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Odyssey Plans New Hires for Expanded Pfizer Service Contract, Says Deal Validates Hybrid Business Model

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In what one company executive called a “major transforming event,” Odyssey Thera this week announced the multi-year expansion of its service contract with Pfizer to further develop certain Pfizer lead compounds using Odyssey’s stable of cell-based protein-fragment complementation assays.
 
The research contract helps validate Odyssey’s business model of providing drug-discovery tools and services while fostering an internal small-molecule discovery program. In addition, the contract will necessitate a significant bolstering of its workforce, Odyssey said.
 
The agreement expands upon a May 2005 collaboration – which itself expanded upon an original agreement between the firms – in which Odyssey profiled Pfizer compounds using the PCA technology.
 
According to Odyssey, the success of those efforts led to the current agreement, in which Odyssey and Pfizer will use the PCA technology and other automated microscopy assays to measure changes in cellular signaling networks in response to Pfizer compounds across a number of undisclosed therapeutic areas.
 
Under the terms of the expanded agreement, Odyssey will receive an undisclosed upfront payment, research and capital expenditure funding, and success-based milestones.
 
John Westwick, Odyssey Thera’s president and CSO, this week told CBA News that Pfizer will use the PCA technology “early and often” in the lead-development phase, “in that critical area where you really have a dearth of information” and where hundreds of thousands of hits need to be winnowed down to promising lead candidates. Pfizer representatives declined to comment on the agreement.
 
Westwick said that the immediate impact of the expanded agreement is that Odyssey will be “significantly” beefing up its workforce, particularly on the scientific side, to deal with the scope of the Pfizer project and other potential pharmaceutical contracts. Westwick declined to give an estimate of the number of new employees it plans on hiring.
 
Even as Odyssey prepares to expand its workforce, it is not feeling any particular pressure to replace recent lost leadership. In May, Marnie MacDonald, who had served as president and CEO of Odyssey since 2002, parted ways with the company. Westwick assumed the role of president while retaining his title of CSO, but the company hasn’t yet named a replacement CEO, interim or otherwise.
 
“I think status quo will be the name of the game for some time,” Westwick said. “Everybody seems to be happy. I’m on the board, so there is board representation at the company. Our focus now is really going to be a pretty significant hiring stint.”
 
Perhaps more importantly, Westwick noted that the deal serves as a shot in the arm for the company’s business model, which balances contract assay development and screening work with its own internal discovery program – a model that has fallen through for similarly structured companies in the past few years.
 
Westwick said the new deal, along with ongoing contracts with two other large pharmaceutical companies, has allowed Odyssey to achieve revenues “an order of magnitude higher” than it did last year.
 
“I think that it is important because [it shows] this business model really has legs,” he said. “For us this is a major transforming event, changing the company in a radical way. If we continue at this rate of increasing our revenues by more than 10-fold every year, then we’ll be in pretty good shape.”
 
Recent notable examples of companies that have tried to survive both as a product or service provider and drug-discovery outfit include Danish biotech BioImage, which last year was forced to scuttle its internal discovery program and earlier this year sold its Redistribution assay technology to Fisher Biosciences (see CBA News, 4/28/2006); and Xsira Pharmaceuticals, which last year sold off its Transfluor technology to Molecular Devices so it could focus entirely on drug discovery (see CBA News, 3/15/2005).
 
Odyssey had been relatively quiet this year in terms of new service contracts or assay licensing agreements. It last announced new deals with pharma companies such as Bristol-Myers Squibb, Pfizer, and Lexicon Genetics in 2005. The company declined to provide information about the progress of its in-house discovery projects, but Westwick said that the company’s service contracts have allowed it to be self-sustaining.
 
Most of Odyssey’s revenues are derived from contract research, but Westwick also believes the company will eventually be able to sell cell lines or assay kits. For now, though, pharma companies may not have the dedicated internal infrastructure necessary to conduct large-scale high-content cell-based screens, he said.
 
“Everybody we talk to wants to eventually incorporate the technology at some level in their organization,” Westwick said. “But people are definitely realizing that it’s not as easy as getting an Evotec or Cellomics box and starting profiling. You really have to build this highly developed infrastructure.
 
“I think we’ve created something completely unique here out of necessity – the ability to manage tens of thousands of images per day,” he added. “And if you’re analyzing at the single-cell level, you’re actually talking millions of cellular scans per day. You really have to have the infrastructure to support that kind of throughput.”
 
Planets Aligning
 
Why does Odyssey’s business model thus far seem to be working in the wake of the failures of some of its peers? Westwick said that Odyssey’s PCA technology, which is applicable to a broad array of intracellular drug targets, has something to do with it. But he also said that it has a lot to do with good timing.
 

“A lot of the thought process that we’re applying to this has already happened in gene expression analysis – dealing with large data sets, and analyzing and interpreting data – a lot of that heavy lifting has been done by the gene expression folks.”

“I think there are a couple of converging trends here that act in our favor,” Westwick said. “The industry is clearly obsessed with this area of attrition, and trying to move that to an earlier stage in the discovery process. In addition, all of these companies are realizing that they want to exploit the power of the cell, and also high-content technologies. I think these things are all working together in our favor, and I think it’s sort of like the planets are aligning here.”
 
What’s more, pharmaceutical companies are starting to understand where in the discovery pipeline HCS technologies can most benefit them, he said. In addition, despite the copious amounts of data produced by high-content image-based screens, companies are more comfortable in dealing with such informatics challenges due to previously adopted screening techniques, such as gene expression analysis.
 
“I’m sensing out there when I talk to our customers that everybody gets this now,” Westwick said. “A lot of the thought process that we’re applying to this has already happened with gene expression analysis – dealing with large data sets, and analyzing and interpreting data – a lot of the heavy lifting has been done by the gene expression folks.
 
“How do you classify the data, essentially, and how do you quickly transform that data classification into something meaningful for your hit-to-lead attrition process?” he added.
 
Westwick also believes that the adoption of Odyssey’s technology – which is designed to increase the overall throughput of automated cellular imaging through intensive data analysis – will be a boon for the overall field of high-content screening, which has somewhat struggled to penetrate the high-throughput paradigm often implemented in pharma.
 
Some pharma researchers, including at Pfizer, Westwick said, are very interested in using automated cellular imaging for “fairly low-throughput, mechanism-intensive” kinetic analyses.
 
But, he added, “The success that we’re having indicates that most of the mileage is going to be obtained here in really ramping up the throughput of these tools – getting the throughput into the range that was previously the sole domain of highly artificial in vitro screens.
 
“That will push the field in a certain direction,” he said. “There will still be people doing low-throughput kinetic analyses, but I think this will work to the benefit of companies like Evotec who have focused on really getting the throughput up to a certain level.”

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