Meets Wall Street
words by eve jacobs /
photography by john emerson & andrew hanenburg
Academic research and business spoke no common language — until recently. Mixing pure science with the potential for commercial success was thought to taint the outcome.
itness a sea change in the making, where today’s “hot” university lab finding might earn coveted space in an academic journal and also a spot on the Dow Jones.
But the old adage that you need to spend money to make money certainly holds sway here. It takes a major infusion of dollars to found a scientific company and launch a new product, and those dollars are certainly hard to come by.
For UMDNJ, a unique concept has given birth to a company that handpicks academic researchers with promising findings and helps them lay the foundation for a business enterprise, giving them hard-to-come-by dollars and launching them into a world where none had thought of venturing before.
It all started with a pivotal meeting in 2005. In attendance was a dynamic trio — Vince Smeraglia, JD, director of UMDNJ’s Office of Patents and Licensing; Jim Golubieski, president of New Jersey Health Foundation, Inc., the parent company of the Foundation of UMDNJ; and George F. Heinrich, MD, vice chair and CEO of New Jersey Health Foundation — who spoke about the possibilities of taking new intellectual property developed at the University and licensing it to companies. Conversation became lively; ideas gelled, and then crystallized. Voila! A new enterprise was born.
Foundation Venture Capital Group (FVCG) — the company grown from this conversation and financed with $5 million from New Jersey Health Foundation — next started the long and painstaking process of finding promising academic labs where they could plant the seeds for future growth.
The Newest “Kid” on the Block
Scott Kachlany’s company, Actinobac Biomed, Inc., is still in its infancy, just nine months post birth. It may be the youngest of the companies founded with an investment of $500,000 from FVCG, but it’s catching up with the bigger boys fast.
That’s because microbiologist Kachlany believes his “crazy idea” needs to find its way out of the lab and into the arsenal of leukemia therapies stat. “Each year, 21,000 people in the U.S. die of this disease; and the five-year survival rates have changed little over the last few years,” he states. “There’s a big need for newer therapies with greater activity and fewer side effects.” That is exactly what he thinks he’s onto.
“It all started as a protein band on a gel,” he relates.
While studying the proteins secreted by an oral bacterium calledAggregatibacter actinomycetemcomitans (Aa) — that causes a juvenile form of periodontal disease — Kachlany made a discovery. A protein called leukotoxin — not previously thought to be among those secreted by the bacterium — was evidently present.
The young scientist took this finding and pushed forward to follow the protein’s path, discovering that leukotoxin allows Aa to survive by specifically killing large numbers of white cells and thereby undermining the immune defense.
It was in 2003, when Kachlany joined the faculty at UMDNJ’s New Jersey Dental
School, that he took his research to the next step, and thought of using leukotoxin as a therapy. “The neurotoxin BOTOX is used to treat neuromuscular disorders and the drug ONTAK, composed of diphtheria toxin, is used for the treatment of T-cell lymphoma,” he says, “so the concept of using a toxin as therapy is not entirely new.”
Since then, he has shown that leukotoxin preferentially kills cancerous white blood cells in the lab; that mice injected with human leukemia cells get sick and die after several weeks, but those injected with these cancer cells and with leukotoxin remain healthy and live to be almost a year old, about their normal lifespan; and that non-human primates injected with leukotoxin tolerate it well with no toxicity.
But the big question remained: Does leukotoxin target cancer cells rather than normal white cells? “We tested it against normal human white blood cells and leukemia cells and found that the normal cells were relatively unaffected while the cancerous cells were killed.” Bingo! It was time to think bigger.
Kachlany estimates that it will take $2 to $3 million to bring leukotoxin to Phase 1 human trials. With enough money, “We could have it ready for human trials in two to three years,” he says.
With lab and office space in an incubator site in North Brunswick, a CEO on board, and Kachlany serving as founder and scientific advisor, the company is off and running. They have applied for five grants and are conducting more mouse studies in India (in an FDA-approved facility) and elsewhere comparing leukotoxin with known chemotherapeutic agents.
