[Editor’s Note: Founder Forum, a weekly interview with a startup founder in Maine, is sponsored by the Maine Technology Institute. Read more about MSI’s sponsored-content strategy here.]

Kevin Strange, CEO and co-founder of Novo Biosciences.

Kevin Strange is co-founder and CEO of Novo Biosciences, a four-year-old biotech startup in Bar Harbor that is working on nothing less than developing a drug that could provide humans with regenerative properties.

While that sounds straight out of a sci-fi novel, Strange and his co-founder, Viravuth Yin, along with another researcher, Michael Zasloff, have identified a certain molecule (it’s called MSI-1436) that has demonstrated regenerative properties in the laboratory, first in zebrafish and then in mice. The goal now is to lead this drug candidate through clinical trials in large mammals and then, hopefully, demonstrate that it can help humans regenerate heart muscle tissue following a heart attack.

“That was pretty much a crackpot idea eight years ago, but in less than four years we made the discovery of a drug that launched Novo Biosciences,” Strange says. “To date, it’s the first and only drug that’s ever been shown to stimulate regeneration of the mammalian heart.”

Despite his confidence in the research results so far, Strange is careful not to oversell the company’s potential and its drug candidate. There are still many hurdles in front of them, not least of which is the need to raise massive amounts of money from investors. Leading a drug through clinical trials could cost as much as $30 million, he says, and the failure rate in drug development is incredibly high.

“We couldn’t be in a riskier business than drug development,” Strange says. “I’ve heard that people who invest in drug development are viewed as fairly delusional.”

But the payoff if it does work could be massive. Besides the honor of coming up with a drug that could help people survive cardiovascular disease, the number one killer in the world, such a drug would generate billions of dollars a year in revenue.

Novo Biosciences is a for-profit spinoff of MDI Biological Laboratory in Salisbury Cove, where Strange is also president, having left a job at Vanderbilt University School of Medicine in 2009 to move to Maine for the job. Besides spinning off Novo Sciences, the laboratory under Strange’s leadership also

In his Founder Forum interview, Strange goes deep into the financial risks of drug development, how Maine could better incentivize technology transfer from academic institutions, the lack of resources in the state to support biomedical entrepreneurs, and how perception about the state has hurt his chances to raise investment. We also discuss how changes Strange made when he took the reins at MDI Biological Laboratory led directly to the spinning off of Novo Biosciences and the recently launched the Maine Center for Biomedical Innovation, which serves as an incubator for biomedical startups. Besides Novo Biosciences, there are four other startups in the incubator, including two that moved to Bar Harbor from out of state. We discuss all that and more.

As always, this hour-long interview has been edited for clarity and length (though, it’s still a very long interview).

MSI: You’ve spent a career in biomedical research and academia. Is Novo Biosciences your first foray into entrepreneurship?

Kevin Strange: Yes, though it depends on how you define entrepreneurship and startups. I would argue that the MDI Biological Laboratory is a startup—it just happens to be 120 years old. But certainly where it was eight years ago versus where it is today is very different, and that’s actually what led to this discovery.

I also don’t equate entrepreneurialism with for-profit entities. I think it’s people who takes risks and go out and start something new that in particular might be disruptive, against the grain, or different from what is the status quo. But it is the first for-profit entity that I’ve started.

Ok, let’s start with the MDI Biological Laboratory then. It was founded in 1898. You became president in 2009, I think. Why do you consider it a startup?

It was basically a seasonal marine research station until the year 2000. In 2000 there were only nine employees here and none of them were scientists, none of them were faculty. Their sole job was to open the place up in May, run it for visitors from out of state through the summer months, close it down in September, and keep it from falling down in the winter. But in 2001, and it was largely driven by money, the decision was made to create a full-time research institution here. The model of a seasonal research institution certainly wasn’t viable any longer. It grew in an ad hoc way until 2009 when I came in and I put a very, very strong research focus in place, which it didn’t have before. That is what led to this discovery.

