When Matthew During and Michael Kaplitt first went hunting for capital to commercialize their research in gene therapy, their timing couldn't have been worse. It was the fall of 1999, just after teenager Jesse Gelsinger died in a clinical trial of gene therapy -- the use of genes to deliver medicines to diseased cells. Together, During and Kaplitt were able to scrape up an initial $2.5 million. "Maybe we were arrogant to think we could start something at that time," Kaplitt concedes. Today, the two physician founders of Neurologix Inc., in Fort Lee, N.J., are feeling much more upbeat. They're searching for $10 million to fund a pivotal trial in Parkinson's disease, and they expect to find it.
Others are also prospecting in the once-neglected field of gene therapy. On Nov. 7, Colgate-Palmolive Inc. (CL ) invested $20 million in Austin-based Introgen Therapeutics Inc. (INGN ), which is pursuing novel remedies for oral cancer. And the Michael J. Fox Foundation is about to award its first ever grant for gene therapy research. The $750,000 will go to San Diego-based Ceregene Inc. (CEGE ), which, like Neurologix, is zeroing in on a treatment for Parkinson's, the disease that afflicts actor Fox. Ceregene also raised $32 million in venture capital last year.
Recent success stories in clinics and labs add to the sense that gene therapy is moving back into the mainstream. China has been quietly approving such treatments. And on Nov. 22, Genzyme Corp. (GENZ ), in Cambridge, Mass., announced it will spend $3.2 million to acquire a manufacturing facility that will make several gene therapy treatments, including one aimed at a common condition among the elderly called peripheral arterial disease. "We've been in gene therapy a long time, and we've seen the ups and downs," says Richard Gregory, Genzyme's senior vice-president of research. "But we're optimistic."
Champions of gene therapy today say that they have learned from the mistakes of the past. The original dream was to repair faulty DNA by replacing the genes that malfunction and cause disease. Researchers attach copies of healthy genes to viruses -- known as vectors -- which then ferry the genes into cells. But Gelsinger had a rare metabolic disorder that may have caused an immune reaction to the virus used in the trial. Gelsinger's death was attributed to that reaction, not the gene.
Gene therapy companies say they have figured out how to sidestep the virus-overload risk. Not only are they vigilant about making sure the technology is only applied to patients who are fit enough to weather potential side effects, but they're getting better at containing the viral transporters. In Parkinson's, for example, both Ceregene and Neurologix are delivering genes only to the diseased part of the brain. The implanted genes make their way into brain cells, where they churn out substances that have been depleted over the course of the illness. In tests, there is no indication that the viruses do harm in the brain or are capable of moving throughout the body. What's more, explains Ceregene CEO Jeffrey Ostrove: "We're delivering extremely small volumes -- like a drop from an eyedropper."
Other biotechs are finding innovative ways of delivering genes exactly where they're needed. Introgen invented a mouthwash that contains, among other things, a benign form of the common cold virus. Introgen uses it to carry genes known as tumor suppressors, which rid the body of cancerous cells. This form of the therapy specifically targets precancerous growths in the mouth. CEO David Nance believes Colgate's recent investment in Introgen -- the consumer-products giant now owns a 9.7% stake -- will spur other investors to give gene therapy a second peek: "It opens the door and validates the idea of using these therapies in new ways."
Of course, putting a gene in place isn't the end of the story. You might also need to switch that gene on and off. That mechanism is the focus of tiny RheoGene Inc., a startup owned by the University of Pittsburgh Medical Center. Biotechs are also seeking out safer transporters. One popular vehicle is the common adeno-associated virus (AAV), which doesn't cause illness in humans. "We hope it becomes the safe vector," says David Lowe, a partner with Skyline Ventures, a Palo Alto (Calif.) venture-capital firm. Skyline is one of four VC firms that invested $15.2 million in gene-therapy startup Applied Genetic Technologies Corp., which, like many others, uses AAV as a vector. The company has struggled to raise funds, but Lowe believes that things will get easier as other investors regain their confidence. "If one company gets it to work, they'll have washed out years of concern," he says.
Some of the country's largest institutional investors are starting to pay attention. Jordan Schreiber, who manages the Merrill Lynch Health Care Fund (MER ), says he has met with Neurologix and other gene therapy companies. He's not ready to jump in yet but is watching carefully for signs that one of the many treatments in the pipeline is ready for late-stage human trials. "I think it's coming, and I'd like to be early," he says.
Overall, Schreiber adds, interest in gene therapy has moved from "a little above zero to something more heated." For the dogged biotechs that work in this controversial field, the support of big-time investors will be a most welcome therapy.
By Arlene Weintraub