PharmaTelevision - Martin Buckland talks about the great potential created by the recent merger between SuperGen Inc. and Astex Therapeutics

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Video title: Martin Buckland talks about the great potential created by the recent merger between SuperGen Inc. and Astex Therapeutics

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In this episode of PharmaTelevision News Review, Fintan Walton talks to Martin Buckland, CBO of Astex Therapeutics

Origin and corporate partners

Fintan Walton:

Hello and welcome to PharmaTelevision News Review here at BioTrinity 2011. On this show I have Martin Buckland, who is Chief Business Officer at a company called Astex Therapeutics based in Cambridge in the UK, welcome to the show.

Martin Buckland:

Thank you very much Fintan, it's good to see you again.

Fintan Walton:

Astex Therapeutics, is a Cambridge based biotechnology company a private company currently, tell me little bit about the origins of Astex itself and particularly who the original backers were and also what is different about Astex versus all the other biotech company?

Martin Buckland:

Absolutely, very happy to do that. So the company was formed originally in 1999 and the that the three co-founders were two professors from the University of Cambridge and Harren Jhoti who at the time was Head of Structural Biology at GlaxoWellcome. So it was founded by Harren, by Professor Sir Tom Blundell from the University and also by Professor Chris Abell from the Chemistry Department of the University. So the company was incorporated in 1999 we started operations in 2000 the original backers for the company were two key venture capital groups Abingworth Management Limited and Oxford Bioscience Partners in Boston, in the US. We did an initial fund raising in 2001 and that brought in some additional investors into our Series A round including Gimv, and Alta Partners, and Advent International and then in 2003 we did a Series B round via the acquisition of a German company called Metagen [PharmaDeals ID = 14269] and that brought in amongst others Apax Partners as a venture capital investor and it also brought in Schering AG [PharmaDeals ID = 12799] as a first of our corporate partners and corporate investors. And then in 2007 on the back of a deal that we did with Novartis [PharmaDeals ID = 22815] we started a Series C round which was lead by Novartis and now we have Novartis, we have Johnson & Johnson Development Corporation, [PharmaDeals ID = 32070] [PharmaDeals ID = 12524] we also have GSK [PharmaDeals ID = 34138] [PharmaDeals ID = 27062] shareholders all of those have come in on the back of deals that we've done with them over the last few years.

Fintan Walton:

And all these people who've been putting money into Astex for what reason?

Martin Buckland:

Well the venture capitalists obviously want to make money out of the opportunity, the corporate partners see this as a great sort of corporate investment an endorsement if you like of the partnerships that they've established with us so the money came in as part of the upfront cash and equity they got put it into the company as part of those deals.

Fintan Walton:

And there was obviously good science in there as well?

Martin Buckland:

There was certainly a lot of science in there, absolutely.

Fragment chemistry platform

Fintan Walton:

Right, so just describe what was good about that science to attract these investors?

Martin Buckland:

Sure, well you know Astex was formed in order to exploit a new area of chemistry, a new approach that was emerging during the late 1990's and this is an approach which is now called fragment-based chemistry, so what fragment chemistry is all about is starting really small in the drug discovery process the reason why that's important is if you look at the way in which the industry has gone about small molecule drug discovery over the last sort of 30, 40, 50 years it started by screening libraries of chemicals generally using bioassays identifying molecules that address particular targets, inhibit particular enzymes and then once you've identified those molecules you allow the chemists who're going to work and the one thing that chemists are very good at is adding molecular mass, adding complexity to molecules and that's worked well for the industry for a long period of time, but what has happened is over the years these molecules have tended to get a little bit too big, a little bit too fat if you like a problem that has recently been coined as molecular obesity so what fragment chemistry allows you to do is to address it's problem of molecular obesity, so what we do is we don't start with the typical high throughput screening library size molecules which are may be typically of sort of 300 may be even 350 molecular weight, we start with molecules that are about a 150 molecular weight on average. Now the problem with that is that you cannot detect the binding of molecules that small to target proteins using bioassays the signal levels are just too small and you'll just see noise that you won't be able to pick up in the bioassay. So what we do is we use a series of biophysical screens including for example X-ray crystallography, we use NMR, we use calorimetry techniques in order to detect that initial binding and once having identified molecules that bind very specifically and very efficiently to the target protein we then use structure guided methods in order to optimize those molecules and what we do is we end up on average with molecules that are smaller, less lipophilic, less likely to suffer attrition in the clinic as a result of not having all the sort of obese properties that you know say are associated much more with the outputs from high throughputs screening, so that's the fundamental principle behind the approach.

