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Category Archives: Technology
Innocutis’s product – a novel delivery system for a well-established drug (acyclovir) – was recently featured on the cover of Dermatology Times and could help the scores of millions of people suffering from cold sores in the U.S. Herpes labialis is an extremely widespread condition, with between 20% and 40% of the adult population suffering from recurrent cold sores.
Sitavig® is a tablet which adheres to the gum above the incisor tooth on the side of the lip that is infected with a cold sore, providing sustained release of acyclovir – a drug that has been around for 30 years. This safe and effective delivery system results in fewer, shorter, and less severe outbreaks because the drug is released locally for 12-15 hours – during the period when the virus is attempting to replicate.
“There have been obstacles to overcome to ensure the optimal use of acyclovir and optimal healing,” says Stephen Tyring, M.D., Ph.D., principal investigator of a phase 3 double-blind, placebo-controlled trial on Sitavig (50 mg acyclovir, BioAlliance Pharma). “Compliance was always an issue when it was used five times a day in the oral form. We began recommending that patients use it three times a day and double the dose. In the case of the topical use of the medication, patients need to constantly reapply it. With this type of application, they simply put it in the right place and it stays there.”
Based on proprietary Lauriad® technology and patented until 2029 in the major territories, comes in the form of a mucoadhesive tablet which the patient places on the gum and which delivers a high concentration of acyclovir directly to the lip, the site of the cold sore infection. In addition to its efficacy, Sitavig® offers the major advantage of a particularly unobtrusive and simple formulation with a single application for the episode’s entire duration, particularly adapted to patients suffering from recurrent herpes sores.
Innocutis is a pharmaceutical company specializing in the development and commercialization of therapies focused on medical treatment of dermatological conditions, with a portfolio of established branded prescriptions. Innocutis meets growing unmet medical needs is this specialty and with “best-in-class” therapies, provides clinicians with improved solutions for the management of daily challenges experienced in their practice.
Here is the long-overdue “VIth” installment of our Vintage Future series, in which we take a tongue-in-cheek look back at the predictions of past generations of investors and futurists.
In our line of work it’s good to guard against the hubris inherent in projecting conventional wisdom too far out into the future, and to remind ourselves that today’s trend can be tomorrow’s punchline.
Predicting technology trends is not for the weak at heart – and that’s before one tries to protect the IP and find a way to profit from it.
These are among the reasons we affectionately call the really early stage of investing adventure capital, and consider ourselves a “growth accelerator” for established, rapidly growing businesses with strong management teams. We prefer to focus our efforts on assessing competitive and execution risk rather than product or business model risk, and we want to see tangible evidence of the unique value offered by a company’s product or service.
N.B. – previously featured in Vintage Future:
- Nine Technologies That Will Change Your Future
- Innovative Products from the Past that Never Were
- Ten Worst Internet Ideas
- William Shatner narrating MicroWorld 1980
- Crazy Patents
- The Chef of the Future.
Ballast Point Ventures is pleased to announce a growth equity investment in PowerDMS, a cloud-based document management software company whose platform organizes policies and procedures online, allowing companies to distribute crucial documents collaboratively, message employees and capture signatures. Proceeds of the investment will be used to augment the company’s sales and marketing team and enhance its technology platform by offering new features to its customer base, which includes customers in law enforcement, public safety, healthcare, and retail.
Founded in 2001 by CEO Josh Brown, the robust software platform provides practical tools necessary to organize and manage crucial documents and industry standards, thereby helping organizations maintain compliance with constantly evolving industry accreditation protocols. Created as a software-as-a-service (SaaS) model, PowerDMS combines attributes of Governance and Risk Compliance (GRC) and Enterprise Content Management (ECM) into its software platform.
Over at the HBS Blog Network, Matt Reilly points out that “it’s easy” to make the argument that large companies struggle to innovate “because they need to reorient their attitudes toward failure” and “not only tolerate but celebrate the fruitless pilots and instructive flops that are an inevitable part of the process.”
