"Szentgyörgyi-Von Neumann" Initiative (SVNI) for Personalized Medicine

May, 2002

András J. Pellionisz, Ph.D., Founder
HelixoMetry, Inc.
advisor:
Dr. Edward Teller

http://helixometry.com
cob@helixometry.com

(408) 891-7187
Silicon Valley, CA

A window for opportunity: A historical perspective

Hungarian Nobel Laureate Albert Szentgyörgyi and genious Hungarian mathematician John Von Neumann*, both gained international recognition in biochemistry and computer science, for their discovery of vitamin C and ground work in computer science, respectively. Their recognition came well before any joint venture would have been possible between biochemistry and computer science, and especially between the US and Hungary. Had world history taken a different course since their time of achievements, a "coordinated effort" of US-Hungarian scientific and business relationships may have been attainable**.

The era of Szentgyörgyi and von Neumann is past. In their time, global cooperation was neither timely nor realistic. Unfortunately, for half a century, the Hungarian Peoples' Republic was cold to US business, and particularly to Hungarian-American joint ventures in all sectors of society.

Today, a boom of Hungarian-US relations is necessary and possible. Moreover, this occurs at a timely period when Hungary is not yet a member of the European Union. As such, we believe that until that time she is a more lucrative partner for the US, particularly in our area of specialty.

Today's trend of modern medicine called "Personalized Medicine" can become a locomotive for the Hungarian economy. Indeed, Hungary stands ready to set international standards by linking genetic research, performed in Hungary but mostly in the USA, with powerful tools of bioinformatic computer technology available in the US, that would ultimately lead to advantageous clinical trials in Central Europe. Were they alive today, Albert Szentgyörgyi and John von Neumann in all likelihood would be chief proponents of such an initiative.

In this proposal we wish to convey our desire to build and profit from a plan that is a sure win-win oppurtunity both for Silicon Valley and for Budapest, that we named SVNI after initials of the other Hungarian scientific talent that collectively helped to introduce the foundations for modern biotechnology***

* Underlined material are links to background literature on the Internet. This information might be particularly helpful for those reading this material on line. However our proposal is complete without any supplementary background detail.

** Although not commonly known, Szentgyörgyi and von Neumann, who was a US resident since 1930, were both proposed as leaders of the Hungarian Academy of Sciences. However, the country as well as the Academy met a fate different than the one seen by others in the Western world. It is still fascinating to ponder about the contribution that an entire generation of Hungarian scientists, hallmarked by Szentgyörgyi, von Neumann, Bay, Wigner, Szilárd, and Teller, would have made had history been more favorable to them. Today, Hungary is an integer part of the NATO, and under the present trends of globalization, it is eager to expand a solid base for booming economic relationships with the US. The window of opportunity is wide open. It would be inexcusable not to profit from such fortunate set of circumstances.

*** The intellectual property of SVNI belongs to its proponents, but as neither Szentgyörgyi nor von Neumann are alive, SVNI is intended as a memento to their great intellectual achievements. Should their legal successors raise issue with the name, the SVNI plan will be renamed - or just the plain acronym will be used.

Strategy and tools for SVNI

The strategic goal: To elaborate a strategic plan to enhance coordination of the US and the Hungarian "high tech" in the area of Personalized Medicine, and ensure that this will become a locomotive for economic development and will contribute to a modern and fresh image of Hungary. Presently, there is no distinct image of Hungarian high-tech industry, when looked from a distant Silicon Valley. Interestingly, smaller countries with a less advanced and recognized scientific and technological legacy, for example Singapore, have already achieved such a distinction. Consequently, although Hungary makes the list in information technology, and she ranks surprisingly high in competitiveness, she is rated rather unfavorably in capital strength and management.

The general toolkit: Achieve a profitable market penetration of Hungarian personalized medicine into Silicon Valley, particularly by software development and clinical trials in Hungary, under management of global companies and US.

The specific intention: To integrate Hungarian research and development (R&D) into health care and fields of information technology globally.