Fintan Walton:

And from that if we call that a platform a chemistry platform?

Martin Buckland:

Yes we call it Pyramid that's the sort of brand if you like for the approach that we attend.

Products and programs

Fintan Walton:

How successful has that been in terms of generating products into clinic?

Martin Buckland:

It has been very successful both for our own proprietary pipeline and also for our partner programs, we now have multiple products in the clinic, so just to give you an idea we've recently taken three Pyramid generated oncology products derived from this platform into Phase II clinical trials those are all part of our proprietary pipeline. We also have another molecule which is being ready for the clinic currently which has come out of the pipeline and we've also announced two partner products sort of going to Phase I so one of these was with Novartis coming out of the collaboration that we established in late 2005 [PharmaDeals ID = 22815] that started clinical trials early this year and then just a couple of days ago we announced that a molecule that came out of one of our AstraZeneca [PharmaDeals ID = 21184] partnerships that also started Phase I clinical trials at the being of the year, and then behind that we have clinical candidates sort of being selected by AstraZeneca for example around our beta-secretase Alzheimer's [PharmaDeals ID = 1240] program which are moving towards the clinic under AstraZeneca's osmosis.

Fintan Walton:

Right, just on the investment that Novartis made is that through one of their funds or was it directly from just Novartis itself?

Martin Buckland:

Now Novartis that was a direct investment from Novartis Pharma AG as part of the deal that we did with.

Fintan Walton:

Right, so it not wasn't through one of the Novartis funds?

Martin Buckland:

No it wasn't, I mean you know different companies have invested in different ways, so for example you know Johnson & Johnson when we established our partnership with them in June 2008 that investment [PharmaDeals ID = 32070] came via Johnson & Johnson Development Corporation, so that's the VC arm of Johnson & Johnson.

Merger deal with SuperGen Inc

Fintan Walton:

Excellent, now of course Martin we are in April 2011 now and your company has announced a deal, could you tell us what that deal is?

Martin Buckland:

Sure, yes. So last week we announced that the company was merging with a US public company called SuperGen Inc [PharmaDeals ID = 40098] just to give you a few details about that deal, the so I said the announcement was last week the deal won't close for about three months, because we have to go through a whole series of shareholder approvals and regulatory approvals and so on, but broadly the deal is structured such that Astex's former Astex's shareholders will own 35% of the equity in the combined the large equity in the combined company, those shareholders will also receive $25 million in cash at closing, and in addition there is differed consideration which will be paid out over the next 30 months post closing of $30 million and that could be paid back in form of cash or it could be paid back in the form of equity and as of the discretion of the combined board, also the new company is gonna be named Astex Pharmaceuticals Inc . it will have a NASDAQ listing so it will be a public company in the US, at closing we expect to have around about $120 million in cash in combined company and the company also has a royalty stream from a product called Dacogen [PharmaDeals ID = 17696] which is sold by Eisai [PharmaDeals ID = 29181] in North America, and Johnson & Johnson [PharmaDeals ID = 24684] in the rest of the world and at least for the next few years the expectation of that would put a may be about another $50 million a year, so the company is financially strong it's going to be a global company.

Fintan Walton:

It's got a cash flow?

Martin Buckland:

It's got a cash flow absolutely, it's going to be oncology focused and it represents a great opportunity I think for both companies going forward.

Fintan Walton:

So just tell us little bit how that happened, because there are lots of companies out there who had loved to do what you've just done, tell us how that came about I mean was it just done overnight or was there a longer-term relationship?

Martin Buckland:

No, I think as you know these things always takes a bit of time. It's an interesting history actually here, because we got to know SuperGen about two years ago initially around about two years ago and that initial relationship was actually built in part because John Lyons, who is our Vice President Translational R&D, John joined us about seven or eight years ago, but he joined us from SuperGen so he had actually spent about 10-years of his career in California working for Onyx and then with SuperGen and wanted to come back to Europe. So John joined us maintained the relationship with the SuperGen management introduced us and we kept bumping into each other at meetings and you know having you know a beer or coffee or whatever and then over a period of time we got to know these guys pretty well and then about two-years ago we started building much more sort of meaningful relationships if you like at senior management level and again started sort of speculating is to whether the merger of these two companies might actually make a lot of sense so we talked about it often on for a period of time and then just before Christmas last year a formal approach was made.

Fintan Walton:

By them?

