Trust me, I'm the CAT doctor

Ten years ago David Chiswell was running his new company from home, earning a modest £30,000 a year and celebrating the delivery of his first corporate car, a thrifty and solid diesel Montego. Today, he is the £155,000-a-year chief executive of that same company, Cambridge Antibody Technology (CAT), with £16m of shares in an operation that many see as the flagship of the burgeoning UK biotech industry.

CAT's technology, a world leader, centres on inventing and perfecting millions of different antibodies to form the basis of drugs to tackle myriad diseases. For the past fortnight, Dr Chiswell and his executive team have been fund-raising in America. The target this time is to raise £90m - downgraded this week from £100m because of "market conditions" - to pay for continuing developments and increasing staff numbers from 150 to 250.

"There are plenty of road shows, meetings every hour, no breaks, but it is a lot of fun,'' he says. "Now we have validation of what we do by the major companies, it is really just a race to expand the company.''

The evolution of CAT over the past decade has been even more dramatic than the material changes in Dr Chiswell's life, not least the replacement of that green Montego with a black BMW. CAT, which began with two employees and £750,000 capital, has seen its share price soar from £2 just six months ago, to a peak of almost £50 before dropping back to £19.65, valuing the company at £538m.

The company has garnered a glittering portfolio of commercial partners, including Pfizer, Eli Lilly, Searle, Wyeth-Ayerst, Astra Zeneca, and BASF Pharma. The latest and highly strategic recruit is Human Genome Sciences, the US gene sequencing company, which announced a $55m equity investment in CAT at the beginning of last month.

The research-to-riches story for CAT has its genesis in 1990. Dr Chiswell, 47, who has a PhD from Glasgow and worked on post-doctoral molecular biology research at the University of California in Los Angeles, had joined the health sciences company, Amersham International, nine years earlier, where he had been involved in product development and research management.

But changes were afoot. "Amersham was, in effect, closing the department and there was the chance to either continue with them doing something else or striking out, and setting up on our own,'' he says. With a friend, Dr Greg Winter, then working for the Medical Research Council in Cambridge, he co-founded CAT in early 1990. "We put together a package, although that's perhaps a grand word for what it actually was. There were initially two of us paid for by the company, myself and John McCafferty who is now our principal scientist.

"I worked from home in Buckinghamshire, while John worked in Greg's lab in Cambridge. For John it was a case of finding a desk each week by looking at the holiday list every Monday morning to see who wasn't around. In those days we were under-capitalised. We raised £750,000 to start up and that lasted us two to three years. My first salary was the same as my last at Amersham - £30,000, but I did have a company car.''

The key aim in those early days was to prove the viability of the technology on which the company's fortunes are based, the use of antibodies to treat disease. For decades, since the evolution of synthetic chemistry in the last century, therapeutic pharmaceuticals have been largely based on the idea of using man-made chemical compounds that were active against diseases. Big pharmaceutical firms stockpile huge libraries of synthetic compound formulae in the hope that one day they will find a disease they work against.

Antibody therapy is a different, natural approach to combating disease, harnessing or mimicking the body's own responses to infection. When the body is under threat, the immune system through the white blood cells begins to generate antibodies which kill off unwanted invaders such as viruses, bacteria and fungi.

Incoming material is identified as friend or foe by its molecular signature, the unique protein on the surface of the cells. When the antibody locks on to the invader it tries to get rid of it in a variety of ways. With the common cold, it will orchestrate responses that include a runny nose and cough, designed to flush the bugs out of the body. Inflammation and swelling are other weapons in its armoury of the killer cells. But sometimes the immune system does not work properly. It may not recognise an invader as a dangerous alien, or the antibody response it mounts may be too weak so the defences are easily overcome, as in some cancers. On other occasions it can overreact, as with rheumatoid arthritis where healthy tissue is destroyed.

The philosophy behind the CAT approach is that there is an antibody to just about everything, and that if it isn't present it can be added in the form of a drug. Just as every action has a reaction, so each disease-causing molecule has an antibody, and the secret of success for CAT is to mix and match antibodies with diseases.

The jewel in the CAT crown is the huge collection of antibodies its researchers have cloned over the past decade. It has amassed a biological library of 100 billion individual antibodies, by far the biggest collection in the world and 10 times as many as the average human has.

But although big in numbers, the library is small on volume. At the company's high- tech factory in Melbourn, near Cambridge, there are no overloaded benches with foaming test tubes and gantries of bubbling beakers. All the antibodies are neatly stored in freezers.

The simple but remarkable fact of molecular life is that a single copy of all 100 billion antibodies can be contained in one teardrop of colourless, odourless liquid. Inside each teardrop is a micro-version of the human immune system and somewhere among the 100 billion antibodies are treatments for nearly all the diseases known to man and probably quite a few still waiting to be discovered.

The key to a successful antibody library is its size and diversity. The larger thelibrary, the more chance it has of containing high-quality antibodies that will bind to any given target. A second key factor, and another area where CAT is a world leader, is speed of production of antibodies, by growing them in fast-replicating bacteria. No other antibody isolation technology can match the speed and capacity of CAT. As a bonus, it works with human antibodies rather than animal-based products, thus minimising the risks of side-effects.

CAT tests its arsenal of antibodies against molecules implicated in disease. The routine is to expose the target molecule to a test-tube of antibodies and stand back and see which of them stick to it. It's an ingenious approach which many believe will revolutionise medicine and the pharmaceutical industry over 20 years. Some believe one in three drugs will eventually be antibody-based, perhaps more.

