Sometimes a startup is born when a couple of old friends bump into each other after years of going their separate ways. That’s what happened in February for Seattle Sensor Systems, when Carole Spangler e-mailed University of Washington genomics researcher Clem Furlong to ask him a scientific question and to catch up personally.
He wrote back with an update about how his family was doing. And Furlong added a more pointed question of his own.
“He told me, ‘I’m looking for somebody to run my biosensor company. Are you interested?'” Spangler recalled. “He said the magic words.”
These two had a lot to catch up on. They first met in the late 1990s when Furlong was working with Texas Instruments to develop a miniaturized chip for surface plasmon resonance. The technology is versatile enough to detect a wide variety of viruses, bacteria, small chemicals, or proteins in a sample. Spangler, a scientist herself with a doctorate in biophysics from Johns Hopkins University, had the job at UW’s tech transfer office in which she negotiated an agreement with Texas Instruments to support Furlong’s research and development. She finished the deal with Texas Instruments, learned the ropes of industry relations at UW, and took night classes on campus to get her MBA. She then left campus in 1999 for a stint as director of business development at Seattle-based Dendreon (NASDAQ: DNDN).
Years went by. Spangler took some time off to be a mom, teach a few classes at Seattle Pacific University, do some consulting, and land a full-time gig doing business development for Seattle-based Clario Medical Imaging. Then came her reunion with Furlong.
Seattle Sensor Systems has been around since it was incorporated in 2002. But in just four months since taking over earlier this year, Spangler is suddenly running a reborn company with a fair amount of buzz in local startup circles.
The idea is to commercialize that miniaturized surface plasmon resonance (SPR) tool. The basic technology has been around in the lab for 20 years, and there are currently three or four main companies, including GE Healthcare, Bio-Rad Laboratories, and Cepheid, that market large cart-bound systems that cost about $50,000 to $300,000. Those tools are operated by skilled technicians in central biology labs who can identify an unknown contaminant in, say, a water sample, or a mysterious white powder that officials fear might be a bioterrorist agent.
One of the big drawbacks of this standard technology is that it requires somebody in the field to package up a sample, ship it to the lab, and wait for a result in two or three days, Spangler says. No one has yet commercialized a portable version of SPR technology that can be used directly in the field, she says. That’s what got her excited. Furlong’s team at UW had spent 10 years, and about $8 million of grant funding from the Department of Defense, to build such a handy tool that could be carried around in the back of a Humvee. Unlike a mass spectrometer or a polymerase chain reaction machine, an SPR tool is thought to be more versatile because it can detect more than just one type of biological substance, Spangler says.
The portable SPR machine created by Seattle Sensor Systems, called Bio-Spy, isn’t just an idea on a whiteboard. The prototype weighs about six pounds and is about the size of a lunchbox. It is supposed to be able to simultaneously detect 24 different pathogens out of hundreds of possibilities, and to give the answer on the spot in 10 minutes. Suppliers have already been lined up to provide components, and a couple research versions have been assembled and sold to scientists at the University of Maine and Mississippi State University for $30,000 apiece. The company is built on a razor/razor blade business model, in which customers buy the machine first and then pay $250 for disposable chips that can be used about 100 times.
What was really needed, Furlong told his old friend back in February, was a CEO who could craft a business plan to seize the technology’s true potential, and tap into a bigger market than just a few researchers.
So Spangler jumped at the opportunity. She worked on crafting the business plan and her pitch for investment capital.
Then a couple of big breaks happened in April. Spangler got on the docket for the Zino Life Sciences Investment Forum in Seattle. She did well enough there to become one of three finalists competing for a $50,000 round of angel investment. After her presentation, someone in the audience from the food services industry approached her and suggested the tool might be useful for food safety screening.
Then, the very next day, another important thing happened. Spangler pitched the company again at the Technology Alliance’s “Innovation Showcase” at the Rainier Square Conference Center. While Spangler talked about the potential for military and research customers that day, a different customer from the food services industry was in the audience and made the very same point about the need for food safety screening.
“I was awake then and could smell the coffee,” Spangler says.
It made a lot of sense to Spangler. Today, there are big farms in places like California’s central valley that would like to do spot checks to see if the spinach they are harvesting is carrying, say, an E.coli or salmonella pathogen. Because the shelf life of spinach is only about two weeks, and testing takes two to three days, it’s not practical to do wide-scale testing across a lot of acres.
This got Spangler thinking about a new market, and running the numbers. No one really knows the total cost of food-borne illnesses in the U.S., although estimates from the USDA and FDA range between $6.9 billion and $35 billion. The more Spangler sized up the market, the more she liked it. She started rewriting the business plan to make this the company’s top priority.
“The nice thing about food industry is they have deeper pockets, and a faster sales cycle,” compared to academic researchers, Spangler says.
Of course, this new venture for Spangler is all still in its early days. The device needs a few design tweaks for the commercial market, “to make it prettier” and to ensure that it’s simple enough for someone to use without training, Spangler says. The financial projections are for the company to turn cash flow positive by late 2011.
But that’s not where Spangler’s vision ends for Seattle Sensor Systems. She’s scoping out the next new market, with something even smaller—a true next-generation handheld device. Something like that could be useful for cruise ships, or maybe in ambulances, Spangler says. That lighter device could be ready by 2014, she says.
Spangler expects to find out soon whether she has passed the due diligence phase with Zino, and will win the angel group’s $50,000 prize. Whether she gets it or not, the company is staying lean, watching its pennies for now as it seeks to cement some of these emerging relationships with customers. A lot needs to happen for Seattle Sensor Systems to make it big, but Spangler definitely has a spring in her step that says she believes it will happen.
“I don’t tend to sleep much,” Spangler says. “It’s fun and exciting. I find you put time into things you love. It’s not like work.”