BioAccel

May 3, 2010

Transcript:

Ted Simons:
Scientific discoveries in health care and innovative new products can't provide much public benefit if they never make it to the public. Tonight, we take a look at Bioaccel, a nonprofit that celebrates its one-year anniversary this week. It's dedicated to helping bio-tech companies speed the process of getting their products to market. Companies like Kemeta.

Shane Bravard:
Take the disposable mouthpiece, plug it in there, press the button, blow.

David Majure:
Kemeta is hoping this will revolutionize weight loss.

Shane Bravard:
It tells people they're metabolizing fat.

Woman 1:
You will know if you're burning fat and an indication of your fat burn rate.

Shane Bravard:
It measures acetone and the more acetone you have in your breath, the higher the fat metabolism is.

David Majure:
Kemeta says doctors can use the device to help patients manage weight-related diseases.

Joan Vrtis:
The second application for this is the self-directed dieters or fitness buffs that want to see if they can try this different type of exercise or different diet program to actually see if they're losing weight. Or burning fat. It's really simple. This is the handset. Basically, what to do, you put the mouthpiece into the handset and you hit go and you blow. And in a single breath, within minutes, you will have an indication of whether you're burning fat and your fat burn rate, it links up automatically to our software system. Right now, we have a USB connect but we will have wireless connect in the future.

David Majure:
The software provides a variety of tools to help people manage their weight. You can join with other people that do the gym.

Joan Vrtis:
Join Club Kemeta, the Facebook, if you will, of dieting and exercise. Here we have a tab that will monitor body metrics.

David Majure:
The breath analyzer will eventually go on sale to the public for about $80.

Joan Vrtis:
We know the technology works, we know this device works.

David Majure:
Now the company is trying to show how people will use it before applying for FDA approval that requires clinical study which takes money, money that a nonprofit organization called "Bioaccel" provided.

Joan Vrtis:
Bioaccel has been wonderful. Through Bioaccel's generosity of funding us and the confidence level they've had in us, it has really given Kemeta a boost to bring this closer to market.

Ted Simons:
Indeed. Bioaccel is a nonprofit organization that helps biotech companies like Kemeta accelerate the commercialization of their products. Joining me are Maryann Guerra, Bioaccel's chief executive officer and chairman of the board. And Ron King, chief scientific and business officer for Bioaccel. Good to have you here. Thank you for joining us. We appreciate it.

Maryann Guerra:
Glad to be here.

Ted Simons:
The idea of helping commercialize bioscience research, how do you do it?

Maryann Guerra:
Well, first we have to identify the right technology. So that's the important thing. We're focused on what is the technology that can actually be moved into development and commercialization and create companies here in Arizona. So we try to establish the companies in economically deprived areas, enterprise zones in Arizona. So identify the technology, if it's going through our rigorous review, which Ron has set up a wonderful system, we then fund it through proof concept so that we de-risk the technology. We've now identified, de-risk the technology, make sure it is a viable business, set up the business infrastructure and then hopefully attract downstream funding to make that a sustainable organization.

Ted Simons:
I want to get back to that model in a second, but as far as choosing and kind of going through the process of finding out who fits the profile, who doesn't, give us some examples here. What are you looking for?

Ron King:
We initially fall into three categories of technologies we look at. We look at therapeutics, diagnostics and medical devices. Kemeta you would find in the medical device category. Then once we've identified various technologies, we look at technologies, look at over 300 some-odd technologies across the state of Arizona, then goes through a multistage review process that we have implemented for both technical feasibility and then also business feasibility, so we look at it from a complete perspective of the end game, the technology and how it will get into the marketplace.

Ted Simons:
Does this mean you're dealing with mostly late-stage research?

Ron King:
This would be late-stage research, so it is essentially what I call the -- we deal with things after the Ah-ha moment or the eureka moment, from that point on, so that's our space.

Ted Simons:
I read a little bit about the company in a sense what you're looking to do is to diversify the portfolio of firms, like you would do a diversification of stock portfolios. Tell us about that.

Maryann Guerra:
We want to make sure that we identify companies that can get into the market quickly. So one, we want to prove the model that if we, as Bioaccel, can step in and help accelerate that process, there is economic benefit to Arizona. So therapeutics take a long time to develop so the time line is over 12, 15 years, so you don't want to have everything in your therapeutic. Devices have a much shorter turn around, like Kemeta. I mean, they are now in clinical trials, their device is going to be available. In a year that we've known Kemeta, they're off and running. Diagnostics are somewhere in the middle. So by having a diversified portfolio, we can show success along the way and hopefully have some return on our investments to keep Bioaccel and our programs going.

