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To Find New Partners, GeneProt Seeks Smaller Deals from Pharma, Biotech

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Facing a tough business climate and constraints on pharma spending, GeneProt has decided to modify its partnering strategy to appeal to pharma and biotech companies unwilling to spend on the scale of its current partner Novartis, which signed a deal valued at $84 million with the company a year and a half ago, GeneProt officials told ProteoMonitor last week.

With the departure of CEO Cédric Loiret-Bernal in late April, and an inability to sign a big pharma customer to fuel its expansion to New Jersey, GeneProt will now focus its efforts on generating scientific results at its flagship facility in Geneva and on seeking smaller scale partnerships, said Bertrand Damour, GeneProt’s chief financial officer and a co-chair of the company’s interim management board. While GeneProt’s board of directors searches for a new CEO, Damour shares responsibility for managing the company with Marc Funk, the general counsel.

Although Damour would not comment on GeneProt’s CEO search, saying that was the responsibility of the company’s board, he said Loiret-Bernal’s departure simply involved a disagreement over the company’s strategy. “The board and the CEO sometimes have different views on the strategy and the future of the company,” he said. “The board came to the conclusion that it was time to move apart.”

“The challenge is that we were hunting for big elephants, because the plant in NJ was going to be pretty expensive to operate,” said Damour. “Now that we have reduced, at least for the time being, our expansion in New Jersey we can discuss deals with big pharma which are of a more reasonable amount,” he added. “They are extremely receptive to that.”

Damour said that the company is also addressing its ability to share the results of its proteomics research for Novartis with potential customers. In the past, GeneProt was hampered in its ability to sell its strength in proteomics analysis because of Novartis’ concerns with the confidentiality of its data, Damour added. “We have this big contract with Novartis, and we think the scientific results are outstanding, but because of confidentiality we have not been able to discuss it and to show that to the rest of the world,” he said.

“We have now an action with Novartis to get legal approval so that we can do that, and we think that is going to completely change the picture,” he said. “In the short term what we want to show the world is that we are not only the tool or the arm of Novartis. We have now our own R&D activities and development that we are working on.”

GeneProt’s plans to expand to the US have not evaporated, Damour said, but are delayed by as much as a year. “This does not reduce in any case our US ambitions, and the fact that we think New Jersey is a good place to be,” he said. “Right now, installing the plan, recruiting the people, and installing the machines would have [taken] lots of time and money, when we would be better focusing for the remainder of 2002 in Geneva, and focusing on business development at the same time,” he added.

Although GeneProt had begun hiring for the North Brunswick, NJ, facility, which initially was to be operational by the fall, most of the company’s new hires will take positions in Geneva, said Keith Rose, GeneProt’s chief scientific officer. “Actually we kept nearly all of them,” said Rose of the new hires. The number of employees who couldn’t be accommodated in NJ were “very few,” he said. “I could count them on the fingers of one hand.”

Although industry watchers have expressed skepticism about the ability of companies such as GeneProt to reach profitability purely through performing contract research, Damour and Rose maintain that the company’s scientific results validate their approach, and that the company is also developing its own drug discovery program.

Damour added that GeneProt has sufficient cash reserves to cover two years worth of operations at the Geneva facility, and can expand its capacity in Geneva in the short term if necessary. “If worse comes to worst, the company is in good shape financially,” he said. “We don’t control the market, [and] we don’t control the budget of big pharma, but we control the scientific results and we’re going to rely on that to move forward.”

— JSM

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