Lest anyone forget that before the Internet there were investment booms and busts in promising technologies, consider the tale of Howard Weiner, a Harvard neurologist and researcher who set out in the early 1980s to find a cure for multiple sclerosis.
By Jenny Anderson
July 2001
Institutional Investor Magazine
Lest anyone forget that before the Internet there were investment booms and busts in promising technologies, consider the tale of Howard Weiner, a Harvard neurologist and researcher who set out in the early 1980s to find a cure for multiple sclerosis. He didn’t. But the story of his journey, which included the creation and collapse of his biotechnology company, AutoImmune Technologies, is a fascinating one, chronicled by Susan Quinn in Human Trials: Scientists, Investors and Patients in the Quest for a Cure.
Weiner believed that a cure for MS could be found in an oral treatment that addressed inflammation of the myelin, the covering around nerve cells in the brain and spinal cord that is attacked in MS. The proposed treatment was a dosage of myelin itself, which Weiner theorized would prompt the body to produce antibodies to fight the disease.
In 1986 Weiner and his team treated a group of mice with myelin protein and then injected them with the equivalent of MS for mice. The mice did not develop the disease. Two years later Weiner launched AutoImmune Technologies with $2.5 million from two venture capitalists, CW Group co-founders Walter Channing and Barry Weinberg, whom he had met through a venture advisory panel.
Soon after, AutoImmune conducted a one-year clinical trial with 30 MS patients. Not even the subjects’ doctors knew whether they were taking myelin or a placebo. The results were encouraging: Of the 15 people who took the oral protein, only six had an attack of MS, compared with 12 of the 15 who took the placebo.
Though these results were not statistically significant, Weiner and his team at AutoImmune were euphoric. They hired Hambrecht & Quist and Montgomery Securities, which in January 1993 raised $39 million in an IPO. The stock went public at 13 - the top of its range - and soon reached a high of 18.
The company quickly moved to a Phase III clinical trial in which 500 MS patients received treatment over a two-year period. These results were devastating, showing no difference between AutoImmune’s drug, named Myloral, and the placebo.
AutoImmune’s prospects, and its stock, went steadily downhill after the Phase III results were released in early 1997; eventually, the stock hit a low of 40 cents a share. The company still exists - it traded at $2.75 last month - and research on its patented ideas continues alongside clinical trials for diabetes prevention and treatment for rheumatoid arthritis.
The drug business “is sort of like prospecting,” Fred Bader, AutoImmune’s head of operations, told the author. “You dig a hole in the ground, and you don’t see anything. You keep digging, and you may be two inches away from a vein of gold and walk away.”
Although retail investors, as usual, suffered serious losses, AutoImmune’s venture capitalists, who bought at 3 and sold at 16, made good money on the deal. Still, the saga left them leery of biotech investing. “To be in the venture capital business, you need to be optimistic,” CW Group’s Weinberg told Quinn. “But I think we were overly optimistic. The advent of these biotechnology tools [has not reduced] either the risk, the time or the cost of bringing a product to market.”
Quinn, the author of biographies of psychiatrist Karen Horney and scientist Marie Curie, does an impressive job of explaining complicated science and the politics of lab research. A fine writer, she brings her characters to life: Weiner, who records in his journal and on video the highs and lows of pursuing his dream to find a cure for MS; Karyn, a young mother slowly being crippled by MS, who participates in the Phase III clinical trial while trying to care for her daughter and keep up her work as an administrative manager at Northrop Grumman Laboratories. Quinn also introduces the reader to the researchers who toil in Weiner’s lab, including Gabriela Garcia, a Brazilian with a fondness for Tom Waits lyrics, and Anthony Slavin, a homesick Australian postdoc who stays in the U.S. because of the enormous resources available to him.
The book is lighter on finance than on science, and Quinn might have spent more time considering one of the difficult questions she presents: Is society best served when profit-minded venture capitalists finance something as important - and uncertain - as a major biotech advance? Or should research be funded by institutions like the National Institutes of Health and private universities until a technology’s commercial prospects are better known?
As Weiner remarks in these pages, “Success in science is going from one failure to another without losing enthusiasm.” Penicillin and insulin failed on their first clinical runs, he points out. He is still searching for a cure for MS.
