Upstart Drug Firm Fails

An upstart drug developer that was spun out of the Medical University of South Carolina before moving to North Carolina last year has failed. Durham, N.C.-based Argolyn Bioscience Inc. filed for bankruptcy liquidation this month. Argolyn, which became a private company in 2002, was for several years one of the brightest prospects in Charleston's biotechnology industry.

After its launch from MUSC's Department of Pharmaceutical Sciences, the firm obtained patents and raised $19 million, including almost $16 million in 2007 in a round led by the respected Intersouth Partners of Durham. Other investors in that last financing included Philadelphia-based Quaker BioVentures and Amgen Ventures of San Francisco.

Argolyn was working to develop medications with fewer side effects to treat psychosis, pain and other disorders. The company relocated most of its local operations in 2008 to the Raleigh-Durham area, which is a hotbed for pharmaceutical research and home to Intersouth Partners, after a change in top management in 2008. It filed for bankruptcy July 6 in North Carolina, listing $73,342 in assets and $452,811 in liabilities.

According to news reports, Argolyn's failure was tied to the disappointing performance of its primary drug candidate during the testing phase. "It just wasn't potent enough to go forward," Suzanne Cantando, a spokeswoman for Intersouth Partners, one of Argolyn's biggest investors, told the News & Observer of Raleigh. "This really is a rare example where I don't think the economy was responsible." Thomas Caskey, a member of Argolyn's board of directors, told The Triangle Business Journal in North Carolina that safety concerns arose during the clinical testing phase, saying, "You just can't go forward if something is not pristine and safe." The company was founded by Thomas A. Dix, who also was its chief scientific officer.

After Argolyn bolted for the Tarheel State, he was to continue to oversee its research and development from his MUSC lab and a facility in North Charleston. The bankruptcy filing shows that Dix retained a 7.85 percent stake in Argolyn but that he had left the company March 1. He also is listed as creditor in the case and is owed $80,000 in severance pay. He could not be reached Friday for comment. Argolyn was working to develop drugs carried by peptides, which can deliver medicine with great accuracy but break down quickly in the bloodstream. The business took its name from the amino acids arginine and lysine, which it worked with to produce peptide-based drugs.