Drug Delivery Company Pegs Future On `Pegnology'

Enzon Inc. gains ground in a growing industry with its innovative approach for enhancing the efficacy and durability of medicine Abraham Abuchowski was a Rutgers University biochemistry graduate student in the 1970s when his adviser set him to work on an inert polymer called polyethylene glycol (PEG). Abe Abuchowski, 42, runs his company the way he teaches karate classes. The cofounder and CEO of Enzon Inc. in South Plainfield, N.J., Abuchowski got hooked on the martial art while an undergraduate at Rutgers University in New Brunswick, N.J., where he pursued his belts with the same vigor as he pursued his B.S. degree in biology and chemistry. Remaining at Rutgers for graduate study in biochemistry, Abuchowski eventually a second-degree black belt taught biochemistry students by day and eager karate disciples by night. Karate classes and a biomedical company may seem worlds apart, but Abuchowski sees an intimate connection. "I use my experience in teaching karate, which has classes of 100 students, in running the company", he says. "In karate, I gained skills in moving people along, and it became almost second nature to organize people's roles as the company grew." Although he and his company's roots are in the laboratory, Abuchowski doesn't do much science anymore. He spends much of his time managing his staff and satisfying the demands from Wall Street that his small, publicly traded biomedical company perform well. And when the pressure starts to build, there's always a workout in the gym. --L.B.W. Abuchowski's mission was to fasten it to an enzyme to see whether the polymer changed how the enzyme performed in the body. PEG not only changed how the enzyme worked, it also has altered the course of Abuchowski's life. By 1981, Abuchowski had founded Enzon Inc. in Southfield, N.J., and with the help of his former adviser and Enzon's cofounder, Frank Davis, continued his biochemical research. In the nine years since then, Abuchowski and Davis have parlayed that polymer-which is used in drugs and cosmetic products like shampoo-into a new technology that they call pegnology. Pegnology is one of the nineties' first breakthroughs in the burgeoning business of drug delivery. Last March, Enzon's first product, PEG-modified ADA, adenosine deaminase, was approved for marketing by the U.S. Food and Drug Administration. The product is used to treat the rare but deadly severe combined immunodeficiency disease (SCID), which robs about 50 children a year of the ability to fight off infections. It is known as the "bubble boy" disease because its victims have to live in a sterile environment that isolates them from the outside world. The approval was the first FDA-sanctioned therapy for SCID, and one of the first uses of a polymer-based drug delivery system. For this treatment, the enzyme ADA is coated with PEG to slow its disintegration in the body, where it is injected twice a week to help restore immune system function. "When we modified our first protein and it worked, there was elation and disbelief because this thing opened up a whole new era of medical treatment," recalls Abuchowski, Enzon's president and CEO. It also opened a new era for Abuchowski, who now functions as businessman and salesman as well as a scientist. While the size of the market for PEG-ADA may be small, the government nod puts Enzon ahead in a crowded drug delivery field in which most companies are still testing products for a variety of diseases or, in some cases, still developing them. Those products are critical to many of biotechnology's new protein-based drugs, which need to be shepherded through the body because proteins don't last long unprotected once ingested or injected. Another plus for Enzon: The firm, which has 105 employees, has something to sell, and that means cash flowing into the till-a significant advantage for Enzon over competing medical technology companies that rely solely on venture capital infusions to keep themselves afloat. Today, Enzon has its marketable product as well as $26 million on hand, money that it has attracted from outside investors, Enzon officials claim. They project that this is enough to cover the firm's operating expenses for the next two years. However, a marketable product and outside support are no guarantee of success for Abuchowski and his company. "There are so many more players than there were 15 years ago," says S.J. Enna, scientific director at Nova Pharmaceutical Corp. of Baltimore, which is conducting the final stage of clinical trials for a biodegradable polymer delivery system used in treating brain cancer. But only a few of these players will achieve superstardom, Enna predicts. Many regulatory, financial, and marketing hurdles loom ahead. Whatever the future holds, Enzon already has captured a spot in the limelight by getting its polymer to market so fast. PEG-ADA, sold under the name Adagen, moved from inception to commercialization in a little more than six years, Abu-chowski points out. Typically, it takes 10 or more years to develop many biotech products or other pharmaceutical delivery technologies, such as liposomes. But whether Abuchowski's drive and Enzon's technology will keep the firm ahead of the legions of companies scrambling to develop various types of delivery systems remains to be seen. Enzon faces potential competition from other technologies as it moves to make other PEG products, and must also cope with sizable regulatory and technological hurdles. In addition, it anticipates relatively small markets for its PEG products. Robert Kupor, a Kidder, Peabody & Co. biotech analyst who informally follows Enzon, estimates that the combined market for the firm's major products won't reach $100 million for at least five more years. That projection pales next to the nearly $200 million in current annual sales for single products like Genentech's clot buster, Activase (TPA). Enzon expects its annual sales of Adagen to run between $1 million and $2 million, not nearly enough to make the firm operate profitably. But Enzon has reason to look to the future with optimism as agreements with other biotechnology and pharmaceutical companies have helped boost the company's stock prices, in the last 12 months, from a low of $3.50 a share to as high as $12.75, and a current price in the $6 range. In January, Enzon announced it had teamed