He then cites a new Accenture Survey about entrepreneurial culture that digs a little deeper and finds that the “entrepreneurial impulse” isn’t destroyed, it’s merely channeled in other directions.
In spite of the challenges, the majority of employees report having initiated an entrepreneurial pursuit at their companies… Looking more closely at these employee innovations, however, the overwhelming majority had to do with internal programs and processes; 54 percent were limited to the workings of the business unit in which the employee worked while another 31 percent improved processes or created programs that crossed unit boundaries. That leaves just 15 percent whose pursuits were focused on externally-focused products – the innovations that companies are most rewarded for in the marketplace.
One interpretation of these findings is that employees have an entrepreneurial impulse that even time constraints and unsupportive management can’t destroy, but it is being channeled in a direction that doesn’t match their companies’ urgent need for market-facing innovation. And what’s responsible for the diversion? Again, I would point the finger at the typical company’s unhealthy response to any foray that visibly fails.
The entrepreneurial impulse thrives in a high-trust environment that allows people to play with mistakes. In Stupid Experimentation (May 2012) we cited author Jim Manzi, who believes innovation is based on “epistemic humility.”
“Many things about our company turned out differently than we had expected… The Hayekian knowledge problem is not a mere abstraction… External analysis can be useful for rapidly coming up to speed on an unfamiliar topic, or for understanding a relatively static business environment. But at the creative frontier of the economy, and at the moment of innovation, insight is inseparable from action. Only later do analysts look back, observe what happened, and seek to collate this into categories, abstractions and patterns.
“More generally, innovation appears to be built upon the kind of trial-and-error learning mediated by markets. It requires that we allow people to do things that seem stupid to most informed observers — even though we know that most of these would-be innovators will in fact fail. This is premised on epistemic humility. We should not unduly restrain experimentation, because we are not sure we are right about very much.”
Failure is a by-product of pushing the envelope and can be counted on to make a cameo in any endeavor. It can be a great teacher, it’s the secret to national wealth, and “useful” failures can help prevent catastrophic ones. In our business, where “failure” is not uncommon, it’s also important to learn how to fail the right way.
Thank you to all our readers for joining the conversation here in 2013. We wish you all a happy and prosperous 2014, and look forward to seeing many of you at the Florida Venture Capital Conference, January 28&29 at Hyatt Regency Orlando.
Offered for your reading pleasure, in case you missed any: a compendium of our twitter highlights from 2013.
- As Exit Runways Grow, So Does Growth Equity. Growth equity is a class of venture capital not be confused with private equity or leveraged buyouts.
- CA taxes entrepreneurs & investors 5 yrs retroactively, and maybe even after they flee… to Texas & the Southeast.
- Vintage Future, V – special ’80s edition. Our 5th (Vth?) look at how today’s trend can be tomorrow’s punchline.
- Transparency, objectivity, truth-telling, opening doors. Making the Most of Your Board.
- Don Burton honored for his pioneering work as a founding father of the Florida venture capital industry.
- FL to pass NY in population. Pro-business/low-tax environment, plus actual climate environment cited as reasons.
- Interesting piece on the history of patent reform. Did 1979 law create tidal wave of software litigation?
- 7 Things Investors Love To See (with bonus “7 Signs You’re Not Entrepreneur Material” in Read More section).
- What every entrepreneur needs to learn from food trucks: make it easier for customers to engage & transact.
- 6 Things Successful Entrepreneurs Always Do. Even if there were a genetic component to “entrepreneurial engagement,” entrepreneurs succeed because of their good habits which they repeat day in and day out.
- Florida’s entrepreneurial activity rate exceeds national average. (From the 2012 GEM U.S. Report from Babson College.)
- A statistical ranking reveals which states have the most thriving startup communities, and which states have work to do. FL&TX ranked 1&2 in “The United States of Innovation.”
- SEC making it harder for start-ups to raise $: A Red-Tape Turnoff for Startups.
- Might be for earlier stage companies, but still good advice: 5 Things VCs Want You to Know Before You Pitch.
