SMALL BIOTECHNOLOGY COMPANY

Tom D'Alonzo, Genvec, Inc.

Genvec's Intellectual Property

What we do at Genvec is start with a virus and declaw it. We do that by pulling out part of its genome and putting human DNA in its place. Then we grow it in commercial quantities that represent possible products. In developing the intellectual property of our business, we concentrate on what to take out of the virus and what to put back into the virus, and perhaps most important—having removed part of its genome—we need to figure out what is required in cell lines to replicate the modified virus, that is, how to grow it. Our objective is to produce a clinical preparation that will meet Food and Drug Administration specifications for use in humans. It is a fairly daunting exercise. The progress that has been made on this in just the last couple of years is striking. I think it is naive to consider gene therapy in any context other than traditional drug development. We should expect a series of generational improvements, in terms of filing patents, in the products that are developed.

Ultimately, we are looking at the clinical application of our virus technology. For us, it has initially been in cystic fibrosis. Within the next few weeks, we hope to start a clinical trial with colon cancer metastatic to the liver through which we expect to improve the performance characteristics of the vectors being used for gene therapy and to add to our understanding of how these vectors work.

Role of Venture Capital

Venture capital is a greater asset in the United States than anywhere else in the world. It provides the engine for the biotechnology companies that are reviving up across the United States. In the biotechnology industry, venture capitalists perform the service of identifying potential technologies that might be too underdeveloped, too underadvertised to attract the interest of the larger companies, or too far outside their technology area to induce them to displace ongoing research programs and businesses. A venture capitalist sees that as an opportunity that begins with assessment of the technology. Are there other technologies with which it might compete? How does it relate to the overall market? What about the proprietary estate that surrounds it? Is it something that can be developed, progressed, and finally made into a business? More than any other country in the world, the United States has the ability to pull in venture capital from various sources, tie it up for 10 years with the understanding that there are going to be occasional conspicuous failures, and return enough of a gain to a pension fund or investor to attract more money to invest in the cycle. Venture capitalists take on the risk and invest in a small company. They enlist people to envision how the business is going to be formed and developed. They might spend a bit



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