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New Focus on Government, Non-Profits Lands Caprion $12.9M NIAID Contract

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Caprion Proteomics announced last week it has been awarded a $12.9 million contract from the National Institute of Allergy and Infectious Diseases as the company plumbs a funding segment that it has largely ignored to date.
 
The five-year contract, which directs Caprion to find and identify candidate protein biomarkers for diseases that can be caused by biopathogens, is just the second in the history of the firm dating back to when it was housed within Caprion Pharmaceuticals.
 
Its first government contract, awarded in 2004, was a five-year deal for about $13 million to develop new immunotherapy targets and vaccines against Brucella abortus.
 
Since then, however, Caprion Proteomics has largely overlooked government agencies and the not-for-profit segment as funding sources. That will change, however, as the company moves forward, CEO Martin LeBlanc told ProteoMonitor this week.
 

The contracts are “big, they pay the bills, we retain the IP. Why wouldn’t we be more active in this area?”

In addition to the NIAID contract, the company entered into a deal with the Aeras Global TB Vaccine Foundation to identify vaccine targets for tuberculosis. In the pilot stage, Caprion will be demonstrating the efficacy of its main technology platform, CellCarta, for the application.A Caprion spokesman declined to disclose the financial terms of the partnership.
 
The new strategy, LeBlanc said, came about in early 2007 as Caprion reassessed its business after it spun out from Caprion Pharmaceuticals, which merged with Ecopia BioSciences [See PM 01/11/07]. When the proteomics business was housed within Caprion Pharmaceuticals, LeBlanc said, the focus was on developing CellCarta.
 
But after its carve-out, company officials were struck that it had only one government contract and was missing out on a potentially significant revenue source. And as it prepared to proceed as a stand-alone firm, it decided it had to make headway in that sector, LeBlanc said.
 
“We had given ourselves a goal last year of applying for at least one or two government contracts … and our goal was to get at least one. This year, we’ll probably apply for two or three more,” he said.
 
To be sure, the pharmaceutical industry remains Caprion’s main income generator and the firm has no plans to leave that market. At any given time Caprion has 15 pharma contracts active, and this year it has signed nine new contracts with pharma clients for its service business, including new ones with Mitsubishi Tanabe Pharma and Merck Serono.
 
But, LeBlanc said, “as pharma progressively withdraws its funding of early-stage research … governments and [non-profits] can help fill the void.”
 
The contracts are “big, they pay the bills, we retain the IP. Why wouldn’t we be more active in this area?” he said. Caprion has the rights to commercialize candidate biomarkers and diagnostic products resulting from the work done as part of the NIAID project.
 
“We really see it as having two commercial outlets and it’s a different way to drum up business,” he said. “You have to be on the lookout for [requests for proposals] that come out and make sure you meet the deadlines and that you find academic collaborators who will work with you. But I think that it’s good, solid research funding that we don’t want to overlook.”
 
Under the terms of the contract, Caprion will search for biomarkers in at least four infectious disease areas from a list of about 150 that the NIAID has identified as being of interest. The company has not yet chosen the diseases, which the NIAID would need to approve. But because of work it has been doing as part of its 2004 NIAID contract, Caprion will likely include Brucella, LeBlanc said.
 
Work being done under the 2004 award lasts through next summer, and while the Brucella-specific targets the company has discovered “make good science, … unfortunately [they] are not likely to yield much commercial potential outside of biodefense.”
 
Caprion has also discovered assays with potentially broader applications, LeBlanc said. These assays have preliminarily been shown to have the ability to inhibit the interaction of any pathogen with its host, “so it could be a broad antibiotic platform,” LeBlanc said. “It’s still very early stage, but we will continue to find ways to creatively fund the continuation of these programs to the point where we can validate our findings and find partners.” 
 
The company has also identified tuberculosis as another disease of interest. Aside from Caprion’s TB-based collaboration with Aeras, tuberculosis would be a “good intersect of market need and biodefense imperatives. Those are the ones that I think are the most exciting for Caprion because we can serve the interest of the NIH but also have commercial potential for our discoveries,” LeBlanc said.
 
During the next few months, the company will be seeking out research partners, in particular those that can help Caprion collect and provide patient samples. Based on the responses it receives, it will make a final decision on which diseases to pursue.
 
In addition to Caprion, the NIAID awarded the University of Texas Medical Branch a five-year contract for $10.9 million under the same RFP.
 
State of Freedom
 
As it comes up on its two-year anniversary as a stand-alone company, Caprion is still to some degree diagramming a blueprint for its future. When it was spun out of Caprion Pharmaceuticals, the plan was to sell the proteomics business within a year. In July 2007, hedge fund Great Point bought an 80-percent stake in the spinout while Thallion Pharmaceuticals, formed by the merger of Caprion Pharmaceuticals and Ecopia, owned the balance [See PM 07/05/07].
 
At the time, LeBlanc said the Great Point transaction was setting Caprion up to be purchased by a large pharma or biotech firm. This summer, LeBlanc said that that goal had lost its urgency, and in the face of profits during the last two years, the company can be more selective about finding a suitor [See PM 07/31/08].
  
The company is on target to turn a profit for 2008, LeBlanc said this week, though he declined to elaborate.
 
With interest in protein biomarkers showing no signs of deceleration, Caprion is well-positioned to meet demand for discovery and validation services, he said.
 
Two years ago, most pharma firms didn’t have translational medicine departments, but now “you’d be hard-pressed to find a company that doesn’t have a translational medicine department with a staff, with a budget, with some projects,” LeBlanc said. “People are putting departments together; they are increasingly interested in conducting projects.
 
“Invariably, they look for all-mix providers and proteomics providers, and many of them don’t have proteomics capability in-house so they come to us and some of those internally sometimes give us overflow,” he said.
 
In addition to pharma, the federal government also has numerous biomarker projects underway including those sponsored by the US Department of Defense as well as the NIH. While many are closed to commercial vendors, those that aren’t can prove invaluable to a company such as Caprion, LeBlanc said.
 

“This is great because it is essentially a fully funded diagnostic and biomarker discovery program,” he said. “Ideally, that’s where all of the research that we don’t want to do as a service can come from, and [for] the rest of it, pharma, we can be just a [contract research organization] for biomarkers and funded target discovery.”

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