Perspectives Online

New Technology, New Companies, College research discoveries lead to venture and gain.

N.C. State University’s land-grant mission includes sharing its research results for the benefit of the community. The university implements that mission by overseeing the various processes in the transfer of academic discovery. Part of that oversight includes supporting the creation of new companies — or startups — based on university research.

Dr. Paul Agris developed the technologies that led to the startup of Sirga Advanced Biophrama, a company focused on new therapies against drug-resistant diseases.
Photo by Daniel Kim

A startup, of course, starts with a product, something to sell – something that holds promise of commercial growth after risks and investment needs have been weighed. At N.C. State, that “product” could be a faculty member’s discovery or new technology – intellectual capital developed in campus research. The key word is potential: potential for product success and, in terms of the university’s mission, potential benefit to the state’s citizens and its economy. The establishment of new startup companies is an area in which the College of Agriculture and Life Sciences has been extremely active. Following are some examples of what has happened as the discoveries of CALS researchers have become the start of new ventures.

New Therapies, Up and Running By Terri Leith

Sirga Advanced Biopharma is a drug discovery company with emphasis on diseases that have become drug-resistant. Read the new company’s name backwards and you have “Agris,” as in Dr. Paul Agris, CALS professor of molecular and structural biochemistry, who developed Sirga AB’s technologies, which target ribonucleic acids, or RNA, function as sites of disease intervention. Sirga AB was formed in late 2006, began operating in 2007 and has exclusive option to license from N.C. State unique technologies that promise to lead to new broad-spectrum antibiotics and small molecule therapeutics for pharmaceutical disease intervention.

“Sirga AB is focused on drug development for diseases where drug resistance is a significant problem,” Agris explains. “Initially, the company will discover and develop lead compounds against drug-resistant HIV. But in addition it will explore candidate therapeutics against drug-resistant bacterial infections, such as MRSA (methicillin-resistant Staphylococcus aureus).”

How did this startup happen? “I and the College were very excited about recent intellectual property I have developed in my lab which was funded by National Institutes of Health grants over a period of several years,” says Agris.

Once this intellectual property was identified as having significant commercial value, he says, “The university and I began discussions with several potential investors and pharmaceutical collaborators. The company was presented by the College to the North Carolina Biotechnology Center. We were selected as the second company to receive the North Carolina Biotechnology Center’s TEAM loan, which provides funding to startup companies to fund overhead and administrative costs. Coupled with some early seed funding from an angel investor, we were able to get the company up and running.”

In this case, Agris was the primary driver in getting the company established and funded. “A faculty member that wants to see his or her invention come to fruition is still the only person who can drive the process of obtaining loans, grants or early-stage investments to establish their company,” he says. “The NCBC TEAM program is a great start to provide an easier pathway for inventors to start companies to commercialize their technology, and Sirga AB has benefited from that process significantly,” he says.

Agris adds, “I would like to advocate that the College … provide more resources to its professors to navigate the intricacies of starting a company. It would be helpful to have a central person within the College system to make us aware of College resources which are available for College spin-outs.”

Located at the First Flight Venture Center in Research Triangle Park, Sirga AB currently employs a technical lab manager. “If our NIH grant gets approved next year, we anticipate hiring additional scientists,” says Agris, who serves as the company’s principal consultant. Sirga AB’s CEO is Cindy Clark, whom Agris describes as a recognized leader in biotechnology startups, one who has experience in securing more than $250 million in capital for companies.

Agris has worked in the startup of two other companies, but Sirga AB, he says, “is the first in which I alone have created the company and its vision. It is quite elevating to see a product of your mind go into a practical stage of discovery that perhaps could someday be of benefit to human health.”

He offers an example scenario involving disease-resistant HIV. “The Center for Disease Control estimates that approximately 40,000 people were newly diagnosed in the United States with HIV in 2005,” he says. “There are 2.1 million people in the U.S. and Western Europe living with HIV in 2006, up from 1.9 million in 2004.”

