By Randall Osborne

West Coast Editor

Athersys Inc. "went public" - though not on the stock market - in disclosing three pieces of news: a joint venture with Elan plc, a collaboration with Acorda Therapeutics Inc. and the filing of patents covering more than 10,000 gene sequences.

Gil Van Bokkelen, president and CEO of Athersys, said the Cleveland-based functional genomics firm has been quietly perfecting its Random Activation for Gene Expression (RAGE) technology, to create cell lines without using the usual recombinant DNA procedures for cloning and isolating genes.

He likened the competition in genomics to guerilla warfare.

"We were trying to win a big part of the battle without anybody knowing we're in the game," said Van Bokkelen, who spoke at the BIO CEO & Investor Conference in New York.

Athersys teamed with Elan to develop and commercialize a therapeutic protein for the treatment of AIDS-associated muscle wasting. Elan, of Dublin, Ireland, made an equity investment in Athersys, but no further details were disclosed.

The pact with Acorda, of New York, is focused on the discovery of validated drug targets to treat central nervous system disorders, including spinal cord injuries and multiple sclerosis. No terms were disclosed in the agreement, which the companies made public as Gil Van Bokkelen, president and CEO of Athersys, spoke to the BIO CEO & Investor Conference in New York.

Van Bokkelen told BioWorld Today the deals are "equally important in different ways." One proves the company's ability to develop proteins, and the other shows its capacity for joining forces with other firms for broader projects.

RAGE requires no data on gene sequence, structure or typical expression pattern, but works by randomly activating genes - including those normally not active - to create genome-wide protein expression laboratories.

It works by subjecting a large pool of cells to stimuli that cause temporary breaks in DNA, one per cell on average. Next, "activation switches" consisting of defined DNA sequences are inserted at the breakage point, which leads to the expression of a nearby gene. Repeating the process creates a library with a large number of cells; collectively, every gene in the genome can be activated and expressed. High-throughput screening can then detect the cell expressing the protein of interest, so a production cell line can be made.

"Our basic idea was to synthesize human chromosomes from scratch," Van Bokkelen said. "We were worried about potential limitations of the viral systems, and a lot of those worries have proven to be well-founded."

The backlog of patent applications - and the legal wars that many predict will break out, as the patents are accepted and more extensive research begins - are hazards, Van Bokkelen acknowledged.

"We see ourselves as a solution to that problem, not an exacerbation of it," he said.

Kathryn Garvey, director of strategic planning for Athersys, said the company is in the race with companies such as Celera Genomics, Incyte Pharmaceuticals Inc. and Human Genome Sciences Inc., "but we don't rely on the cell expressing the gene in order to discover it, so we don't have to go to every tissue in the body. We don't have to sequence the non-genic regions of DNA."

The company is "having an incredibly high rate of novel discoveries, greater than 50 percent," she added.

Athersys is working on several proteins using the RAGE approach, and is pairing its technology with Elan's Medipad drug delivery system, which allows up to 48 hours of continual subcutaneous delivery of the drug for AIDS muscle wasting. The research will be done at Athersys' facility.

With Acorda, protein expression libraries will be screened against bioassays.

The RAGE method may allow Athersys to make an end run around the intellectual-property blocks that often stymie drug designers, Garvey said. Big pharmaceutical firms may have a huge investment in screening against a drug target, and need to stop because of potential patent conflicts.

"We've really taken a close look at this," Garvey said. "Most of the patents are for the isolated gene or the use of the isolated protein. We don't require any of that, because we're not touching the gene. We're not even purposely going after a particular gene. We're turning them on, but then we screen for a protein that we're looking for, and we provide a cell line to the company that expresses that protein."

Athersys no longer needs to keep a low profile, Garvey said.

"We jokingly called it 'stealth mode,'" she said. "Because of the sensitive nature of being able to circumvent the intellectual property that exists, we wanted to build our own portfolio. We have 18 patents filed and with that, combined with funding and partnerships - on the horizon or announced - we feel comfortable coming out."

Athersys has filed patent applications covering more than 10,000 novel gene sequences identified using RAGE. The company says a significant number are believed to encode novel G-coupled-protein receptors, secreted proteins, ion channels, protein kinases, proteases and other potential drug targets and therapeutic candidates.

Founded in 1994 and incorporated in 1995, Athersys has 42 employees and has raised $24 million so far in private equity and corporate financing. A private placement in October 1998 yielded about $10 million.