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Could This Start-Up Change the Face of Medicine?

Doris Taylor’s groundbreaking U of M research on how to build hearts and other organs is now the core of a fledging start-up, Miromatrix. It could be a sign that technology transfer at the university is improving. And while the company doesn’t own a mailbox today, tomorrow, some believe, it could spawn a whole new med-tech industry.

Could This Start-Up Change the Face of Medicine?

Late last year, Doris Taylor acquired a second business card. The first one identifies her as director of the University of Minnesota’s Center for Cardiovascular Repair and Medtronic Bakken Chair of the Department of Integrative Biology and Physiology. The title on the second card is more succinct and may one day be far more famous: Founder, Miromatrix Medical, Inc.

Taylor is the University of Minnesota researcher who made headlines around the world in 2008. In February that year, the journal Nature Medicine published her description of a new, patent-pending process by which she brought a dead heart back to life.

The heart belonged to a rat. Taylor removed all the cells from it, leaving only the “extracellular matrix” intact, then repopulated the matrix with heart cells from other rats and nurtured the organ in a bioreactor.

The result, first achieved in November 2005, was a heart that began to beat. It opened the door to whole-organ “decell-recell” technology.

Taylor expects her process to help bring about nothing less than the birth of a new medical-technology industry. Knowledgeable observers share that assessment, including University of Minnesota officials, who hope for a bonanza in patent-licensing revenue. The university’s Office for Technology Commercialization (OTC) has worked closely with Taylor to lay the groundwork for the launch of Miromatrix.

“We’ve had people tell us this will change the face of medicine,” says Doug Johnson, a former investment banker who heads the university’s Venture Center, the business-incubating arm of the OTC. Miromatrix “could be the start of the next Medtronic.”

 

A Platform for Anything That Gets a Blood Supply

The implications of the beating rat’s heart in Taylor’s laboratory are staggering. To start with, Taylor says her decellularization process demonstrably works with any organ or tissue that gets a blood supply: heart, liver, kidney, lung, pancreas, bone, skin, ovaries, trachea, tongue . . . .

“I don’t want to gross you out,” she says, “but we’ve got images of whole rats that we’ve decellularized. We’ve done whole organ systems from a pig.”

More than a million people die of organ failure each year in the United States. So think of transplants. Organ rejection could become a non-issue if a transplanted heart or kidney were made from a patient’s own matrix (or a pig’s), repopulated by the patient’s own cells or a compatible donor’s.

In the current state of medicine, tens of thousands of heart transplant candidates die annually waiting for a donor heart. This is due to a shortage of donors, but also to the fact that transplantation must take place within four hours after a donor’s heart is harvested. A decellularized matrix can be stored for months, Taylor says. Recelling and growing a rat heart to the point where it begins to pump fluid through its aorta takes about three days.

Miromatrix also holds promise for hundreds of thousands of other patients who don’t need a whole organ, just a smaller piece or patch—a new blood vessel or heart valve. Burn victims could receive skin grafts in which the skin doesn’t have to be taken from elsewhere on their bodies, but the cells are their own.

“And if we could make skin that will grow hair,” Taylor says, only half joking, “we could finance a company forever.”

Can she do any of these things today? “No, we’re not there yet,” she says. She acknowledges it will be several years before her technology is deployed in patient care. “But this is a platform that makes it all reasonable to think about.”

 

Commercialization, Step by Step

Step one in getting the bioscience out of the lab and into hospital operating rooms is to form a company to develop and commercialize it. As of early February, Miromatrix had no funding and no offices or facilities. (By March, it had attracted some angel investment.) The company consisted of two people with their newly printed business cards: Taylor, the founder, and Robert Cohen, president and CEO.

Cohen is a former St. Jude Medical executive who most recently headed Travanti Pharma of Mendota Heights, a privately held maker of drug-delivery devices that was sold a year ago. Johnson at the university’s Venture Center introduced Cohen to Taylor.

The next Medtronic? Cohen says that’s understating the potential.

Taylor’s technology “is blockbuster stuff,” he says. “I’ve never seen anything like it. As wonderful as the pacemaker was . . . the pacemaker treated a single small area of cardiovascular disease. What Doris has done here can treat any organ or any part of an organ.