Martin Buckland:

Well it sort of came naturally out of the serious discussions that we had and very quickly a basic deal structure was agreed and we spent the last three months where about just on the back of that sort of a great deal structure just negotiating with various agreements that inevitably surround these type of transaction.

Fintan Walton:

So there was never a collaboration, a scientific collaboration as all with SuperGen before, this is purely a relationship between management?

Martin Buckland:

That's correct. Yes.

Martin's perspective : Core things needed to be a successful biotech company

Fintan Walton:

So Martin, you've been in our business for some time and you've as you said you joined Astex to help build that business which you've been involved in, what is in today's climate what do you need to be a successful biotech company?

Martin Buckland:

I think you probably need three core things. One is great science and you know one of the things that Astex is always proud on itself is great science. The second thing you need is an experienced and committed management team and again one of the interesting things about Astex is all of us have come out of big pharma or mid-cap pharma or experienced biotech executives, that's the second thing. The third thing you need is capital to build the business and if you like the third piece of the jigsaw it's just being put in place by this merger, so you know SuperGen bring the US listing, they bring the capital that help us to grow this business into a global powerhouse and they also bring some very significant clinical development and regulatory experience on the back of this stuff that they've done.

Astex Pharmaceuticals Incorporated: Business model and future vision

Fintan Walton:

So with the merger of these two companies what do we have? What you know what sort of company can you now describe Astex Pharmaceuticals Incorporated?

Martin Buckland:

What we have is a potential global powerhouse in oncology>, so a research innovation driven company based in two of the leading health science clusters in the world in California, SuperGen are based in Dublin, California on the East Bay of San Francisco and we are based in Cambridge which is probably Europe's only world class health sciences cluster. So you have a real global powerhouse based in those two areas, well capitalized and we have a great portfolio of products going through the clinic.

Fintan Walton:

And is the business model and the vision for that business model to be a fipco or is it to be a drug development company?

Martin Buckland:

I think that the true vision of the company is still to be determined, we see ourselves very much as a company that delivers products into the clinic and then looks for opportunities to monetize those products in the future, it's just possible with that monetization may include the fipco type model, but that's the discussion that the combined company is gonna have-to-have as we truly merge.

Fintan Walton:

Martin Buckland, thank you very much indeed for coming on the show.

Martin Buckland:

Thank you Fintan, really appreciate the opportunity.

Fintan Walton

Dr Fintan Walton is the Founder and CEO of PharmaVentures . After completing his doctoral research on the genetics of cell proliferation at the University of Michigan(US)and Trinity College (Dublin, Ireland), Dr Walton gained broad commercial experience in biotechnology in management positions at Bass and Celltech plc (1982-1992).

Martin Buckland

Chief Business Officer

Martin Buckland joined Astex as Chief Business Officer in September 2004 and was appointed to the Board in July 2008. He has more than 20 years of commercial and business development experience in the pharmaceutical industry and joined Astex from Elan Pharmaceuticals where he previously held the position of VP Global Business Development. His prior experience includes a variety of business development and commercial management roles with Quintiles, Xenova and Celltech. He has a BA in Chemistry and a DPhil from the University of Oxford, and an MBA from the Open Business School.

PharmaVentures

PharmaVentures is a corporate finance and transactions advisory firm that has served hundreds of clients worldwide in relation to their strategic deal making in the pharmaceutical, life science and healthcare sectors. Our key offerings include: Transactions / deal negotiations; Product / technology valuations; Deal term advice; Due diligence & expert reports; Strategy formulation; Alliance management; and Expert opinion for litigation/arbitration cases. PharmaVentures provides the global expertise to ensure our clients generate the highest possible return on investment from all their deal making activities. We have experience of all therapeutic areas and can offer advice on both product and technology commercialisation.

Astex Therapeutics

Astex Therapeutics is a UK based biotechnology company that discovers and develops novel small molecule therapeutics. Using its pioneering fragment-based drug discovery platform, Pyramid, Astex has built a pipeline of molecularly-targeted oncology drugs, of which three are currently being tested in clinical trials with others in discovery and pre-clinical development. In addition to its proprietary research programs, Astex's productivity in lead discovery has been endorsed through numerous partnerships with major pharmaceutical companies, including AstraZeneca, GlaxoSmithKline, Johnson & Johnson and Novartis. On April 6th 2011, Astex announced that it had entered into a definitive merger agreement with SuperGen Inc a NASDAQ listed company, to form a financially strong, oncology focused company, to be called Astex Therapeutics Inc.