It sounds like something out of the old sci-fi flick “Fantastic Voyage,” but Solgene Therapeutics Inc. thinks it has a better way to treat such problems as diabetes.
Rather than merely insert insulin-secreting cells into a diabetic’s body, and risk having those foreign cells destroyed by the patient’s immune system, Solgene first encapsulates each of those cells in miniature protective vessels.
Those vessels, made out of ceramic, are perforated to allow nutrients to flow in and insulin to flow out to the patient’s bloodstream. Luckily, human immune cells (which would kill the foreign insulin-secreting cells) are larger than the nutrients or insulin, so the holes in the ceramic vessels are large enough to allow the nutrients in and insulin out, but small enough to keep the killer immune cells at bay.
“Live-cell encapsulation entered the research literature in the 1970s,” said Jim Lucas, spokesman for Westlake Village-based Solgene. “The problem has been in developing a vessel that would adequately protect the encapsulated cells, while letting cell-produced hormones out.”
Solgene has relied heavily on the pioneering work of majority shareholder Edmund Pope, a UCLA Ph.D. in material sciences who developed patents for the ceramic vessels, and transferred those patents to Solgene.
In trials with mice, the small ceramic vessels have worked in suppressing diabetes, said Lucas.
The company has attracted seed venture money, including some from a manager at Brentwood-based Barrington Associates Inc., better known for its M & A; work. But the Barrington manager was intrigued enough by Solgene to take a stab at the venture side of the fence. Dollar amounts were not revealed.
The Solgene developments are the latest indication that there may be a small biotech boom brewing for Los Angeles. Over in Santa Monica, a company named Vivorx Inc. is trying something along the same lines as Solgene, making this region something of a leader in the cell-encapsulation field. Another company in Irvine is working in the area as well. The other companies are using organic polymers, however, not ceramics.
Aerospace bets
In quick succession, Century City-based Tennenbaum & Partners LLC (as in Michael Tennenbaum, formerly managing director at Bear Stearns & Co.) upped its stake in aerospace outfit Whittaker Corp. to 6.2 percent, followed by Beverly Hills-based Canyon Capital Advisers LLC a day later upping its stake to 19 percent. Thus, within the span of 48 hours, 25.2 percent of Simi Valley-based Whittaker’s stock became concentrated in West Los Angeles.
Canyon Capital Managing Director Joshua Friedman, Tennenbaum and Whittaker CEO Joseph Alibrandi last week all said it’s just passive investing no restructurings, new directions for the company, or changes in board seats are envisioned, which might normally follow such sudden, heavy investment in a stock.
“They (Canyon Capital and Tennenbaum) are clearly in for investment purposes,” said Alibrandi.
Friedman explained his reason for investing in Whittaker this way: “It is a real value equity.”
Where the bucks are
As the Business Journal reported last week, the number of L.A.-area companies filing for initial public stock offerings has dropped off dramatically in recent months. Yet while L.A. executives may be cooling to IPOs, they haven’t lost their appetite for other instruments to raise capital on Wall Street. Bonds, secondary stock offerings and even preferred stock offerings are much larger than IPOs, at least for Los Angeles-based underwritings.
In the second quarter, four Los Angeles-area companies issued a combined $206 million in initial public offerings, but 15 local companies issued $2.08 billion in secondary offerings. One company (Occidental Petroleum Corp.) issued $450 million in preferred stock, and 29 local companies raised $2.42 billion in bonds.
Total funds raised in public capital markets during the second quarter came to a hefty $5.16 billion, according to New York-based financial printing house Bowne & Co. That’s nearly twice the $2.77 billion raised by Los Angeles-based publicly held companies in the year-earlier quarter.
Quick takes
John Merriman, formerly head of equity research at Beverly Hills brokerage Dabney Resnick (now Imperial Capital LLC), then briefly with Seidler Amdec Securities Inc. in downtown, is up in San Francisco now, with brokerage Van Kasper & Co. Fred Roberts of Brentwood-based F.M. Roberts & Co. Inc. in mid-July completed a deal in which Georgia-based optometrist chain National Vision Associates Inc. will pay a whopping 49 times earnings ($77 million) to buy Tempe, Ariz.-based New West Eyeworks Inc., a similar chain, and Roberts’ client. Roberts pointed out the P/E multiple is far higher than the norm for acquisitions in the eyewear industry. New York powerhouse law firm Skadden Arps Slate Meagher & Flom set up shop in Los Angeles in the early 1980s, and expanded to about 120 lawyers with the rise of Drexel Burnham Lambert, its big client. When Drexel and the junk-bond market cratered in the early 1990s, along with the Los Angeles economy, Skadden shrank to about 90 lawyers. Now, the firm has 130-plus encamped here, and is looking for new space, as its lease expires in two years. Rand April, managing partner, hinted that a move from downtown is a possibility.
Contributing reporter Benjamin Mark Cole writes about the local investment community for the Los Angeles Business Journal. His e-mail address is [email protected].
