May - 2004 - issue > Entrepreneur
The bacteria eater
Pradeep Shankar
Tuesday, July 8, 2008
Every year, about 40 million patients in the U.S. acquire nosocomial (hospital-acquired) infections during their stay in the hospital. Patients develop infections from bacteria that have become resistant to nearly all available drugs. One such deadly infection is the MRSA, which kills 80,000 patients every year. The bacterium staphylococcus aureus, usually present in a person’s skin and mucous membranes, becomes resistant to the antibiotic—Methicillin. This could prove fatal in patients recovering from surgery and those whose immune systems have weakened. Is there a solution? Phage therapy seems to provide the answer.

Phages are otherwise harmless viruses that kill the bacteria they’re meant to, almost without fail. As antibiotic resistant bacteria are on the increase, scientists like Dr. Janakiraman Ramachandran have started looking at bacteriophages for answers. In 2000, Ramachandran set up Gangagen to develop therapeutics based on bacteriophages. Bacteriophages are nature’s tiniest viruses that specifically infect—and usually destroy—bacteria. (See illustration.)

However none of the big pharmaceutical companies or investors would like to venture into this space. Their concern: the concept of phages as therapeutics was known since ages—phage therapy has been practiced, with some success, in Eastern Europe and the Soviet since the late 1930s—and no intellectual property can be built around the products. Yet another concern of the pharma industry is that unlike Penicillin—which is a broad-spectrum antibiotic—phages are very specific. For instance, a phage that works on typhoid will not work on cholera, pneumonia or any other infection. Each infection has specific phages. However, for the same infection there could be many phages.

So how does one build a business in patenting phage therapy for a particular infection?
The fears of the pharma companies and investors led Ramachandran to figure out how he could develop a proprietary technology on which he could claim IP. “Research has identified that the breakdown of the bacterial cell is the point where the bacterium is dead. But I realized that it is not true,” says Ramachandran, “The bacterium is dead within the first five minutes of the introduction of the phage. So in order to contain the infection, the key is to kill the bacteria and at the same time stop the phage from coming out of the bacterial cell and invading other hosts or propagating itself.” The body’s immune system would clear the dead bacterium and the phage contained within at one go. It was an ingenious idea, but there was no guarantee that it would work.

He was quick to file a patent on this idea and then called upon two of his ex-colleagues to develop the process of knocking out the gene that breaks down the bacterial cell wall. With the modified phage the bacterium could be killed without the phage escaping out.

Ramachandran filed the full patent application in September 2002. He raised $4 million from ICF Ventures and angel investors in two rounds of financing. “What excited us in Gangagen was the experience that Ramachandran had in the phages control and the innovative methods he has created around the IP issue,” says Vijay Angadi, Managing Director of ICF Ventures.

Ramachandran and his team of 25 scientists spent a considerable amount of time creating a library of phages that was required for research, and he has also managed to put in place a Scientific Advisory Board of some leading authorities in the field of bacteriophages.

The time to identify a phage is far less than the time required to develop an antibiotic drug. Typically it takes anywhere between two to four years to develop an antibiotic and bring it to clinical trial. However, a phage for a particular infection can be developed in six months. “You cut short the time to develop by several years,” says Ramachandran. “And if the antibiotic develops resistance to the bacteria within a year or the clinical trials fail, you are back to the drawing board.

In case of phage therapy, a panel of phages for a particular bacterial pathogen can be identified. Even if one phage fails, there are several others that work on the same infection.” Apart from cutting down on time to market, there are other advantages as well.
Costs of developing a phage are one-tenth that of developing a traditional drug. Also the expertise required for drug development is far higher, and leads to teams at least five times the size required for phage development. That should explain the size of Ramachandran’s team.

For the last two years his team has been discovering phages for MRSA, urinary tract infection, infections caused by burns and wounds. “We have identified the phages for these infections and hope to start clinical trials by end of this year in India and Phase I trials in the U.S by end of next year.” What is delaying Ramachandran’s plan is the U.S FDA regulations: so far it has not licensed any phage product.

Ramachandran has no way but to navigate the untested waters at the FDA, and is hopeful that the FDA will make it easy to commercialize the phage therapeutic products sooner or later. As a start, Gangagen, like most others companies, has forayed into developing phages for the control and elimination of bacterial pathogens in animals, plants and the environment. The reason: it is an easier path to commercial phage products. The U.S Department of Agriculture or the Environmental protection Agency have lesser regulatory hurdles to product approval.

Gangagen has set up a subsidiary in Ottawa, Ontario, dedicated to agricultural and environmental phage R&D. In the past year, a team of eight scientists at the Canadian Center has identifyed a phage that kills Escherichia coli bacteria in manure. Bacterial contamination in manure is a big problem in the U.S and Canada, infected manure pollutes ground water. In May 2000, for instance, over 2000 people in the farming community of Walkerton in Ontario fell ill as a result of E.Coli infection, and seven died.

Treating manure using Gangagen’s proprietary phages may help reduce ground water contamination. At Gangagen, Ramachandran is hoping to add phages that kill E.Coli in the manure. The exponential reproduction of phage particles will make it possible to treat large vats of manure with relatively modest amounts of phage. “The product will be ready for trial by the end of this quarter and will hit the market in about 18 months,” he says. The company plans to raise $ 4-5 million, this summer to take the product to market.

“The manure market is huge,” he says. Around 1.4 billion tons of manure is produced in North America annually. At $1 for every ton treated, Gangagen could stand to generate revenues of $50 million if it gets to treat at least 50 million tons of manure.

Another opportunity for Gangagen is in the meat industry. Companies that sell meat need to ensure that their product is free from dangerous bacteria. Treating cattle with phages two weeks before slaughter can reduce infections in the meat. “Each year 140 million cattle are slaughtered in North America. Even if we charge $1 a dose and two doses are required for each cattle before slaughter, this can be a big consumer market,” says Ramachandran.

Gangagen’s smart route to IP and phage development may just pique the interest of the giants in the pharma industry. As Ramachandran says, “all the better in the cure for humanity.”
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