"The library sits in tubes in the freeze," says Dr Chiswell. "When you decide on your target, you essentially coat it on the sides of a tube, and then you pour the library into the tube. You let it sit there for a bit.'' When the library is drained out of the tube, the antibodies which recognised that particular molecule as an enemy will be left sticking to it.

These antibodies are recovered and their genetic code added to the DNA of bacteria. As the cells of bacteria grow and multiply, each additional cell grows a cloned antibody. The bacteria works like a super- efficient biological factory giving birth to a huge number of antibodies. After further tests, these antibodies, the natural enemies of the bug, may form the basis of a new drug treatment for that disease.

Dr Chiswell says proving the technology in the early days wasn't difficult. "It took off on a technical basis almost immediately, Greg had already shown in his lab how we could make large lines of antibodies. Probably the first experiment John did formed the basis of how we could get the antibodies out of those long lines. What we developed was a new way of making antibodies. It means we can isolate them very quickly, literally within a day or two and faster than anyone else.''

But it was three years after the start of the CAT, in 1993, before this became routine in the lab. That year was a turning point for the fledgling company. Its researchers published their isolation technology successes in Nature, and the next round of funding was raised. A year later, a deal with BSF Pharma, part of Knol Pharmaceuticals, was struck, and in 1996, Genentech, one of the first and most successful American biotechs came on board.

Three years ago, the company raised £10m to grow the operation to flotation and was listed on the London Stock Exchange with a share price of £5 and capitalisation of £100m. At the time there was no product in the pipeline. Now there are four products in clinical development, with many more waiting in the wings.

Pride of place as lead product and the drug likely to be the first to come to market is D2E7, an antibody to rheumatoid arthritis. With more than one million people in Europe and North America suffering with severe forms of the disease, the potential market is huge.

Working with partner BASF Pharma - and with locally based Eisai in Japan - the product could come to market within two years. It is now in phase three, human trials, and early results show eight out of 10 patients achieve clinically significant responses to the drug. Results from studies involving 470 patients also show it is safe and effective.

The drug works by bringing under control a rogue protein called TNF that causes the inflammation in rheumatoid arthritis as a result of an over-reaction by the immune system. The antibody developed by CAT acts against TNF to stop it destroying healthy tissue.

"It will compete with other drugs, but with medium-successful marketing of our own drug by our partner BSF you would expect it to sellin the region of £1bn [a year]," says Dr Chiswell. "If it was really successful it could be worth £2bn.''

Of the three other drugs in the clinical pipeline, CAT 152 is in its phase two trials. It works against a protein called TGF and is designed to prevent scarring after glaucoma surgery. Two more drugs, both at the phase one stage of clinical development, are directed at auto-immune disease, including Crohn's disease, and fibrosis or scarring.

One of the key developments this year is the technology-sharing deal with Human Genome Sciences. US-based HGS is a world leader in gene sequencing which means it can find the protein targets at which CAT can aim its antibodies. Most diseases are caused by some form of malfunctioning of proteins within the body.

Sequencing the human genome will identify all the genes and, more importantly, the proteins associated with them. Each of those proteins can be targeted by CAT's designer-antibodies to correct malfunctioning. On paper at least, and in scientific terms, it appears to be an ideal match.

CAT will have access to HGS's sequencing and the right to select up to 24 proteins found by HGS for the basis for the pre-clinical development of therapies. There is also an exclusive right to develop up to six products, and to co-develop 18.

HGS, which is putting in an up-front payment of $67m, including a $55m equity purchase, as well as licensing fees, milestones and royalties, also gets the right to develop CAT antibodies.

It is not difficult to see the potential in the antibody business. There are probably about 12,000 proteins on the surface of cells that could be targeted by antibodies, and as many as 1,500 of them could be used as drug targets for treating disease.

Although CAT will mostly design and develop new therapies and hand them to partners for further development and marketing, it may take some products further down the line, reaping greater rewards.

"The majority of drugs will be developed by partners, but we will do a few ourselves. The general rule of thumb in this industry is that the more risks you take, the bigger the rewards,'' says Dr Chiswell. "Statistics show that for every 10 products that go into clinical trials, one comes out at the end as a market product, so there can be a lot of risk.

"We feel we have been very successful but there is still a lot of work between now and becoming the shining example, a role model for everyone.''

Where does he see CAT in five years? "We want to have products on sale through our partners. We could be profitable by then and we could have a drug pipeline approaching 40 or maybe 50 antibodies at some stage of development. By then we will have shown we can populate a large pipeline.

"Last year we spent £16m and the cash flow out was £11m. Next year we will probably spend almost twice that but the cash flow out may be less.

"Our next goal is to get to cash break-even which is likely to be associated with the launch of our first drug, probably for rheumatoid arthritis in 2002. Sustainable profits will be probably come with the launch of the second drug.''

Last year's loss before tax was £12.7m in the 12 months to the end of September, up from £6.9m in 1998. Cash and liquid resources at the end of January were £29.8m. Dr Chiswell won't be drawn on predictions for products, or get involved in the big numbers game of the pharmaceutical industry. He is, says a colleague, a realist - the antibody of hype.

But he is canny too, and he has vision. He may have dumped the Montego on the way to greatness, but not a single CAT share has left his ownership since the day the company was founded.