I tried to implement an outsourcing model in the 1980s, and it wasn't easy because there were just so few contractors to manage the work. Now there are many companies to pick and choose from, and they actually bid for our business as opposed to having to beg them to work for us. And so it can be done, and it can be done well.

The second thing is that Wall Street was not receptive to this kind of model, and if Wall Street's not receptive, good luck raising capital. And the reason Wall Street wasn't receptive is because they were unfamiliar with the idea and figured that if you're going to be a bio company and ultimately a pharmaceutical company, you had to have a big infrastructure in order to do it. Now Wall Street embraces it. Even Big Pharma is outsourcing to some degree.

Is it more attractive to venture capitalists?

The real issue is that it doesn't work for every biotech company. In our case it works beautifully because we have a discrete technology; we have a lot of IP that covers it; it's multifaceted so we can expand the platform; and there's a lot of outside interest in collaborating with us.

So there are many researchers and others who want to help us, even though we control the IP. That's why it plays well into our hands. Whereas, if you were strictly in early-stage research, you might not want to outsource too many functions because you could lose control of the IP, and that's always an issue to consider. Or if you were building tools or accessories for the industry, then that might not lend itself to outsourcing. If you want to be a laboratory that tests DNA, you're not necessarily going to outsource that.

Is this a long-term strategy or one you'll use until you commercialize your first product?

We will continue to do what we're doing as long as we can create value. We don't want to become a multinational pharma company. It's unpredictable where this company will be in five years.

Would you say outsourcing has cut down on the time and cost it's taking to develop T-beta-4?

It's given us a lot of flexibility. People always ask how I sleep at night. You're able to sleep at night knowing that you don't have this big infrastructure that you've got to support tomorrow, with no revenue coming in. Because with contractors you know what your costs are, and you know that if your capital markets allow it, you can turn those costs up easily, and if the capital markets get tight, you can turn them down almost as easily. But with an infrastructure, you're talking about hiring and firing people and selling assets.

Have you ever done the calculations to see how much you're actually saving?

If you look at the past five or six years of operations, and how much we've spent, I think it's probably only around $15 million. We have about $13 million in the bank, so in total, we've probably raised about $30 million. We're now in three Phase II trials and getting ready to start two more in very important indications. That's a pretty good bang for your buck over five or six years.

RegeneRx was founded in 1982 as Alpha 1 Biomedicals. At the time, Allan Goldstein, now the company's chief scientific advisor, was working on a treatment for hepatitis B and C using a molecule he discovered, thymosin alpha 1.

Alpha 1 BioMedicals would ultimately license thymosin alpha 1 to SciClone Pharmaceuticals, which then commercialized the product abroad. The drug currently does about $30 million in sales, mostly in China, under the brand name Zadaxin.

A dispute with SciClone caused Alpha 1 BioMedicals to lose control of the product, and the company was dormant for a short time in the mid-1990s.

Current president and CEO J.J. Finkelstein returned in 1999 with an investment group and bought up about half the company. He then implemented its current outsourcing business model. With a new identity, RegeneRx, the firm would go on to develop another molecule also discovered by Goldstein: thymosin beta 4, which is being tested for both large-market and orphan indications.

J.J. Finkelstein has served as CEO of three early-stage biomedical companies, and has raised $60 million in capital over the past two-and-a-half decades. He was CEO of RegeneRx from 1984 to 1989 and vice chairman from 1989 to 1991. He returned to the company in 1999 to develop its current lead molecule, thymosin beta 4.