More than 30 percent of HIV patients develop drug resistance to at least one of the drugs in the “cocktail” of drugs they receive, Agris says. “Sirga AB hopes to identify a drug for which the virus cannot develop resistance. It is expected that this drug, which could take 10 to 15 years to develop, will be provided to patients as part of a multi-drug therapy to treat HIV. We believe that the mechanism of action that we are exploring is different from all other drugs that are available on the market today, or are being developed for HIV. If we are successful in getting this drug approved, the potential market could approach $1 billion.”

Agris also lists a number of short- and long-term benefits to the state of the establishment of Sirga AB:

  • Developing a new therapeutic that solves a significant unmet medical need: treating drug-resistant HIV;
  • Establishing industry-academia collaboration between Sirga AB and local universities, including N.C. State and UNC-CH.
  • Providing new job opportunities within Sirga AB, as well as at NCSU through the collaboration with Sirga AB.
  • Further establishing North Carolina’s leadership in HIV research with other local companies like GlaxoSmithKline and Trimeris.

“Startups like Sirga AB generate public interest in the potential applications of fundamental research in universities,” Agris says. “It is important for the public to realize that most of the research at universities is fundamental, and that only by understanding the fundamentals of biology, chemistry and physics can a scientist envision a practical application, invent a tool or method. Public support for basic research is the proven pathway to the invention of technology and its application.”

Agris believes that the university and its colleges also benefit from the licensing of the inventions to startup companies.

“They and the public at large benefit most when the company succeeds with the approval of a new therapeutic, which could take 10 to 15 years,” he says. “The College and the university obtain royalties, and the public has a new marketed drug.

“Successful companies that spin out from the College will provide more industry focus on other intellectual property developed at the College and make it easier for future spin-out companies to succeed.”

A Vaccine for Dengue Fever By Dave Caldwell

Dr. Dennis Brown, head of the Department of Molecular and Structural Biochemistry, and his wife and colleague, Dr. Raquel Hernandez, research associate professor of molecular and structural biochemistry, were studying interaction among virus proteins when Hernandez removed a piece of protein from the Sindbis virus they were using as a model. She found that while the resulting mutant survived in animal cells, it did not reproduce rapidly the way a normal virus does. In insect cells, however, the mutant reproduced at the same rate as the wild virus.

Dr. Dennis Brown and Dr. Raquel Hernandez developed the new vaccine against diseases transmitted by blood-sucking insects, patented it and now serve as advisers to Arbovax Inc., the company that licensed the technology. Communication Services
Brown and Hernandez realized that the large-deletion mutant virus they had created could be used to make safe, live-virus vaccines for virtually any of the 700 or so diseases caused by viruses transmitted by blood-sucking insects.

A live-virus vaccine uses a virus with reduced pathogenicity to induce an immune response, providing protection from the pathogenic version of the virus. While live-virus vaccines provide more effective protection than other types of vaccines, they also are more dangerous. In some cases, a live-virus vaccine can cause the disease it’s designed to immunize against.

Because the large-deletion mutant virus produced by Brown and Hernandez reproduces slowly when transmitted to an animal host, the host’s immune system has time, as Brown puts it, “to catch up with” and recognize the disease caused by the virus. Live-virus vaccines made using large-deletion mutant viruses should be safe and effective.

The scientists patented the technology, and early in 2006 Arbovax Inc., a Raleigh company, licensed it. Brown and Hernandez are serving on the Arbovax scientific advisory board. Brown said the company is working to produce a vaccine for dengue fever, a viral disease spread by mosquitoes that infects 100 million people in the Third World annually and causes 250,000 deaths.

Brown said work on a dengue fever vaccine is moving faster than he and Hernandez thought it would, and testing in an animal system is expected by next summer.

“It’s very exciting,” Brown said.

Targeting Disease, One Cell at a Time By Dave Caldwell

Understanding how plants become infected with disease and treating cancer in humans would seem disparate pursuits, but Dr. Steve Lommel appears to be making the leap.

