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Startups Advised at Biotech Forum

WORCESTER— How to raise money. Where to get good advice. Why a good landlord matters. These are the things that entrepreneurs learn as they create and develop life science companies in Central Massachusetts, according to speakers yesterday at a biotechnology forum at Worcester Polytechnic Institute that attracted about 80 people. “There are a lot of ups and downs in business, and I definitely experienced them,” said Harry Wotton, president and chief executive of Securos Inc., a Sturbridge-based developer of veterinary orthopedic implants and instruments that was purchased last year by MWI Veterinary Supply Inc. of Meridian, Idaho. The trials of startup life science companies are well known in Central Massachusetts, which is home to a number of small businesses engaged in drug discovery, development of diagnostics and contract research. Norman Y. Garceau, president and chief scientific officer of Worcester-based Blue Sky Biotech Inc., said the challenges for Blue Sky ranged from whether a company could really survive by performing work for drug makers to persuading his wife that leaving a corporate job for Blue Sky was a good idea. “Honestly, I had no idea how tough this would be, but it’s been fun,” Mr. Garceau said. In addition to finding investors and financing, entrepreneurs said they have angled for flexible arrangements with landlords that would allow their companies to expand, scrambled for advisers and learned to market and sell, even if their expertise was scientific rather than financial. The best step that entrepreneurs can take is to seek out good advice, said Laura E. Allen, director of MedTech IGNITE, a new program of the Massachusetts Medical Device Industry Council that is matching a small number of entrepreneurs with medical device chief executives for mentoring. “At the end of the day, I think it boils down to having a savvy board,” Ms. Allen said in an interview after speaking at the WPI forum. “Having someone who’s done it, who’s been there before … That’s really valuable.” Tanja Dominko, president and chief executive of CellThera Inc. of Worcester, said she and a business partner formed CellThera to do the kind of scientific work in regenerative therapies they wanted to pursue. Yet, a small company in an arena with large competitors must find opportunities, she said. “You have to have something that is new and groundbreaking if you want to contribute to this field,” she said. Although Blue Sky may have once seemed an uncertain venture, Mr. Garceau said, the company founded in 2003 has adjusted its services, developed a large client list, grown to 28 employees and begun to think of itself as a “collaborative research organization” offering expertise in addition to services. One difficulty for entrepreneurs, he said, is developing a way to turn over control of their companies, or an “exit strategy,” as businesses grow or change. “You never know how things are going to go, so you have to be prepared,” Mr. Garceau said. Mr. Wotton said he never expected to sell his company when he did, but after 10 years of building the business he realized that the resources of a larger business could help Securos, which now has 28 employees, a 17,000-square-foot facility and plans to bring certain manufacturing operations from Germany to Sturbridge. “We were putting so much on hold because we couldn’t fund it,” Mr. Wotton said. March 27, 2008, Worcester Telegram & Gazette

Buying Biotech: RXi Pharmaceuticals goes public on Nasdaq

WORCESTER— Shares in RXi Pharmaceuticals Corp., a biotechnology company developing potential medical treatments based on RNA interference, started trading publicly yesterday on the Nasdaq Capital Market. The stock opened at $6.01 and surged as high as $23.95 before settling back on volume of 59,725 shares to close at $10.51. RXi, founded last year on work done by University of Massachusetts Medical School researcher and Nobel laureate Craig C. Mello and other scientists, was spun out of Los Angeles-based CytRx Corp. CytRx did not conduct an initial public offering of RXi shares. Instead, shares that had been distributed or awarded by CytRx and registered with the Securities and Exchange Commission became available for trading yesterday, including shares owned by UMass, according to SEC filings. RXi Chief Executive Tod Woolf said that with the start of public trading, RXi became a rare publicly traded company focused exclusively on RNAi. Another is Alnylam Pharmaceuticals Inc. of Cambridge . “In that sense, we feel there’s a need for more than one company,” Mr. Woolf said. In two prospectuses filed yesterday, CytRx said it was distributing 4.5 million RXi shares to CytRx shareholders and awarding nearly 28,000 RXi shares to CytRx directors, officers and other employees. Another 462,112 shares owned by UMass Medical School were offered for resale, according to a third prospectus. CytRx reported that after those transactions CytRx would own about 6.2 million shares of RXi, or 49 percent of RXi’s outstanding shares. CytRx has not registered those shares for sale, according to a spokesman. RNA interference uses double-stranded RNA, or ribonucleic acid, to block the action of genes in cells. Interest in the technology has soared in recent years, and some scientists believe it could be useful in medical treatments by shutting down the cascade of events caused by disease-related genes. To support its work, RXi has licensed technology on “nanotransporters” to deliver RNAi into the body, short “hairpin” RNAi for more efficient triggering of the strands, and chemically modified double-stranded RNA designed to evade the body’s mechanisms that seek out and remove foreign objects. Large pharmaceutical companies have bet big sums of money that RNAi will yield lucrative products for their pipelines. Merck & Co. paid $1.1 billion to buy Sirna Therapeutics Inc. in 2006. Last year, drug giant Roche agreed to invest $331 million in a collaboration with Alnylam, which recently reported it was able to demonstrate the effectiveness of an RNAi treatment in humans for respiratory syncytial virus. RXi will focus on developing RNAi for neurology, metabolic diseases and cancer. The company is studying RNAi’s ability to work on a gene implicated in amyotrophic lateral sclerosis, or Lou Gehrig’s disease. RXi is also working on RNAi to tackle obesity and type 2 diabetes. The work remains in the early stages. Mr. Woolf declined yesterday to say when the company might be prepared to test a compound in humans. RXi will also likely seek development partners for drug candidates that it generates but chooses not to pursue on its own, Mr. Woolf said. “It’s a very broad technology,” he said. “You can simply choose a gene, turn off the gene, and weeks and months later, have a candidate.” Some of the technology comes from UMass, which has received stock from RXi as part of license agreements. With a public market for RXi stock now available, UMass will have an opportunity to sell its shares. Money from stock sales goes to support university research, said James P. McNamara, executive director of the UMass Medical School office of technology management. “Sometimes the only way to get a deal done is with equity, depending on the size of the company,” said Mr. McNamara, who is involved in making deals but has no involvement with UMass decisions to hold or sell stock. “If we do a deal, we’d like to do it with a company that has a chance of going public.” RXi, which employs 17 people and leases about 5,300 square feet of space in the WPI Life Sciences and Bioengineering Center at Gateway Park, chose to locate in Worcester to be close to UMass scientists, including Tariq Rana, Michael Czech and Dr. Mello, all of whom are scientific advisers to the company. Dr. Mello is “playing a key role in gaining the attention of investors,” Mr. Woolf said. “He plays a big role in getting us contacts at the major pharmaceutical companies at high levels because he meets these people at scientific events.” March 13, 2008, Worcester Telegram & Gazette

State Competing Against the World
Report says research effort is facing long-term threats

The Massachusetts “innovation economy” stacks up well against many states and foreign countries when it comes to the factors that feed modern economic growth, but the state continues to lose residents to other states and sends too few young people into math and science studies, according to a new report. Worcester Telegram & Gazette, February 1, 2008. Read More

 
 
 
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