Former CEO Alexis Borisy Voices Mixed Feelings on CombinatoRx Saga

7/6/09

Alexis Borisy stepped down from his chief executive role at drug developer CombinatoRx (NASDAQ:CRXX) last week after nine years on the job. His departure was revealed on the same day as the planned merger between Cambridge, MA-based CombinatoRx and Vancouver’s Neuromed Pharmaceuticals. I caught up with Borisy, an Xconomist, on the heels of the merger announcement to hear his thoughts about the deal and to discuss his plans for the future.

Borisy isn’t saying what his next move will be, but he sounds optimistic about his career prospects and the CombinatoRx-Neuromed merger. The merger deal initially gives owners of each of the two firms a 50-percent stake in the combined operation. Neuromed chief executive Christopher Gallen is expected to become CEO of CombinatoRx after the planned completion of the merger in the fourth quarter of 2009. Borisy credits Gallen with leading efforts at Neuromed to develop its lead anti-pain drug, called Exalgo, which is an oral, extended-release version of the opioid drug hydromorphone. The FDA is expected to say whether it will approve the drug on Nov. 22.

It’s been a difficult year for CombinatoRx and Borisy. The company’s stock lost three-quarters of its value when it reported early last October that its experimental osteoarthritis drug, Synavive, failed in a mid-stage clinical trial. To conserve cash, Borisy cut about two-thirds of the company’s staff, or about 100 workers, last year alone. He says that was a “miserable” experience to go through, especially after spending the previous nine years of his life founding and building the company. Also, Borisy says activist investors such as the Biotechnology Value Fund have bought up large stakes in CombinatoRx since the steep decline in its stock price last October.

“After we had the setback late last year,” Borisy tells me, “I felt an obligation, one, to get the trajectory positive again, as well as to do a transaction to build for the long term.”

A key to the merger with Neuromed, Borisy notes, is that it adds resources to further develop CombinatoRx’ experimental drugs and discovery platform. As I wrote in last week’s piece about the planned merger, Neuromed recently sold marketing rights to its pain treatment to Mallinckrodt, a subsidiary of Irish medical products giant Covidien, which has promised to pay up to $40 million to Neuromed upon approval of the drug as well as tiered royalties on sales of the product. And that could be a nice revenue stream for CombinatoRx if the drug is approved and the merger goes through.

Not surprisingly, Borisy is still a big believer in CombinatoRx’ discovery platform. The platform uses computer-screening methods to find novel treatments based on combinations of existing pharmaceutical compounds. Though the firm’s treatment Synavive—which combined a generic steroid, prednisolone, with dipyridamole, an anti-blood clotting drug—fell short in clinical trials, the company has other experimental products in its pipeline such as CRx-401 for Type 2 diabetes and CRx-197 for dermatological conditions. In fact, the firm reported in May that CRx-401 showed in a mid-stage clinical trial that it was better than an existing therapy in helping diabetics control their blood sugar. In a small vote of confidence in the discovery technology, Swiss drug giant Novartis agreed to pay CombinatoRx an upfront fee of $4 million in a deal to tap CombinatoRx’ discovery technology to find combination treatments for cancer.

Robert Forrester, who had been chief financial officer of CombinatoRx since 2004, is now serving as interim CEO of the company while the merger is being finalized.

Borisy, who left his doctoral studies in chemistry to launch CombinatoRx in 2000, says he sees his stepping down from his post at the company as an opportunity to pursue another entrepreneurial endeavor—but he’s not ready specify exactly what that next move will be. Meantime, he is serving as chairman of Forma Therapeutics, a Cambridge, MA-based startup that is pursuing new treatments for cancer and resistant infections. (Borisy is also not leaving CombinatoRx empty handed; his severance package includes a lump sum payout of $932,500, two years of free health coverage, and a separate payment of $150,000 as part of a bonus agreement, according to a regulatory filing.)

It’s clear that the former CEO of CombinatoRx has mixed feelings about his departure. “I’ve been itching to do this for a while,” he says. “At the same time there’s an element of sadness because CombinatoRx has been my baby.”

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