Lommel, a professor of plant pathology and genetics, and Dr. Stefan Franzen, chemistry professor in the College of Physical and Mathematical Sciences, founded a company called Nanovector that has licensed technology developed by the two scientists. Lommel also serves as assistant vice chancellor for research development for North Carolina State University and as interim associate dean for research in the College of Agriculture and Life Sciences.

Dr. Steve Lommel is co-founder of Nanovector, a company based on a drug formulation and disease-targeting technology that uses viruses loaded with therapeutic agents delivered to specific cells in the human body.
Photo by Becky Kirkland
Lommel’s research focuses in part on understanding how viruses infect plants. While exploring how the red clover necrotic mosaic virus assembles itself, he discovered a 17-nanometer cavity inside the virus. Under certain conditions, pores open on the virus surface, and therapeutic agents can be pumped through the pores into the virus’ internal cavity.

But the agents must be particularly small, which is where Franzen’s specialty – nanoparticles – comes into play.

Lommel and Franzen are working though Nanovector to develop a system that uses nanoparticles – viruses loaded with therapeutic agents – to deliver the therapeutic agents to specific cells in the human body. They believe the system may be used to target cancer cells, particularly breast cancer cells. They’re also working with scientists at UNC-Chapel Hill, Duke and in Poland to place RNA inside the virus shell to attack genetic diseases like sickle-cell anemia.

“We’re in conversations with lots of medical people now,” Lommel said. “Our ultimate goal is to demonstrate that this is a drug formulation and targeting technology.”

BioResource International — From Benchtop to Marketplace By Suzanne Stanard

What started as a discovery in an N.C. State research lab in 1987 has grown into a successful biotech company closing in on its first $1 million in revenue.

Dr. Jason Shih, professor of poultry science in the College of Agriculture and Life Sciences, knew he was onto something big when he discovered a naturally occurring enzyme that breaks down the tough protein found in chicken feathers. Today, his discovery and subsequent years of research have resulted in two patented products that are the cornerstone of BioResource International Inc. (BRI), a biotechnology firm that develops and markets enzymes from nature to enhance animal and human health.

Jason Shih and his son Dr. Giles Shih founded the Morrisville-based company in 1999 to bring two enzyme-based products – Versazyme™ and Valkerase™ – to market in the animal industry.

Dr. Jason Shih (right) and Dr. Giles Shih co-founded BRI, which develops and markets enzymes from nature to enhance human and animal health.
Photo by Daniel Kim
Versazyme™ is used as a natural supplement in poultry feed to improve digestion of protein and enhance absorption of nutrients. The company’s other product, Valkerase™, also stems from the original enzyme discovered by Jason Shih. It breaks down keratin, a major component of chicken feathers, allowing the feathers to be ground into a protein supplement for feed.

“The discovery that the enzyme could be added to chicken feed to improve protein digestion suddenly opened a big market potential for BRI,” says Jason Shih, who serves as the company’s chairman and science adviser.

Today, opportunity is ripe.

“What’s driven demand for our product is that corn prices have hit all-time highs because of bioethanol production,” says Giles Shih, who earned his master’s degree in microbiology at N.C. State and serves as BRI’s president. “Feed costs are very much tied to corn and soybean costs, so there’s a great opportunity here. Because our product improves the digestibility of poultry diets, farmers can get more value out of the existing formulations they use.”

This means that farmers can grow bigger chickens with the same amount of feed naturally, without the use of antibiotics or chemical additives.

BRI was incorporated in November 1999. By the following spring, the company had acquired its first seed money.

“When we started BRI, our objective was to scale up production of the enzyme to industrial levels, to be economically feasible,” Giles Shih says.

BioResource International ’s Dr. Giles Shih (left) and Dr. J.J. Wang are aggressively marketing the company’s enzyme-based animal feed supplements to international markets.
Photo by Daniel Kim
Enter Dr. Jeng-Jie “J.J.” Wang, who spent years in Jason Shih’s lab developing the technology to produce the enzymes at lower cost and higher yield. Wang earned master’s and doctorate degrees from N.C. State, and now serves as the company’s chief scientific officer.