Since “leukotoxin may also be effective for such autoimmune diseases as psoriasis, rheumatoid arthritis, multiple sclerosis, ulcerative colitis and Crohn’s disease, in which there’s hyperactivity of white blood cells,” the company is testing it in Denmark in “a psoriasis mouse, a unique animal model that is available in only several labs in the world.”
And tested in the lab against Genentech’s psoriasis therapy Raptiva, leukotoxin has been highly effective at much lower doses.
What’s the next step? Kachlany says he’s almost ready to “approach the big companies to co-develop leukotoxin as a therapeutic,” but more data is needed.
His dream is to walk into a clinic in four to five years and see patients with leukotoxin in their IV bags. “Some of these leukemia patients are so sick — many have run out of options.”
And the man with the dream continues: “This is a natural protein — not a foreign compound — that is made by a bacterium found in the mouths of healthy individuals. It is a targeted therapy — specific for killing white blood cells. At moderate doses, there is no toxicity in mice or monkeys. While their white blood cells dropped, their hemoglobin, red blood cell and platelet values did not change.”
So, the beat goes on. The microbiologist is “learning so much about drug discovery, how complex it is, and how costly. And there’s no income for a long time. The frustration can get to you. Everything might be in line and ready to go, but if the funding is not there, you can’t move forward.” And, then, of course, there’s the issue of a setback in the testing.
“But science isn’t all or none,” he says. “You think of how to make it work. You don’t stop — you change it.”
A Visionary Disguised in Academic Drab
Kiran Madura is no one’s idea of a dull guy. Begin a conversation and you’ll be swept into a whirlwind of mental energy. He has the inventor’s zeal for life’s many inherent possibilities.
After earning his doctorate in biology from the University of Rochester in 1989 and completing a postdoc at MIT and CalTech, he moved onto the standard academic track. “That was the only fate available for postdocs at the time,” he says. “In 1989, there was no significant biotechnology. In the minds of university scientists, academia equaled freedom of thought. Going over to industry was a ‘sell-out’ that meant no freedom to explore.”
He stayed with academia. But in the ’90s, the university research world began to transform, and Madura was intrigued. With lots of ideas for the practical application of his bench science, the UMDNJ-Robert Wood Johnson Medical School researcher took his first steps into the inventors’ circle. In 2000, he filed for patents, and in 2001, was awarded his first. But it took until 2007 for him to attract funding to establish a company; FVCG grasped his vision and supported it with a half million dollar investment. He waited eight months for incubator space, but now CellXplore, Inc. is off and running.
Madura’s supreme confidence is “catching.” His goal is to develop a breast cancer screening tool as simple as the PSA test for prostate cancer — a blood test that would sound an early warning and identify those in need of closer monitoring, or, at the very least, an assay that could guide the clinician in the diagnosis and treatment of the patient. Ask any woman who has had a breast cancer scare requiring a biopsy and she will tell you that a noninvasive tool to discriminate malignant from benign growths would be a godsend.
The science underlying this potential new diagnostic tool is Madura’s discovery of several biomarkers — or proteins — linked to breast cancer that can be detected in breast cancer tissue. If these biomarkers are also present in blood, urine and/or saliva, it might mean the demise of the breast biopsy, or the development of a complementary assay to provide more specific information. Because this biomarker test is quantitative, it may be able to stage the disease based on the amount of the proteins in the bodily fluid. “If you have a pre-malignancy or malignancy, cells that are sloughing off all the time may release biomarker proteins that can be detected in blood or other bodily fluids,” he says.
Madura will be working closely with a hospital in Queens, NY, that is providing 400 specimens of blood, urine, saliva and tissue of breast cancer patients. His company will examine samples to see if the biomarkers that are linked to an elevated risk of the diseased tissue are also present in blood.
The technology, he states, would not be limited to breast cancer diagnostics.
But as if that’s not enough of an undertaking, Madura has set his sights on a condition that is totally unknown to most of us. Dairy cows, like human mothers who breastfeed their infants, often are affected by mastitis, an inflammatory condition that results in high levels of white blood cells in the milk.
“It’s a massive problem,” he says, “affecting 5 to 10 percent of cattle and resulting in an estimated $8 billion of losses to dairy farmers, just in the U.S.
