Reata Discovery Inc.'s founders in Dallas reached back in time to the days of cattle barons and oil wildcatters in naming the new company it created.

Reata was the name of the ranch in the movie "Giant," starring Rock Hudson and Elizabeth Taylor, a movie set in the early part of this century in Texas, said CEO Warren Huff.

"We wanted to harken back to that Texas wildcatting spirit," Huff told BioWorld Today. "We hate the boring biotech names - we wanted some style."

But whereas those days might have been ones of going it alone, the creation of Reata was done in the spirit of cooperation, both from a financing and scientific perspective.

The technologies on which the company is based originated with researchers at UT Southwestern Medical Center at Dallas and is the result of a public-private endeavor.

"We basically put together a lot of capital providers on the seed side, myself as an entrepreneur, and the university assembled quite a deep set of assets to form the company," said Huff.

And by assets, he means four classes of compounds in the areas of neurological diseases and cancer, as well as a drug discovery platform. Two of Reata's lead compounds are scheduled to enter the clinic in the third quarter of 2004.

"The idea was to do a much deeper and much more significant set of scientific assets that were designed to be the basis for a real built-to-last company as opposed to [more of a] traditional situation in biotech, where the impetus behind the founding might be a scientist in a single laboratory," Huff said. "And a company might be founded on a fairly narrow technology."

The ownership of Reata is shared among the three constituencies: the management team, the university and the capital providers.

Huff said the founders were looking for "outstanding" preclinical candidates that could be moved to the clinic very quickly.

"Those opportunities tend to cluster in cancer, so we have a portfolio of small molecules with novel and conventional mechanisms of action, worldwide composition of matter patents and anticancer agents," Huff said.

The founders also felt the company needed a significant discovery platform. That platform is an assay technology for discovering new drugs that can rescue the folding status of a target protein.

"One of the key mechanisms of disease that has really emerged over the last five to six years is that proteins have to have the right amino acid sequence, but they also have to fold into the right 3-dimensional shape or confirmation," Huff said. "A whole raft of diseases that have been identified are directly attributable to misfolded proteins."

The improper folding of a protein can have two possible impacts, he said. It might not have its function, and that loss of function might lead to disease. Also, the protein might itself either be toxic or gain toxicity, therefore leading to disease. Huff said it is generally thought that incorrectly folded proteins are the cause of all major neurodegenerative disorders such as Alzheimer's disease, Lou Gehrig's disease (ALS), Parkinson's disease and Huntington's disease. He said there is a similar situation in a high percentage of cancers, in which there is a "loss of function in an important housekeeping gene called p53."

"There haven't been good technologies for finding small-molecule drugs that could rescue or reverse or stabilize the folding status of a protein," he said. "[Our] discovery platform technology is the best way to do that; it's a superb technology for doing high-throughput screening for compounds that can rescue the folding status of a target protein."

Reata has developed assays for p53 and the key proteins involved in Alzheimer's disease, ALS and Huntington's disease.

The company raised $1.6 million to fund the search for the "right assets" on which to found the company, and raised $3.6 million led by Ojai-Goliad partners James Bass and Peter Brooks, that will carry the company to the clinical studies. At the point of investigative new drug filings, Huff said Reata will be looking to raise about $15 million to fund its clinical trials. Reata now has 10 employees, but it is immediately planning to grow that number.

A key player in the formation of the company was Dennis Stone, vice president for technology development at UT Southwestern. The technology development office was created about five years ago and is responsible for forming not only start-up companies, but also outlicensing agreements. In that five-year span, licensing revenues have jumped from $3.5 million to about $11 million, Stone said. He is a medical doctor who also is a professor in the departments of internal medicine, biochemistry and physiology.

Stone has worked almost full time on the formation of Reata for the past year, determining which technologies had promise, pursuing patents, participating in capital-raising activities and working to secure an agreement with ScinoPharm Taiwan Ltd., of Shan-Hua, Taiwan, for the manufacturing of and further development of Reata's compounds.

Stone said the university has a "very reasonable but significant equity stake in the company," with the university taking equity rather than cash repayment for its work in forming the company and securing intellectual property. In addition to equity, the university also stands to receive royalties on net sales.

"It's been interesting," said Stone. "A lot of times, investigators want to have a company built around themselves and their own work, and one of the real surprises has been the synergy of having six or seven scientists in one company, their technologies there - it's been delightful."