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After Laying Off Most of its Staff, AxCell Sees its Future in Virtual Drug Discovery

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After failing to snag any revenue-generating collaborations with private-sector partners, AxCell Biosciences has scaled back its effort. Earlier this month the Newtown, Penn.-based provider of protein-protein interaction data laid off 14 of its 20 employees and resigned itself to pursuing drug discovery through its academic collaborators — what AxCell interim CEO Michael Becker refers to as a “virtual drug-discovery model.”

The changes are not completely unexpected, as Cytogen, AxCell’s parent, had hinted in earlier earnings statements that it was looking to reduce AxCell’s contribution to its burn rate. With the staff reductions, AxCell is now expected to spend $2.4 million a year, down from $4 million a year, Becker said.

“The decision was made by Cytogen to narrow our focus to near-term commercial opportunities as opposed to the basic science that had been our pillar of focus over the past several years,” Becker said. “It was a very painful exercise to go through in terms of scaling back our organization, but we did it so that we could still explore opportunities, just in a more focused arena.”

AxCell is no longer adding information to its ProChart database of protein-protein interactions involving the WW domain family, which it has licensed to several academic collaborators. Instead, it is engaged solely in producing synthetic peptides, and the domains to which they bind, as consumables for existing assay technologies. Becker also said the company hopes to market its peptides as content for protein arrays. The company has the capability to produce about 1,000 custom peptides a month, with an average length of about 17 amino acids, including a spacer sequence and biotin tag.

Becker said the ProChart database contains “more than enough to work with,” and that the current goal is to use the company’s academic collaborators at the National Cancer Institute, Mt. Sinai School of Medicine, the University of M nster in Germany, and the Kimmel Cancer Center at Thomas Jefferson University as surrogate researchers for the company. In return for providing their collaborators with access to ProChart or the company’s peptide synthesis technology, AxCell has the first right to commercialize any discoveries.

“[ProChart is] proof that we can generate protein-protein interaction data in a high throughput manner,” Becker said. “Once you’ve proven and validated that, there’s less of a need to continue generating more data. It’s really up to us to show that that data can be applied and result in more efficient or accelerated drug discovery and development. That’s really our narrowed focus,” he added.

AxCell troubles are rooted in its timing and the shifts in focus within the pharmaceutical industry, Becker said. He admitted that business based on providing databases to big pharma fell rather quickly out of favor with both pharma companies and venture capitalists, and that AxCell “entered the database game in the seventh or eighth inning.” But he added that Cytogen is committed to seeing a return on its investment in AxCell, and has no plans at the moment to shutter the operation entirely. “I don’t think that in the foreseeable future that there’ll be any other dramatic steps taken,” he said.

Although Becker’s current title is interim CEO, he said there are no current plans to find a permanent replacement. In fact, the downsizing has made the company “much more manageable,” he said.

And Becker said he and his superiors at Cytogen are still hoping the company can expand in the years ahead. “I don’t think we’re ever more confident that signal transduction will continue to have important applications in drug discovery,” he said.

— JSM

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