April 1, 2005 (Vol. 25, No. 7)

Biotech Companies Follow the Lead of Car, Chemical, and Drug Firms and Set Up Shop in the State

Even before the automobile industry made Michigan famous, chemical and drug pioneers set up shop in the state. In 1898, Herbert Dow began making bleach in Midland, and by 1916, Dow also produced acetylsalicyclic acid, the active ingredient in aspirin. Dow Chemical Co., grew to become one of the world’s greatest producers of chemical products.

Kalamazoo was the home of the Upjohn Company more than 100 years ago. Through a series of mergers and acquisitions, Upjohn became Pharmacia & Upjohn, then Pharmacia, and now belongs to Pfizer.

Kalamazoo also is the home of Stryker Instruments, started in the 1940s by Homer Stryker, a local orthopedic surgeon. Today, Stryker is one of the world’s leaders in the medical device industry. The former headquarters of the Parke-Davis division of Warner Lambert are found in Ann Arbor, and also are owned by Pfizer.

This rich history of pharmaceutical and chemical success stories forms a foundation for current life sciences start-ups. About 160 companies are members of the Michigan Biosciences Industry Association (www.michbio.org).

“About 100 start-ups formed in the last five years are in various stages of maturity,” says Michael Witt, executive director of MichBio. The first new companies generally were spinoffs of discoveries made at the University of Michigan in Ann Arbor, where about 50 life science firms operate today.

Although Ann Arbor receives credit for launching the modern life sciences industry, the area lacks incubator space to nurture them. “It’s an anomaly,” says Michael Long, Ph.D., founder, president, and CEO of Velcura Therapeutics (www.velcura.com) in Ann Arbor.

“We found our own space, built our own benches, and bought our own equipment. An incubator certainly would have been cheaper,” adds Dr. Long. The Ann Arbor community is starting to address the need for incubator space.

In Kalamazoo, scientists who once worked for Pharmacia have launched several new companies. When Pfizer acquired Pharmacia in 2003, some scientists chose to stay in Michigan, rather than relocate to other Pfizer sites. The types of companies sprouting up in Kalamazoo differ from those in Ann Arbor, where researchers often seek to discover new drugs or therapeutics.

Such discovery-based companies tend to sell out, if successful, or are absorbed by larger firms. In contrast, service-oriented companies are forming around Kalamazoo, and they offer expertise in analytical chemistry, medicinal chemistry, toxicology, and high throughput screening skills.

“These companies plan to stay in business and create jobs,” says Robert Gadwood, Ph.D., a former Pharmacia scientist and co-founder and president of Kalexsyn (www. kalexsyn.com) in Kalamazoo.

New companies in the Kalamazoo area are aided by the Southwest Michigan Innovation Center, a life sciences incubator located at Western Michigan University (WMU), and run by Southwest Michigan First, a local economic development group.

To retain the brain power of former Pharmacia scientists, in 2003 the state of Michigan established the Bioscience Research and Commercialization Center (BBRC) at WMU. BBRC “funds start-ups and finds equipment, consulting services, and business services,” says Matt Kurz, associate vp of university relations at WMU.

The BBRC has funded nine companies located in the Southwest Michigan Innovation Center, and former Pharmacia scientists launched eight of them.

The life sciences industry “is flourishing in Ann Arbor and Kalamazoo, and it’s starting to blossom in Grand Rapids,” says Tim Damon, managing director of business marketing at the Michigan Economic Development Corporation (MEDC) in Lansing.

In 1999, the state government established the Michigan Life Sciences Corridor with income derived from the settlement of Michigan’s suit against tobacco companies. MEDC administers the funds. The widely successful program “has funded up to 100 companies,” says Damon.

Promoters of the life sciences industry in Grand Rapids are out to attract medical device companies. “Grand Rapids traditionally has been a manufacturing center and the expertise in some areas, like injecting plastics, extends well to medical devices,” says Matt Dugener, executive director of the West Michigan Science & Technology Initiative at Grand Valley State University.

