Most of the publicity in biotechnology usually concerns the discovery of another gene or the development of genetically engineered bacteria that produce a valuable new drug. But there is a more mundane side that is also important: finding efficient ways to "harvest" a new drug from the bacteria or animal cells that produce it. It is a ticklish job, because the drug must be purified of all toxins and other detritus produced by the host cells.

To address that, researchers at [PerSeptive Biosystems] Inc. of Cambridge, Mass., recently patented a separation technology employing novel porous particles that they said speeded purification tenfold.

Until recently, the fastest process has been high-performance liquid chromatography, in which a solution containing the new drug passes through a tube packed with specially coated particles that snag molecules of the drug. These particles are filled with tiny channels, making it possible to absorb large quantities. But the process is still slow.

To speed the process, the new particles are riddled with both wide and narrow channels, which the inventors said are analagous to superhighways and city streets. "If you try to get in to the center of a city by taking the small streets, it can take hours," said Fred E. Regnier, a chemistry professor at Purdue University and one of the inventors. "We solved that problem by creating superhighways that bring you right into the center of the city, within a few blocks of where you want to go."

In the new particles, made from polystyrene, the wide channels serve as the highways that let the solution flow easily to the particle's center, where it can be absorbed rapidly by scores of tiny channels.

Dr. Regnier, [Dr. Noubar Afeyan (born 1962)], president of Perseptive, and Robert C. Dean, a consultant, received patent 5,019,270.

The Beat Goes On

[Let] us examine the case of a new company, now just three years old, and in the newest of emerging technological fields, biotechnology. PerSeptive Biosystems is too young to "prove" anything, but its formative years again show the uncertainty and sometimes even turmoil that need resolution as a start-up finds its own direction and moves forward.

Noubar Afeyan and PerSeptive Biosystems, Inc. Beirut, Lebanon, is the starting point of the story. Noubar Afeyan was born there in 1962 in the Armenian section, the youngest of three sons. His father had had an architecture education in Bulgaria and worked at that profession in Lebanon during the day, but started an import/ export business at night two years before Noubar was born. While Noubar was growing up, his father's business, now a full-time occupation, grew too and Noubar remembers well his childhood impressions of warehouses, the port, unloading ships, rounding up day workers by truck. His childhood was not exactly typical for a to-be biotechnology entrepreneur, with continuing outbreaks of violence eroding the quality of life. But in that polyglot community Noubar received a good education, becoming fluent in Arabic, Armenian, English, and French, while also developing a "street smart" sense. In 1975, the civil war in Lebanon had erupted again and Noubar's parents decided to move the family out of the country. They departed for Montreal, where cousins were already living. One indicator of the trauma they were experiencing is that the Beirut airport closed two days after the Afeyans departed, not to reopen for four years.

During their first year in Montreal, the boys entered Jesuit school while their father tried to start a manufacturing business. Months of frustration led to the elder Afeyan reestablishing his import/export enterprise, which five years later, in 1981, finally led into the manufacture of plastic-covered furniture and related products. Noubar, his brothers, and his mother actively worked at the business whenever needed.

Noubar thought about applying to MIT when he was finishing high school. But concern about leaving his then 86-year-old great-aunt, who had lived with the family throughout his childhood, led Noubar to enroll in McGill University, just one block down the street from his house. Choosing chemical rather than electrical engineering for his undergraduate major was influenced by his father's encouragement that chemical engineering might at least relate somewhat to his plastics activities. The first semi-serious discussions about starting his own company took place regularly with Noubar's undergraduate friend Dave Rich. Together they were going to create ARC-Afeyan-Rich Company, to undertake a variety of creative businesses but nothing real came of these many chats. Noubar's rather remarkable great-aunt, 97 years old in 1990, reminds him that he was always talking about running his own business even when he was a child.

