Did you know? University of Arizona chemistry professor Victor Hruby and UA Cancer Center researchers Sydney Salmon, Kit Lam and Evan Hersh formed Selectide Corp. in 1990, using the new field of “combinatorial chemistry” to screen vast numbers of chemical peptides for their potential to fight disease. The company was sold to Marion Merrill Dow in 1995 for $53 million, and through a series of sales and mergers became part of Sanofi in 2004.
French drug giant Sanofi has spun off its drug research center in Oro Valley, but the center will continue to serve Sanofi and may grow by conducting research for other major pharmaceutical companies.
Icagen Inc., a North Carolina-based biotech drug research company that was recently part of Pfizer, purchased Sanofi’s Tucson Research Center at 2090 E. Innovation Park Drive in a deal that closed in late July.
The value of the deal was not announced, but regulatory filings show Icagen paid a cash price of just $1 (one dollar), plus the assumption of certain liabilities.
But the deal includes a five-year contract under which Icagen will continue to perform drug-discovery services and maintain Sanofi’s chemical libraries in exchange for payments totaling $32 million over five years.
Sanofi’s interest is secured by a five-year, $5 million lien, and Sanofi will regain rights to the Oro Valley operation if Icagen sells the facility within five years, according to an Icagen filing with the U.S. Securities and Exchange Commission.
Icagen’s chief executive said the deal wasn’t about the nominal purchase price and more about allowing to keep access to an important research center and its scientists while building a third-party drug research business.
“It was really taking on the site, keeping the jobs, keeping the people here working and Sanofi also wanted to continue to work with the group here,” Icagen CEO Richie Cunningham said.
Cunningham said the Oro Valley site — a spinoff of University of Arizona drug technology in the 1990s — was not working at full capacity, and Sanofi and other companies are looking to outsource more drug-research services to control their variable costs.
“We can go out and sell the capacity and services to other pharma companies we are working with and bring them in and operate and grow the company — that’s our vision,” he said.
Sanofi, which says it has more than 100,000 employees in 100 countries, launched a restructuring effort in mid-2015 and earlier this year announced it would eliminate 600 jobs in France over the next few years and has cut some jobs in its Boston hub. But the company also is expanding some businesses, including its Sanofi Genzyme operation in Cambridge, Massachusetts.
“This deal is part of Sanofi R&D’s responsibility to optimize its research and development efforts, review operations, and determine the right balance between internal and external innovation,” Sanofi said in an e-mailed statement.
“The agreement offers an important opportunity to maximize the research offering of the site to both Icagen and Sanofi’s benefit.”
The new owners kept Sanofi’s management team at the Oro Valley center, including site director Ken Wertman, who joined the original UA technology spinoff company, Selectide Corp., in 1992.
The center now employs 88 people, including about 50 scientists, Cunningham said.
As of 2013, Sanofi said the site employed about 100 people, including 78 scientists.
The Tucson center adds its ultra high-throughput biology, screening and chemistry capabilities to Icagen’s flagship operation in Durham, North Carolina, while the contract with Sanofi provides a “runway” to build the business, Cunningham said.
The North Carolina site focuses on research on so-called ion channels — proteins that are frequently studied as drug candidates because of their role in regulating the flow of molecules across cell membranes — and related ion transporters.
That was the foundational technology of the company when it partnered with Pfizer on drug development.
Pfizer acquired Icagen about four years ago for $56 million, but in July 2015 it sold the company to XRPro Sciences, a Boston-area drug research firm that developed a high-capacity drug research technology based on X-ray fluorescence.
Paul August, senior director and biology head at the Oro Valley center, said the center has deep capabilities in early drug development, including biological and synthetic chemistry and computational chemistry, which uses computer models to narrow down promising leads from a many as 3 million beginning candidate compounds.
“It essentially gives us 3 million shots on goal,” he said.
The center features state-of-the-art equipment for high-throughput analysis, including robotic equipment to autonomously handle test sample plates.
The facility has longtime expertise in so-called combanatorial chemistry, which allows rapid synthesis of closely related drug compounds. That technology was advanced by UA faculty and formed the foundation of Selectide in 1990.
In the past 25 years, the research center has worked on nearly every major disease you can think of, said August, who joined the center in January 2015 after heading Sanofi’s U.S. “early to candidate” drug-research unit.
As of 2012, the Oro Valley center had produced more than 40 new candidate drug compounds for Sanofi’s drug-development pipeline, including two in active clinical trials for cardiovascular disease and osteoarthritis.
In the past five years, August said, the center has focused on rare diseases in collaboration with Sanofi and its Genzyme unit in the Boston area, including Charcot-Marie-Tooth disease, an inherited neurological disorder, and Gaucher disease, an inherited disease that causes organ damage.
“We’re looking for opportunities in the future to partner with large companies, small companies and academic labs,” August said.
Contact Assistant Business Editor David Wichner at email@example.com or 573-4181. On Twitter: @dwichner
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