“And it’s curative,” Cohen adds. Pacemakers, stents, dialysis machines, insulin—they only compensate for the body’s failings. “We haven’t really been fixing anything, we’ve just been trying to deal with the symptoms of what’s broken.” Miromatrix will be “creating an environment, if you will, to allow the body to fix itself.”

It will be years—but less than a decade, the company’s principals predict—before the first recelled heart is transplanted into a human. What’s needed to reach that point is further development of the technology; clinical trials, beginning with more modest applications, such as a cardiac patch; and approval by the Food and Drug Administration. Also money. And a business plan.

Because Taylor did her research as a faculty member, the University of Minnesota owns the intellectual property and has filed for patents surrounding it. In February, the university announced its agreement to license those patents to Miromatrix on an exclusive global basis. The school gets a major ownership stake in the company (it won’t specify a percentage), which will be diluted over time as other investors come in.

With licenses in hand, Miromatrix is seeking an initial round of capital from angel investors—local ones, Cohen hopes. The company will use its funds to set up a modest R&D facility, more for product development than for research because Taylor will still do research in her university lab. Then Miromatrix will start hiring engineers and lab technicians.

One key hire has been made: Vice President of Business Development William Still, a former director of business development for St. Jude Medical and general manager for Boston-based Haemonetics blood processing systems. Cohen says Still will “spearhead our sublicensing program.”

Both Taylor and the university want her science to spread quickly. Miromatrix will make products of its own, probably concentrating on cardiac applications. Its engineers and lab techs could begin by developing cardiac patches for damaged hearts. But it would take decades, never mind billions of dollars, for any one company to pursue all of the possible uses for Miromatrix’s technology.

Sublicensing is therefore a central feature of the company’s business plan, with fees from those sublicenses forming the earliest revenue stream. Since the publication of Taylor’s work, researchers around the world have been applying it to lungs, pancreases, and other organs.

“Those will be the first people we visit with our license from the university,” Cohen says. They represent a ready-made market of sublicensees who know how Taylor’s process works. “We’ll suggest ways in which they can continue to work with the technology, as opposed to getting to the point where they actually turn it into a product and then can’t market it because they’d be infringing our patents.”

What the U Can Do

Most patent-worthy inventions that come out of the university are incremental improvements to existing technologies, Johnson says. Commercializing them usually means licensing the patents to existing companies. Much of the work done by the university’s Office for Technology Commercialization focuses on that. But “game changing” developments, such as Taylor’s, call for the formation of start-up companies and for help from the OTC’s Venture Center.

“A successful start-up needs three things: world-class technology, experienced management, and money,” Johnson says. The Venture Center’s job is to find university researchers who are developing the first ingredient and help connect them to the other two.

In Taylor’s case, the OTC has been helping for several years already, going back to a grant that it gave to her lab so she could standardize her methodology and publish her work. Support continued with the careful crafting of the patent applications, including help from patent attorneys outside of the U. And again, the Venture Center introduced Taylor to Cohen. Both say the Venture Center and the OTC have been enormously helpful.

Johnson’s office also has given guidance on sublicensing. The goal is to get people working quickly on as many applications of the technology as possible, both for commercial and humanitarian reasons. “So you don’t want to grant a broad license to one company that might use it to work on certain fields and neglect others,” he says.

In other words, Miromatrix wants to avoid granting a sublicense that would allow a company to commercialize work on livers, say, while safely putting the lungs and pancreas aside for later development.

As a shareholder in Miromatrix, the university can’t act as an agent for the company in soliciting investors, Johnson says. However, the OTC can and will offer to introduce potential investors to the company.

 

A Technology-Transfer Overhaul

The process of turning technology developed by the university into money-making patent licenses or start-ups is known as “technology transfer.” The Massachusetts Institute of Technology and Stanford University are considered among the best at it. The University of Wisconsin also is highly regarded. For many years, the University of Minnesota was not.

Critics in the state’s business community say the situation has improved greatly since 2005, however, when Tim Mulcahy was recruited away from his research policy post at the University of Wisconsin. As vice president for research at the U of M, Mulcahy brought in former Honeywell executive Jay Shrankler to head the Office for Technology Commercialization, and encouraged the formation of the Venture Center under Johnson.

One converted critic of the university is Dale Wahlstrom, CEO of the Biobusiness Alliance of Minnesota. The U’s transfer rate still is not everything it ought to be, he says, but Mulcahy, Shrankler, Johnson, and others have “revamped that whole system. They are making great strides.”