That research focus is in the field of regenerative biology and medicine. We have taken a decidedly very different approach to this field than what was mainstream. I’m sure you’ve heard about stem cells—this had been the focus of regenerative medicine I would say for the last 15 to 17 years or so. The idea that you can simply inject patients with these special type of cells and they’ll fix whatever ails the patient… This is something I’ve always been very skeptical of, in part because there’s not a lot of good, strong science backing this idea. And so when I came here I decided to move the institution into the field of regenerative medicine, but take a very different tack. The approach we’ve taken is, if you look across all kinds of animals in nature, there are many animals that have profound capacity to repair and replace tissue after it’s been damaged or amputated. They have this remarkable capacity. If they lose a limb, they grow it right back. If their spinal cord is severed, they heal it right up just fine. If their brain is damaged, they repair it without question. If there’s any sort of heart damage, whether we do it experimentally to them or it happens naturally, they repair that quite readily. So the approach we have here is to look at these animals, study them intensely, and ask a very basic question: How do these animals accomplish this amazing feat and why is it, for the most part, that most of our tissue—our heart, our spinal cord, our brain, for example—don’t regenerate after an injury?

To date, it’s the first and only drug that’s ever been shown to stimulate regeneration of the mammalian heart.

If you were to have a heart attack today and you survive it, the part of your heart that was damaged by loss of blood flow would turn into non-functional scar tissue and that’s something you’ll have to deal with the rest of your life. It can lead to more heart attacks and eventually lead to heart failure. So, again, the idea was study these animals, ask how they do it, define these mechanisms in detail, and then let’s try to understand why most of our tissue doesn’t do that very well. And we then go from there to develop drugs to treat these kinds of injuries that might turn on this regenerative capacity. That was pretty much a crackpot idea eight years ago, but in less than four years we made the discovery of a drug that launched Novo Biosciences. To date, it’s the first and only drug that’s ever been shown to stimulate regeneration of the mammalian heart. I’m cautious to say it’s not humans yet—we haven’t got that far. But it’s the only drug to stimulate mammalian heart regeneration after a simulated heart attack. So there’s really a direct connection between the very entrepreneurial approach we took here, the bucking-the-system approach, and the result of this company, Novo Biosciences.

From a more broad perspective, I’ve always been interested in the interface between basic science and application of that science. I think it’s something we don’t do very well in our universities and most research institutions. So that was something that was not valued here, so I put a lot of effort into that. We launched the Maine Center for Biomedical Innovation just a few months ago, which is meant to be a hub and accelerator in the state for the commercialization of biomedical discoveries. We have lots of entrepreneurship training for science students, scientists, folks who are launching biotech types of startup companies. We also provide incubator space here on campus. I have five companies that are incubating on our campus, including two from out of state. One from New York and one from Pennsylvania. We’ve done a lot from that perspective in just trying encourage and stimulate this type of activity.

Commercialization of university-based research has been a perennial topic of discussion in Maine. Given your experience at Vanderbilt University School of Medicine and Harvard Medical School, why do you think it’s been hard to generate commercial activity from academic research in Maine?

There’s a lot of different reasons. Number one, most basic research really doesn’t lead directly to a commercializable product. You have to have a massive understanding of—let’s just say biology in the case of biotechnology—the underlying biology before a discovery is made that you go, ‘Ah ha, that might lead to a new drug.’ I think there’s also a profound misperception amongst government or UMaine that someone—UMaine or us or JAX—is supposed to be spinning out a company every other day. The reality is most of what we do will never lead to a direct application. But when it does lead to it, it’s because there’s been a massive accumulation of knowledge that created that opportunity.

