Biotech seeks to shake off its past

Attracted by Seattle's deep reservoir of expertise in immunology and cancer, several small public biotech companies have moved their headquarters here in hopes of raising fresh capital and making a new start.

None carries as much baggage, or as little conclusive science, as the latest arrival, TapImmune.

It's the surviving shell of GeneMax, which gained notoriety a few years ago as a penny stock that was aggressively touted by Canadian promoters and fought a long legal battle with short sellers.

Those promoters were led by G. Brent Pierce. Lately he's been in the news for hyping the failed local biotech CellCyte and for being ordered by a Securities and Exchange Commission administrative judge to surrender $2 million from concealed sales of stock in an oil-and-gas company called Lexington Resources. Earlier, he and his associates steered GeneMax as it rose to $10 and then collapsed.

This summer the renamed company relocated from Vancouver, B.C., to Bellevue. A quarterly report last month says, "We are now poised to relaunch our efforts."

Its new executive chairman, Issaquah resident Glynn Wilson, says Pierce has "no involvement with the company, no influence" and just a "bare bones" number of shares.

"You have to look at the restructured company on it own merits," he says, citing changes in management and finances.

He adds: "The technology has a lot of life and potential, and that's been recognized by investors we're talking to."

But the University of BritishColumbia, where TapImmune/GeneMax got its technology, pretty much dismisses the company's prospects.

"The technology goes back into the '90s, and in biotech you just don't have that kind of shelf life," says Angus Livingstone, managing director of UBC's University-Industry Liaison Office. "It's hard for us to see a viable business model with it going forward."

Because of the company's history and finances, says Livingstone, "quite frankly, we wanted to distance UBC's name from it."

UBC turned over all the associated intellectual property in return for partial payment of what it was owed, because "we don't want to have an ongoing relationship," he says.

That's not how TapImmune portrays things.

It says the latest patents acquired from UBC "add depth to our pipeline" of technology to improve the potency of vaccines for cancer or infectious diseases.

It names well-known companies such as Dendreon and Cell GeneSys as potential competitors. "The immunotherapy sector is buoyant right now, primarily because of Dendreon," says Wilson, referring to the Seattle biotech that's readying a final FDA application on its prostate-cancer drug.

But unlike those companies, TapImmune hasn't launched a single clinical trial in its 10-year existence.

UBC researcher Wilfred Jefferies, whose team made the discoveries now owned by TapImmune, but is no longer associated with the company, says "clinical trials to test these approaches are certainly long overdue."

Wilson, whose TapImmune résumé shows executive stints at SmithKline Beecham Pharmaceuticals and Ciba-Geigy, says the company couldn't do testing because financially it was "treading water for a couple of years at least."

Now, he says, new money is being raised after a management makeover and debt restructuring.

TapImmune has been slow to detail some of those changes. An Aug. 27 regulatory filing listed several management changes it says happened July 1:

GeneMax co-founder Alan P. Lindsay, TapImmune's chairman until earlier this year, resigned as a board member. Chief financial officer Patrick A. McGowan was replaced. Denis Corin stepped down as TapImmune CEO, but remains president.

Then, in late July, TapImmune issued 33.8 million shares to erase $3.2 million in debt. The company hasn't reported who got that stock, which amounts to about 95 percent of TapImmune's outstanding shares.

Wilson says the stock went to insiders owed money: "a number of the original investors," including Lindsay, as well as current management, and advisory firm Dusford Overseas Investments that's helping with the restructuring.

Upon moving to Seattle, biotechnology companies such as AVI BioPharma and Oncothyreon (formerly Biomira) have raised their profile — and some serious money. AVI recently sold $30 million in stock; Oncothyreon drew $13 million from a partnership with Merck.

But those companies had clinical results that showed promise. Wilson acknowledges it will be the end of 2010 before TapImmune could even finish the basic preclinical work needed to embark on the years-long process of testing its technology in patients.

Yet TapImmune is trading in the over-the-counter market at around $1.10 a share, giving it a market capitalization of about $40 million.

That's comparable to last spring's market cap of OncoGenex, another biotech that moved here (by merging with Sonus Pharmaceuticals). Since then OncoGenex reported some impressive clinical trial results and raised a fresh $9.5 million this summer, news that lifted its market value more than fivefold.

TapImmune, which operates out of the Regus temporary-office center in downtown Bellevue, has little but Wilson's vow that he will turn it into "a well-established company with top-class people."

Comments? Send them

to Rami Grunbaum: rgrunbaum@-

seattletimes.com or 206-464-8541

Information in this article, originally published September 6, 2009, was corrected September 11, 2009. A previous version of this story incorrectly stated that market capitalization of TapImmune is comparable to that of another local biotech, OncoGenex, at about $40 million. OncoGenex's market cap was about $40 million before news of clinical trial successes last May lifted its stock price more than fivefold.