- Lessons in Entrepreneurship – MIT prof re-examines how e-ship is taught. Interesting, especially for early stage companies.
- Rise of the high-tech south, cont. – Austin to get non-stop London service from British Airways.
- SEC set to cripple angel investing. Government regulations rarely get the details right even when intent is good.
- HB 705 creates Florida Capital Technology Seed Fund. Companies who receive $ from the Fund must provide 1:1 private $ match.
- Kleiner’s Laws – great entrepreneurial wisdom from legendary VC Eugene Kleiner.
- Tampa #2 in Forbes “10 Best Cities For Young Entrepreneurs.” Southeast &Texas grab 5 out of 10 slots.
- “Existing companies execute a business model, start-ups look for one.” ‘Lean’ practices for (very) early stage companies.
- 5 Habits of Great Startup CEOs. If a candidate fits this profile, move quickly to hire them. But do your diligence.
- Keys to innovation from The Economist: Government get out of the way of entrepreneurs, reform public sectors. and invest wisely.
- “Seeing Steve Jobs Everywhere” – Watermark Medical and its founder Sean Heyniger mentioned in BusinessWeek.
Congratulating David Day and his team at UF’s Office of Technology Licensing is becoming a habit: they’ve been ranked 4th nationally for the number of start-ups formed, and 11th for the number of licenses and options granted for university research. (In a yearly audit conducted by the Association of University Technology Managers.)
This represents the 3rd time in under six months we’ve had the pleasure to give David & team a shout-out. Last April they were named the 2013 Incubator of the Year by the National Business Incubation Association, besting much larger competition from all around the globe, and just this past July they were named World’s Best University Biotechnology Incubator by the Sweden-based research group UBI.
The university’s OTL, Innovation Hub and incubator are vital parts of the hodge-podge of scientists, institutions and funding that make up Florida’s entrepreneurial ecosystem, all of whose members share great regional pride in their accomplishments. We’ll cut & paste this post into another draft and save it for re-use a couple months from now…
Today’s Wall Street Journal includes a story about the dramatic genetic breakthroughs that are revolutionizing cancer treatment.
(The promise of personalized cancer treatment, Part I, can be found here.)
One of our portfolio companies, MolecularMD, provides highly validated, standardized pharmacogenomic tests that support regulatory approval and clinical adoption of targeted, personalized oncology. Several of their assays help to identify a subset of the EGFR mutations mentioned in the story.
MolecularMD was founded by CEO Sheridan Snyder and Chief Scientific Officer Dr. Brian Druker. Mr. Snyder is a renowned leader in the biotechnology industry and behind several previous successful start-ups in the field, including Genzyme (NASDAQ: GENZ) where he served as Chairman, CEO, and President. Dr. Druker is a recipient of the Lasker-DeBakey Clinical Medical Research Award for his critical role in the development of Gleevec, a drug featured on the cover of Time magazine and described as a “magic bullet” that “convert(ed) a fatal cancer into a manageable chronic condition.”
Here’s an excerpt from today’s story, DNA Sequencing of Tumors Brings Hope of New Cancer Drugs:
Kellie Carey’s doctor finally stopped dodging questions about how long she had to live six weeks after he diagnosed her lung cancer.
“Maybe three months,” he told her in his office one sunny May morning in 2010, she recalls.
Yet she is still alive, a testament to the most extraordinary decade of progress ever in the long scientific struggle against lung cancer.
Tests found Ms. Carey’s lung cancer to be of a rare type that researchers had found just three years earlier by deciphering its genetic code. The 45-year-old businesswoman in 2010 went on a drug Pfizer Inc. was testing for that type. By pinpointing her cancer, the drug probably helped give her years more to live than chemotherapy would have, her doctors say…
Ms. Carey has one of at least 15 lung-cancer variations, almost all of which scientists didn’t know existed 10 years ago. Researchers have identified those variations, most of them in just the past four years, by decoding DNA in tumors—akin to how crime labs analyze DNA to genetically fingerprint suspects…
Among signs that revolution really is afoot: A June 2013 study found that lung-cancer patients who were treated with drugs targeted at their genetically identified varieties lived 1.4 years longer than patients on chemotherapy whose cancers weren’t genetically identified.
