SRI plans subsidiary to handle drug trials

Birmingham's Southern Research Institute is forming a for-profit subsidiary to license and manage new products as part of a strategy to become more self-sustaining, executives said Thursday.

"We are looking at creating a new company," said Tom Batchelor, the institute's business development vice president.

Batchelor told the Birmingham Venture Club at a luncheon meeting the management company will outsource trial management and other expertise needed to develop drugs.

Batchelor was one of three executives who joined Southern Research Chief Executive Bob Lonergan in talking about the firm's attempts to secure investments. Tina Rogers, who heads the drug development division, and Art Tipton, CEO of the institute's 6-month-old spinoff Brookwood Pharmaceuticals, were the other presenters.

Reinventing itself:

Lonergan said 65 percent of the 63-year-old, 600-employee research center's business is with the federal government. It wants to shift its heavy dependence on Uncle Sam to earning more from the marketplace.

Though revenues are up to $75 million this year, profitability is sharply higher and productivity is at record levels, Southern Research is still not at "investment grade," Lonergan said. "We still don't cover the cost of capital, and if it were not for the exciting royalties that we earn from drug licensing ... we would still have a problem in terms of funding our own future," he said.

Southern Research is reinventing itself by improving existing operations, continuing to evaluate itself for partnerships in the market and finding new ways to grow, Lonergan said.

One way to grow is to develop more drugs.

More than 70 of 200 patent applications Southern Research has filed have been approved, Batchelor said. "It's pretty prolific the amount of technology that has been developed," he said, adding that six cancer drugs it played a role in are on the market.

The institute has three compounds ready for clinical trials.

The institute's intention is to add the new company to manage and fund clinical trials.

E-mail: cmccauley@bhamnews.com