Biotect Romantic

As a 10-year-old at Hyderabad's prim St. Anne's (boarding) School for girls, Villoo Morawala would routinely add to the despair of her teachers, mostly Italian nuns, by making it a habit to push her chair back to the tipping point. Thirty eight years on, a child's playful defiance has turned into an adult scientist's abiding quest for pushing the frontiers of biotechnology. Morawala, now Patell and mother to two girls (Farah, 22 and Sanaya, 20), is the founder and CEO of Avestha Gengraine Technologies, a three-year-old biotech company (yes, she was 45 when she started it!) that is defying popular wisdom-which is to do something that fetches money every quarter-to bet on basic research.

That makes Patell's Avesthagen-which draws the first part of its name from the Zoroastrian holy book, Zenda Avestha, or book of knowledge, and the latter part from a combination of words Gene and Grain-the only biotech start-up of its kind in the country. Biocon, another Bangalore-based biotech player founded by a woman, Kiran Mazumdar Shaw, started as an enzyme company and still does bacteriology-based biotechnology, which mostly does not involve creating a new product from scratch. Strand Genomics, again Bangalore based, is a bioinformatics company that makes software for drug discovery and development. Shantha Biotechnics, a biotech player in Hyderabad, makes recombinant drugs, which involves experimenting with two existing drugs to create a new, more effective drug. So basic research is still a no, no for most.

Not surprising, because a business model like Avesthagen's is not terribly lucrative. In fact, in the last three years, the 96-employee, privately-held company has earned a bare $2-3 million, or Rs 9-14 crore, in total revenues, although it has sunk Rs 45 crore in investment. Sure, the company has filed for 42 patents and obtained seven, but profits are non-existent. The company hopes to break even in the current fiscal, but that still leaves Avesthagen and its two subsidiaries, AvGen Inc. and Avesthagen Quality Agriculture Services (AQUAS), perennially scrambling for funds.

Understandably, then, there are people who dismiss Patell as a biotech romantic, whose stated mission (''to improve productivity in agriculture and develop agro-technologies that would lead to value addition in food and pharma products'') and chosen route are at odds with business logic. Says a Bangalore-based venture capitalist who has been watching the company, but did not wish to be identified: ''I have the highest respect for Dr Patell as a scientist and an individual, but I have doubts about Avestha's ability to deliver. They are too confused about their business model, there's too much emphasis on basic research, which is a more misses-than-hits game.''

But that's something Patell-a petite, short-haired woman, with dark brown eyes and a strong-set jaw-has been hearing ever since she launched Avesthagen as a concept at the University of Agricultural Sciences in Bangalore, where she was a professor. In fact, the first person to tell her so was the otherwise prescient Dr K. Anji Reddy of the eponymous pharma company in Hyderabad. Although Reddy, an old acquaintance of hers, did give her Rs 50,000 to put together a project report, when it was done (she titled it From DNA To Drugs) he merely heard her out without committing anything. ''He made polite noises, but basically thought the project was ahead of its time,'' recalls Patell.

Doing the rounds of venture capitalists proved even more disappointing. All of them wanted to know just one thing: What was the revenue model of Avesthagen and when would it turn cash positive. ''My numerous explanations that I was out to create IP (intellectual property) in the genomic space and that the services part of Avestha was fundamentally different and would take time to break even, fell on deaf ears,'' says Patell, whose affluent forefathers moved to Hyderabad in 1920s on invitation from the then Nizam. So, in September 1999, she was surprised when one state-funded venture capital firm showed a keen interest in funding her. But, of course, there was a catch: It wanted half the company for a paltry Rs 1.5 crore. It was a moment of anguish. Patell had to decide whether to accept the humiliating offer or abandon the whole idea of setting up a plant biotech company.

Summoning every ounce of courage in her, Patell decided to do neither, instead make one final attempt at tapping friends for funds. In 1999, when all this was happening, Keon Wentink came to town. Wentink, a Dutch national, had been a student at ICRISAT (International Crop Research Institute for Semi-Arid Tropics), where Patell used to do research before she left for a PhD at the Louis Pasteur Institute in Strasbourg, France (that's another interesting story we'll come to in a moment). Wentink heard Patell out and decided to invest his life's savings as an angel investor in Avesthagen.

The first two years of Avesthagen at the University of Agricultural Sciences, before it was spun off as a separate company in 2000, was funded out of the money put in by Patell and Wentink, and two research grants from the Rockefeller Foundation. Then, the tide started to turn for Patell. ICICI Ventures came in as an investor in March, 2001, investing $1.5 million for a 25 per cent stake. GTB chipped in with Rs 2 crore, and four months later, Tata Industries put in another Rs 1 crore. Says Renuka Ramnath, MD & CEO, ICICI Ventures: ''Villoo is very passionate about the job she does. Inner strength and confidence in herself are the factors that have helped her come so far.''

