
will continue to develop it.
But Garcia has not told the bidders of a final decision "because
something might happen," he says. "I have been there before.
A letter of intent is a very good thing. Working on a contract is
a very good thing. But until we sign on the dotted line, we don’t
Place, Suite 4 Auburn, CA 95603. 530-889-8833; fax, 530-889-8824.
In Princeton, 609-252-0446. Ramon L. Garcia, president. Home page:
A Hulfish Street venture capital firm, Care Capital
LLC, is incubating Vanda Pharmaceuticals, a company that hopes to
use genomic profiling to reposition drugs that have run into trouble
in late stage development. Founded this year, Vanda is a 50/50 joint
venture between Care Capital (www.carecapital.com) with the Singapore
Economic Development Board.
"Singapore has an enormous fund to build an infrastructure for
biotechnology," says David Ramsay, a partner at Care Capital LLC.
The city is trying to compensate for the loss of jobs to China by
building Biopolis, a $286 million biomedical R&D complex and has
$2.3 billion in biotech incentives. "They invested in our fund
as a window to biotech in the United States and Europe,"
Jerry Karabelas, the board chairman, tapped Pat Nasshorn as Vanda’s
vice president for business development. Nasshorn had worked in the
same Hulfish Street building for Unipath marketing, an innovative
woman’s pregnancy testing firm that was sold and moved to
Vanda has research centers in the United States and Singapore.
Nasshorn grew up in the Philadelphia suburbs, the second daughter
of three of an entrepreneur (U.S. 1, November 17, 1999). She majored
in business at Temple, Class of 1976, and earned a marketing and
MBA at Temple. First she worked at Johnson & Johnson, then moved to
Bristol-Myers Squibb. In 1991 she joined Merck and did a deal —
a copromotion of Zocor — with Karabelas, then head of the U.S.
business of SmithKline Beecham.
She returned to J&J in 1994 as a vice president of marketing, where
she oversaw the development and marketing of Confide, the first
HIV testing service, and J&J’s pregnancy test kits. Unilever
J&J about a partnership for its fertility monitor, but decided to
go it alone, and hired Nasshorn to create the U.S. division for
In 2002 that division was divested to Inverness Medical Innovations.
Then Nasshorn, who had worked for Leschly at Squibb, was hired as
the first employee of Vanda. She is in charge of business development.
She and her husband, a district justice, live in Newtownand have two
Nasshorn says her company hopes to turn shelved or niche compounds
into marketable products, and also to find new indications for
products. In particular it seeks drugs that passed Phase II clinical
tests, but not with flying colors. "That’s where we would put
our genomic engine behind it, to find the optimal patient populations
or disease areas on which the drug could have a positive impact,"
Vanda pays to gain access to a compound. At a minimum the originator
of the compound gets the opportunity to opt back in — share in
the improved compound with Vanda. Otherwise Vanda takes it to market
Vanda has less than 20 employees, and most of them are in Rockville,
Maryland, where Mihael Polymeropoulos (pronounced Po-ly-mer-OP-a-los)
conducts a research team. "We use genomic, genetic, and proteomic
analysis along with knowledge management for the purpose of
the development of pharmaceutical products and conduct the clinical
development programs," he says. "Our vision is to use advances
in biological sciences to develop more effective and safe drugs."
Polymeropoulos had worked for the National Institutes of Health and
Novartis and was involved with identifying the gene for Parkinson’s
"Vanda could be a potential employment opportunity for Rockville
and Princeton," Nasshorn says. "Our CEO will be based in New
Jersey, and so will our CFO. We will stay on Hulfish Street for the
"This will be a novel addition to the pharmaceutical industry.
We are not just going after a segment, we are doing product
and enhancement," says Nasshorn. "We feel we will carve out
Suite 310, Princeton 08542. Patricia Nasshorn, vice president business
development. 609-683-3678; fax, 609-683-5787.
When Epigenesis closed its labs, it vacated space that
was perfect for another company, Linguagen, which does research in
molecular biology of taste signaling for the flavor industries.
"Why we ended up here is because this space was fitted out,"
says Richard Lufkin, the vice president and CFO who may soon depart
to start yet another firm. The 10-person company moved from a sublease
in Paramus to 5,000 square feet at Eastpark at 8A.
Linguagen also has another Princeton connection — Bob Johnston,
the biotech venture capitalist. One of his associates, Robert
introduced Lufkin to Robert Margolskee in 1991, and together they
founded Linguagen, incorporating in 1995. "At first we subsisted
on SBIR grants and modest corporate sponsorship," says Lufkin.
When we felt the intellectual property had reached critical mass we
brought in a CEO."
Their first patent is for the first molecular compound that can block
bitter tastes in food and beverages. Called a "bitter
it will address just one of the 30 bitter taste receptors on the
Linguagen has 20 bitter blockers so far and has patents for four of
them. Because all of them are found in foods, no approvals need be
sought from the Food and Drug Administration. Masking the bitter
could also let manufacturers cut fats and salt in processed foods,
or make a sugar substitute without a bitter after taste.
"Any number of foods, ranging from coffee to canned products to
international culinary dishes might benefit from ending the bitter
end," writes Donald E. Pszczola, senior associate editor of Food
Technology (July, 2003). He points to nutraceutical products
may have off-notes caused by or associated with vitamins, mineral,
and other such components," and cancer-fighting vegetables, such
as broccoli, cauliflower, and brussel sprouts.
The R&D operations of Fortune 500 firms are potential competitors,
but Kraft Foods and a soy-food company owned by DuPont have said they
are interested in Linguagen’s research. Another free-standing
San Diego-based Semonyx, has a similar approach to Linguagen’s
of the commercial potential for taste signals, and Semonyx has a
contract with Coca Cola.
Linguagen’s corporate counsel is David Sorin at Hale & Dorr. Chris
Olsen of CB Richard Ellis helped Linguagen locate to the park owned
by Eastern Properties.
Lufkin went to MIT, Class of 1968, and earned a Wharton MBA. After
serving in the Navy, he worked for Corning and Johnson & Johnson
starting a string of new companies, 10 so far, with two or three more
in the offing.
"Now that Linguagen has the level of maturity that professional
management can handle,I will probably start another one. I am more
of the serial entrepreneur," says Lufkin.
It takes confidence to always start over. Lufkin attributes that to
the MIT experience ("You work very very hard and you come out of it
with a sense of I can handle just about anything") and to driving
an aircraft carrier. "Also I have a high tolerance for
I don’t need to know what is happening tomorrow." His wife, to
whom he has been married for 30 years, supports these endeavors.
"My sense is we are close to the stage at which professional
can and should take over," says Lufkin. "Beyond that I believe
we are truly offering a new set of tools to the flavor industry. The
industry represents an incredibly sophisticated art, and we think
we are delivering a new type of science that has the potential to
significantly change the way it delivers products.
"Whether the company will succeed as an IPO or an acquisition
— darned if I know," he says. "I think we have a
chance and am excited at the long term potential. But I have other
ideas percolating in my head. I will let others realize the Linguagen
Exit 8A, Cranbury 08512. Shawn Marcell, acting CEO and COO.
fax, 609-860-5900. Home page: www.linguagen.com
Corrections or additions?
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