Nonprofit Aims to Boost Early-Stage Healthcare Startups in Milwaukee
The spotlight for healthcare innovation in Wisconsin often falls on the state capital of Madison, and for good reason. The city’s biotech scene has produced a number of successful startups that got acquired or went public, and researchers at its flagship university have for decades made impactful—and at times, incredibly lucrative—discoveries that have fueled a juggernaut licensing and patenting foundation.
But Madison’s success means the public sometimes overlooks the biotech community in the state’s largest metro area, Milwaukee, which features a major GE Healthcare hub, a leading pharmaceutical manufacturer in Cambridge Major Laboratories, and advanced research at several local universities.
“We have unsung heroes (in the Milwaukee area) that are doing good applied science that’s having an impact on society,” says Daniel Sem, a pharmaceutical sciences professor and director of technology transfer at Concordia University Wisconsin, located north of Milwaukee in Mequon.
For Milwaukee’s biotech reputation to rise to Madison’s level, it will require a blockbuster drug discovery (or two) on the scale of the blood thinner Warfarin or vitamin D derivatives from University of Wisconsin-Madison researchers, Sem says. And local advocates believe Milwaukee-area scientists need more help to turn their ideas into commercial successes like these.
That’s why Sem and other local partners have formed Bridge to Cures (B2C), a new nonprofit that will provide mentorship and seed funding to medical entrepreneurs, primarily university researchers spinning out companies. B2C is partnering with Medical College of Wisconsin, University of Wisconsin-Milwaukee, Concordia University, Marquette University, Milwaukee School of Engineering, and BloodCenter of Wisconsin.
B2C will use a “venture philanthropy” model similar to that of BrightStar Wisconsin Foundation, in which any returns from the nonprofit’s startup investments are put back into the fund for future investments, says Sem, B2C’s co-founder, president, and CEO. B2C received $140,000 from Wisconsin Economic Development Corp. and will now seek private donations to match that grant.
The plan is to invest $280,000 total in four local healthcare startups annually. B2C’s strategy will be to help entrepreneurs take ideas in pharmaceuticals, medical devices, and clinical and diagnostic services to the point that they’re ready for venture capital, ideally within three to five years. For example, with drug development, B2C aims to provide seed money and expertise that will help the venture advance from the point of making a discovery that was funded by federal grants to filing an investigational new drug application prior to clinical trials.
After soliciting applications later this year, B2C’s investment committee—which will include Giovanni Ferrara, a venture partner with Novartis Venture Funds in Cambridge, MA, and Loren Peterson, a managing director of Madison-based Venture Investors, among others—will pick the most promising ideas for the first year’s group. Those entrepreneurs will participate in workshops helping them develop and fine-tune their business plans, Sem says. B2C will eventually whittle the group down to about 10 companies that will pitch to a panel of VCs and biotech experts from Wisconsin and both coasts.
The winning pitch in the product category will receive a $200,000 grant and office space in B2C’s headquarters in the Innovation Accelerator building on UW-Milwaukee’s Innovation Campus in Wauwatosa, west of Milwaukee. The winning services company will get $42,000 and office space. The runner-up in the product category will receive $28,000, and the second-place service startup will get $10,000, according to B2C’s website.
B2C plans to secure a new $280,000 pot annually, half from public funds and the other half from private donations. Sem says one option could be to designate a new theme each year, seeking startups that aim to treat a certain disease or medical condition that matches a priority for the organizations that donated to the B2C fund, such as leukemia or Alzheimer’s.
Obviously those grants are chump change for most new healthcare ventures, particularly pharmaceuticals, but Sem says the more important value B2C brings is the business training and intellectual property expertise, as well as connections to investors. (The investors on the panel aren’t expected to put money into B2C startups, but they could do so, or at least connect the entrepreneurs with more VCs, he adds.)
It’s getting more difficult for biotech startups to raise venture capital, says Sem, who co-founded Triad Therapeutics in San Diego and helped it raise two rounds of funding totaling $42 million.
“That much money, you’re not going to raise nowadays in this environment, so you have to find a way to build drug development companies, sort of bootstrap them,” Sem says.
B2C is the latest effort by Milwaukee-area institutions to boost the commercialization of local medical research. The nonprofit is partly a byproduct of a consortium of eight higher education institutions and medical centers, the Clinical and Translational Science Institute of Southeast Wisconsin. Other recent initiatives include UW-Milwaukee’s partnership with Medical College of Wisconsin to build healthcare-related mobile apps and the appointment of former GE Healthcare executive Bill Clarke as Medical College of Wisconsin’s director of research commercialization.
“The momentum has slowly been building,” Sem says.
He attributes it to a convergence of several broad factors, including a downsizing of Big Pharma, which he says means the industry is increasingly looking to small biotech companies for innovation. The federal government has recognized this, Sem says, and NIH is starting to fund not only basic research, but also drug discovery.
“They too are…trying to solve this problem. Where are the new medicines going to come from?” Sem says.