The specific toolkit: Spearhead Personalized Medicine by Hungarian-American pioneering activity within Silicon Valley, a location unparalleled for activity in biotechnology. Our company, HelixoMetry, Inc., established by an accomplished Hungarian-American Scientist and former professor at New York University (NYU), is devoted to ensure a timely success for such an endeavor.

SVNI aims to forge tight business bonds between members of the US and new NATO countries such as the Hungarian, Czech and Polish Republics.

What is "Personalized Medicine"?

Personalized Medicine is the result of modern Biotechnology. The best illustration of its significance is that although US Venture Capital firms, for the first time in their history, closed the first and second quarters of 2001 with a loss, investment into Biotech not only avoided a loss but increased by 37% from last year. In quarterly figures, venture capital investment steadily declined in four consecutive quarters, but according to compilation by PriceWaterHouseCoopers, investments increased by 6% in the area of life sciences and health care. Thus, Personalized Medicine is the undisputed and most spectacular boom sector in this decade.

A shining example for Personalized Medicine among small nations is Singapore with its population at less than 4 million. However, without their enormous capital reserves, their success would be difficult to mimic. In 2001 alone, Singapore is expected to invests about $6 billion into its national economic development program that hinges on information technology, with Personalized Medicine well in the lead. IBM currently invests about $1.5 billion into Personalized Medicine and expects a market of $40 billion by 2004. Another positive indicator of the realism of this expectation is seen by Emory University's deployment of 1,250 IBM servers for analysis of genomics research centered on cancer. The market cap of Genentech, a leader in the biotechnology and genome research sectors is valued at $23 billion.

Personalized Medicine rests on the genetic information contained in DNA, better known as the "double helix". Every individual's DNA contains a staggering amount of healthy and sometimes pathological features. As of today, the 3 gigabits of information coded in our DNA has just been "mapped out" as a result of a gigantic international scientific research program. The Bible has been opened, but the script remains to be read and interpreted. However, even before this detailed information was uncovered and especially before we knew and appreciated how the genetic code can lead to protein malformations and to human inborn diseases, the first Personalized Medicines were already designed, manufactured and some even approved and sold in our pharmacies. These Personalized Medicines were and are currently designed and created based on the genetic profile of each disease.

In its cover article this May, TIME magazine announced 4 new Personalized Medicines that are proven to successfully fight pathological cells in human breast cancer. One of these anti-cancer Personalized Medicines created from discoveries in genetics is "Herceptin", by Genentech. This medication has been approved and is available on the market, Accordingly, Genentech's revenue has since shot up in the last quarter of 1999 (by 29% to almost half a billion ($445.2 million).

Oversimplified, Personalized Medicines are pharmacological breakthroughs, half in genomics and half in information technology. This is why our Hungarian Initiative is named after Albert Szentgyörgyi, the Hungarian Nobel Laureate pharmacologist who discovered Vitamin C and John von Neumann, the Hungarian mathematician, and architect of modern computer science (cf. von Neuman's book "The Computer and the Brain"). Although their seminal contributions are "best kept secrets", the search is on for individuals and nations that are equally talented and proficient in both the "Bio" and "Tech" parts of "BioTech".

There is hardly any American ignorant of Vitamin C, often taking mega-doses following the advice of Nobel Laureate Linus Pauling, but the fact that Vitamin C is a Hungarian discovery is not well known. Also while every American citizen is familiar with computers, only experts in computer science know that the concept of storing both data and programs in memory is the brainchild of a Hungarian. It is somewhat better known perhaps that the ball-point pen was invented by the Hungarian Biro, and that Rubik's Cube is also a Hungarian invention, although one must dig deep in Rubik's home page for Hungary to find recognition. Finally, Hungary has among the highest number of Nobel Prize winners relative to its population size.

Sadly, intellectual capitalization of Hungarian scientific creativity has not yet been fully exploited by professional public relation (PR) campaigns within the scene of today's fierce international competition. HelixoMetry proposes to generate such professional PR campaigns, to communicate Hungarian scientific talent and turn Hungarian Intellectual achievements into lucrative magnets for Venture Capital exchanges with the US in general and specifically within Silicon Valley, where $1 of every $3 investment is made in the USA. (Nearly $2.5 billion in Q2 of 01 invested in Silicon Valley, compared to $0.323 billion in the Los Angeles region)

Why all the buzz about Personalized Medicine today?