In effect, lung cancer is no longer a few common diagnoses. Instead, it is a growing list of rare cancers, each a target for its own drug regimen… The same goes for other malignancies: Scientists have decoded tumor DNA from breast, colon, kidney, skin and other cancers in recent years to discover scores of variations they didn’t know existed before… (R)apid diagnostic advances are making it easier for any doctor to test for the newfound cancers. Tests now can hunt for more than 200 mutations—of lung and other cancers—in one biopsy.
In June 2011 the WSJ wrote about what this would mean for the approval process for new cancer-fighting drugs:
By targeting mutations, researchers say fewer patients will be needed to prove the efficacy of new drugs, hastening their path to the market. In addition, fewer people will be enrolled in trials of drugs that provide them little hope of benefit.
But the use in drug development of specific genetic traits in tumors, called biomarkers, poses a maze of challenges. Many tumors are complex organisms fueled by multiple pathways. When one is disrupted even by a potent single agent, others compensate to help tumors develop resistance to treatment. Target therapies will likely be more effective when given along with similar agents or as some are used now, with existing conventional drugs… Researchers and drug companies are already working to test combinations of targeted agents. In some cases, they are collaborating with rivals. Combining agents risks increasing side effects and the cost of therapy, researchers and regulators say, and will likely require changes to current procedures for approving drugs.
This recent op-ed in The Wall Street Journal explains why venture capital is drying up for medical-device startups facing the new 2.3% tax on their revenue under Obamacare.
…This tax will likely cut into the profits of large medical-device manufacturers, a cost that will almost certainly be passed on to health-care consumers. But its effect on U.S. medical-device startups—the small companies that fuel innovation—may prove devastating. Coincident with the 2.3% tax, venture capital investment in medical devices has all but ceased. Why? Ask yourself two questions: Who would want to invest in a highly-regulated, government-controlled industry that faces a unique tax? What startup medical device company can reach the magical break-even point with a tax on its revenue?
When combined with the ever-increasing time it takes to get approval from the U.S. Patent and Trademark Office and the Food and Drug Administration, this levy is bound to destroy startups and stunt medical-device innovation in the U.S. and thus the quality of health care world-wide.
We are physicians and developers of medical devices, and we know firsthand that—unlike, say, the pharmaceutical industry, which requires high-cost, high-tech labs—substantial breakthroughs in our industry are made by individuals or small teams working in a space the size of a garage.
In 1993, Dr. Burbank and his small team of physicians and engineers invented the Mammotome… transform(ing) breast biopsy from open-breast surgery to a minimally invasive method requiring only a bandage to cover the skin nick at the end of the procedure.
Dr. Burbank conceived the Mammotome in his living room, creating a model made of balsa wood, a wooden dowel and a drinking straw before developing it into an actual medical device in a shop the size of a two-car garage.
To further develop and finance the Mammotome, the two of us, with pass-the-hat seed money from three other founding physicians, formed Biopsys Medical Inc. As the device succeeded in testing, Biopsys obtained investments from venture capitalists. Once the breast biopsy device proved clinically successful, investors were provided an exit through an IPO in 1996 (Biopsys Medical Inc.). In 1997, Johnson & Johnson acquired Biopsys and began selling its products world-wide.
Venture money is only available if VCs see an exit somewhere in the near future (when their invested money will be returned with a profit). Without reasonable response times from the Patent Office or the FDA, and without new medical-device IPOs and acquisitions, venture capital dries up, leaving startups stuck in the two-car garage stage of development.
These pages warned (and we weren’t the only ones) of this very scenario several times. Last June we quoted a Wall Street Journal op-ed on the complexity involved with hiding just that one tax and the harm it will do to the nation’s competitiveness:
(C)hanges to the ordinary corporate tax code wouldn’t raise enough money and would have hit many other innocent bystanders in manufacturing. So they chose an excise tax. About the only exemptions are for things that retail consumers buy directly, such as contact lenses or hearing aids.
