AlphaGene Inc.

Genomics; Bioinformatics. Alphagene intends to use its abilities to speedily find full-length genes and determine that they are indeed novel and disease-related on behalf of Big Pharma clients. The company will use its original analytical software, itsmethod for building gene libraries, and its robotic system for determining which genes are turned off or on in normal and diseased tissue to work with drugmakers working in defined disease areas (rather than selling its set of tools to clients).

Big Pharmas can order out for genomics and bioinformatics, from AlphaGene

• 260 West Cummings Park

• Woburn, MA 01801

• Phone: [phone]

• Fax: [phone]

• Contact: Alan Schecter, CEO

• Industry segment: Drug Discovery Tools

• Business: Genomic technologies, bioinformatics

• Founded: November, 1993

• Founder: George Scheele, MD

• Employees: 35

• Financing: $7.2 million (expecting another $4-5 million in October)

Like many young genomics companies, AlphaGene Inc. hopes to one day develop drugs based on novel genes it expects to find with its proprietary technologies and unique skills. In the near term, however, CEO Alan Schecter figures the best way to put a foundation under that dream is to sell disease-related genes to Big Pharmas. That's hardly an original notion, these days. But Schecter says the speed with which AlphaGene can find full-length genes, not just the gene fragments called ESTs, and determine that they are indeed novel and disease-related, will carry the day for the company.

"We can get 15 full-length genes a day, and deliver them as physical, biological entities to Big Pharma partners," Schecter says. He's convinced drugmakers need genes faster than they can come up with them themselves, and faster than any other genomics firms now provide them. Genes assembled in AlphaGene's FLEXlibraries are all set to be put into vectors and expression systems, so that drugmakers can immediately put them into vectors to get expressed proteins they can test in high-throughput assays, without having to do any sequencing at all. "It's great when you find a novel EST that interests you, but then you can be right back to the laborious process of sequencing and validating those leads," Schecter notes.

"We think the full-length genes we offer customers are a natural match to the ESTs that Incyte Pharmaceuticals Inc. offers through its databases," says AlphaGene's director of bioinformatics, R. Mark Adams, PhD, who co-wrote Incyte's original analytical software, along with Temple Smith, PhD, of Boston University. "So we could end up in an agreement with Incyte or we could make a business giving customers something they can't," Adams muses. He notes that Incyte presently generates 100 complete genes a month, half of what AlphaGene can do. One of Incyte's collaborators is discussing doing a deal with AlphaGene worth several million dollars, Adams says, but at press time his firm has no firm agreement with any Big Pharma.

AlphaGene's method for building gene libraries, developed and patented by the company's scientific founder George Scheele, MD, is just one of the technologies the firm intends to use on behalf of Big Pharma. If a drug company is working on a particular type of molecule, such as a kinase or a protease inhibitor, and knows it wants to find genes coding for other members of the same family, AlphaGene can do targeted gene selection to pull out and deliver other relatives. Then the company runs these genes through its so-called IMAGEsystem, which stands for Illuminescent Microarray Analysis of Gene Expression. This robotic system determines which genes are turned off or on in normal and diseased tissue, giving scientists the ability to find disease pathways and observe them over time.

Instead of selling clients the IMAGEsystem and other methods as tools they'd have to figure out how to use themselves, AlphaGene offers to do the work itself, like a contract research organization specialized in genomics. AlphaGene tracks the data it gathers with a bioinformatics software system that Adams, his colleagues and outside collaborators built specially for this purpose. "What NetGenics Inc. is offering—an Oracle-based relational database with an object-oriented middle and a JAVA front end—we built ourselves," Adams declares. He believes that any firm looking to track mass quantities of genetic information will need similar kinds of bioinformatics systems, whose manipulation is still largely the province of experts.

The question is whether drugmakers want to build bioinformatics systems, buy them, or have someone else find and process genetic data for them. AlphaGene is betting enough Big Pharmas will decide on the latter option, because many drug companies already do outsource other types of research. "Getting genes and storing them in databases is just the first piece of what we plan to do for clients," Adams explains. Next the firm will analyze the results of clients' high throughput assays, and integrate them into the same databases, then process the data with algorithms written by AlphaGene and other programmers outside the company. "We'll process the results for clients, and present them with predictions of genes' likely functions," Adams says, noting that all the data will reside at customer sites, where it can be updated daily yet remain confidential.

In a sense, AlphaGene will function as a high-level consultancy, working with customers to pick the mix of technologies and systems they need based on the targets and diseases they are pursuing. AlphaGene will then do as much of the implementation as a customer likes. Adams says his company has designed user interfaces that will make it easy for clients' individual scientists to look at results on their own workstations: "We're counting on collaborations to bring in revenues, so it's in our interest to have people to be able to use the software."

AlphaGene admits that it doesn't have any super-sexy sales pitch, "but on the other hand, we have really good technology we can make available on a dynamic basis," Adams says. Schecter adds that he intends AlphaGene to be exceptionally attentive to Big Pharma customers, who have already made plain they do not want masses of data just dumped on them. AlphaGene will assign a project manager to each customer, or at least one to each disease area. The agreements the company is negotiating now specify how many novel genes the firm will deliver in what time frame.

For now, the company plans to work with drugmakers that can define where their interests lie—in a particular tissue type, for instance, or a particular disease area, such as cardiovascular disorders or diabetes or Alzheimer's—and who are amenable to working in partnership with a small firm. AlphaGene is looking for upfront payments in the millions, plus milestone payments for clinical and scientific achievements. It will also ask for royalties— "more for bragging rights than for big money," Schecter says. Depending on the company's resources and its perception of market needs, AlphaGene may work on its own instead of under contract to isolate disease-related genes in hot areas it will then offer for license.

Asked whether it's not a bit late to be getting into genomics, where so many other companies have gone before, Adams replies: "Better a winter bride than no bride at all. We've got solid peer-reviewed technology, a very integrated facility to do it in, and a bioinformatics edge. We're going to give Big Pharmas what they're asking for."

AlphaGene's president and CEO is Alan Schecter, who previously held the same position at Applied Carotenoid Sciences Inc., a device company acquired by a major pharmaceutical manufacturer. Prior to that, he was chairman and CEO of Noetix Medical Technologies Inc., which was also acquired. Gerald Schimmoeller is VP and CFO, as he was at Concentra Corp., an enterprise software company. James Lyddy is director of licensing and business development; he was previously director of ventures and technology for Boston's Beth Israel Hospital. Mark Adams is director of bioinformatics.AlphaGene's financing has come entirely from private individuals. —DE