Kalexsyn Grows In Kalamazoo
Neither Robert Gadwood, Ph.D., nor David Zimmerman, Ph.D., had experience running a business prior to establishing Kalexsyn in 2003. But as former Pharmacia scientists, they had plenty of experience in the laboratory research environment, as well as some talents they didn’t even know they had.
The medicinal chemistry services firm that began with just Gadwood, president of the company, and Zimmermann, CEO, has expanded to include 22 employees, of which 15 are scientists. Kalexsyn is moving out of its 7,000-square-foot space in the Innovation Center in Western Michigan University’s Business Technology and Research Park and into its new $4.5 million, 20,000-square-foot headquarters in the research park this week.
Both Gadwood and Zimmerman are former Pharmacia scientists whose positions were cut during the downsizing that followed Pfizer’s acquisition of Pharmacia in 2002. Gadwood had been with Pharmacia and its predecessor, Upjohn, for 17 years, and Zimmermann had been with the two companies for 23 years.
Kalexsyn is involved in the early stages of the drug discovery process. It manufactures molecules for pharmaceutical and biotech companies that test arrays of molecules to see if they have the ability to inhibit an enzyme or block a receptor. Molecules identified in the assay are sent to Kalexsyn for “improvement,” Gadwood explained. Kalexsyn is contracted to move those molecules into a position where they could be potential clinical candidates.
One of the things that kept the two chemists in southwest Michigan, Gadwood said, was the easy access to people who could help them get Kalexsyn off the ground. Their resources included Southwest Michigan First, Biotechnology Business Consultants and the Small Business & Technology Development Center at Kalamazoo College. SBTDC helped them write a business plan, and other organizations provided assistance and services.
Both men also spent time meeting with business leaders in the Kalamazoo area who had been successful in the life sciences, Zimmermann noted.
“We felt that Kalamazoo was working hard to support startups, so we wanted to stay in Kalamazoo,” Gadwood remarked.
The pair received a loan of $225,000 from WMU’s Biosciences Research and Commercialization Center for financing and operational support and were able to purchase $700,000 worth of donated Pfizer equipment and instruments from WMU. They also received a $192,000 loan from the state’s $2 billion Company Creation Fund that was established to help former Pfizer employees begin new life sciences companies in Michigan.
They received 100 percent property tax abatement by locating in the Innovation Center. They set up offices and a lab in the center in July 2003 and aggressively began pursuing medicinal chemistry contracts both domestically and abroad, trying to capitalize on the trend towards pharmaceutical outsourcing.
“The tangible support of the Kalamazoo community and southwest Michigan has played and continues to play an enormous role in our success,” Zimmermann noted.
It became clear to both of them early on that they were going to need a ready supply of chemists to tap as the business grew. From the time they left Pharmacia to the time they started Kalexsyn, Gadwood kept track of and stayed in close contact with a group of displaced medicinal chemists from Pharmacia who he had identified as potential Kalexsyn employees.
“I sent out a weekly newsletter to the group. I needed them to be aware that there were things going on — that this was not just Bob and David’s pipe dream — that we were doing concrete things to get this started, and if they remained in Kalamazoo, there would be jobs for them here,” he recalled.
Gadwood is a planner. He likes to have every strategy charted out in advance. Zimmermann is more of a live-in-the-moment kind of person.
“Our skill sets are complementary,” Gadwood said. “The David and Bob combination is much stronger than either David or Bob by himself. Neither David nor Bob could do this alone, but David plus Bob can do it.”
Gadwood is grounded in the day-to-day operations of the company while Zimmermann spends most of his time traveling around selling the company and securing new contracts. Zimmermann said his transition from scientist to salesman wasn’t difficult at all.
“I think there was a salesman’s gene in me that started expressing once I left Pharmacia,” he joked. “Although my lifestyle would not appeal to many people, I honestly enjoy the travel and the dynamics of the job. At times I feel like a little boy out exploring and discovering the world.”
Kalexsyn hired more people as the business came in and that’s its continued mode of operation. The first few years were tough, Gadwood acknowledged, because the company would get a new contract, hire people to work on it, and then the contract would end. A few times, several employees had to take time off without pay when there was a gap between contracts. Both Gadwood and Zimmermann give the lion’s share of the credit for Kalexsyn’s success to their employees.
Kalexsyn turned a corner in the fall of 2005 when it reached profitability. By that time, it had increased the size of some of its contracts and had new customers coming in. Now the goal is to secure longer-term, multi-year contracts.
“I think all the efforts David was making and the work we had already done just started to snowball,” Gadwood recalled. “We’ve more or less been at capacity since fall of 2005.”
The company has hired an additional staff person and three more chemists in preparation for its move into the new building. They’re coming on board in November, December and January. Kalexsyn will soon begin interviewing for another chemist as well, Gadwood said.
In Gadwood’s estimation, WMU’s research park is one of the most desirable places in the Kalamazoo area in which to locate a high-tech company. Kalexsyn has additional land on its new site to accommodate future expansion of its headquarters. He anticipates that 10 years from now, the company will have about 50 full-time chemists, a total staff of 65 and back-to-back, multi-year contracts.
Zimmermann said the vision has never been for the company to be the “biggest.” Kalexsyn will continue to grow its already strong global recognition and will be considered one of the top companies in the world for medicinal chemistry services, he predicted.
Rockford Companies of Grand Rapids is the contractor on the Kalexsyn project. Rockford was selected because of its willingness to partner on the project, Gadwood noted.
Rockford’s intent was to create a partnership with Kalexsyn that would allow the company to expand operations, continue research and be able to work and grow in a customized space, said Rockford Development Group President Mike Maier at the groundbreaking ceremony.
“Development is about creating economic opportunity — this is a bellwether project in that regard,” Maier said. “Kalexsyn is part of an emerging group of entrepreneurs who are investing locally and creating jobs to help spur future employment in Michigan.” CQX