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In unique donation, UPMC gets biotech firm
Wednesday, February 18, 2004

A corporate donation that the University of Pittsburgh Medical Center received in May and valued yesterday at $30 million could eventually be worth a lot more in technologies that could lead to "personalized medicines."

The donation, from Philadelphia-based chemicals maker Rohm & Haas Co., came in the form of a small biotech enterprise, RheoGene Inc., whose discoveries included compounds that can regulate the amounts of various chemicals that animal or plant cells produce.

RheoGene, with 20 employees, remains headquartered in suburban Philadelphia but plans to open a laboratory this year in Pittsburgh.

Rohm spokeswoman Michele Chierici said RheoGene emerged from research and development work done at Rohm, but that its technologies -- which are aimed at clinical medical applications and use in agriculture -- didn't fit into Rohm's long-term business plans.

Rohm does no business health care and recently sold its agricultural chemicals business. Donating RheoGene provided a novel way for it to recover more value from its investment in the biotech company than selling it would have, said RheoGene's chief executive, Tom Tillett.

He said RheoGene's discoveries involve so-called "platform" technologies, which can be used to facilitate or enhance a broad spectrum of product developments. But potential buyers wanted to pay only for the value the technology would have had for particular uses.

By donating the company, Rohm will get tax benefits that help it recoup its investment and more of the potential applications of RheoGene's technologies, Tillet said.

"No one has ever done this before," he said. "Other corporations have donated intellectual property, but Rohm donated an operating company" giving away not only patents, but also equipment, lines of cells used in development, business agreements and government grants.

Tillet said RheoGene had revenue from a combination of commercial sales and government grants last year that totaled $100,000, and expected that number to climb to $2 million this year.

UPMC spokeswoman Michele Baum estimated the value of the Rohm's donation at $30 million.

There were numerous nonprofit institutions that would have been happy to receive such a donation, Tillet said. But he said he recommended UPMC because of research collaborations RheoGene already was beginning with Pitt's McGowan Institute for Regenerative Medicine and clinical collaborations it hopes to do with UPMC's Hillman Cancer Center.

In addition, he said, UPMC's experience in investing in biotech enterprises was an advantage.

Tillet said the RheoGene donation actually was made to UPMC in May. But the two held off disclosing it while waiting to see of they might be able to attract some outside funding to announce simultaneously. That funding didn't materialize.

Alan Russell, who heads Pitt's McGowan Institute, hailed RheoGene's technologies, saying they are "fundamental to realizing significant advances in areas such as personalized medicine, where treatments will be individually tailored" to particular patients.

Russell said a major value of RheoGene's technology was that it enables chemicals that cells produce to be regulated just as a rheostat electrical switch regulates the brightness of light from a chandelier.

For example, if a Parkinson's disease patient could be treated with nerve cells, RheoGene's regulator compounds would be able to control the amount of dopamine those cells produce, he said.

First published on February 18, 2004 at 12:00 am
Pamela Gaynor can be reached at pgaynor@post-gazette.com or 412-263-1613.
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