From Idea to Enterprise
Moving a research discovery to the marketplace is a difficult journey for many scientists. Two NC State researchers share their experiences charting a smoother course.
By David Hunt
In his comfortable office in Polk Hall on the campus of North Carolina State University, John Cavanagh lifts a tall glass trophy off his desk with a mixture of pride and good humor. It's the Entrepreneur of the Year award that Cavanagh and his colleague, Christian Melander, recently earned from the university's Office of Research, Innovation and Economic Development. Perhaps the trophy's teardrop shape is a metaphor, he grins, representing all the blood, sweat and tears the two researchers have invested in their discoveries over the past few years.
The award comes with no small dose of irony.
"We're not good at running a company," Cavanagh says. "We don't really want to understand business. We just want to hire good people and get out of the way."
It's true that great scientists don't necessarily make great businesspeople. Like most, Cavanagh approaches the business of marketing his discoveries the same way a freshman approaches organic chemistry — with a combination of dread and bewilderment.
"A lot of my buddies in academia have started companies over the years," he says. "But they've all crashed and burned. Why would you ever try it?"
And yet he and Melander have tried it. The men are co-founders of Agile Sciences, a startup company headquartered on NC State's Centennial Campus that's raised millions of dollars in funding from public and private sources over the past two years, including $2.5 million from the U.S. Department of Defense Small Business Innovation Research/Small Business Technology Transfer program, known as SBIR/STTR.
The business is a good fit for the researchers precisely because they steer clear of the day-to-day management of the enterprise. They're driven by science, not profits, the men explain.
"On a daily basis, we don't think about research to benefit the company, we think about research to benefit humanity and our students," Cavanagh says.
"And like all academics, we think about publishing our research," Melander
In fact, it's unlikely the pair would have launched a company except for one small thing: a very big discovery. In 2007, Cavanagh, a professor of biochemistry, and Melander, an associate professor of chemistry,
were studying proteins that help bacteria survive. A class of these, a slimy collection of microorganisms called biofilms, is found virtually everywhere, from desert hot springs
to arctic glaciers and dental plaque.
Biofilms comprise about 80 percent of the world's microbial environment and are, according to statistics from the National Institutes of Health and the Centers for Disease Control, responsible for up to 80 percent of all bacterial infections. Their tough, sticky coating gives many bacteria the ability to resist antibiotics. And they form in the lungs of people with cystic fibrosis, complicating management of the disease.
Biofilms also have an enormous impact on agriculture and industry. They destroy crops, foul the hulls of ships and coat medical devices. To see biofilms in action, look no further than your own teeth. If you've ever had plaque scraped away during a trip to the dentist, then you already know that getting rid of biofilms once they adhere to a surface is really difficult.
To create chemical compounds that can scrub away biofilms, Cavanagh and Melander looked to a sea sponge, Agelas conifera, that lives in the Caribbean Sea.
"Somehow, this sponge that can't run away and that has no immune system stays remarkably clean while everything around it is covered in biofilms, so the sponge has some molecular way of keeping them at
bay," Cavanagh says.
Using the sea sponge as a model, the researchers made molecules with the same properties as ageliferin, the compound that keeps the sponge free of biofilms. Unlike the original found in nature, the compounds the scientists created are not toxic to mammals.
Almost immediately, the researchers realized the implications of their efforts.
"It became apparent that these molecules overcame all bacterial resistance," Cavanagh says. "If it had a smaller impact, I think we would have been less enthusiastic."
Melander says he did a quick calculation on the back of an envelope.
"The Navy has 290 ships and the amount of buildup on their hulls due to biofilms adds 25 percent in extra fuel costs," he explains. "That works out to $1 billion a year just because of the ships moving slower, not to mention more than a trillion tons of extra CO2 released into the atmosphere."
Cavanagh sits forward in his chair.
"There are hundreds of applications for this discovery," he says.
MRSA, of course, is the most obvious. Methicillin-resistant Staphylococcus aureus — its official name — is the deadly staph infection sometimes acquired by patients during a hospital stay. It kills more than 20,000 people in the United States each year and adds more than $8 billion to the annual cost of health care. It's a tough infection to combat since it essentially disarms antibiotics, the wonder drugs that have nearly eliminated diseases like tuberculosis from the industrial world over the past seven decades.
When antibiotics interact with resistant bacteria, receptors on the surface of the bacteria identify the antibiotic as a threat. The bacteria can then choose what to do to survive. MRSA has two main ways to defend itself against antibiotics. It can shield itself by creating a biofilm — a thin layer that prevents the antibiotic from entering its cell — or it can change its own genetic makeup, so the antibiotic can't get in.
"Like any bacteria, MRSA goes in, sets up shop in the body, and then essentially pollutes the environment around itself — that 'pollution' is what makes people sick," Melander says. "In normal situations, antibiotics go in, disrupt the cell structure of the bacteria and destroy it. Then your body can clean up the mess. But when a bacterial strain becomes resistant to antibiotics, we have to continue upping the dosages or strength of the medications we use against it. Eventually, the treatment can become just as harmful as the bacteria itself."
But instead of trying to directly combat MRSA's defense mechanisms, the researchers' compound works by disarming them before they can be activated. It interferes with the bacteria's ability to recognize the antibiotic, so it can't initiate a defensive response. The compound effectively recharges the antibiotics and makes them effective again.