“As the quality of the milk deteriorates, the milk output from the affected cow goes down, and the animal becomes more prone to mastitis in the future,” he continues. Because the milk from an entire herd of dairy cows is collected in a common reservoir, poor quality milk will reduce the quality of the entire batch, and thereby adversely affect the price the farm can obtain.
The scientist teamed up with a dairy farm in Sussex County and tested their samples for 16 months. He confirmed that an assay he developed — to quickly identify a cow with mastitis — is highly accurate and sensitive.
“We can add a small quantity of a reagent to the sample of milk and get a reading within minutes,” he states.
Madura says the technology would also be valuable in the companion pet market. For instance, he says, “There is a high incidence of specific diseases among certain breeds of animals due to inbreeding. If a certain breed of dog is prone to leukemia, for instance, we may be able to develop an assay that can detect this condition in that specific breed.”
The researcher’s exuberance is infectious. When asked what he thinks his prospects for success are, Madura answers: “While the likelihood of success is very low — as is the case with all start-ups — there is a good chance that other collateral findings, such as our mastitis results, could prove positive for the company. So, my hope is that even if breast cancer detection is a long-term and high risk venture, other opportunities will co-emerge, so that CellXplore can follow multiple avenues to become successful.
“I’m a realist,” he continues. “The economic environment is poor; and the reality is that greater than 90 percent of scientific hypotheses prove false or unproductive. Notwithstanding these difficulties, we seek investors who will take a risk. To be an entrepreneur does not mean that the journey cannot be enjoyable; we need to keep in mind that failure is not inevitable: it is a possibility; but so is success.”
Snowdon Runs with a Basketful of Eggs
If you think the name Snowdon, Inc. is more evocative of white-covered peaks and silent rumination than biochemistry, you’re absolutely right. Company founder William Welsh — whose ancestry is not Welsh — named his company after Mt. Snowdon in Wales. “I’m an optimist,” he says. “It would be SNOW on the Nasdaq. I like that.”
After earning a PhD in theoretical physical chemistry, he decided pure academia was not for him. “I like to take science and make something that’s useable,” he says. He spent the first five years of his career at Proctor and Gamble.
He then went back to school to complete a postdoc, but was determined “not to return to things that had no utility.” What called to him was the world of computers and their potential to accelerate the discovery and development of new drugs and polymers.
“The average time from concept to commercialization is 8 to 12 years and a billion dollars,” Welsh says. “There are lots of false starts.”
When he came to UMDNJ-Robert Wood Johnson Medical School from the University of Missouri in 2001, Welsh’s research in the development and application of computational tools for molecular design was funded by the National Institutes of Health and that funding has continued. “The NIH now wants academia to be more involved in early drug development,” he comments.
Snowdon became the first company that FVCG invested in on March 22, 2007.
Welsh says the big three expenses to start such a venture are: leased space; employees; and the legal expenses of creating the company and licensing and maintaining the technology. “The burn rate is extremely fast,” he explains. “Most companies need $1 to $5 million to start, and then they can bring in potential investors.”
“It’s a rat race,” he continues. “You need money so you can get bigger money and do science that’s compelling, create a storyline, make an argument for your existence. You have to be able to say, ‘This is how big the market is and this would be our piece of it.’”
Welsh recalls that a year and a half ago Snowdon did some soul searching and made some strategic decisions. “What will be our exciting and compelling story?” they asked themselves.
“We decided to focus our attention on old drugs that are off patent but still used and try to find surprising, unexpected new utility for them,” he says. “The beauty of the idea is that the core structure of the drug has already been FDA approved, even if we modify it a little to get it into your bloodstream faster. The process of bringing the old-new drug to market will be remarkably faster and more efficient.”
They began their search with molecules associated with central nervous system diseases, and one “hit hard,” he says. “Snowdon has begun developing this molecule, which is already FDA approved, off patent, nontoxic, and useful for treating pain.”
With the huge need for drugs to treat neuropathic pain from diabetic herpes, shingles and other conditions, and the fact that those already on the market have many side effects, Snowdon may have a winner. Tests of the molecule on a special rat model have shown it to be more effective than existing drugs.
“We’re moving this project along aggressively,” he says. “We’re talking with pharma companies as potential partners.”
