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February 2008

February 27, 2008

Burrill: Plenty of capital, not enough connections

 Madison, WI-  Greater Madison biotechnology executives should stop worrying too much about raising capital and focus on mastering a new biotech business model, according to life science venture investor G. Steven Burrill.

Burrill, founder of Burrill & Co. in San Francisco, is considered a pioneer in the world of biotechnology investing. The Madison native returned to his alma mater Thursday to deliver a lecture in the Microbial Science Building on the University of Wisconsin-Madison campus.

His subject was the global transformation now taking place in areas like biotech and biofuels, but his best advice may have been aimed locally. Burrill spoke of a bio business model that is transitioning from vertical integration for research, manufacturing, clinical and regulatory steps, and sales and distribution to more of a virtual integration model with partnerships for all of these functions.

Burrill, who publishes an annual report on the biotechnology industry, said the changing model means it will be far less important to be in San Francisco and more important to be virtually integrated. “To succeed in Madison, you don't have to get me here,” Burrill said. “You have to be linked.”

The value of integration, he said, is evident in the RCA example. RCA invented the color television set, but could not sell color TVs initially because none of the national television networks broadcast in color. The company's solution was to acquire the NBC television network and make it the first network to broadcast in color. The rest is history.

In contrast, healthcare still is one of the few industries in which important pieces - buyer, payer, and practitioner - are delinked, he noted. The industry will need a greater degree of integration, he said, as it helps deal with issues like pandemic disease and regulatory harmonization.

Burrill & Co. is a life sciences merchant bank that concentrates on companies involved in biotechnology, pharmaceuticals, diagnostics, and other health-related industries. The firm, which primarily raises money from large companies, has more than $950 million under management worldwide and is increasingly raising money globally. Following his visit to Madison, Burrill was off to Dubai in the Middle East, where a surge in petroleum revenues is creating vast sums of wealth.

During his apperance in Madison, Burrill said something that would surprise those who are working to raise Wisconsin's profile to outside investors - there really is no shortage of venture capital. “I would put every dime in Madison if the best deals were here,” he said.

World in transition

The new bio business model will continue to emerge as it becomes more difficult, thanks in part to the Vioxx scare, to get new products approved, as researchers increasingly turn to the private sector for grants, as Congress attempts to give Medicare more power to negotiate what it pays for drugs, and as the pharmaceutical industry is increasingly seen as the bad guy when it is, in fact, part of the solution. These are all challenges that Burrill said would accompany the opportunities that await biotech.

New business models are only part of a transformation that is changing the scientific world from one dominated by chemistry to one ruled by biochemistry, from one-size-fits-all to personalized medicine, and from the mindset that says aging “just happens” to an era in which aging is optional.

The longer life spans that result will raise healthcare costs from the current $2 trillion, or 18 percent of the Gross Domestic Product, to $4 trillion, or double its current percentage of GDP by 2015. Medicare, he added, is on track to spend more than it takes in by 2013.

Some, including HIMSS chairman John Wade, don't believe this slice of GDP is sustainable and view greater adoption of healthcare information technology as a mitigating factor. Burrill, however, believes it's inevitable. He cited the combination of greater longevity made possible by new drugs for AIDS and cancer, and the aging population they create. None of the presidential candidates, he added, will be able to stop it.

While many believe the bulk of healthcare costs are linked to drugs, 75 percent of healthcare dollars actually are spent on chronic care. “What has happened is we've taken all these things that used to kill us - a dead patient is a cheap patient - and by keeping people alive through chronic care therapy, it's costing us money,” Burrill said.
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By Joe Vanden Plas • Published 02/21/08 in WTN Newsletter

February 17, 2008

Alternative Financing for Early-Stage Biotech

Kiessling_lab_notes07_2460 The public markets aren't what they used to be and venture capitalists are seeking investments with shorter timelines. But the good news is several new sources of financing are becoming available.
Although levels of financing going into the biotech sector overall may be increasing, the number of companies receiving seed investment is down. Almost half of funding from venture capitalists (VCs) goes to companies with drug candidates in the clinic, and angel funding continues to retreat. All of which means it's getting harder for young companies to get up and running. At BIO-Europe in Hamburg, Germany, on November 11 a panel of experts gathered to discuss the financing and partnering landscape, with an eye to the future. The roundtable has been edited to reflect the main themes of that discussion.
Read the full article here.

