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© Guy Sargent
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Ireland's pharmaceutical industry can trace its origins to a garage attached to the suburban Dublin home of Ohio-born entrepreneur, Don Panoz. It was 1969 and Panoz had traveled to Ireland with $50,000 (US) and a point to prove, having parted company with Mylan Laboratories, the company he cofounded in Pennsylvania. The new company he established in his garage was called Elan.
That organization has gone on to nurture several generations of seasoned pharmaceutical industry insiders who have caught something of Panoz's entrepreneurial spirit and are applying it to the development of their own ventures. Almost 40 years later, the Elan alumni are at the forefront of efforts to build a broadly based indigenous pharmaceutical sector in Ireland.
"It was a very vibrant corporation," says Daniel O'Mahony, a partner at Cork-based venture capital fund Kernel Capital, who worked in Elan from 1994 until 2003. "It had the ability to do what other companies were afraid to do." That culture - O'Mahony calls it the 'Elan testosterone' - is now beginning to pervade large parts of the Irish life sciences sector.
Why it is doing so is linked to the company's recent history. For much of its existence, Elan appeared hermetically sealed from the rest of Ireland's indigenous life sciences industry. It operated on a different plane compared to the small-scale, undercapitalized ventures that otherwise constituted the sector.
By the late 1990s, Elan had almost completed a transition from being the world's leading drug delivery company into becoming a fully integrated pharmaceutical firm, with a huge portfolio of biotechnology assets and partnerships. However, the way in which it accounted for these holdings - in off-balance sheet, special-purpose entities - nearly precipitated a collapse in 2002 amid the market sensitivity that followed the Enron scandal. It encountered further trauma in February 2005, when its newly approved multiple sclerosis drug, Tysabri (natalizumab), was temporarily withdrawn from the market after several patients developed a severe neurodegenerative condition. It was reintroduced under a strictly controlled program in July 2006.
The fallout from all this was a major restructuring of the company, accompanied by a mass exodus of hundreds of executives and scientists from its Irish operations in Athlone and Dublin. Although this experience was no doubt traumatic for some of the individuals involved, it has had a seminal impact on the nascent life sciences sector in Ireland.
It was "probably the single greatest thing that ever happened to this country," says Mary Skelly, CEO of a Dublin-based venture development firm, Angel BioVentures. "The result was quite a nice number of startups being driven by people who know the industry."
Chips Off The Old Block
Some senior employees had begun leaving Elan in a low-key fashion before the 2002 crisis. By the late 1990s, much of its energy had begun to shift to the United States, as it sharpened its focus on biotechnology-based drug discovery. A string of US acquisitions, which began with the takeover of San Francisco-based Athena Neurosciences in 1996, had fueled this strategy. As the action moved across the Atlantic, some senior Irish employees decided that their futures lay elsewhere.
In 2001, John Devane, John Kelly, and Patrick Ashe, the trio who had built up Elan's drug delivery business, established Athlone-based Athpharma, the first post-Elan venture. Athpharma is a specialty pharmaceutical firm with a focus on adapting known molecular entities for cardiovascular and gastrointestinal conditions. A Canadian firm, Biovail, quickly snapped up its cardiovascular pipeline in a deal worth $44 million (US); that agreement was terminated in 2006. Around the same time, Athpharma gained a new owner, a former Elan executive, Seamus Mulligan, who transferred its assets into a new venture called Circ Pharma. Nevertheless, the original deal validated for Irish investors the specialty pharma business model, which underpins several other post-Elan ventures.
Afterwards, John Devane quickly built up a second firm, Dublin-based AGI Therapeutics, which is reprofiling familiar molecules for gastrointestinal conditions. Its chief operating officer is Mary Martin, who was previously managing director of Elan Biotechnology Research, a unit based at Trinity College Dublin that had developed delivery technologies for biologic drugs. AGI grossed €42.5 million ($66.5 million US) in an IPO in Dublin and London in February 2006. Its lead compound, Rezular, has entered a Phase III trial for irritable bowel syndrome.
