San Diego’s Leading Ventures Takes on Commercialization of Bioengineering Breakthroughs

Xconomy San Diego — 

[Corrected 2/9/11, 2:15 pm. See below.] Their histories are so entwined, it’s hard to say which were sowed first—the seeds of San Diego’s Leading Ventures or those of InflammaGen, an early stage biotech founded to commercialize technology conceived by Geert Schmid-Schönbein, a professor of bioengineering at UC San Diego.

Leading Ventures revealed last month that it plans to raise an inaugural fund of as much as $10 million that would be used primarily to fund InflammaGen and AnoZyme, a related diagnostics startup that also licensed technology developed in Schmid-Schöenbein’s lab.

With each company, “Our strategy is to fund human testing, and then find a partner to take us through the full FDA approval process,” says John Rodenrys, a senior managing director at Leading Ventures. Until now, Leading Ventures has operated mostly behind the scenes as a vehicle for investing money from friends and family, says Rodenrys, an angel investor and longtime medical device executive in San Diego and Orange Counties.

John Rodenrys (courtesy UCSD)

[Corrects to show Chip Parker instead of John Macfie as a founder] “Five years ago, I sat down with two colleagues and we discussed how angel investing was just not generating returns,” Rodenrys tells me. He decided with his partners, Charles Gathers and Chip Parker, that Leading Ventures would actually manage the technology development and commercialization from an early stage. “It’s a different model than most VCs use,” says Rodenrys, who initially served as InflammaGen’s CEO. The firm says it intends to serve as an alternative funding resource for early startups with long-term potential.

Rodenrys and Schmid-Schönbein met in 2005 at an informal event organized by UC San Diego’s William J. von Liebig Center for Entrepreneurism and Technology Advancement, which was founded to help commercialize technology coming out of UCSD’s engineering labs.

“The von Liebig Center has supported the translation of some of Dr. Schimid-Schönbein’s research through the award of three grants for proof of concept,” von Liebig Director Rosibel Ochoa told me by e-mail. Volunteer business and technology advisors “continued providing support to Dr. Schönbein and Mr. Rodenrys, even after the grant funding was completely spent and the company was launched.”

Rodenrys says Leading Ventures picked up the subsequent funding of InflammaGen, and has invested about $2 million in the startup so far. In addition to that investment and its stake in AnoZyme, Leading Ventures funded five other biomedical technologies out of UCSD that it will move toward the trials process, says Hank Loy, a business development executive who now manages both InflammaGen and AnoZyme as the CEO of Leading Ventures’ portfolio companies.

Loy has been talking with six “major” pharmaceutical companies about forming a potential strategic partnership with InflammaGen, Rodenrys says.

Schmid-Schöenbein, who received his PhD in bioengineering from UCSD in 1976, spent most of the ensuing 35 years studying biomechanics and microcirculation in living tissues. He has specialized in studying inflammation at the cellular and molecular level. (Inflammation is the body’s complex biological response to stress or harmful stimuli, and occurs in response to traumatic injury, burns, chemical exposure, extreme cold, and infections.)

Inflammation is a necessary process for destroying dead cells and damaged tissue; without it wounds and infections would never heal. But inflammation also can go too far—degrading capillaries and attacking vital organs.

Geert Schmid-Schönbein (courtesy UCSD)

Schmid-Schönbein has theorized that powerful digestive enzymes produced in the pancreas and secreted in the small intestine play a key role in what he calls “the inflammatory cascade.” In experiments at UCSD, Schmid-Shönbein’s team has induced hemorrhagic shock in laboratory rats, causing the blood pressure to fall sharply in the intestine. Within minutes, digestive enzymes begin to penetrate the intestinal wall. After escaping the confines of the intestine, these enzymes attack the interior walls of capillaries supplying blood to other organs. He describes this “auto-digestion” process as a previously unknown mechanism in the host inflammatory responses—and one that is particularly dangerous if unchecked.

“We’re trying to block the activity of these proteases,” Schmid-Shönbein says, by using a nasal tube to deliver protease inhibitors directly into the stomach. “We don’t give it intravenously, because you can’t reach high enough concentrations quickly enough” to change the outcome as the digestive enzymes go on their rampage. Scientists have identified four compounds that bind to such enzymes, blocking their activity. Schmid-Shönbein says InflammaGen’s strategy is simple: conduct clinical tests that show how these compounds can safely and effectively block the enzymes. “We have a specific way of administering the drug, but we are not married to any particular drug,” he says.

AnoZyme is working on a different aspect of this auto-digestion mechanism that can be triggered as part of an inflammatory response. It came to light after Schmid-Shönbein’s lab discovered that rats going into hemorrhagic shock had a characteristic and distinctive breath. He says certain well-known volatile compounds arise when meat starts to break down in the presence of these digestive enzymes. So the Leading Ventures team formed AnoZyme as a separate company to develop a handheld diagnostic breathalyzer that ER physicians could use to tell if a patient is going into shock.

“As far as I know, Leading Ventures is very unique and the only one at UCSD that works so closely with faculty,” says Ochoa of the von Liebig center. “We think that Dr. Schmid Schönbein’s R&D is absolutely first-class and potentially groundbreaking in the field of medicine. [It] could have significant implications in the way patients are treated.”

Leading Ventures’ Rodenrys says the work at InflammaGen has reached the point where the group is ready to move from the laboratory to clinical trials. The startup now has an Institutional Review Board application pending, which means that InflammaGen is still at an early stage in proving its concept. It also helps explain why Leading Ventures plans to raise its first fund.