Cerylid Biosciences Ltd.

Cerylid Biosciences Ltd. is tapping the pharmaceutical potential in a collection of some 600,000 extracts of plants, microbes, and marine macroorganisms from Australia and South East Asia. The firm says it has identified nearly 350 active molecules, and has taken three into development. The company is keen to expose its libraries to good targets, and so is seeking partners.

Extracting value from natural products

• 576 Swan Street

• Richmond, Victoria

• 3121 Australia

• Phone: [phone]

• Fax: [phone]

• E-mail: [email protected]

• Web Site: www.cerylid.com.au

• Contact:Jackie Fairley, CEO

• Industry Segment:Biotechnology

• Business:Drug discovery via natural products and genomics

• Founders:Consortium of venture capitalists including Rothschild Bioscience Managers Ltd.; JAFCO (Asia ); Development Australia Fund Management Ltd.; Coates Myer & Co.; Amrad Corp. Ltd. and JBWere Private Equity

• Financing to date:$27 million dollars, Australian

• Employees:35

The land Down Under has been largely overlooked as a source of natural biological diversity, says Jackie Fairley, CEO of Cerylid Biosciences Ltd. That's perfectly okay with her, because it means Cerylid has better odds of tapping the pharmaceutical potential of its collection of extracts from plants, microbes (bacteria and fungi) and marine macroorganisms from Australia and South East Asia. Approximately 85% of Australia's 23,000 known species of higher plants are unique to that country. Together, they account for almost 10% of global plant biodiversity.

The start-up was formed in January 2000 through the buy-out of a drug discovery division of Amrad Corp. Ltd. , a drug development company listed on the Australian stock exchange. First known as ExGenix Ltd., the firm was renamed Cerylid Biosciences Ltd. in March 2001 for the Cerylidae family of kingfishers, meant to symbolize speed, precision and focus. By the time the division was spun out, Amrad had spent a lot of time and money forming a natural products portfolio—collecting samples during a seven-year period, via relationships with the proper authorities, and screening them for five years.

At the time of its formation Cerylid had several corporate partnerships along with a collection of some 600,000 extracts derived from source material gathered from alpine to tropical to arid desert regions, as well as Australia's Great Barrier Reef and Antarctica. The firm is screening the library, looking for novel compounds, on its own behalf and on behalf of collaborators. Current and past collaborators include Aventis SA , Chugai Pharmaceutical Co. Ltd. , Chiron Corp. and BioChem Pharma.

So far, so good. Fairley says Cerylid has identified nearly 350 active molecules, has taken three of them into development on its own behalf with partners, and is considering a number of others. For now, the firm will focus its efforts on finding compounds active against inflammation and cancer.

A small tree found in the Malaysian state of Sarawak, on the island of Borneo, is the source of a novel molecule that Cerylid calls CBL-316. The compound has been through a lot of in vitrotesting, Fairley says, and the firm has started in vivo work, some of it with the National Cancer Institute in the US. The molecule shows promising anti-cancer activity and may act via a unique mechanism, she says, explaining, "from its pattern of activity—the sorts of cancer cells it kills and which phases it kills them in—the compound's profile doesn't seem to resemble any existing classes of cancer drugs." Because there is so much resistance to current anti-cancer compounds, it would be quite significant for the start-up to find a compound that works in a different way. Fairley says, "to some extent it's a leap of faith, but it does appear to be novel."

Cerylid also has two blockers of TNF-alpha production in early-stage preclinical development as anti-inflammatory agents. Both of these compounds are derived from plants in the Northern Territory of Australia—one, from an arid desert area and the other from a lush tropical region. The source of one of these compounds has a relevant ethno-botanical use among Aboriginal peoples, Fairley says, though she declined to identify it. The company does not specifically go out looking for folk medicines, she says, even though it did just fund the publishing of a book about ethno-botanicals. Mostly, Cerylid's natural products chemists look closely at genus and species only when sifting hits.

Fairley is enthusiastic about the diversity in her firm's library, but acknowledges, "it is only potential value until you get to active compounds." Identifying truly active compounds is difficult, however, because many natural product extracts have non-specific toxicities and thus generate a high number of false positive results. Indeed, she says an average screen of 100,000 compounds can yield a hit rate as high as two percent—piling up 2,000 potential candidates. That historical problem is one reason Fairley believes major drugmakers have moved away from natural-product screening that they used to do routinely. She thinks her company can rekindle their interest.

Fairley believes the key to getting the full value out of Cerylid's assets—and distinguishing the start-up from other natural-products-based companies—is a proprietary "de-replication" process. Fairley won't say much about the details, other than to describe it as an automated, miniaturized way of getting high quality data sets on each active compound present in the extracts that initially register as hits.

"Before we developed the de-replication process, it would have taken months to sort through hits in a way we can now accomplish in a few weeks," Fairley says. The process yields a data set that effectively defines the profile of an extract, revealing aspects such as the polarity, bioactivity and molecular weights of the compounds present. "The source taxonomy can also tell you quite a lot about the sorts of compounds you're likely to find," she notes, adding that all of this information helps Cerylid's chemists pick the best prospects. The compounds that make it through the de-replication process are then isolated in larger amounts to determine their chemical structures. Those that look suitable for the target Cerylid or its partners have in mind may be taken straight ahead into preclinical testing or sent out of house for optimization.

Cerylid is keen to expose its libraries to as many good targets as possible, Fairley says, noting that the firm has identified a lot of interest on the part of small and medium-sized companies. She says that she's open to collaborating with firms of any size, provided they've got good targets and acceptable commercial terms can be reached.

The natural-products library is clearly Cerylid's core technological asset, but the start-up also has a gene-discovery platform that may eventually help it identify useful targets. Cerylid is the sole commercial partner of Australia's Cooperative Research Center for Discovery of Genes for Common Human Diseases (the Gene CRC), and as such has rights to the output of research projects on Type I diabetes, endometriosis, multiple sclerosis and other diseases. It is also collaborating with Oxagen Ltd. to further explore the genetics of endometriosis [See Deal]. Cerylid is also developing two botanical medicines in collaboration with a large European nutraceuticals company.—DE