Life sciences startups: a stage-by-stage look at four companies
Sep 20, 2017 02:24PM
● By Kathleen Maris
By Shelia Watson
When it comes to entrepreneurial startups, one size does not fit all. Starting and growing a company means going through stages, a progression of rungs up the ladder of success.
For the most part, the startup stages – Very Early, Early, At Market, and Recent Exit – are fairly self-explanatory. It may help to think of the stages in terms of the primary focus of the company at that particular time. For instance:
Very Early = Existence
Early = Survival
At Market = Success
Recent Exit = Take-Off
The main use for the labels is for investing purposes. Deciding whether to invest in a brand new company depends a great deal on the company’s startup stage, as the risk factors are different for Very Early companies than they would be for the relatively more seasoned At Market venture.
Here are a few recent examples from the Coastal region:
This company’s status is highlighted by the filing of its incorporation papers in March 2017.
Led by Dr. Alex Zhadkevich as CEO and Becky DeLegge as COO, ArchCath is aiming for the heart and vascular space in the life sciences market with its medical devices.
ArchCath went through the PriMed Accelerator program, a collaboration between The Harbor Accelerator and the Medical University’s Foundation for Research Development. The program provides a curriculum designed to help the company focus on its market, customers and legal/business issues as well as meetings with mentors and networking with other companies in similar markets.
ArchCath is currently in development with a device that will prevent strokes in patients undergoing heart and vascular surgery such as bypass, valve replacement, and placement of stents.
In May, ArchCath was one of five companies awarded funding through the South Carolina Research Authority’s SC Launch program, which supports early-stage entrepreneurs through investments, grants, and mentoring.
With Barry Hand at the helm as CEO, Reify is considered at early stage with its 3D modeling and visualization solutions.
The dictionary definition of the word reify – “to make something abstract more concrete or real” – helps explain a bit more about the company whose mission is “to connect architects, engineers, and innovators” through its solutions in a way that will add value to their customers’ businesses.
Hand started Reify when he left corporate America and focused the company on 3D printing. Its products include:
• Architectural 3D model file creation and repair
• 3D printing
• 3D printer acquisition facilitation and advice
In 2014, the company received a $100,000 Small Business Innovation Research (SBIR) award through the Department of Defense to fund market testing for its products.
“That contract was to prove the feasibility of 3D printing on prosthetics,” Hand said. “After we successfully completed it, we saw the amount of viable business we could do. So we put together a commercialization plan to move forward.”
In July 2016, the company, doing business as Extremiti3D, was accepted into the SC Launch program producing its 3D printed prosthetic sockets and cosmetic covers for amputees. The company was also awarded an SC Launch grant of $50,000.
“It was important to rebrand this part of the company under a different name,” said Jim Price, co-founder and chief marketing and sales officer. “Reify remains where we do R&D and market planning.”
In May of this year, Extremiti3D announced an exclusive distribution agreement with Friddle’s Orthopedic Appliances, located in Honea Path, S.C., to distribute the company’s line of 3D-printed transtibial and transfemoral sockets and covers.
“It’s a great partnership,” said Price.
The company has begun penetrating the market and plans to market aggressively through the end of the year, putting it near At Market status.
Meanwhile, in June, parent company Reify won phase two of the SBIR award for a $1 million DOD contract to continue the research and development of 3D prosthetics.
Bill Park founded PharmRight in 2013 to produce devices and offer services for dispensing at-home medications.
“I’ve always been involved in pharmacy automation,” Park said. “This was our step into the home. There are 32 million people in the country taking more than five prescription medications, and it’s important that they’re able to do so while remaining healthy and independent.”
The company’s first product was Livi®, an automated in-home dispensing system managed by a cloud-based application that allows for real-time monitoring of medications. The dispenser, dubbed “an intelligent pill box” and resembling a Keurig coffeemaker, can store up to a 90-day supply of 15 different oral medications and supplements in solid form. The secure cloud application, through PharmRight’s partnership with Zipit Wireless, monitors all interactions and can send alerts about missed doses or refill needs to medical professionals and family members.
Much of the funding happened in pre-sales, with funding from angel investors and an offering of common stock, which helped finance the device’s engineering and the software development of the cloud application.
After the company closed on a $200,000 funding agreement with SC Launch, the company began volunteer testing and soon after received the go-ahead from federal regulators.
Earlier this year, the company had its first paying customers, but continued to seek investments. According to securities disclosures, some of those were convertible notes, a type of debt that investors can trade for stock at a later date.
Several pharmacies have signed on as customers, including Reconnect4Health in Greenville and The Medicine Shoppe-Rapid City and Pharmnet in Mississippi.
Founded in 2010 by David Maness, Cactus, LLC began as a way to collect and dispose of refuse systems in medical facilities. Without the proper compliant waste management programs, pharmaceutical waste could be flushed or dumped, which could lead to strict penalties.
“We saw this need in the industry and decided to address it,” Maness said. “The regulatory changes that came about regarding proper waste management in the medical field are good ones.”
The company’s product line includes the Smart Sink®, Pharma Lock®, and Pharma Lock® O.R. Controlled Substance Waste Management Systems.
Within two years, the company had formed strategic partnerships with two other companies to refine its solutions and consulting services: One with EXP, Pharmaceutical Services Corp. and one with Cegedim Compliance Solutions. The former serves 70 percent of the U.S. hospital-based reverse distribution market; the latter is an expert in regulatory compliance for waste management.
In April of this year, medical technology giant Stryker acquired Cactus. Active in more than 100 countries, Stryker offers innovative products and services in the areas of orthopedics, medical and surgical, and neurotechnology and spine.
According to Stryker’s marketing director, Nate Miersma, the acquisition would allow the company “to help its medical facility clients to improve their anti-drug diversion efforts, promote environmentally sustainable disposal practices and ensure that their facilities remain regulatory compliant.”
The acquisition was sought to provide Stryker’s customers with proven products that facilitate drug diversion prevention and meet the pharmaceutical waste disposal standards.
The products have been in the U.S. market under the Cactus name since 2012 and are currently installed in more than 1,300 facilities.