Medical Device Link.

Originally Published MX November/December 2004

BUSINESS PLANNING & TECHNOLOGY DEVELOPMENT

Economic development agencies throughout the United States consider companies with a specialty in the life sciences to be very attractive businesses. When successful, such companies can create a substantial number of jobs and sustainable economic growth. But competing to get medtech companies to locate in a particular region often calls for extraordinary coordination among a wide variety of public and private entities.

High-performance polycrystalline thin-film transistors (TFTs) on a flexible polymer. These TFTs were made using a proprietary process by NanoHorizons Inc. (State College, PA), in which transistors are fabricated on a high-temperature, reusable, rigid substrate, and transferred to a flexible polymer or foil material. (Photo courtesy NANOHORIZONS INC.).

In Central Pennsylvania, that's a role that has been undertaken by the Life Sciences Greenhouse of Central Pennsylvania (LSGPA; Harrisburg, PA), a public-private joint venture formed to accelerate the commercialization of discoveries in the life sciences. Created under the Tobacco Settlement Act of 2001, LSGPA became operational in October 2002. The greenhouse and its programs have been specifically designed to address commercialization-related needs identified for the region, including access to preseed capital for technology development, programs to facilitate technology transfer, and solid management teams.

LSGPA partners with a range of institutions, including local research universities, colleges, medical centers, economic development agencies, and both large and small companies, to identify needs and opportunities, provide funding for carefully crafted programs, and deliver a range of services.

To meet the need for early-stage capital, LSGPA administers a gap fund that provides companies with funding in the range from $300,000 to $500,000. The fund's investments are released in installments based on the achievement of milestones, and can be converted from debt to equity or taken as equity investment in pre-seed-stage companies. Matching funds are required.

The Life Sciences Greenhouse of Central Pennsylvania partners with the region's research universities and medical centers to stimulate the commercialization of medical technologies. Here, researchers at Penn State University (State College, PA) bring their expertise to bear. (Photos courtesy PENN STATE UNIVERSITY) (click to enlarge)

Deal flow into LSGPA's gap fund is enhanced by a technology development fund, which invests up to $250,000 in projects that show commercial promise but need additional development of proof-of-concept, prototype, or assessment of commercial potential. Applications are accepted on a rolling basis from universities, SBIR-eligible businesses, or joint projects between universities and industry. Funding is provided in milestone-driven installments, and matching funds are required. Returns from successful projects are via formation of new corporate entities or shared royalty streams.

Since its inception, LSGPA's gap fund has awarded $2.4 million in preseed-stage capital to five promising start-ups. Investment has been leveraged by $9 million from angel investors, grants, contracts, and revenue. Meanwhile the technology development fund has awarded $3.42 million to 33 projects—15 within universities and 18 from small businesses—generating $4.15 million in matching funds.

LSGPA provides a range of business-development services that extend well beyond current funding pools. Staff routinely meet with life sciences start-ups to help develop their business plans. Many of these emerging companies become successful applicants to LSGPA's funding pools; others are redirected toward more-appropriate sources of assistance or capital. LSGPA also introduces businesses to potential venture and angel investors.

LSGPA's portfolio companies include Glucolight Corp. (Bethlehem, PA), a company that is developing a real-time, noninvasive glucose monitor; NanoHorizons Inc. (State College, PA), which is applying nanotechnology to the development of new mass-spectrometry systems and novel biosensors for use in critical care; and Serenix LLC (Bethlehem, PA), which is developing novel vasopressin antagonists for multiple therapeutic targets.

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