February 16, 2008

Genetic Basis for Cancer: Oncogenes, by Steve Clark

Chromoimage2 The first clues that cancer has a genetic basis came from several independent observations. In 1914, the German cell biologist, Theodor Boveri, noticed that cancer cells often carried abnormal chromosomes as seen through the microscope. However, the fact that a specific chromosome abnormality was routinely associated with a particular type of cancer did not come until 1973 when Janet Rowley showed that chronic myelogenous leukemia (CML) cells carried a chromosome translocation in which the ends of chromosomes 9 and 22 were exchanged. Several other studies also showed that certain types of cancer could run in families, suggesting that the risk for specific cancers can be inherited. Then, in 1981 the laboratories of Robert Weinberg and Geoff Cooper showed that DNA from a human bladder cancer cell line could cause nonmalignant cells in tissue culture to become cancerous. This was the first direct demonstration that genes can cause cancer. A cancer-causing gene was called an “oncogene”.

Since the Weinberg and Cooper observations, dozens of oncogenes have been identified and characterized. It is now clear that oncogenes represent normal cellular genes that are either aberrantly expressed or functionally abnormal. Such normal cellular genes, called “proto-oncogenes, can be “activated” to become oncogenes through a variety of different molecular mechanisms.

RNA tumor viruses lead to the discovery of cellular proto-oncogenes.

In 1911, Peyton Rous reported that a class of RNA virus can cause tumors in animals. These RNA tumor viruses, called “retroviruses,” carry an RNA genome that, once inside a cell, is reverse-copied into DNA, which then is inserted randomly into the host cell’s genome. Some retroviruses are slow to cause tumors. After they infect and spread to a large number of cells, the  DNA copy of the viral genome, by chance, might integrate into a host cell’s DNA near or within a normal gene that plays an important role in cell growth. If this viral integration disrupts the expression or structure of the normal cellular gene, it could induce abnormal growth signals that cause this single cell to develop into cancer.

In contrast to retroviruses that take a long time to cause cancer, other retroviruses cause tumors to appear very quickly. In these cases, during the process of reverse-copying the viral RNA into DNA, RNA in the cells that is expressed from normal cellular genes is sometimes mistakenly copied into the viral genome. If this captured cellular RNA is from a gene that is important in stimulating cell growth, the recombined virus can transfer the captured cellular gene to many other cells where it then causes abnormal growth stimulation leading to the rapid development of a cancer.

Through molecular cloning, many genes that are activated by the insertion of retroviruses into the genome, or that are captured by reverse-copying of cellular RNA into the viral genome have been identified and characterized. Almost three-dozen such retroviral oncogenes and their related cellular proto-oncogenes are now known.

Proto-oncogenes can be activated in the absence of retroviruses.

The first human oncogene, called Ras, ultimately was identified in the Weinberg and Cooper experiments mentioned above. We now know that the protein product of the Ras gene serves as a “switch” that turns growth signals on and off. Normally, the activity of this Ras switch is tightly regulated in cells. However, single mutations (or “point mutations”) in critical sites of the Ras gene cause the Ras growth “switch” to remain constantly on, and this leads to cancer. Thus, some normal proto-oncogenes can become oncogenes by random genetic point mutation in cells.

Oncogenes also can be activated by structural changes in chromosomes known as “amplifications” or “translocations.” DNA amplification increases by several-fold a specific region of a chromosome. This can produce many copies of any genes that lie in the amplified region. If one of the genes in an amplified region is important in driving cell growth, its overexpression due to amplification could lead to uncontrolled cell proliferation and cancer. In the case of chromosome translocations, a proto-oncogene on one chromosome might be moved to another chromosome resulting in the gene’s structural alteration and/or aberrant expression. For example, in the translocation between chromosomes 9 and 22 that is found in CML, a proto-oncogene on chromosome 9, called c-Abl, is moved to chromosome 22 where it is fused to another gene called Bcr. Normally, c-Abl is a nuclear “tyrosine kinase,” which is an enzyme that adds a phosphate molecule to proteins at an amino acid called tyrosine. Phosphorylation on tyrosine regulates the function of certain proteins that play important roles in stimulating cell proliferation. The fusion of Bcr and c-Abl genes creates an oncogene, called Bcr/Abl, which makes a protein with highly elevated tyrosine kinase activity and that is found in the cytoplasm instead of the nucleus. These changes in the activity and cellular location of the c-Abl proto-oncogene lead to chronic myelogenous leukemia.