In the past, say Wahlstrom and others, the university seemed more intent on protecting its intellectual property than on working with the business community to commercialize it. Johnson says that might have been due to the university’s belief that it never got fair compensation for earlier technologies that it helped invent, including the pacemaker and the heart valve.

Personnel changes helped change attitudes and solved other problems, too. Prior to Mulcahy’s arrival, the OTC was staffed by academics. It takes business experience to form viable start-ups or negotiate realistic licensing or joint-development deals with the private sector. Links to local companies, venture capital firms, and angel investors were weak or nonexistent.

The VC landscape has played a role there, Johnson says: “Every day, 10 venture capital investors are cruising the halls of MIT, Harvard, and Stanford,” in part because “Boston and Palo Alto are surrounded by a hundred venture capital firms.” In Minnesota, there are fewer, and the university has to work harder to connect money to technology.

“I was in the venture capital business for a long time, and I didn’t come near the university,” Johnson adds. “It was hard to find stuff. What do you do, knock on doors in the chemistry department?” In 2006, Mulcahy created the Academic and Corporate Relations Center as an entry point to the university for companies.

Some in the local med-tech industry still grumble about technology transfer at the U, however. Doug Daum, director of Boston Scientific’s cardiac rhythm management research and business development, was a panelist at a March medical-technology event hosted by the entrepreneurial networking group the Collaborative. One barrier to innovation in the industry, Daum said, is university technology transfer offices that are more concerned with building their schools’ endowments than with negotiating to get their research into the marketplace.

The University of Minnesota is not the worst in that regard, Daum said. Fellow panelist Mike Berman, a medical device entrepreneur and investor, added, “They’re not the best, either.”

An Expiration Date Looms

The University of Minnesota’s revenue from licensing patents rose last year from $86.9 million to $95.2 million, a healthy gain of 9.5 percent. But of that $95.2 million in fiscal 2009, more than 90 percent was royalties from the sale of Ziagen, the anti-HIV drug marketed by GlaxoSmithKline. The university’s Ziagen patents will expire overseas next year and in the United States in 2013.

Money from licenses and other commercialization helps underwrite the university’s research spending, which stood at $683 million in 2008, as measured by the National Science Foundation. That ranked the U of M ninth in research spending among all public universities.

With the clock ticking on the U’s long-time cash cow, “we’re really keeping our eye on the non-Ziagen part of our portfolio,” Mulcahy says. That part, too, is growing. Non-Ziagen revenue rose by 10 percent in fiscal 2009, from $7.9 million to $8.7 million. Still, the impending crunch is an obvious threat.

More patents are needed in the pipeline. Mulcahy’s office reported that in 2009, the university’s patent filings increased from 50 to 265.

But as Ziagen demonstrates so vividly, and as Mulcahy notes, the question isn’t really how many patents the university owns, but how many are bringing in money. The number of revenue-generating agreements involving the university’s intellectual property also increased in 2009, from 281 to 306.

So indications are that revenue growth from technology transfer will continue. The questions are how much and how soon.

Taylor notes a third question: How much of that income will actually be reinvested in research? She says that in her six years at the university, she’s seen a growing share of the U’s income diverted into simply “keeping the lights on,” as state support for the school has dropped off. Where her research group used to pay the university $4,000 a year in rent for lab space, it now pays more than $100,000 a year for fewer square feet.

 

Opportunity, Seen from Different Angles

Those involved with launching Miromatrix and those watching the start-up with interest have two concerns in common: one, a desire for the company to succeed, and two, for it to do so in Minnesota.

“It’s a new era in biologics, not just for [their use in] diagnostics and prognostics, but for therapeutics,” Taylor said at the Collaborative’s med-tech event in March. “We have to build that technology in Minnesota.”

Wahlstrom, who spent 25 years of his career at Medtronic, recalls a 10-year-old study showing that St. Jude Medical, Boston Scientific, and more than 100 other companies could be traced directly to the electrostimulation technology that Medtronic pioneered.

His point: If a new bioscience industry is to be spawned, creating jobs, bringing in talent, and both generating and attracting money, then let its epicenter be here.

Wahlstrom says Taylor’s presence in the Twin Cities—her head filled with far more knowledge than can be gleaned from the patent documents—is an anchor that ties Miromatrix to the state. But ultimately, he believes, money talks. The investors who help launch the company must be from here, or at least be happy to base the enterprise in Minnesota. He worries that local investors, used to dealing with medical devices, might shy away from leading-edge tissue engineering.

