Alnara Pharma Used “Flexible” Strategy on Road to Eli Lilly Deal

7/8/10

Cambridge, MA-based Alnara Pharmaceuticals made headlines before Fourth of July weekend when the drug giant Eli Lilly agreed to buy the startup and its late-stage drug for pancreatic insufficiency for an undisclosed sum. But what might have been lost in all the hoopla about the deal was that there are only 21 full-time employees at Alnara.

Indeed, Alnara used what CEO Alexey Margolin called a “flexible model” en route to its buyout agreement with Lilly (NYSE:LLY). It’s an example of how biotech startups are trying to achieve, and in this case attaining, big successes with relatively modest resources.

The startup, which has raised a total of $55 million in venture capital, has relied heavily on its full-time staff of experienced people and a large number of contractors since it was founded in July 2008. Bob Gallotto, the chief business officer of Alnara, said that the company has kept its number of full-time staff members low to limit spending. It also used a contractor for manufacturing, Lonza, rather than investing in its own own large-scale drug production facility.

“On any one day we may have 40 people in the office, 25 of them coming in and doing different things one day a week here or there,” Gallotto said.

Biotechs have had to do more with less by necessity because of the lack of available capital since the financial meltdown in 2008. Alnara is among a growing number of biotech startups that have adopted business strategies or models that include the use contract workers, partners, and lean staffs of highly capable people to move their drugs toward the market. Another local example is Cambridge-based Zafgen, a developer of obesity drugs that complements its core staff of three senior executives with a network of consultants and contract research organizations, company CEO Tom Hughes has told me.

These companies have learned from the spending sins of their predecessors in the drug-development game. Take Altus Pharmaceuticals, the … Next Page »

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