Oncogenes cause cancer by “short-circuiting” normal growth control mechanisms.

Normal cell growth is controlled by the availability of growth factors, which are hormone-like molecules that bind to specific receptors that usually sit on the surface of cells. When this happens, the receptor initiates a signaling cascade from the cell membrane to the nucleus that ultimately tells the cell to divide. Many of the gene products in such signaling pathways are proto-oncogenes that can become oncogenes when activated by the different mechanisms described above. When a signaling proto-oncogene is activated, the signaling cascade becomes “short circuited” and cells behave as if they are continually in the presence of their growth factor.

For example, the v-sis oncogene from a monkey cancer virus known as the simian sarcoma retrovirus (SSV) comes from a gene that encodes platelet-derived growth factor, which stimulates growth of different cell types. Cells infected with SSV are, therefore, constantly bathed in the v-sis growth factor and stimulated to proliferate. Other oncogenes are mutated growth factor receptors where mutation leaves the receptor permanently “on” even in the absence of the growth factor. Two examples of mutated receptor oncogenes include v-erbB found in a bird retrovirus that causes various cancers and v-fms, which is carried by a mouse retrovirus that causes leukemia.

Inside the cell, components of the signaling cascade that connect cell surface growth receptors to the nucleus also can cause cancer when their activity is altered by mutation or overexpression. The Ras proto-oncogene that was mentioned above is an example of a signal-transmitting molecule that is found inside cells that can be mutated into an oncogene.

In the nucleus, normal growth signals trigger the expression and activity of yet other proteins, called “transcription factors,” that regulate gene expression needed for cell growth. Many of these transcription factors also are proto-oncogenes. Two examples of proto-oncogene transcription factors are c-Fos and c-Jun, both of which were first identified as retroviral oncogenes.

“Tumor suppressor genes” inhibit the development of cancer.

In 1983, Raymond White and Webster Cavanee, using a technique called “chromosome mapping,” learned that the loss of a small segment of human chromosome 13 was a recurring feature in retinoblastoma, a rare childhood cancer of the retina that can run in families. In this deleted region of chromosome 13 they discovered a gene that they named RB (for retinoblastoma), both copies of which were inactivated either by DNA deletion or by a mutation within the gene that destroyed its function. Interestingly, such inactivation of both copies of the RB gene occurs in about forty percent of all human cancers.

Oncogene_figure_3 The product of the normal RB gene functions as a brake to cell division, so that loss of this brake can lead to unregulated cell growth. Another gene that also is associated with cancer when both copies are inactivated by mutation is the p53 gene, which acts as a “guardian” of the genome. This gene product induces a cell suicide program called “apoptosis” in cells with damaged DNA. Normally, this protects the body from cells whose DNA is damaged. However, loss of p53 activity allows cells with damaged DNA to grow and pass DNA mutations to their daughter cells, thereby contributing to the growth of tumors. A third type of gene that plays a role in cancer when it is inactivated is NF1. This gene encodes a protein that turns off the Ras growth signal mentioned above. Thus, loss of NF1 function is another way that the Ras growth signal can be left constantly on.

Since the discovery of RB, researchers have identified several additional genes in which both copies are inactivated due to mutation or chromosomal deletion. These genes normally block cell growth and prevent tumors from growing; hence they are called “tumor suppressor” genes. Since both copies of these genes need to be inactive in order to release cancer cells from growth inhibition, tumor suppressor genes act recessively. This contrasts to the oncogenes described above, where only one copy needs to be activated in order to promote cancer. Therefore, in contrast to tumor suppressor genes, oncogenes act in a dominant fashion.

Cancer usually arises after multiple genetic “hits.”

