Photograph by Richard A. Nichols
Behind locked doors emblazoned with biohazard warnings, the Center for Emerging Technologies’ various wet labs hum with—what? Even after 10 years of hearing civic hype, the rest of us aren’t quite sure what happens in there.
We know there’s an alphabet soup of possibility simmering. We know CET’s part of a research district called CORTEX (Center of Research, Technology and Entrepreneurial Exchange), its buildings lined up along a corridor of power that stretches down Forest Park Parkway from Washington University to Saint Louis University. And we have a vague sense that the city’s future rests rather heavily on spun-down nanoparticles and decoded DNA.
But we can’t see that stuff, and the projects are pipelined and far too complicated to go with breakfast cereal. We remember how, in the mid-1990s, civic leaders exulted in St. Louis’ life-sciences future, telling each other excitedly that the raw materials were all here. We had Washington University’s Genome Sequencing Center, Saint Louis University’s virology and immunology research, the University of Missouri–St. Louis’ tropical botany, Monsanto’s genetic engineering and chemistry and Pfizer’s pharmaceuticals, not to mention the varied wonders of Mallinckrodt (later Tyco Healthcare and now Covidien) and a reassuring abundance of hospitals.
What we didn’t have, until Marcia Mellitz founded the center a decade ago, was a business incubator that could nudge scientific discoveries into the real world. There were no labs to rent; there was no early-stage venture capital to fund the research; there were no experienced entrepreneurs to guide it. Until CET opened, if a university researcher hit upon a new way to diagnose cancer or head off a heart attack, he either stayed in the ivory tower perfecting his theories, periodically winching up a small basket of grant money, or left for California to start his own company.
Mellitz started luring academics down to earth and reminding them it was possible to make a little money—and a real difference—here. She guided them toward funding sources and partnerships, force-fed them business savvy, found them CEOs who could sell science. Above all, she helped them keep their projects alive in the “valley of death” that sears the months between discovery and clinical trial, the period when no sensible venture capitalist will risk investing in a possibility.
CET opened on the campus of UM–St. Louis, then moved to a building rehabbed by the city of St. Louis for just such purposes, then expanded into the old Dorris Motor Car Co. warehouse next door. But because most of its technologies are biomedical, it still needs more wet-lab space. “We’re planning a 60,000-square-foot lab building,” Mellitz says. “We own about an acre and a half on Laclede Avenue, and the idea is to create a campus.”
Since 1998 companies at CET have attracted more than $600 million in funding. More than 80 percent of that money came from outside St. Louis—but since CET opened, six new venture-capital companies with a life-sciences focus have opened here. Ilya Nykin, founder and managing director of one of those firms, Prolog Ventures, calls CET “one of the most important catalysts of new venture creation in our area”; Prolog has already invested in four CET companies. Eight-year-old RiverVest Venture Partners, also based in St. Louis, has invested in two CET companies, to the tune of more than $6 million.
CET’s first big success, Stereotaxis—which uses magnetic technology for cardiac interventions—has already flown the incubator, landing in airier quarters down the street. Fourteen other biomedical companies are incubating right now, six of them focused on cancer and four on heart disease. Their projects will either save lives or die trying.
Marketers might have christened St. Louis the BioBelt, but all of it—the plants, the chemicals, the drugs and devices—is still a crapshoot. An intense, exasperating, verge-of-a-miracle crapshoot. “It takes time,” says Jay Schmelter, cofounder and managing director of RiverVest. “Decades. And it requires consistent effort, and ultimately, it takes one or two great successes, like Stereotaxis, to create the next generation of entrepreneurs’ enthusiasm.”
We went inside four labs to see just what technologies are emerging to create that enthusiasm … and against what odds.