Despite an attractive job offer from Dow Chemical Noubar decided, in 1983, to apply, and got accepted, to MIT's new Ph.D. program in biotechnology process engineering. His work primarily with Professors [Dr. Daniel I-Chyau Wang (born 1936)] and Charles Cooney exposed him to their growing networks of consulting relationships with large and small companies in the United States and abroad, as well as venture capital firms. Noubar generated lots of ideas, leading to impressive experimental findings and he published papers with several MIT faculty. But he had no interest at all in becoming a professor; he clearly wanted all along to be a key player in some company. One of the MIT faculty, Raymond Baddour, gave a seminar on all the alumni of the MIT Chemical Engineering department who had achieved outstanding success (several in association with Baddour's own multiple entrepreneurial efforts; see Appendix, Track 1). That seemed great to Noubar and he wanted to become part of that list.

In 1986, Afeyan enrolled in the New Enterprises course in the Sloan School of Management and had to prepare a business plan. He worked out a semiserious plan, without the financials, for one of his ideas on a protein purification system that he named CARE-Continuous Affinity Recycle Extraction-doing the project alone because he was afraid someone might try to take the idea and run with it. Noubar reports feeling that the Sloan School was entirely foreign to him-the jargon, costume, aspirations of business school students were almost alien to the engineer. Later that year he entered into negotiations with the giant Swedish firms Alfa-Laval and Pharmacia to turn that CARE idea into an actual company, but the deal evaporated when the two large companies had a falling out with each other. The negotiations were not without some lasting benefit; Noubar married one of the women Alfa-Laval had sent over to MIT during the discussions.

In spring 1987, as he was nearing completion of his Ph.D. dissertation, Noubar came to see me for permission to take my course on Corporate Strategies for New Business Development. I initially refused him, as he obviously lacked the formal prerequisite subjects. I told him that I doubted that he could write an acceptable term paper without lots of Sloan School background education. Afeyan's persistence overcame my stubbornness and in the end he prepared one of the best papers in the course, contrasting entry strategies into the biotechnology field of several major chemical companies. 

At the same time Noubar had tired of trying to get his own ideas translated into the basis for a new firm. He reluctantly accepted the notion that he seemed to be hearing from everyone that he was too young and inexperienced and needed industry seasoning and was on the verge of accepting a job in industry. Fortuitously, Professor [Dr. Daniel I-Chyau Wang (born 1936)], his thesis chairman, introduced Afeyan to a much older experienced multicompany entrepreneur who was being pushed out by investors from his latest company creation. Noubar, then 24 years old, and the older entrepreneur, 60 years old and wiser from his several company start-ups, hit it off immediately, and by the end of one intensive day of discussions they had more-or-less agreed to start a new company in the area of biotechnology processing. On the very next day several people began warning Noubar that this relationship would not work out, that his partner was too inflexible and had a reputation of being tough to work with. Noubar had concluded that they were a good complementary match. Now he had the chance to translate his many ideas into a real company. Wistfully thinking back to that time, Noubar recalls, "I thought he knew his limitations and that therefore we'd be able to get along. I could create and promote and he could manage the technology development." 

In August 1987, Noubar Afeyan became the first Ph.D. graduate from MIT's Center for Bioprocess Engineering, and he was already hard at work getting the new company underway with his partner. During October Afeyan brought me a copy of their first business plan, a proposal for launching Synosys Corporation as a rather generic developer and producer of biotechnology processing hardware, with one of Noubar's system ideas as product number 1. He invited me to become a director and an initial stockholder, but after reading the plan I declined. They hoped to enlist major corporations as their principal financiers and collaborators in a series of strategic alliances. Neither the plan nor its timing was great; the stock market's Black Monday occurred one week after I saw Noubar. Among other effects of the market crash, venture capital companies became more conservative and especially skeptical of new companies focused on capital equipment markets, such as Synosys. Despite the apparent problems Synosys was incorporated at the end of November, the two founders each owning half the company, with the bills being paid by loans to the firm from the older partner. 

Months dragged by as they presented their plan to numerous companies and prospective investors. In the meantime Professor Fred Regnier of Purdue University, one of the world's leading experts in separations technology, was recruited to become an advisor to Synosys and began working with Noubar on new approaches to porous materials for biotechnology separations processes. Noubar took a part-time job at MIT in January 1988, working as the technology transfer manager for the BioProcess Engineering Center under Danny Wang's directorship. Much more time was going to  be needed to raise the capital to get going and they could use the income and the contacts the job would produce. They also rented a small office in American Twine Office Park, a converted old mill filled with MIT high-technology spin-offs, located just behind MIT in East Cambridge. 