“Our second big goal was to prove the technology in animal trials at N.C. State, as well as in commercial trials,” Giles Shih adds. “We’ve had success with that and were able to demonstrate consistent performance.”

Now that research and development are complete, the company – with a core staff of five and a team of consultants – is aggressively marketing their products to potential customers in the U.S. and abroad.

In late 2006, BRI completed its first sales with major customers in the United States and Thailand, and the company plans to expand into other markets in Asia and South America.

“Some of the fastest-growing markets in the world are in Asia and South America,” Giles Shih says. “Domestic production of pigs and chickens has increased in those areas, and we see that as a big opportunity.”

Sustaining itself initially on grants and angel investment, the company now is approaching its first $1 million in revenue.

“Right now, we’re at the stage where we’re growing; we’re at the tipping point,” Giles Shih says. Using a sports analogy to demonstrate the company’s revenue growth, he adds, “We’re starting to get good traction in the market, getting close to that upward bend in the hockey stick.”

According to Wang, the company’s products are unique, and it has the patents to protect it. “We understand the market, the industry and our customers’ needs. We also have international connections, so there’s plenty of room for BRI to grow.”

While growth is imminent, Giles Shih says, the industry can be tricky.

“The upside of agricultural biotech is that we were able to go from benchtop to marketplace relatively quickly,” he says. “But the downside is that the market is tough, from the price perspective. There are some big players out there pushing prices down, so we’ve been very careful with our pricing strategy.”

His vision for BRI? “Five years from now, it’s highly likely that BRI will be a lot bigger, or will be a subsidiary of another company, both of which would be very positive outcomes.”

From Food Product Startup to Food Systems Leadership

New developments are on the horizon for Dr. Ken Swartzel, Food Systems Leadership Institute director.

Dr. Ken Swartzel, William Neal Reynolds Distinguished Professor of Food Science, is no stranger to startups. Twenty years ago, Swartzel helped develop the technology for pasteurized liquid eggs in aseptic packaging that led to the startup company, Easy Eggs, which became Michael Foods Inc., the world’s largest egg breaking company.

Easy Eggs exemplifies the benefits of sharing College discoveries via a startup. The process developed by Swartzel and his fellow food scientists provided a more cost-efficient and safer egg-handling method for the food service industry, as well as a convenient low-cholesterol egg product for consumers.

These days Swartzel leads an initiative that offers as its product national leaders in the food and agriculture industry.

For the past three years, Swartzel has directed the Food Systems Leadership Institute, a program aimed at developing leaders to advocate for a strong food system. The two-year institute, funded by the National Association of State Universities and Land Grant Colleges and the W.K. Kellogg Foundation, attracts academic leaders from land-grant colleges and universities across the country.

Easy Eggs Carton The program is implemented by N.C. State University in partnership with The Ohio State University and the University of Vermont. A group of about 20 to 25 fellows begins the program by spending a year learning in sessions held at the three universities.

The curriculum is focused on a set of core leadership competencies and aims to help these leaders

  • enhance their personal leadership skills so they can be effective in any leadership role;
  • broaden their food systems perspectives, stressing collaborative, interdisciplinary approaches to difficult challenges; and
  • develop the knowledge and skills needed to foster organizational change.
Swartzel says the program grew out of an emerging concern that top-level leaders nationwide didn’t have an appreciation and understanding of the nature of modern food systems. What was once viewed as simply food production and distribution has grown to encompass bioenergy, nutrition, medicine, the environment, and a host of emerging issues in a complex system. Even within colleges of agriculture there are challenges to be responsive to the needs of both traditional supporters and new stakeholders.

Several College of Agriculture and Life Sciences leaders have participated in the program during each of its first three years. Dr. Ken Esbenshade, associate dean and director of Academic Programs for the College; Dr. Donn Ward, head of the Food Science Department; and Sam Pardue, head of the Poultry Science Department, have each been FSLI Fellows.

“We believe we can help our fellows grow as leaders,” Swartzel said. “These fellows get a lot of personal attention, and we have been proud to see what they have been able to accomplish in such a short time.”

—Natalie Hampton