For instance, Avalon Laboratories, a manufacturer of heart cannulae, is located in Grand Rapids.

Overall, the life sciences industry in Michigan employs about 32,000 people, and has grown 27% in employment and 32% in number of companies since 2000. Some representative companies are described here.

Dow Legacy

The legacy of Dow Chemical continues in Midland, where Dowpharma (www.dowpharma. com), a business unit of Dow Chemical Co., opened a large oligonucleotide manufacturing facility in the world. The first batches of oligonucleotides were processed in January 2004.

The cGMP plant is capable of producing kilogram amounts of oligonucleotides, as well as smaller quantities for toxicology and clinical trials. Dowpharma experts work with small biotechnology start-ups and large pharmaceutical companies who have identified a molecule or sequence that requires process development.

Oligonucleotide manufacturing is a new field, and Dowpharma offers advantages over smaller competitors. Because of their connections to Dow Chemical, “if you do business with us today, we’ll be here a year from now when you need a new supply of your oligonucleotide,” says Mark Sullivan, business director for nucleic acid medicines at Dowpharma. Customers also benefit from Dow’s analytical science capabilities, which can be used to perfect oligonucleotides.

Dendritic NanoTechnologies (www.dnanotech.com) in Mt. Pleasant develops dendritic polymers, particles so small that materials are built atom by atom. “Our dendrimer architecture is a platform technology that can be applied to therapeutics and diagnostics, including drug delivery, transfection reagents, or contrast agents for imaging,” says Robert Berry, Ph.D., CEO of the two-year-old company.

“As nanotechnology moves into the biotechnology and pharmaceutical markets, our dendrimers will be key players because they are reproducible and precise,” says Dr. Berry. Current product development includes protein, antibody, and anti-inflammatory drug delivery methods and new diagnostic solutions for enhancing MRIs.

University Spin-offs

Although several therapies slow bone loss, only one stimulates new bone formation. Unfortunately, it is a peptide that must be injected daily. An oral medication that promotes bone formation was discovered at Velcura Therapeutics.

“We focus on the discovery of drugs to stimulate bone formation,” says Dr. Long. The same compounds that prevent osteoporosis may also heal fractures or treat periodontal disease.

Researchers at Velcura discovered a method to grow human bone cells into three-dimensional aggregates in tissue culture dishes. This allows them to investigate genes, cell pathways, and drug targets associated with new bone formation.

This led to the identification of 1,250 genes associated with new bone formation, which Velcura scientists made into a customized DNA microarray, the OsteoChip. Velcura researchers use the OsteoChip to screen drug leads discovered at other biopharmaceutical companies, and they also are creating an in-house pipeline of promising drug leads.

The first is a small drug molecule that stimulates bone formation, and Velcura plans to file an IND by the end of 2005. “The Holy Grail of osteoporosis drugs is to find a pill,” says Dr. Long, since injections are dreaded by patients.

The three-year-old NanoBio (www.nanobio.com) develops and commercializes topical nanoemulsions invented in the laboratory of James Baker, M.D., at the University of Michigan Medical School. The nanoemulsions, which contain water, detergents, and soybean oil, kill viruses, bacteria, fungi, and parasites by disrupting their membranes and causing them to burst.

The concept is an old one in microbiology with a new twist, the high-energy nanoemulsions work at very low concentrations. So they can be applied topically without causing irritation or other side effects. The company’s broad platform approach, called NanoStat, also destroys anthrax spores, Ebola virus, and HIV, according to laboratory experiments.

NanoBio’s first target is herpes simplex 1 virus that triggers cold sores. Animal models show that a “topical nanoemulsion kills the virus where it erupts and produces ulcers,” says Mary Flack, M.D., director of clinical and regulatory affairs.

Early results from a Phase II trial of 300 patients suggests that the nanoemulsion product applied to cold sores brings very early healing. Another Phase II trial will start soon to evaluate a nanoemulsion to treat toenail fungus. A trial of genital herpes also is planned.

