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ZS Pharma To Get $2 Million From Texas

Fort Worth's ZS Pharma To Get $2 Million From State [Fort Worth Star-Telegram, Texas]

From Fort Worth Star-Telegram (TX) (September 1, 2010)

Sept. 01--Texas is awarding $2 million from its Emerging Technology Fund to a small Fort Worth company that’s developing medications designed to eliminate life-threatening toxins in patients with kidney disease.

The fund cut an initial $800,000 check to ZS Pharma Inc., and will release the remaining $1.2 million once the company meets certain milestones. In exchange, Texas takes an ownership interest in the private company.

"ZS Pharma has been well-vetted, and we are confident that they are going to be a very successful company," Bill Sproull, chairman of the technology fund’s state committee, said Monday at the University of North Texas Health Science Center. ZS has been conducting pre-clinical research at the center and hopes to begin human trials early next year.

The award announced Monday is the latest investment from the technology fund, which the Texas Legislature created in 2005. The fund, headed by the governor, lieutenant governor and House speaker, has awarded more than $159 million to 113 early stage companies and $161 million in grant-matching and research funds to Texas universities.

ZS is doing research into medication -- taken in tablet or capsule form -- that eliminates excess potassium, ammonium and phosphate in patients who have renal disease.

The company wants to focus its zirconium silicate compound on potassium and ammonium, toxins for which CEO Al Guillem said there’s either no remedy or an inadequate one. Healthy patients get rid of such toxins through their urine, Guillem said.

In unhealthy patients, the zirconium silicate should expunge the toxins, which patients would excrete in their stools, he said. The zirconium silicate has shown no toxicity or other safety problems in preclinical research on animals, Guillem said.

"It’s truly like taking something and mopping the GI tract," said Guillem, who has a Ph.D. and 25 years’ experience in pharmaceuticals, at major companies and startups.

ZS, which Guillem co-founded in Indiana in 2008, began doing initial research into the drug then.

As test data began to show favorable results, Guillem said the ZS principals, including several who lived in Tarrant County or had ties here, began to organize the company.

In January 2009, the company began approaching investors, raising about $1.25 million toward a $3 million goal, Guillem said. That round is still open, he said.

The company subsequently linked up with the Emerging Technology Fund through the TECH Fort Worth business incubator and the University of North Texas, and applied for an award.

ZS began running preclinical tests at the health science center. And several months ago, ZS officially changed its corporate home to Fort Worth.

"What attracted us was the programs that were here, the infrastructure that was here," Guillem said Monday, after receiving a ceremonial check during an event at the health science center’s new Medical Education & Training Building in Fort Worth.

"We could have gone through something similar in Indiana," he said. "But being endorsed by the state of Texas, we thought we’d get more validation in what we were doing."

UNT officials view the ZS partnership as another milestone in the university’s campaign to support more research and become a Tier 1 research center. Lee Jackson, the UNT System chancellor, said recent initiatives that put cancer and Tier 1 initiatives before voters and funded the Emerging Technology Fund contribute to the development of "basic long-term science" in Texas and to more immediate "market-ready technology and intellectual property that’s close to translating into jobs."

"Texas has found a way to do both," he said.

ZS expects to file an investigational new drug application with the Food and Drug Administration at the end of this year, Guillem said.

The company also has more fundraising ahead, which will dictate how much of a stake Texas ends up with.

ZS has more than 18 months to raise $500,000. If it doesn’t, Texas would get a 20 percent larger share price than other investors, Guillem said.

But ZS feels good about its prospects, Guillem said.

Taxpayers could eventually cash out under a number of scenarios, including an initial public offering by ZS or a partnership between ZS and a bigger pharmaceutical company, Guillem and Sproull said.

Guillem also expects ZS employment, now at nine, to grow.

Scott Nishimura, 817-390-7808

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Posted: September 2010