News | May 27, 1999

ChiRex Acquires Cauldron Process Chemistry

ChiRex Inc. (Stamford, CT) has announced that it will acquire Cauldron Process Chemistry (Malvern, PA), a leader in the provision of rapid-response process research and development for the pharmaceutical industry. ChiRex will operate the business as ChiRex Cauldron. Cauldron, which operates a cGMP pilot plant and process development laboratory with 21 bench chemists, has more than 30 pharmaceutical customers, including Abbott Laboratories, Agouron, Cephalon, Maxia, Merck, NAPP Technologies, Pfizer Inc., R.W. Johnson PRI, Sepracor, and SmithKline Beecham.

"ChiRex Cauldron significantly expands our process research and development capabilities in the United States," stated Michael A. Griffith, chairman and CEO of ChiRex. "It adds to our customer base and provides a critically important customer service. The rapid-response competency of ChiRex Cauldron is highly complementary to our existing array of services for the pharmaceutical industry and fulfills our 1999 goal of adding to our North American small-scale capabilities. ChiRex Cauldron has a substantial and growing book of business of its own and we plan to expand its facilities during 1999 and 2000 to further drive its revenue potential. In line with our strategy of offering fully integrated services, ChiRex Cauldron will join the existing ChiRex service network of the Technology Center in Boston, the Development Center in England, and our two manufacturing facilities in England and Scotland."

ChiRex Cauldron's gross revenues grew substantially in 1998, to $3.9 million from $1.2 million the year before. Process development and analytical development work is typically carried out first in the laboratory and then at 20 to 100 gallon scale. This compares to the ChiRex Technology Center (Cambridge, MA), with a maximum scale of 50 liters, and the ChiRex Development Center (Dudley, UK), which typically operates at 100 to 300 gallon scale. ChiRex Cauldron's 23,000 square foot facility consists of laboratories for process development chemistry, quality assurance, and analytical methods development. The modern and highly versatile pilot plant produces materials for pre-clinical evaluation and clinical trials under fully validated conditions, by a staff of 25 including 9 Ph.D. chemists.

Cauldron's 23,000 square foot facility consists of process chemistry and quality control laboratories, plus the state-of-the-art pilot facility pictured here.

Two chemists will lead ChiRex Cauldron, each with over 20 years experience in pharmaceutical process research and development. Michael A. Christie, who founded Cauldron in 1992, will continue as general manager of ChiRex Cauldron. He was formerly Director of Chemical Development at SmithKline Beecham, and received his Ph.D. in organic chemistry at MIT. John F. Arnett, who joined Cauldron in 1997, will continue as director of process research and development of ChiRex Cauldron. Arnett was formerly associate director of process research and development at DuPont Merck, received his Ph.D. in organic chemistry at Florida State University, and completed a post-doctoral appointment at Harvard University.

ChiRex acquired all of the operating assets and working capital of Cauldron Inc., a wholly-owned subsidiary of ProClinical Inc. (Phoenixville, PA), a privately- held company. The purchase price was approximately $5.5 million in cash up-front plus a $1.0 million cash payment due in September 1999 and an additional payment due in February 2000 that is to be calculated based on the performance of the business during 1999. The acquisition will be accounted for as a purchase. ChiRex intends to invest approximately $2.0 million to improve and expand the pilot plant and laboratories during the next eighteen months with the intention of doubling the revenue capacity of the facility.

ChiRex's contract services, developed over the past thirty years, include:

  • design, development and synthesis of molecules, including process research and development
  • hazard evaluation, analytical methods development, clinical quantity production and scale-up
  • pilot-scale and commercial-scale manufacturing at its world-class, current Good Manufacturing Practices facilities in Boston, MA; Malvern, PA; Dudley, England; and Annan, Scotland.

ChiRex is one of only a few outsourcing companies that offers all of these services in-house, in addition to offering an extensive portfolio of proprietary technologies. By offering integrated services, ChiRex is able to minimize the risk, cost, and time associated with its customers bringing new drugs to market.

Chirex customers include Abbott Laboratories, AstraZeneca, Bristol Myers-Squibb, Cephalon, Glaxo Wellcome plc, Eli Lilly and Company, Pfizer Inc., Pharmacia & UpJohn Inc., R.W. Johnson PRI, Rohm and Haas Company, Sanofi S.A and SmithKline Beecham plc.

Successful Contract Manufacturing Spinoff
Cauldron emerged from a business unit of Zynaxis, one of the early Philadelphia-area biotech ventures. At one point, Zynaxis tried unsuccessfully to outsource production of 10–20g quantities of its molecules, which were difficult to make. So the company decided to bring that small-scale manufacturing capability in-house. Michael Christie, who eventually became CEO of Cauldron, was hired to bring a small GMP pilot operation online in 1982. The plant was commissioned by 1984, but soon thereafter Zynaxis found itself running out of money. Management wondered whether it was possible to make money through their pilot plant—a new idea 15 years ago.

"At first Zynaxis was viewed as lacking critical mass, almost broke, and a company that did contract manufacturing it on the side," Christie told Pharmaceutical Online. Despite its reputation as a barely viable newcomer to contract manufacturing, by 1996 Zynaxis was making money, and by the end of that year it had merged with CytRx (Norcross, GA), which spun off and sold Zynaxis's contract service business, now known as Cauldron, to ProClinical in May, 1997. At the time, Cauldron had fewer than 10 employees. Today it has 25 and has expanded to fill most of its existing laboratory space. "Business just exploded," Christie explained, "to the point where we almost don't have to go looking for it other than attending trade shows and keeping our name out there."

Cauldron has grown significantly during the last two years. By the time it was acquired by ChiRex, it had become an established player for its manufacturing niche. "One thing ProClinical couldn't do was fund our growth," Christie stated. "Now that we have ChiRex as our parent company we're set to expand as far as our capabilities take us."

The acquisition, described by Christie as "very, very good for Cauldron," is "very, very good" for ChiRex as well. Although ChiRex has become a leading contract manufacturer, it lacked small pilot manufacturing capabilities to fill the gap between research and full pilot-scale development. ChiRex also strongly desired a greater physical presence in North America.

For more information: Michael Griffith, CEO, Chirex, Inc., 300 Atlantic St., Suite 402, Stamford, CT 06901. Tel: 203-351-2300. Fax: 203-425 9996. Joe Siple, Manager of Business Development, Cauldron, 383 Phoenixville Pike Malvern, PA 19355. Tel: 610-727-2215. Fax: 610-727-5762.

By Angelo DePalma