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October 26, 2003
New Biotech Start-Up in Buffalo, NY
On October 26, The Buffalo News reported that Dr. Allen Barnett will become CEO of Kinex Pharmaceuticals, a company working to develop a new generation of cancer drugs. Dr. Barnett, former vice president of technology acquisition for New Jersey-based Schering-Plough, led the development of the allergy drug Claritin. Carly Cottone-Collard, the 11-year-old inspiration for Carly's Club at Roswell Park Cancer Institute, was Dr. Barnett's adopted granddaughter. She died of brain cancer in 2002.
The Buffalo News reported that the local company has licensed technology from the University at Buffalo department of chemistry to develop a line of cancer drugs attacking enzymes called kinases. The chemical compounds, developed by Associate Professor David G. Hangauer, have shown an ability to bind to the kinase Src (pronounced "sarc") and inhibit tumor growth. Several drug companies are rushing to develop kinase inhibitors as the next generation of cancer drugs. Imclone's potential blockbuster drug Erbitux, which caught Martha Stewart in an insider trading scandal, is a kinase inhibitor. Hangauer worked for Merck before joining UB in 1989. His medicinal research has focused on kinases for the last 10 years. Hangauer's work involves attacking kinases along a different chemical pathway than those being developed by other companies.
According to Buffalo News reporter Chet Bridger, Johnson Y.N. Lau, the former chairman and CEO of California-based Ribapharm, also has taken a role with the new Buffalo company. Ribapharm raised $300 million of equity several years ago in the second-largest initial public offering for any American biotech firm, trailing only Amgen. The firm has since been reacquired by ICN Pharmaceuticals. Lau will serve as executive chairman but remain based in Newport Beach, Calif. He is a dealmaker with access to investment bankers, venture capitalists and pharmaceutical executives. "I have made a commitment that when the company matures, if they want me to take a day-to-day role, I will step in and relocate to Buffalo," said Lau, who became involved through his friendship with Barnett. The industry veterans lend additional credibility to Buffalo's effort to build a life sciences industry around the $145 million research complex being constructed on the Buffalo Niagara Medical Campus. "If they've got the VP of technology from Schering, they've got a seasoned pro. It's pretty darn good to have somebody of that caliber agree to be the CEO of your start-up company. . . . Right away, that's something with credibility," said Dr. Ron Cohen, a Westchester County biotech executive who heads the New York Biotechnology Association.
Bridger reports that developing the company in Buffalo is part of a new strategy being promoted by the State University of New York, along with multimillion-dollar state investments in research centers in Albany, Syracuse and Buffalo. In the past, UB professors typically licensed discoveries to out-of-state companies and collected a small royalty stream. Barnett, who retired after a 33-year career at Schering-Plough, did his doctoral work at the UB School of Pharmacy. His wife is from Buffalo. The couple owns a house near Fort Erie, and their daughter and grandchildren live here. Chuck and CarolAnn Collard of East Amherst adopted Carly after both the girl's birth parents died of cancer before reaching age 40. Carly, later diagnosed with a brain tumor, became an inspiration in the Roswell Park community for living bravely with the illness and treatment. Barnett also led early-stage development of Clarinex, the sedative Doral and the cholesterol-lowering agent Zetia. The four drugs have generated billions of dollars in annual revenue. He said Hangauer's work shows great potential for a drug pipeline, because there are about 1,000 kinases in the human body. "This is not just one series of compounds or one drug that David is working on. We see the pipeline for a series of drugs," Barnett said. "Whenever I take on something, I do whatever it takes to make it work. And I'm very committed to this."
The Buffalo News story revealed that Kinex will launch its business plan Wednesday with an invitation-only event for venture capitalists at the Buffalo Club. The company wants to raise $6 million, which could fund the business for 24 to 30 months. The company will work from 3,200 square feet of lab and office space at the corner of Main and Virginia streets. About 12 employees will be hired in the first two years, including organic chemists, lab technicians, a controller and an administrative assistant. Lyn M. Dyster, who founded the local biotech company Gencyte, will serve as vice president of operations and business development. Hangauer is vice president of research and development. The company will screen chemical compounds and conduct biological and toxicity studies. Those chemical compounds will be produced by a contractor, possibly Albany Molecular. Kinex wants to have a drug prototype ready for human testing within two years. If the company is successful, it could ultimately strike a deal with a big drug company to manufacture its first drug. The deal would bring a cash payment and royalty stream. Kinex would use the money to build infrastructure in Buffalo, potentially including drug research and manufacturing plants, Barnett said. "The ultimate aim is to build this company in Buffalo, not to just be a supplier for big pharmaceutical companies," Barnett said.
According to The Buffalo News, the company faces many risks. Most new drugs being developed ultimately fail. Other major drug and biotech companies, including Novartis and Genentech, are already developing kinase inhibitors. There are two main ways to bind chemical compounds to kinases. All kinases have a substrate called ATP, and each has a unique protein. As an analogy, think of 1,000 unique sandwiches in the human body. Drug companies have figured out ways to attach chemicals to the bread, meaning the drug has side effects on other sandwiches. Hangauer is one of the first researchers to figure out how to get at the unique filling of the sandwich. His compounds have shown an ability to specifically inhibit the Src enzyme by binding at the peptide level, to stop the growth and spread of tumors, without negatively affecting other kinases. "I'm as confident as one can be at this point," Hangauer said. "What we can say at this point is that our drug prototypes have shown two things. They've shown good activity against cells from a wide range of cancers, including activity against tumors removed directly from patients here in Buffalo. "They've also shown no toxicity in mice. We've administered this drug to mice, at extremely high doses, and not had any mice die or show serious side effects. If I administered the same level dosage of any cancer drug on the market today, all the mice would die." Lau said he's involved because he considers Kinex a good financial opportunity. He plans to invest some of his own money. "At this point in my career, I want to work with a winner. Anything I get involved with, I want to make sure it has a good chance of being a winner," he said. "The more I evaluate this, the more I believe this is a substantial opportunity."