Merger gives C Sixty stability, CNI access to medical markets

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Dec. 23, 2004 — Nanomaterial and biotech companies usually make for unlikely bedfellows. But on Tuesday, a manufacturer of carbon nanotubes and a startup that uses a relative of nanotubes for drug applications announced that they had merged.

The merger will give carbon nanotube manufacturer Carbon Nanotechnologies Inc. (CNI) an avenue for developing drugs or other medical products. C Sixty Inc., which will become a wholly owned subsidiary of CNI, will get financial security as well as business support.

Ray McLaughlin, CNI’s executive vice president and chief financial officer, said the merger dovetails with CNI’s long-term goal of using nanotubes in medical applications. CNI already works with customers to incorporate single-wall carbon nanotubes in energy devices, conductive polymers and lightweight materials. Nanotubes are tubular cousins of buckyballs, the carbon molecules that are at the heart of C Sixty’s drugs.

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“One of the applications we always held in our back pocket was medical applications,” McLaughlin said. “It’s always been part of our long-range business plan. C Sixty is playing in that market today.”

C Sixty was founded in 1999 in Canada under the leadership of oncologist Uri Sagman. In its early days, the company focused on developing buckyballs as delivery mechanisms for AIDS and cancer drugs. Scientists use the term C-60 for buckyballs, referring to their structure of 60 carbon atoms linked together. The molecules’ formal name is buckminsterfullerene, named for geodesic dome inventor Buckminster Fuller.

In 2003, C Sixty moved to Houston, the birthplace of buckyballs. That same year it partnered with the pharmaceutical giant Merck & Co. to develop drugs for degenerative diseases. Buckyballs work as antioxidants, mopping up cell-damaging free radicals that are believed to cause Alzheimer’s and amyotrophic lateral sclerosis, or Lou Gehrig’s disease.

The support of CNI will allow the smaller C Sixty to concentrate on the challenges of developing nano-based drugs rather than devote time to fund raising, said C Sixty President Russ Lebovitz. With Merck, C Sixty was able to complete a round of safety and efficacy trials. At the same time, it has been tackling some basic questions such as the relationship between buckyballs’ structure and function.

“I need a year or two to move things forward,” Lebovitz said. “I have to keep the science going forward. … This provides a framework for stability.”

Lebovitz and McLaughlin said the merger will allow the companies to look for opportunities to use their complementary intellectual property portfolios. CNI was co-founded in 2000 by Richard Smalley, who co-discovered buckyballs in the 1980s as a chemist at Rice University in Houston.

CNI also will explore ways to combine the spherical and tubular forms of carbon to improve or make new products, McLaughlin said. “There’s the unknown potential of bringing those two technologies together,” he said.

In addition, CNI will help C Sixty pursue federal funding opportunities, according to McLaughlin. CNI and its partners received a $3.6 million Advanced Technology Program award through the National Institute of Standards and Technology in October to develop fuel cells.

“We’re hoping to create a mechanism (allowing C Sixty) to be self-funded,” McLaughlin said. “We’ve already started the process.”

C Sixty will retain its offices near Houston’s medical hub and not move to CNI’s headquarters in South Houston. Bob Gower, the president, CEO and a co-founder of CNI, will serve as chairman of the board at C Sixty. Smalley is a scientific adviser for both companies.

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