Homegrown biotech success story plans to flourish in OKC
By Stephen Prescott
Copyright © 2015, The Oklahoma Publishing Company
Oklahoma City has hit its share of biotech home runs.
Alexion, the biotech giant with a market capitalization of almost $40 billion, grew out of discoveries made at the Oklahoma Medical Research Foundation. Likewise, work at the University of Oklahoma Health Sciences Center gave birth to Novazyme Pharmaceuticals, which Genzyme purchased for more than $200 million in 2001. And Myriad Genetics acquired OMRF spin-off Crescendo Biosciences in 2014 for $270 million.
But from our city and state’s economic perspective, these were not unqualified successes. That’s because even though the seeds of all three of these companies were planted in Oklahoma City, their fruits were harvested elsewhere.
Alexion hit the road early, following its start-up investors’ money to Connecticut. And while Crescendo and Novazyme initially established operations in Oklahoma City, these businesses—and the jobs they’d created—migrated to other states upon their acquisition by biotech behemoths.
Now, I’m happy to report a new Oklahoma City biotech success story. In October, another homegrown biotech company, Cytovance Biologics, was acquired for $205 million by an American subsidiary of a major Chinese pharmaceutical manufacturer. The best news is that, unlike Alexion, Novazyme and Crescendo, Cytovance is not going anywhere.
As a contract development manufacturing company, Cytovance makes investigational new drugs for use in clinical trials. It plans to expand its business to allow it to make larger batches of experimental drugs and, ultimately, to manufacture commercial drugs.
Unlike Novazyme’s or Crescendo’s laboratories, this business is not easily portable. Thus, the state-of-the-art facility that Presbyterian Health Foundation initially built for the company, as well as the warehouse and manufacturing operations center that Cytovance subsequently constructed for itself in 2014, serve as anchors that should keep the company here for many, many years to come. And that is a very good thing.
After the company was founded in 2003 by former Novazyme employees, a coalition led by the Presbyterian Health Foundation, the Oklahoma City Urban Renewal Authority and the Oklahoma City Redevelopment Authority constructed a 30,000-square-foot manufacturing facility for Cytovance. The company underwent a rebirth of sorts when Novazyme co-founder Dr. William Canfield led a recapitalization and reorganization in 2005, which included fellow investors and local energy executives Aubrey McClendon and Tom Ward. When the company hired Darren Head as CEO three years later, it had a handful of employees and $1.5 million in revenues.
By 2011, with a staff that had grown to 68 and sales in excess of $10 million, Cytovance closed on a new round of financing. The investors were the Presbyterian Health Foundation and Great Point Partners, a Connecticut-based private equity firm.
In the ensuing years, Cytovance has grown steadily. It’s continued to build its manufacturing business, which now counts 45 clients worldwide. That list includes Oklahoma City’s own Selexys Pharmaceuticals, for which Cytovance is making an experimental drug for the treatment of sickle-cell anemia.
When sales hit almost $40 million—and profits $4 million—Hepalink USA acquired the company. That sale will accelerate Cytovance’s expansion plans, which include the addition of several major pieces of scientific equipment that will increase its production capacity.
With this expansion will also come more employees: Cytovance is planning to recruit another 50 staff members to join its 165-person workforce. And with an average wage of $75,000, these are highly compensated, intellectually rewarding positions. In other words, they’re the kind of jobs cities on the coasts would kill for.
These jobs, though, are staying right here. As are a good deal of the proceeds from the acquisition of Cytovance. Because much of the capital that helped Cytovance succeed came from Oklahoma investors.
They say that success breeds success. And I hope that this homegrown biotech success story encourages local investors to think about supporting Oklahoma biotech start-ups. There’s great value to be had here.
Stephen Prescott is president of the Oklahoma Medical Research Foundation. He can be reached at [email protected].