With all the critical feedback on their first business plan Noubar wrote a new one in March, aimed at venture capitalists not corporations as the potential funders and following to the letter the guidelines in Jeff Timmons' textbook, New Venture Creation (1985). This plan had a dual focus: the porous separations materials and a biotechnology processing hardware system, aimed at new product developers. Noubar started sending around the new plan and visiting venture capital firms. I received my copy in April 1988, read it and decided to visit the founders in their offices. As I entered I was offered a bench to sit on, just being hammered into completion by Danny Wang's son who was working there part time. The co-founders and I talked at length, especially about my feelings that the materials business was attractive by itself and that the hardware system was a confusing distraction. We also talked about the roles of the two co-founders and whether they would be willing to bring in a more experienced partner as CEO or Executive VP (reminiscent of AR&D's hesitation with DEC). Despite some reservations, upon return to my office I called the biotech specialist at First Stage Capital, a venture capital firm I co-founded and serve as a General Partner, and suggested he look into Synosys in depth. First Stage began working closely with Synosys, criticizing many aspects of their plans but also encouraging their overall efforts. 

[Dr. Daniel I-Chyau Wang (born 1936)] began to get more involved and technical progress was being made with the porous materials. But funding decisions dragged on. In June First Stage Capital turned down Synosys because of our unwillingness to fund the hardware part of the company. Noubar borrowed some money from his father and began to pay the bills; his partner was running out of funds and was looking for alternative employment in academia. In August, Wang and several friends invested $200,000 and suddenly things seemed a bit brighter. In September an agency of the Canadian government with which Noubar's father had good relationships indicated that it would be willing to invest $2 million in the company, provided that Synosys would move its hardware activities to Canada. Despite uncertainty as to whether Synosys should or would accept the Canadian funds, that change in prospects was enough to renew First Stage Capital's interest in financing the materials portion of the company. 

By November, still without the major capital infusion needed to move ahead decisively, the Synosys team and its consultants developed "perfusion chromatography", an approach to protein purification that could produce a tenfold speed advantage over existing technologies. Finally, or so it seemed, in mid-January 1989 Synosys reached agreement with First Stage Capital and Noubar signed off on a detailed term sheet. Two days later his older partner suddenly announced he was through, claiming family pressures, thus beginning several months of fighting over stock, roles, compensation. Terry Loucks from Rothschild Ventures, who had met Noubar during the fund-raising period, agreed to come in as full-time chairman and CEO, with Noubar becoming president and chief technical officer. On April 1, hopefully not to be remembered later as April Fools' Day, the checks were signed for $1 million for one-third of the company, First Stage Capital being joined in the investment by Raytheon Ventures and 3i, a large British venture capital fund with an office in Boston. In search of a new identity the firm was reincorporated as PerSeptive Biosystems, trying to put the trauma of Synosys Corporation in the background. Two years had elapsed since the day Noubar and his now former older partner had agreed to start a company. The new team now featured Noubar Afeyan, Terry Loucks, and Fred Regnier from Purdue. 

People began to be hired, several new Ph.D.s coming in from Purdue and MIT. Patents were filed on the concepts, the materials, and the designs for new processing equipment. The now named "Poros" materials began to generate amazing results in lab tests. In November the PerSeptive team stole the show at a technical symposium in Philadelphia, presenting several papers on the technology and its performance and generating instant sample orders from several large companies. 

As of September 1990 PerSeptive Biosystems had 26 employees, a growing group of enthusiastic customers, and newly delivered checks from its second round of venture capital, $3.3 million from its original venture capital investors plus Venrock and Bessemer Securities, the funds needed for expansion of the company and for development of its second product line, an instrument system for automating use of the Poros materials in developmental applications. I asked Noubar what he wanted to accomplish now. "I want to create an analog of Hewlett Packard-tools for a new breed of engineers, bio-process engineers. If the industry grows the way it's expected to, we should be able to reach $40-50 million in sales in five to six years. By the way, becoming rich wouldn't hurt", he added. "There's nothing more motivating to succeed than having to beg for money to get started." N oubar Afeyan was 28 years old. 

