Four Duke professors took their research off-campus. Now they're reaping big rewards.

The Chesterfield houses lab space for research spinoffs from Duke University, UNC-Chapel Hill, N.C. Central University and N.C. State University. One of them, Element Genomics, just sold for $30 million.
The Chesterfield houses lab space for research spinoffs from Duke University, UNC-Chapel Hill, N.C. Central University and N.C. State University. One of them, Element Genomics, just sold for $30 million. Duke University

For a quartet of Duke University professors, graduation this spring isn't so much about caps, gowns and ceremony as it is about their off-campus biotech company taking off.

Their firm, Element Genomics, is the focus of what may ultimately become a $30 million acquisition by the Belgian pharmaceutical maker UCB. The deal comes about three years after Element's founding, and sets up an expanded collaboration that ultimately should yield new drugs.

"We’re not only going to be resourced in such a way that we can create medicines that go all the way into patients, we can in some ways jump ahead in the process," said Kris Wood, a professor of pharmacology, cancer biology and biomedical engineering at Duke. "We're pursuing projects not only left over from Element, we're linking into existing drug development programs at UCB."

Wood and the other professors who co-founded Element Genomics, Greg Crawford, Charlie Gersbach and Tim Reddy, are trying to figure out how the "junk" that makes up the vast majority of the human genome contributes to disease and its treatment.

The so-called "non-coding" part of the DNA chain doesn't trigger the creation of any proteins, but that 98 percent of it "plays a very critical role in regulating the expression and function" of the remaining 2 percent that does, Wood said.

The professors have worked in their Duke University labs to create tools to unravel what the non-coding portion of the genome does and how it does it. They use the gene-editing technique called CRISPR to alter the chain, turning parts of it off or on to see what happens, and then apply big-data computing firepower to analyze their findings.

Though they developed the tools at Duke, the professors elected to go off-campus to start their business and begin using them in drug-development work.

Leaving campus behind

At first, that meant starting Element Genomics. But it eventually led them to rent lab space in the Chesterfield, the former cigarette factory on the edge of downtown Durham that's now hosting several Duke and private-sector operations.

The firm is among the 19 research operations that have rented labs in the Chesterfield from BioLabs North Carolina, a "co-working" operation that opened there last fall and provides equipment, bench space and other amenities to its clients.

About half of the groups using the BioLabs space have Duke ties, another quarter are UNC-Chapel Hill spin-outs and the rest are a mix of groups tied to N.C. State University, N.C. Central University or the private sector, said Ed Field, president of BioLabs North Carolina.

For university professors, the attraction of an off-campus lab is that it gets around some of the restrictions on commercializing discoveries that go with working on campus. There are also intellectual-property considerations, Field explained.

"Typically when a company is formed, they license the technology from the university" and for that reason alone need to move off campus, he said. But "once a company is in our space and they create IP [intellectual-property] in our space, they own it."

Raising a lot of money

The other reason to move off campus is that it widens the sort of fundraising a group can do, Wood said.

On campus, a typical research grant in the biomedical arena can run from a few hundred thousand dollars up to something "on the order of a million dollars," he said. But drug development is extremely expensive, with early stage costs consuming millions and actual human trials going into the tens or hundreds of millions.

"The grants we have are great for doing academic discovery or early stage development, but they’re not really adequate for the later-stage development where you need the resources you can only really get in the private sector," Wood said.

Starting a company enabled the the professors "to raise a lot of money," and within the first few months they also received an introduction to UCB, which makes a number of drugs used in treating epilepsy, Parkinson's disease and autoimmunity disorders.

UCB officials "were very intrigued by the technologies we were developing and using and the ways we were using them to do drug discovery," Wood said, adding that Element's founders saw benefit in working with "a very established and successful pharmaceutical company that knows how to develop drugs and get them into patients."

The $30 million involved in the deal isn't coming as a single lump-sum payment. Instead, the deal provides Element some of the money up front, and includes performance clauses that will release the rest later presuming the company makes progress.

Element Genomics is becoming "a wholly owned subsidiary" of UCB but will remain in Durham, Wood said.

UCB's U.S. subsidiary has a clinical-development arm that's based in the Brier Creek development, on the border between Durham and Wake Counties. The Belgian company booked a 771 million euro profit in 2017, the equivalent of about $954 million at current exchange rates.

Element has eight employees, all of them Duke alumni, working in the lab at the Chesterfield. It will continue operating there, and the ambition is that this area becomes "the headquarters for advanced genomics within the broader UCB" corporation, Wood said.

Ray Gronberg: 919-419-6648, @rcgronberg