Orion Genomics, LLC
Nathan Lakey, president and CEO
In place: $20 million in grants and revenue, $10 million from angel investors
Still needs: $20 million to launch its first screening product
The goal: Developing genetic cancer-risk tests
What it could mean: Treatment early, when cure rates are at their highest
Nathan Lakey, president and CEO of Orion Genomics, strides through a vast, wide-open lab, relaxed as a cowboy on a ranch. He’s wearing jeans, and over the blasting rock music, he recites, without embarrassment, a rather low-key background—bachelor’s degree only, in biochemistry; some time as a hired gun doing research at Harvard Medical School; a stint directing DNA sequencing at Millennium Pharmaceuticals. “I got to know Rick Wilson [director of genetic sequencing at Washington University],” he says casually, “and we thought it might be kind of nice to start our own company.”
Orion’s researchers started out like cryptographers, translating a secret layer of operating instructions on plants. “Turns out DNA writes two codes on its molecules,” Lakey explains. Everybody already knew about the gene sequence; Orion wanted to focus on the second code, written “in a language of DNA methylation.” Coating one of DNA’s base molecules, methylation chemicals can tell a cell how to package DNA in the nucleus, turning certain genes on or off.
In plants, what’s methylated is junk DNA—repetitive sequences, ancient viruses that occur over and over. The plant’s gene-coding DNA is not methylated. So Orion created a “gene thresher” that removed the methylated DNA and sequenced what was left. “We were able to get rid of 90 percent of the genome and work on one-tenth,” Lakey recalls with a satisfied grin. “It was like convincing all the fish in a cove to swim into a net so you could catch them.”
Since 2001 his team has sequenced palm oil for the government of Malaysia, tobacco for Philip Morris and rye grass and clover for the government of New Zealand. They made about $20 million with the thresher, but as they worked, papers were being published suggesting that in humans, methylation patterns could be connected to cancer.
The heck with the plants, they told each other. Maybe they could use their techniques to verify that methylation patterns did indeed reflect the DNA changes associated with cancer.
“Some genes in tumors are hypermethylated—the DNA is packaged densely, so proteins can’t get through and their genes are silenced. Genes that were supposed to be on get turned off.”
This kind of abnormal methylation is not necessarily present from birth. “For all the talk of genetic risk, most cancers happen simply because mistakes are made in the body’s cells as they age,” Lakey says. “An adult human has on average 100 trillion cells, all of which arose from a single fertilized egg. The DNA in a fertilized egg is about 6 feet long, and every time cells divide, you’re adding another 6 feet. An adult human has 125 billion miles of DNA. No wonder some have mistakes. And all it takes to kill you is for one of these cells to go crazy and become a tumor.”
The team of scientists set the clover aside and started mapping human methylation, comparing tumors and adjacent tissue. Lakey’s team discovered more than 300 methylation changes consistent with various cancers. Then, after homing in on these “biomarkers” for breast cancer, ovarian cancer and lung cancer, they screened 14 other cancers for the same methylation patterns. Now they’re using those patterns to detect cancer earlier than ever before.
For starters, they’re focusing on a flawed gene that’s connected to increased risk and earlier onset age of colon cancer. “In studies, patients just diagnosed were more than five times as likely to have this biomarker in their blood,” Lakey says. “We think people with this gene would be well served to have a colonoscopy 10 to 20 years earlier than the recommended age of 50. One-third of colon cancers result in death. If this gene causes cancer to develop earlier, the people in whom it’s found too late may be the ones with the flawed gene. It’s a shot on goal, a potential way to identify the most deadly cases.”
Orion is entirely privately funded, and in 2009 Lakey expects to have FDA approval to launch Orion’s first screening product. It will be, he hopes, the first of many.
BioSynthema
Dr. Jack Erion, president and CEO
In place: A 10-year partnership with European and U.S. researchers and clinicians
Still needs: $15 million to $30 million to reach the regulatory approval phrase
The goal: Bringing an urgently needed, finely targeted tumor treatment to market
What it could mean: A real treatment option for patients with recurring neuroendocrine tumors
Soft-spoken, wearing a gray pullover and unlabeled jeans, Jack Erion’s the personification of caution. He earned his Ph.D. in biochemistry at the University of Kansas and did what all his friends did: went to California to work in biotechnology, engineering supertomatoes. But the industry was rolling around like a pinball. “We were being bought and sold every three years,” he says. “So I came to St. Louis to work at Mallinckrodt, which I thought would be more stable.”