Today, we live in the infancy of the scientific and technological breakthroughs of 21st Century health-care. Currently, no more than 3-4% of the 3 gigabits of our genetic information is understood and appreciated, and consequently, most of it remains an enigma laden with mistery. Despite this fact, several extremely potent commercially available Personal Medicines have been designed from what is known of our genetic information, and not simply through serendipitous discoveries. For example, Pfizer has already generated $4 billion in revenue from its Personal Medicine Lipitor that keeps cholesterol levels in check, and Genentech's anti breast-cancer Personal Medicine Herceptin promises similarly lucrative revenues.

Research in Personalized Medicine clearly results in more targeted and marketed discoveries than traditional research. In addition, with the help of computerized profiling of patient genetic data, this form of research results in faster and cheaper drug approval.

Genentech Inc, located in Silicon Valley, has been a leader since its inception 25 years ago, in developing the field of Personalized Medicine. Genentech is a true success story as a company that has turned genome research into very lucrative business. Currently, Genentech markets nine Personal Medicines very successfully, each of which it designed through genomic research. Its revenues in excess of $1 billion dollars can measure Genentech's success over the last six months alone, shooting up in our times of recession by a staggering 30% over the previous time-period!

However successful, genetic research alone is but one half of Personalized Medicine. The other half consists of Information Technology. Today, at the dawn of the 21st Century, Silicon Valley that grew up explosively during the "Internet boom", now unleashes Information Technology with fury onto the Computer Science challenges of Personalized Medicine research. Indeed, several analysts now predict a boom in Personalized Medicine that will outweigh the one seen for the Internet boom. We at HelixoMetry believe that such expectations are realistic for several reasons. First, because the Internet has been built to satisfy the information-hunger of human kind. Biological survival, a desire to heal and remain healthy, is a far more potent driving force than information-hunger. Second, because Personalized Medicine development currently makes use of the Internet. For example, genomic research as we know it today was built around data being stored and shared on the web. However, the use of Information Technology in Personalized Medicine research goes well beyond the use of the Internet as a tool for sharing information. In the remainder of this proposal, we will introduce concepts, which we believe will significantly enhance the profitability of Personalized Medicine research, by bridging Information technology and genetic research currently practiced in Hungary and the US.

Hungarian American Joint Ventures in Personalized Medicine Research:

A pillar of economic prosperity for the US West-Coast

A global boom in Personalized Medicine research has already begun. Any country, large or small, stands to loose significantly if it does not set itself into motion and partake from this window of opportunity. Indeed, the stakes are exceptionally high for Hungary, which has a proud legacy of academic achievements, both in biomedical and information research. Because of its strong intellectual and industrial standing, we at HelixoMetry believe that Hungary is an ideal international partner for the US, in its quest to further capitalize in Personalized Medicine research and development. Indeed, we have named our SVNI initiative in recognition to the many brilliant Hungarian scientists that have influenced and helped shape science as we all know it today. A Hungarian-US model of international scientific cooperation can exist, and may readily be based on existing strengths and achievements, verifiable and fostered by experienced and competent expert scientific and management staff at HelixoMetry.

All necessary components of a Hungarian-US Model in Personalized Medicine unquestionably exist. However, even with all its basic components in place, a Hungarian-US Model in Personalized Medicine research requires expertise, goal-oriented action and skillful coordination. The outcome of successful partnerships between Hungary and the US would result in significant capital returns for members of both nations. However, if this window of opportunity is missed , both nations will loose out from attainable success in the most promising area of investment of our time.

The admission of Hungary into NATO has opened up opportunities that are not well publicized, however have been well known to experts for years. Hecht-Nielsen Computing valued at $ 1 billion (in San Diego, stock symbol HNCS), is the leading neurocomputer company. It started from criminal profiling for the CIA and with VISA credit risk analysis, secured multimillion contracts from USA government for new types of neural net pattern recognition several years ago - software that has already been proven during the "cold war" for submarine sound pattern recognition. Joint work in such areas between the US and Hungary was unthinkable just a few years ago - though Hungarian-Americans, carefully shielded away and with proper clearance, contributed to US defense project through several decades (Teller, Neumann, Rákóczi, and András Pellionisz our Founder).

