It’s been about two years since Allergan PLC was acquired in a friendly manner by Parsippany, N.J.-based Actavis after deftly deflecting a hostile takeover attempt by Canada-based Valeant Pharmaceuticals International Inc. and activist investor Bill Ackman’s Pershing Square Capital Management LP.
Several senior executives and scientists, in the midst of the action, left to start their own companies, and these entrepreneurs are taking the kinds of risks that Allergan is not anymore, said Jinsong Ni, who was a scientific researcher and executive at Allergan for nearly 13 years.
Allergan, instead of feeling threatened by the upstarts, is doing business with some of them and could engage with other startups as they develop.
“As Allergan adapts (an) ‘open science’ policy and focuses more on later-stage drug development rather than early-stage discovery, new startups are created to take risks to develop projects to complete Phase II clinical trials,” said Ni, who is president of the Sino-American Biomedical and Pharmaceutical Association, Los Angeles/Orange County Chapter, which promotes the life-sciences industry between the U.S. and China.
Ni said open science refers to a project or product originating either in-house or outside of the company. Phase II trials typically are performed on groups of up to 300 people and designed to assess how well a particular drug works (see related story on page 21 in Special Report.)
“If successful in the clinical trials, these new startups would team up with Allergan to get drug approval to the market.”
One of the first out of the gate was Fred Ouyang, a scientist at Allergan for about nine years. He co-founded Alan Laboratories in March 2014 with business partners Yong Qiu and Min Xia.
Ouyang left right before the acquisition because he thought his personality was better suited for a small company than a “well-established multi-national,” he said.
He’s now chief operating officer of Alan Labs, which focuses on research and development of generic drugs, particularly in tablet and capsule forms.
Ouyang said that working at Allergan helped him in the company’s founding because he learned about the process of drug development and obtained technical knowledge.
“A good drug has to have a set of desirable characteristics,” he said. “Our job is to select the drug candidate with the best combination of the characteristics. At Allergan, we learned the art of the selection process and criteria, which helps to advance the drug candidate along the development process.”
He said he also was able to build a professional network from connections made at Allergan.
Alan Labs has received $9 million from private sources, Ouyang said.
Market Opening
Irvine-based WBR Laboratories Inc. was co-founded by Alex Lu, who worked as a scientist at Allergan for 12 years.
He’s president of the company, which provides biological research products, such as antibodies, to universities, research institutes and others. Co-founder Zhen Zhu was a scientist at Allergan for more than 13 years.
They decided to start the company in late 2014 based on seeing a market for research support of companies focused on medical devices and pharmaceuticals, many of which are based in Southern California, he said. Allergan already is one of its customers.
The startup is so far self-funded; Lu has put in approximately $75,000, he said, adding that the company is in the black.
Botox-Like
Fauad Hasan, former Allergan director of biologics manufacturing and development, co-founded drug company Bonti in Newport Beach. It’s developing a drug that works similarly to Allergan’s Irvine-centered Botox and is in the midst of raising Series B financing in an effort to get $20 million for its second phase of clinical studies.
Hasan is the chief executive and president. He left Allergan in May of last year, following the acquisition.
“I had the entrepreneur bug in me for quite some time,” he said in an email. “Allergan provided me with a great development and growth opportunity. ”
Bonti’s lead product is a neuro-toxin, as is Botox, but is a different molecule. Hasan said it works much faster and is more conducive to treating certain ailments, such as muscle spasms, musculoskeletal pain, and the recovery of muscles and joints due to injury or surgery.
Bonti closed a Series A round in August 2015 that netted $9 million. The funds are being used for drug development and to start the first human clinical studies. It just finished manufacturing its drug for the studies, which Hasan said it plans to start by year-end. They will be spread over multiple sites, one of them in Orange County.
Double the Effort
Scott Whitcup was so inspired that he started two new companies last December: Akrivista and Whitecap Biosciences, both based in Mission Viejo.
He was head of Allergan’s Ophthalmology Therapeutic Area for four years, followed by an 11-year stint as executive vice president of research and development.
Whitcup co-founded Akrivista with a focus on ophthalmology and dermatology. The other co-founders are Michael Garst, a former senior vice president at Allergan in chemical sciences, and Orest Olejnik, former senior vice president of Allergan’s Global Pharmaceutical Sciences division.
“We spent months thinking through how patients are currently treated for a number of illnesses and conditions to identify areas where there was an opportunity for a radical change in the treatment paradigm,” he said. “Some of the products we are working on are new molecules, but others are existing compounds used in a unique way.”
Akrivista is working on three different treatments, formulating the science, patenting them, and making compounds to get them into the clinics, he added.
Whitecap licenses technology others have started to create, working on further developing and commercializing it. He said he may merge the two companies at some point.
Akrivista has been self-funded by people in the company, including Garst, Whitcup said. It has enough money to fund projects for the first two years, so there’s no pressing need to knock on the doors of venture capital firms right now, he added.
One of the biggest contrasts between starting his own companies and working at Allergan is that he and his team spend more time thinking about ideas and less time spending money on “unnecessary activities,” he said.
“Thinking is cheap but important,” he said. “I think it’s a good model to live by. … We’re very cautious. Most of the money, our big spends, are for (when we get to clinical studies).”
One of the best features of working at Allergan, he said, was the company’s approach to fostering interdisciplinary knowledge. For example, his research and development team would spend time with the commercialization, manufacturing and finance departments, he said.
“You gained insight into more than just your specified area,” he said. “In today’s economy, you have to ensure your drugs are cost-effective and understand the commercial opportunities, pricing and reimbursement. For all of my [future] projects, before they get into the clinic, I already think about who will pay for them, how will they be reimbursed, and what are the challenges five to 10 years from now? A lot of that critical thinking you get from spending 16 years or so at Allergan with good training.”
