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New funding has Semafore set for trials: Local pharmaceutical company to test cancer drug on humans

January 22, 2007

Hours before the underdog Florida Gators were crowned college football champions, Joseph Garlich wore a blue shirt to support the team as it prepared to upset the Ohio State University Buckeyes.

Garlich, who spent two years as a post-doctoral fellow at the University of Florida's School of Pharmacy, is equally optimistic his biotech firm is on the verge of achieving a milestone of its own.

The northwest-side Semafore Pharmaceuticals Inc. should launch within a few weeks human trials of its drug that targets prostate, brain, breast and ovarian cancers. The $9.5 million in equity financing it recently raised from individual, or angel, investors will fund the trials.

Getting Federal Drug Administration approval to start a process that could take up to five years is "huge," said Garlich, 50, Semafore's president and chief scientist. He cofounded the company in 2000 as ComChem Technologies.

Though still in startup phase, Semafore's progress is encouraging considering its struggles to attract financing. Venture capitalists largely have declined to invest in its nascent technology. One that has is the locally based Twilight Venture Partners LLC.

"We knew it was very risky, but we quickly recognized the importance," said Ron Henriksen, Twilight's chief investment officer who doubles as Semafore's board chairman. "Maybe we recognized that earlier than other VCs."

Likewise, the previous state administration thrice rejected its bid for 21st Century Research and Technology Fund money. Semafore ultimately landed a $2.27 million grant from the fund early last year.

Other grants include $1 million from the Multiple Myeloma Research Foundation in Norwalk, Conn., and $535,000 from the Cancer Treatment Research Foundation in suburban Chicago. The MMRF funds will be used to conduct a separate trial to evaluate the drug's effectiveness on multiple myeloma, an incurable cancer of the blood plasma cell.

Semafore's technology

What may separate Semafore from other cancer researchers is its novel approach to inhibiting tumor growth. Cancerous cells multiply by receiving nutrients from nearby blood vessels, a process called angiogenesis. Semafore's drug inhibits the activation of a particular cell receptor called the PI3K pathway. The pathway is the one aggressive cancers often use to cause a tumor to grow, so blocking that receptor could slow or stop the process.

"It's a broad-edge sword that cuts across cancer progression," Garlich said. "Nobody else has that inhibitor. We hope and believe we will be the first."

The initial trial phase, which normally takes about a year and involves drug safety, determines the maximum dose cancer patients can tolerate.

The second stage also lasts about a year and is used to evaluate the efficacy, or the ability to produce a desired effect, in patients. The final step is the most expensive and time-consuming, usually lasting two to three years and involving a larger number of subjects.

That level is the most difficult, Garlich said, because the percentage of cancer patients who are willing or able to participate, after conventional treatment has failed, is "abysmally low."

Trials will be conducted at a hospital in Scottsdale, Ariz., and the Indiana University Cancer Center.

Starting the company

Garlich has taken a drug to trial before. The University of Missouri graduate who earned a doctorate in organic chemistry discovered medicinal chemistry while at the University of Florida. Following his fellowship there, he landed a job in 1984 as a drug researcher at the Dow Chemical Co. in Freeport, Texas. He transferred to Dow Agro-Sciences in Indianapolis in 1995 and stayed until 2000.

His tenure at Dow produced 23 patents and one drug, Quadramet, a treatment for metastatic bone cancer pain. Another one of his creations that targeted hematological malignancies never made it out of phase three trials.

In 2000, amid the fruits of a new economy, Garlich left Dow to pursue his dream of operating his own company. He never envisioned, however, that he and his wife would need to use their home for collateral on a loan to purchase pricey lab equipment after receiving lukewarm responses from lenders. About $450,000 in early grants allowed him to hire a few employ- ees. Semafore now has 10.

The business model for the former ComChem Technologies, which Garlich co-founded with Barry Dreikorn, was to provide contract chemistry services for Dow and Eli Lilly and Co., and using the lab facilities to develop new ideas for drugs.

The recession prevented them from completing their plan. But as luck would have it, Garlich met Dr. Donald Durden, then an Indiana University Medical School researcher now at Emory University in Atlanta.

Durden's work involved identifying how receptors in a cell's wall react to various chemicals and become cancerous. Blocking those receptors could cause cells to remain normal. His patents are licensed to Semafore, although Garlich has added another patent to his list since starting the company.

"He kept telling me this would be the next big thing in oncology," Garlich recalled of Durden, "and I listened to him."

He changed the company name in January 2004 to Semafore, which refers to nautical flag signaling. It was selected because it reflects the company's work with key cell signaling pathways to develop cancer treatments.

Securing lab space

In the meantime, Semafore had set up shop on Georgetown Road near West 86th Street, in a 4,500-square-foot building barely noticeable next to the hulking Indianapolis Star printing plant. Once inside, though, one is surrounded by impressive laboratory equipment, including 16 fume hoods that protect users from inhaling chemicals by constantly pulling air out of the building.

A local distributor of the hoods referred Garlich, during his quest for space, to John Sima. He owned the building and from it operated Simalabs International, a chemistry-based analytical company for the environmental industry.

With one lab available, Sima agreed to incubate Semafore in exchange for an equity stake. That relationship, and Semafore's escalating potential, caused Sima in 2003 to sell his company, which had 90 employees in four states. He currently serves as Semafore's interim CEO.

"That was a good thing for [me]," Sima said. "Watching the company mature over two years from a concept to that of becoming somewhat reality was intriguing to me."

Sima succeeds Henriksen of Twilight, who now chairs Semafore's board of directors. Whether he will be named permanent CEO will be determined during the next three months as the company evaluates candidates.

Regardless of who assumes leadership, Bill Hunt, former ArvinMeritor CEO and chairman of the IU initiative Advancing Indiana, has no qualms about supporting the company financially. He's among the early-stage angel investors Semafore has relied upon for much of its financing.

"Whether we hit a home run, triple, double or single, we don't know," Hunt said. "But being involved in a [possible] cure for cancer and making money at the same time is a pretty nice combination."
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