What we propose as elements of success for Hungarian-US collaborations:

Currently, there are approximately ten thousand University Professors with Hungarian ancestry living and working in the US. Additionally, there is a very large number of talented and exceptionally well-trained Hungarian citizens scattered Worldwide. Moreover, there are numerous second generation Hungarians born and educated in the Western World, with close ties to their roots that are ready to join our efforts. Either we write off this national treasure as a loss - or as we at HelixoMetry propose, we make use of them as the pivotal component of our strategy for joint ventures between Hungary and the US. In fact, in the Silicon Valley of today, the "Hungarian presence" exists and is noticeable, even when compared to other well educated ethnic groups with a homeland population that far exceeds that of Hungary's.

András J. Pellionisz, Ph.D., Founder of HelixoMetry Inc., is the chief proponent of the SVNI proposal. Dr Pellionisz has 28 years of experience in living and working in the USA, starting with a Post Doctoral Fellowship at Stanford University in 1973. Subsequently (1976-1990), Dr Pellionisz was Professor of physiology and biophysics at New York University. During the past 11 years, Dr. Pellionisz pursued and significantly enriched his scientific career here in Silicon Valley. He gained extensive experience in several areas of high technology while working with the NASA Ames Research Center for the US government. Finally, in the last five years, Dr. Pellionisz held executive positions in Internet Companies within the private sector, where he gained enormous experience and skills in global business development and management.

Dr. Pellionisz holds M.S.E.E. and Ph.D. degrees in Computer Technology earned at Budapest Technical University. He also holds a Ph.D. in Biology (1976) and a D.Sc. in Physics (1990) from the Hungarian Academy of Sciences. Finally, Dr. Pellionisz was honored by receiving the "Senior Distinguished American Scientist" Prize from the German Alexander von Humboldt Foundation for his pioneering work in neural network research and development, which he began at the Szentágothai school in Budapest Hungary. The experience and preparedness of our founder is but one example of the talented Hungarian scientists that live here today, some of which have already made huge impacts in our economy, and other younger ones who are ready to take charge.

HelixoMetry is not alone in Silicon Valley - although for the moment the contacts listed below represent potential opportunities, we include them as possible partners. For instance, HelixoMetry has always been in close dialogue with AGY Therapeutics, a genomics company founded by fellow-Hungarian Scientist Károly Nikolich, himself having worked at Genentech for 12 years. HelixoMetry currently coordinates its activities with the KFKI Company of Budapest, that has recently established a subsidiary in Silicon Valley under the name of KFKIsystems. We have also helped smaller Hungarian software houses to Silicon Valley, such as iSoft in Kecskemét, and are in partnership with the software-localization company in Budapest, Multilingua. According to a recent press release, AGY Therapeutics has acknowledged an active collaboration with the Institute of Enzymology of Budapest. In addition to its strong Hungarian contacts here within the US, HelixoMetry is actively seeking contacts with pharmaceutical companies located in Hungary.

International Efforts promoting Personalized Medicine research in Hungary are very significant. It is worth quoting from an article in the April 2001 issue of HVG Magazine, stating that the Genetic Research Institute of Szeged has received since 1996, ten times as much financing from the Canadian company Chromos relative to the Hungarian Academy of Sciences. The article quotes the agreement that all intellectual property generated by the Hungarian Genetic Research Institute is to be patented exclusively by Chromos. We propose to put experts on the spot, in Hungary, with local familiarity of the world biotech market, to point out to US business how to generate US patents from Hungarian intellectual achievements. Indeed, our founder at HelixoMetry, Inc holds and has profited from such a USA patent for his Neural Net algorithms, that resulted from his work at the Szentágothai School in Hungary.

So, can we create a "Hungarian-US IT Model", in which business development is directed by familiarity with local world markets, while the production is kept competitive by trendy "software development outsourcing"? Specifically, what is required for managing outsource development? We address these questions in the remainder of our proposal.