His company has a patent pending. Welsh explains that the original molecule went to the stomach. Snowdon has modified its ability to cross from the stomach and lower intestine into general circulation and then directly to the target receptors.
It is also being modified to cross the blood/brain barrier, so it potentially could be used for schizophrenia, epilepsy, bipolar disorder, ALS, anxiety and depression, he says.
“When you’re picking a disease to go after, pick one where there is a good animal model. There is a good animal model for neuropathic pain. You need data that are compelling.”
Snowdon has several other ongoing projects — molecules with the potential for treating cancer and others for infectious diseases.
Their work with a University of Chicago professor specializing in the treatment of toxoplasmosis — a parasite that can travel from pregnant woman to fetus and cause terrible birth defects — has demonstrated that one of Snowdon’s compounds for treating this infection is the “best she [the professor] has ever seen.”
Toxoplasmosis is from the same family of diseases as malaria, so Welsh has been in touch with Walter Reed Army Hospital, which will test Snowdon’s compound.
Another series of compounds — developed from an off patent drug — has been tested and shows promise against latent TB.
Yet Welsh calls Snowdon’s product for neuropathic pain, “our big one.” First animal studies, then humans. “This would be our firstborn.”
Welsh’s optimism is well founded — he has been highly successful in garnering grants. He won an Edison Innovation Award grant, additional NIH funding, and is awaiting an answer on a Department of Defense three-year, $8 million contract for work on biopathogens.
“A contract with the Department of Defense would push Snowdon to the next level,” he says. “We are building a portfolio. It’s never good to run with just one egg in your basket.”
For budding entrepreneurs, Welsh advises: “Start at the end and ask, ‘What is it I want to accomplish?’ Then go back and ask each day, ‘What do I need to do today?’”
“Academic science plods along from experiment to experiment. With a company, you need a big vision and then many mini visions.
“It’s like learning a whole new language.”
From Russia, With Love and Research
Alexey Ryazanov hit pay dirt as a young man in his 20s, not long after his graduation from Moscow University. Working in the laboratory of Alexander Spirin, his mentor and director of the Institute of Protein Research at the Academy of Sciences in Pushchino, the young researcher discovered a “fundamental event in the process of protein phosphorylation that regulates the global rate of protein synthesis in the cell.” The research was published in Nature, July 14 1988, a fabulous coup for a beginning scientist.
After spending 10 years there, Ryazanov was recruited to the U.S. and Rutgers by “one of the greatest mathematicians of the twentieth century who also had a strong interest in cell biology,” Israel Gelfand. Was New Jersey high on the young researcher’s list of places to go? “In Russia,” he explains, “it’s not important where you work, but with whom.”
That theme has remained a constant in his life. When The Cancer Institute of New Jersey (CINJ) was founded, Ryazanov was invited to set up his lab at UMDNJ-Robert Wood Johnson Medical School and to collaborate with CINJ’s new director, Bill Hait, whose research was related to the Russian researcher’s early discovery.
Ryazanov has since had a number of breakthroughs, all based on his initial discovery in Russia. He has cloned — or determined the sequence of— a new type of enzyme, which he named alpha-kinase, and five more kinases of this kind.
“The structure of most kinases is very similar, but this one is different,” he says. “We have discovered a whole new class of protein kinases.”
But a major paradox set off bells in the researcher’s mind. “The kinase we are working on is one of the most active kinases,” explains Ryazanov, “but when we tried to look at it in live cells, we couldn’t see any activity.”
That’s when things got exciting. By creating a knockout mouse that could not produce this kinase — a mutation that the researchers thought would prove lethal — the investigators found that the absence of the kinase actually made the mice resistant to radiation and extended their lifespan.
“This is an astonishing finding,” he says. “Remove this kinase from cells and you can protect the organism and extend lifespan.”
“Usually, if you irradiate mice, some will die, others get gray hair,” he continues. “But if the mice do not have this kinase, they become protected from hair-graying and death caused by radiation.”
In cancer treatment, drugs are often highly effective in killing cancer cells, but in order to kill all the cancer cells, doses need to be pushed so high that they are highly toxic to normal tissues. “If you have a method that would specifically protect normal cells without compromising the killing of cancer cells, you would have a winner,” he states.
