GenPhar on the verge of success

GenPhar’s product line sounds more like a list of miracles: A test to determine HIV drug resistance, a treatment for solid cancerous tumors and an AIDS vaccine platform that also can work for hepatitis B and protect against viral agents used for bioterrorism – all with virtually no side effects.

But to some, the most unbelievable part of GenPhar is this: Its Charleston-area address.

“It’s been an uphill battle,” said Dr. John Dong, the company’s chief scientific officer on whose research GenPhar is based. “Many venture capitalists do not believe us simply because we’re in South Carolina.”

The company has connections from San Francisco to New York, yet Dong and other GenPhar officials consider Charleston home, and here, they say, is where it will grow.

If GenPhar does what it is setting out to do, that growth could be significant.

Spun out of research done at the Medical University of South Carolina, the 20-employee company is planning to market its drug-resistance test this year that will result in doubling its size.

That, plus $8 million in venture capital and key partnerships with the National Institutes of Health and the Army, will provide the firm with footing to move forward next year with human clinical trials on the vaccine and cancer treatment.

If all goes as planned, the company hopes to build a facility here to manufacture its vaccines.

Yet GenPhar is hardly alone in its efforts. Competition looms just about everywhere – particularly with the AIDS vaccine, where pharmaceutical giants such as Merck and GlaxoSmithKline are doing research.

OUT OF MUSC

The Chinese son of a college professor and a physician, Dong received his medical degree from the Capital Medical Institute in Beijing – where he also met his wife, Dr. Danher Wang, a microsurgeon. They moved in 1984 to the United States where both received doctorates in cellular and molecular biology at the University of Alabama-Birmingham.

While at UAB, Dong was doing research that later would become the basis for GenPhar’s products. Still, as a physician, his goal always has been to find ways to stop disease.

“At the time, I fully believed that molecular medicine and molecular biology were going to revolutionize medicine in general,” Dong said.

After completing his doctorate, Dong remained at UAB for a couple of years before moving to the University of California-San Francisco.

While there, Dong worked with a number of biotechnology companies in the Bay area and filed a number of patents. But he said he resisted the idea of starting a company because he always has been interested in academics first.

Dr. James Norris, chairman of microbiology and immunology at MUSC, and Ken Roozen, who directs the school’s Foundation for Research Development, recruited Dong to Charleston in 1998. Dong then was asked if he wanted to start a company based on his research.

That year, Dong met Steve Hutchinson through a mutual friend. Hutchinson, a New York resident who has his bachelor’s degree from Vassar College and an MBA from Harvard University, has worked in private-equity investing for 25 years.

Over lunch one day at Coconut Joe’s, Dong, Hutchinson and Roozen sketched out a relationship between the university and what would be GenPhar. “This one was so easy it’s unbelievable,” said Roozen, whose job at the foundation is to license university technology to companies as a way to generate revenue. Normally, he said, such relationships take much more time.

Dong, Hutchinson and Wang officially founded GenPhar in 1999 – GenPhar is short for Genetic Pharmaceuticals. The next year, the company was able to recruit Dr. Bill Shannon, whom Dong had known in Birmingham, where Shannon was director of the microbiology department at the Southern Research Institute.

In addition, the company has recruited scientists from across the country, and even one from London, to serve on its scientific advisory board.

ON THE MARKET

For the most part, GenPhar quietly has gone about its business in a somewhat cramped office on Lowcountry Boulevard in Mount Pleasant, doing research and building support. The company only recently has turned up the volume on what it can do – largely because its new product and upcoming clinical trials on humans will give it little choice in terms of publicity.

GenPhar is in position to make its move. The company has three products – the drug-resistance test, the vaccine technology and the cancer treatment.

The company is getting ready to market the test later this year, and that will require additional hiring and perhaps another location.

Since 1996, AIDS patients have been treated with a therapy requiring them to take multiple drugs, which has cut the disease’s death rate. Yet in many HIV patients, the virus has developed a resistance to one or more of those drugs.

The test simply determines which drugs a patient’s virus can resist, allowing physicians to better determine a treatment that could work.

