Cathie Anderson

UC Davis cancer researcher weighs risk of leaving campus against reward of cutting-edge startup

UC Davis researcher Michael Degregorio will receive a little more than $6 million in venture capital for his startup company – if he hits benchmarks set by investors. His company, ImmunoTess, aims to produce potent, targeted treatments that will boost cancer patients’ immune systems to help them fend off the disease.

The hard part, Degregorio told me, is making the decision to leave behind his job security, his grant-funded lab and the opportunity to continue growing his pension. He and his team work on the UC Davis School of Medicine campus in Sacramento.

“We have to hit certain milestones in the next year in order to get all that capital,” he said. “The investors, they don’t want me inside the University of California anymore because they think that their investment is more at risk if I have security.

“It kind of makes sense – Why would you invest in somebody who isn’t directly at risk themselves or at least sharing the risk?”

The opportunity is tantalizing to Degregorio because he has spent 30 years of his career studying the impact of Tamoxifen and other cancer-fighting treatments on the immune system. He and his UC Davis team say they have found a way to both fortify a patient’s immune system and then monitor it closely so that oncologists know the optimal time to provide chemotherapy to their patients.

“If we’re able to monitor the immune system while we’re giving the chemo or other treatments … then we have a chance of improving the impact of the treatment,” Degregorio said. “We have a class of drugs that modulate, modify and improve the immune system so that patients can have a better chance of utilizing their own immune system to treat their cancers. It’s like when passengers take these preventative flu treatments before they get on planes.”

Degregorio and longtime research associate Greg Wurz teamed up with molecular biologist Chiao-Jung Kao a few years ago. Degregorio said after that, they restructured studies, looked at data differently and had research breakthroughs that had the whole team asking: “Hey, how come we’re not looking at this class of drugs?”

Immunotherapy is one of the hottest areas of cancer research right now, Degregorio said, because it’s less toxic than many chemotherapies, and it has shown some advantages over those treatments. Essentially, researchers identify treatments that allow the body’s immune system to recognize cancerous cells, even those masquerading as normal, and direct white blood cells to destroy the cancer.

Investors have suggested that Degregorio, a Kelseyville native who has worked at UC Davis since 1995, locate ImmunoTess in the Bay Area, a hotbed for biotech companies. But he said he wants to remain in the Sacramento region where he feels workers are less likely to leave for the more expensive Bay Area. Plus, he said, the local hospital systems all have solid cancer treatment programs.

“My vision is that we can actually do something here that will invigorate every cancer center in the region, and that’s my goal,” he said. “I’m going to try to bridge all the different groups, including Sutter, Mercy, UC Davis, and try to formulate a little group to take our innovations and test them in their systems.”

Wurz and Kao are so certain that they’re onto something, Degregorio said, that they’re pressing him to leave the UC nest so they can start building their new company. Yet, it is not the greatest time to be launching a biotech company, Degregorio said.

After four years of remarkable growth in the biotech sector, investors began to lose confidence in biotech stocks last fall after allegations of profiteering surfaced about companies such as Rodelis Therapeutics and Turing Pharmaceuticals. Consequently, biotech stocks have fallen even harder than the broader market.

Fortunately, Degregorio said, he negotiated his funding with investors before the end of the year. The funding agreement is contingent on Degregorio deciding to fly without his UC safety net, he said, and he plans to make a decision by summer. The $6 million, he said, is a small part of what it will take to bring a drug to market, but it will allow his team to meet benchmarks that will eventually attract larger capital investments from Big Pharma.

“You have to have built respect and relationships and trust with big pharmaceutical companies,” Degregorio said. “And you have to be a little lucky.”

Degregorio definitely has contacts and experience when it comes to drug development. The German multinational Merck KGaA funded the research that led his team to focus on boosting and monitoring the immune system. At the time, they were studying an investigational cancer vaccine manufactured by Merck. They determined that the vaccine, known as tecemotide, could strengthen the immune system while reducing tumors in mice when paired with the anti-cancer drug cisplatin. Products being developed by ImmunoTess will further enhance the effectiveness of Merck’s vaccine, Degregorio said.

He already has invented two drugs that have won approval from the U.S. Food and Drug Administration. His latest was a product being marketed under the brand name Osphena. Approved in 2013, it is used by postmenopausal women who experience pain during sexual intercourse.

To ensure that ImmunoTess is on solid legal ground, Degregorio said, he has worked closely with the UC Davis Office of Research to secure the company’s intellectual property, filing the correct patents, securing licensing agreements and structuring their business operations. UC Davis holds the patent and a tiny interest in ImmunoTess.

If ever there was a moment when the 60-year-old Degegorio could leap into the commercial sector, this is it, he told me. Academia, however, offers him the freedom to study potential drug treatments without worrying about whether his research delivers dividends. In the private sector, he said, failure could mean that he loses a high-profile position at the company he founded.

Fortunately, he said, he can retire from UC Davis with a pension that pays as much as he earns now, plus he and his family would still receive medical benefits. So, if he gets canned at ImmunoTess, Degregorio said, the biggest loss he would suffer would be to his ego. When he starts to think about that, he said, he recalls cancer researcher William McGuire who recruited Degregorio to work at the the University of Texas Health Science Center in San Antonio.

“Three months after I get there, he goes scuba diving and has a heart attack and drowns,” said Degregorio, who keeps a copy of McGuire’s obit on the wall of his office. “This guy is world-renowned, but you know who was on the front page of the paper that day? The front page of the paper is that (then Spurs basketball star) David Robinson sprained his thumb. (McGuire) ends up on the classified page, so whenever I think too much of myself, I think, ‘I could end up in the classified section.’ ”

Cathie Anderson: 916-321-1193, @CathieA_SacBee