Phage Biotech’s research is targeting a $26 billion worldwide market for bacterial infection therapies.Biotechnology companies may be getting the headlines for new ways of manipulating DNA, but one Israeli company is quietly making a name by giving new life to a medical technology discovered over half a century ago in the remote labs of the Soviet Union.

The company, Phage Biotech Ltd., is a world leader in a field of disease treatment called “phage therapy,” which utilizes tiny viruses that attack bacteria, helping to cure infections without the use of antibiotics.

Phage is developing its Soviet-inspired technology with the help of Russian scientists who honed their skills at Israeli universities, said Asher Wilf, Phage Biotech’s CEO and founder.

This powerful source of know-how is targeting a worldwide market for bacterial infection therapies that will reach about $26 billion this year and is expected to surpass $32 billion by 2007. Nearly 90,000 people die each year in the United States alone just from being exposed to these deadly strains of bacteria, up from just 15,000 in the early 90s, Wilf said.

Tests of Phage’s treatments, conducted in cooperation with Jerusalem’s Hadassah Hospital, have offered “very promising preliminary results,” already demonstrating “the clearance of bacteria concentrations in infection sites through the application of (our technology),” Wilf said.

In addition, Phage’s technology has potential uses in agriculture, for de-contaminating foodstuffs, and even in the fight against biological warfare agents such as anthrax.

“Our added value is combining seventy years of Soviet knowledge with vast Israeli experience in cutting-edge molecular engineering,” Wilf said. “We want to incorporate advanced molecular techniques in order to optimize the drug’s effectiveness.”

Since the introduction of the most famous antibiotic, penicillin, the world has come to count on the drugs as a cure-all for almost every type of infectious disease, from infected hangnails to sore throats.

But that type of indiscriminant use has come at a price. The overuse of antibiotics has created new strains of highly resistant bacteria that are developing at a rate faster than the introduction of new drugs to kill them.

The misuse of antibiotics has even led to the return of long-forgotten epidemics like tuberculosis – not only in less developed places like Africa and Eastern Europe, but in inner city America as well.

Phage Therapy’s technology was first applied by Soviet scientists in the 30s, when Soviet-era labs successfully isolated a variety of phages, which are up to 20 percent more effective in treating bacterial infections than antibiotics.

Phages work by latching onto harmful bacteria and injecting them with
their own genetic material. The bacteria are killed when phage DNA is replicated inside them and released.

Phages, which only attack specific bacteria, also cause minimal side-effects – unlike antibiotics, which attack the body’s good bacteria along with the bad. And, whereas bacteria gains resistance to antibiotics, bug-busting phages mutate right along with them, virtually nullifying their resistant qualities.

Because of Cold War skepticism over Soviet scientific methods, phages remained hidden behind the Iron Curtain for decades.

But, in 1990, Wilf – then running a successful pharmaceutical technology-transfer company – happened across one of the phage institutes in the Soviet Union. A BBC documentary on the promise of phage therapy convinced him to introduce the Soviet technique to the West.

According to Wilf, Israel offered the perfect geographical gateway for importing the therapy to the United States and Europe. Israel was also beginning to develop as a vibrant business environment for pharmaceutical startups.

Wilf began Phage Biotech by entering into exclusive agreements with a leading Russian phage institute, gaining access to their extensive collections of the valuable bugs. Despite suspicions regarding phage therapy, the company gained the critical backing of many of Israel’s leading experts on infectious diseases.

“It’s not that there’s no skepticism, said Ethan Rubinstein, a professor of medicine at Tel Aviv University, and a member of the Phage’s scientific advisory board, “but there aren’t too many options right now. Most companies are moving away from antibiotics. There are two driving forces behind this: one is rising resistance, and the other is the lack of effective antibiotics and the need for new agents in view of the rising resistance.”

Phage Biotech also received the crucial financial support of the Maot Group, a Miami-based boutique venture capital fund.

Maot’s founder, Aryeh Rubin, said he is excited about the startup’s future. Maot provided nearly $500,000 in seed money so the company could begin developing and testing its treatments. Israel’s Chief Scientist matched that money, demonstrating a critical show of confidence in the field.