An ultra-Orthodox startup's secret to weathering crises: modest living

Startups up and down the land are slashing at salaries and perks as the financial crisis bites down, threatening their very survival. But there's one company that doesn't need to cut to the bone.

Immune System Key doesn't need to take any special steps to weather the world crisis because its workers only make NIS 4,000 a month to begin with. They don't drive company cars or take taxis, but ride the bus to work. They never fly abroad, at least not on "company business." Life at the office is characterized not by voucher lunches at local eateries, but by reserve and restraint.

The man behind this model of modesty is Dr. Yoram Devary, scientist and "the first ultra-Orthodox entrepreneur." His startup employs nine people, all Haredim.

ISK's offices are located at the Cardiac Institute of the Jerusalem College of Technology. The office space is segregated by gender, with one area earmarked for men and another area for women, as befits the mores of the ultra-Orthodox community. The company's staff includes two women, one Devary's wife, an endocrinologist, and the other her assistant.

ISK, formerly known as ThymoFight, is working on drug development for treatment of cancers and autoimmune diseases such as Crohn's, using a proprietary peptide chain (a piece of protein) - more on that below. The peptide has been named "Nerofe," which is based on the Hebrew word for "cure."

So far the company has taken in $1,400,000 in support from the Chief Scientist of the Ministry of Industry and Trade, in two payments of $700,000 each, and has raised "a lot" from private sector investors.

Devary doesn't think he's ready to approach venture capitalists just yet, not that the world's venture capitalists are in a mood to scatter money around these days.

"I want to go to them from a position of strength," he explains. "Anyway, why should I give 50% of the ownership in the company to somebody else?"

Working on a tight budget, ISK "thinks twice" before embarking on any experiment, Devary says. "The fact that we don't have money is a big advantage. The more money there is, the greater the confusion, and it goes the other way around. That's why the present crisis isn't affecting us."

Devary's personal story is not the usual one of an Israeli "start-upist." He found religion 27 years ago, at the age of 18, after meeting his future wife at a science workshop at the Weizmann Institute of Science.

"She was religious and I was secular," he relates. They lost touch for a while but then reconnected and wound up marrying. "She influenced me to become religious," he says.

He completed not one but two bachelor's degrees at the Hebrew University of Jerusalem, in biology and in chemistry, then studied at the San Diego School of Medicine, at the San Diego campus of the University of California, where he received his doctorate in basic medical sciences.

Not satisfied with his academic achievements yet, Devary then studied computer science in his spare time, while teaching and conducting research at the Jerusalem College of Technology. In 1999 he was tapped to found the bioinformatics department at the Cardiac Institute and come 2005, the Cardiac Institute received licensing to launch an academic program for the logical planning of pharmaceuticals.

The year before, Devary took part in a seminar at Tel Aviv University together with a fellow scientist, Prof. Azriel Sandler. The seminar was about the discovery of new hormones consisting of peptides (protein chains). Insulin, which regulates the level of sugar in the blood, is one example of a peptide hormone.

Devary left the seminar feeling dissatisfied. Insulin is made by the pancreas, and when its production goes haywire for whatever reason, diabetes results. Devary wondered why no single drug similar in potential to insulin had been discovered in the last 10 years, even though oceans of money had been poured into the search.

"From about 1994 or 1995 to 2004, some $4 billion had been put into finding new peptide hormones, but the result was beigeleh," he says, or, zilch.

"It turned out that science's ability to discover new peptide hormones was limited," he relates. "We left the seminar feeling irritated, and for a year played around with the idea of finding a new way to discover peptide hormones."

Then came a eureka moment that led to the discovery of a genetic sequence, which might, might just be a peptide hormone on chromosome 10.

Humans have 46 chromosomes, in 23 pairs, and for all the hype surrounding genetic engineering and the revival of the woolly mammoth, scientists are far from understanding how our genetic material - DNA - actually works. Research continues apace, however, and in the case of ISK, the discovery was a "virtual" one, Devary explains - an "intelligent guess" based on better use of existing computerized tools.

They were pleased with the discovery, he says, but didn't actually do anything about it.

Until his wife became involved, that is.

"She heard the conversations and asked why we weren't checking the discovery physically. Perhaps a peptide with medical abilities could be produced," he says. "Finally we decided to check it out in depth. I used my own money and bought a PCR device." That's shorthand for "DNA polymerase chain reaction" machine.

What the DNA polymerase chain reaction machine does is replicate a piece of DNA, using enzymes. That DNA then serves as a template for protein production.

The long and short of it is that the genetic sequence they'd discovered becomes a protein that is expressed in the thyroid gland, which is responsible for the development of the body's immune system.

The thyroid is also "responsible" for the development of autoimmune system diseases, which is when the immune system goes awry, overreacts and attacks the body. Examples include multiple sclerosis, Addison's disease, another is celiac disease.

Discovering that the peptide was involved in immune system development was crucial. Devary and Sandler obtained $100,000 from private investors and family members, and began clinical trials on animals. They found that the peptide was efficient in helping to treat Crohn's Disease, which attacks the intestines, and various conditions of the blood, including leukemia.

So far ISK has registered five patents on its pet peptide, based on its uses. Now Devary intends to take the company to the next stage, though the team has yet to decide which direction to go in - toward Crohn's or leukemia. Meanwhile, Ichilov Hospital, at the Tel Aviv Medical Center, has granted permission for human clinical trials of the peptide for diagnostic purposes. More specifically, the peptide is being tested for two roles: to detect early-stage leukemia, when it's easier to treat, and to detect people with a heightened tendency to develop the disease, Devary explains.

Devary may not want venture capital at this stage, but he does mean to find investors to provide $1.5 million to $2 million. And no, he doesn't mean to use that money to raise salaries.