Rochester Startup Eyes Clinical Trials After Financing
After raising more than $5 million in debt financing since its inception three years ago, Mayo Clinic-backed start-up Xcede Technologies Inc. of Rochester says it has now secured a financial path for bringing its touted blood-loss patch into human clinical trials.
Xcede was established in 2013 as a joint venture between Mayo and Dynasil Corporation of America (NASDAQ: DYSL), based in Newton, Massachusetts. Its goal is to commercialize the Xcede Hemostatic Patch, which was originally developed by Dr. Daniel Ericson, a former Mayo Clinic hematologist.
The company promotes it as a low-cost, internally deployed patch that uniquely combines a fibrin hemostatic with a sealant, which when working together are capable of halting severe, traumatic bleeding within 60 seconds of application. Unlike traditional patches, Xcede claims its product has high tensile strength and is quickly effective against even the most aggressive bleeding.
Backers such as Dynasil Chairman and CEO Peter Sulick claim the patch has the potential to “revolutionize” the $1 billion topical hemostatic market, which currently lack any patches approved for internal use.
This potential has landed Xcede several local Minnesota financial backers, including Mayo Clinic Ventures, the Southern Initiative Minnesota Foundation, Rochester Area Economic Development Inc. (RAEDI), as well as a group of angel investors.
All of the $5.1 million the company had raised since its inception had been in the form of convertible promissory notes, but SEC documents filed in late December revealed the joint venture reached a financial milestone in the fourth quarter – all of the debt was converted to 5.4 million shares of preferred stock.
The filings indicated that Dynasil — which has a licensing agreement with Mayo for the patch technology – now owns 83 percent of Xcede’s common stock and 53 percent of its equity following the conversion. The documents also revealed Xcede issued 238,535 common shares to Mayo earlier this year in satisfaction of an anti-dilution clause within the agreement.
The debt conversion was carried out in November at the same time that Dynasil announced it had completed a new $3.1 million financing round for Xcede. As part of that deal, the Massachusetts company itself invested a further $1.2 million in cash; CEO Peter Sulick and members of his family personally put in an additional $450,000; and, perhaps most importantly, Cook Biotech Inc. of West Lafayette, Indiana, committed $1.5 million in the form of a secured loan.
All told, the proceeds will be used to fund Xcede’s first human clinical trial, which is to be managed by Cook Biotech as part of the deal. Dynasil said preclinical studies were anticipated to begin in 2016 with the clinical trials to be held in 2017.
“Dynasil's investment combined with Cook's extensive experience in medical device development and clinical trial execution will continue to move the Xcede Patch forward towards licensure,” company president and CEO Linda Zuckerman said in an issued statement. “We are on a timeline to get the product in the marketplace within the next several years.”