The second thing is most scientists, most academics, aren’t entrepreneurs in the true sense of the word, i.e., they don’t have the aptitude or an interest in or appetite for going out and starting a company. It’s not a trivial thing. They don’t have that bent. I would say on a good day, if I’m positive about it, 10% to 20% of them have that interest. If you look at most of the academic institutions in this country, particularly in this state, they’re also not incentivized to do that. I mean, sure, the governor would love to see more commercialization happen, the Legislature would love to see that happen, but they’re not incentivized to do that at the University of Maine. They’re incentivized to publish papers and teach classes. So the mechanisms aren’t really in place to reward those folks. You go to a place like MIT, on the other hand, and they’re cranking out companies.

I think the other problem is we don’t really encourage our young people enough to think this way and operate this way. It’s hard to change an academic who spent his or her career trying to get to where they are to all of a sudden be an entrepreneur and start a company. It’s less hard, in my opinion, to take students who aren’t siloed yet and get them to think that way. That’s something we’ve been trying very hard to do here. It’s really a two-sided equation; it’s an expectation that’s unrealistic, but it’s also a culture where there’s not a lot of entrepreneurs and that kind of activity is not incentivized to start with. Those are the two or three reasons, I guess.

It’s hard to change an academic who spent his or her career trying to get to where they are to all of a sudden be an entrepreneur and start a company. It’s less hard, in my opinion, to take students who aren’t siloed yet and get them to think that way.

You mentioned that MIT has a culture where professors and researchers are encouraged to spin off companies. Do you know if that culture developed organically or if it resulted from certain public policies or other incentives?

I can’t speak authoritatively on MIT. I don’t know if it was mandated by the state of Massachusetts. But there are certain places that set up universities and institutions to specifically do that. I was just meeting with a group from Finland the other day and they have a lot of commercialization activity going on in the university system, but they’re very much mandated by the government to do that, and they’re incentivized, too. They’re provided the resources to do it with. So I think there are plenty of case studies where you see more of that activity and it’s really been something that’s expected, either by leadership within the institution, perhaps within the state government, but it’s more than just expected and mandated, it’s something that people put money and effort behind. The reality is everyone needs to make a living, so I think people will go where they see the opportunities if they’re there for them.

Do you have ideas for how we in Maine could better incentivize members of our university system to pursue real-life applications from their research?

Sure. I always make the mistake for opening my mouth, but yes, I’ve worked a lot with state government. I understand the capacity. I understand the constraints. I’ve been in academia for 30 years. I’ve been at huge institutions—the tiniest one is this one by far. What’s interesting about Maine is for a population of only 1.3 million people, it actually has a lot of excellent R&D assets, it’s got a lot of excellent institutions of higher education, particularly in science, and so it actually has one of the cornerstones you would need to build a science- and technology-based economy. The problem is none of those institutions are linked up or working together in a coordinated fashion. You don’t have a clear understanding and mandate from state government about how you’re going to do this. You don’t have any real leadership driving this in the state at the end of the day, so you don’t have the kind of long-term commitment—and when I say long term, it’s probably 20 or 30 years before you start to see big returns on it—and with commitment comes the finances to help incentivize that type of activity.

One of the things we established a few months ago is this Maine Center for Biomedical Innovation. Basically we’ve created it to help drive this activity without a government mandate, without a massive amount of resources. It’s really going to create a focal point in the state for what the state can and should be doing to try to help grow this kind of activity. What we do in the Maine Center is provide incubator space to companies, and it’s more than just a rental. A lot of people think an incubator is just a place where you can rent some space. We’re providing them with an enormous amount of expertise, scientists, scientific expertise, very costly scientific infrastructure, networks of people. I can’t tell you how often some of these folks will come to me for help solving a particular problem. So we’re providing them the resources they need to get their companies off the ground. We’ve provided a lot of entrepreneurship training for science students in this state, and a lot of those courses not only focus on the basics of what does it take to launch and get a company growing, but how do you think across disciplinary boundaries, how do you communicate with someone in a different discipline to launch new ideas and go out and do disruptive things in the world. We provide that same kind of training for the startup companies that are here, as well as scientists.

