West Coast Editor
For its ongoing efforts in "next-generation disease management," GenoMed Inc. said it has nailed down as much as $21 million in financing within a 12-month period by revising an earlier agreement with Swiss venture capital group Pierpoint Investissements SA.
GenoMed's stock (Pink Sheets:GMED) closed Thursday at 16 cents, down 8.6 percent.
"We're pretty much set for the next five to 10 years," said David Moskowitz, chairman and CEO of St. Louis-based GenoMed. "We couldn't give away our restricted stock in the U.S., but there's a big market in Europe."
Under the terms of the first Pierpoint deal, entered in early March, the group could exercise 35 million warrants over a five-year period once GenoMed's share price reached $1. Under the new arrangement, Pierpoint can exercise all 35 million warrants within a 12-month period - which, at a 40 percent discount to the market price, would bring GenoMed at least $21 million.
As an incentive to place all its warrants within a year, Pierpoint would receive 80 million replacement warrants, but if the firm can place only 20 million, the reward would be 40 million replacements, to be exercised over a minimum of five years, as in the earlier terms.
GenoMed is marching ahead with its genotyping project. In May, the firm signed a service agreement with the McGill University and Genome Quebec Innovation Centre both in Montreal.
"We're constructing a large chip of 20,000 [single nucleotide polymorphisms]" with Genome Quebec, Moskowitz said. "They're putting the chip together and we're getting samples. We will rapidly go through something like $1 million with them over the next four months or so. Then we're going to ramp up our genotyping, find any hits and validate hits with a much larger number of samples."
The validation genotyping might be done with Genome Quebec also, he said, although that has not been decided.
Moskowitz is noted for his work in medical genomics, particularly diseases associated with the angiotensin I-converting enzyme (ACE), such as chronic renal failure due to hypertension or Type II diabetes, emphysema and psoriasis.
"We've found 150 new diseases that ought to do well with ACE inhibitors, even ones you wouldn't expect, like cancers," he told BioWorld Today, recalling the hard times for genomics that his company survived.
"It was a tough year and a half," he said. "We never got investors. We had some money from Florida, about a third of what they thought they could raise for us. That was available in November 2001. We ran out of money in a year, and I let everybody go in October 2002. We were on our own and couldn't raise any money."
The picture began to brighten at the start of this year.
"Our chief scientific officer [Paula Hempen] fortunately was still in town, and I hired her back," Moskowitz said. GenoMed has five employees.
"It's just amazing to me how fickle the market is," he said, recounting the trends - genomics, proteomics, RNA interference. "We're still getting clinical payoff from monoclonal antibodies, but nobody would invest in a monoclonal antibody company anymore. I've been doing this since 1998, and the rate-limiting step has been with money raising as much as the science."
In June, the firm said the second case of West Nile virus encephalitis had responded quickly to its treatment protocol, which uses blood pressure drugs already available. The approach is showing a 100 percent response rate among 13 immunocompetent patients. If the clinical trial proves successful, it expects to charge a licensing fee beginning in 2005 for use of its protocol, for which a patent is pending.
This month, GenoMed entered a multiyear collaboration with Italy's National Institutes of Health to test its patent-pending use of ACE inhibitors to treat avian influenza in poultry. Recently, the company applied to trade on the American Stock Exchange.