a second tranche, leaving the company stranded with no money. “I begged for money from friends and family to keep it alive,” Chain says. In 2005, he moved the company from Israel to New York, hoping the proximity to Wall Street would make it easier to raise money.
Shortly thereafter, Chain met a group of private investors who agreed to fund the company with $2 million in debt. Chain renamed the company, listed it on the OTC bulletin board, and by April of 2010 had raised a total of $24 million, all in convertible debt. “There were all sorts of complicated financial instruments,” he says. In December 2010, Intellect’s shareholders converted their debt to equity—a major step towards cleaning up the balance sheet, Chain says. “It was dilutive to the original shareholders, but it was the right thing to do,” he says. Still, money is tight: In a Feb. 2 letter to shareholders, Chain said the company is subsisting on about $1 million in cash.
And Intellect seems to be in a constant battle to protect its intellectual property. Last year, the European Patent Office made a preliminary decision to revoke Intellect’s patents on its original Alzheimer’s technology, after Elan and Pfizer petitioned the agency. Intellect said it would fight the ruling, and today it submitted the formal appeal to the European Patent Office. If Intellect loses the appeal, it will be unable to collect on royalties in 39 countries.
Oddly enough, Intellect’s greatest hope for survival in the short term rests outside the Alzheimer’s realm. Last September, the company licensed a molecule it developed called OX1 to Exton, PA-based ViroPharma (Nasdaq: [[ticker:VPHM]]), which plans to research it as a treatment for Friedreich’s Ataxia, a rare nervous-system disorder. OX1 is a potent antioxidant that Intellect initially studied for the prevention of amyloid plaques in Alzheimer’s disease.
A few years ago, a member of Intellect’s scientific advisory board suggested that OX1’s mechanism of action might prove useful in fighting Friedreich’s Ataxia, which is caused by a genetic deficiency of a protein vital for the functioning of mitochondria—the energy producers within cells. In the absence of that protein, iron accumulates and causes free radical damage, which leads to gait and speech problems, muscle degeneration, and early death. Intellect’s scientists had a hunch OX1 might bind to the iron and help reduce the damage.
Intellect contacted a Friedrich’s patient group, which immediately hooked Chain up with pharmaceutical companies working on the disease. After a 9-month negotiation, ViroPharma pledged $6.5 million up front, potential milestone payments of $120 million, and royalties on sales should the molecule make it to market. “It was the most promising approach we’d seen in the area,” says Colin Broom, chief scientific officer of ViroPharma. “It reverses the aging effect in the mitochondria, and we hope that prevents the progression of the disease.”
ViroPharma expects to meet with the FDA later this year, and if all goes well to begin pivotal trials in humans in 2013, Broom says. Because Friedreich’s is an orphan disease, affecting about 6,000 patients, the regulatory pathway may be expedited, Broom says. “These patients have no options—nothing,” Broom says. He adds that although Intellect was developing the molecule with very limited resources, ViroPharma was “impressed by the quality of the work done,” and by the receptiveness of its executives to look beyond Alzheimer’s and consider developing the drug for a much less common disease.
The deal freed up Intellect to focus on its Alzheimer’s vaccine—and to continue the search for additional funding sources. “We’re focused on raising venture capital, both traditional and from pharmaceutical companies,” Chain says. “But it’s tough. What we’re missing is something that’s close to getting into the clinic.”
The desire to use science to combat deadly diseases is in Chain’s blood. His father, Ernst Chain, shared the 1945 Nobel prize with Alexander Fleming and Howard Florey for the discovery of penicillin. Chain’s mother was a biochemist who studied diabetes and obesity. And the Alzheimer’s vaccine that Intellect is working on emanated from technology invented by Chain’s brother, Benjamin, who is an immunologist at the UCL School of Life and Medical Sciences in the UK.
Meanwhile, the debate between the Baptists and the Tauists continues. Most recently the Tauists got a boost when two high-profile studies seemed to show that defective tau proteins spread between brain cells like an infection in mouse models of Alzheimer’s disease.
As for Chain, he believes that maintaining respect for both wayward proteins may be the only way to achieve what everyone working on Alzheimer’s wants: a drug that can prevent the devastating symptoms from occurring in the first place. “We think we found a way to do that with our vaccine,” he says. “Hopefully it will be able to be used at the pre-symptomatic stage—that’s the holy grail.”
