The riddle of Sphinx.

• Author: Perkins, David
• Position: Sphinx Biotechnology Corp. - Company profile

THE RIDDLE OF SPHINX

How town-gown venture capital is moving medical technology from the lab to the marketplace.

For a year and a half, they had met monthly for breakfast at the Sheraton Imperial Plaza in Durham--always at the first table on the left in the dining room. Robert Bell, one of the world's leading biochemists, had made a discovery that he thought could beget a family of important drugs, including treatments for diabetes, psoriasis and some forms of cancer. Frustrated with sluggish R&D at the big pharmaceutical firms, he was thinking about going commercial himself. Enterprising professors at Stanford, Harvard and MIT had proved it could be done without leaving the grove of academia.

Dennis Dougherty of Intersouth Partners, a Durham venture-capital firm, liked Bell. He was impressed with his ideas. But Dougherty said the marketplace would pose some hard questions: How many products could Bell spin off, how soon and at what cost? When could he have something proven and tangible?

Bell, who knew as little about venture finance as Dougherty knew about genetic engineering, was at a loss at first. But, as 1986 moved into 1987, Bell learned to speak Dougherty's language. An early product to satisfy investors? How about an ointment to cure psoriasis, which, using existing medications, can be controlled but not cured? Bell said a cream would clear the Food and Drug Administration faster than other drugs. Time line: three to five years. Cost: $2.5 million for the first year's work.

"I could see the light go on in Bob's mind," Dougherty says. "He had stopped thinking just as a scientist and was thinking about markets and FDA approval processes and money requirements. We realized we had a chance to start a company because the founder had some savvy. Bob had that focused vision you look for in an entrepreneur."

What both Bell and Dougherty were aiming at and what others had hoped would one day happen in North Carolina is a repeat of the Silicon Valley phenomenon--the speedy transfer of technology from the lab to the marketplace.

Although Sphinx Biotechnology Corp.'s first product--if one emerges--is still years away, the start-up company based on Bell's research has already raised $2.25 million from four venture firms, making it the largest seed-stage investment ever in the Research Triangle, according to Dougherty. But the long road to the marketplace underlines how hard it is to move from premise to proof to product.

"I don't think it could have happened here four years ago," Dougherty says. "Intersouth Partners wouldn't have been here to lead it, the venture community wouldn't have the respect for the Triangle, and the folks at Duke who were such key catalysts wouldn't have been as knowledgeable" about transferring technology to the marketplace.

Installed in rented labs at Research Triangle Park and in the Liggett & Myers Research Laboratories on Main Street in Durham -- a fitting symbol of new industry emerging from old -- Sphinx's researchers, led by Bell's former Duke colleague Carson Loomis, are trying to make the leap from basic science to marketable products. There are no guarantees that they will ever sell a penny's worth of anything. And, even by the most optimistic projections, it will take 10 to 15 years to bring a cancer treatment to market. More start-up capital will be required to get there -- perhaps as much as $50 million.

But Sphinx's investors are willing to gamble that Bell's research will be as epoch-making and profitable as the 1970s-era recombinant-DNA research that led to...