Mallinckrodt promptly started reinventing itself just about every three years—and then got bought by Tyco. By that time a resigned Erion had found a niche in the firm’s discovery group, collaborating with scientists in Europe and the U.S. on molecular technologies that would find and attack cancer cells. The team was making progress, but Tyco chose not to pursue the project—which meant their research could have left the country or been lost altogether. In 2001 several high- level scientists who’d already had their jobs eliminated flew back to St. Louis, convinced this technology was too important to lose. Encouraged by their support, Erion gulped, took a deep breath and formed a company with his overseas colleagues to buy the rights to their own work.
“I’d had a similar opportunity in California, but not the”—he gropes for a polite word then gives up—“to go through with it. But I’d come to the realization that if I was going to stay in the industry, there was no guarantee of stability anywhere. This way, if we did fail, at least it would be our own doing and not somebody pulling the rug out from under us.”
Far from failing, BioSynthema, of which he’s president and CEO, has made it through an obstacle course to the clinical-trial stage in Europe. And the 600 patients treated overseas at Erasmus University Rotterdam since 2000 are living, on average, almost four times as long as they would have without the new technology.
BioSynthema’s products are small molecules, peptides, that bind with cancer cells’ signature proteins. Used for imaging, these peptides can light up a tumor with radioactivity so it can be seen—and clearly, not as the shadowy blur that forces so many radiologists to use dreaded phrases like “It could be …” and “We can’t be sure but …” Photons glow, spotlighting even tiny, scattered tumors that conventional imaging would miss altogether. Used as therapy, the peptides circulate throughout the body but are absorbed primarily by the tumor cells, which they either zap with a lethal dose of radiation or bomb with chemotherapy drugs. The peptides quickly clear the body, minimizing toxic side effects, and are targeted so precisely that they can be given at a dose far lower than traditional chemotherapy.
Erion works with two other scientists at the CET lab, and right now they’re comparing parallel struggles with the BioSynthema office in Amsterdam as they fight for regulatory approval in Europe as well as the United States. They swept past the biggest obstacle last year: “Mallinckrodt owned a blocking patent, and another company owned one that was blocking Mallinckrodt, and it was stalemate,” Erion explains. “We managed to get the parties involved to give us license to go forward.”
BioSynthema’s peptide is made in California; the radioactive material is made at the University of Missouri Research Reactor in Columbia, Mo.; a manufacturing formulation’s being made in Italy to use in a clinical trial in Houston. “There’s a small collection of people around the world who all happen to know each other,” Erion explains.
The molecule-making is as automated as a bread machine. Erion did the preliminary design for the synthesis of the peptide himself, and at this stage all the machine needs is chemical starter materials—a bit like using a yeast starter to make sourdough bread—to actually build the peptide. Then comes the wearying part: month after month of repetitive tests and verifications.
“So is science reaching the point where anyone with cancer can walk in and demand a small molecule?” I ask hopefully.
“Yes,” Erion says, “but it’s cancer-specific. In our case we are looking at a rare cancer. At Mallinckrodt there was pressure to focus on larger cancer populations, but this worked so well. And it’s the things that work that you should develop, not the things you wish you could do.”
The rare cancer? Carcinoid neuroendocrine tumors, which are so hard to diagnose that they’re often fatal. Just one year ago this cancer was thought to affect 50,000 patients in the United States; that estimate has since doubled. Early symptoms are misleading, ranging from diarrhea to asthma to hot flashes. “The patients our drug is being used for now have had tumors surgically removed, and now they have metastases so small their location is either unknown or inoperable,” Erion says. “Until now, there’s been no treatment—that’s why this is so important. People at this stage have a 12- to 18-month life expectancy. But with this intervention we’ve already gotten them up to 46 months—and that’s with the sickest patients.”
He opens his laptop and pulls up four diagnostic scans. The first shows a ghostly abdominal area with black blotchy circles, like inkblots, indicating the tumors. By the fourth, done a year later, the blotches are gone.
