Firm takes different course.

Unlike scores of biotech companies struggling to get funding, Advanced Biotherapy Inc. doesn't have to worry about money for the moment.

The company is in the unusual position of being publicly held without so much as one single product or even a source of revenue.

"It may sound strange, but it's a good strategy for us," said Edmund F. Buccellato, chief executive of the Woodland Hills-based firm.

While it may seem to many in the industry as a case of putting the cart before the horse, Buccellato says the company has benefited from the arrangement.

"We have some very loyal investors who have a lot of confidence in our technology," he said.

Brent Reinke, an attorney with Reed Smith Crosby Heafey LLP, a law firm specializing in finding funding for biotechnology firms, said Advanced Biotherapy's efforts to finance itself are unusual, but seem to work so far.

"I don't recall another biotech going public from the beginning, but it appears to work for them," he said. "Most startup biotechs start out privately just because it's very difficult to find people willing to invest in a startup biotech."

Bill Robbins, managing director of Los Angeles-based Convergent Ventures, a venture capital firm that funds biotech firms, said the investment environment for biotech companies has been hurt by the down economy.

"There's a lot of skepticism out there on biotechs and I don't see things changing very quickly," he said.

Advanced Biotherapy researches and develops therapeutics for a number of autoimmune diseases such as multiple sclerosis and rheumatoid arthritis. Its research is based on the company's anti-cytokines platform technology. Cytokines are a substance secreted by the cells of the immune system to protect the body against disease.

But so far, the company is a long way from bringing any products to market. However, it is preparing for clinical trials in the use of Gamma Interferon antibodies to treat corneal transplant rejection later this year.

FDA application

Buccellato said the company is in the process of meeting requirements of the U.S. Food and Drug Administration in order to submit its application to begin clinical trials for the therapy.

"Our strategy has been to conduct pre-clinical human studies abroad to establish proof of concept," Buccellato said, referring to testing where results are later shown to regulators to prove how the therapy works.

The company's research has been done primarily in Moscow, with additional research done in Maryland.

"It's really a question of costs and it's simply less expensive to work in Europe," he said.

Buccellato said the company's research aims to neutralize cytokines which have been linked to a number of diseases such as rheumatoid arthritis, multiple sclerosis, psoriasis, AIDS and other autoimmune diseases.

Although the company's stock has been trading around the 15 cent range over the past few weeks, it had been as high as $8 when the company began trading publicly in 1986. The result of the acquisition of Nadar Inc., a public shell company at the time, the then struggling startup suddenly had $2 million in cash from new stock issues and big plans for a technology developed by company founder Dr. Simon Skurkovich.

But Skurkovich knew more about science than raising capital and despite initial funding, Advanced Biotherapy was later unable to garner much capital and went dormant from 1991 until 1996 when Buccellato was brought in to lead it.

"The company, unfortunately, was not well managed and it just ran out of money, so I was brought in to raise money and move the company forward," Buccellato said.

Buccellato went on to raise about $500,000, giving the company enough cash to kick start its research once again.

"Our plan was to conduct some proof of concept trials in humans overseas and if what we were doing was working, then we'd move to the patent office and we'd file for patents," Buccellato explained.

Raising money

Since he arrived, the company has raised nearly $7 million, with $4.2 million raised last year through the sale of company stock and by converting much of its debt into stock, as part of an agreement with its creditors.

With enough cash to last it another year and a half, Buccellato said the company is well positioned to license its technology or to find a partner to help it develop new drugs.

But more importantly, the company has strengthened itself through its growing list of patents for its research therapies, including most recently, its Gamma Interferon therapy. Already the company has about a dozen patents, nearly all of which were granted after Buccellato was hired as chief executive in 1996.

"If you're a biotech, you have to have patents or you're not going to be worth much," Bucellato said.

"With a patent, you can license your technology to other companies or be able to partner up with one because of that technology."

Advanced Biotherapy's pursuit of new patents was largely the result of Buccellato' s leadership tying the company's fortunes to the development of therapies that could be patented.

"The company's patent position was weak when I first got here, but we've strengthened ourselves significantly since then," he said.

Advanced Biotherapy is now looking for licensing deals and co-development projects.