The next step is to increase the compound's strength so that the antibiotics work at normal dosage levels. If what he's seen thus far in test tubes turns out to work as well in people, Melander says, the compound will provide an effective weapon against MRSA, without the side effects associated with high dosages of super-strong antibiotics.
Call of Duty
The discovery resulted in two opportunities. The first was a call from an investor offering seed money to establish a business. The second was the chance to work with the Department of Defense to help wounded soldiers.
The offer from the Pentagon was easy to accept, says Melander. The wounds infected with MRSA are on the skin, he says, so they can be treated with a topical application of the compound.
"We don't have to worry about absorption so we can use a high dose," he says. "That's something we can solve."
In addition to helping the troops, the project provided a research benefit as well.
"Now, we finally have a compound that they can test," he says. "It proves a point: if you put it on an infection, it gets better."
But what about the more common type of MRSA that attacks the body internally? It's a tougher and much longer process to develop a pharmaceutical product that wins FDA approval and succeeds in the market.
"I have no delusions of grandeur," Melander says. "There's no way I believe that some compound we designed in our lab is going to go straight to approval. There will have to be refinements."
That's where a company like Agile Sciences comes in. It takes the research and development power of a business — a well-funded business — to see a potential drug through the federal approval process. And so in 2007, armed with the seed money from the investor, Cavanagh and Melander began the work of turning an idea into an enterprise.
To make up for their lack of business acumen, they turned to NC State's resident experts, the professionals in the Office of Technology Transfer.
"You have to give the people in tech transfer their due," Melander says. "They didn't look at how we could make a quick dime, they looked at how we could really advance the technology and improve the state's economy. It's not about just making money off a patent, it's about creating a company with longevity that provides jobs and opportunities. That's much more profound than a quick buck."
For his part, Cavanagh found working with the university's licensing office more helpful than he expected.
"I know that at other institutions they try to get as big a slice of your company up front as they can," he says. "But here, they were savvy enough to say we want you to succeed. You're onto this enormous discovery; we'll let you get on with that and just take a little bit."
The technology transfer staff, it turns out, has a solid track record of commercializing laboratory discoveries. They've helped researchers spin off more than 100 companies and guided more than 270 products to market. With more than 200 patents pending, more are sure to follow.
That expertise is vital, says Maria Rapoza, vice president of science and technology development at the North Carolina Biotech Center, a state-funded organization that supports North Carolina's thriving biotechnology industry.
"It takes a whole ecosystem to move ideas from the lab into the commercial marketplace," she says. "There are so many steps along the way and the right thing has to happen at the right time. It's a tricky process, but it can yield tremendous benefits for business, society and individuals."
In fact, the 500 companies that make up the state's biotechnology industry are responsible for 226,823 jobs and $64.6 billion in annual business volume. Plus, they pay North Carolina's high-tech workforce more than $12.7 billion in salaries and contribute nearly $2 billion per year in taxes to state and local government, according to a 2010 study by Battelle Technology Partnership Practice.
For Cavanagh and Melander, who have more than a dozen patent applications in process, the business side of research has been remarkably low maintenance. The CEO of Agile Sciences, Keith Stoneback — a 1974 All-America linebacker and two-time Duke University most valuable player — keeps the goal in sight for the team. He has more than 30 years' experience in the health care field, much of it shepherding startup companies to success.
"Keith and his team don't need the founders looking over their shoulders," Melander says.
The researchers trust Stoneback's business instincts, even if they don't share them. When the scientists came to him recently with an idea for a new product, the CEO was candid.
"That's a $100 million market," he told them. "I wouldn't get out of bed for that."
That's just fine with Cavanagh and Melander, who aren't driven by things like market share or profit potential.
"John and I just think about science," Melander says.
Collaborate to Innovate
It's that focus on results that has made their ongoing work one of the most successful collaborations on campus. At a time when the university is encouraging cross-disciplinary work to drive innovation, and even looking at hiring faculty in clusters to focus on key areas, Cavanagh and Melander prove the power of partnerships.
"Scientists by nature don't work very well together," Melander observes. "What makes us a good example of working together is that we understand the problem we are trying to solve and genuinely like working together."
If they're good role models for their colleagues on campus, they're even better ones for their students. In their labs, graduate students, undergraduates and even high school students are encouraged — even expected —
to work together to tackle tough assignments.
With $1 million in funding from the Jimmy V Foundation, the students are part of a project designed to inspire the next generation of cancer researchers. The results are impressive, and Cavanagh hopes the foundation renews the grant this year.
"We've had 50 kids comes through the program since 2008," he says. "We've tried to give them a lot of shots on goal to see if something would stick, and so far 90 percent have stayed in cancer research or stayed in the life sciences."
It probably helps that their labs are getting results. In the past 12 months alone, students have worked on two potentially big breakthroughs, Cavanagh says. One is a discovery that could help chemotherapy work more effectively in patients with renal and colon cancer, and the other is a compound that targets the infections cancer patients often get in the hospital.
Teamwork, Cavanagh tells his students, is the key to success in the laboratory.
"Working collaboratively will bring you into areas you would never even consider," he says.
Melander echoes the sentiment.
"Increasingly, the answers we are seeking lie across disciplines," he says. "Working together, we can answer far more questions than we can apart. At the end of the day, we don't care if we're wrong or right, as long as we get to the answers."