Supplement: Entrepreneurs Boldly Break New Ground

Entrepreneurs Boldly Break New Ground By Clare Kittredge Early-stage funding is oxygen to young life science companies struggling to keep their companies afloat and research moving forward. RELATED ARTICLES Successful Strategies Margaret Foti: Devoted to cancer research The Launch and the Exit Mark Tykocinski: Open doors lead a scientist to his calling Shire Pharmaceuticals: A Study in Exponential Growth Many Happy Returns: Cephalon celebrates its 20th year Creative Collaboration ACUREON PHARMACEUTICALS - It's all in their heads Matthew Gantz, CEO of Acureon Pharmaceuticals, says his company's technology is all "in our heads." That's because he and his partner are searching for late-stage therapeutics in the areas of infections, transplants, and critical care to improve for use in hospitals. "We do not actually have a product; we are looking for one," says Gantz. "We look everywhere - databases, products approved outside the US but not here, serious unmet needs.... The challenge for us is to find the right product to build a business around." Acureon was formed in the summer of 2006 in Berwyn, Pa., when Gantz's partner, Giorgio Mosconi, approached him with a product opportunity. Gantz, former president and CEO of Hydra Biosciences in Boston, Mass., had previously spent six years in London building the European operations for Pathogenesis, a US biopharmaceutical company that launched inhaled antibiotics for cystic fibrosis patients and was acquired by Chiron. In contrast, Mosconi had a great deal of product development experience. "[Mosconi's] an MD-PhD, and I'm an MBA, more on the business and commercial end, so it was a natural fit. That combination really appealed to our new investors," says Gantz. Locating Acureon in the Philadelphia area was a logical step, as Mosconi was already there with a company called Vicuron. Unlike Boston and San Francisco, with their "phenomenal R&D infrastructure, academic centers, history, and companies sprouting out of labs," the tristate Philadelphia area has more late-stage product development, manufacturing, sales, and marketing people, according to Gantz. "That makes it a world-class axis. At the end of the day it's about people. I don't need a scientist in a lab with a Petri dish telling me what to do. I need people experienced with late-stage clinical trials, marketing and sales experience, regulatory people - key people to build a late-stage commercial company." The year-old company is "the antithesis of academic," Gantz says. "We're more real-world. We try to identify needs in the market, take a step back and say: Are there products out there that are used for other means that we can reformulate for other purposes? Look at multidrug resistance. Can you find older drugs with poor toxicity profiles and improve them so clinicians can use them more aggressively? Instead of reinventing the wheel, we look for ways to address unmet needs in a speedier manner." With three full-time employees, Acureon follows a specialty pharmaceutical model. "The idea is not to be small forever, but right now we want to limit our expenses. We're operating virtually for the moment," Gantz says. Acureon's funding strategy is to keep it simple. "In my previous company, I had a lot of venture investors, and I saw how difficult it was to get them all aligned in the same direction. I felt that a smaller syndicate of investors would be easier to manage." When its first opportunity, a hospital antibiotic, didn't "pan out," Acureon's investors said, "'instead of you looking for other investors, why don't we give you some walking around money so you can form a small team, and we'll fund the opportunities you bring us,'" Gantz says. Fueling Acureon's search is "a couple million dollars of seed funding," says Gantz. "We're still searching. We're a young company. We're early-stage in the sense of funding, but unlike an early-stage R&D company, we can very quickly become a late-stage company." VIROPHARMA - Dreaming lean The people at ViroPharma say that unlike most biotechnology companies, theirs has a promising late-stage pipeline plus a lot of cash on the books, enabling the company to be active in acquisitions to further growth. Based in Exton, Pa., ViroPharma develops and markets treatments for serious infectious diseases, including Clostridium difficile-associated disease (CDAD), hepatitis C, and cytomegalovirus (CMV). The five virologists who founded ViroPharma in 1994 had "a double dream," according to chairperson, CEO, and president Michel de Rosen. "The founders' scientific dream was that while many companies were working in the field of HIV, few worked on other viral diseases. They saw a major medical need." The second part of ViroPharma's dream was to create a small, lean and different company. "Most had worked in big pharmaceutical companies and felt they were plagued with significant weaknesses - too many silos, too many people competing, too much focus on titles," says de Rosen. "Their dream was to create a company that was smaller, more nimble, more focused on patients, and getting things done." ViroPharma chose the Philadelphia area because some of the founders originally worked for Sterling Drug, which Sanofi Aventis later acquired. They also knew the area's talent pool. "The tristate region is the number one cluster in the world for pharmaceutical companies," says de Rosen, former CEO of Rhone-Poulenc Rorer, who came onboard in 2000. The company focused early on the common cold because two of its founders had led Sterling's antiviral program and discovered Pleconaril, the first compound that worked against the cold virus, de Rosen says. Sanofi Aventis then licensed Pleconaril to ViroPharma for use in the United States, and it became ViroPharma's most advanced asset as it was already in human trials. Its two other programs with drugs in the discovery stage focused on hepatitis C and respiratory syncytial virus (RSV). Although raising early money was not easy, the company went public in 1996, based on one Phase II trial of Pleconaril. "It was quite a stretch, but it gave the company some oxygen for the next clinical work," de Rosen says. "Most biotechs have a great pipeline, but they burn money and are in debt. We have an impressive late-stage pipeline and more than $500 million in cash ..." --Robert Doody In 2000 ViroPharma became a star, thanks to Pleconaril. Its stock soaring, the company made the front page of USA Today. "The bubble was bubbling, and ViroPharma was part of the bubble," says de Rosen. The stock crashed the same year with Pleconaril's disappointing Phase III results. Then the company bounced back; with redesigned protocols Pleconaril achieved positive Phase III trial results. However, the FDA denied approval in 2002 because of a drug-drug interaction with an active agent in women's oral contraceptives. The company then successfully reformulated it as an intranasal compound, which eliminated the drug-drug interaction problem, and out-licensed the compound to Schering-Plough in 2004. ViroPharma also out-licensed its RSV program, switching its focus to infectious disease, gastroenterology, and hospital-based products. The company prefers to work in areas that address significant, unmet medical needs and that require focused sales and marketing efforts. According to Robert Doody, corporate communications manager, ViroPharma would not look to market a product that serves primary care. In partnership with Wyeth, ViroPharma has brought four hepatitis C compounds into clinical trials, including the "promising" HCV-796, says Doody. In addition, the company's anti-CMV drug, Camvia, for transplant patients, is now in Phase III and expected to go to the FDA for approval in 2009. ViroPharma acquired its mainstay drug, Vancocin, from Eli Lilly in 2004. Vancocin is the only drug approved for treatment of CDAD, says Doody. With an epidemic of a virulent strain of CDAD associated with broad-spectrum antibiotic use spreading across the United States, Canada, and the United Kingdom, Vancocin sales reached $167 million in 2006, and they are expected to exceed $200 million in 2007, says Doody. "It's a great compound for the company, a fabulous, life-saving drug, and it pays for the development of other compounds." "We have a fantastic balance sheet for a biotech company," Doody says. "Most biotechs have a great pipeline, but they burn money and are in debt. We have an impressive late-stage pipeline and more than $500 million in cash ... enabling us to continue to acquire new and interesting opportunities, which will ultimately provide hope for patients who are currently underserved."

Supplement: Entrepreneurs Boldly Break New Ground

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