By Muphen R. Whitney

When entrepreneur Robert Capon joined forces with University of Virginia Professor Joel Linden to found Adenosine Therapeutics LLC (ATL) in 1999, Capon realized what their biggest challenges would be.

“A major problem with any new company is building a good team, but the biggest problem faced by all biotechnology companies is having promising technology that requires investment to get to the product opportunity stage,” Capon said recently. “Finding financing to be able to take an idea from the early stages to the product opportunity stage often is described as ‘Death Valley’.”

Fortunately, CEO Capon, Board chairman Linden, and the 10 scientists who were in on the founding stage of ATL and still make scientific contributions to the company walked through the valley and emerged triumphant on the other side.

“We had the right people at the right time to build our initial organization,” Capon explains. “And we were able to bridge some of our financial needs with other activities. We had a portfolio of products, including one that was ripe for partnering with a pharma company.”

First year deal with DuPont Pharma
When it was barely into its first year, ATL did a collaboration and licensing deal with DuPont Pharmaceuticals for two cardiac compounds. These compounds had significantly different behaviors at different doses – high doses dilated the blood vessels of the heart and low doses acted as a powerful anti-inflammatory. DuPont had the worldwide rights to the cardiac applications only.

“In one fell swoop we financed our first product into clinical trials and had a second product going into clinical trials using the investment from DuPont. In 1999 this was the plan for how to finance the company.”

Having just closed a Series C deal with the new Novartis Option Fund, Capon is seeing his investing/financing strategy paying off substantially. He notes that investors in the company approve that APL has “greatly reduced dilution through SBIR and Pharma investment. This has really minimized dilution along the way.

Location was important to team building
“Investors also like how open we are and how we communicate. We have always been very open and realistic with our investors about our prospects. We issue a quarterly newsletter that is very well received.”

When it came to the challenge of building a good team, Capon credits location-location-location with much of his success in that area.

“We were very fortunate to be based in such a wonderful community as Charlottesville. The quality of life along with the University of Virginia and the other organizations here attract very good people to this area. We were presented with a steady stream of talented people wanting to join the company.”

“We set out to be the leader in adenosine (see box) development and to work on novel products for unmet needs,” Capon says. “We now recognize that the pharma world is hungry for this. This was our bold strategy eight years ago…it is paying off now in lots of opportunities for APL.

“We are very excited about how we are positioned right now. One of the key drivers in the pharma industry is that product patents are expiring, companies are losing patent protection and will be subject to generic competition. People are looking for new products. There are too many ‘me, too’ products and not enough novel products because novel products are riskier.

“We have novel products in our pipeline. We plan to have five products in clinical development by the end of ’08. That’s where we’ll be.”

Adenosine….A PRIMER

Adenosine is a nucleoside that combines the base adenine with D-ribose; adenosine is one of the building blocks of DNA and RNA. Adenosine plays an important role in many biochemical processes and it modulates many physiologic processes, including acting as a dilator of coronary vessels. Cellular signaling by adenosine occurs through four known adenosine receptor subtypes.

Working with Kathryn LaNoue, Ph.D. of Penn State University, Dr. Joel Linden, co-founder and Board Chairman of APL discovered that adenosine A2B receptor antagonists lower blood glucose in insulin resistant animals.

Research by Dr. Linden and others also suggests that A2B receptor antagonists may be effective for the treatment of asthma and other disorders.

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