Chemicon to consolidate research in Temecula

By: CHRIS BAGLEY - Staff Writer | Wednesday, July 27, 2005 10:24 PM PDT ∞

TEMECULA ---- Chemicon International will expand its work force in Southwest County and begin making tools for research on human embryonic stem cells, company officials said this week.

The two developments are separate, but both relate to the company's research activities in Temecula. Chemicon will license technology from the University of Wisconsin and incorporate that technology into new laboratory products, company officials said. The patents cover a wide range of stem-cell research technologies and could have various applications, Chemicon President Jeff Linton said. Chemicon makes a range of products for biological research, including test kits for Alzheimer's disease and proteins used in cancer research.

Separately, Linton said the company will consolidate its research department in Temecula. Chemicon's corporate parent, Atlanta-based Serologicals Corporation, acquired an East Coast biotech firm in October and has been integrating it into its Chemicon unit. Since April, Linton has been chief executive of both companies.

By the end of the year, Linton said, as many as 36 employees could move from Lake Placid, N.Y., the research center of the former Upstate Group. The company is cutting another 20 jobs at the Lake Placid facility.

"By combining functions ... we can get rid of a lot of duplication of effort," Linton said.

The New York employees are in Temecula this week scouting out homes, he added.

The company, which now employs about 200 here, will begin to sell products that use the Wisconsin technology. But it made the decision to consolidate research facilities before it signed the licensing deal, Linton said.

Chemicon said the deal allows it to use all patents related to embryonic stem-cell research that are now held by the Wisconsin Alumni Research Foundation, an arm of the university. The deal isn't exclusive, and allows the foundation to license the technology to others. Company officials wouldn't comment further on the terms of the deal, but Linton said licensees typically pay cash and royalties on products that use the technology.

Tools for stem-cell research already make up about 10 percent of the company's business, a fraction that Linton expects to grow significantly. Up until now, most of the company's tools have been used for research on mice. The Wisconsin deal marks its entry into the market for research on human embryonic stem cells.

Investors' reaction was lukewarm. Since the company announced the agreement Monday, Serological's shares have risen 1 cent to close at $21.50 Wednesday in Nasdaq trading.

One financial analyst said it was a good move.

"It's promising," said Adam Chazan, a San Francisco analyst who covers biotech companies. "It shows they're accessing the intellectual property they need to, in terms of accessing the supply they need to do the research they do."

Pacific Growth Equities is an investment bank that trades in shares of Serologicals and other health-care and technology companies. Chazan said he owns no stock in the company.

Chazan and John McCamant, editor of the Berkeley-based Medical Technology Stock Letter, described the university as a leader in stem-cell research.

"(The research foundation) has some of the better intellectual property in this field of stem cells," McCamant said, but said it wasn't clear exactly how much the technology will help Chemicon against competitors, which include Geron Corp. of Menlo Park.

McCamant said California voters' passage of Proposition 71 in November may have helped inspire the deal. Some of the annual $300 million the law provides for stem-cell research could end up being spent on tools and molecules produced by Chemicon.

Contact staff writer Chris Bagley at (951) 676-4315, Ext. 2615, or at cbagley@californian.com.

First name only. Comments including last names, contact addresses, e-mail addresses or phone numbers will be deleted. Attempts to misrepresent your identity or impersonate any person will not be approved. All comments are screened before they appear online, so please keep them brief. Comments reflect the views of those commenting and not necessarily those of the North County Times or its staff writers. Click here to view additional comment policies.