Ryazanov’s method of selectively protecting cells by turning off the action of this enzyme could prove to be the answer. The team has acquired a series of patents from 1997 to 2007 protecting this technology, but commercialization was not on their minds at first. “I was a pure scientist,” says Ryazanov. “I had no experience in starting a company.”
But given a little push, Ryazanov could see that this discovery was “obvious for commercialization.”
“It can protect the GI tract from radiation, heart cells from ischemia, and brain cells from sickling. The same process can be used for many things. And nothing adverse happens to mice that don’t have the enzyme.”
And because the structure of the kinase is so distinctive, explains the researcher, “it’s easy to make a specific inhibitor.” His company, Longevica Pharmaceuticals Inc., was founded in 2008.
What’s his vision for two years down the road? “I want to come up with an investigational new drug,” he says, “that will enhance the efficiency of chemotherapy. Many things are in our favor. Mice without this enzyme can live for many generations with no ill effects, so we know for short-term cancer therapy, there won’t be a problem.”
Next among his goals is tackling Alzheimer’s disease. “We have preliminary evidence that this same technique may slow down the development of Alzheimer’s,” he says.
His lab has an NIH grant to develop inhibitors of this kinase as radiation-protectors — for accidents and also for radiation therapy. Ryazanov’s work has been funded by the NIH for the past 10 years.
Not only has the seed money from FVCG allowed him to lease incubator space and hire a CEO, but it has funded his travels to various countries, including Russia and China, to talk with other investors.
“Our science is so easy to explain and our results are so clear that interest has been high,” he says.
All in a Day’s Work
It’s a rare day when you find Jim Golubieski or George Heinrich in a University lab, but their “invention” now lies at the heart of UMDNJ’s academic research. Let’s just say they are like the yeast that encourages the dough to rise, yielding an exquisite loaf several steps down the line.
More to the point, they are successful matchmakers. Interested in science and knowledgeable about money, they helped forge the ties that bind.
After devising a plan to create a $5 million investment fund, the two went back to the New Jersey Health Foundation’s finance committee for approval. “We were charged with finding a similar model, but actually there is no other independent foundation investing in university research,” Golubieski says.
The closest model is Case Western Reserve. “We took the best of their plan and created our own,” he continues. “We got approval to create a separate company to exclusively invest in UMDNJ start-ups.”
Their collaborator in this project, Vince Smeraglia, “digs up the talent,” explains Golubieski. “Out of every 100 ideas that he studies, he brings five to us for a closer look.”
The process has been ongoing — every two months new ideas are presented. Of the few that make the cut, an outside group, hired by FVCG, “does independent due diligence, studying the IP (intellectual property), proposed market and competition. Only one or two will be brought to our Board.”
The transition from university research to commercial company is huge. “We take a leap of faith but we need something that gives us a hope of commercialization,” he says. “Foundation Venture Capital Group is not a granting agency. We are investors. We’re looking for something that can make it in the future. But we recognize that pre-seed funding is the biggest need. The risks are too high, so traditional venture groups do not invest here.”
The $500,000 seed funding allows the new company to get on its feet and raise more funds. Golubieski has been contacted by Indiana, Michigan and Connecticut universities, among others, about this model. He has spoken about it at investment conferences, including one at the NIH.
So, what happens when (not if) one or more of the companies takes off? “We have three primary exit strategies,” he explains. “One is the traditional. A venture capital fund comes in and we have the option of staying in or pulling out. Number two: We come to a license agreement with pharma and get a revenue annuity. Three: Someone could buy out the company. And there is a fourth — although it’s not very likely — and that’s going public.”
“This is very risky,” he states, “not unlike opening a new restaurant.”
But the entire half million dollars does not get turned over to the new company on day 1. It’s given in installments. If the idea doesn’t move forward, that funding can be given elsewhere.
“Part of our investment is contingent on the new company getting outside funding,” says Golubieski. “Our goal is to make a profit — so that we can invest in more research at UMDNJ.”
His dream is to leave a legacy of academic-commercial partnerships that will underwrite the birth of a long line of healthy offspring.