One of the things we established a few months ago is this Maine Center for Biomedical Innovation. And basically we’ve created it to help drive this activity without a government mandate, without a massive amount of resources. It’s really going to create a focal point in the state for what the state can and should be doing to try to help grow this kind of activity.

So we’re trying to do a lot with this Maine Center, but the whole idea all along is to make it a hub, a focal point that says, ‘Look, this is something that can be done in the state of Maine, but you’re going to have to do things like this—I’m not saying this is the only idea; I’m not even saying it’s a perfect idea—but you’re going to have do things like this if you want to grow the state.’ And as we have more successes, we start to lobby more, advocate more, and get out in front of this at every possible level. The number of people I have knocking on my door now compared to a year ago is at least a hundred fold more and that’s because of talking about this, working with our senators, our state reps, people are starting to make those connections and make things start to happen now. I’ve actually turned companies away because we don’t have the space for them. But, again, it’s a long-term commitment; it’s not a fast turnaround by any means.

I commend you on taking the initiative. There’s certainly always been talk at the state level of big long-range plans and there have been big reports completed, but it seems there’s never been the continuity from administration to administration to keep those initiatives alive.

I will tell you one thing as a cranky taxpayer. I wish they’d stop paying for those reports. I wish they’d stop hiring consultants from out of state who don’t even know what the assets are in the state to tell the state how they’re supposed to do these things. It’s the most irresponsible, ridiculous waste of money I’ve seen at this level. I just had to get that off my chest.

So far, have the resources you’ve used for all this been internal? Or have you received state money through MTI?

Yes and no. We did receive a state bond approved in 2014. It did not start as this commercialization idea, though. It was critical for us to expand our research infrastructure as part of an effort to continue growing our programs here and renewing a big grant that’s critical to what we’re doing. That’s what we lobbied for, but once we received the money—because we’re a small institution and quite economically fragile, we have to take every opportunity that comes our way and leverage the hell out of it. We need to get a 10 to 1,000 fold return on investment. We’ve been involved in this commercialization effort—like I said the companies are here on campus, we have our own efforts with Novo Biosciences, so we created the Maine Center out of this initial bond initiative. The space was paid through the bond, the idea was my idea, to try to create more of this activity. We do hope to obtain more state funding. I know there was just the $50 million bond passed in June; $45 million of that money will go to MTI. I know we’d be in a position to compete for that. We would use that for increasing the commercialization activity and the infrastructure. There’s also a bond initiative that a state senator is pushing for for us without us asking for it that would be focused on the commercialization side of things as well. So we got state money, it wasn’t for this idea originally, but we turned it into that idea because we felt it was important for us to do for our survival and it’s also an important way to pay the state back.

“I wish you had told me that I was going to kill my career when you first heard about what I was doing because it would have driven me that much faster.”

You said only 10% to 20% of academics and researchers have the entrepreneurial bent necessary to launch a company. You seem to have it. Is that something you’ve always known you’ve had, or did it emerge once you realized what you discovered at MDI Biological Laboratory?

Well, going back to what an entrepreneur is, I’ve always been someone who marches to my own drum beat. I’m not a very traditional academic. I’ve done many things that most people thought were absolutely insane in my career. I had a Nobel laureate tell me after he heard about a research direction that I had taken off in that when he first learned about it he thought to himself, ‘This guy has just built a coffin of his career, climbed in and nailed the lid shut.’ I saw him a year or two later giving a seminar at his institution, and he told me that story. And he said to me, ‘You know, I was completely wrong.’ I said, ‘I wish you had told me that I was going to kill my career when you first heard about what I was doing because it would have driven me that much faster.’ So I’ve always had interest in doing things that aren’t the mainstream, that aren’t the status quo—that’s what I consider an entrepreneur, if you will—fortunately, all of them seem to work out for me. I guess it’s just the way I’ve operated my whole life. But this is my first for-profit endeavor, only because it’s the only opportunity I’ve had to do something that I thought… and it’s not motivated by money, although if it ever pays out it will be worth the money, for sure. It was more motivated by the discovery and the knowledge that we had to try to move this forward into patients if at all possible. It was more a moral obligation than anything else with Novo Biosciences.

