Not many informatics startups claim several top-tier pharmaceutical firms as customers at their launch, and even fewer have a 25-year jumpstart on their product development, but Optive Research, a cheminformatics software firm based in Austin, Texas, isn’t just any startup.
Bob Pearlman, founder and CSO of the company, has spent the last 25 years developing computer-assisted drug discovery software at the College of Pharmacy at the University of Texas at Austin. The lab, which has been “operating like a small software company in an academic setting,” according to Pearlman, is already well known for developing a number of software packages marketed by Tripos, including Concord, DiverseSolutions, and CombiLibMaker. The lab also has a history of close collaborations with pharmaceutical companies, including Pfizer, Aventis, Bristol Myers Squibb, and GlaxoSmithKline. In late 2002, Pearlman decided to strike out on his own, and renegotiated the licensing agreement between Tripos and UT to give Optive exclusive rights to the software.
The company is now staking its future on the Pearlman lab’s reputation.
Optive will retain Tripos as a distributor, but a new direct sales force should help expand its customer base into agribusiness and biotech, as well as a few remaining pharma holdouts. In addition, the company will now be able to add a new level of customer support to the pharmaceutical collaborations initiated in the Pearlman lab.
Leaping (Safely) from the Ivory Tower
Optive’s auspicious launch illustrates the yawning gap between the bioinformatics and cheminformatics software markets. While many bioinformatics entrepreneurs have made a similar leap from academia’s ivory tower, few have Optive’s parachute of 15 commercial-grade software products — not to mention the cushy landing pad of a solid customer base. Unlike most bioinformatics groups — academic and commercial alike — Pearlman’s lab has never relied on federal grant money to support its research. “It’s 100 percent industrial support,” he said. His group created the software hand-in-hand with the pharmaceutical discovery groups funding its development, so even those products that weren’t marketed by Tripos needed to be commercial-grade, Pearlman explained. “A receptor cares whether you give it the right-hand version of the molecule or the left-hand version. There’s no room for error when it comes to cheminformatics,” he said.
The ultimate differentiator, he noted, is the “targets vs. leads” question, which may be plaguing many struggling biotechs today, but is a no-brainer for most pharmaceutical firms: “Although bioinformatics is critically important, it’s not directly related to the actual intellectual property of drug discovery companies. Their real value is in their compounds,” he said. The result, from the perspective of a software firm, is that pharma doesn’t take chances with home-grown cheminformatics software like it does with bioinformatics software. On the contrary, it is very happy to pay outside specialists handsomely to do the work.
With industry support secured for his work in academia, it was thoughts of retirement that ultimately launched Pearlman into the risky commercial world. “I got started thinking that I’m not going to retire this year or the year after that, but it’s not going to be that much longer, and what’s going to happen to the software? What’s going to happen to users around the world who actually depend on it as part of their computer-aided drug discovery infrastructure?” he asked.
Although he was convinced that a commercial enterprise was the best mechanism for ensuring long-term maintenance and development of the software, Pearlman said he waited until he found the right business partner in Bryan Koontz, Optive’s VP of marketing, before taking the plunge. “It takes more to being a successful company than just having customers in line,” he said. “How are you going to get others in line? And how are you going to support them after they’re customers? I knew enough to know that I needed somebody else to help with those things.”
With Koontz on board, its licensing position with UT secure, and 15 employees signed on, Optive celebrated its official launch on July 9.
Up Against the Big Guys
Optive still faces a number of challenges as it sets out to claim its share of the computational molecular discovery market — after all, while the bioinformatics sector is in the midst of a shakeout right now, the cheminformatics sector went through its own growing pains over a decade ago, leaving only a few big players and little room for smaller startups.
Koontz acknowledged that the company will be up against larger players like Accelrys for some purchasing decisions, but noted that “some of those exact companies who you would expect to be competition have already started to call us to say, ‘Hey, let’s talk about opportunities.’” With Tripos already marketing some of its software, Koontz said Optive plans to add other distribution partners to its list and is willing to talk. In addition, Pearlman said, Optive doesn’t sell the molecular graphics software that companies like Tripos and Accelrys are known for, making most of their products complementary. “People need molecular graphics tools, and we say, ‘Great, because that’s not our area of expertise,’ but we’re going to help people decide which compounds they want to be looking at with those sorts of tools.”
Optive’s product suite is built on what it calls its “Discovery Engines” — a selection of 15 different programs designed to address a range of molecular design applications, including library design, structure-based design, ADME-related property prediction, high-throughput screening data mining, and traditional and 3D QSAR. The Discovery Engines can be used as stand-alone workstations or servers, or wrapped as web services to be used within custom-written or third-party discovery informatics pipelines. In addition, most of the programs have built-in distributed processing capabilities. Optive has also packaged several of its programs into user-friendly “Benchware” solutions geared toward the bench chemist rather than the computational chemist.
Koontz said that Optive has already begun expanding its reach beyond its core pharmaceutical customer base and has been approached by several biotech firms looking to ramp up their lead discovery and optimization capabilities. Sequenom, for example, is one of Optive’s most recent customers. “They realized, much like many other biotechs, that at the end of the day, people buy drugs, not targets,” Pearlman said.
Sequenom declined to comment on its use of Optive’s software.