CoroNovative BV
This article was originally published in Start Up
Executive Summary
CoroNovative BV is wagering that company co-founder Albert Osterhaus, PhD--who has a worldwide reputation as an expert on viruses--and the team assembling around him will make a habit of identifying new pathogens, and so provide the organization with intellectual property supportive of novel vaccines, diagnostics and treatments.
Identifying viruses, developing treatments
P.O. Box 1738
3000 DR Rotterdam
Netherlands
Phone: +31 10 408 8064
Fax: +31 10 408 9270
Contact: James Simon, DPhil, CEO
Industry Segment: Biotechnology
Business: Anti-viral treatments, diagnostics
Founded: December 2003
Founders: Albert Osterhaus, DVM, PhD, CSO; James Simon; Eric Claassen, PhD
Employees: 6 FTEs
Financing to date: Undisclosed
Investors: Founders; Erasmus MC Holding BV
In the pharmaceutical industry, it's a well-recognized fact that some people are better at discovering drugs than others. Individuals with good intuition about how molecular structures behave in the body can and have contributed greatly to the fortunes of big companies, by coming up with hit after hit. (See "Wanted: Drug Hunters," IN VIVO, September 2003 (Also see "Wanted: Drug Hunters" - In Vivo, 1 Sep, 2003.).)
The founders and backers of CoroNovative BV are betting that a similar phenomenon will bring their new venture commercial success. They're wagering that company co-founder Albert Osterhaus and the team assembling around him will make a habit of identifying new pathogens—and so provide the organization with intellectual property supportive of novel vaccines, diagnostics, and treatments.
Osterhaus is the start-up's CSO, as well as the head of virology at Erasmus Medical Center in Rotterdam, Holland. The company is headquartered in a technology incubator there, where Osterhaus has built a worldwide reputation as an expert on respiratory viruses. Arguably best known for his insights into influenza, Osterhaus jumped into the search for the cause of the mysterious outbreak of respiratory disease in Asia in early 2003. His group worked with the World Health Organization SARS task force that ultimately linked the disease to a previously unknown human coronavirus, and took the opportunity to apply for two patents related to the work.
The intellectual property Erasmus filed on SARS served as the starting point for CoroNovative, spun out of the medical center in December 2003. How commercially useful that will be remains to be seen—not only because SARS has yet to spread widely in any population, but because several groups have filed patents on the genetic sequence of the SARS virus. Given the conflicting IP claims, CoroNovative's freedom to operate is limited—as is that of any group wishing to leverage the sequence to create a diagnostic or a treatment. The Dutch company is promoting international policy measures that would reduce the risk of having to pay licensing fees to others holding IP, or of being shut out if one group withheld rights or licensed them away exclusively—and so resuscitate the commercial appeal of SARS.
CoroNovative's more immediate potential now lies with IP relating to another virus recently isolated in the company's labs. This one, called human coronavirus NL63, also causes respiratory symptoms. It circulates annually and is found everywhere, says James Simon, CoroNovative's CEO. He says the virus turns up in a small percentage of people who are hospitalized, and the company is evaluating the epidemiology to determine whether the burden of disease from this virus is sufficiently large to warrant developing a product, such as a vaccine or prophylactic antibody. Here, too, though, there are overlapping patents.
IP issues aside, Simon is confident about the potential for a company capable of identifying new pathogens. "Very few people have that expertise," he notes, pointing out that the ability entails lots of know-how not just in human disease but in animal disease. "The costs to discover a pathogen are not particularly high, and the patents are worth a lot once you get them," he asserts. As evidence, Simon points to a deal between MedImmune Inc. and ViroNovative BV , a 2001 spinout of Erasmus Medical Center, in which he and Osterhaus are involved, which included an up-front fee of $10 million, milestone and royalty payments, and R&D funding. [See Deal]
After scientists at Erasmus identified human metapneumovirus in 2001, and determined that it causes some 7 to10% of hospitalizations for respiratory illness (second only to RSV, respiratory syncitial virus), ViroNovative was formed to leverage the discovery. It licensed to MedImmune rights for vaccines and prophylactics, retaining for itself rights to develop anti-virals, as well as diagnostic rights that it has out-licensed to a number of diagnostics manufacturers.
In mid-June of this year, CoroNovative signed a deal of its own that brings it research support and access to scientific expertise, in exchange for preferential access to any IP it develops outside the area of diagnostics. No numbers have been disclosed for the agreement with Akzo-Nobel NV's Nobilon International BV business unit, but Simon says the arrangement initially calls for CoroNovative to focus on identifying pathogens involved in respiratory disorders. Presently, he notes, about 70% of people hospitalized with viral respiratory tract infections are diagnosed with a known virus. That leaves 30% with an unknown cause, and therein lies an opportunity for the start-up.
"If someone comes in with a respiratory infection, doctors want to be able to rule in and rule out specific pathogens," Simon declares. He says that diagnostics manufacturers tell him that sales for respiratory tests are already going up faster than they expected, and he expects the trend will only continue. When and if bird flu begins spreading from human to human, for instance, it will move much faster than SARS did, Simon claims, and will surely generate demand for diagnostics and treatments.
Simon says the arrangement with Nobilon is a good deal because it provides research funding without diluting equity for the start-up, and rights of first refusal to new targets for Nobilon. CoroNovative aims to leverage this funding to the benefit of all parties involved, through a similar deal with a manufacturer of diagnostics, which would gain rights of first refusal to the diagnostic applications of the new targets. In addition to revenues from licensing its IP, the start-up may generate cash through contract co-development work for Nobilon and others.
As CoroNovative attracts additional funding, it will be able to conduct research in new disease areas where viruses are suspected to be involved but as yet are not proven to be so. Simon notes that discovery of the connection between cervical cancer and human papillomavirus was a big breakthrough that has given rise to novel diagnostics and two vaccines: Gardasil, just recently launched by Merck & Co. Inc. and Cervarix, GlaxoSmithKline PLC's version, now pending marketing. Prostate cancer is also suspected of being caused by a retrovirus of some sort, Simon observes. No one has confirmed that link as yet, but CoroNovative could be just the team to do it, and thereby capture intellectual property with big commercial potential.—Deborah Erickson