Tri-Partnership Venture for Drug Discovery Company

A new drug discovery company, Argenta Discovery, has just received £7.2m of funding from a syndicate of venture capitalists.

Argenta Discovery is a three way partnership between Imperial College of Science, Technology and Medicine, which is the UK’s largest science-based university, a management buy-out (MBO) team from Aventis Pharma AG and a syndicate of venture capitalists comprising MVM, 3i, TTP Ventures and Genavent.

This innovative partnership between academia, industry and the City was put together by the advisory arm of the private investment firm, Company Guides. It recognised that by bringing together the worlds of academia and industry it would create a very powerful proposition for any venture capital investor.

Argenta Discovery

Argenta Discovery will have two activities: its own proprietary drug discovery programmes and the provision of medicinal chemistry and biochemical screening services to the pharmaceutical industry.

Argenta will develop compounds that interact with novel disease targets sourced from Imperial College and other academic and commercial collaborators and sell them on (“partner the programmes out”) to the pharmaceutical industry for feeding into the ever-hungry drug development pipeline (see Notes to Editors). This approach offers major benefits to the pharmaceutical industry through both hastening the drug development process and reducing costs by focusing on candidates that are more likely to succeed.

Argenta Discovery will receive up-front payments, milestones and royalties on marketed products derived from these collaborative programmes.
It will also offer medicinal chemistry and biochemical screening services to pharmaceutical and biotechnology companies. The first contract has already been signed with Aventis and contracts with others are in discussion.

Argenta Discovery will focus entirely on the early stage of drug discovery, leaving the capital-intensive phase of clinical evaluation and drug development and the later stage of drug marketing to its partners in industry.

A key part of Argenta Discovery’s philosophy is to ensure that its academic partners share in the success of its drug discovery programmes. A proportion of the income generated by each programme will be shared with the appropriate academic institution.

Commenting on the deal, David Brister of MVM, leading the venture capital syndicate, said ‘We are delighted to have been able to work with Aventis to create this new company, and we are grateful for the extensive help we have had from Aventis executives worldwide to make this happen.’

Daniel Morgan of 3i said, ‘Argenta Discovery is a superb example of a collaboration between leading academics, industry and finance. It has all of the ingredients needed to become a significant and successful player in its market.’

Chris Newton, of the Aventis MBO team, said ‘the Dagenham team pays tribute to all the hard work of the Argenta Discovery’s executives who have encouraged us to go forward with our joint plans over the past nine months. We are also grateful to Aventis’ senior management who have given us enormous support and advice throughout the process.’

Professor Christopher Edwards, Principal of Imperial College School of Medicine, said ‘The successful launch of Argenta Discovery brings together the strengths of the Imperial College Department of Chemistry and Imperial’s very large new Medical School. The synergy between these two world class research centres presents a remarkable opportunity to match new understanding of common diseases with novel therapies.’

Professor Tony Barrett, Glaxo Professor of Organic Chemistry at Imperial, said ‘I am absolutely delighted to be involved in Argenta Discovery which, I believe, has an excellent future in pharmaceutical discovery and innovation. I welcome the early involvement of a major pharmaceutical company, Aventis, and I look forward to working with a stellar team of industrial scientists, academics and experienced managers.’

David McMeekin, Chairman of Company Guides, said, ‘Company Guides is delighted to have helped to create an exciting new company which brings together academia, industry and the City on terms which are beneficial to all.’

Notes to Editors:

Drug Discovery and Development

Biomedical research generates novel disease ‘targets’, against which selected compounds are tested. Compounds which interact in a particularly promising way (‘leads’) are then modified and tested further - this is known as the process of ‘lead optimisation.’ When a series of compounds has been through this process successfully, there results a patentable ‘validated lead.’

It is high quality validated leads, tested against a flow of novel disease targets from Imperial and other universities, that Argenta Discovery will be selling to the pharmaceutical industry.

The pharmaceutical industry needs these validated leads to feed into its drug development pipeline. Once in the pipeline, the validated lead has to pass numerous hurdles before it can reach the market as a drug. It takes around ten years from discovery to first marketing of a drug and the average cost is estimated at over US$300m.

Because so many validated leads fail to reach the market as a drug, it is estimated that each major pharmaceutical company needs an average of 30 to 60 such leads to enter its drug development pipeline every year if it is to produce revenue growth of 10 percent annually. The industry recognises this need and has sought partnerships with companies able to offer validated leads. It is also seeking higher quality, more robust leads to help reduce the failure rate within the expensive and lengthy drug development pipeline.

One way of improving the likely success of a lead is early collaboration between medicinal scientists and chemists, as envisaged in Argenta Discovery. Traditionally, university-based medical research has few links with academic chemistry departments. The two disciplines often only come together within large pharmaceutical companies, well down the development pipeline. This results in costly delays in eliminating unsuitable compounds.

Imperial College of Science, Technology and Medicine

Imperial College is the largest applied science-based university in the UK. It has more than 9,000 students, of which about a third are postgraduate. Argenta Discovery will be working with both the School of Medicine and the Department of Chemistry at Imperial.

The School of Medicine is one of the largest academic biomedical research groupings in Europe, with turnover that accounts for over half of the external research income of the entire College. It was created by the merger of two undergraduate schools (St Mary’s Hospital Medical School and Charing Cross and Westminster Medical School), with two postgraduate schools (the Royal Postgraduate Medical School at Hammersmith Hospital and the National Heart and Lung Institute at the Royal Brompton Hospital). The School’s high quality biomedical research generates innovative targets for new drugs and it is a selection of these targets that will be developed by Argenta Discovery.

Argenta Discovery will also work closely with Imperial’s Department of Chemistry, which has an outstanding record in areas that are key platform technologies for early stage drug discovery.