In 1971, Alfred Knudson, Jr. proposed that retinoblastoma resulted from at least two separate genetic defects. In families with a high risk of retinoblastoma, the first defect was inherited, while the second occurred sometime during childhood. This came to be known as Knudson’s “two-hit theory”. We now know that the “first hit” is the inheritance of a copy of chromosome 13 that carries a small deletion in the region that carries RB. The “second hit” occurs when a random mutation inactivates the remaining copy of RB in a single cell making the cell susceptible to unregulated proliferation.

Subsequent research has shown that most, if not all, cancer arises from multiple genetic events or “hits.” Bert Vogelstein and coworkers first showed this in colon cancer in the late 1980s. Colon cancer begins with a pre-cancerous stage, called a benign polyp. Left untreated, this will progress through successively more cancerous stages until it becomes an aggressive carcinoma. Vogelstein’s group found that the progression of colon cancer through these different stages was associated with the acquisition of genetic changes in oncogenes such as Ras, as well as in a number of different tumor suppressor genes including p53. Together, sequential activation of different oncogenes along with inactivation of various tumor suppressor genes drives the step-wise progression of pre-cancerous cells to highly cancerous tumors.



Bibliography:

Bishop, J. Michael. “Oncogenes.” Scientific American 246 (1983):80-92.

Cavenee, Webster K., White, Raymond L. “The Genetic Basis of Cancer.” Scientific
American March (1995):72-79.

Croce, Carlo M., Klein, G. “Chromosome Translocations and Human
Cancer.” Scientific American 252 (1985):54-60.

Varmus, Harold. “Retroviruses.” Science 240 (1988):1427-1435.

Weinberg, Robert A. “A Molecular Basis of Cancer.” Scientific American
249 (1983):126-142.

-- “Tumor Suppressor Genes.” Science 254 (1991):1138-1146.


This article was originally published in Genetics, vol 3, R. Robinson, ed.  2003.

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Steven S. Clark, Ph.D., a former professor and medical researcher at the University of Wisconsin School of Medicine provides consulting services for investors and biotechnology companies.  He encourages contributions to this page.  Email him with story pitches.
________________________________________________________________________________________

© 2008 Steven S. Clark, PhD. All Rights Reserved.

Disclaimer: The authors used their best efforts in collecting and preparing the information published herein. However, neither Steven S. Clark, nor other authors,  assume, and hereby disclaim, any and all liability for any loss or damage caused by errors or omissions, whether such errors or omissions resulted from negligence, accident, or other causes.

Articles contained herein, are meant to be distributed freely to interested parties. However, any excerpts from any article must credit BioScience Biz.

 


February 11, 2008

Predicting Success of Early Stage Biotechnology--Part 1, by Steve Clark

Nautilus After a session at the recent Wisconsin Early Stage Symposium, I was talking with an investor from Indiana and explained to him that I analyze biotechnology. He then asked me the $64,000 question every investor would like to know--how do I determine if an early stage biotechnology will be successful?

It is a great question but, I submit, the wrong one to ask because there are no unambiguous or concrete criteria one can use to determine if a promising technology will succeed scientifically. On the other hand, one can look for warning flags that provide a measure of the risk of failure of that technology. Therefore, a better question to ask is this: are there reasons that a particular technology might not succeed. By asking the question this way, you avoid the impossible task of trying to predict success, and instead you look to reduce risk, thereby, increasing your chance of success by investing in technologies with lower chance of failure.

Invariably, when considering a promising technology at this early stage of development, the investor is presented with very exciting laboratory and maybe animal studies. Also, the inventor invariably claims that his product has tremendous market potential and there may be a lot of press hype around this (remember interferon?).

The savvy investor does his due diligence and makes his own assessment of the market potential, the business plan, company structure, etc. All of these are certainly important considerations, but even with the best structure, financing and business plan in place, the whole enterprise ultimately rests on the success of the technology, which, at this stage, is not fully tested.   

Let me turn to a case study to illustrate the technological pitfalls that can derail even the most promising science.

A case study of an anti-cancer therapy

Several years ago, a colleague published very exciting results showing that a simple plant oil—the oil that makes oranges taste “orangey”--could both, prevent and cure, advanced breast cancer in rats. Better yet, the compound, perillyl alcohol, or POH, showed no toxicity in the animals. POH already was approved for human consumption as a food flavoring, was cheap to produce and readily available, so there was high hope that POH would become the first cancer chemotherapy and chemoprevention agent devoid of side effects.

