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SBI and GFI Become Cengent; Focus on Proteomics Services, Drug Discovery


Almost five months after Structural Bioinformatics and GeneFormatics said they were going to merge, their new identity has been revealed: last week, the two companies became Cengent Therapeutics, after the California Department of Corporations and shareholders of both companies approved of the merger.

With a reduced headcount, a cushion of cash, a broader range of computational and experimental technologies than either company had, and a new emphasis on internal drug discovery, the company hopes to better weather the unfavorable current economic climate.

Cengent, now at just over 70 employees, laid off about 50 staff — more than half of them computational scientists and engineers, according to president and COO David Muth. The company is now headquartered at SBI’s San Diego location; a facility to house the NMR equipment is about to be built.

Along with the reduced headcount, Cengent has lowered its burn rate such that it is now only slightly above that of either company beforehand, according to Chris Earl, managing director at Perseus-Soros BioPharmaceutical Fund, an investor in both companies. “This is a market where the longer you can go without having to refinance, the better off you are,” he said. “The goal here was to create a company that meets the needs of today’s marketplace.” Combined, SBI and GeneFormatics have raised more than $90 million. The remaining cash (the exact amount of which the company did not disclose) will take Cengent to the end of 2005, if not beyond, said Muth.

According to Earl, although “mergers are always difficult,” this one went smoothly. What helped, he said, was the close proximity of the companies — both were located in San Diego —, the fact that they shared some investors, and that it was clear early on who would join the new management team.

Going forward, Cengent is planning to devote about 65 to 70 percent of its resources to service work, and the remaining part to its internal drug research programs, according to Edward Maggio, the new company’s CEO.

All of the technologies that SBI and GFI were previously providing are still available, though some have either changed their name or have been modified in other ways. “We did not eliminate any of the services,” said Muth. “The main driver in this merger was the ability to have a broader offering of products and services.”

SBI’s Genes to Leads technology, for example, a computational method that generates leads based on an X-ray, NMR, or modeled protein structure, will now be enhanced by GFI’s NMR capabilities, which will be used to validate the list of hits experimentally.

NMR will also complement the structure determination and prediction services: They now comprise SBI’s proprietary Augmented Homology Modeling, its X-ray crystallographic services, and GFI’s NMR offering.

Cengent also offers a database, StructureBank, for the comparative analysis of protein targets and closely related proteins, so-called anti-targets. The technology derives from SBI’s ProMax, a database of about 6,000 modeled novel proteins that is no longer marketed. StructureBank is available in three versions: as a standalone, “empty” repository; with a curated version of the Protein Data Bank; or with models of proteins — taken from ProMax — of particular interest to a customer.

GFI’s gene and protein annotation service is now available under the name Computational Proteome Analysis. This product, which is based on three proprietary computational technologies to assign structure and functions to protein sequences, may also “be able to help facilitate patentability,” said Muth.

Cengent has also now started offering a data mining and pattern recognition technology called Discrete Bayesian Approach, or DBA, which was developed by a wholly-owned subsidiary of SBI called Moldyn, located in Cambridge, Mass. “We haven’t talked much about this in the past,” said Muth, adding that the business model for DBA is “still evolving.”

Cengent recently started a pilot project with Pfizer to explore the technology’s utility for clinical trial data. The company has also used DBA in a project with DARPA, in the analysis of clinical data for Quest Diagnostics, and in several projects to analyze DNA microarray data.

Cengent has used DBA, for instance, to re-analyze a microarray dataset on breast cancer patients published in Nature last year and claims its results have a better predictive value than the original method described in the article.

Besides providing services, Cengent is also pursuing four pre-clinical drug discovery programs, in the areas of diabetes, anthrax, breast cancer, and asthma. Its most advanced project relates to a diabetes target called PTP-1B, a phosphatase for which Cengent has developed several tightly binding and selective leads. It also recently obtained a co-crystal structure of one of these molecules with the target. Though the company has not decided yet whether to take this project into phase I clinical trials by itself, “We are in discussions with several of the major [pharmaceutical companies] to potentially partner our PTP-1B program,” said Muth.

What remains to be done, Muth said, is “creating a new corporate culture at Cengent.” Moreover, the company needs to deliver on its business model, which calls for a certain amount of revenue from services.

SBI and Geneformatics already had partnerships with Pfizer, Johnson & Johnson, Boehringer Ingelheim, Yamanouchi, Incyte, Analex, De Novo Pharmaceuticals, ArQule, AtheroGenics, Shire Pharmaceuticals, and Texas Biotechnology, providing Cengent with a base on which to build.

— JK


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