The winning teams were announced today in the Neuro Startup Challenge, a two-year-old virtual accelerator that helps academic researchers and entrepreneurs build companies around promising technologies developed by NIH researchers.
The 13 winners include a team from the Medical College of Wisconsin, which is launching a startup called Angio360 Diagnostics to commercialize a blood-based test to detect cancer in humans and pets. Other winners include teams from the University of North Carolina at Chapel Hill, Duke University, the University of Texas at Houston, and the California Institute of Technology.
The Center for Advancing Innovation (CAI), a Bethesda, MD-based nonprofit, started the competition as a better way to realize the potential benefits of the valuable research being done by NIH-employed scientists. The problem is the government agency isn’t really set up to effectively spin those patented inventions into biotech companies, says CAI founder and CEO Rosemarie Truman. “They don’t have a commercialization marketing group,” she says in a phone interview. “They don’t have anybody who pounds the payment and says, ‘Look at these inventions.’”
With the startup challenge, CAI evaluates a large pool of NIH patents to find the ones with the most potential for business success. Then it recruits entrepreneurial teams to form companies based around those inventions. The first startup competition focused on breast cancer, and it produced 11 startups, six of which have gone on to strike patent licensing agreements, Truman says. “This is an innovative approach to create a new channel to get these inventions out,” she adds.
More than 578 students and entrepreneurs from around the world formed 70 teams to compete in the second annual challenge, which launched last August and focused on therapeutics, devices, and diagnostic tests for neurological diseases. Over the next several months, the teams received mentorship from a horde of pharma executives, venture capitalists, and academic researchers, who helped them form business plans, craft their research and development strategies, and hone their pitches.
The winners announced today successfully passed through two phases of the contest. Now they enter the final stage, during which they will incorporate their businesses, apply to license the NIH patents, and begin the work necessary to earn regulatory approvals.
Although the winners aren’t guaranteed to acquire the patents they’re seeking, the challenge’s organizers say the “risk is remote” that another organization would swoop in snag the desired patents first. It’s unusual for NIH to receive more than one application for a family of patents, challenge organizers say. Plus, NIH’s tech transfer rules give preference to small business applicants, and challenge winners are getting advice about crafting a detailed application that should increase their chances of success.
The 13 winners will each receive a $2,500 cash prize from the Heritage Provider Network. Two other teams were named as finalists; they won’t get a cash prize. But all 15 teams will now receive additional mentorship and assistance with raising seed capital and negotiating license agreements with NIH, Truman says. In a few months, the teams will also have an opportunity to pitch their startups to a room of about 120 investors at a biotech industry conference.
The winners, of course, have a long way to go to achieve commercial success. Even if they grab the rights to key technology and seed funding, they must still navigate a series of potential pitfalls that any life sciences company faces, including proving that the technology works as envisioned, securing FDA approval, and convincing potential customers to buy their products.
Stephanie Cossette, co-founder and CEO of Milwaukee-based Angio360, is ready to give it a shot. Trying to build a life sciences startup is “very challenging, and I think will be very rewarding,” she says.
Cossette is a post-doctoral fellow specializing in tumor vasculature research. This is her first time leading a biotech startup. But she and several of her Angio360 co-founders have industry experience, including consulting for local biotech companies via a Medical College of Wisconsin program called Postdoc Industry Consultants, or PICO.
Cossette’s team—which includes seven people working part-time on the startup—has also received mentorship and business training through Milwaukee accelerators The Commons and Bridge to Cures, she says.
Angio360 intends to develop diagnostic products based on several blood biomarkers that are tied to blood vessel growth in tumors. “Because all solid tumors require blood vessels, this is a diagnostic tool that can be used for a wide range of cancers,” she says. Currently, the company plans to target brain and ovarian cancers, she adds.
It will develop diagnostic tests that could be used for early detection of tumors, measuring how well a cancer treatment is working, and monitoring tumor recurrence, Cossette says. Its customers would include doctors, as well as drug developers that could use it as a companion diagnostic. That’s also a “good opportunity” to find pharma partners “who would hopefully want to acquire us down the road,” she says.
Angio360 is trying to break into an increasingly crowded market of companies offering blood-based cancer tests, which include Johnson & Johnson, San Diego-based Epic Sciences, and Houston-based ApoCell, among others. However, these tests often target lung, breast, prostate, and colorectal cancer. There are fewer effective blood-based diagnostics targeting brain or ovarian cancer, Cossette says.
One interesting twist that could help Angio360 get off the ground: It will first target the pet care market.
Pet owners are spending more money on healthcare for their animals these days, Angio360 says, and they might be willing to try new diagnostic and treatment options. “Cancer is the leading cause of death in both canines and felines, but the tools to accurately detect tumor growth are largely ineffective,” the company says. Its diagnostic “toolkit will fulfill this unmet need by offering pet owners an inexpensive and non-invasive test to confirm cancer diagnosis, while enabling veterinarians the ability to develop more personalized and cost-effective treatment plans.”
Going after the veterinary market first, which has fewer regulatory hurdles, means Angio360 should be able to start generating revenue faster than if it went after FDA approval for a human cancer diagnostic first. It intends to use the revenue from its animal cancer diagnostic business to help fund its entrance into human cancer diagnostics and decrease the need for additional venture capital.
That was an approach that seemed to resonate with contest judges. It certainly impressed Truman, who called Angio360’s plan a “very creative bootstrapping model” that is “operationally achievable.” “I’m very excited about their plan because of the feasibility,” she says. “I can’t imagine an investor would say no to them because they’re de-risking in a lot of different ways.”
Angio360 has gotten some early validation from at least one potential backer. Bridge to Cures, the Milwaukee nonprofit helping to train and fund local biotech startups, has offered the startup up to $50,000, Cossette says. That’s contingent on the company securing matching private funding, and the deal would need final approval from the Bridge to Cures board and the Wisconsin Economic Development Corp., which provides funding to Bridge to Cures, she says.
Daniel Sem, Bridge to Cures CEO, says Angio360 is a “very promising startup.” “Their approach of first targeting the veterinary market with the cancer biomarker-based diagnostic they plan to develop is very pragmatic, yet has potential for significant upside as well,” Sem says in an e-mail message. “It is also great to see them attempting to leverage latent NIH [intellectual property] assets via this program.”