By Deborah Borfitz

Oct. 6, 2008 | The merger of two brand-name modeling and simulation firms should help bridge the historic divide between drug discovery and clinical development, eliminating some of the costly mistakes pharmaceutical companies make as they usher compounds from the bench to the bedside.

Tripos, a St. Louis, MO-based discovery software company, is about to acquire Pharsight Corp., a Mountain View, CA-based clinical development software company, in a $57 million cash deal that will heighten the focus on translational research and help industry “make better decisions earlier in the overall drug development process,” says Shawn O’Connor, Pharsight’s chairman and CEO.

Although Pharsight is “slightly” larger than Tripos, the acquisition will allow it to expand its footprint and existing product and service lines, as well as do more with translational medicine by expediting the flow of information from one end of the research and development continuum to the other, says O’Connor. Pharsight’s scientific consulting practice on its own has helped clients apply molecular intelligence to the development of new drug opportunities, such as preventing mistakes made with similar therapeutic agents.

Interest in translational medicine is at an all-time high because “the cost of failure is astronomical,” says Jim Hopkins, CEO of Tripos. Using a technique called “lead hopping,” Tripos has been guiding its clients to promising compounds based on known properties of like molecules. “If a company has already invested a few hundred million dollars in a compound, and data [from clinical trials or animal studies] suggest it has a problem with toxicity, it’s nice to do lead hopping and try a rescue molecule.”

Excluding some clinical research organizations served by Pharsight, “there’s a huge overlap in the [large pharmaceutical] customers we sell to,” says Hopkins. But the two companies are “polar opposites” in terms of their product lines. Tripos has Sybyl, a computational toolkit for molecular design and analysis. Pharsight’s flagship product is a WinNonlin data analysis tool used in PK/PD modeling.

The newly combined company will most immediately begin defining a translational medicine product via a dialogue with its pharmaceutical customers, says Hopkins. “Our scientists here at Tripos are very excited about the [product development] prospects. They have lots of ideas.”

Formerly part of a public company, Tripos’ software division was acquired last year by the San Francisco, CA-based private equity boutique Vector Capital. It serves more than 1,000 customers spanning over 46 countries. At its peak, the division had $80 million in annual revenues. “The idea is for Tripos to be the platform for acquiring other companies in the life sciences business,” says Hopkins, who previously ran other Vector acquisitions. Pharsight was one of the names that emerged from the initial market analysis. The companies were relatively unfamiliar with each other previously.

The acquisition is expected to close in the fourth quarter of 2008.

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