We discovered it first in a model we use here a lot, zebrafish, a very common aquarium fish. We discovered it originally in zebrafish, tested it exhaustively in zebrafish. Obviously the next step was to move it into mice, which we’ve done. If all goes well the next step is to move it into pigs. We’ve shown it works beautifully in mice. I like to say if your pet mouse has a heart attack, I can fix it for you. Whether this drug will work in humans we don’t know yet, but there’s a lot going for this molecule that encourages us, much more so than what you might find in the typical drug-discovery and development process.

 

Kevin Strange and Viravuth Yin, co-founders of Novo Biosciences in Bar Harbor.

What are the advantages of doing this as a for-profit spinoff versus continuing to do it under the nonprofit umbrella of the laboratory?

 

First of all, I wouldn’t mind being rich (he says with a laugh). But that wasn’t the motivating factor because the likelihood it’s going to pan out is still a long way off. Right now we’re focused on using this molecule—it’s not really a drug until it’s approved by the FDA, so I’ll call it a molecule—we’re really pursuing it initially for the treatment of heart attacks. There are no drugs that exist to treat a heart attack, so that’s what we‘re really pursuing. In order for us to get it through the various stages of development and then eventually into what are called Phase 1 and, if we’re lucky enough, Phase 2 clinical trials, it’s going to cost somewhere between $25 million to $30 million. You’re not going to get that kind of money from the NIH. You need to have investors putting that kind of money down, and investors expecting an enormous return if this works. Literally, if the drug is approved—and again, we’re a long, long ways from that; I don’t want to oversell it—but if it’s eventually shown to work in humans and is approved, it is literally worth billions and billions of dollars a year. Cardiovascular disease is the number one killer in the world. So, just to take it where it needs to go, it has to be a for-profit entity because you need investors, and you need access to capital you can’t get unless you’re a for-profit company.

What have been the challenges since spinning off as a for-profit entity? Any cons?

First of all, I knew nothing about it when I started. I learned everything the hard way. Fortunately, I’ve always said I’m at least smart enough to know what I don’t know, so I’ve managed to not make any disastrous mistakes yet. But it’s hard work. We just received our first patent on this molecule last November. It’s the first patent application and first patent in this institution’s 120-year history. I knew nothing about the patent process, and learning about it took an enormous amount of time, effort, and frustration, not to mention some money to get this thing patented. So there’s a big startup curve. We all have finite bandwidth, so you start doing something else, something else goes. It’s cost me my scientific career largely to do not just Novo, but the entire institution. So it’s hard work, it’s highly risky. We couldn’t be in a riskier business than drug development. I’ve heard that people who invest in drug development are viewed as fairly delusional. And the outcome is binary: You either lose everything or you make huge amounts of money. The cons are the risk, the time commitment, hopefully not making any big mistakes that get you sent to jail or get you sued.

You touched on what my next question was going to be, but maybe you can expand on it. How confident were you when you spun off the company? Was it a major leap of faith or did you feel confident in your ability to leave the laboratory and launch a startup?

It was a total leap of faith. Pretty much everything I’ve done when I’ve gone off in a new research direction or moved to Maine after leaving an extremely secure academic position, those are all leaps of faith. I look at the deep end of the pool and if I see something shiny at the bottom, I kind of jump in and figure it out on the way down. So, it was a huge leap of faith. I had no clue what I was doing, absolutely zero.

Have you just learned by yourself on the go, or have you worked with mentors or reached out to other entrepreneurs as you learn along the way? Has the entrepreneurial support network existing in Maine been helpful to you in the biomedical field?