up with Amgen Inc. of Thousand Oaks, Calif., now a biotechnology powerhouse thanks to the success of Epogen in treating anemia associated with kidney disease. The two companies will collaborate on applying Enzon's technology to Amgen's granulocyte colony stimulating factor (G-CSF) and other therapeutic compounds. Sterling Drugs Inc., the Eastman Kodak Co. pharmaceutical unit, and Erbamont, N.V., the drug subsidiary of Montedison S.p.A. of Milan, Italy, have lined up behind PEG-based applications for injuries associated with kidney transplants and acute lymphoblastic leukemia, respectively. In April the Schering Corp. of Kenilworth, N.J., a subsidiary of Schering-Plough Corp., signed a letter of intent to enter into a full product development and license agreement to use PEG for an undisclosed Schering drug. In addition, Enzon holds a strong position on its patents. The company's products rest on a hard-to-copy process technology to which Abuchowski and Davis-who is on Enzon's board of directors- have devoted their professional lives since teaming up at Rutgers. Analysts caution that the invention of another inert polymer would give the PEG process a run for its money, but so far that has not happened. In any event, Enzon also has the flexibility to sublicense its technology. Its original license came in 1985 under a patent from Research Corporation Technologies (RCT), an unaffiliated nonprofit company that works with universities seeking to commercialize their faculty's discoveries. All patent rights issued in 1979 to Davis, subsequently were assigned to RCT. Recognizing that this license applied to only a few proteins, Enzon signed an agreement in 1989 with RCT that substantially broadened its rights to include more proteins. "At this point, they are in a much better position than before," says Kidder, Peabody analyst Kupor. Today, Abuchowski has a two-track strategy for Enzon's growth. It has certain proprietary products under development that could prove very profitable. The company also plans to license other rights to companies with the resources to pursue clinical trials and commercialization. Enzon hopes to be like Alza Corp., the well-established Palo Alto, Calif., drug delivery company that has demonstrated how to capitalize on its strengths and let the royalties pile up on several products, including skin patches that slowly release medication. Enzon's next hopeful is PEG-asparaginase, a treatment for acute lymphoblastic leukemia. L-asparaginase is currently sold worldwide for the treatment of this disease, but clinical use has been stymied by severe allergic reactions in some patients. Enzon's modified form of the drug, PEG-L-asparaginase, reduces this risk and requires less frequent dosing, according to Abuchowski. Enzon has applied for a license to market this drug, and Kupor predicts its sales could soar from $4 million the first year to $435 million annually in five years. But there have been production hassles. Enzon has run into problems getting timely delivery of L-asparaginase. Company officials say the problem has been resolved, but concede that such delays can hurt. Finding another supplier and then showing the FDA that the new raw material is biologically the same as the one used in the application for approval would cost the company time and money. Enzon's long-range future depends on whether it can handle the various technological hurdles that come with applying pegnology to other, trickier proteins, such as hormones. "There are some innovations that have to be developed," Abu-chowski acknowledges. The company must also clear the psychological hurdle of getting academic researchers to try its products because the technology is so new. One convert is Michael Hershfield, a Duke University medical scientist who initially was very skeptical but did eventually agree to treat one very ill patient with PEG-ADA. After monitoring 14 patients, he says Enzon's achievement is "remarkable." He thinks that PEG enzymes can be developed to treat other diseases, but "it's going to require people in academic institutions to do the initial testing and development." Such comments fuel Abu-chowski's faith in his pioneering firm. "There are very few companies with a drug that works," he says, "especially a company as young as ours." Leah Beth Ward is a reporter for the Albuquerque Journal in Santa Fe, N.M. Drug delivery is an increasingly important concept in therapeutics. Indeed, many experts say that it is crucial to the success of a host of genetically engineered medicines that otherwise might be attacked by the body's immune system or metabolized before they can take effect. So scientists are devising systems that control where, when, and how fast drugs are released in the body. These systems, like PEG, can be relatively simple ones in which the drug is coated with a substance such as a biodegradable polymer or embedded in fat globules called liposomes. Or they can be more complicated, like implanted pumps or skin patches that slowly release the desired drug. In the drug delivery marketplace, each new technology faces intense competition from other systems being developed, not to mention therapeutic substances that don't need pricey delivery systems. According to Technology Management Group of New Haven, Conn., a market research company, at least 182 companies and 95 other organizations are promoting some two dozen drug delivery approaches as they vie for a market expected to be worth more than $2 billion by 1999. Those approaches include: Osmotic pumps: These are drug delivery systems in which the encased medication is more dilute than the body's fluids. Consequently, fluid leaks through its membrane, carrying the therapeutic substance with it. Encapsulation: These are gel caps that control the release rate in the gut because the capsules consist of different thicknesses of collagen. Liposomes: These are molecules of fatty acids that organize themselves into a bubble that can carry a drug through the body to a target. Bioerodible polymers: These are polymer capsules that are implanted under the skin and degrade more slowly than does swallowed medication. As they degrade, medication is released. PEG: This inert polymer is attached covalently to a protein drug for transport in the body.

Drug Delivery Company Pegs Future On `Pegnology'

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