Other tests are on the market, but Dong and Shannon said theirs is cheaper and more accurate. Dong also said that the diagnostic test ultimately saves money because patients can spend $15,000 a year on anti-AIDS drugs.

“A true drug-resistance test is an insurance company’s dream come true,” Shannon said. The company believes the test can bring in $50 million to $100 million a year.

The test will allow the company to bring in money to help support research into the firm’s other technologies that have long-term growth potential.

One of those technologies is the cancer treatment. GenPhar is developing a treatment based on the genetic transfer of signals at the cellular level, Dong said.

In essence, the treatment tells cancer cells to age so they die on their own, causing no side effects. The company is targeting solid tumors of the brain, liver, prostate, breast and pancreas.

Shannon said that, in testing so far, the treatment has been able to make tumors “go away completely” with almost no side effects. The company hopes to begin clinical trials on humans next year.

VACCINE WORK

For various reasons, the technology at GenPhar that has received the most outside attention has been the company’s work on a vaccine platform that could be used for different vaccines.

The vaccine works by using partial genetic material of a particular virus that essentially mimics an infection, or a “sheep in wolf’s clothing,” as Dong puts it. Unlike traditional vaccines that are weakened versions of a virus, GenPhar’s vaccine can’t make the patient sick.

In response to the mimicked infection, the body builds its defense system in the same way it would if it were invaded by an actual virus.

So far, the vaccine has been tested on mice and monkeys and has been found to work against AIDS and hepatitis B, but company officials believe it could be used for a variety of viruses.

The company has plenty of rivals in its efforts to develop an AIDS vaccine – several companies around the world are involved in the same race with some having already begun clinical trials.

It’s easy to see why: AIDS is a huge worldwide problem, particularly in Africa where 28 million people are infected with the disease, according to the World Health Organization.

An AIDS vaccine could mean a lot of money to the company that comes up with one. Dong quoted estimates saying a vaccine that is just 30 percent effective could generate as much as $1.5 billion in revenue by its second year.

Dong said GenPhar’s vaccine could be close to 100 percent effective. The company also hopes it can work for those who already have the disease.

As for the competition, Dong is confident his company’s technology is better.

“Everything is based on technology,” he said, adding that his company is closely monitoring other efforts. “So far our data is much more superior than any of the other competing companies.”

Dong added that partnerships with the NIH and the Army validate that belief.

The NIH has agreed to fund and perform its own trials of GenPhar’s HIV vaccine on rhesus monkeys this year. The company also wants to begin clinical trials on humans next year.

The Army, meanwhile, is interested in testing the vaccine on viruses that could be used by terrorists. The company has signed an agreement with the Army Medical Research Institute of Infectious Diseases to test the vaccine on the Marburg virus, which is similar to Ebola.

Hutchinson said such agreements build confidence with the public, but the real proof is in the science.

“For the lay person who is not experienced in the area, oftentimes they look for affiliations with identifiable reputable experts, and so for the general public this may give it credibility,” said Hutchinson, the company’s chairman and chief financial officer. “What gives it credibility in the scientific community is the actual results we have obtained.”

LIVING IN CHARLESTON

Dong has enjoyed living in Charleston. He talks often about the natural beauty here and how companies like his can provide the community with well-paying, high-potential jobs without ruining the environment.

Yet there have been challenges. Raising money here can be difficult, and while the company has been able to raise $8 million from individual investors – one of them being Charleston industrialist Jerry Zucker – most of its money has come from outside the state’s borders.

The partnerships with NIH and the Army, Roozen said, may keep the company from having to rely too much on outside investors.

Still, the Army has suggested that GenPhar should consider building a manufacturing facility so it doesn’t have to contract the production out to another company, thus keeping the technology in fewer hands and making it less available to potential terrorists. A manufacturing facility would require a lot more investment money.

Company officials acknowledge the area’s challenges, but they say Charleston has many benefits: its tax structure, the low cost of labor, the natural environment and tax incentives. “Charleston does provide a great advantage for starting a biotech company,” Dong said.

“With the help of the local community, we can combine the natural beauty and the natural talent in the area,” Dong said. “We can become the San Francisco of the East Coast. With time and work, that will come true.”