Alchemia slashes workforce

One of the stars of Queensland’s biotech industry, biopharmaceutical company Alchemia, has sent shock waves through the sector by slashing staff by 30 per cent.

About 17 scientists are caught in the cutbacks which will also see Alchemia narrow the focus of its R&D programs to concentrate on a few key initiatives.

Alchemia board member Prof Peter Andrews said prudent financial management dictated that the company trim its headcount.

“On the other hand, to lose a number of the highly-trained people who have the capacity to successfully develop the opportunities Alchemia has to utilise its platform and technology is a tragedy,” Andrews said.

Although the company has been remarkably successful in raising venture capital since its launch in 1995, its cash burn has also been vigorous.

“Primarily, the decision was to cut our cloth according to our resources and ensure the company has adequate means to develop our primary programs over the next year,” Andrews said.

Alchemia will put on hold several early-stage drug discovery projects and concentrate on opportunities with the potential to produce revenues in the nearer term.

One involves synthetic heparin and the other an anti-bacterial compound.

Alchemia’s cutbacks are a blow to the Smart State’s build-up of biotech skills because the company has assembled a world-class concentration of scientific talent while developing novel scalable methods of synthesising carbohydrates.

More than half its staff have PhDs and many were attracted to the company from overseas, so Alchemia's corporate downsizing could result in their skills being lost to the local market.

Most of the departing staffers are in carbohydrate and synthetic organic chemistry and a number are interested in remaining in Australia to work, according to company sources.

Alchemia has received approximately $AUD30 million in funding to date, but the staff contraction demonstrates that the company, like most biotechs, is finding venture capital historically difficult to access.

It has been attempting to bring another funding round to a successful conclusion and the staff cuts probably reflect investor demands for a more conservative cash burn.

The current funding round is believed to involve about $AUD10 million, but CEO Dr Tracie Ramsdale said she could not set a definitive figure at this stage.

She said the company has achieved its minimum target but the ultimate total would depend decisions yet to be made by several potential investors.

“It is an exceptionally risk-averse investment climate,” Ramsdale said. “We anticipate having to raise further funds within 12 to 18 months.”

Alchemia recently secured two key patents in the US and Europe on its underlying technology platform, Versatile Assembly on Sugar Templates (VAST). The technology gives researchers a toolset for quickly building designer carbohydrate molecules as drug candidates.

Alchemia has a further 30 patents in train across 18 patent families which focus on specific classes of molecules and their activity. Carbohydrates have fertile therapeutic potential as the basis for new drugs aimed at conditions from cancer to bacterial infection and cardio-vascular disease. But they are too complex and expensive to tap into without help from platforms such as VAST.

Besides several agreements with drug and biotech companies concerning the use of VAST, Alchemia has an alliance with The Dow Chemical Company to manufacturecommercial quantities of carbohydrate-based drugs.