By Shawn Lawrence
A new Canadian biopharmaceutical company with past ties to a now defunct company is launching itself with a new focus. On September 2, 2008, the remnants of Hemosol Corporation, a company and facility which went into receivership in 2005 officially turned the corner, reinventing itself as Therapure Biopharma Inc. and opening its doors for business.
It’s not what was initially envisioned for the facility when it was built in 2003 by Hemosol Corporation, nor for the company which was initially established in 1993.
Yet after years of maintaining market silence, the company and the facility has emerged intact and with a new purpose. In its new incarnation, Therapure Biopharma Inc. primary business is biopharmaceutical manufacturing. Additionally, they’ve developed an extensive pipeline of products based on improving drug transport delivery by developing hemoglobin-conjugated therapeutics to treat infectious disease, cancer and anemia, in essence a secondary business still tied to its biotech roots under its former branding.
Some see this as transformation; others see it as something entirely new.
Regardless, it represents a case study of how a small biotech firm can come back from the brink with the right strategy.
Two factors have played a role in remaking the company according to Therapure Biopharma president and CEO Tom Wellner.
Firstly, the company was rescued by Catalyst Fund Limited Partnership II, a billion dollar private equity fund based in Toronto and managed by The Catalyst Capital Group Inc. Along with financial stability, a four man management team that was put together over the course of 2008 has done its part in bringing the company along. Wellner along with vice president finance and chief financial officer Peter Winkley, who joined the company from MDS, are the relative newcomers to the team. They are joined by vice president, operations Dirk Alkema and vice president, drug development and chief scientific officer David Bell who were both with the previous Hemosol business.
“Our business management team is a compelling strength to this company,” stated Wellner who joined the company after spending 20 years with Eli Lilly & Co. “We’re all Canadians, and we all have an idea of what it takes to make something work in this marketplace because of our extensive experience.”
The key to making the management team work, states Wellner, is respecting the past but at the same time focusing on the future. This entails sharing ideas with one another and being open to suggestions.
One of the first tasks the four man group actually took together was in re-branding the company and creating its new image.
“We got together as a team and looked at a whole series of expressions of what we thought we were all about and at the end of it, we found we were about therapeutic proteins and our sweet spot is downstream purification, and hence we came up with the concept of Therapure Biopharma,” said Wellner.
Now collectively they hope to turn the 130,000 sq. ft facility into a hub of activity, expanding on its contract service portfolio, and moving its own products down the pipeline.
“We had the idea of continuing on with our own activities and absorbing activities from other companies before we even went into receivership. It became more formalized when we looked at where this business can go in July of 2007, and we came out with a press release in July of 2007 announcing that we would provide manufacturing services, licensing and acquisition. We followed that up in the second half of that year with a hard campaign to land contracts based on fit to the facility and that’s when that plan sort of took off,” stated Alkema.
A lot of the credit for making the plan work goes to the introduction of a new business plan catered to making the best possible use of the facility.
“We’ve made the facility more flexible than what it was originally intended for,” states Wellner. “It’s modern; it’s flexible and fully scalable.”
He adds that it is amenable to a diverse range of manufacturing scenarios including vaccine production, fermentation type operations and protein purification, built to FDA, EMEA and HPB standards for the aseptic handling and purification of proteins. The facility also incorporates 26,000 square feet of clean space and an additional 12,500 square feet of laboratories for research and development, in-process and finished product, analytical and microbiological testing and stability studies.
Which leads to another strength, the company benefits from a science team that includes engineers, Master’s and PhD level scientists from major institutions like the University of Toronto, Sick Kids Hospital and the University Health Network.
“We’ve been able to make the best of our assets. One is this fantastic facility, but we’ve retained a number of the key scientists. David’s (Bell) team and the scientists that are here are experts, because of all the work that they did on hemoglobin and protein development over the years. They’re able to do development and make the necessary changes to the protein, taking up specs for manufacturing and making things more efficient. That’s hugely beneficial to biotech companies that are trying to get their products through to the next phase of development,” stated Wellner.
While providing development and manufacturing services represent a big portion of Therapure’s business, all four members of the management team are adamant that the company is more than just a straight contract manufacturing organization (CMO).
“We do a lot more than that, we don’t just replicate a recipe, rather we make the recipe better. We deal with biologics, and anything from any mammalian source and manufacturing is critical in that business. We also do a combination of other services that clients require because we have the capability to do it.
It is unique in Canada and unique in North America from the size and scale of which things we can do in protein purification,” said Wellner.
David Bell, the man behind much of the science that goes on at the facility, explained there’s also another piece to what they’re able to do as a CMO,
“It’s the whole idea of going from the small scale development work to GMP to clinical and then manufacturing. Most of these projects work in one of those segments. We feel we can take our clients right from very beginning all the way to the very end right to commercial. We can basically work with companies from the bench all the way up through to market which is a unique advantage,” said Bell.