I think there are a lot of great resources for entrepreneurs in this state, but I don’t think those resources translate into these kinds of science and technology-based endeavors. Some of them are fine, but there are also a lot of other ones you need along the way too. Those don’t exist in Maine.

I’ve had people in Maine offer me $50,000, $100,000, and in return they want 20% or 25% of the company and they’re expecting a 10-15 fold return on that investment in two to three years. I just have to laugh at them. First of all, I can’t give away 20% of the company for $50,000 if it’s going to take $30 million to get it to the point where it might be viable for somebody to buy it from us, or license it from us. You’d never get there. So, you have to learn that real quick. It seems great when someone offers you money, but I’ve turned those offers down.

I’ve worked very closely with MTI. But by and large, it’s by going to people that are knowledgeable, getting different opinions, and try to sort it out by myself and going slow enough so as not to make too many disastrous mistakes.

I spent a number of years at Harvard Medical School and I am quite certain that had I spun this out of Harvard or a Boston institution, I would have plenty of money and investors by now.

Tell me about your experience approaching investors about Novo Biosciences?

There are two things we’re running into. One is that investors keep telling us we’re too early, they want to see it work in humans first. Ok (chuckle), that’s again, going to take millions of dollars. The other thing is I do think we suffer from perception up here. I mean I spent a number of years at Harvard Medical School and I am quite certain that had I spun this out of Harvard or a Boston institution, I would have plenty of money and investors by now. Up here in Maine, particularly in Down East Maine, this is something that buckles convention here, and I think people look at it very skeptically. How can those guys up there in the middle of nowhere find something like this? So I think there’s a perception issue here. And there’s also a realistic one, too. If you’re an investor with X amount of money to put down in a risky endeavor, are you going to put it down on a little place you’ve probably never heard of on Mount Desert Island or Harvard Medical School? Obviously, you’d probably go with Harvard Medical School if your first instinct is to go where you think the money is safer. You’re not sitting in this big robust biotechnology, biomedical research community. It doesn’t exist in Maine. There are pieces of it everywhere, but they’re spread out over 35,000 square miles. I think people perceive less risk if you’re in Boston. Although I’ve seen things invested in down there that just shocked me to death. People who literally have nothing but an idea and they get millions of dollars to pursue the idea, whereas we have a patent, phenomenal data, etc., etc. There’s a herd mentality here too when it comes to investing sometimes.

I understand that perhaps Maine’s local investor community isn’t experienced enough in biomedical startups to understand the opportunity, but…

If someone comes to me and wants to give me $50,000 for 20% of this company, they don’t have the slightest clue what they’re involved in. If they did, they would know how absurd that is. When it comes to something like drug development that investor expertise doesn’t exist here. Science and technology requires patient capital. People have to wait a long time for a return. It’s also much riskier than investing in a craft brewery of some kind, or the next gizmo or gadget is. It requires high risk tolerance and it has to be patient.

Given the makeup of the local investor network, I assume you immediately targeted out-of-state investors, maybe ones well versed with the biotech industry in Boston. They are savvy, they understand the challenges of drug development and working with biomedical startups, but have you run into perception problems with them because you’re in Maine?

Yeah, but most of them don’t say it to you. I did have one very prominent investor group that I have a connection to; the individual told me that very thing. He said, after he blithered along about it being too early, he said, and, I’m sorry it shouldn’t be, but it’s where you are is a problem too. I don’t know if that’s an exact quote, but that’s pretty much what he said to me. That was a huge investment group that I had a direct connection to even get in the door with. So you assume it’s perception a lot of the times, but in this case he told me it was.

When you tell me you’re not going to invest in me because I’m in Maine, yeah, it’s disheartening. But screw you. We’re going to keep going.

Was that disheartening? What did that do to your hopes of being able to raise the necessary funds for your company?

