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Biosym in Drug Field by Design

SAN DIEGO COUNTY BUSINESS EDITOR

These days, the conception and development of a new drug are as likely to start at a computer workstation as in a research laboratory. And Biosym Technologies, an up-and-coming San Diego software company, has become a significant force in the new approach.

Biosym Technologies publishes software that helps pharmaceutical companies create molecular models of potential drugs on computer screens. Based on their theoretical properties, the molecular models are tested for their potential as drugs. Chemical manufacturers also buy the software to study new products and chemical processes.

Founded in 1984 by two UC San Diego research chemists, the company is part of the “rational drug design” phenomenon, the buzz words that denote the process by which drug companies use computer models of molecules to bypass expensive and time-consuming laboratory research.

The computer-aided drug design tools sold by Biosym Technologies and its competitors are not foolproof: much additional research is required before a drug can be converted from concept into a drug ready for human testing. But, at minimum, the software gives manufacturers a significant head start in product development.

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“The bottom line is, any time you can sit down at a computer and do experiments and gain information from that, it saves time in the laboratory. And going in the lab and doing research is expensive,” said Robert Garten, vice president for research at Catalytica, a Mountain View-based company involved in the development of chemical and fuel process technology. Catalytica is a Biosym Technologies customer.

Biosym Technologies software “allows you to simulate biological systems, the interaction or properties or behavior of large molecules,” said Herschel Weintraub, head of theoretical chemistry at Marion Merrill Dow Research Institute in Cincinnati. Understanding those mechanisms helps researchers learn “how to arrest a disease or reduce symptoms, which is basically what drugs are supposed to do,” Weintraub said.

If rapid growth is any sign, Biosym Technologies is doing well indeed. The company expects sales for the current fiscal year ending in June to reach $32 million, up from $22.8 for 1991, $17 million in 1990 and $8 million in 1989. The firm has 160 employees and is expected to hire 45 more over the next year, President Kevin Roberts said. Of the employees, 66 hold Ph.D.s.

Biosym Technologies is not in the business of designing drugs itself, only creating the computer programming tools that enable its clients to develop them. Those clients, who total nearly 500, include many of the nation’s major pharmaceutical and chemical companies, from Bristol Myers/Squibb and Upjohn to Exxon and Dow Chemical.

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The company, which has raised $5 million in venture capital from investors, including Sequoia Capital of Palo Alto, Paribas Bank of France and Mitsubishi of Japan, faces a slough of competitors.

But the company has emerged as one of the leaders in molecular modeling software, according to the Aberdeen Group, a Boston-based management consulting and computer research organization that recently surveyed the industry.

One of the keys to Biosym Technologies’ success is the three consortiums the company set up for its customers, said Bruce Gelin, an independent consultant who co-authored the Aberdeen Group report.

Convening at least twice a year, the three groups divide along industry lines and provide a forum where clients can exchange information and tell Biosym Technologies what they want in updated software.

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Consortiums have been set up for three kinds of clients: those developing products in biotechnology, polymers and catalysis. Polymers are “building block” molecules used in a variety of products, ranging from tires to clothing. Catalysis is the process by which chemical agents speed up or enhance a chemical process.

Each member pays up to $75,000 a year and signs three-year contracts to receive updated versions of the Biosym Technologies software. That the customers are willing to pay that high a fee is a tribute to the company’s technology, which was first developed by founders Arnold Hagler and Donald Mackay.

The consortium arrangement benefits the customers because it keeps them current, Roberts said. And it benefits Biosym Technologies because it gives it a stream of revenue with which it can fund its business growth.

“None of the other companies have done that successfully,” Gelin said. “They have a great cash flow from this, and so the company can hire programmers to give people what they want. Other companies have to fund product development out of sales.”

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