The crux of the business is focused on helping and partnering with biotech companies to help them with that next step towards commercialization. Not surprisingly the company is already striking some deals. This includes teaming up with Biovectra Inc. in developing specialty biologics as well as collaborating with a large European fractioner for similar services. Likewise, Therapure has tapped into its expertise in cell culture, partnering with Induce Biologics Inc. to produce and manufacture growth factors for stimulating bone regeneration. As per this agreement, Therapure will aid in the design and development of scaled-up biologic manufacturing processes to advance the initial research and development conducted by Induce. More deals are on the way according to Wellner.
Likewise, Alkema feels the facility has positioned the company to cater to niche applications as well as filling a void for Canadian biotech companies in general.
“We operate in an area, purification, that’s not well addressed, generally most activities are especially focused on fermentation, and purification gets built on afterwards. Another thing is rather than having small biotech’s going to the U.S. for manufacturing, they will be coming here,” said Alkema.
Moreover, therapeutic proteins already represent one-third of all new drugs, and biological proteins have been found to have higher efficacy and fewer side effects than other pharmaceutical products, as they can be specifically targeted to address the cause of disease, rather than the treatment of its symptoms.
While the trend as such is on the protein side, Canadian researchers and companies in this field already face major challenges in that while they are successful at reaching medical discoveries in the laboratory, they have less expertise when it comes to translating those discoveries into globally available commercial products. Quite often they are forced into seeking resources outside of Canada in order to launch commercially.
The process of manufacturing and regulating production of protein-based therapeutics is highly complex and many Canadian biotech companies struggle with access to capital and lack the in-house production capabilities. On average it takes seven to 10 years, and over a billion dollars to bring a product to market.
“Our hope is that Therapure will fill this gap and pave the way for Canadian innovators to continue developing protein-based therapies, university students and biotech companies need access to expertise to properly formulate, purify, manufacture and distribute the biological protein so that it can be used at the patient level-this is where Therapure Biopharma will have a huge impact globally,” said Wellner.
Moreover by partnering, Therapure not only wants to help biotechnology companies achieve the objectives they set for themselves in sharing costs and risks, but ultimately Therapure wants to share in the opportunity.
“It’s a unique part of our business model. In some cases we might put at risk our profit margin for a particular development or manufacturing services contract and take a stake in that company. We try and balance off the types of projects that we do. A straight CMO tends to get caught up in scheduling and low margins and one contract falling off and trying to fit in an exact contract like it. They don’t get as attached to their clients because its an in and out shorter term arrangement. We’re looking for clients to be with us for a longer period of time and we’re willing to invest and grow with them, and hopefully towards mutual success” said Wellner.
As alluded to, the company hasn’t abandoned the original idea of bringing its own products to market. The company’s researchers have been developing an extensive pipeline of products of their own based on the unique biological properties of blood’s most abundant protein, hemoglobin. This work has led to the development of advanced technologies and products applicable in the treatment of infectious disease, cancer and anemia.
They’re doing this specifically through their own proprietary purification techniques and impressive formulation, fill and finish expertise in biologics handling.
“We have a range of products, but the ones that we’re focused on right now fall under three areas. One area is drug delivery, and the use of proteins as drug carriers. It’s an advanced field but we think that we have our own unique approach to treating certain diseases. The other area is our own technology, the protein purification; it’s the thing that we’ve focused on as a manufacturer. And the third area is anemia, which is an area we’ve worked in for a long time. We have developed an antibody to the marker that stimulates red blood cell production in a way that is complimentary. It has high promise in a very well defined market,” stated Bell.
Collectively the management team feels that this will be an excellent opportunity for either a large research based pharmaceutical company or for one of the generic companies to partner with Therapure.
“Our plan is to take it through various stages of proof of concept, from discovery through to pre-clinical, through to toxicity, and at that point we think that there will be a licensing partner,” explained Wellner, while adding that this approach will apply to all the products the company develops.
Any fears of this part of the venture failing like its predecessor are quelled by the fact that this time the company has its manufacturing services to draw upon and more importantly that it isn’t going it alone. The company is of course privately owned by Catalyst Capital Group, a Toronto-based private equity group that specializes in asset turnarounds. It’s a relationship that Wellner and Winkley says is working very well.
“It is a bit of a unique investment for Catalyst. We’re a startup that just happened to have a $150 million plant already built and so it’s been very encouraging that they’ve recognized that there is some investment needed. And financially we’re realizing you can’t cut costs by a company that’s being run by a receiver because they’ve pretty much already done that,” explained Winkley.
Wellner expands on this idea, “In this business you have to have a long horizon and an iron stomach, and they’ve been very good partners. They’ve listened to us, they’ve invested in us personally, they have responded when we’ve asked them to invest in new capital for different parts of the facility. That’s one of the things that makes us different from most biotech companies, is we don’t have to run around the countryside every six months doing a fundraising or financing. And in today’s market, that’s a good thing.”