Entrepreneurs dream of meeting rich backer

September 25, 1994|By John E. Woodruff | John E. Woodruff,Sun Staff Writer

Peter Andrulis Jr., dreams of restoring the reputation, or at least the usefulness, of Thalidomide, the drug that became synonymous with birth defects and gigantic lawsuits when it was given to pregnant women for morning sickness in the late 1950s.

He has patented Thalidomide variations and treatments that he believes can treat multiple sclerosis, some complications of AIDS, some forms of cancer and a range of other previously untreatable or hard-to-treat diseases.

Now he needs a few tens of millions of dollars for the costly tests that would be required to get Food and Drug Administration approval of each treatment.

His vision has drawn him into a milieu that is filled with dreamers -- hundreds of them competing against each other for money or (( even for just a few minutes of attention -- and brings them face-to-face with some of the world's most case-hardened realists, venture capitalists.

Despite more than a year without a score, Mr. Andrulis' eyes glisten and his voice intensifies as he warms to his subject.

"This is the rare case where the economics works together with the potential of the drug. A new drug would require $250 million in testing, but for Thalidomide each treatment could be tested for only about $10 million or $15 million, because years of the FDA's research on toxicity and other effects of Thalidomide have already been done," so that what is left to do is to test the effectiveness and safety of each specific treatment, he said.

Last week Mr. Andrulis paid $45 for a pasta buffet and the chance to listen to a panel of five investors, along with some 90 other people who also have dreams.

People such as Vo Tran, who happened to get to the right rooftop near Saigon's Tan Son Nhut Airport in 1975, caught a helicopter out as U.S. forces fled the city, majored in computer science at American University and today is president of Rockville-based Quyen Systems. He said his 10-employee company needs "about $1 million for marketing" of an asset-management software package that he and his staff designed.

"Maybe half of these people have ideas that could become viable businesses if they could get the capital together, but nowhere near that many will ever find the money," said Charles O. Heller, director of the University of Maryland's Dingman Center for Entrepreneurship, which sponsored the meeting.

The good news, Mr. Heller said, is that venture capitalists are discovering Maryland as a place to invest. Several have recently opened offices in the area, and emerging growth companies with exceptional profit potential now have a fighting chance to find angels, he said.

But like Mr. Heller, venture capitalists warn that only the few will be chosen.

"We think there are more deals here than capital available to fund them," said Jeffrey Davison, vice president of Triad Investors, which recently opened a Washington, D.C., office to serve the Mid-Atlantic area.

"For us to invest, your company should have a track record of perhaps $5 million a year in sales and the potential to grow in a year or two to perhaps $50-150 million," said Thomas A. Smith, general partner in Edison Venture Fund.

Mr. Andrulis organized his Beltsville-based company, Andrulis Pharmaceuticals Inc., in 1990 to exploit properties of Thalidomide that he learned about while an earlier company of his, Andrulis Research Corp., had a contract to test the drug for use against side effects of leprosy.

Four years later, Mr. Andrulis has not had much luck finding investors who want in on Thalidomide.

Wherever he goes, he finds himself fighting to overcome memories of Thalidomide's nightmare years decades ago. He's heard the objections so often that he has a speech ready.

"The pronounced effects were on the fetus, not on the adult. For men, and for women who are not pregnant, that does not happen. There are side effects on the nervous system, but those are well studied, predictable and controllable," he said.

While he has not found an investor, his companies have picked up $3 million in funding from the National Institutes of Health (NIH) to study Thalidomide for use against aphthous ulcers, an unusual but unbearably painful complication of AIDS that, in effect, corrodes the lining of the mouth. They are also providing the drug, as the only FDA-licensed American maker, for NIH-sponsored studies on uses against asbestosis and inflammatory bowel disease.

"One day, what I believe is actually going to happen is that we are going to find some wealthy relative of someone who lived because of one of these Thalidomide trials, and that relative is going to be very moved and will see the potential and want to invest in advancing this work," he said.

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