“This is divergent technology from what we typically fund in this region,” Wahlstrom says. “I think that [Taylor and Cohen] will be careful to pick funders who want to see it stay here—but only if that’s possible.”

Mike Berman of Berman Medical in Minnetonka, says everything will depend on the business plan that potential investors see. The fact that Miromatrix won’t be selling mechanical devices “will not make it a mortal disadvantage to be in the Twin Cities,” he says.

His own take on Miromatrix from the information available so far? To say that any single start-up will spawn an entire new industry is “presumptuous,” Berman says, “though I do know that the work [Taylor] has done is held in extremely high regard by the medical and biotech community.”

The business plan that Berman and other investors will focus on—one that identifies and prioritizes potential technology applications, customers, and partners—is something Taylor and Cohen are still mapping out. And on the subject of potential partners, Medtronic comes into the conversation again.

If decell-recell technology eventually changes disease treatment the way some people believe it could, it could turn out to be a competitive threat to manufacturers of devices like pacemakers and stents.

“But from our point of view, it could be an opportunity for them, as well,” Cohen says. Transplantable, recelled organs or organ parts would be “perfect for the distribution and sales networks of companies [like Medtronic]. It goes right to their existing customers.”

Pharmaceutical companies already have contacted Taylor, interested in using recelled organs to test drugs. “Think about the two organs most likely to be affected by drugs, and the reason why drugs come off the market: heart and liver. We can build them,” she says, using cells from children or pregnant women or 80-year-olds or people from any ethnic background—whatever the pharma companies need for their tests.

Merck had to yank its arthritis medication Vioxx from the market in 2004 because a study showed increased risk of heart attacks and strokes in patients using the drug. If tests on recelled hearts could determine “which 3 percent of the population was vulnerable,” Taylor says, Vioxx could be sold again.

 

Back to the Lab

The problem of decelling an organ has been licked. “In theory, I could sell you the matrix of a pig’s heart or kidney today,” Taylor says.

Recelling organs is a different matter. She has recelled parts of a pig’s heart but not an entire one. It cost about $50,000 to build the equipment necessary to get a rat’s heart to beat. There are several hundred million cells in a rat’s heart, several hundred billion in a pig’s. “What that means is a lot more money, a lot more time, and a lot more people in my lab,” Taylor says.

She has not yet tried to transplant a recelled rat’s heart into a living rat’s chest, because “I want to work out all the glitches first. The last thing we need at this point is a spectacular failure.”

One of the challenges remaining is to find the best combination of stem cells and other cells with which to repopulate any particular organ or tissue. In this, Taylor is finding that the matrix itself may be a remarkable source of help.

She has placed heart matrices from rats into the abdomens of living rats, having recelled nothing in the matrix except the blood vessels and then connecting them to the rat’s blood supply. Despite relocation to the belly, she says, the heart matrix “recruits cells from the rat . . . that start to look like heart cells.”

Taylor says, “The matrix seems to have cues in it that tell cells where to go, what to be, and how to behave. It’s beginning to be a fascinating story.”

Beginning to be?

Recent Tech-Transfer Deals at the U

Dale Wahlstrom, CEO of the Biobusiness Alliance of Minnesota, says a start-up like Miromatrix has the potential to be a “home run” for the University of Minnesota, but start-ups don’t bring in revenue quickly. So “singles and doubles,” patents licensed to existing firms, will continue to be hugely important.

From 2007 through 2009, the university launched, took equity in, and assumed early management of five start-up companies (listed below). It also licensed technology to six independent start-ups in which it has no equity stake (also listed). But the bulk of its agreements continued to be made with established companies including St. Jude Medical, Boehringer Ingelheim, and GlaxoSmithKline. Those kinds of agreements account for the majority of licensing revenue, says John Merritt in the university’s office of the vice president for research.

The high-reward, high-risk nature of start-ups was highlighted in February this year, when university spinoff VitalMedix declared bankruptcy. (VitalMedix had moved its headquarters from Minnesota to Wisconsin, where CEO Jeff Williams said support from angel and venture investors was stronger.) Though the company folded, the University of Minnesota still owns and is developing the underlying intellectual property.

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