Last week the community received a sneak peek at Global Entrepreneurship Week with the second annual “Lessons Learned from Mayo Clinic Entrepreneurs”. This panel discussion, hosted by the Mayo Clinic Business Accelerator, gave three entrepreneurial Mayo Clinic employees the opportunity to share their story and discuss lessons learned from building a startup with Mayo Clinic technology.
The panel included: Allan Dietz, Assistant Professor of Laboratory Medicine and Pathology at Mayo Clinic and Scientific Advisor at Mill Creek Life Sciences; Kah-Whye Peng, Professor of Oncology at Mayo Clinic and Co-founder and Chief Operations Officer at Imanis Life Sciences; and Karl Clark, Assistant Professor at Mayo Clinic, Technology Consultant at Recombinetics, and Chief Scientific Officer at Lifengine Technologies.
All three startups took very distinct paths to move their technology out of Mayo Clinic and turn it into a company.
Mill Creek Life Sciences, Dr. Dietz explained, had a unique and organic evolution.
“I’m an accidental entrepreneur. I never set out to be one,” he laughed.
Dietz was originally running a Good Manufacturing Practice (GMP) facility within Mayo Clinic, developing cells as therapeutics. At the time, his lab was growing cells in media- a liquid that supplies cells with the nutrients and food they need to grow- and calf serum. However, this serum ultimately had to be removed for the cells to be used as therapeutics in patients.
To avoid this issue, Dietz’s lab searched for an FDA approved substitute for serum and stumbled across platelet lysate, a product derived from expired platelets originally donated for blood transfusions. His lab successfully substituted the platelet lysate for calf serum, developing the main product that Mill Creek sells today.
Use of this serum-free media organically gained a commercial customer and, consequently, needed to get out of the Clinic. Dietz took the Intellectual Property (IP) for the product and launched a Limited Liability Company (LLC) to move the product forward. Today, Mill Creek Life Sciences is located on the second floor of the Minnesota BioBusiness Center and will likely outgrow the space soon.
When Dietz first began the startup in 2012, he said there was “almost nothing” to support entrepreneurship or Mayo Clinic startups in Rochester. Over the past five years, he’s learned some key lessons about building biotech startups in Rochester.
“Don’t do it to get rich,” he joked. “Do it because you don’t have enough things going on in your life and you’re bored and you’re tired of watching Netflix.”
He quickly learned that the whole process of product development must go quickly. He advised seeking out experts who can supplement your own knowledge and finding trusted partners in line with your goals for the company that can help you move fast.
“If it’s a good idea, there are other people working on it,” he said.
Dietz said there also must be separation between your role as a founder in your startup and your responsibilities at Mayo Clinic; he said it’s not a great idea to do both and suggested that you’re better off focusing on the Mayo job or the startup to really succeed.
Imanis Life Sciences had a slightly similar path, but a bit of a different outcome. Imanis is a reporter gene imaging company that is developing a range of reagents and services to monitor the fate of cells and viruses in real-time, non-invasively, in animal models.
Since Imanis launched in 2012 as one of the first companies out of Mayo Clinic’s Employee Entrepreneur Program, Dr. Peng said the biotech community in Rochester has grown tremendously.
“Five years ago, it was really kind of lacking,” she explained.
In the early stages of the company, Peng said they struggled to find a wet lab space in Rochester to build their technology, an amenity that she said still does not really exist in the city. Imanis eventually found a home in the lobby level of the Minnesota BioBusiness Center.
“We could afford the cheapest place, which is a place with no windows,” she laughed.
Imanis was self-funded in the beginning stages by Peng and her business partner Dr. Stephen Russell, founder of sister company Vyriad. Two years after the company’s launch, Peng said they had to take larger capital investment to hire staff.
Now, the business is celebrating its five-year anniversary and has global reach. Imanis is currently focused on growing their brand and building their customer base.
Alongside the community in Rochester, the startup hopes to “build a solid foundation for a dynamic biotech industry in Rochester, because it can be done.” Creating such a community, Peng said, offers alternative career options for highly trained scientists and helps to create new industries.
Lifengine Technologies, conversely, is a very new company, launching just last year to manufacture and sell gene editing reagents, products that can very precisely modify the genome- or all the DNA content- of an organism. Dr. Clark said most of the first few months were spent just figuring out direction for the startup.
Clark’s time with Lifengine may be limited so far, but he spent years with two other gene editing companies, Discovery Genomics and Recombinetics, where he witnessed, first-hand, growth from startup to small business.
“The pathway that you think you’re on in the first year, is not the path you’ll be on in your third year,” he advised.
Instead of moving Lifengine into the BioBusiness Center, Clark instead took advantage of a brand-new program within Mayo, called “The Hatchery”. Using this concept, he rented vacant lab space within Mayo Clinic on a month-to-month contract, allowing Lifengine to churn forward with little upfront capital.
Lifengine has its first part-time employee and is currently in bootstrapping mode, where the company is seeking to fund itself without outside investment.
Although the three founders followed different paths, the startups all faced issues with raising capital and identifying qualified workforce.
As far as the funding goes, “The number one source of capital is you,” Dietz explained. To attract significant money from outside investors to fuel the business, investors look for founders to have some of their own skin in the game.
Moreover, if you need to significantly develop the technology within your company, it’s riskier. Expect that process to suck up more capital and be prepared to give more equity away.
Small business grants, such as those provided through the Small Business Innovation Research (SBIR) program, are also available. These offer an attractive alternative capital option, especially for founders with a strong history in academia, and give away no equity. The process, however, is quite slow.
Attracting trained scientists to a startup can also be tricky, especially when you’re competing with benefit-rich employers like Mayo Clinic. Peng said Imanis de-risked a lot of payroll issues by hiring contractors; their full-time employees are mainly people on their scientific team. She said there are people interested in the technology and the draw of a startup, you just have to pay them more than what Mayo is offering.
Dietz said it’s not too difficult to attract scientists, but hiring on the business side is a struggle.
“The idea that Rochester itself will natively or organically grow a great biotech or entrepreneurial thing is really naïve,” he explained.
Recruitment of qualified talent, he believes, is a significant challenge faced by the city today.