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Health & Tech / ONY Inc. succession plan positions drug company for future growth

Health & Tech is a regular feature highlighting life sciences and high-tech companies throughout the region.

Company name: ONY Inc.

Address: 1576 Sweet Home Road, Amherst

Website: www.onyinc.com

Year founded: 1985

Founders: Dr. Edmund A. Egan, Dr. Goren Enhorning, Dr. Robert Notter, Fred Possmayer and Dr. Melinda Stanfield

Industry: Pharmaceutical

Description: ONY is the maker of Infasurf, a drug given to premature infants to help them breathe.

Number of employees: 42

Annual sales: $12.5 million

Lowdown: ONY Inc., a 30-year-old drugmaker and one of the original tenants of the University at Buffalo Technology Incubator in Amherst, is embarking on an ambitious growth plan.

The new strategy comes as ONY’s chairman and chief medical officer, Dr. Edmund A. Egan, works with a partner, Randy Burkard, on a transition that will see Burkard take a controlling ownership stake in the company by 2019.

ONY was founded by a group of five academics from Buffalo, Rochester and Ontario who had done research in the 1980s into a drug, known as a surfactant, that prevents, or reverses the effect of, respiratory failure in premature infants. The drug works by coating their lungs with a film that prevents the lungs from collapsing. The company markets the drug to neonatal intensive care units in hospitals.

Although he wasn’t an ONY founder, Bruce A. Holm, a respected UB scientist and longtime university administrator, was deeply involved in the company’s growth from 1987 until his death in 2011.

ONY’s surfactant, sold under the brand

name Infasurf, won approval from the U.S. Food and Drug Administration in 1997.

Before ONY could sell Infasurf, however, it had to fend off a patent infringement lawsuit from Tokyo Tanabe Co., the Japanese company that developed the dominant surfactant on the market, Survanta, and by Abbott Laboratories, which markets Survanta in the United States.

The company in 1999 started a 10-year distribution deal with Forest Laboratories, in which ONY manufactured Infasurf and Forest marketed the drug.

But Egan and other ONY officials soon came to believe Infasurf was a low priority for the pharmaceutical giant. In 2002, at its peak, Infasurf had $18 million in sales and 35 percent of the country’s surfactant market. By 2009, it was down to $12 million and 20 percent of the market, Egan said.

In 2009, ONY declined to extend its agreement with Forest, opting instead to build up its own sales and marketing force.

In the interim, Egan turned 70 in 2011, and he began to think about succession planning with the company. He said he wanted to preserve the company’s future in Buffalo.

At around the same time, Burkard, an investor who is a member of the board of the Buffalo Museum of Science, was looking for a new investment opportunity. The men connected through Dr. Robert Genco, a museum board member and veteran UB administrator and researcher.

ONY has hired a president, John Librie, but Burkard said he will serve as a “fairly active owner.” He became partners with Egan in September 2013 and the men have an agreement that spells out how the transition will take shape over the next three years.

ONY remains in the UB Technology Incubator, in the Baird Research Park across from UB’s Amherst Campus. ONY produces 35,000 vials of surfactant annually, and they easily could quadruple production, Egan said.

The company has 42 workers now, three-fourths of them in Buffalo. Twenty-five employees work in production and administration and 17 are in sales and marketing.

The partners have plans to take the proceeds from the sales of Infasurf – which reached $12.5 million last year – and invest them in research and development of new drugs or acquisition of existing drugs to grow the company. The company would focus on drugs and drug candidates that also serve infants in neonatal ICUs.

“I just think we have room for substantial growth in the future,” Burkard said.

– Stephen T. Watson