Compared with the cases presented throughout this book Afeyan shows strong continuity of the earlier patterns. Noubar's father was a professional and an entrepreneur, and Noubar gained much experience with the process of business development while he was growing up. After receiving his MIT degree he had worked only in an MIT lab before setting up his own company at a young age. In fact, Noubar really started PerSeptive on a part-time basis while he was still in graduate school, and his general interests in running his own firm stem from childhood. The technology was transferred directly from his MIT education and lab work as well as from Fred Regnier's work at Purdue. Initial funds came from his co-founder's savings, then from his family and friends, and only later in two large rounds of investments from venture capital firms. [...]

Shares of Perseptive Biosystems Inc. plunged 30 percent yesterday after an analyst reduced his forecast for the company's third-quarter earnings.

The stock fell $4.75, to $11, a 52-week low, in Nasdaq trading. The selloff came after David K. Stone, a managing director at Cowen & Company, lowered his earnings forecast for Perseptive to a range of 10 cents to 12 cents a share, compared with Wall Street estimates of 13 cents to 15 cents a share for the quarter, which ended on June 30. In the third quarter a year ago, Perseptive lost $400,000, or 3 cents a share.

"Earnings may be increasing, but it's disappointing in this environment if the increase does not exceed or meet expectations," Mr. Stone said. He cut his rating on Perseptive shares to a "buy" from a "strong buy."

Perseptive, based in Cambridge, Mass., manufactures and markets products and systems for the purification and analysis of biomolecules.Merger Talks Announced

The selloff overshadowed a company announcement yesterday that it was in the final stages of completing an agreement to acquire the Biosearch division of the Millipore Corporation. The division is a leading supplier of equipment and reagents in the fields of DNA synthesis and peptide synthesis.

Millipore's stock fell 75 cents a share, to $52.50.

While the companies have not disclosed the terms of the proposed deal, Mr. Stone estimated that the Millipore unit would bring $30 million to $50 million, or one to two times revenues.

Mr. Stone said yesterday that he recalculated his earnings forecast after a discussion with Perseptive officials at the close of the company's third quarter, which ended Thursday. Because of the nature of the company's sales cycle, many sales are not closed until the final weeks of the quarter, Mr. Stone said.

He said he now expected the company's sales to total $10.3 million, about $900,000 short of previous expectations. Perseptive executives could not be reached late yesterday for comment.

The [Perkin-Elmer Corporation] said yesterday that it had agreed to acquire [PerSeptive Biosystems] Inc., a maker of laboratory kits and instrumentation used by biotechnology companies, in a stock swap valued at $360 million.

Perseptive, based in Framingham, Mass., is a leading producer of equipment used to separate and identify intact proteins, which form the basis of most biotechnology drugs, and has also developed advanced products for the separation and purification of biological molecules in the life science market. [Perkin-Elmer Corporation], through its 1993 acquisition of [Applied Biosystems] Inc., is a leading provider of DNA sequencing and synthesizing equipment to biotechnology companies.

The acquisition will allow [Perkin-Elmer Corporation] to add greater value to gene-based drug discovery than it has had as a tools provider, said Peter Barrett, Perkin-Elmer's vice president for business development. Making the company a player in the emerging field of genomics, rather than just an instrument vendor, has been a key strategy of [Tony Lee White (born 1947)], who joined Perkin-Elmer two years ago as chairman, president and chief executive.

''If you look at the genomics companies, like Human Genome Sciences or Incyte, the value created by these companies is driven by our systems,'' Mr. Barrett said in a telephone interview. ''What we're trying to do here is move to another level of platform delivery, to move closer to the information.''

The deal valued Perseptive at $13 a share. Its shares surged 17 percent, or $1.8125, to $12.4375 in Nasdaq trading. Perkin-Elmer shares rose 62.5 cents, to $78.6875, on the New York Stock Exchange.

