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Divergence

From his office window in the Nidus Center for Scientific Enterprise in St. Louis, Divergence CEO Derek Rapp can see the campus of Monsanto, the Nidus Center’s corporate sponsor and a world leader in agricultural products and plant genomics. Across the street is the Donald Danforth Plant Science Center, where Divergence rents space to grow plants and Divergence scientists interact and collaborate with other scientists. "There’s a critical mass forming here for plant science and life science in general," says Rapp, a former director of mergers and acquisitions for Monsanto.

Divergence, which discovers and develops proprietary products to safely and effectively control parasitic nematode diseases in plants and animals, is a growing force in that mass. A world leader in the application of genomics to agriculture and infectious disease, it’s the largest nematode control group in the United States, and nearly the largest worldwide — even though it has only 20 full-time and a few part-time employees. Nematodes are roundworms that cause billions of dollars in damage annually to crops such as soybeans, cotton, strawberries and bananas. Parasitic nematodes also cause widespread illness in animals and humans, including intestinal worms in livestock, heartworm in dogs and cats, and elephantiasis and African river blindness in humans.

When Rapp joined Divergence in 2001, the company was housed at Washington University, where company founder Dr. James McCarter, now president and chief scientific officer, was researching parasitic nematode genomics. As a 12-year employee of Monsanto, Rapp was aware of — but had not visited — the Nidus Center. Neither McCarter nor Rapp had small-business experience. "Applying to an incubator seemed like an obvious call for us," Rapp says. "We were confident that having advisors around us, as well as peer companies, would be extremely beneficial for us." The quality of its staff and facilities, focus on life sciences and proximity to the Danforth Center all contributed to Divergence’s decision to apply to the Nidus Center.

The center’s contacts also have proven beneficial for Divergence. For example, the Nidus Center has helped Divergence build partnerships with other companies to support activities such as testing and synthesis of compounds. Perhaps of greatest service, though, was the Nidus Center’s network of institutional and angel investors, who pumped $9 million in equity financing into Divergence.

In the past three years, Divergence has landed eight SBIR grants, including two Phase II awards. That funding is a direct result of Divergence’s scientific advancements, which have led to 30 patents pending on its proprietary collection of target genes for discovery of nematicidal products. "The science is absolutely outstanding," says Robert Calcaterra, Nidus Center president and CEO. "It’s beyond state of the art."

Divergence uses relatively new tools, such as bioinformatics and RNA interference, to look for unique genes essential to the function of nematodes and to seek ways to interfere with those genes, possibly through a chemical or a plant gene that inhibits the function of a particular nematode gene.

Divergence has become a leader in its field in part because it focuses only on nematodes. By creating products that are specifically nematicidal — and therefore less likely than more broadly targeted products to harm other animals or plants — the company is fulfilling its objective to discover effective and environmentally sound strategies for parasite control. "Other companies do a lot of other things; this is what we do," Rapp says.

Divergence doesn’t expect any of the products it develops to enter the marketplace for years. "We have a number of compounds in development," Rapp says. "Divergence will not be the commercializing entity, but someone downstream would take a product forward to the marketplace."

That someone could be Monsanto, with whom Divergence has negotiated a commercial licensing agreement for transgenic soybeans that are nematode resistant. Being close to Monsanto promotes easy interaction between the two companies, Rapp says. It helped to have Rapp’s Monsanto contacts in negotiating the license agreement, and Nidus Center staff also assisted in sealing the deal. "There was a level of trust and appreciation of what mattered to Monsanto. We had an understanding of their needs and wants," Rapp says.

Divergence’s cutting-edge science, strong management team, and its ease in raising money and building strong corporate partnerships are good indications that the company will succeed, Calcaterra says. "They are managed very well by a good group of people who have the experience to run it in a very disciplined way," Calcaterra says.

The company’s growth is due in part to the Nidus Center. "We definitely would have to give a lot of credit to the Nidus Center," Rapp says. "It’s allowed us to focus our business on the projects, instead of a whole lot of the other infrastructural sorts of activities, and we’ve benefited from the great consulting that we’ve received."

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