Ted Simons:
When you're working with these companies, say you're working with my brand new start up, is it everything from paperwork to marketing and all? What is involved here?

Ron King:
We're very hands on. I think that is a critical component to being able to create an environment for these companies to be successful. So yes, and they vary in stage, depending on the company. Kemeta is a little further advanced but literally from the very beginnings of setting up your company, the infrastructure that's needed and then creating an environment of support, a support network that you'll need as you go through your various stages of your company going forward.

Ted Simons:
The idea of a business and philanthropic model combined together, talk to us about this. This sounds fascinating in the sense that you are a nonprofit here but you are accelerating growth, or at least trying to.

Maryann Guerra:
We call it the philanthropic capitalism model, and Michael Bishop, there is a book about it and you can read about it, but how do we use philanthropy to drive economic development or do disruptive market changes that maybe the market won't naturally do. This is also an area of high risk, so when you take an aha moment of discovery, and say we want to create a commercial product, there is a lot of work between those two points. Very high risk. Many times that discovery, while it is a great scientific achievement, isn't really going to be a viable commercial product for many different reasons. Some of that review process that Ron talked about identifies those technologies that can be validated and that we can then fund. Venture capital doesn't want to put their money there, it is so high risk. So how are we going to fund that? The SBIR program is post that, so philanthropy in this space is willing to take the risk, de-risk the technology, de-risk the business by what Ron said about helping those businesses be successful, and therefore, making this more attractive to the venture world.

Ted Simons:
And Ron, does being a nonprofit help in the sense that maybe you might seem a little safer?

Ron King:
Absolutely. We, I call it the honest broker, it's very important to be able to, especially what we're trying to do on a statewide basis with multiple institutions, to be seen as not predatory, as someone who is trying to complement, trying to assist and trying to help, I think the best way to put it is, you know, you've heard it takes a village to raise a child, well, it takes a community to build a bioscience industry, and we have to be members of that community and be seen to be supportive neighbors.

Ted Simons:
I know you both came from TGen and I know ASU has the bioscience center and there seems like things are happening. Are things happening?

Ron King:
Lots of things are happening. Actually, to take you back, the road map of 2009 focused on building research infrastructure and what the results of that is what you're seeing now with TGen, Bio Design, Bio Five down in Tucson. There is over $450 million invested in that over the last seven years, and they've done what they're charged to do, they're developing new technologies that now need to be commercialized.

Ted Simons:
And needing to be commercialized means needing to find some venture capitalism. I know it is difficult out there. How difficult is it?

Maryann Guerra:
Well, it is the worse of times when you look around the financial situation. Arizona is facing its own financial crisis, as well, so, you know, it is getting out there, educating the community about -- they've already invested in the biosciences, as Ron said. The Flynn Foundation has reported that, say he's got this investment, now how do we leverage that investment and capitalize on that? And getting everybody to understand that it's not a natural process to commercialization, it requires different skill sets, it -- you know, you're a scientist in an academic lab, you may not a business person and may not want to be, so how do we integrate all that and make the community understand you've got to invest in this area of philanthro-capitalism. We have this infrastructure, now let's go out, review technologies. We looked at 300. There is a lot of good technologies there. We are looking for a small slice of commercial so we've just got to educate more and get out there more and I think once we -- I don't think, Ron, that we've been in a meeting that we sat down with the business community and when we explain it, it is a very interesting outcome. They say, that makes incredible sense, you de-risk our investment so they've actually turned to us and said, do you have a venture fund we could belong to? Now, we're not into creating the venture fund because we want to do the philanthropy, but we're working with local investment groups and local investors saying, maybe we should create this fund and a new fund that actually puts money back into Bioaccel to fund the program. So we're working on that concept, as well.

Ted Simons:
One last question. Is it tough for Arizona because we are such a new player in this field?

Ron King:
It is, but I'm a glass half full type of person and that presents opportunity. The opportunity being that we don't have a lot of the legacies we have in Boston, San Francisco, the bay area, so that means we have opportunity to actually do some unique and innovative things.

Ted Simons:
All right, very good. Stop it right there. Good discussion. Thank you for joining us. We appreciate it.

Maryann Guerra:
Thank you.