The technology itself is no longer new, he adds, but there are still just a handful of products. “There are financial reasons,” Erion says, noting that BioSynthema is still trying to raise enough money to finish clinical trials. “Plus, it just takes a long time to develop a new drug product. All kinds of new science have to be learned. By the time these things come on the market, the guys who originally invented them have practically forgotten about them.”
Kereos
Dr. Robert A. Beardsley, president and CEO
In place: $22 million in venture capital, $25 million in grants
Still needs: $25 million to $40 million to advance one or more candidates through Phase I
The goal: Developing targeted therapies and biomarker imaging for more effective cancer treatment
What it could mean: Clearer imaging and easier detection of tumors; lower doses and fewer side effects from chemotherapy
Cancer’s an elephant, and everyone stalking it tends to focus on one part of the beast. Orion emphasizes the damaged DNA that can foreshadow a tumor, BioSynthema the tumor’s unique molecular structure, Kereos the blood supply it needs to survive. You see, because of a breakthrough by two Washington University researchers, Dr. Gregory Lanza and Dr. Samuel Wickline, Kereos has the nanotechnology to cut off that supply in the most precise way imaginable.
Lanza and Wickline are the research brains. Kereos’ president and CEO, Robert Beardsley, has a Ph.D. in biochemical engineering, but he also has an MBA in finance—making him that rare and exotic creature most start-ups would sell their mother to find. When he arrived in 2003, Kereos had raised $250,000 in four years. “We did a deal pretty quickly out of the box with Bristol-Myers Squibb,” Beardsley confides, “and then we raised venture capital of more than $20 million in 2005. We’ve been driving our lead candidate toward clinical trials ever since.”
That candidate is a nanoparticle, an oily little cluster of droplets 500 times thinner than a human hair that carries molecules of dye or drugs that work much the way BioSynthema’s wee peptides work—except the nanoparticles can carry more baggage, and their destination is the new blood vessels that form on the surface of a tumor or a heart blockage.
“We can find tumors”—Beardsley picks up a pencil and slides his finger all the way to the sharp point—“that size. One or two millimeters.” Because the tumor obviously has its own blood supply, the guesswork’s gone. And because its margins are highlighted, surgeons and radiation therapists can better decide what to do.
The partnership with Bristol-Myers involved a cardio MRI agent; other Kereos products include a plaque-stabilizing drug and another heart drug (with a more than $1 billion potential market apiece, according to Kereos), a tumor MRI drug ($100 million potential market), drugs that stop blood vessels from growing and thus strangle the tumor ($1 billion potential market).
Beardsley shows me an 8-millimeter tumor, its silvery image outlined in white at the margin, and lets the computer slice it and map out where the new blood vessels are forming. (Tumors grow wildly and randomly, not evenly like a nice zoysia lawn.)
The National Institutes of Health put millions into the foundational research at Washington University that developed this technology—but it’s Kereos’ job to get these nanoparticles on the market so a physician can order up an MRI with the agent Beardsley affectionately calls “triple zero-one.” Funding for this journey is 80 percent venture capital, much of it from Prolog Ventures, supplemented by partnerships and spillover grant revenue from Kereos’ Wash. U. docs. The money pays for about 50 safety, consistency and purity tests per nanodroplet, and for the making of the nanodroplets themselves. “They’re liquid droplets suspended in water, with balls of liquid perfluorocarbon at the core,” Beardsley says as though he’s describing his favorite penny candy. “The droplets are surrounded by surfactants—essentially, soap—so they remain in droplet form. We anchor about 100 copies of a molecule on each droplet, and about 100,000 copies of an MRI dye. These are not solid balls you have to build up bit by bit; you’re making these droplets and decorating their surface.” Sounds like a rainy-day crafts project until he describes the machine that, using 20,000 pounds per square inch of pressure, “mixes all the materials in repeated passes until they come down really small.” He cocks his head. “It’s tougher than you might think to measure the size of a droplet that’s 250 nanometers.”
No, it isn’t.
