Issue Date: April 11, 2011
Signed, Sealed, Stored, Delivered
BioFocus, A U.K.-based drug discovery services firm, is pleasantly surprised by the rising prospects of its compound management division, Compound Focus. The South San Francisco operation—which specializes in acquiring, formatting, storing, and shipping compound libraries for drug research labs—has new contracts with the Danish drug firm Lundbeck, the University of Nottingham, and eMolecules, an online market for compounds. BioFocus itself recently contracted with Compound Focus to manage its compound library.
“If you asked me five years ago I would have said there is not much of a fit between BioFocus and Compound Focus,” says Richard Gordon, senior director of marketing for BioFocus. That was when his company’s parent firm, Galapagos, merged BioFocus with a compound management operation it acquired as part of Discovery Partners International. “But the market has changed in the last three years to where they are now a strategic part of our company.”
With the increase in drug discovery efforts led by government and private institutions, the drop-off in venture capital support for biotech firms, and the downsizing of research organizations at large drug companies, a market for compound management services is emerging. And Gordon points to Compound Focus’ work with its cornerstone client, the National Institutes of Health, as the formative engine.
The California operation started as the combinatorial chemistry unit of Axys Pharmaceuticals in 1998. “But Axys decided to focus on drug discovery and spun us off,” recalls Scott Snyder, general manager of Compound Focus. The group was acquired by Discovery Partners in 2000 and became part of a sprawling drug discovery services organization.
“Most of the activity was in making compounds,” Snyder says. “We had as many as 100 people here,” and many were synthetic chemists designing libraries. The biggest client was Pfizer, which contracted with several services firms to work on its compound library program. “Then Pfizer halted the project. The chemistry operations in South San Francisco were closed,” he says. That left the compound management group in South San Francisco with a staff of about 20 and one big job.
NIH’s Molecular Libraries Program was one of the first initiatives undertaken by the agency as part of its Roadmap for Medical Research, which is now supported by the NIH Common Fund, according to Jamie Driscoll, project officer for NIH’s Molecular Libraries Small Molecule Repository. “Our goal was to develop molecular probes for novel biological targets by giving academic investigators access to high-throughput screening centers and a high-quality library of compounds to screen.” NIH had never done anything like it. Neither had the 13 bidders on the project, including Compound Focus.
“When we first started this, we didn’t realize the amount of work that would be involved,” Driscoll says. “We needed to identify compounds, acquire them, test them for quality, and start getting them out to our screening centers as soon as possible.”
Compound Focus began managing NIH’s Molecular Libraries Program in 2004, just prior to the Galapagos acquisition. The company “played a big role in putting together the commercial component of the collection,” Driscoll says. Now housing an NIH library of about 365,000 compounds, Compound Focus is primarily involved with screening, formatting, and routing compounds to nine NIH screening centers, she says.
Handling the NIH contract required significant investment in storage and analytical systems, Snyder says. Most recently, the company purchased eight compound storage systems that had been at the former Wyeth campus in Collegeville, Pa. This will add capacity for 800,000 compounds. “We are expanding and investing in high-end commercial-grade automation,” he says. “We see this as a competitive advantage—we are using brand-name equipment to do the work, the same as pharma and biopharma companies use.”
Building on its success with NIH, Compound Focus currently stores about 1.5 million compounds for customers and has the capacity to store 4 million. In all, BioFocus has invested about $14 million outfitting its compound management service, $9 million of which was spent on technology at its 23,000-sq-ft facility.
Although jobs vary by client, a typical contract begins with taking in compounds from the client or a source with which the client is working; running quality control tests to check weight, solubility, and purity; creating a working storage arrangement; and plating and shipping compounds on request. “We are like a very specialized warehouse,” says Mike Stock, operations manager at Compound Focus. “Really, logistics is what we do.”
The Wyeth equipment will help Compound Focus meet the demand resulting from contracts with European customers. The deal signed late last year with Lundbeck is a three-year agreement under which Compound Focus will manage the Danish firm’s liquid chemical library, distributing screening sets to centers in the U.S. and Europe.
For the University of Nottingham, the Compound Focus group will select, source, acquire, and reformat the university’s Managed Chemical Compound Collection, a new library supporting drug discovery research. The university also signed on for computational chemistry services from BioFocus in the U.K.
According to Christian Thomsen, vice president for biological research at Lundbeck, the drug firm had managed its liquids library on its own. It was able to manage high-throughput screening, but transporting compounds to partners’ sites created difficulties. “Increased outsourcing, including to China, required us to ship larger volumes and generate focused libraries on the fly,” he says. That consumed a lot of internal resources, Thomsen says.
Compound Focus’ revenues are growing at about 10% annually, Stock says. Recent momentum bodes well for growth in Europe, he notes. Compound Focus is also looking to expand its business with small pharma and biopharma firms.
The emergence of online compound marketing presents another growth avenue, and the deal with eMolecules, signed in October, positions Compound Focus with a pioneer in the field. Under the agreement, eMolecules’ customers will have the option of having compounds purchased online from multiple sources reformatted, analyzed for quality, and shipped by Compound Focus.
Stock says Compound Focus’ main competition is in-house compound management, although companies including Sigma-Aldrich and ASDI, a contract research organization in Newark, Del., also offer compound management services. Compound Focus is hoping to distinguish itself by providing a broad range of services at a level of quality comparable with major drug firms.
But the group, which currently employs 28 people, intends to keep to its core business as a compound management service. Maintaining this focus is a good strategy, argues BioFocus’ Gordon. “I firmly believe that compound management will be a big area of outsourcing in the future.”
NIH’s Driscoll, one of the first to identify the benefits of outsourcing compound management, agrees. “As the years have gone by, I’ve heard more and more discussion of outsourcing compound management,” she says. “People are coming to the same conclusion. We need expertise to support our programs, but we don’t want to build it in-house.”
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