Biotech is being tipped as the next great technology, with the potential to have a greater impact on the way we work, live and play than the PC chip.
Futurologists and doomsters alike are philosophising about the moral and political implications of human genetic engineering and gene manipulation. For SA in 2005, the march of biotech will be more mundane, though some SA companies are developing new innovations that will have a global impact.
On a commercial level, the rate of investment in biotech around the world has overtones of the tech-bubble hype of 1999. Biotechnology is an industry that has yet to be profitable, either locally or internationally. But though the field is a high-stakes gamble - in which huge amounts of capital are initially required in exchange for returns that may or may not materialise many years down the line - those that get it right can reap huge rewards. For now, the biotech industry feels like the IT incubators of five years ago.
SA is trying not to be left behind. In 2005 the local industry should begin to gain momentum as government's R400m support package starts to take effect and a core group of young biotech companies begin to come of age.
Bioventures, S A 's only venture capital fund dedicated to biotechnology, has already invested R50m in the industry and plans to raise a second fund in 2005.
Two local biotech companies, Shimoda Biotech and Disa Vascular, are well on their way. Based in Plettenberg Bay, five-year-old drug-discovery company Shimoda Biotech already has more than 15 patents under its belt and several products in various stages of clinical development.
The most exciting, says financial director Darren Shur, is a unique formulation of the world's most widely used general anaesthetic, propofol. Propofol is a drug that until now has been delivered in an oily emulsion. That has several unfortunate drawbacks, not least that it is prone to bacterial growth. This is why Shimoda's achievement of developing a water-based (aqueous) propofol formulation holds such promise.
"Annual sales of the propofol molecule are close to US$1bn and are all emulsion-based, so anyone who can develop an aqueous propofol formulation will have a big competitive advantage," says Shur.
Shimoda will be seeking to obtain investigational new drug (IND) status for the drug from the US's stringent Federal Drug Administration (FDA) next year. IND status must be obtained before a drug can enter human trials in the US.
Shimoda already has the rare distinction for an SA company of having secured IND status for another home-grown pharmaceutical, its injectable diclofenac product (an analgesic).
The company recently signed its first licensing agreement with a US pharmaceutical company for the sale of this drug. It is undergoing final clinical trials in Europe. Full registration in the EU is expected in late 2005.
Another drug that it intends to submit for European regulatory approval in 2005 is an oral fast-acting painkiller based on diclofenac - the active ingredient in Voltaren (now off-patent) - but delivered using cyclodextrin technology to enhance the drug's effectiveness in treating acute pain such as a migraine.
Shimoda was created by inorganic chemist Greg Gilbert, who was seeking a new challenge and a fresh start after 13 years in the mining industry. He moved to Plettenberg Bay in 1995 to escape Johannesburg's rat race and has built the company up into a core of 12 permanent biochemists, geneticists and biologists.
"Shimoda is a collection of some of SA's smartest scientists who have and continue to come up with novel products and technologies in the biotech and pharmaceutical space with the potential to have an impact in international markets," says Shur.
To increase its skills base and cut costs, Shimoda outsources some of its research and hires laboratory space at the universities of Port Elizabeth, Cape Town and Stellenbosch.
Together with the University of Port Elizabeth, Shimoda subsidiary PlatCo Technologies has developed a novel technology platform that enables it to produce platinum-based anticancer compounds that it expects to prove better in fighting cancer than present ones. Several such compounds have shown excellent results in preclinical testing.
Platinum-based anticancer drugs are among the most successful classes of chemotherapy agents available and generate billions of dollars in sales globally each year. PlatCo will be working hard to do a deal with a large multinational pharmaceutical company next year , says Shur.
Bioventures, an investor in Shimoda, was quick to spot the potential in PlatCo Technologies and has funded the company since start-up. "It is a great example of cutting-edge science that has a strong commercial leaning," says Bioventures manager Heather Sherwin.
Shimoda was launched with seed finance from angel investors (Gilbert himself contributed a chunk). Minority shareholders include listed financial services group Peregrine, Bioventures and the Industrial Development Corp.
Another promising biotech company is Disa Vascular. Established in Cape Town six years ago by two University of Cape Town engineering students, it is developing world-beating coronary stents for the international market.
Stents are tiny, scaffold-like, metallic devices implanted in the coronary arteries to re-establish blood flow to the heart and other areas that have become blocked as a result of vascular disease.
The 10-person biotech company has sold several thousand of its first stainless steel stent, the S-Flex, in SA and abroad, proving it can produce world-class products that meet rigorous EU certification requirements.
It recently obtained European regulatory approval to sell its new ChromoFlex stent in the EU and many other countries that accept European Certification (EC). Made of a cobalt chromium alloy, it will be only the fourth such stent in the world. Previously, stents were all made of stainless steel but new, stronger cobalt chromium stents are much thinner and cause less damage to the arteries, reducing the risk of subsequent blockages (restenosis), which occur in certain patients.
But the real excitement is over Disa Vascular's new drug-eluting stent, which has several features that make it superior to anything else on the market.
CEO Greg Starke explains that because vessels sometimes become blocked again after stenting, stents have been designed to release a tiny quantity of drug into the vessel wall adjacent to the stent to prevent this from occurring. The two drug-eluting stents on the market are based on bulky, old-fashioned stainless steel designs.
Disa Vascular's Taxochrome drug-eluting stent will use the ChromoFlex platform for drug delivery. Not only is this new-generation stent much easier to deliver, but the drug is released from a polymer coating that erodes completely, releasing 100% of the drug. In existing drug-eluting stents, only a portion of the drug diffuses out of the coating, leaving behind a polymer with unknown consequences for the human body.
The stent is undergoing preclinical testing and will undergo a human safety study in SA in 2005. Starke says the multibillion-dollar stent market is highly complex and competitive, but the barriers to entry in the medical device market are lower than those in the pharmaceutical industry.
"When it comes to developing drugs you need huge resources," he says, "but in the case of medical devices a thorough understanding of the end-user issues, some innovative thinking and the ability to act quickly can create huge value for small companies. The innovation opportunity is about having hard-working, smart people capable of bright ideas and SA's hard-working, smart people as are good as those in the US or anywhere else."
Disa Vascular was established by Starke and fellow student Damian Conway in Cape Town in 1998. While still a student, Starke consulted to a large UK-based orthopaedic firm, conducting computer simulations of how the body interacts with implants. On graduating, he and Conway set up shop providing computer-based design services to companies developing implants. Later they started to design heart implants.
Sherwin says small biotech companies such as Shimoda and Disa Vascular manage to survive in a tough industry because they have two critical components: world-class science and excellent management teams.
"The achievements of these two companies cannot be underestimated," she says. "They have managed to compete and survive in an industry that is dominated by huge multinational companies with R&D budgets bigger than the GDPs of many emerging countries."