Life goes on, even in the face of great tragedy. Startup life also goes on, even in the face of great economic decline.
That was one message that came through loud and clear yesterday at the Early-Stage Life Sciences Technology Conference, an annual event (this was the fifth) put on by the Massachusetts Technology Transfer Center. A dozen hopeful startup founders and technologists gathered at Harvard Medical School in Boston to share their entrepreneurial visions with potential investors, partners, and others. In the process they painted a picture of a world with new ways to fight breast cancer and deliver drugs to the brain, gel-based scaffolds to promote tissue regeneration, safer and more accurately positioned catheters, and even less painful tonsillectomies.
The presenters, all pre-venture money but some with angel funding, represented recently formed Massachusetts companies or “faculty of Massachusetts institutions with technologies that could be the basis of a start-up or license,” according to the application guidelines. The forum provided an opportunity for these folks to give 10-minute pitches laying out the market for their products, their business strategy, and their technology, and describing the funding they are looking for to get off the ground—and in some cases, to get all the way to profitability. But to kick things off, I had the privilege—and fun—of moderating an opening panel on the climate for startups today.
I had four great guests: Carl Berke, associate director of Partners Innovation Fund and co-founder of MA Medical Angels; David Beylin, program manager of the SBIR Development Center at the National Cancer Institute; Aaron Sandoski, managing director of Norwich Ventures; and David Steinmiller, founder and COO of Woburn, MA-based Claros Diagnostics, which just raised a $4 million B round.
In other words, three people with different flavors of money for startups, and one who had successfully raised money in this climate. We had a great discussion about current conditions for launching a life-sciences startup—and yes, there is life in life sciences. The main message for me was that while innovation is always messy, it’s even messier today, with a multitude of eddies swirling in the startup pool–as opposed to rosier times, when the flow is more uniform. Here are some highlights of the conversation:
—Money is still available from venture firms and angels, but it comes with more strings. Berke pointed out that investors are asking for a lot more in capital efficiency in startups, challenging development plans more carefully, and doing more tranching of investment dollars to reduce risk.
—More virtualization and outsourcing—but at a potential cost. At the conference, and in my discussions before the panel, panelists mentioned that forming more virtual companies and outsourcing non-core work can save a lot of money in today’s cash-strapped climate. At the same time, they pointed out, workers in such settings don’t necessarily have that same passion and drive as when everyone is together, going all-out to fulfill a startup’s vision. Sandoski predicted that there might even be a little bit of a backlash a year or two from now against so much outsourcing and virtualization.
—-Strong interest in the new SBIR (Small Business Innovation Research) Phase II Bridge Program, which launched last May to provide up to $1 million per year for up to 3 years to aid development of cancer therapies, cancer imaging technologies, and cancer diagnostics. Beylin said the program, which requires at least a 1:1 match by a third party investor, corporate partner, foundation, state fund, etc., saw a 30 percent spike in applications last December. The first projects funded under the program will be announced soon.
—On the positive side of the ledger, this is great time to hire talented, qualified (even over-qualified) employees in the life sciences. Real estate is also far cheaper. Steinmiller pointed out that space in Cambridge was out of the question for Claros not so long ago. Now it is at least possible. “Not that we want to be in Cambridge,” he quickly added.
—-Entrepreneurs seem to be getting more creative in a down economy. Sandoski said he had seen a doubling of interesting things coming in his door.
—Coming wave of M&A. Big Pharma, medical device companies, and other large concerns are already on the prowl, sensing bargains in cash-strapped startups. Said Sandoski in our pre-conference call, “What I hear from folks is pretty much everybody’s for sale.” Berke, meanwhile, predicted the demise of 30 percent of biotechs and venture firms.
Towards the end of the session, I asked the panelists for take-home advice–should entrepreneurs hold off on their plans in the current climate or plow ahead? No one thought they should put their ambitions on ice, but Berke did say if entrepreneurs are able to incubate their ventures for six months longer in the safe haven of a medical school or university lab, they might find a better climate to come out in.
That said, none of the companies presenting seemed to want to go that route. They were looking for funding—now. Here’s the list of those firms, in alphabetical order, including the university or program each company is associated with, the core contact, and an excerpt of the company’s self description from the conference program (you can find last year’s presenters here):
Acetylon Pharmaceuticals (Harvard University, Dana-Farber Cancer Institute)
Walter C. Ogier, business founder
“Acetylon is focused on development and commercialization of next generation, selective, small-molecule Histone Deacetylase (HDAC) inhibitors with enhanced therapeutic efficacy and tolerability versus current alternatives.”
AugmentRx Medical Technologies (University of Vermont)
Stuart K. J. Smyth, president and CEO
“AugmentRx was created to manufacture, license and market a new class of bioceramic materials that are microporous and are not brittle.”
Unnamed company (Boston College)
Michael J. Naughton, professor
“This is a retinal implant technology that could dramatically improve vision in patients suffering from incurable retinal diseases such as retinitis pigmentosa (RP) and age-related macular degeneration (AMD).”
Cadrus Therapeutics (UMass Medical School)
David Easson, president
“Cadrus Therapeutics, Inc is developing an innovative, receptor mediated, drug delivery technology to enable oral delivery of many of today’s injectable-drug products.”
Kathleen McMillan, president
“gRadient is developing a device for precisely controlled thermal therapy as a safer, less costly, and painless alternative to tonsillectomy in children and adults.”
Immuneering Corporation (MIT/Harvard University)
Benjamin Zeskind, founder and CEO
“Immuneering is developing groundbreaking patient stratification technology to pre-identify patients who will respond to specific therapies.”
Lumos Catheter Systems (Children’s Hospital Boston)
Farhad Imam, president, CMO
“Lumos Catheter Systems has developed a simple solution to enable real-time visualization of invasive catheters…during insertion procedures to reduce the risk of misplacements.”
Unnamed company (McClean Hospital)
Miles Cunningham, laboratory director
Technology 1: “The Intracerebral Microinjection Instrument (IMI) is the only neurosurgical device that has a minimized delivery cannula diameter and allows dissemination of medicine from a single proximal brain penetration…”
Technology 2: “Convection Enhanced Delivery (CED) is the continuous injection into the brain under positive pressure of a fluid therapeutic.”
Daniel Katzman, CEO
“Moma develops therapies for regenerative medicine employing injectable gel-based scaffolds designed to reprogram the function of cells in vivo and promote tissue regeneration.”
Jason Koshnitsky, CEO
” Orbital Therapy…is developing a dedicated self-shielded radiation therapy device for the treatment of breast cancer.”
Rajiv Gupta, MGH laboratory director
“Our mission is to devlop a suite of image-guided, patient-friendly electromechanical tools that allows for more accurate diagnosis and treatment of disease.”
Unnamed company (UMass Medical School)
Alexander B. Sigalov, research assistant professor
“Our technology, which is based on our novel model of immune signaling…prevents communication via the cell membrane between the receptor and its associated signaling proteins…thereby enabling small molecules and doses.”
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