Cobra bites back after tough times

Cobra bites back after tough times

Cobra Biologics was a biotech pioneer in the 1990s. It’s had a roller-coaster ride, but now it’s back with aspirations to return to the market. Ian Halstead hears its story.

Cobra’s sprawling headquarters contain more microbiology experts per square metre than any place on earth, so visitors without at least a PhD in gene therapy are entitled to a moment’s apprehension at the intellectual rigours ahead. However, such qualms dissolve into the chilly air hanging over Keele University’s science and business park, when CEO Peter Coleman arrives with a firm handshake – and well-practiced words of reassurance: ”I’m not a scientist.”

He is, though, a finance director by trade, so it’s with welcome precision and the absence of scientific jargon that Coleman explains Cobra’s long journey. “The original business was set up in 1992 to develop products based on gene therapy, which is very different from traditional medicines which just tackle the symptoms. Gene therapy cures whatever gene-related condition you have, and fundamentally changes the way your body operates,” he says.

“When it floated, it raised the largest amount of investment of any European company in its sector, around £30m, but gene therapy fell from favour. Now though, it’s back in fashion and we have a whole new raft of products.

“We manufacture products on a contract basis from DNA, protein or viruses. You can make these products in a test tube, but the real challenge is to make them in sufficient quantities for clinical trials. You have to prove that the products are safe, effective and better than what has been produced before, so customers come to us to make more of what they need.”

Cobra is now the grandaddy of Keele’s tenants; employing 75 at its original location, another 150 across two sites in Sweden, and with a sales team in the US. Its survival had looked far from assured as the 90s began to fade though, as its original product failed to develop as expected, leaving the management team with tough decisions. However, it had assembled a talented manufacturing team, and a new regulatory framework allowed it to offer its services to others, taking the business in a new direction.

“We manufacture gene-based DNA products and our process can typically create between three and seven grams of DNA over six weeks, which is enough to treat several hundred people in a clinical trial,” says Coleman. “We’ve had ups and downs, as you’d expect. In 2003-2004 we were recognised as global leaders for DNA products, but then came the recession and the funding streams dried up. A product costs around £200m to research, develop and test – and nine out of ten fail.

“Most of our clients are small and medium-sized one-product companies, so if they run into trouble, it hits us very hard. In 2008, the markets crashed, and our funding ‘tap’ was just turned off. We were very close to being bankrupt, but managed to survive.”

Cobra had floated on the Alternative Investment Market in 2002, when Coleman was the finance director, and attracted several major institutional investors. However, as the global crash deepened during 2009, it became clear that the company could no longer continue to trade independently. “We were bought in that December, just as the banks were about to shut our door, by a Swedish owner, which gave us access to the facilities of his company (Recipharm), so we now operate from here, Stockholm and a third site 400 miles further north,” says Coleman.

Much has changed in the last five years, not least Cobra’s customer base. Then, it was dominated by companies from Northern and Western Europe, but now they are as far apart as Israel and South America, and its most recent came from Iceland. Cobra also became independent once more, after finding it challenging to operate as the smaller subsidiary of a large company, and Recipharm spun the business off in 2011.

That year saw sales of just £2.5m, but in 2014, they were £16m, which Coleman attributes
to several influences. He says: “I brought back our previous operations director, we rebranded the company, worked hard at getting the sales team re-engaged and also tried to develop a more entrepreneurial mind-set.”

However, throughout the ups and downs, Cobra has remained at its original home. “We have thought of relocating many times, but one issue is that the UK doesn’t have a sizeable bio-hub. It would also cost anywhere between £30m and £50m to replicate what we have here at Keele,” admits Coleman.

“What lies ahead now? We’d like to get to a position where we could look for a listing, but you obviously have to be comfortable about forecasting your numbers. It’s an aspiration of mine to float.” The most notable strategic change came in 2014, with the spin-out of a business called Prokarium, which is looking to develop the best platform for oral delivery
of protein vaccines.

“The distinction between us is that we manufacture products for companies who retain their IP rights, but Prokarium is that kind-of company,” explains Coleman. Prokarium’s model is based on its synthetic biology platform, Vaxonella, which will make vaccines more accessible to people in rural and resource-poor areas.

Dr Rocky CraneburghChief scientific officer, Dr Rocky Cranenburgh manages its scientific programmes, including the development of its vaccine candidates and genetic technologies.  “Essentially, what we do is genetic engineering,” he says. “Our focus is to develop a vaccine pill, so people can be treated simply, and there is no requirement for healthcare professionals to carry out the procedure.

“We worked with a US firm in 2012, which was using a genetically modified typhoid vaccine. We applied some of our genetic engineering to their vaccine, which has since gone successfully through eight clinical trials. The strain we acquired grows well, and we own the patents surrounding that strain.

“People have been using the salmonella virus as a method of vaccine delivery, but only we are using it as a platform for delivery.”

Prokarium’s first target is travellers’ diarrhoea, which makes adults suffer pain, but can be fatal to children, and its vaccine designed to combat that illness enters phase one of its clinical trials this summer.

Cranenburgh says it will take years of testing, trialling and fine-tuning to get the product to market, and he’s expecting a launch in 2022.

“Our second product, which is at the research stage, is designed to tackle the C.Diff superbug, and we’re developing that in collaboration with a big pharma company, and our third product, which is at the very early stages, would tackle chlamydia.”

Prokarium is already talking to venture capital providers, as it will likely require several
million pounds by 2016-2017, and could also look to generate revenue by taking on service contracts to develop vaccines for pharma companies.