Start-Up Companies Rise From The Ashes Of Corporate Cutbacks

As the wave of consolidation washes over the pharmaceutical industry, it is leaving behind a sizable pool of human resources, particularly experienced scientists. While many researchers shift to other drug or biotechnology firms, some are combining their talents to form start-up companies that could one day become their former employers' competitors or collaborators.

That transition from scientist to business owner can be daunting. Sometimes, though, all it takes is some words of encouragement—and a stack of "how to" books—to start fresh.

Kim Albizati, cofounder and chief executive officer of BioVerdant, a San Diego-based biocatalysis firm, took the leap less than two years ago after Pfizer laid off about 250 people at its site in La Jolla, Calif. The entire group of 60 to 65 process chemists that Albizati led was cut, and although Pfizer offered to place a number of them at other sites across the country, few were interested in leaving San Diego.

Albizati looked around and realized the wealth of expertise at his disposal and a potential need in the market for that particular skill set, setting in motion what was to become BioVerdant.

"The industry is consolidating, and there is a big drive for cost-cutting, especially in the manufacturing area," he says. His process development group at Pfizer had focused on using enzymatic biotransformation to devise more efficient, greener, and less expensive manufacturing routes. "We decided we could do for other companies what we had been doing internally for Pfizer," he says.

But Albizati and partners Junhua (Alex) Tao and Tony Tibbetts, who also worked at the La Jolla site, had no experience in starting a business. "I'm a science jock, and my two cofounders are science jocks," he jokes. "We knew nothing about the investment community or starting a company."

The one thing they quickly realized was that they were going to need "multimillions" to run the business. "We weren't going to do this in a garage," Albizati notes. He and his cofounders bought 10 books on venture capital to start learning about how to come up with a business plan.

Another critical step was reaching out to Peppi Prasit, a former Merck scientist who had started his own biotech company. "We had a key lunch with him one day," Albizati recalls. "He told us his story, and we realized we could put a company together in a few months."

Prasit's story is strikingly similar to Albizati's. He had been at Merck's research lab in San Diego, where he helped develop top-selling drugs, including Vioxx, Arcoxia, and Singulair. When Merck shuttered the site in June 2005, Prasit, like many of his colleagues, was firmly rooted in San Diego. Rather than relocating to one of Merck's East Coast sites, he began knocking on the doors of venture capitalists.

"You look around and see that you've hired and trained these people, and it's a shame that they will be dispersed through every biotech company in the San Diego area," Prasit says. He and his cofounders, also Merck veterans, thought, "Why not start something?" he says.

The end result was Amira Pharmaceuticals, where Prasit is now the chief scientific officer. With the help of business acumen and resources from his financial backers, he managed to open the company for business in just six weeks.

Just 18 months after its inception, Amira is poised to file the European equivalent of an Investigational New Drug Application, for an inflammation treatment. A U.S. filing will follow, he adds.

Prasit's success in lining up financial backers encouraged the BioVerdant founders. "Three of us started meeting on a regular basis at our homes," Albizati explains. After putting together a budget spreadsheet and a slide presentation, Albizati and his cofounders started talking to investors and managed to secure funding. They also managed to recruit a seasoned biotech executive, Sandy Madigan, who helped bridge the founders' science expertise to the business world.

Though it is early days for BioVerdant—the company was incorporated in February—it is seeing a lot of interest from potential customers, Albizati says. Of the company's 16 employees, 10 had worked together at Pfizer, providing a ready-made synergy that, along with a unique technology offering, has been a real asset, he adds.

A new batch of La Jolla scientists has been affected by the layoffs Pfizer announced in January, and Albizati has been trying to encourage former colleagues to think beyond big pharma to start up their own ventures. "We've been having a blast," he says. "This had been more fun than anything I could have imagined. When you're forced to think outside the box, you realize it isn't that hard."