Our specific suggestions:

Opportunities derive from a continuous "food chain", and are almost limitless. Presently, the "food chain" between Hungarians living abroad and Hungary is fragmented. These following suggestions are aimed at strengthening the links of the Hungarian-US food chain. Although Hungarian-founded, HelixoMetry operating in Silicon Valley will thrust forward even if enterprises in Hungary are slow to join.

What kind of "broken food chain" are we referring to? Time Magazine named as "Man of the Year" Andy Grove, who, together with Leslie Vadász, benefit the Intel empire with their Hungarian talent. The Intel Venture Fund distributed last year $1.3 Billion to start-ups under the direction of Leslie Vadász. Hungarian-born Charles Simonyi, Jr. is Vice president of yet another empire, Microsoft. Caroline Kovac leads the "Blue Gene" program of IBM, worth $1.5 billion. Third generation Hungarian Steve Fodor founded Affymetrix, a multi-billion dollar "gene chip" company in Silicon Valley, Affymetrix is responsible for creating the major breakthroughs in "bio-chip or gene-chip technology" that can analyze the genetic composition of a patient from a single drop of body fluid. It is worthwhile noting that the analysis of gene-chip generated information calls for "neural net" pattern recognition algorithms, technology that our Founder helped create.

The examples given above of successful companies founded and managed by Hungarian-Americans emphasize the potential for active cooperation between companies in Hungary and here in the US. Unfortunately, for the moment, such cooperation is not yet common. HelixoMetry, Inc proposes to encourage such joint ventures, here in Silicon Valley.

As far as specific and concrete suggestions are concerned, a New York-Budapest joint venture can serve as a leading example. Indeed, in a recent press release N-Gene Research Laboratories, founded in 1997 in New York, revealed that they had signed agreements with N-Gene Kutató Intézet in Budapest. They shared $6 million in investments in the summer of 2001, obtained from the Perseus-Soros BioPharmaceutical Fund, with the Magyar Kockázati és Magántőke Egyesület (Hungarian Venture Capital Fund) being an active participant. According to the press release, the Board of Directors of N-Gene Research Laboratories mentioned that Zsolt Pál Harsányi, Chairman of Porton International and Joseph Takacs a former partner of KPMG in New York also participated in the joint venture. This Budapest-New York joint-venture model joins the links even closer between Hungary and the US, since a major investor in Magyar Kockázati és Magántőke Egyesület is a Kockázati Alap from KFKI Investment Funds. KFKI has been recognized for years for developing a software-system package that is currently used by European AstraZeneca in Clinical Trials within the Hungarian, Czech and Polish Republics, as well as in almost 40 countries worldwide.

Our SVNI proposal at HelixoMetry can thus rely and count on overlapping and existing elements in Hungarian-US joint ventures, and proposes to create Budapest-Silicon Valley joint ventures based on the successful New York - Budapest joint venture model cited above. As an example of our preparedness, our Founder, Dr. András Pellionisz, even as Professor of New York University in the 1980s, regularly invited software developers from Budapest, well before the boom of "internet age". From our analysis, the abundance and quality of Information Technology and Biotech centered in Silicon Valley can be made to connect this "food chain in Hungary" by talented Hungarian and American individuals here and abroad. Our goals would provide for more than just a Silicon Valley presence. However, this bridgehead is vital from the viewpoint of local familiarity with the World markets. A Silicon Valley presence is necessary not only for closing agreements and sales, but also for business development, market research and analysis. Furthermore, investments in Silicon Valley made for outsourcing "on the cheap" is an advantageous consideration for Hungary just as for any other country. Development in Hungary would be beneficial both for Hungarian partners and US. At the same time, Hungarian companies need a Silicon Valley presence that can provide information on market conditions first hand. Such a presence could complete system analysis in the planning stages to lay down the necessary system architecture and plan & develop the market strategy, product and customer support. In summary, a strong Silicon Valley presence is required to assure successful and optimal business development strategies.

Why is it vital to crack open the USA market for Hungary by 2002?

What will our sales pitch be to sell and generate Hungarian-US joint ventures?