So for the first time ever, the Internal Revenue Service is now writing rules that will treat some of medicine’s most inventive and complex products the same way it does gas, cigarettes, liquor and wine, guns, airline tickets and tires. Those are the commodities on which the political class normally attaches excise taxes, and the appeal is that the levies are hidden in higher prices, rather than listed separately like a sales tax. This is somewhat awkward for a law that claims to aspire to make health care more “affordable.”
The device tax is also worse than advertised because it won’t apply to actual sale prices. The industry’s supply chains and distribution networks are idiosyncratic, but different buyers usually pay different prices due to rebates and discounts. The draft IRS rules don’t credit these common business practices and instead apply to the “highest price for which such articles are sold to distributors in the ordinary course of trade” or the “normal method of sales,” as if there is a normal method. So the tax will be assessed on income that device makers never earn…
Perhaps the Bureau of Alcohol, Tobacco and Firearms—which does most excise-tax enforcement against bootleg smokes and rum running—should be dispatched to the device-company hubs of Boston and Minneapolis.
The providers will also be hurt from the device tax because of something they don’t like to mention, which is the government’s price controls. Medicare and Medicaid pay fixed rates per procedure, such as replacing a hip, and the rates don’t change when device prices do. So a hospital that must buy a higher-cost joint due to the device tax will have a smaller share of the reimbursement.
…Europe, Israel and Asia are working aggressively to overtake the American lead in the life sciences, which include emerging breakthroughs like tissue engineering, nanotechnology to fix individual cells and gene-based diagnostics. The rest of the world is looking on agog as Washington rushes to impose this tax.
A little over two years ago, while writing on how to fail the right way, we quoted Harvard Professor Shikhar Ghosh: “manage failure so that enterprises fail but people can still succeed…[and] build a society that can reinvent itself as the world changes.”
Last week Kevin D. Williamson updated the famous Leonard Read essay “I, Pencil” to discuss the same idea: how society reinvents itself via creative destruction. (You can watch a brief video summary of the original 1958 essay here at our YouTube channel.)
Williamson recounts a humorous story about the first cell phone call before moving on to how dramatically the technology has evolved in a short period of time:
Everybody knows the first words spoken on a telephone call — Alexander Graham Bell’s simple demand “Mr. Watson, come here. I want to see you.”
April marked the 40th anniversary of the first cell-phone call, which was quite different in tone. Two research teams had been competing to bring the first real consumer cell phone to market, and the first mobile call was placed by Motorola engineer Marty Cooper to his chief rival, Joel Engel of Bell Labs. “Joel, this is Marty,” he said. “I’m calling you from a cell phone.” In other words: “You lose, suckers.”
It took nearly a century to get from Alexander Graham Bell’s conversation to Marty Cooper’s, even though the basic technologies of mobile phones — telephony and radio — date from the 19th century. Conversely, it took only 66 years for mankind to go from the Wright brothers’ flight at Kitty Hawk to Neil Armstrong’s stroll on the moon. Technology does not move in predictable ways.
But it does move.
We treat technological progress as though it were a natural process, and we speak of Moore’s law — computers’ processing power doubles every two years — as though it were one of the laws of thermodynamics. But it is not an inevitable, natural process. It is the outcome of a particular social order.
When I am speaking to students, I like to show them a still from the Oliver Stone movie Wall Street in which the masterful financier Gordon Gekko is talking on his cell phone, a Motorola DynaTac 8000X. The students always — always — laugh: The ridiculous thing is more than a foot long and weighs a couple of pounds. But the revelatory fact that takes a while to sink in is this: You had to be a millionaire to have one. The phone cost the equivalent of nearly $10,000, it cost about $1,000 a month to operate, and you couldn’t text or play Angry Birds on it.
