MOUNT PLEASANT,Ken Roozen, executive director of the Medical University of South Carolina’s Foundation for Research Development, chuckles when asked how his organization, with a budget that totals less than $500,000 and grants amounting to about $125 million, plans to attract new biopharmaceutical and other medical research companies to nearby Charleston, the renowned vacation destination.

It takes a little spurring but Roozen finally acknowledges that GenPhar, a biopharma company that sounds like it is offering miracles — a drug resistance test for HIV patients, a vaccine for HIV and Hepatitis B and C patients, and a treatment for solid cancerous tumors — is the area’s all-star biotech attraction.

“They are the pioneers,” Roozen says. “We want and need for them to make it. We’re going to work with this company as carefully as we can.”

GenPhar launched in 1999 under the auspice of chief scientific officer Dr. John Dong and principle scientist Dr. Dahner Wang – a husband and wife team – chairman and chief financial officer Steve Hutchinson and Xihong Deng, who is no longer with GenPhar, with an $8 million investment from more than 60 individuals.

One of those investors includes David Borhoff, a partner in McColl Partners, the new Charlotte-based firm run by Hugh McColl, former Bank of American chairman and CEO who last year took a personal interest in introducing GenPhar executives to legislators and other government officials in Washington D.C. GenPhar officials declined to reveal who else holds a stake in the privately held company.

So it’s easier to imagine how GenPhar, with its high-profile launch and eye-popping products, was able to attract the interest of researchers at both the National Institute of Health and the United States Army Medical Research Institute of Infectious Diseases. Both agencies declined to comment for this story.

Good things come in threes

GenPhar officials seem to be the most excited about the HIV drug resistance test, which enables researchers to hold on to information that is naturally lost through current testing procedures, in some cases as much as 95 percent more data. It also has the potential to generate annual revenues approaching $100 million, Hutchinson claims.

“In the past we’ve learned results from computer models and probability determinations of what a patient’s drug resistance characteristics are likely to be,” he says. “The problem is that the number of genetic permutations is astronomical; conservatively the number would be something like 20 to the 100th power. All researchers can say now is that a person is either more or less likely resistant to a certain drug.”

In GenPhar’s model the patient will never see the diagnostic test being performed. Blood will be drawn and sent to a lab where scientists will able to determine if the disease is mutating in response to a drug. GenPhar officials declined to reveal specific attributes of its tests, which have yet to be tested in humans. Hutchinson says the company is awaiting regulatory approval in both the U.S. and overseas for human testing. Currently the products are lab tested in mice and monkeys.

For the cancer treatment platform GenPhar’s product essentially increases the aging process of solid tumors growing in the brain, breast, liver, pancreas and prostate, until they eventually die, and the process leaves no side effects, Hutchinson says.

But Dong says its GenPhar’s vaccine platform that is generating the loudest buzz among industry observers. The vaccine injects a virus similar to an infectious disease or agent into the body where it then begins to develop a defense against that virus as if it actually were being attacked, he says.

From feasibility to profitability

Dong says the company is still unclear as to whether it will bring on an internal sales and marketing team to sell the products itself or license its vaccines and tests to larger biotechs that already have the facilities needed to take a product from inception to the market.
Another option is to continue pursuing revenue-generating research and development contracts, such as the private deal GenPhar recently signed to develop a vaccine against the highly infectious Marburg Virus, Hutchinson says.

This may be the easiest route considering that GenPhar was able to produce its platforms over several years through university-funded research, and Charleston’s relatively inexpensive cost of living helped keep costs down, Roozen says.

Right now, Hutchinson says the original $8 million investment in GenPhar, and a handful of future financial commitments from undisclosed investors, will fund the company through the end of 2002 and hopefully through profitability.

One of the biggest obstacles the 20-employee GenPhar faces is securing manufacturing space where it can manufacture the active ingredients found in its products. In the meantime the plan is for GenPhar to subcontract its manufacturing work, Hutchinson says.

“But we’re reluctant to outsource because then you’ve basically told someone how to produce the core of your intellectual property,” he adds. Hutchinson declined to indicate how much it may cost GenPhar to build a manufacturing plant in Charleston.

If GenPhar constructs a new plant it may pave the way for patent attorneys, accounting firms and investment firms to follow, Roozen says. But more importantly to Roozen and his colleagues the attention makes it easier the MUSC Foundation for Research Development to attract new investors to help get un-hatched business plans out of the incubator.

“We’re driven by what we find being developed in the university (by students and faculty,” Roozen says. “We’re always looking for new ideas around which to build a new business plan.”

GenPhar Web