Editor’s note: Many of the most promising high-tech, biotech and pharmaceutical firms will be presenting at the annual venture capital conference sponsored by the Council for Entrepreneurial Development. The event will be on April 27-28 in Chapel Hill. As it has in the past, Local Tech Wire will profile presenting companies that wished to participate in a Q&A. First in the series in Metabolon.Metabolon has set its sights quite high, targeting such degenerative diseases as Alzheimer’s and Parkinson’s.

“There is a substantial unmet need in the area of neurodegenerative disease,” says Reid Tripp, Metabolon’s vice president for business development. “For example, there are few, if any, effective drug treatments for these diseases. The drugs currently being prescribed have limited effect on the disease, yet they have very large sales.

“The few drugs in the development pipeline are aimed at the treatment of symptoms of the disorders and do little or nothing to delay or stop disease progression. In order to make significant progress in drug development, we need earlier disease detection and technologies that will allow us to monitor disease progression and the effects of drugs on disease progression.”

Metabolon also wants to use its disease mapping and biochemical reaction tracking capabilities to assist other companies in drug development. “Our technology can cut dramatically the cost of drug development,” Tripp says.

The company, which started in 2000, has already attracted investments from The Aurora Funds, Trelys Funds and Alexandria Real Estate. It also is led by well-known biotech executive John Ryals, who served as chief executive officer at Paradigm genetics.

Answers for LTW’s Q&A were provided by Tripp.

Given the difficult investment climate, have you explored or used other means of getting funds than venture capital? If so, please explain why you remain interested in venture capital. Are investors telling you that the climate for making deals is improving? Please explain.

Our business model is to use our research platform in partnering arrangements with pharmaceutical companies to help offset our costs of technology development. We still seek venture capital as a source for financing but not our only source. While the climate seems to be improving in terms of availability of investment dollars, the money still is coming only at a high cost of capital.

If you had only one chance and one paragraph to convince an investor, how would you answer this question: “Why should an investor choose your company?”

Metabolon is a biopharmaceutical company designing novel therapies for the treatment of neurodegenerative disease. Metabolon’s competitive advantage is that we are the leaders in the use of metabolomic technology for neurodegenerative disease. The company has a strong intellectual property position, is managed by a seasoned, successful, entrepreneurial team and has an exceptional Scientific Advisory Board.

In addition, Metabolon’s technology capability has excess capacity, beyond our internal needs for neurodegenerative disease. The company intends to partner in therapeutic areas outside of the central nervous system area. These partnerships will bring in significant early revenues that will be used to offset the expense of our internal research activity.

What is the “pain point” (or points) you address for your customers?

Our technology can cut dramatically the cost of drug development.

What makes your company unique? Do you have a proprietary and/or a patented technology? Please explain why it is unique and what the status is of any patent filings.

Metabolon is a leader in the new field of metabolomics, a powerful scientific approach, for the discovery and development of drugs. Metabolon’s patent-pending technology accurately measures the repertoire of biochemical changes and maps these changes to metabolic pathways. Our scientists can rapidly and accurately build a metabolic model for a disease or for the reaction to a drug.
Metabolon’s initial disease of focus within Neurodegenerative disorders has been ALS.

This program (in collaboration with the Massachusetts General Hospital) has identified biomarkers for the disease and for the action of Rilutek®, an Aventis drug for the treatment of ALS. We have applied these biomarkers to classify patients with different types of ALS and we are in the process of using these biomarkers for early (pre-symptomatic) disease detection.

Because we know the molecular identity of the biomarkers, we are also building biochemical models for the disease, which will greatly aid in the development of new drugs. This research has gained wide support among the world’s top academic ALS researchers as well as, the national ALS association (ALSA) and the National Institute for Environmental Health Science (NIEHS).

The company is currently applying its technology to produce a similar understanding of Alzheimer’s disease and Parkinson’s disease.

Metabolon has a strong portfolio of pending patent applications covering major concepts of metabolomics, including biomarkers, lead identification, target identification, monitoring response to therapy, sub-classification of disease states, evaluation of toxicity and repositioning of failed drugs, and data mining concepts.

Metabolon has also filed intellectual property covering the biochemical signatures, the biomarkers and the specific small molecules associated with ALS and responses to Rilutek®.

What makes your product(s) and/or services unique vs. your competition? (Who is your competition, and what do they offer?) If you have no competition, why not?

Competition in the metabolomics technology is representative of companies focused in various areas such as plant and/or human metabolomics as well as proteomics. Metabolon has a technological head start in the area of metabolomics versus these competitors. In addition, Metabolon is focused specifically on metabolomics and the utilization of this science to discover and develop new treatments and diagnostics for neurodegenerative diseases. None of the competitors have both the focus on metabolomics and neurodegenerative disease.

Does your company already generate revenue? If so, how much? Are you cash flow positive?

Yes, we are generating revenue but do not want to discuss details.

What is your target market? What is the size of that market in terms of dollars? What share of that market do you believe you can win?

Metabolon’s development strategy focuses on the discovery and development of novel therapeutic drugs for the treatment of neurodegenerative diseases. The worldwide market for therapies to treat central nervous system disorders has been estimated to exceed $30 billion. The group of diseases that comprise neurodegenerative disease is a significant and steadily growing portion of that market.

US Neurodegenerative Disease 2003:

Alzheimer’s: 4.5 million patients
Parkinson’s: 500,000 patients
Huntington’s: 30,000 patients
ALS: 20,000 patients

These diseases have many commonalities including a significant cost of care and dramatic societal cost including a devastating impact on the families of patients. By the time the diseases are diagnosed in a clinic, most of the neuronal damage has occurred and there is little chance to reverse or stop the damage.

There is a substantial unmet need in the area of neurodegenerative disease. For example, there are few, if any, effective drug treatments for these diseases. The drugs currently being prescribed have limited effect on the disease, yet they have very large sales.

The few drugs in the development pipeline are aimed at the treatment of symptoms of the disorders and do little or nothing to delay or stop disease progression. In order to make significant progress in drug development, we need earlier disease detection and technologies that will allow us to monitor disease progression and the effects of drugs on disease progression.

What do you want from an investor other than money?

Other than money we look for good connections with other venture groups to help support future rounds of financing.

Why will investors be impressed with your management team?

We have an outstanding group of experienced people who have a track record of building successful companies.

What is the exit strategy for the investor from your company? Are there potential strategic alliances with larger companies? Do you wish to take the company public? Or do you wish to grow the company and either sell it or acquire other companies?

The market and success of the technology and business will drive the exit. We could certainly see a possible IPO or acquisition.

Fact box on Metabolon: http://www.localtechwire.com/article.cfm?u=7689

More information about the conference: www.cednc.org/cgi-bin/irCom.pl?1066/1/db/351/0/0/28/0/0/0/2083

Tuesday’s profile: Alveolus