Phase I of the clinical trials begins this year, and Beardsley’s predicting a scant five years until triple zero-one hits the market. “I’m thinking funding won’t be a problem,” he says, forgivably cocky. He’s already got venture capital.
VirRx, Inc.
Dr. William S.M. Wold, founder, and past president and CEO
In place: $1.7 million in grants; $2.5 million in research and development funds from biotech business relationships; $300,000 in contracts from biotech companies
Still needs: $1 million for a Phase I clinical trial; $2 million to $5 million if testing moves to Phase II
The goal: To develop a genetically engineered virus into a commercial anti-cancer drug
What it could mean: A new way to efficiently kill only cancer cells, leaving healthy surrounding tissue intact
Unlike Kereos, VirRx isn’t even sure it wants venture capital.
Over the past three decades, Dr. William Wold has helped Saint Louis University build a world-class reputation in virology and immunology (he now chairs the department of molecular microbiology and immunology). Along the way he started thinking about ways the human adenovirus—which causes symptoms similar to the common cold—could be used for gene therapy.
When a virus infects a cell, it takes over the cell and converts it into a factory that churns out Mini-Mes. “Enclosing the DNA molecule is a protein shell, like a soccer ball with some spikes on it that are different proteins,” Wold explains, pointing to a diagram of the process. “When the virus enters a cell, it makes 10,000 progeny viruses, each identical to itself, in about 24 hours. Once the cell is packed full of virus, it bursts open, and the progeny viruses go and infect other cells.”
In the mid-’90s, cystic fibrosis researchers tried removing one of the adenovirus’ genes—thereby crippling it so it couldn’t replicate—and substituting a cellular gene that would, once the adenovirus invaded the lungs, start manufacturing the protein CF patients lack. “It didn’t work, but for trivial reasons,” Wold says sadly. “The lungs of CF patients are so full of slime and inflammatory cells, the virus can’t infect the cells properly.”
Next, researchers decided a modified adenovirus could be a great anti-cancer drug—as long as you could stop it before it destroyed normal tissue, too. “And indeed, there are quite a number of tricks you can play,” says the man who’s mastered most of them. He reaches for a pad of grid paper and draws a long, skinny rectangle, a DNA molecule, crosshatching for different genes. “Let’s say this gene here”—he points to one of the shaded areas—“makes a protein essential for virus replication, a ‘promoter.’” The gist of what follows is that the mixture of proteins in a cancer cell is different from that in a normal cell, so you can replace a regular promoter with one that’s cancer-cell–specific. It will work only in cancer cells. Meaning your virus can replicate its lethal army in a cancer cell, but not in a normal cell. “That’s one trick,” he says with a shrug. “There are others.”
In 1999, after watching others make brave but unsuccessful stabs at this work, Wold and two faculty colleagues at Saint Louis University founded a company, VirRx. Its researchers have since made quite a number of “vectors” (genetically engineered adenoviruses), each more promising than the last. Theirs is one of 10 to 15 labs around the world trying to do this, and they’ve already licensed the technology from SLU and made a collaboration agreement with Introgen Therapeutics.
VirRx has consistently won federal and state business grants but remains wary of any venture capital that might allow outsiders to swoop in and start dictating strategy. The timing’s too crucial.
VirRx has already secured patents in Europe and Australia and is near to a patent in this country. “We are struggling with the U.S. examiner,” Wold says, “but I think we’re going to win.”
The agent is VirRx’s seventh vector, and its performance does credit to its smoothly lethal “007” namesake. For proof, Wold turns to his computer and pulls up photos of nude (hairless, not just unclothed) mice that have been injected with a cancer-cell line. Nude mice don’t have an immune system, so tumors grow immediately. He points to huge lumps on the mice that haven’t been treated. Then I notice the lower row of mice. They’re svelte.
