November 2001

Neuronautics seeks Alzheimer’s cure By Jeff Meredith

In the United States it is estimated that 4 million people suffer from Alzheimer's Disease (AD), a debilitating neurodegenerative condition marked by the death of nerve cells in the brain and the loss of memory and learning functions. Common in older people - ten percent of adults over 65 develop AD, as well as 50 percent of those over 85 - it could become an even bigger problem as the baby boomers inch toward retirement. No one knows what causes the disease and there is no cure.

For Neuronautics, an Evanston company operating out of Northwestern's business incubation facility (managed by the University's Office of Strategic Initiatives), this provides both motivation and an opportunity to enter a multibillion dollar marketplace. Co-founded by Lester Binder, a professor of cell and molecular biology at the Northwestern University Medical School, Neuronautics aims to halt or reverse Alzheimer's progress and to develop diagnostic tests to help identify patients before they become ill.

Binder believes the disease is caused by a substance called tau protein, which can collect and form neurofibrillary tangles, capable of killing brain cells. Autopsies of Alzheimer’s' victims commonly reveal both neuritic plaques and these tangled bundles of fibers. While it is not clear what causes these changes in brain tissue, Sam Khatami, co-founder and vice president of operations, notes that there is significant evidence that tangles play a role.

"It's been shown that you can actually artificially form the tangles and kill the cells, " said Khatami.

He says the company's goal is to intervene and diagnose the condition early. In testing thousands of drug compounds per day, Neuronautics is looking for something that can prevent tau polymerization, meaning the formation of tangles. Khatami said the company is also looking at ways to tag tangles, or provide a brain image using compounds that

bind to the structures. This is the company's diagnostic intent, which would leverage neuroimaging applications like PET scans.

"We feel until we make some significant progress in therapeutics, diagnostics may not have much meaning," said Khatami. "But it's (diagnostics) actually a much bigger market than therapeutic: once you have the therapeutic, anybody 60 to 65 would want to get tested."

Neuronautics is currently working with two groups on animal models that will help evaluate the potency of certain drug compounds. The University of Massachusetts is providing access to a unique system using lampreys and a mouse model is also being sought with another partner.

Khatami's hope is for clinical testing in a year or two. But he added, "You can't get there with $600,000." That's all the company has gone through since its origin in 1998, and it currently has 3 employees. Neuronautics has raised $1.1 million to date and is seeking at least $1 million in private equity funding. This money will help accelerate animal testing and Khatami mentioned the possibility of bringing a salaried CEO on board - as it currently stands, much of the company's team is in academia and cannot fully participate with the company. Binder is a professor, as is Ferid Murad, a director, investor and board member known for winning the 1998 Nobel Prize in medicine.

Murad, who teaches at the University of Texas, was recently on a fundraising mission for the company in China. The capital picture is especially difficult, but Neuronautics has succeeded raising some funding from a variety of public and private sources. The company received a $100,000 grant from the NIH, has received a $500,000 investment from a Japanese pharmaceutical company, Fujisawa, and another $300,000 from private investors was matched by the Illinois Development Finance Authority earlier this year.

But Khatami feels a little overwhelmed. "I haven't had a vacation in so long," he said. "I enjoy what I do, but I feel like I am so committed to this." Khatami labors away for long hours in the lab testing drugs, but his mind also turns to grant proposals and patents. He doesn't have a secretary or communications team, he routinely works on holidays. But he's still finding creative ways to move forward with his company

as evidenced by the $400,000 worth of equipment in his lab which only cost him $10,000 to accumulate for use.

And at the heart of his quest, he finds meaning.

"It's a good cause," said Khatami. "It's great to come up with something to slow down the progress of this disease."