Executives nurture a startup

Potential for tests draws GSK alums

Dan Mitchell took the job over a beer at the Hibernian Restaurant & Irish Pub in downtown Raleigh.

The GlaxoSmithKline retiree joined Trana Discovery, a fledgling Cary company that has developed a test to screen chemical libraries and detect new treatments for infectious diseases such as malaria, HIV and AIDS and bacterial infections resistant to antibiotics.

Trana has been languishing in a virtual state for about five years. Its founders, N.C. State University scientists Winnell Newman and Dick Guenther, haven't been able to attract investors to get the company off the ground.

But Trana is about to get a boost.

The company plans to announce today that five former GSK executives have agreed to serve as its management team. Company founders want to use the executives' experience and connections to expand the business and attract outside investing.

"I couldn't say no," Mitchell said.

Neither could Michael Gallucci, Ron Stanton and Ed Gallagher, three other GSK retirees with expertise in infectious diseases. Steve Peterson, the man who recruited them, is a former co-worker whose judgment they trusted.

They all met about 20 years ago at Glaxo, a predecessor company of GSK in Research Triangle Park that employed just a few hundred in the 1980s. Careers and mergers took them to different places in the growing company, but they stayed in touch.

Now, the crew is back together, and they're taking Trana under their wing.

"When Glaxo was small, it was very reminiscent of what we're doing with Trana," Peterson said. "We didn't mind working on weekends and extra hours at night."

Trana is the latest Triangle startup benefiting from having large drug makers as neighbors. The chief executive officers of Oriel Therapeutics and Serenex came from GSK. Biolex recruited its CEO from Bayer's former blood plasma business in RTP and its senior vice president of operations from Biogen Idec's drug manufacturing plant in RTP.

Executives with big-company resumes not only bring scores of industry contacts, they can raise a startup's chances of attracting investments.

Peterson learned about Trana while doing pharmaceutical consulting. He has brought 16 brands of drugs to market during his 30-year pharmaceutical career, including several HIV and AIDS treatments, and recognized the company's potential to fill the industry's drug development pipelines.

"This opportunity was just screaming out for good business management," he said.

Peterson is taking the lead as Trana's chief executive. Mitchell, a pharmacist by training, is overseeing research and development. Gallucci will serve as Trana's chief financial officer. Stanton is taking on business development, and Gallagher is in charge of intellectual property.

Trana will remain a virtual company for now, with executives working out of their homes. The management team won't collect salaries right away.

The reward of heading a startup is usually in earning a piece of the company. Stakeholders can become millionaires if the startup grows and is sold or goes public.

"There certainly is a fiscal attractiveness to it," Mitchell said.

Trana was incorporated in 2000 as Neos Discovery under the home address of Newman, one of the founders. She and Guenther worked on the test in their spare time. The technology is based on genetic material crucial for viruses, bacteria and fungi to spread an infection, and screens for chemicals that stop the infection.

Newman and Guenther dreamed of discovering new classes of drugs.

But they were unable to find investors willing to come up with $1 million or $2 million to get Neos off the ground.

The screening test has yet to prove it can spot a chemical with drug potential.

The new management team has already proven itself, Newman said. It renamed the company and attracted a private investor who agreed to fund operations for the next year or two. They've started talking to venture capital firms about raising more money. And they are piquing the interest of several drug makers, including GSK.

"We're so excited," Newman said. "They've already shown that they can take the company where it needs to go."