Some of the most innovative work to discover new drugs happens in federal laboratories, fueled by millions of taxpayer dollars. But many of these discoveries can be slow to come to market — if they make it at all.
That gap prompted Rosemarie Truman, a former investment banker, to create the Bethesda-based Center for Advancing Innovation (CAI) in an effort to connect promising research with entrepreneurs willing to bring the ideas to market.
“The problem we found was that some of the inventions are really appropriate for start-ups, but there’s no commercialization path to get them out,” Truman said.
Truman’s nonprofit group has reached 17 agreements with research laboratories across different corners of government. Truman regularly peruses the government’s stock of intellectual property, picks the ideas she thinks have the most commercial potential, and holds nine- to 12-month competitions drawing start-up teams from across the country.
Each team — typically a mesh of PhDs and MBAs from elite universities — puts forth its plan for getting an idea to market. In its first challenge, the winners received $5,000 cash prizes from the Avon Foundation, which partners with CAI.
The government is not required to sign over the idea for a drug or device to whoever wins the competition, so a company that lost the competition or wasn’t involved could step in and win the intellectual property, leaving the competition winner with nothing. But that hasn’t happened yet.
“Frankly, I wasn’t sure it was going to work, but it worked beautifully,” Truman said.
CAI has helped launch 32 biotechnology start-ups in the three years since its pilot competition, but the struggle begins when they win the competition. Most start-ups never turn a profit, and those in the biotechnology space have it particularly hard.
Just acquiring intellectual property typically costs about $5 million, and then the process for getting government approval for a new treatment can take years or decades. A start-up’s best hope is often to nab a lucrative buyout or partnership with a big pharmaceutical company.
Cogentis Therapeutics, a Baltimore-based start-up that won a CAI competition last year, has built its business around what it believes will be an effective Alzheimer’s treatment. The company incorporated in May 2015 and is working on getting a license for the research it won. The company hasn’t been able to raise any investor capital yet. Its founders have tried, but most investors require that companies have intellectual capital first.
Others among CAI’s alumni have closed up shop. ProVivox, a McGill University-based start-up that won one of the nonprofit group’s first competitions in 2014, recently decided to close amid funding concerns.
Oncolinx Pharmaceuticals, a Boston-based start-up that won one of CAI’s challenges in 2014, seems to be the exception to the rule. The treatment, originally developed by the National Institutes of Health’s National Cancer Institute, is designed to direct chemotherapy chemicals more closely toward cancerous cells and away form healthy cells, lessening the side effects.
After just a few years in operation, the start-up has netted more than $1 million from angel investors and nabbed 14 partnership agreements with larger pharmaceutical companies, through which it is earning revenue.
“There is so much innovation that goes on in NIH, 32 million taxpayer dollars that go there every year,” said Sourav Sinha, chief executive of Oncolinx. “I think this is just the start of moving those inventions out into the marketplace, where they can start treating patients.”
Last month, CAI announced a new challenge, dubbed the “Space Race,” this time partnering with NASA.
The competition, slated to be held next year, will pit entrepreneurs against each other to compete for previously uncommercialized devices created in NASA laboratories. After watching some alumni start-ups struggle to raise investor dollars, CAI is working on creating an investment fund to steer resources to competition winners.