GlaxoSmithKline in licensing deal with enzyme-producer Codexis

Codexis Inc.'s enzymes and other tools allow cheaper, more environmentally friendly manufacture of drugs.
Codexis Inc.'s enzymes and other tools allow cheaper, more environmentally friendly manufacture of drugs.
Posted: July 16, 2014

Shifting needs of players in the pharmaceutical industry came together Monday afternoon when GlaxoSmithKline P.L.C. announced a licensing deal with California-based Codexis Inc., which produces enzymes and a related process that allows drugmakers to manufacture medicines less expensively and in a more environmentally friendly manner.

London-based GSK, which has operations in and around Philadelphia, will pay Codexis $6 million up front and $19 million more after the technology is successfully transferred. Codexis could make $5.75 million to $38.5 million per project based on GSK's successful application of the technology.

GSK needs this deal because, like other big pharmaceutical companies, it wants to pare costs while developing medicines that boost profits.

For years, drugmakers have used vats of chemicals to get particular reactions, and combinations of reactions to make medicine. The vats and solvents used in the process take up space and cost a lot to dispose of properly. Synthetic enzymes are supposed to allow drugmakers to skip steps, use less space, and create less waste.

GSK and others have used synthetic enzymes in spots for several years, but Codexis said in a statement that this was the first time it had licensed its "protein engineering platform technology" to any party in health care.

The deal is meant to accelerate and "modernize a manufacturing process that had been stagnant for 50 or 80 years," said John Baldoni, a senior vice president of platform-technology science at GSK. His group will manage this technology at the company's facility in Upper Merion, then later in Upper Providence. The research work done in those facilities will then be applied to GSK manufacturing sites elsewhere, and Baldoni suggested it could mean a tenfold reduction in space requirements in factories.

Codexis is a much smaller company - and needs the cash. Founded in 2002 and based in Redwood City, Calif., it faces challenges common to some life-sciences start-ups. It also has some very big clients: Drugmakers Novartis, Exela, and Merck accounted for 77 percent of first-quarter revenue, according to Securities and Exchange Commission filings.

But Codexis, perhaps, was the type of company President Obama had in mind last week when he urged big companies to pay their bills to small companies sooner. Those three drugmakers accounted for 69 percent of what was due Codexis at the end of the first quarter.

Hurt by Shell Oil's not renewing a contract with its biofuels division, Codexis went from nearing profitability in 2010 to increasing losses through the end of 2013, with corresponding cuts in its workforce, which was 125 at the end of 2013.

Big Pharma has its own employment turmoil. GSK, which dramatically changed its sales force-compensation system to the dismay of many reps, had 103,483 worldwide employees at the end of 2007 and 99,451 at the end of 2013, according to annual reports.

Asked how Monday's deal would affect local employment, Baldoni said a group of 10 to 12 would grow to 20 to 24. Add a group in England, and the total would be 45, when there were none three years ago.

"People are adapting," he said. "People are retraining and reinventing themselves for a new way of manufacturing."



comments powered by Disqus