Zen-Bio Inc. is looking for $3 million in financing from its pharmaceutical and biotech partners and customers to spur research the already profitable company’s revenues won’t support.

Founded in 1995, the 12-employee company already makes money selling a line of human fat cells to researchers, doing contract jobs for pharmaceutical and biotech customers, and developing intellectual property.

Zen-Bio developed and commercialized a system for producing cultured human fat cell lines and studies the biology of fat cells to identify new potential new avenues to treat diabetes, heart disease, and obesity.

“We’re profitable,” Zen-Bio’s Chief Operating Officer Richard Giersch tells Local Tech Wire. “Revenue this year will be in the $1 million range. Over the last five years it rose 20 to 30 percent a year.”

Giersch, who joined the company recently, says the Zen-Bio derives its revenue from selling lines of human fat cells to researchers who use them to hunt for drug targets. It also makes money from contract research projects and receives milestone payments from spin-off Artecel as it advances its own technology.

The company spun off Triangle-based Artecel in November 2000. Using patented technologies from Zen-Bio, Artecel acquired $3 million in venture backing from Eno River Capital in Durham, among others.

Among other useful properties, fat cells include an early adult stem cell type that can be coaxed to form tissues of various types. Artecel is exploring the use of altered fat cells to plump facial wrinkles or replace bone marrow destroyed by cancer radiation treatments, among other possibilities.

Capital sought for new research

Giersch says Zen-Bio, founded with under $1 million in loans and from private angel investors, seeks $3 million in strategic financing to spur research in areas its revenues won’t support. “We’re targeting customers and partners rather than venture capitalists to raise the round,” Giersch says.

The company’s customers include most of the major names in the pharmaceutical industry: Glaxo SmithKline, Astra Zeneca, Amgen, Eli Lilly, Fujisawa, Merck & Co., Wyeth, and Pfizer, among others.

Giersch says Zen-Bio has no U.S. competitors and one major European competitor, German-based ProCell. “They only sell one-fourth as many cells as we do. We’re pretty competitive,” he says.

Companies buying the fat cell lines use them to hunt for drug candidates, Giersch explains. “Pharmaceutical companies have large libraries of chemical compounds they test on the fat cells to see if they react in a way that identifies them as possible candidates to treat a disease such as diabetes.”

Human cell advantage

One of the attractions of Zen-Bio’s human fat cell lines is that they can help pharmaceutical companies avoid costly mistakes made from basing decisions on research on animal cell lines.

The biology of human fat cells and the rodent fat cell lines previously used in preliminary research do not have identical biology, which Amgen discovered to its misfortune not long ago. Giersch says Amgen licensed technology from a University based on research on the rodent model that suggested a hormone in fat cells called leptin induced weight loss in the mice.

“They spend millions in license fees and testing but found out it didn’t actually work in humans. If they had been using human cells, they would have saved a lot of expense,” Giersch says.

Using human cells from the start cuts out the need to move up to a human model, speeding up the time it takes to get experimental drugs to market, Giersch says.

Zen-Bio has continuing collaboration agreements with Nautilus Biotech of Evry, France, and Canadian biotech Entelos Inc.

Collaborations yielding results

Dawn Franklin, Zen-Bio director of business development, says the company also is working with functional genomics company Nautilus to examine the genetics of fat cells. “We look at these cells under lean and obese conditions. We knock out various genes to see if there is potential for new diabetes or obesity therapies.”

Franklin says Nautilus has the only effective method of forcing fat cells to take up foreign DNA, accomplishing this with viruses.

“We’re working on a preliminary patent to protect the methods we’re using,” she says.

Entelos takes Zen-Bio’s fat cells in culture and some of what it knows about their biology and makes a computer models that give researchers “a bird’s eye view,” Franklin says.

Franklin says the collaboration is already producing results. “We filed one patent on intellectual property and there is more coming. One of things we found is a receptor not usually considered a target for diabetes treatment.”

Zen-Bio Web site: www.zen-bio.com