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Startup Firm Stakes Future On New Way To Identify, Test Drugs

PALO ALTO, CALIF—In the high-pressure world of pharmaceutical research, scientists routinely risk corporate fortunes in a search for new compounds that could lead to big payoffs in such areas as cancer or heart disease. Indeed, virtually every major company has tried to speed up its process of creating and testing blockbuster drugs—a move that could save millions on development costs and beat a firm’s competitors to the marketplace. But progress in this high-stakes field has b

By | September 18, 1989

PALO ALTO, CALIF—In the high-pressure world of pharmaceutical research, scientists routinely risk corporate fortunes in a search for new compounds that could lead to big payoffs in such areas as cancer or heart disease. Indeed, virtually every major company has tried to speed up its process of creating and testing blockbuster drugs—a move that could save millions on development costs and beat a firm’s competitors to the marketplace. But progress in this high-stakes field has been slow. What’s needed, according to Alejandro Zaffaroni, is a highly auto- mated, low-cost system to test thousands of natural and synthetic compounds in a matter of hours.

Zaffaroni is a Uruguayan-born biochemist and the founder of ALZA Corp., a drug delivery firm he launched two decades ago. Last year, spurred by his belief in the potential of a drug-testing enterprise, he founded Affymax, N.y., and set out to lure scientists from academe with the promise of future glory and a unique ‘scholarly atmosphere.

The startup’s name, Affymax, is derived from the Affinity Matrix Discovery System, the trademarked term for the proprietary technology that the firm is developing. The system depicts the vast chemical diversity (represented as rows on a matrix) of compounds under study, while the matrix columns represent probes—which recognize specific biological activity or molecular properties—and biosensors, which signal whenever one compound binds to a receptor. The goal is to generate a comprehensive “bioactivity profile” of a given compound.

The company opened shop in June 1988 and is based in the Netherlands. The location is more, than a tax haven, however. The site will help the company compete in an economically united Europe in 1992, and officials harbor plans to add a European marketing and manufacturing component. For the time being, however, all operations are conducted at its American subsidiary, Affymax Research Institute in Palo Alto, a 22,000-sq. ft. facility that houses the young company’s entire 32-person staff.

While Affymax is one of myriad fledgling high technology firms that dot the green hills along San Francisco Bay, it tries to stand out from the crowd. “This is not a typical biomedical startup,” maintains chief operating officer J. Leighton Read. One major difference is, Zaffaroni’s successful track record: Starting with $3 million of his own money in 1968, he helped turn ALZA into a 650-person company with revenue of $84.2 million and a profit of $17 million last year. That performance has removed some of the risks associated with the typical startup by making it easier to raise capital and attract scientific talent.

But one person is not enough to lure the scientists needed to establish the company’s credibility and ensure its future. Affymax officials emphasize the company’s university-type atmosphere, which blends the organic chemists, biologists, engineers, and even physicists needed to develop the software and hardware for its complex systems. The result is an appealing potpourri unusual for such a small firm.

“It’s ironic,” says Read, “but it’s often more collaborative and more multidisciplinary here than what people experience in their academic departments.” The academic thread extends even to the recruitment process, as every job candidate must lead a seminar similar to those required of prospective faculty at many universities.

Such efforts seem to have paid off. All told, 17 of the 32 employees hold doctorates—and many of them came directly from universities. This month, Stanford Medical School cell biologist Lubert Shyer will be named president, and Read himself was a physician in internal medicine at Harvard University before Zaffaroni persuaded him to join the new venture.

Furthermore, the company has engaged four founding scientific advisers, who also lend a strong dose of credibility. They include chemist Carl Djerassi, a major force in Syntex’s scientific development, and molecular pharmacologist Avram Goldstein, both of Stanford. Another prize is University of California, Berkeley, chemist Peter Schultz, who received the 1988 Waterman Award from the National Science Foundation as the country’s outstanding young scientist; and Nobel laureate Joshua Lederberg, president of the Rockefeller University.

Indeed, Affymax’s challenge—to develop a system that saves time and money when assaying biological compounds—is worthy of the best minds in the field. While scientists have learned many rules and tricks to make the drug discovery and testing process easier, the task has traditionally proved exhaustive. Compounds not only must be screened for the right characteristics, but also must be tested rigorously for safety and efficacy.

With only one in perhaps 10,000 compounds becoming marketable drugs, it’s easy to see why streamlining the process—particularly the identification of compounds with the right general characteristics of potency and selectivity—would be welcome. Zaffaroni’s idea in founding Affymax was that a physical and chemical system that could increase the efficiency and sensitivity of this process would save money and dramatically increase the capacity to screen substances. While the Affinity Matrix Discovery System won’t provide all the answers, the young firm hopes its namesake capability will prove an essential tool in testing both natural drugs and synthesized compounds.

In return for financing development, companies will receive marketing rights to compounds discovered by Affymax scientists. But the firm, which was started with several million dollars from Zaffaroni and a few private investors, plans to retain the right to participate in any such efforts.

With its strategy and foundation now well-entrenched, the company is preparing for a period of rapid growth. Its business plan predicts a staff of 130 within three years. To make room for the new staffers, operations will move next year to a 38,000-sq. ft. facility in nearby Mountain Yiew. And Zaffaroni expects big things from the new facility. He points out that breakthroughs in different fields are often associated with developments in instrumentation. And, he predicts, “Our success will have a major impact on the productivity of the industry.”

Robert Buderi is a science writer based in San Francisco

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