Working The Library

Little known Merlion Pharmaceuticals quietly sits on what may be a gold mine: the world's largest and most diverse collection of natural products.

The collection comprises 100,000 organisms and more than 30,000 plant samples from more than 100 countries, according to Chris Molloy, MerLion's head of business development. "There are decades of work in our library," he says.

Isao Yanagisawa, senior vice president of drug discovery research at Japan's Astellas Pharma, is impressed, calling MerLion "a remarkable natural products research company with both screening technology and a qualified library." Astellas, which resulted from the merger of Yamanouchi Pharmaceutical and Fujisawa Pharmaceutical last spring, started collaborating with MerLion a few months ago.

Pharmaceutical companies come to MerLion with validated drug targets that MerLion exposes to its natural products library in order to generate drug leads. Tony Buss, the firm's president and chief executive officer, says its other core asset is an ability to perform high-throughput screening. "Few people outside large pharmaceutical companies can do this," he says.

Buss came to Singapore in 2000 to head the Centre for Natural Product Research of the Institute of Molecular & Cell Biology (IMCB).

MerLion was formed two years later through the privatization of the natural products unit. GlaxoSmithKline simultaneously sold its own library of natural products to MerLion. At the time, GSK felt that natural products research was not a core activity. "We're delighted they took this view," Buss says. MerLion then proceeded to physically move the entire GSK collection from England and Spain.

The drug giant, however, remains a shareholder in MerLion, and key managers of the Singapore outfit are former GSK employees. For example, MerLion's chairman is Richard Sykes, the former GSK chairman. Before joining MerLion, Molloy was for 14 years in preclinical drug discovery with GSK. And Buss was a senior researcher at GSK for 14 years.

The library requires constant loving care. Some of MerLion's 67 staff members are tasked with constantly replenishing and expanding it. They do this by nurturing fermentation broths or by extracting samples from plants and biomass delivered to the firm. "It's a living collection," Molloy says. MerLion has copied the entire collection for safety and stores it in a separate location in Singapore.

Drug companies often ask MerLion to expose their targets to the entire collection. Some of the work is done by human technicians, but it is largely automated.

Although the companies that work with MerLion pay some of the expenses involved, the Singapore firm's prime source of income is the royalties and lump sum payments it receives when it identifies promising drug leads. "We don't have customers," Molloy says. "It's a collaboration on a risk-share basis."

So far, most of MerLion's funding has been from its shareholders. The founding ones are GSK, Singapore's Economic Development Board, and IMCB. In 2002, when it was launched, MerLion raised an additional $13.5 million in private equity.

Buss says MerLion is now preparing to list itself on a stock exchange, most likely the Tokyo exchange. Other than ensuring the continuity of operations, cash from the listing will be used to further work on some of MerLion's own drug leads, taking them as far as Phase II clinical trials.

According to Molloy, there was a period perhaps 10 years ago when large pharmaceutical companies believed that natural products would no longer be a major source of new drugs. But this sentiment has changed. "There's a renaissance in natural products," he says. "It's an industry-wide recognition that natural products remain a vital source of novel chemistry and potential drug candidates."

If that belief endures, MerLion is unlikely to remain the small company that it is.