"A stable business environment guaranteed by Hungary's NATO membership, attractive wages relative to those in the Western World, and importantly, a significant appreciation of investments, providing M/A exit strategy when Hungary joins the European Union within 2-5 years"

Can Hungary afford to miss out from this window of opportunity offered by an initiative such as SVNI, proposed by HelixoMetry? Hardly. According to our plan for a "Hungarian-US IT Model", our citizens could gain access to the best pharmaceutical preparations available and those to come. Our plan proposes not only to boost needed medical research, but also business in the Hungarian software industry, information technology, all of which will likely result in large capital returns. Furthermore, as successful joint ventures flourish in Hungary, the model will gradually and naturally expand to neighboring and less well-developed countries in Central Europe. Indeed, the SVNI proposed by HelixoMetry Inc, has the potential to grow into a full-blown "economic boom" in the region.

But why hurry? The plan is bold and well justified. Indeed, our plan is designed to be scalable as ventures between Hungary and the US become more popular. However, it must first be put at work here in Silicon Valley. In the second step, it will be extended to other countries new to NATO. Furthermore, the well organized and successful Hungarian pharmaceutical industry marketing in East Europe, could be extended to certain regions of the former Soviet Union. Academgorodok ("Town of Academicians" in Novosibirsk) already contacted HelixoMetry to provide them with a fulcrum in Silicon Valley.

We believe that our SVNI proposal is timely as Personalized Medicine research and development is in its formative period, globally. Australia, Singapore and a slew of other countries already have Personal Medicine research and development as a cardinal component of their "National Development Plan".

HelixoMetry agrees that there is "life outside of the European Union". Indeed, Personalized Medicine is exactly the kind of "boom sector" in which Hungary would enjoy a special advantage over many competitor countries. As Hungary is not yet a member of the European Union, wages are still relatively depressed and will remain as such until she joins. At that point, American businesses will plan an exit, not an entry into Hungarian investments. By that time, current investments will appreciate significantly. Thus, HelixoMetry believes that an extremely precious window of opportunity is open for the American investor. However, this window will not remain open for long.

Indeed, this window for lucrative investments will close when Hungary joins the European Union. Not only because wages will rise, but also because existing, and extended, red tape of the EU will make clinical trials much more complicated to perform. Thus, investments in Hungary must move before she joins the EU, and especially from now to 2002, to get some "fresh air" through this window of opportunity that remains wide open. If early investments and deals are clinched and market penetration is successfully accomplished within the extremely critical year or 2002, the model will naturally expand to regions that are next in line to join the EU. This will yield a domino effect that will increase the market, and appreciation for the model. An advantage in the Eastern (non-Union) markets will prevail, and a new one will develop and gain access to the EU markets.

To ensure the success of our SVNI initiative, HelixoMetry is ready and committed to establish contacts with appropriate partners here and in Hungary, such as organizations, investment funds, and experts of Hungarian science, technology, and health care. 

*

Acknowledgements

HelixoMetry Inc. wishes to acknowledge the generous and meaningful contributions made by the following Individuals and Companies in helping to develop our SVNI initiative.

Anna Jona Associate Director, Novacept, San Francisco Bay Area, California

David Kupferman CFO of the San Francisco Bay Area Subsidiary of KFKIsystems, Budapest

Barnabás Németh Hungarian Trade Office, New York

Dr. Károly Nikolich Founder and CEO of AGY Therapeutics, South San Francisco, California

Dr. Robert L. Raffai Research Scientist, J. David Gladstone Research Institutes, UCSF, San Francisco, California

László Rákóczi Senior Partner of Pan Pacific Partners Investment Banker, Palo Alto, California

Dr. John Reher Biomedical Venture Capitalist, San Francisco Bay Area, California

Dr. Drew Senyei Managing General Partner, Enterprise Partners Venture Capital, San Diego, California

Dr. Edward Teller , Senior Research Fellow of the Hoover Institution, Stanford, California

László Végső Founder and CEO of Multilingua, Budapest, Hungary

Dr. Szilveszter E. Vizi President of Hungarian Academy of Sciences, Hungarian NATO-Council, Dir. Pharmaceutical R&D

***