Sometimes amazing feats of scientific research get all the attention, but the actual process of creating a company from that research and developing a product is rarely that glitzy.
Take the case of Miromatrix Medical Inc., the Eden Prairie, Minnesota company trying to become a viable business by commercializing the stunning science of Dr. Doris Taylor, director for the University of Minnesota’s Center for Cardiovascular Repair. In the lab, Taylor’s research team drained the heart of a dead rat of cellular material until only the extracellular matrix or tissue scaffold remained. Then, researchers filled the vacuum of the empty heart shell with cells from new born rats and managed to create a beating animal heart, an extraordinary medical breakthrough.
In licensing that technology to Miromatrix in February 2010, the U of M talked of its promise to be able to one day replace human organs with new ones grown in the lab. That is still the long-term goal at Miromatrix, said CEO Robert Cohen, in an interview this week. But in the short term, the company is focused on creating a first product by utilizing Taylor’s decellularization technology. For that, the company will try to raise $5 million in series A financing in a funding round to be launched end May, early June.
“The strategic business plan makes a sensible assumption for an early stage company in 2011,” Cohen said. “That assumption is that, despite the fact that we are going to make human organs one day and should continue to work towards that goal, some shareholders want to see a quicker return.”
Even as Cohen prepares to raise capital and figure out a new product, he has had to deal with some dirty laundry being aired involving the ouster of Taylor from the company’s board. Cohen declined to comment on the matter, but said that her absence will not hurt the company’s prospects and fundraising efforts. The co-inventor remains on the board.
Miromatrix has already raised $1.4 million in a seed round that included two $250,000 loans from the state of Minnesota. Impressed by Taylor’s success and attracted by the hope that Miromatrix might one day spawn a regenerative medicine industry in Minnesota, state officials provided those loans in 2010. However, the loans don’t place any limits on where the company needs to be based, Cohen said. The company needs to begin repaying those loans in 2015.
So what is the first new product that will set the ball rolling?
It is a biomesh aimed at the hernia repair and breast reconstruction market. Cohen said it is a $2 billion market and is buoyed by the success of Strattice, which supports tissue generation and is aimed at a similar market. In January 2010, Kinetic Concepts Inc., which makes Strattice, said that the product was approaching $100 million in its second full year of sales.
“What we did was to identify a product that can get to the market pretty quickly and start earning revenues to pay our own way instead of always raising money,” Cohen said.
The mesh will be made of porcine material and either derived from the heart or the liver. It will also be stronger than competing products in the marketplace, Cohen said. He appeared confident of receiving a 510(k) approval for the product and added only half of the $5 million would be needed to get to the 510(k) application stage. The product can hit the market two years after the first $1 million is raised.
A state-appointed observer responsible for keeping the state apprised of the company’s progress is thrilled with the idea for the first product.
“I am very excited about the market. There are not many technically superior products,” said Peter Bianco, a business development executive specializing in orthopedics, biologics and biomimetic materials, in a phone interview this week. “It’s incremental. It’s a base hit not a swing for the fences.”
Cohen said three to five people would likely be hired at the company’s lab at the University Enterprise Labs in St. Paul, Minnesota once the capital is raised. Raising that capital will not be easy and everyone is aware that it’s a cold venture capital climate, especially here in frigid Minnesota. But Cohen likes bad weather, so he may be particularly well suited for the ride ahead. Wisely, he repeatedly declined to put a deadline by which he expects to raise the money. He also appeared to be undaunted by challenges ahead.
“I like to be in a room where all four walls are on fire and there is no apparent exit,” Cohen said.