The Wall Street Journal - February 21, 1996
Ralph T. King Jr., Staff Reporter of The Wall Street Journal

The start-up company, Genenvax Inc., will seek $18 million from private investors to finance a pivotal-phase clinical trial for gp120 involving thousands of patients in the U.S. and Thailand. Genentech will contribute $1 million now, plus an additional $1 million as soon as the private funds are raised, giving it a 25% stake in the closely held firm.

Donald Francis, one of the nation's most prominent public-health experts who supervised Genentech's gp120 research, will serve as the company's president. Its chairman, Robert Nowinski, is a virologist who helped found several biotechnology companies, including Genetic Systems Corp. and Icos Corp.

Genentech and many AIDS researchers saw gp120 as the best hope for halting the spread of the HIV virus, which infects at least 5,000 new people a day. The company spent more than $50 million developing gp120, and stockpiled more than 100,000 doses for a large-scale trial to be funded by the federal National Institutes of Health.

But in June 1994, the NIH decided not to pursue the pivotal-phase trial because of a dispute over funding and thorny social questions, such as how a vaccine that proved less than 100% effective might influence sexual behavior, perhaps leading some who people had been immunized to unwittingly risk exposure. The politically charged decision frustrated Genentech's search for a marketing partner and ultimately triggered the formation of Genenvax, said Rodney Ferguson, director of business development of Genentech, based in South San Francisco, Calif.

"People here fervently believed and continue to believe that this trial should be done," Dr. Ferguson said. "This would be a way of them doing it without the government, one that would go faster and hopefully more efficiently."

But some analysts said Genentech was moving to distance itself from complicated testing that carries substantial legal and public-relations risks.

"This a way out of the dilemma," said David Stone, an analyst at Cowen & Co. "This program doesn't meet their criteria for funding in-house. But if they don't do it, no one will."

The start up of Genenvax just happens to coincide with an announcement by NIH officials last week of a new strategic plan in seeking an AIDS vaccine. One such arrangement involves giving patients a primer shot to boost their immune response followed by a version of gp120 made by Chiron Corp. of Emeryville, Calif. "We have never abandoned our commitment to the [gp120] protein. Since 1994, we've had ongoing program looking for new approaches," said Chiron spokesman Larry Kurtz.

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