Evotec Technologies this week said that it has sold an ultra-high-throughput screening system worth $2.8 million to the Computational Medicine Center, a collaborative institute between the University of Cincinnati and the Cincinnati Children's Hospital.
For Evotec Tech, which is the tools and technologies division of German drug-discovery firm Evotec OAI, the placement marks the start of an ongoing collaboration with UC and Cincinnati Children's that would allow it to establish its first commercial base of operations in the US. In addition, the deal will enable the three partners to develop a state-funded drug-screening facility for multiple Ohio-based research institutes.
Together, these developments could help Evotec Tech improve its penetration of the US drug-screening market, both through the planned use of the Cincinnati facility as a demonstration site, and because of the strong industrial play of the academic institutions involved.
The deal is also a welcome financial windfall for Evotec Tech, which saw a significant drop in sales last year, primarily due to the introduction of new instrument platforms and the integration into its own drug-discovery platforms of new ultra-high-throughput screening technology acquired last year from Carl Zeiss (see CBA News, 5/16/2005).
According to Carsten Claussen, Evotec Tech's CEO, the Computational Medicine Center purchased a plate::explorer ultra-high-throughput screening system consisting of five modules, including a plate::vision multimode CCD-based plate reader and an Opera confocal high-content screening device.
"It's not just a university playground, we think."
The plate::vision and plate::explorer are two of the technologies Evotec Tech acquired from Zeiss in May 2005, and Evotec has said that one of its goals was to integrate these platforms with its own Opera technology. Claussen said that although Evotec Tech has successfully integrated Operas into the ultra-HTS platforms installed at former Zeiss customer locations, the Computational Medicine Center placement is the first totally integrated unit Evotec Tech has sold.
According to Rich Kiley, general manager of the Computational Medicine Center, Evotec's screening system and operations base will be located at the Genome Research Institute, a 300,000-square-foot facility located about 10 miles north of UC and Cincinnati Children's adjacent city campuses.
The GRI is a state-funded collaborative research effort between UC and Cincinnati Children's and houses researchers from both institutes, as well as other collaborators, Kiley said.
Ruben Papoian, director of drug discovery at GRI and research professor at UC, will oversee the screening facility. He told CBA News that the facility will not be completely operational until September, but that GRI has solicited research projects that are ready to be scaled up into a high-throughput format.
"We canvassed workshops mostly within UC — and we'll do it with Children's, too — where we invited researchers to present about where they see their research going toward a therapeutic end," Papoian said. "Most of them come with targets, or some molecules that have shown some drug-like activity; some need to do some late-stage validation; and some projects we chose because they are ready for high-throughput screening."
Although the Evotec platform is capable of performing both high-throughput biochemical and high-content cell-based assays, the majority of projects presented at these workshops so far are high-content cell-based assays that need to be optimized for screening, Papoian said.
Big Deal for Evotec
The news is significant for Evotec Tech on several fronts. First, the sale, worth an estimated $2.8 million, accounts for more than 13 percent of what the unit collected in revenue for all of last year; a welcome boost considering that last week it reported a 12-percent drop in year-over-year revenues (see CBA News, 3/31/2006).
"What Evotec found here is a combination of academic research institutions … as well as business partners with a deep commitment towards commercial development"
Total 2005 receipts for Evotec Tech declined to €17 million ($20.8 million) from €19.3 million in 2004, but Evotec's parent last week said that it expects the Tech unit to report increased revenues this year — despite maintaining that it is no longer core to the company.
In addition, Evotec Tech may be able to parlay the UC and Cincinnati Children's deal into additional sales in the US. The first and most important step in this direction is for the Hamburg, Germany-based company to establish a US base at the CMC.
According to Claussen, Evotec Tech currently has about 10 workers in the US — mostly "salespeople and some instrument and applications people." The majority of these employees work either out of home offices, a small lab space in Woburn, Mass., or, in some cases, at customer sites.
"Now, as part of this deal, we will send people from Hamburg to Cincinnati to start operations there, and we also will hire some people to work there," Claussen said. These workers will be on the parent company's payroll, but will be supervised by GRI's Papoian.
"Then we will have instrument demonstrations and also some stock there in Cincinnati, in the middle of the US," Claussen added. "So it will be a showcase for potential customers."
Lastly, Evotec may be able to drum up platform sales specifically through its new connections at the University of Cincinnati and Cincinnati Children's Hospital. One of the reasons Evotec Tech wanted to work with these institutions is their strong top-to-bottom play in academic drug discovery, as well as their strong ties to the pharmaceutical industry.
"What's really important is their focus on translational medicine, from the Genome Research Institute all the way to the patients at the Children's Hospital," Claussen said. "They are really good at target discovery, with animal models, and in patient studies, and underneath that, they will do screening at our drug-discovery center. So they should really be a complete unit with all these modules to hopefully discover more and better drugs. It's not just a university playground, we think."
Furthermore, UC, Children's, CMC, and GRI together have a strong interest in commercial development.
"What Evotec found here is a combination of academic research institutions in Children's and UC, as well as business partners with a deep commitment towards commercial development," CMC's Kiley told CBA News. "The founding principle of the Genome Research Institute was really around translational medicine, and how you can accelerate discoveries taking place now into actual therapeutics."
Along with that philosophy comes a great deal of pharmaceutical industry experience within the institutes. For example, Jane Henney, senior vice president and provost for health affairs at UC's Academic Health Center, was commissioner of food and drugs at the US Food and Drug Administration from 1998 to 2001, and is currently an AstraZeneca director.
George Thomas, interim director of the GRI and genome science department at UC, is on the scientific advisory board of Novartis Oncology; and GRI and UC's Papoian has more than 20 years of pharmaceutical experience with companies such as Novartis and Serono.
In addition, GRI has an ongoing collaboration with Cincinnati-based Procter & Gamble Pharmaceuticals, and the center is geographically very close to current Evotec customer Eli Lilly, which is based in Indianapolis.
Finally, once the screening center at the GRI is up and running, there is a large possibility that it will become a core-type screening facility for other academic entities in the state and region, because the Ohio Third Frontier, a state-run economic development group, funds the CMC, which in turn negotiated the deal with Evotec.
"The Third Frontier program is investing $1.5 billion in accelerating the growth of technology companies in Ohio, and the majority of that is focused on life sciences areas," CMC's Kiley said. "The GRI itself received $10 million when it started up; the Computational Medicine Center, which I manage, received $28 million from this program; and we plan to seek additional funding with the idea that having high-throughput screening capabilities and compound libraries is an extraordinarily expensive asset."
Kiley cited Evotec's collaboration model in Europe, in which it does a great deal of preliminary research with academic institutions, and then "funnels" the final targets and assays to its central screening facility in Germany.
"We think the same model will emerge here, and we think it will be a real benefit to other institutions here like Ohio State, Case Western Reserve, and the Cleveland Clinic, to really have access nearby to that kind of expertise, which is unusual," he added.
In fact, according to Papoian, many of the initial projects for the screening facility were chosen in part because of their translational promise into new drugs.
"The first projects we chose would fall into the area of CNS diseases — some migraine-type targets, and some for opiate tolerance; as well as some metabolic disease stuff," Papoian said.
"We picked those because they fell into different phases, so there wouldn't be a bottleneck," he added. "But we also picked those because they were therapeutic areas where we already had interest from commercial partners in pharma — that they would probably be interested in those projects once we brought them a little further along."
— Ben Butkus ([email protected])