Of course it was disheartening. I’ve known all along this was going to be a hard road to go down. What propels me is the importance of what we’ve discovered here. There’s just some features about this molecule—and I’ll just mention them because that’s what got us to the point where it seems like there’s a moral obligation here, too. Any drug or drug possibility that’s discovered in a laboratory, 98% of those never make it into human trials. There just proves to be some problem with them. Too toxic. They don’t work the way people think they’re going to work as they do more pre-clinical animal studies. I mean, 98%—that’s a huge failure rate. Of the ones that actually prove to be safe enough and specific enough to try in human clinical trials, 90% of those fail. They fail because they don’t work. Once you get into a sick human, that’s very different than a laboratory-bred mouse, for example. They have other effects that weren’t counted on. They’re too toxic or they just don’t work at all.

So failure rate is enormous for drug development, but one of the important things about this molecule is it’s already been tested in humans back in 2007 as a potential treatment for obesity and Type 2 Diabetes. So to even get into human clinical trials, you have got to go through massive and very expensive toxicity testing, and so it has already cleared all those early toxicity tests. It was then tried in 65 or so patients. The reports that are publicly available characterize the molecule as being very well tolerated by the patients. That’s actually a very important thing. In other words, they didn’t all die or grow a second head or something. In addition, when you have a molecule or a drug-like molecule, it’s typically inhibiting a protein (sometimes it can activate a protein), but we actually knew the target of the drug, which is a huge piece of information, and in these very early stage clinical trials, they actually reported data suggesting that the drug was actually working by inhibiting that target. I can’t tell you… that literally represents 10 years of work and millions of dollars in investment to get that far. So we’ve gotten over this huge, huge hurdle already. In addition, in our animal studies, we’re using the drug at a concentration 50 times less, 50 times lower, than the maximum well-tolerated dose shown in these clinical trials in 2007. So we’re working way below what at least patients were able to tolerate. So those were things that compelled us to move forward. There’s just an obligation for us to move forward. I don’t think I could live with myself if I said I don’t care. When you tell me you’re not going to invest in me because I’m in Maine, yeah, it’s disheartening. But screw you. We’re going to keep going.

When it comes to the actual intellectual property, who owns that? Does the laboratory own it, or do you and your co-inventors?

The institution owns the intellectual property, and the patent is awarded to me and my two co-inventors: Yoon and Michael Szabo. But the institution licenses it to us to develop and if it pays off they’ll get a nice chunk of cash out of it, as well. This is another motivation. We need to diversify our revenue sources,s so again trying to commercialize things is part of the longer range plan for the MDI Biological Laboratory.

What if you can’t find investors willing to put up $30 million to get this through all the stages of clinical trials? Is another route to go to some Big Pharma giant that has the funds to do the trials itself and sell it to them?

I’ve certainly talked to a lot of pharmaceutical companies. I’ve been very pleased. The biggest ones have expressed a lot of interest, but like everybody else they say well we want more data. We want you to show it works in a large animal model first. Our goal is to—if, again, we can keep moving it forward—the next step is to test in pig model, and hopefully we’ll get getting some funding for that. If it gets through pig trials, we’ll go to the FDA and say what do you need to see from us now? They’ll probably want more tox testing, only because standards have changed. We would then try to move it into Phase 1 clinical trials, and eventually to Phase 2 trials if it got that far. At Phase 2, what you’re really testing in quite a few patients—probably a couple hundred—is will it improve the outcome of a heart attack. If it was to get through those, at that point of time it becomes far too big for us to manage. You’d have to license it to a pharmaceutical company at that time. Because they’re the ones that have the expertise to move it through Phase 3, which is thousands of patients all over the country, maybe the world, managing it, controlling everything, funding it will probably many tens of millions to do that. And so we would divest ourselves of it if we could get through Phase 2 trials, we’d license it to a Big Pharma.

That’s when you and the investors in Novo would have an exit?

Yeah, I mean the typical way it would work is they would basically come in and give you some up-front payment, there would probably milestone payments, so if it made it through Phase 3, you’d get another tranche of cash, and if it got approved by the FDA you’d then get some sort of royalties.