Important note: Information in this article was accurate in 1984. The state of the art may have changed since the publication date.
|
|
The Wall Street Journal - 30 January 1984
Sanford L. Jacobs, Staff Reporter of The Wall Street Journal
Greenwich Pharmaceuticals Inc. has no sales and has had a number of crises in a hand-to-mouth existence. Yet, in the 14 years since it was formed, the company has obtained $6.5 million from investors willing to gamble that its patented compound, Therafectin, will become a commercially successful drug.
"People buy stock in the company in the hope that they have found the next new company that has found something of scientific value," says H. Lee Browne, the 36-year-old president of the Greenwich, Conn., concern and a major shareholder.
Managing a company in its development stage is much different from running one that has goods or services to sell. The pursuit of funds is constant. "I'm always knocking on doors," says Mr. Browne who, for the 10 years he has been with Greenwich Pharmaceuticals, has been explaining to the scientific and investment communities Therafectin's ability to regulate the body's immune system.
Mr. Browne, son of a former shipping industry executive and himself a successful real estate investor, believes the company has survived because of Therafectin's tantalizing possibilities.
THERAFECTIN WAS developed by Paul Gordon, a pharmacologist and adjunct professor at Loyola University of Chicago's medical school. Mr. Gordon assigned his Therafectin patents to the corporation in 1969 for 3.7 million shares of stock. A group of private investors bought 73,000 shares at 33 1/3 cents a share.
This modest sum was to finance sufficient testing to demonstrate the drug's potential and attract additional investors to pay for further development. The first laboratory tests with biological materials were encouraging, but they weren't proof that the drug would work in humans. And before human testing could be done, tests in animals had to be performed.
Raising money was harder than the original investors had imagined. Ten years ago, the medical community had only a beginning interest in immune-system modulators, and the public was only slightly aware of immune-system research. Recently, publicity about Acquired Immune Deficiency Syndrome, or AIDS, has sparked intense interest in finding ways to control the immune system. So, in the last year both the medical and investment communities have looked more closely at Therafectin, Mr. Browne says.
TEN YEARS AGO, however, the company had to scrounge for funds. "It was almost a Catch-22 situation," Mr. Browne says. "We couldn't get the money because we didn't have the scientific information to satisfy investors, and we didn't have the scientific information because we didn't have the money."
Often, the original investors responded to the company's needs. "They have been like loyal alumni," Mr. Browne says. What money was raised came from repeated sales of relatively small amounts of stock. Between 1969 and 1982, there were 29 sales of stock in amounts as small as 6,500 shares at prices as low as 16.7 cents a share and as high as $2.24.
The pool of stockholders was enlarged in 1971, when the company took over the shell of a small corporation and gained access to the over-the-counter market. There are now 5,500 shareholders and more than nine million shares outstanding. The recent price of the stock was $2.125 bid, $2.25 asked.
Money problems seemed over in 1980 when the company signed a licensing agreement with a U. S. subsidiary of Kali-Chemie A. G., a big West German pharmaceutical concern. It paid Greenwich Pharmaceuticals $500,000 for a world-wide license to make and sell Therafectin, and it paid for toxicology and animal tests.
But the German company later decided to pull out of the American drug market, and the agreement was terminated near the end of 1981. By then, the foreign concern had spent $1.5 million on Therafectin development. But more testing had to be done, this time on humans.
A $2.9 MILLION limited partnership that L. F. Rothschild, Unterberg, Towbin tried to market in 1982 got nowhere and was abandoned after six months. Greenwich Pharmaceuticals was practically broke.
"A lot of people thought we were down for the count," Mr. Browne says. But a private placement of stock through H. C. Wainwright & Co., a Boston investment firm, raised $750,000 early last year, and a well-heeled stockholder chipped in $375,000 for more stock.
Human tests began. Therafectin was given to a few people with rheumatoid arthritis, AIDS and cancer. Incomplete tests suggest that the drug is safe for humans, affects the immune system and has anti-inflammatory properties. But Therafectin's therapeutic worth -- or worthlessness -- hasn't been satisfactorily demonstrated yet.
Mr. Browne will try to raise $2.5 million to $4 million this year, depending on market conditions, to pay for the balance of the planned testing. He hopes it will be the company's last public financing.
His near obsession with finding out if Therafectin is worthwhile has helped the company weather repeated crises, he says. "I think a lot of times survival is due to determination and faith and motivation to find out if a project is worthwhile."
840130
WJ840101
Copyright © 1984 - The Wall Street Journal. Reproduction of this article (other than one copy for personal reference) must be cleared through the WSJ Permissions Desk.
AEGiS is a 501(c)3, not-for-profit, tax-exempt, educational corporation. AEGiS is made possible through unrestricted funding from Boehringer Ingelheim, Bridgestone/Firestone Charitable Trust, Elton John AIDS Foundation UK, the National Library of Medicine, AIDS Walk of Orange County, and donations from users like you.
Always watch for outdated information. This article first appeared in 1984. This material is designed to support, not replace, the relationship that exists between you and your doctor.
AEGiS presents published material, reprinted with permission and neither endorses nor opposes any material. All information contained on this website, including information relating to health conditions, products, and treatments, is for informational purposes only. It is often presented in summary or aggregate form. It is not meant to be a substitute for the advice provided by your own physician or other medical professionals. Always discuss treatment options with a doctor who specializes in treating HIV.
Copyright ©1980, 1984. AEGiS. All materials appearing on AEGiS are protected by copyright as a collective work or compilation under U.S. copyright and other laws and are the property of AEGiS, or the party credited as the provider of the content. .