“We inject the vector either directly into the tumor or into the bloodstream,” Wold says, “and start measuring.” In 2006, after a large toxicology study in animals turned out to be “quite acceptable,” the FDA granted approval to conduct a Phase I (safety only) clinical trial. That was two years ago; VirRx is still trying to raise the $1 million that first trial will cost. “We wrote a grant application to NIH for $600,000,” Wold says, “but didn’t get funded. We’re going to resubmit to address some of the reviewers’ concerns. One guy said, ‘I don’t know if it will be safe or not.’ Well, that’s the point of the trial!” He sighs. “It’s pretty frustrating.”
VirRx has decided to reassure the money-givers by testing 007 on a few patients at a low dose—which means raising an additional $50,000 for that smaller test. “If all that works out, we should be able to begin the big clinical trial in mid-2009,” Wold says. About two years later, if 007 proves nontoxic, VirRx will be able to start a Phase II trial—if it can raise the $10 million that will cost—and then move up to the $100 million Phase III trial, “really getting down to the issue of ‘Does it work?’” Only then? “Earlier trials are designed to show safety, not efficacy, and it’s hard to show both at the same time,” he explains. “Under the best-case scenario, we’re 10 years away from getting a drug. It’s a long and tortuous process. There are hoops to be jumped through, toxicology studies that have to be done but don’t necessarily make any sense.
“One particular rule really bothers me,” Wold admits, leaning forward. “We’re going forward with this 007 vector, but in the meantime in the lab, we have made better ones. But you can’t switch in the middle of the trial; you’d have to start all over again. To me, they should evaluate the changes we made and be able to go with the new one.” Almost as an anticlimax, he adds his final criticism. In someone less self-possessed, it would be a wail: “There isn’t any money for these clinical trials! We spent our grant money on the animal studies, and there’s virtually no government money once you’re past the Phase I trials. There will be investment capital, if the Phase I trials are successful—but every time you’re raising private money, those people are making an investment to make money, so you’re diluting the profitability of your enterprise. Early investment money in a small company is very expensive money.”
Meanwhile, VirRx waits in the valley of death—although you’d never know it, standing in the VirRx lab at CET as one vector after another explodes into existence.
“Show Me”
CET asks every year for Missouri funding through the Department of Economic Development. “This year we’ll receive $500,000—assuming the governor signs it,” Mellitz says. CET also receives various tax credits. That’s it. Gov. Matt Blunt wangled $15 million for biotech research by—to the sputtering outrage of many—selling assets of the state’s student loan authority. But that money went to the Missouri Technology Corporation, and because of concerns over stem-cell research, none of it can be spent on medical research.
Other states are packaging hundreds of millions, usually with citizens’ full support. Mellitz made the state legislators a list: Ohio has pledged $1.6 billion over 10 years; Arizona, $2.5 billion over 20 years; Texas, $3 billion over 10 years (for cancer research alone); California, $3 billion over 10 years; Massachusetts, $1 billion over 10 years.
The natural pull for biomedical companies is to the coasts—and that’s where the venture capital concentrates. PricewaterhouseCoopers’ MoneyTree Report for the first quarter of 2008 shows $2.5 billion in venture capital going to Silicon Valley (36.2 percent of the total) and $1.2 billion to New England and the New York region (17.4 percent of the total). The entire Midwest? $229 million, 3.2 percent of the total.
So … we try to compensate. When CET opened, venture capital in St. Louis was scarce. Since then six new firms with a biomedical focus have formed; business leaders started the Arch Angels in 2005 to sprinkle seed money and strategic advice; and the new BioGenerator fund actually creates companies, using a pool of private, corporate and Danforth Foundation money.
Still, venture capital’s comparatively scarce here, and so is entrepreneurial talent. “We import CEOs, and they don’t quite leave California. And then they want the company to move to California.”
Some do move. It’s the nightmare of the industry: You incubate genius and then it either flies the coop or sells itself to Japan. But Washington University School of Medicine consistently ranks in the top five in the nation for NIH grants, and Saint Louis University’s new Edward A. Doisy Research Center has just catapulted its funding forward. In the first three quarters of this fiscal year, CET companies raised almost $10 million in investment funding alone. Deals like that weren’t happening 10 years ago.
Nothing was happening 10 years ago.
