IBJNews

Marcadia Biotech principals ponder next course

Back to TopCommentsE-mailPrintBookmark and Share

As if it wasn’t enough of an achievement to sell a 5-year-old startup for what may total $537 million when all the money is counted.

The 11-employee Marcadia Biotech Inc. was generating enough cash flow prior to its sale to Swiss lifes sciences giant Roche that its investors ran into an unusual problem.

“Our venture-capital firms were going crazy. They never had a company that had to pay taxes,” said Fritz French, former CEO of Carmel-based Marcadia.

French and Kent Hawryluk, vice president of business development, on Tuesday morning outlined the company’s brief but lucrative life.

BioCrossroads' “Frameworx” discussion series drew more than 50 life science leaders to the 48th floor of Chase Tower. The setting was appropriate, given Carmel-based Marcadia’s lofty accomplishments. It’s become an affirmation of sorts that a company far removed from the venture-capitalist-clustered East and West Coasts can rise and flourish in central Indiana.

“It’s the kind of story that makes you say, ‘If these guys can do it, maybe I can, too,’” said David Johnson, CEO of BioCrossroads.

December's sale to Switzerland-based Roche is expected to generate at least $287 million for the company’s owners initially. Investors could reap an additional $250 million if one of Marcadia’s experimental drugs to treat diabetes reaches market.

Hawryluk noted the benefits of Marcadia’s earlier partnership with Merck, which helped finance the firm’s growth, in addition to the more than $15 million in venture capital that was raised.

Although neither he nor French would elaborate on the value of that partnership, “we still had $37 million on the books when we sold the company,” French said.

Marcadia was founded by Hawryluk and former Eli Lilly and Co. scientists Richard DiMarchi and Gus Watanabe.

The participation of the former Lilly scientists provided “instant credibility,” French said, an advantage that many startups don’t enjoy.

Marcadia also successfully deployed what has become standard practice of major pharmaceutical companies in recent years—operating on largely a contract basis with outside firms. Much of the work was conducted in DiMarchi’s laboratory at Indiana University, with compounds it generated outsourced to other partners, including a research center at the University of Cincinnati.

French and Hawryluk told of a razor-edge walk to engage interest in partners—first those with which they’d enter licensing agreements and later to seek a buyer.

“We really felt that we were getting terms we might not see again for at least a year or two,” Hawryluck said of the process as momentum for a sale grew last summer.

Playing into Marcadia’s favor was a handful of failures Roche had of late in snapping up small players in the diabetes sector.

“Wall Street had expected them to be in this area,” French said.

Marcadia is being absorbed within Roche. French and Hawryluk have been talking to Roche execs about possibly licensing a short-acting glucagon that Marcadia has been developing that could be used to treat those suffering episodes of low blood sugar. A deal could spawn a new company for the duo, but French was unsure Tuesday whether an agreement could be reached.

If that doesn’t transpire, “I don’t know (what I’ll do),” he said, responding to an audience question. “I’ll probably take a few months and think about what I’ll do next.”
 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. The east side does have potential...and I have always thought Washington Scare should become an outlet mall. Anyone remember how popular Eastgate was? Well, Indy has no outlet malls, we have to go to Edinburgh for the deep discounts and I don't understand why. Jim is right. We need a few good eastsiders interested in actually making some noise and trying to change the commerce, culture and stereotypes of the East side. Irvington is very progressive and making great strides, why can't the far east side ride on their coat tails to make some changes?

  2. Boston.com has an article from 2010 where they talk about how Interactions moved to Massachusetts in the year prior. http://www.boston.com/business/technology/innoeco/2010/07/interactions_banks_63_million.html The article includes a link back to that Inside Indiana Business press release I linked to earlier, snarkily noting, "Guess this 2006 plan to create 200-plus new jobs in Indiana didn't exactly work out."

  3. I live on the east side and I have read all your comments. a local paper just did an article on Washington square mall with just as many comments and concerns. I am not sure if they are still around, but there was an east side coalition with good intentions to do good things on the east side. And there is a facebook post that called my eastside indy with many old members of the eastside who voice concerns about the east side of the city. We need to come together and not just complain and moan, but come up with actual concrete solutions, because what Dal said is very very true- the eastside could be a goldmine in the right hands. But if anyone is going damn, and change things, it is us eastside residents

  4. Please go back re-read your economics text book and the fine print on the February 2014 CBO report. A minimum wage increase has never resulted in a net job loss...

  5. The GOP at the Statehouse is more interested in PR to keep their majority, than using it to get anything good actually done. The State continues its downward spiral.

ADVERTISEMENT