Analysts said the deal would strengthen Perkin-Elmer's product line on the biotechnology side, which is growing, and help offset the slowing of its traditional business in chemical analysis tools. Because Perseptive has not yet been profitable, the deal will reduce earnings per share in the near term, but should provide a long-term income boost, they said.

''They're trying to expand their exposure to biotechnology instrumentation,'' said Lawrence W. Borgman, an analyst with Josephthal Lyon & Ross. ''They're very big in DNA synthesis because of Applied Biosystems; with this they add a presence in proteins as well,'' he said. ''The biotech side of the business is growing and has good margins.''

For Perseptive, which expects revenue of $85 million in its fiscal year ending Sept. 30, the deal removed uncertainties about future financing and distribution.

''We felt that under the value proposition presented to us by Perkin-Elmer, our objectives would be better accomplished by the merger,'' [Dr. Noubar Afeyan (born 1962)], Perseptive's chairman and chief executive officer, said in a telephone interview. ''The constraints we've had will be eliminated.''

Nexstar Pharmaceuticals Inc. has agreed to buy DNA synthesis patent rights from Perseptive Biosystems Inc., a move that will allow Perseptive's $360 million merger with the Perkin-Elmer Corporation to take place.

In August, Perkin-Elmer, based in Norwalk, Conn., agreed to acquire Perseptive, based in Framingham, Mass. Perkin-Elmer and Perseptive were the only companies that held the patents necessary for production of certain DNA molecules, used in certain types of medical research.

The Justice Department would not grant approval for the merger until Nexstar, which is based in Boulder, agreed last week to acquire the patent rights for an undisclosed price.

NOTE - Who is "Nexstar" ? 

https://www.gilead.com/news-and-press/press-room/press-releases/1999/3/gilead-sciences-and-nexstar-pharmaceuticals-to-merge 

March 01, 1999

Gilead Sciences and NeXstar Pharmaceuticals to Merge

Foster City, Calif. and Boulder, Colo. -- March 1, 1999

• Creates Biopharmaceutical Company With Worldwide Presence

• Establishes Significant Infectious Disease and Oncology Product Franchise

• Capitalizes On Extensive Strategic and Financial Benefits

Gilead Sciences, Inc. (Nasdaq:GILD) and NeXstar Pharmaceuticals Inc. (Nasdaq:NXTR) today announced a definitive agreement whereby Gilead will acquire NeXstar in an all-stock, tax-free pooling-of-interests transaction. Under the terms of the agreement, NeXstar stockholders will receive 0.425 of a share of Gilead for each share of NeXstar, subject to adjustment based on the trading range of Gilead stock prior to completion of the merger.

"The merger of Gilead and NeXstar accelerates the formation of a global organization to discover, develop and commercialize novel products that treat infectious diseases and cancer," said John C. Martin, Ph.D., President and Chief Executive Officer of Gilead Sciences, Inc. "The combined company will have three commercial products with total annual revenue of over $100 million, a strong pipeline, and the international infrastructure to introduce a number of important near-term products. Gilead and NeXstar share a commitment to inventiveness and to the delivery of advanced treatments for the most challenging human diseases," Dr. Martin added.

BOULDER, Colo. -- NeXstar Pharmaceuticals Inc. said it formed a new company, Proligo LLC, in a joint venture with a unit of SKW Trostberg AG of Germany.

Proligo will supply specialty chemicals for products used to diagnose and treat genetic and other illnesses. The company also will produce diagnostic and pharmaceuticals products on a contract basis, said Patrick J. Mahaffey, NeXstar's president and chief executive.

Mr. Mahaffey said NeXstar and SKW Trostberg saw an opportunity in what they expect to be a fast-growing market.

SKW Trostberg's U.S. subsidiary, SKW Americas, will own 51% of the new company, to be based here; NeXstar will own 49%. For its stake in Proligo, SKW Americas will pay $15 million to NeXstar immediately, and over the next five years, will make $3 million in guaranteed payments and as much as $20.5 million in performance-based payments.

Proligo will consist of NeXstar's former products-technology division, which develops chemicals and processes for making DNA- and RNA-based products; and SKW America's former PerSeptive Biosystems GmbH unit, which owns a chemicals-making facility in Hamburg, Germany.