Small towns are great places to grow up, but they tend to nurture their young only until the fledglings fly the coop for exciting new places. Brookwood Pharmaceuticals, a company that supplies formulation technologies to pharmaceutical and biotech companies, is no such fledgling. After a $40 million buyout by SurModics, a Minnesota-based industry leader in polymer-based drug delivery, Brookwood is staying put in the community where its potential was first realized. Brookwood Pharmaceuticals was incubated in the topflight research and development facilities of Southern Research Institute (SRI), and to carry the metaphor one step further, was hatched by Brookwood Pharmaceutical’s president and CEO Arthur Tipton and former CEO of SRI Bob Lonergan. A product of SRI’s 30-year-old in-house drug delivery group, Brookwood Pharmaceuticals became a for-profit entity in 2005 during an asset liberation phase. Not only was the spin-off effective in creating a strong, stand-alone business, it also attracted the eye of a biotech industry giant and brought together like-minded individuals in companies with resources that complemented one another. According to Bruce Barclay, president and CEO of SurModics, Brookwood Pharmaceuticals was a natural fit for his company, which is a top provider of surface modification and drug delivery technologies to the healthcare industry. “What appealed to us was that it was a very similar business to ours, but with important differences,” Barclay said. “It had a strong focus on biomaterials. They were completely focused on the pharmaceutical industry, and we were focused on the medical device sector. They have more manufacturing base experience, and we have less. We were similar in some respects, but combining the companies created a strong synergy.” Roughly two years after Brookwood was formed, the company already was planning to raise money to continue its growth. The first conversations with SurModics were in terms of potential investment strategy, but those discussions in late 2006 took a different turn. “They liked our work so much that they proposed, as an alternative to investment, actual acquisition,” Tipton said. “For us, it was clear that in partnering with this company, they clearly had the abilities to help us continue growth that we wanted and needed. We are a technology-rich company, but we always want to continue adding to that.” Barclay said the potential in Brookwood Pharmaceuticals was evident — not just in one drug development, but in progress across the board. In 2006, Brookwood generated $12.7 million in revenue. “They have approximately 30 products and multiple customers, many of which are very intriguing to us,” Barclay said. “They were in many areas we were not in — large markets with large unmet clinical needs. It is a great opportunity for Brookwood to develop products.” According to Barclay, in acquiring Brookwood, SurModics strengthens its existing drug delivery systems in cardiovascular, ophthalmic and orthopedic fields. In buying the Birmingham-based company, SurModics also opened doors for treatment of Brookwood’s areas of specialization in diabetes, oncology, dermatology and psychiatric disorder markets. The drug delivery systems Brookwood brings to the table are a boon for all parties, particularly the patients who will find medicating much simpler. “If a client has a drug that has to be injected once a day, we can formulate it so it only has to be injected once a month,” Tipton said. “There are any number of products that might benefit from that. There are products with issues of compliance, because the patients are not motivated to take the drugs. No one wants an injection. If you can get (the drug) in once a month instead of 30 times or more, that’s much more desirable for the patient and for the physician.” Brookwood’s drug delivery products cover a broad spectrum of therapeutic areas, specializing in long-acting parenteral delivery with injectable microparticles and injectable solid implants. With the technology platform it is pioneering, some drugs can be delivered at the recommended dosage for days, weeks or months after being administered only once. The drug delivery systems allow for slow release of medications, rather than a quick burst before the drug is no longer in the system at a therapeutic level. Tipton said the deal with SurModics, announced on Aug. 1, 2007, gave Brookwood Pharmaceuticals the opportunity to take formulations of drugs or delivery systems farther along the path from concept to clinic. “Even if you’ve got a toolbox full of tools to solve problems, you still always look for others that work,” Tipton said. “We are always on the lookout for other technologies to be good fits. If you can advance the product concept on your own before you find a customer, that adds more value.” At present, Tipton doesn’t anticipate a shift into actual clinical testing in-house but sees Brookwood focusing on its strengths in research and reformulation and its experience with drug classes across the board. Barclay said keeping the company where it began in Birmingham was important to both companies. “We learned early that they shared our vision of continued growth and of keeping the company in Birmingham,” Tipton said. “We spent a lot of time getting to know each other before electing to do this. Today, we’re half a year into this — we’re not talking the morning after — and still everyone is quite pleased with the integrations.” “We didn’t consider any other type of structure,” Barclay said. “The business we are both in is very dependent on our employees. It’s very much an intellectual capital type of business.” Tipton said job satisfaction is just one of the assets of being in the drug development industry with the potential to impact countless lives. “Continuing to drive innovative products toward the market is rewarding,” Tipton said. “I remind my employees we are a company primarily driven by great science, and when these products go to market, they will have a proven effect on (patients). That combination is just great.” While little has changed since the SurModics purchase in regard to bricks and mortar, Tipton said since the deal was made, they have added about two employees a month and will continue at that rate. “We have a very good community in terms of the entry-level people we need and a great community in terms of science and engineers,” Tipton said. “We have phenomenal resources in this community.” What Brookwood brought to the table when the deal was inked in 2007 was a host of proven pharmaceuticals and a drug delivery system that positioned SurModics for expansion and diversification. “We thought it was a great opportunity to make each organization better by combining the two,” Barclay said. “We have good cross communication and cross fertilization of technologies. We’re still sorting out what each organization or each site best brings to the combined industry, and we see ourselves being long-term members of the Birmingham community. We’re looking to grow our base there and expand our customers.” March 2008