India has some of the best scientists in the world but very few entrepreneurs. The price of failure is too high

You can say that again. Patell was already 31 years old, married for 10 years and a mother to two daughters when on an impulse she decided to chuck up her job at ICRISAT and pursue higher education. ''After 10 years at ICRISAT, I was bored. The work was repetitive and tedious. I wanted to do things differently,'' recalls Patell. Through a mutual acquaintance, she met a professor of molecular biology from the Louis Pasteur Institute. After a three-hour discussion, he agreed to take her on as a doctoral student. So at the age of 31, Patell found herself moving, family in tow, to France to make a new beginning.

After six years of research, Patell got her PhD and came back to India. This was when she initiated efforts to start a company (she had not decided on Avesthagen till 1998, she says), but was rebuffed by all the VCs she approached. In 1995, she moved to the University of Ghent in Belgium for post-doctoral work. This is where Patell's resolve to return to India and set up her own biotech company would get strengthened. Here' s what happened. During her stint in Belgium, Patell closely observed a company called Plant Genetic Systems (pgs), which despite a 13-year history only had patents to show, but no revenues. Yet, it was considered a hot biotech company. In 1996, pgs was scooped up by Hoechst for a whopping $800 million. ''I could not believe it. I then began to understand how valuable IP could be and decided to build a research-based company in India,'' says Patell.

Returning once again to India, she joined the University of Agricultural Science in Bangalore, where she resumed her efforts to launch a company. To start with, she used the university's resources to get working on her ideas. Her first experiments were on developing drought resistant strains of rice and other hybrid seeds. You already know what happened when Patell set about wooing investors. Laments she: ''India has some of the best scientists in the world but very few entrepreneurs. The price of failure is too high.''

Fortunately for Patell, either there's no dearth of risk-taking scientists or her conviction and enthusiasm are infectious. For example, take Victor Moreno, a PhD from Cornell University and former director of R&D at both Nestle and Procter & Gamble. In October 2002, Patell met him through a mutual acquaintance in the US, and lost no time in selling him the biotech opportunity in India and particularly Avesthagen. Recalls Moreno, five feet six inches tall with a head full of shocking snow-white hair: ''Here she was explaining to me what she wanted to do and how she planned to go about it. It was simply amazing.''

Six months later, Moreno, who incidentally was involved in the development of P&G's famous Vicks lozenges, was on board Avesthagen as the head of its US subsidiary, AvGen Inc., which focuses on developing nutritional compounds for drugs related to diabetes, obesity and bone loss. Wentink's decision to join Avesthagen was also settled by Patell's conviction. Says Wentink, CEO of the group's services subsidiary, AQUAS: ''What attracted me to invest and join Avestha was Villoo's vision, commitment and research capabilities.'' Other top scientists at Avesthagen, such as Rajyashri K.R. and Swati Bhattacharyya, have also come on board simply because the start-up gives them an opportunity to work on the cutting edge of biotechnology. That, however, doesn't mean that researchers at the company get packets of gm seeds for pay. All employees have stock options.

Because she's passionate about what she does, Patell can sometimes seem like a control freak. For example, she likes to look at every piece of scientific documentation before it is sent out of the company either for filing of patents or for any form of public disclosure. The lady herself bristles at such allegations. ''If I don't part with a major chunk of the company for an unreasonable price, and if I want to be kept informed of all important developments, does that make me a control freak?" she asks.

To be fair, Avesthagen is at a stage where it demands-and, indeed, does get-the full attention of Patell. So much so that ask her what her biggest challenge has been and she'll tell you that it is in making sure that her family doesn't get totally neglected. ''I don't think I've been able to spend as much time as I would have liked to with my children when they were growing up,'' says Patell. ''So is the case with my husband.'' Her hubby Zareer, a martial arts instructor and the owner of a chain of gyms in Hyderabad (he's also an ace jazz pianist), has been her pillar of strength, even as Patell rode the highs and lows of her dream.

Her efforts, though, have started to bear fruit. Two months ago, Avesthagen received US patents for transgenic modification (GM) of everything from basmati to maize. With that come potential licensing deals with seed companies. For example, its transgenic Basmati 370 allows seed companies to create new hybrids cheaper and faster. Says Patell: ''The seeds based on our technology will be available in less than a year with the gm tag. As only plant genes are being used, we do not expect any farmer or consumer resistance.''

The technology can be applied to anything from rice to cotton to maize to even vegetables like brinjals and tomatoes. In other words, every plant that has a commercial hybrid seed available in the market can be transgenetically modified using Avesthagen's technology. The company does not, however, plan to get into seed production; it will license the technology to seed companies to produce and distribute.

Even as things look promising, Patell knows that each of her companies-eventually Avesthagen will be holding company for the two subsidiaries and a third joint-venture company that it is setting up with the government of Kerala for phytopharmaceuticals-needs oodles of more money to pump up R&D. It may be years before serious money starts rolling in, but Patell is loath to shift focus away from her basic-research-to-services model. ''We cannot be a me-too player. If for that reason some business is missed, so be it,'' she says. Her critics are right: She is a biotech romantic. But for our sake let's hope she stays one. Incurably.