The financial benefit to Imperial from the exploitation of its technology via Argenta Discovery will provide support for further research.

The key figures at Imperial behind the successful creation of the Company were Professor Christopher Edwards, Principal of the Medical School, Professor Anthony Barrett, Glaxo Professor of Organic Chemistry and Professor William Wakeham, Deputy Rector of the College and Pro-Rector (Research). Professor Edwards and Professor Barrett are directors of Argenta Discovery.

Aventis

Aventis SA (NYSE: AVE) is one of the world’s leading life science companies, focused on two core business areas - pharmaceuticals and agriculture. With global corporate headquarters in Strasbourg, France, Aventis employs around 90,000 people in 120 countries and recorded pro forma sales in 1998 of euro 21 billion (US$21.65 billion). Aventis was launched in December 1999 through the merger of Hoechst AG and Rhône-Poulenc SA.

Aventis Pharma AG is the pharmaceutical company of Aventis SA. Aventis Pharma is dedicated to treating and preventing human disease through the discovery, development, manufacture and sale of innovative pharmaceutical products aimed at satisfying unmet medical needs. Aventis Pharma focuses on important therapeutic areas such as cardiology, oncology, infectious diseases, arthritis, allergies and respiratory disorders, diabetes and the central nervous system disorders. Aventis Pharma has its corporate headquarters in Frankfurt, Germany. Closely aligned with Aventis Pharma are Aventis Pasteur, a world leader in vaccines based in Lyons, France, and Aventis Behring, a world leader in therapeutic proteins headquartered in King of Prussia, Pennsylvania, USA.

Aventis Pharma is supporting the MBO team with a major research contract, the supply of equipment, and the use of its Dagenham facilities until Argenta Discovery’s own facilities in Harlow, Essex are ready.

The Aventis MBO Team

The Aventis MBO team comprises 26 scientists currently based at the Aventis Pharma site in Dagenham, Essex. The four senior members of the team are Dr Chris Newton, the Company’s Chief Scientific Officer, Dr Alan Roach, Director of Marketing and Business Development, Dr Don Daley, Director of IT and Analytics, and Dr Peter Lockey, Director of Biochemistry and Screening. They form the core of what will be a team of over 40 scientists.

Directors of the Company

David White is to be appointed Chairman of Argenta Discovery. David, previously with ICI, Innovex and Quintiles International, has had many years experience in the global pharmaceutical industry and is now on the Board of a number of early stage health care companies. He will take over from David McMeekin, Chairman of Company Guides, who has acted as interim chairman whilst the Company was seeking funding. A CEO with substantial experience of the industry will be appointed shortly. The Board will also comprise Professor Christopher Edwards (Principal of Imperial School of Medicine), Professor Tony Barrett (Glaxo Professor of Organic Chemistry at Imperial), David Brister (from the venture capitalists, MVM) and Bruce Powell, CFO. Other Board appointments will be announced in the future.

The Venture Capital Syndicate

The venture capital syndicate was led by MVM. Other members of the syndicate are 3i, TTP Ventures and Genavent.

MVM Limited is a venture capital company that manages a specialist £40m life sciences fund raised from a group of sophisticated institutional investors. MVM specialises in the creation of new healthcare companies. One of its key distinguishing features is that it has rights over all technology owned or controlled by the MRC and which the MRC has rights to exploit.

3i Group plc is Europe’s leading venture capital company. The Group invests in ambitious, growing businesses in all sectors. It provides funding for growth, recovery, management buy-outs and buy-ins.

3i has a network of 39 offices across three continents. Overall, 3i has invested almost £11 billion in over 13,400 businesses (including co-investment funds). It has a portfolio of investments in almost 3,000 companies, with a combined valuation of £6 billion.

TTP Ventures, which is Cambridge-based, invests in UK and European businesses which are still at an early stage in their development. The technologies of interest match closely TTP’s in-house expertise and include IT and telecommunications, medical equipment, instrumentation, materials and drug discovery technology.

TTP Venture Fund is a £35m fund whose investors include the Boeing Company, Siemens Venture Capital, Abbey National Bank and NPM Capital of the Netherlands. TTP Venture Managers Ltd, which manages the fund, is wholly owned by TTP Group plc.

Genavent is a venture fund created in January 2000 by Aventis and Société Générale Asset Management. The fund is based in Paris and its size is presently 30m euros. Genavent invests in companies in areas such as genomics, biochemistry and chemistry or companies with advanced technologies which provide access to new medicines, vaccines or agricultural products.

Société Générale Asset Management, a subsidiary of Société Générale Group, is a specialist in third party asset management and currently manages 150 billion euros.

Company Guides

Company Guides is a private investment firm with a corporate advisory arm and a seed-capital fund. Its main focus is in the areas of science and TMT (technology, media and telecoms).

Company Guides’ corporate advisory arm is research based and specialises in devising innovative solutions to strategic or funding problems. It helps management at all stages of a company’s development from start-up to expansion, including MBOs, MBIs, acquisitions and disposals. It has its own seed-capital fund and also offers access to early stage investments to a network of high net worth private investors.

erly Head of Corporate Finance at Midland Bank, and Christine Munro, formerly Head of UK Media Research at ABN AMRO. For more information see www.companyguides.com

Company Guides has advised Argenta Discovery from the time that it was formed. It contributed to seed-capital funding, helped to complete the Information Memorandum and negotiate with Imperial College, assisted in the identification and recruitment of certain key members of the management team, negotiated the alliance of the Company with the Aventis MBO team and has now successfully negotiated terms with the venture capitalists.

For further information, please contact:

David McMeekin
Company Guides
Telephone 020 7247 6305
Mobile
07785 926077