In addition, nanoemulsions appear to enhance the effectiveness of vaccines. For example, when the influenza virus is mixed with a nanoemulsion, the virus is killed. “That mixture used as a vaccine is many times more antigenic than the virus alone,” says Dr. Flack.

Rawle Hollingsworth, Ph.D., a chemistry professor at Michigan State University (MSU) in East Lansing, found AFID Therapeutics (www.afidtherapeutics.com) in 2003. AFID (short for Advanced Frontiers in Drug Design, Discovery, Development, and Delivery) specializes in the synthetic chemistry of carbohydrate-based small molecule therapeutics.

“Carbohydrate-based chemistry platforms are rare, because carbohydrates are difficult and unyielding, and it’s hard to make drugs for them,” says Dr. Hollingsworth, CSO. Yet carbohydrates are implicated in many diseases, including cancer and autoimmune disorders.

For instance, “when cells become cancerous, the carbohydrate chemistry on the surface changes,” notes Dr. Hollingsworth.

Chemists for Hire

When Pfizer moved the medicinal chemistry operations that were once part of Pharmacia out of Kalamazoo in 2003, two experienced medicinal chemists, Dr. Gadwood and David Zimmer-mann, stayed behind and founded Kalexsyn.

The company provides medicinal and synthetic chemistry services to other drug companies. “Our largest clients are in California,” says Dr. Gadwood, president and COO. Of the 21 employees at Kalexsyn (short for Kalamazoo Experts in Synthesis), 13 are medicinal chemists.

Customers can contract for the synthesis of compounds on a fee-for-service basis, or Kalexsyn’s chemists may partner with project teams at other companies for several months. “Chemists are infrastructure intensive,” says Dr. Gadwood. “We need fume hoods and costly equipment like NMRs and mass specs.” Rather than small companies investing in such space and equipment, Kalexsyn performs the work at their facility.

AureoGen Biosciences (www. aureogen.com) in Kalamazoo was also established by former Pharmacia scientists. They are engineering the genomes of microbes to make drug compounds with desired characteristics. A number of successful drugs, such as penicillin, cyclosporin, and vancomycin, are natural products made by bacteria and fungi.

These drugs also have side effects, yet it is difficult to modify them chemically to reduce toxic problems. “They have a chemical complexity that makes it hard to modify them to improve them,” says Ake Elhammer, Ph.D., CEO at AureoGen.

The microorganisms contain large enzyme complexes, called nonribosomal peptide synthetase (NRPS) complexes, which direct the synthesis of cyclic peptides. The NRPS complexes form an assembly line process to construct cyclic peptides from amino acids.

Scientists at AureoGen engineer microorganisms to synthesize cyclic peptides with features that previously had to be introduced chemically. Or microorganisms can be engineered to produce entirely novel molecules. AureoGen is “working on producing totally new antibiotics and antifungal compounds,” says Dr. Elhammer.

East Coast, West Coast

Asterand (www.asterand.com) is one of the few life science companies located in Detroit on the campus of Wayne State University in eastern Michigan. Founded five years ago, Asterand employs 53 workers. “We create about one new high-paying job in Detroit for each month of our existence,” boasts Randall Charlton, COO, who plans to hire 20 more people in the next year.

Asterand collects and banks human tissue and blood samples needed by genomic and proteomic researchers. Its samples are used in the drug discovery process to identify genes and proteins that cause diseases. Researchers at biotechnology and pharmaceutical companies can use Asterand’s samples to find diagnostic markers that differ between normal and disease tissue.

Asterand obtains samples from 44 hospitals and clinics worldwide through a dedicated network. When they arrive at Asterand, “each sample is tested for RNA quality, and we cut slides for histology,” says Charlton.

On the shores of Lake Michigan in western Michigan, GeneGo (www.genego.com) in St. Joseph, designs software for a systems biology approach to drug discovery. The company’s first product, MetaCore, is a software platform for the analysis of high throughput data based on human pathways curated from the scientific literature. The software generates networks and maps of the connections between components.

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