Pharmaceutical Firm Banks on Reputations : ISIS Founder Had No Trouble Luring Backers to an Unexplored Frontier of Biotechnology

As ISIS Pharmaceuticals President Stanley Crooke walked through his company’s newly leased Carlsbad facility, he took pains to point out that, despite the mostly vacant office and laboratory space, his new biotechnology firm is hard at work developing products at a temporary lab in Sorrento Valley.

But the nearly empty building in the Carlsbad Research Center symbolizes Crooke’s formidable task of building a company from scratch, of being a pioneer in an unexplored frontier of biotechnology and of having to translate the as-yet-undeveloped technology into marketable products.

Crooke, 44, formed ISIS two months ago after an illustrious career heading up product research operations at two major pharmaceutical firms, SmithKline Beckman and Bristol-Myers. Crooke, who holds a medical degree as well as a doctorate in pharmacology, oversaw the introduction of 17 new drugs during his 14 years at the two firms.

Cheaper Than Boston

He selected San Diego County for ISIS headquarters so it could be near the growing biotechnology community clustered around UC San Diego and Scripps Clinic and Research Foundation. Although housing is expensive in San Diego, Crooke said it’s cheaper than in Boston and the San Francisco Bay area, two other headquarters sites he considered. Carlsbad was chosen over other county locations because of favorable lease rates, he said.

“Crooke is one of the three or four best drug developers in the world, based on his success at SmithKline and Bristol-Myers,” said Christopher Gabrieli, general partner of Bessemer Venture Partners, a Menlo Park-based venture capital firm with investments in eight biotechnology companies, including ISIS. He described drug development as an enormously complex, drawn-out and expensive process.

Before resigning last summer, Crooke was vice president in charge of SmithKline’s research and development operation, where he had a $300-million budget. At Bristol-Myers, which he left in 1980 to join SmithKline, Crooke helped develop an array of chemotherapy drugs for cancer patients that put Bristol at the forefront of cancer treatment.

Trading on his visibility in the pharmaceutical industry, Crooke has moved fast since starting up ISIS in March. He has raised $5.2 million in venture capital and hired 20 employees, many of them research “stars” with strong track records in pharmaceuticals and academia.

Crooke was able to raise the money from five venture capital firms, including Bessemer, plus obtain commitments for up to $10 million next year, even though ISIS may be years away from successful technology, much less U. S. Food and Drug Administration approval of products. The company’s payroll will grow from 20 to 30 employees by year’s end and to as many as 90 in 1990, he said.

“It’s been a long, long time since I’ve seen an initial venture funding for $5.2 million,” said Ray Dittamore, managing partner of Arthur Young & Co., a firm whose clients include more than a quarter of San Diego’s 70 biotechnology companies, including ISIS. “That by itself tells a lot about what the investors and the biotech community think of (Crooke) and the team he’s put together.”

Apart from Crooke, the venture capitalists’ interest revolves around the technology ISIS is trying to develop called anti-sense oligonucleotides. The “oligos” are bits of DNA that bind to “messenger molecules” sent out by DNA that cause the production of disease-bearing proteins.

By binding to disease messengers, which are called messenger-RNA, the oligos theoretically prevent the disease “message” from being passed on and thus from ever being produced, Crooke said.

“Anti-sense oligonucleotides is a method that lots of (drug) companies think is going to work, and ISIS is one of those companies,” said Ignacio Tinoco, a professor of chemistry at University of California, Berkeley, who is on ISIS’ scientific advisory board. “The idea is that, instead of attacking the diseased proteins, you target the RNA that causes them to be synthesized.”

Crooke said the potential for anti-sense drugs is enormous because they could be manufactured as therapeutic agents for virtually any disease since virtually all diseases start as aberrant proteins set in motion by messenger-RNA molecules. ISIS plans to develop its anti-sense drugs using so-called “rational drug design,” or the computer-aided process of designing drugs “by force of thought,” Crooke said.

$2-Billion Market

Citing competitive concerns, Crooke refused to disclose which diseases ISIS has targeted for its first set of products. He did say, however, that the company is pursuing “four markets with aggregate sales potential of $2 billion.” He declined to say whether AIDS is one of the diseases targeted.

ISIS’ competition so far includes San Diego-based Genta, a company that was spun off recently by Gen-Probe, a publicly held manufacturer of DNA-probe diagnostic products. (Genta President Thomas Adams was unavailable for comment Friday.) Crooke said he expects major pharmaceutical firms to join the field in coming years as well.

Although Crooke had studied anti-sense oligonucleotides for the better part of two decades, he said he became convinced they could be used as therapeutic drugs three years ago. That conviction sprang from advances in molecular biology research that have enabled scientists to clone or synthesize DNA molecules.

Crooke was also encouraged by scientists’ increasing ability to modify or manipulate those molecules through a process called hybridization, or the binding of one molecule to another. It’s that binding process by which ISIS’ anti-sense nucleotides will someday “kill” the disease-causing RNA molecules, he said.

But Crooke said he was unable to generate much enthusiasm among his SmithKline colleagues for pursuing the technology, perhaps because the approach was so revolutionary. That, combined with SmithKline’s financial problems last year and the resulting impact on the 3,000-scientist research program in Upper Merion, Pa., he directed prompted Crooke to resign.

Return to Academia

At first, Crooke’s plan after leaving the drug company was to return to academia, specifically to Baylor College of Medicine in Houston, where he has been a faculty member on and off for the past 15 years.

But Crooke soon realized that he was too enamored of the high-stakes game of producing new drugs and the social benefits that successful drugs represent. A turning point in his medical career came when, as a young doctor in Houston, he watched a 24-year-old man die of testicular cancer, a disease that is now largely curable with drugs developed at Bristol-Myers during Crooke’s tenure there.

In March, ISIS signed an agreement with Applied Biosystems, a publicly held biotech company in Foster City that is a leading manufacturer of instruments that produce DNA. The deal calls for the two companies to share rights to products developed. ISIS expects Applied Biosystems to help it surmount a formidable problem: how to produce anti-sense drugs in adequate quantities. Producing DNA and its derivatives is exceedingly difficult in anything but trace amounts, he said.

“It’s almost like going to the moon to consider making clinical kilograms of DNA,” said Timothy Geiser, senior scientist at Applied Biosystems. Because of the difficulty, the products that will be developed by ISIS and Applied Biosystems instead will be derived from substitutes called DNA analogs.

Geiser said his company expects to sign similar agreements with other anti-sense manufacturers.

Anti-sense drugs are “a brand-new field with no clear leader yet,”’ Geiser said. “But we are impressed with ISIS because Crooke and several of his people have experience in drug development. I wouldn’t say they have technology that gives them an exclusive edge, but in terms of smarts, they are way ahead of the pack.”