PARIS -- The young French biotech company FGene SA is in the process of raising funds to finance the development of a portfolio of therapeutic molecules it is licensing from academic institutions. Founded and, for the time being, entirely owned by its chairman and CEO, Tony Marcel, Paris-based FGene intends to develop already-discovered molecules with proven potential and license them to large pharmaceutical companies once the molecules have successfully completed Phase I clinical trials.

"FGene will earn its revenues from the royalty spread between the license fees it pays researchers and the royalties it receives from the big pharmaceutical companies that will be its customers," Marcel told BioWorld International. "Academia is the world's biggest source of molecules, while big pharma, the client, requires high-quality, low-risk product files." He said he already has been contacted by a number of large pharmaceutical companies in Europe and the U.S.

Marcel emphasized that FGene is not in the discovery business, and has no in-house research capability. It is a development company, and because it plans to acquire only biotechnological molecules with a guaranteed intellectual property and an identified market, its risks will be limited and its development costs reduced commensurately. All research and development work will be carried out on a fee basis in the laboratories of the academic establishments from which the molecules are licensed. Marcel said FGene will license both the patented molecule and the process for producing it, but that part of its development input will be to upgrade the production process.

Layered Development Pipeline Planned

The company, set up in December 1995, has spent the past two years looking for appropriate molecules, which could be recombinant proteins, peptides, monoclonal antibodies, gene-therapy products, antisense molecules or molecules involved in cellular signaling. It has come up with eight so far and, in Marcel's view, needs to build up a portfolio of 15 to 20 to ensure that five are eventually brought to market.

Marcel's business plan is based on a layered development pipeline, the top layer of which comprises molecules under active development and the other layers of which comprise backup molecules. Each layer consists of five molecules, and when one of those in the top layer falls by the wayside, whether in preclinical or clinical development -- three out of five can be expected to drop out, Marcel said -- a reserve molecule from the layer below is substituted for it, while the disappointing one is put on the back burner.

To finance its development program, FGene is raising US$14 million (FFr79.31 million) by selling off 30 percent of its equity to what Marcel called "development capitalists" in Europe and the U.S. Marcel said a development capitalist is a financier prepared to take a 10-year view of a company's potential, unlike a venture capitalist, who looks for an exit possibility after four years. Marcel is in the process of increasing FGene's capital from its start-up level of FFr200,000 to FFr2.8 million, of which he and his wholly owned consultancy firm, TMC Development, are putting up FFr2 million. The company has also applied for funding from the French Research Ministry.

Marcel said he hopes to raise, in a single funding round, sufficient funds for four years' development work. He expects the operation to be completed by the end of January or February at the latest. He said an initial public offering would be a possibility after four years.

The first five molecules on which FGene is working, designated FG-001 to FG-005, are for the treatments of spinal section, coronary disease, cancer, osteoporosis and lack of sexual arousal, respectively. FG-001 is a recombinant protein for the emergency treatment of traumatic broken spine within the first few days. FG-002 is an antithrombotic peptide for the treatment and prevention of cardiovascular and cerebrovascular ischemia. FG-003 is a beta-selective interleukin (IL)-2 mimetic which, unlike non-selective recombinant IL-2, specifically activates natural killer cells without activating monocytes that would release tumor necrosis factor. FG-004 is a peptide that acts on the kidney and the bone to treat bone and mineral balance disorders. FG-005 is a peptide for improving male sexual arousal.

Marcel said he expects FG-001 to enter Phase I clinical trials in the third quarter of 2000. If the results are positive, the drug could win fast-track designation from regulators, since it responds to an unmet need. FGene has also licensed three more molecules that will make up the second layer of its development pipeline. FG-006 is another antithrombotic and FG-007 is a skin-rebuilding substance, while FG-008 is an anti-myocardial ischemic agent. Marcel said he expects to have established a complete portfolio of molecules within two years.

Marcel stressed that it is biotech molecules he is looking for, rather than conventional new chemical entities (NCEs), since the latter "have greater hepatic and renal toxicity problems than biotech molecules." He cited a survey which found that market-entrance probability from the preclinical stage and from clinical Phase I was 3.6 and 2.8 times higher, respectively, for biotech molecules than for NCEs. *