A Look at November's Meeting

So You Want to Start a Biotech Company

by Jerrold M. Shapiro, Ph.D.

Keynote speaker Ric Schumacher makes a point.

Richard T. Schumacher, CEO, President, and Founder of Pressure BioSciences, Inc., took us on a fastpaced roller coaster ride through the ups and downs of his career in biotech. As the roller coaster pulled back into the station, he shared his thoughts on what he learned in his first 33 years in business:

• Don't hire people who will later fire you
• When your stock appreciates by a factor of 100 - sell quickly
• Be prepared to take a healthy dose of "ego reductase" each time things are really going well and/or each time you think you don't need to listen to another's advice...because it usually is not that easy

Then after a bit of laughter, he shared his thoughts on what he really learned in his first 33 years in business:

• When opportunity knocks, answer the door - but always look through the peephole first
• Plan your work and work your plan
• Contacts make contracts
• Hire well and treat your employees with respect
• Say "thank you" to every customer at every opportunity
• Don't go it alone - share your vision with staff/colleagues
• There are a number of right ways to raise capital - and a number of wrong ways - do your due diligence, keep emotion at bay, and do what is best for you at the time
• There is no substitute for hard work, but balance your ambition with the other parts of your life

During the break, Schumacher answers a question.

For the biotechies in the audience, Schumacher explained the advantages of Pressure Cycling Technology (PCT) which is safer, faster, more versatile, more reproducible, and more powerful than current technologies that are used to break apart cellular structures, yet PCT is gentle in that it doesn't shear nucleic acids and preserves the biological activity of proteins.

WesaGen, Inc.

Dr. Mustapha Abdelouahed, Ph.D, president of WesaGen, Inc., presented the company's mission of developing a new generation of cancer treatments using drugs that prevent the tumor from developing the blood vessels it needs to feed itself and grow. These nextgeneration drugs are called angiogenesis inhibitors, and originated with Judah Folkman at Children's Hospital in Boston in the 1970s. WesaGen targets the 676,000 people who now have lung, breast or prostate cancer, hoping to reduce the 134,000 deaths (one in five) from these cancers. He explained the mechanism of action of their drugs.

Within the Type 1 segment of their biomolecule are inhibitors of the growth of the endothelial cells that line the new blood vessels. Abbott Laboratories, a competitor, has the ABT-510 version of this segment in Phase II human clinical trials in various cancers. WesaGen's molecule is almost 700 times more active that Abbott's, and is effective in the nanomolar range.

Case Review

Joe Blanchard, Principal at Landhouse Strategies, said that the company plan for an IPO in 2008 was a little aggressive, and that similar companies complete Phases 2 and 3 of their clinical trial before attempting this. He would like the business plan to contain more detail on the proposed clinical trials and their other products.

Mitchell J. Martin, President of C4C Consulting, has seen significant improvement in the business plan since their meeting last week, but it still needs more detail on expenses, and a contingency plan. A competitor with a less effective product doing $10 billion in sales is good to discuss.

W. Grant McGimpsey, Ph.D., Director of the Bioengineering Institute at WPI, would also like to see a more realistic timeline for the clinical trial, and asked a significant strategic question, "With all the competition to develop a cancer drug, why not use this class of drugs to go after a niche market in treating macular degeneration in the eye?" He also reminded us that for a company with only one drug, acquisition was a more likely exit strategy than an IPO.

Joe Blanchard suggested that the company get someone excited about the product and get funding from foundations and angels, not VCs. McGimpsey recommended the federal funding route via SBIR/STTR because the company retains its intellectual property. Abdelouahed has scheduled a meeting with the NIH that looks positive for funding.

Panelists respond to WesaGenÕs case, (from left) Joe Blanchard, Mitchell Martin and W. Grant McGimpsey.

Q & A

Moderator Mitch Sanders, President, ECI Biotech, ably fielded several questions from the audience. Randy Chinnock, President of Optimum Technologies, Inc. asked if the plan would be stronger if the company had more than one owner, and Mitchell Martin responded that while more risky, investors prefer to deal with one owner. Regarding the timeline, Richard T. Schumacher said that it seems to always take two months or longer from when you are sure the deal will go through until you get through all the legal work and it is signed, so it was unlikely that WesaGen would raise the funds by the end of the year, as indicated on the financials presented by Abdelouahed. In response to Martin's question about dividing the patents and licensing them to multiple investors, Abdelouahed noted that they might do so with another patented platform technology in nanotechnology.

Jerry Shapiro is a member and past Chairman of the WPI Venture Forum Program Committee. He is the founder, President and CEO of Fem-Medical LLC in Framingham, Mass., which gives incontinent women the freedom to enjoy their lives via nonsurgical drug-free treatment. He can be reached at shapiro@FemiScanUSA.com.