Laboratory studies showed that POH stops cancer cells from growing and causes them to self-destruct. Studies in the rat breast cancer model confirmed this and further revealed that normal tissues were not affected. Other research suggested that POH interfered with a biochemical pathway that often is abnormal in human breast cancer. All of these pieces of evidence fit into a convincingly coherent picture of an exciting and novel anti-cancer agent. Based on these findings, clinical trials began.

The early phase I trial revealed that in humans, POH is metabolized precisely as it was in rats and also confirmed that POH was non-toxic in humans. These results added to the enthusiasm for the product.

Phase II trials were then undertaken in attempt to treat human breast cancer. In these trials, POH showed no anti-cancer effect at all and it was removed from the experimental therapeutic pipeline. What went wrong?

What are the lessons to be learned?

The first lesson from the POH failure is this: It always is risky to extrapolate experimental results from rodents to humans. Simply because a rodent malignancy occurs in the same tissue as human cancer does not mean that it is the same type of cancer in both species. Rodent cancer models, like the one employed in the POH experiments, use genetically homogeneous inbred animals and the experimental cancer arises from a single, artificial genetic cause. In contrast, human cancers occur in a genetically diverse population and are initiated by many different genetic events. Thus, there is significant risk of failure when human trials are based on the results of a single animal disease model.

Second, the mechanism of action of POH was insufficiently established before the clinical trials were initiated. The data were not adequately repeated and were weak to begin with. In fact, while the clinical trials were underway, another lab found that POH actually affects a completely different biochemical mechanism than originally believed—the original results were wrong. Importantly, the correct mechanism of POH anti-cancer activity may only be relevant for a small subset of human breast cancers and more important in other malignancies.

Since the proper mechanism of action of POH was not accurately established and the rat cancer model was inadequate to generalize to human breast cancer, the human trials were not targeted for the appropriate malignancy and, thus, doomed to fail.

Yet, the risks of failure were discernable before the POH clinical trials began—critical laboratory data were weak, the rat cancer model was too narrowly focused and untested, and the clinical trials were initiated too early. These warning flags could have been picked up by an objective reviewer who understood the science.

I sometimes am called upon to evaluate the science behind products and technologies at a similar stage of development as POH was when it entered clinical trials—that is, the technology shows great promise based on lab and animal studies, but no one knows if it will work in humans. This is a high-risk, make-or-break juncture in the long process of taking a science idea to market. 

The difficulty in identifying the warning flags at this critical stage of development is that each technology will have its own unique warning flags that portend possible failure.  Furthermore, there likely are as many or more different types of warning flags as there are technologies to be developed. 

Therefore, the first, and obvious, requirement in any technology analysis is to seek the input from a professional who has good knowledge of the science. But, doesn’t this beg the question, who has better understanding of the technology than the scientists who developed it and aren’t they already telling you it is sound?

This brings me to the second, and equally important requirement for any technology analysis—it must be objective. 

An objective, informed opinion is critical for thorough due diligence and I submit this is almost impossible to do by a non-scientist, or even by a scientist who is invested in the success of the technology. It is as hard to realistically see flaws in one’s pet project as in one’s own children.

Therefore, for thorough due diligence, make sure to obtain technical analysis from a knowledgeable scientist who has no ties to the technology or the company. And be sure to ask that objective expert to evaluate the risk of failure, rather than the chance for success.

This article was originally published in the Wisconsin Technology Network Newsletter

+++++++++++++++++++++++++++++++
Steven S. Clark, Ph.D., a former professor and medical researcher at the University of Wisconsin School of Medicine provides consulting services for investors and biotechnology companies.  He encourages contributions to this page.  Email him with story pitches.
________________________________________________________________________________________

© 2008 Steven S. Clark, PhD. All Rights Reserved.

Disclaimer: The authors used their best efforts in collecting and preparing the information published herein. However, neither Steven S. Clark, nor other authors,  assume, and hereby disclaim, any and all liability for any loss or damage caused by errors or omissions, whether such errors or omissions resulted from negligence, accident, or other causes.

Articles contained herein, are meant to be distributed freely to interested parties. However, any excerpts from any article must credit BioScience Biz.