26 BioExecutive International
M
AY
2005
Peltz was able to convince inves-
tors that a product-focused company
was the right model, that the way to
commercialize the technology was
through identifying products, diver-
sifying the risk by initiating multiple
high-throughput screens, and pick-
ing out the top contenders for the
development of secondary assays and
subsequent testing.
Later rounds brought the total
funds raised to about $110 million.
In 2000, PTC raised $15 million in its
first venture capital round. It raised
an additional $40 million in 2001,
$35 million in 2003, and another $15
million in 2004. PTC has about $25
million in cash on hand and a burn
rate of about $2 million per month.
Picking the right indications for
the first PTCMs began in parallel with
securing funding for the new busi-
ness. Peltz and Jacobson believed that
the genetic disorders program was
ideal for PTC to advance on its own:
a therapeutic area that promises the
quickest path to product development,
small, specialized indications with dra-
matic medical need. Not only was the
genetic disorders program was perfect
for establishing proof-of-concept, but
it also presented an outstanding com-
mercial potential.
Following the genetic disorders
program, PTC would partner pro-
grams with larger indications as well
as collaborating to apply the GEMS
technology to other pharmaceutical
sectors.
"We built an organization that's an
interesting combination of biology and
chemistry," Peltz says. "Creating value
should not be just about trying to part-
ner it early, because there's very little
value creation in that. You get very
little for your dollars; you get very little
down the line."
S
CALE
D
OWN
As it happened, Peltz already had the
first indications in mind--and close at
hand. His research had well acquainted
him with Duchenne muscular dys-
trophy and cystic fibrosis, and he had
seen their devastating effects on the
mostly young patients.
"Children with Duchenne muscular
dystrophy are diagnosed around three,"
he says. "They can be in wheelchairs
around 10, and the median lifespan
age is about 20 years. At present, treat-
ments are very limited, consisting
mostly of steroids and physical sup-
portive interventions such as braces,
wheelchairs, and ventilators." With
cystic fibrosis, patients can live lon-
ger on average, but may have severe
lung and digestive impairments. The
median lifespan for CF is 33.
In both DMD and CF, a subset of
patients carry the nonsense mutation
targeted by PTC124
2.
Distinguishing
those patients from others with a
genetic screen, through existing diag-
nostics, is encouraged by specialists
and patient associations for both dis-
eases. At this point, from the test-tube
to animal studies, PTC124 has shown
a strong effect in correcting output of
the key protein--with DMD, dystro-
phin; with CF, the CFTR protein.
Compared to gentamicin, the
first substance shown to bypass the
mutation, PTC124 appears in mouse
models to be about 600 times more
powerful and well-tolerated at doses
"far above" the effective level, accord-
ing to the company. Gentamicin is
an intravenous antibiotic with severe
otic and renal toxicities at the doses
required for read-through of nonsense
mutations.
"PTC124 selectively lets you bypass
this messenger-RNA mutation, read-
ing through the mutation, to go on
and assemble the protein," Peltz says.
PTC is betting that the compound will
eventually treat affected patients in
whatever disease the mutation plays
the causative role. Ironically, that
means that one tiny molecule (molecu-
lar weight: 284 daltons), exquisitely
aimed at a similarly miniscule bit of
RNA, may someday defy easy designa-
tion by therapeutic area
3.
"Think about all genetic dis-
orders--cystic fibrosis, muscular
dystrophy, hemophilia, genetic-based
cancers--there are at least 1800 dis-
orders, where between five and 15
percent of all patients have the disease
because of a nonsense mutation," Peltz
observes.
Mouse models have also vali-
dated some clinical endpoints, such
as increased muscle strength after
Isn't that a business as much as a scientific
challenge? It's an issue we see often and
try to address through this publication.
You're in cutting edge science,
translating it into business strategy.
That's where I think a lot of innovation
comes from. The goal of a biotech is
to figure out not only how to create
value, but how to capture some value.
And that's part of the leadership job,
to convince investors to allow us to
build an organization that can actually
capture value, not only create value.
You have to create value to attract
investors, and attract investors to
capture it?
Well, it's like a Catch 22. Early on you
want to start a biotech and you have
ideas, but you don't have the complete
resources to move them forward,
especially if you come from an academic
setting. You don't have the business
expertise to move things forward, so
you're left with good ideas without a
way to make a business out of it. And
early on, my goal was not necessarily
be the CEO, but to get a business going.
What I learned also, at some early point,
is that you need some champion, and
you don't have enough dollars to bring
in the high individual with high risk,
not just an idea. And so what you need
to do is to determine yourself if you're
going to be the champion.
If you're smart, you'll listen to what
people are telling you and try to create
a business model that can help their
interests and yours, together, and you
know, that's what we did. You also have
to decide on the type of investors that
will come into your company because
that can also make or break your
company. If it's a set of investors who
want a return quite rapidly and you're
trying to build something different than
what they want, you're needs don't
mesh and someone's going to
be unhappy in this process.
Some biotech companies rush to
accelerate commercialization, licensing in
small molecules and becoming specialty
pharma companies in the process. The
small molecule thing has been part of
your plan all along?
Oh, from day one. Specialty pharma
goes in and out of fashion. It's an
interesting way toward revenues faster
if you bring in some product that has
been through some of the process, but
DIALOGUE
CONTINUED