Merrion Pharmaceuticals, also of Dublin, acquired some of the oral drug-delivery assets developed at Elan Biotechnology Research in 2004, on which it is building a pipeline in several therapeutic areas, including osteoporosis, oncology, and thrombosis. Although its founding team did not come from Elan, it also has tapped into the Elan gene pool. Its director of analytical chemistry, Catherine McHugh, worked at Elan Biotechnology Research from its foundation in 1994, for example. Peter Thornton, currently back in a senior role at Elan's Drug Technologies unit, after stints with Circ Pharma and New York-based Antigenics, is a member of the Merrion board. "There were lots of ways of getting the corporate memory back," says Merrion CEO, John Lynch.
Another post-Elan venture that looms large is Mulligan's principal venture, Azur Pharma, a specialty pharmaceutical firm with a strong focus on the sales and marketing of niche products. It acquires rights to already approved and late-stage development products and sells them via a 90-person US sales force. The privately held company has raised around $100 million (US) to date. Its management team, most of whom are former Elan executives, includes a clutch of highly experienced pharmaceutical industry dealmakers.
Elan's former chief financial officer, Thomas Lynch, led another management group, including several Elan veterans, who took over at Nasdaq-quoted Amarin in 2004, following Lynch's purchase of Elan's 22% stake in the firm. Amarin is developing drugs for cardiovascular and central nervous system conditions based on purified bioactive lipids. Several drug candidates are in Phase II and Phase III trials.
Spreading Expertise Around
Other Elan alumni dispersed into existing firms, particularly multinationals such as Wyeth, which was building a €9.69 million ($1.5 billion US) biologics facility near Dublin at the time of the restructuring. Some took their expertise into venture capital funds, academia, university technology transfer offices, law firms, or government agencies. Yet others boosted the available skills pool in Ireland by setting up their own consultancies, offering services in areas such as process development, drug regulation, and statistical analysis. "You no longer have all that expertise held in one silo," says Skelly.
One particular trio of former Elan executives, including Manus Rogan, Aidan King, and Ena Prosser (along with a fourth partner, Justin Lynch), is set to play a key role in the development of the lrish life sciences sector in the coming years, following the first closing at €75 million ($116 million US) of the Fountain Healthcare Partners venture capital fund. Fountain, whose founders previously worked on about 25 investment deals as members of Elan's corporate venture-capital group, aim to close off the fund at €100 million ($155 million US). They will invest most of the cash in biotechnology, specialty pharma, diagnostics, and medical devices firms in Europe, with Ireland its primary focus.
This ubiquity of former Elan personnel in the Irish life sciences sector has a significance that extends beyond the provision of expertise and experience. It can actually help the industry to operate more effectively.
"There is an informal network of people who do engage with each other on an ongoing basis," says O'Mahony. If he needs legal advice, for example, O'Mahony calls Colin Sainsbury, former general counsel at Elan's drug delivery division and now life sciences partner at a Dublin-based law firm, BCN Hanby Wallace. For advice on drug development strategies, O'Mahony talks to AGI Therapeutics. For pointers on assay development, he talks to BioClin Research Laboratories, an Athlone-based provider of analytical services, which former Elan scientists Mary Burke and Brian McKenna set up. (The London-based Intertek Group recently acquired it.)
Given that everyone in Irish bioscience already knew everyone else, the spread of former Elan employees across the country's life sciences sector has engendered an extraordinary degree of interconnectedness. As well as being a source of skills and experience, these ex-Elan personnel carry with them the experience of working in a corporate environment with a strong success ethos.
Of course, Elan itself has not gone away. Its Tysabri franchise continues to develop. It has two Alzheimer drugs undergoing Phase III trials - the antibody, Bapineuzumab, and the gamma-secretase inhibitor, LY450139 - which are the subject of alliances with Wyeth and Eli Lilly, respectively.
Elan is still headquartered in Dublin, and it continues to operate a sizeable manufacturing facility at its Monksland campus in Athlone. It would seem that there are still much more skills and expertise to spin off.