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Protein Pathways Bails on Bioinformatics Business Model, Chases Drug-Discovery Gold

LOS ANGELES, Jan. 3 - Don't call Protein Pathways a bioinformatics company. At least not anymore.


This privately held firm, which has been honing data-mining algorithms and building informatics integration platforms since it opened its doors for business in June 1999, is betting what's left of its funding from last year on a new future in drug discovery.


In the "bioinformatics business model [there] is not enough money to interest venture capitalists," said Matteo Pellegrini, Protein Pathways' president and co-founder. "So to grow a company beyond a niche software company you have to move to drug discovery. We don't see the database software model as viable for us. We see informatics as internal to drug discovery."


Pellegrini will have to change the information under his name on his business card—it currently reads "bioinformaticist." His commute also will change: Beginning in February, the company will move its headquarters to Woodland Hills, Calif., from its current home in Los Angeles, and in the process more than double its size to 7,000 square feet. Half of this space will be dedicated to a wet lab.


To run that lab, which Pellegrini said would validate protein targets uncovered by the company's own IT, Protein Pathways has hired Bill Boyle, former head of discovery research at Amgen. Boyle will oversee antisense and RNA inhibition experiments to try and validate protein targets in six pathways suggested via the company's informatics tools, which comprise algorithms licensed from UCLA that mine publicly available genomic, expression, protein interaction, and literature data. Protein Pathways will initially focus on disease pathways linked to inflammation and osteoporosis, said Pellegrini.


But the clock is ticking. Pellegrini said that what's left of the company's initial $6 million in funding—he won't say how much—will only last until the end of the year. To extend that deadline, the company is actively making the VC rounds to raise $15 million to $20 million, which Pellegrini said would keep the wet lab funded for two more years. The company also has some revenue coming in from licensing its informatics, though it earned only $50,000 from those licenses in the last six months, said Pellegrini.


Protein Pathways is also currently talking with a Canadian biotech company about a strategic alliance, though Pellegrini would not disclose the name of the company or hoped-for terms of the possible deal.


Ultimately, Protein Pathways' future seems to rest on the laboratory validations of its in silico predictions as well as deals it can strike once it has those drug targets. Pellegrini estimates that by the summer the company will have initial validations, which it can then take to pharmaceutical companies in the hope of striking development deals.


Between now and then, the company must make the 15-mile move northwest to its new headquarters in the San Fernando Valley—a choice made as much for the space available there as for the proximity to Amgen, which Protein Pathways views as a source for scientific talent: It turns out the firm must also find a CEO.


Protein Pathways co-founder and board member Larry Souza has been serving in that role recently, along with co-CEO Dan Vapnek—both Protein Pathways board members and Amgen veterans—but Souza is shifting his focus to run his own venture capital fund, said Pellegrini.

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