Fine and specialty chemicals company Avecia is planning to spin out part of its pharmaceutical technologies portfolio into a new company to be called Reaxa. The move should complete before the end of this quarter.
Dr Peter Jackson, who will serve as CEO of the new company, took time out of the ongoing Informex show to tell In-PharmaTechnologist.com that the new company would be formed via the acquisition of Avecia's Manchester, UK-based core polymer group.
This group was behind the development of what will be Reaxa's core products - the Pd EnCat range of encapsulated catalysts, QuadraPure precious metal and chemical scavenging resin and QuadraGel synthesis support resin, used in peptide and oligonucleotide synthesis.
Reaxa will be a combined venture between Avecia, Prof Steven Ley of Cambridge University (whose research has been behind the development of what will be Reaxa's core technologies) and the Reaxa management team, with none of he parties holding a majority stake in the new company.
The rest of Avecia's extensive pharmaceuticals portfolio, stretching from process development to contract manufacturing of chemical and biologic drugs, will remain with the parent company.
"Creating Reaxa as an independent operation was the clear next step in the relationship between Steve Ley and Avecia," said Jackson, who said that the stand-alone structure would in no way inhibit the firm's ability to compete with rivals such as Johnson Matthey, which is also building a business in encapsulated catalysts.
"The key to competing in the marketplace is to have better products, and benchmarking studies indicate that we do," he said. Meanwhile, the company can draw on Avecia's analytical and manufacturing capabilities, as well as the latter's sales forces in North America and Japan. And its exiting relationship with Sigma-Aldrich covering the distribution of products into the R&D sector will be unaffected.
There are other advantages to independence too. Reaxa will find it easier to sell its products and services to Avecia's rivals the fine chemicals sector once it is spun out of the group.
The completion of the deal is dependent on the raising of funding (an undisclosed seven figure sum) to buy the core polymer group and fund the addition of new commercial and R&D personnel. This is in the letter stages of negotiation, said Jackson, and will create a company with an annual turnover in the first year (from July 2004) of around $1 million (€765,000).
Reaxa will break even in its first year, and will be cash-generative in its second, with the aim of building a company with annual revenues of $20m within four to five years, he said. Around half of that figure will come from product sales, with the remainder coming from services such as catalyst optimisation.
Reaxa's lead product Pd EnCat, introduced towards the end of 2003, has already revolutionised many of the most common chemical reactions in pharmaceutical syntheses by making them easier to carry out, more environmentally friendly and cheaper.
Reactions such as Suzuki couplings used to involve the mixing of two complex liquids - each containing various elements such as metal salts, catalysts, ligands, and cofactors in a solvent. This resulted in all sorts of processing obstacles, including mixing problems, solvent incompatibility and precipitation of the components. And after the reaction came the often-tricky business of separating all these components out to get at the product of the reaction and retrieve often-expensive ingredients.
With the Pd EnCat range, one reaction mixture of ligands etc is created, and the catalyst is added as a powder, much like throwing sand into a cement mixer. This cuts down on the use of solvents and means there s less work-up required. Meanwhile, the solid nature of the catalyst reduces the risk that of palladium leaching out and contaminating the plant, and also means that the catalyst can be recovered by simple filtration and re-used.
Reaxa is working on a number of pipeline products, including an extension to the Pd EnCat range that will incorporate the widely used ligand BINAP in the product's polyurea matrix, and a palladium-based product with a nanostructure that will be of particular value in transfer hydrogenations. EnCat variants with other metals - including rhodium, ruthenium and platinum - are also planned.
Meanwhile, a development product based on osmium tetroxide - which can be used as an oxidative catalyst - is also in trials in Japan. This catalyst is not used very often because it is unstable, evaporating at room temperature even though it is a solid, and can cause blindness. Reaxa is developing an encapsulated version that prevents leaching and is stable for six months.
Reaxa will also offer drug conjugation technologies and PEGylation, used to extend the half-life of drugs in the body.
Jackson will retain his position as vice president, pharmaceuticals, at Avecia as well as taking the CEO role at the new company. Meanwhile, Dr David Pears will be chief technology officer at Reaxa, and Dr Angela Morris will join the company from Cambridge University and serve as director and company secretary.
Prof Ley will chair the Reaxa's scientific board while his colleague Dr Ian Baxendale will provide technology consultancy to the firm.