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RHeoGene Gets a New Investor, and University of Pittsburgh Medical Center Gets a $30M Gift


RHeoGene, a company that is developing and commercializing a technology to regulate gene expression in live cells, has been donated to the University of Pittsburgh Medical Center, the school announced last week.

The 20-employee company, based in Norristown, Pa., has developed RHeoSwitch, a technology to manage gene expression using a patented small-molecule mediator that can turn genes on or off, as well as adjust the level of gene activity. This regulation of gene expression is initiated through the interaction of the company’s RHeoChem ligand inducers and RHeoCept receptors. The company has engineered for this application a library of receptor proteins that range from zero to 20,000 in levels of target-gene basal expression.

“It’s a nuclear-receptor-based eukaryotic molecular switch,” said Lorraine Keller, a Cornell-trained molecular biologist who helped found the company and is now vice president of marketing and communications for RHeoGene. “It is an inducible system, actuated by a small organic molecule.”

The technology only works in living cells, she added.

The deal is notable in the context of economic development. Pennsylvania, like other states, is looking at the biotechnology sector as a way to replace jobs lost in the economic downturn of the last several years. This deal keeps alive a business in a geographic area close to the big pharma operations of New Jersey and Pennsylvania.

A grant from Pennsylvania’s Department of Community and Economic Development allowed UPMC to retain RHeoGene employees as consultants, said Tom Tillett, the chief executive officer of RheoGene and a co-founder of the company. RHeoGene will continue to remain in its current location, which is located near pharmaceutical companies like Wyeth, Merck, AstraZeneca, and J&J, among others.

This unusual deal, valued at $30 million, brought together UPMC, a non-profit healthcare system affiliated with the University of Pittsburgh Schools of the Health Sciences, and the Philadelphia-based chemical company Rohm and Haas. The publicly traded company, which has a market capitalization of $9 billion, is one of the US’s largest chemical makers and marketers: It makes coatings, adhesives, and electronics, and markets the Morton brand of salt. The technology on which RHeoGene is based emerged from Rohm and Haas research and development.

The transfer was completed in May but not announced until last week as the parties sought additional financial partners.

Tillett told BioArray News that he hatched the idea in January 2003.

“The idea was something I came up with trying to find a win-win-win situation for the all the parties involved,” he said. “Intellectual property is important in this field, but people are just as important. We proposed this idea to retain them and keep them. UPMC ended up as the ideal partner.”

He said that the deal appears to be unique.

“We talked to a lot of people and we didn’t find anyone who was aware of this type of deal being done before,” he said.

UPMC happily accepted the gift.

“The reason that we are willing to do this is that [RHeoGene] fit with the mission of the medical center,” Talbott Heppenstall, treasurer of UPMC and the new chairman of RHeoGene, told BioArray News. “It’s core to what we do in terms of our medical mission. We are a $4.5 billion organization and the investments we make will, hopefully, have a positive impact on that mission.”

UPMC, which includes a network of 19 hospitals and has 37,000 employees, received intellectual property, equipment, compounds, biological materials, research and commercial agreements and licenses — which were then consolidated as a wholly owned subsidiary of RHeoGene Holdings Inc.

Previously, RHeoGene was organized as a limited liability corporation. It will continue to operate in its current location, but plans to open a laboratory in Pittsburgh.

The company is now looking for a distribution partner to supply kits containing the system. Also, the company is in the process of setting up collaborations with UPMC researchers, said Keller.

The company’sRheoSwitch system, which regulates one gene/cell, and its RheoPlex system, which regulate two or more genes/cell, are available for license.



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