Signum Earns a $1M Vote of Confidence

NJBIZ, Jun 18, 2007 by Gaudio, Thomas

SOUTH BRUNSWICK

A loan from the state boosts a biotech run by two scientific brothers

Drug developer Signum Biosciences plans to nearly double its work force with a $1 million loan finalized this month by the New Jersey Economic Development Authority.

The five-year, 6 percent loan, which comes from the agency's $150 million Edison Innovation Fund, will enable Signum to accelerate development of treatments for conditions ranging from skin problems to Alzheimer's disease. Signum licenses its core technology from Princeton University.

The company will use part of the cash to hire eight workers by next year, which will bring to 20 the number of employees at its 5,000-square-foot office and laboratory space, which is located in South Brunswick.

Signum CEO Gregory Stock says the biotech company expects to net another $2.5 million from a round of investing scheduled to close by the end of summer. Signum has no revenue yet and has been burning through about $6 million from angel investors, state grants and loans since Stock and his brother, Jeffry founded the company in 2002.

Jeffry Stock, who serves as chairman, is a Princeton professor of molecular biology and chemistry. He also oversees the company's scientific efforts. Gregory, who is a biophysicist and former professor at the UCLA School of Medicine, put together the company's business strategy.

Gregory says Signum is talking with several consumer health care and pharmaceutical companies about licensing its top product candidate, an anti-inflammatory compound called Arazine. He says the drug is designed to reduce skin irritation from procedures like laser hair removal and chemical peels without the use of steroids, the standard treatment for such conditions.

"We will probably license out or sell particular technologies to give a return to our investors," says Stock. "IPOs [initial public offerings] and things ofthat sort are not very likely paths anymore," he says, "because the capital markets are pretty demanding, and generally M&A activity has been far more prevalent in the last two or three years."

Stock says Arazine and other anti-inflammatory products that Signum is developing are derived from research on regulating communication between cells. That research was spearheaded by Jeffry Stock, a leading expert in the subject.

Other research Jeffry Stock worked on that the company is trying to commercialize focuses on certain enzymes, proteins that facilitate and control chemical reactions. Gregory says the research could lead to the treatment of diabetes and age-related diseases including Alzheimer's and Parkinson's. "We're not a onetrick pony," he says. "We're not moving toward some particular clinical trial or something where we're hanging on one result."

Gregory Stock says Signum currently has enough money to operate through the beginning of next year. He says the company has been going through cash at the relatively modest rate of $180,000 a month by teaming up with other biotech firms and laboratories at Princeton, Rutgers and Cornell universities.

Signum investors include Stephen Modzelewski, owner of Maple Engine LLC, an investment firm in New Hope, Pa., that has pumped almost $2 million into Signum. Modzelewski, a director of Signum, says the company may use this summer's venture funding to speed up the burn rate in hopes of developing products sooner.

Modzelewski says he invested in Signum after "getting to know Greg personally through lunches and dinners, and learning about the science [behind the company]. I became convinced that this was interesting technology that was closer to commercialization than most other [small research-driven technology] companies."

Attorney Dennis Segota, a partner in the life sciences practice of Morgan Lewis, says small companies looking to strike their first licensing deals should make sure the licensee "doesn't have the ability to sit on the technology and do nothing with it. "There should be minimum spending and minimum commercialization and development requirements," says Segota. "And if the licensee doesn't do enough, then the product should revert back to the licensor."

He says the licensor should also "get access to any know-how, including clinical data and studies, developed by the licensee," in order to pick up the project from where the licensee stopped."

E-mail to tgaudio@njbiz.com