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Venture Capital in Life Sciences (III): Monoclonal Antibodies in the Treatment of Ankylosing Spondylitis

The Use of Monoclonal Antibody Drugs as Treatment for Anklylosing Spondylitis

The application of monoclonal antibody drugs is a relatively new innovation. Approximately 54% of monoclonal antibody drugs available are applied in various types of cancer, although clinical trials are also studying monoclonal drugs in autoimmune diseases, and sex organ transplants. When a monoclonal antibody attaches to a cancer cell, it can make the cancer cell more visible to the immune system, block growth signals, stop vessels from forming, deliver radiation and chemotherapy to cancer cells.

Monoclonal antibodies mimic the antibodies that our body naturally produces as part of the immune system’s response to germs, vaccines, and other invaders. The production of monoclonal antibodies was pioneered by Georges Kohler and Cesar Milstein in 1975. In Brandt J (2000), researchers uncovered successful treatment of active ankylosing spondylitis with the anti-tumor necrosis factor alpha (TNFalpha) monoclonal antibody infliximab. Since then, the therapeutic market for monoclonal antibodies in treating ankylosing spondylitis has grown exponentially.

Ankylosing spondylitis is a form of arthritis that primarily affects the spine to fuse together and makes the spine less flexible. It can lead to severe, chronic pain and discomfort. If ribs are affected, it may be difficult to breathe deeply. Symptoms of ankylosing spondylitis typically begin in early adulthood.

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Most ankylosing spondylitis patients have a gene that produces a “genetic marker,” the so-called HLA-B27, which is found in over 95% of the patients. The scientists of the company that we are looking to invest suspect that other genes, along with a triggering environmental factor, such as a bacterial infection, are needed to trigger ankylosing spondylitis in susceptible population. The disease commonly occurs in the people between the ages of 17 – 45 and it is more common in men. Generally speaking, the risk factors that predispose a person to ankylosing spondylitis include: 1) testing positive for the HLA-B27 marker; 2) a family history of AS; 3) frequent gastrointestinal infections.

The Investment Decision

In considering the social impact and the market potential for monoclonal antibodies in effectively treating ankylosing spondylitis, our firm has been actively seeking scientists and young companies engaged in this field. The company or product that my team have completed due diligence process has illustrated the following advantages compared with similar products follow the implementation of TNFR-Fc:

  1. High protein yield and purity
  2. Fewer polymers and other immunogenic materials
  3. Less allergic reactions
  4. No severe injection reactions locally
  5. Easy to use and cost effective – 50mg, once a week only

The President of the company worked at Mayo Clinic from 1987 to 1993, and subsequently set up his med-bio center in the U.S. in 1994 and bio-pharma businesses in China in 2000. The Chief Technology Officer, who is the President’s wife, was a visitor scholar at University of Minnesota during 1986-1987; she graduated with a PhD from Mayo Clinic and a postdoc from The Scripps Research Institute; she was the Director of Clinical Research at Johnson & Johnson until 2010. The Chief Scientist at the company graduated with a PhD in biochemistry from Boston University in 2011, and a postdoc from Harvard Medical School in 2004.

We have done a thorough work at the level of firm leadership and management team, product effectiveness, market potential, firm operations, marketing plan, and financial planning; there are still a great amount of considerations if we put our venture capital into work at this point:

  • The ownership structure of the company is over complex.
  • There is no individual that has actual control over the company.
  • From a venture capital investor standpoint, the company’s core team needs to be restructured.
  • Negative net worth and shareholder loans do not necessarily imply bankruptcy so long as they can service its debt in installment, but the company may have a lot of problems in operations.
  • We also have concerns with the current business models; we will have to work out a more effective framework for its long-term strategic plan.

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writer

Chenjiazi Zhong is a portfolio management professional responsible for portfolio structuring, optimization, asset allocation, and fund due diligence. Prior to this function, Chenjiazi worked as an investment banking analyst at Lehman Brothers. Chenjiazi published the book “Alternatives Thinker: Endowment Investment Philosophy to Active Portfolio Management” in 2013. Serving as a guest writer, my weekly column, “Investment Conversations with Chenjiazi”(now “Market Recap with Jiazi”), sponsored by SprinkleBit Holdings Inc., is published on Sunday at 8:00am EST, covering topics of weekly economic update, market recap, outlook, interpretation of global markets and political events, advice on dynamic optimization of asset allocation strategies, and how to adjust asset classes in a portfolio context to actively manage risk. Chenjiazi holds a Ph.D. in finance, an MBA in finance from University of Miami, and a BBA in finance from École Supérieure de Commerce (ESC). Chenjiazi writes in English, French, and Mandarin Chinese.

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