When the first DynaTac showed up in a movie — it was Sixteen Candles, a few years before Wall Street — it was located in the front seat of a Rolls-Royce, which is where such things were found 25 or 30 years ago. By comparison, an iPhone 5 is a wonder, a commonplace miracle. My question for the students is: How is it that the cell phones in your pockets get better and cheaper every year, but your schools get more expensive and less effective? (Or, if you live in one of the better school districts, get much more expensive and stagnate?) How is it that Gordon Gekko’s ultimate status symbol looks to our eyes as ridiculous as Molly Ringwald’s Reagan-era wardrobe and asymmetrical hairdos? That didn’t just happen.
Later the author broadens his argument from the single technology (handful of technologies?) to the economy, and society, at large:
Market propositions are experimental propositions. Some, such as the iPhone and the No. 2 pencil, are wildly successful; others, such as New Coke or Clairol’s Touch of Yogurt Shampoo, are not. Products come and go, executives come and go, firms come and go… What we really are saying is: “Failure works.” Corporations are mortal. Failure is not only an important part of the market process, it is the most important part of the market process.
U.S. Steel was at the height of its power a behemoth, the largest American business, the first corporation in the world to have a market value in excess of $1 billion. It was formed out of the union of J. P. Morgan’s business interests and Andrew Carnegie’s steel empire. When Carnegie took payment for the interests he sold to Morgan — the equivalent of $6 billion in contemporary dollars — he received it in the form of 50-year gold bonds, documents that took up so much room that the bank in which they were deposited had to build a special vault to house them.
U.S. Steel seemed to be a permanent thing, but it is today a shadow of itself, reduced to a mere division of another firm, surviving mainly in name, and that name reduced to grandiosity: U.S. Steel Corporation indeed, as though it were the U.S. Mint or the U.S. Army. It produces barely more steel today than it did in Morgan’s time, and it is well below Staples and Rite Aid on the Fortune 500.
The decline of U.S. Steel was bad for the company’s shareholders and its employees, but it was good for people who use steel — meaning everybody else in the world. U.S. Steel was itself the product of an improved business model that had displaced older, less efficient competitors. Without the pressure and opportunity created by the possibility of failure, the U.S. steel industry — and the entire U.S. economy — would be (at best) stuck in the early 19th century. It seems paradoxical, but failure is what makes us rich. (And we are, even in these troubled times, fabulously rich.) We’d all be a lot worse off if corporations such as U.S. Steel lived forever (which is one more reason not to engage in bailouts).
Serendipity – the happy accident – is responsible for many remarkable innovations: Gmail, Aspirin, the Pill, insulin, penicillin, antihistamines, the smallpox vaccine, Teflon, Velcro, Nylon, Ivory Soap, the Post-It note…
If there were a process for increasing such accidents it’d quickly become standard M.O. at most companies.
In yesterday’s Wall Street Journal, in The Science of Serendipity in the Workplace, Rachel Emma Silverman describes several companies’ attempts to manufacture serendipity.
Some have odd names: voting doors, lunch button, conversational portals, conversational balance table, infinity loop. Some sound very corporate: Serendipity Day. Some sound unpleasant and a bit manipulative: intentionally smaller rooms and hallways to literally create collisions. (The late, great Steve Jobs famously used central bathrooms at Pixar HQ to force people to run into each other.) Results, so far, are inconclusive.
But despite all the buzz around serendipity—several panels at the popular tech conference South by Southwest Interactive discussed the topic—it is hard to know for sure whether any of these efforts really work. The real challenge, companies and workplace scholars say, isn’t merely connecting workers with their colleagues so much as it is connecting them with the right ones.
“The most productive relationships are difficult to engineer,” says Jason Owen-Smith, a University of Michigan sociologist who studies employee collaboration…
But most companies are “still really primitive at this,” says Greg Lindsay, a visiting scholar at New York University who studies interactions in the workplace. “They compress people in the same space, put in a coffee machine and just hope that something good happens.”
The term serendipity was coined in the 18th-century by novelist Horace Walpole, inspired by the Persian fairy tale about three princes traveling through the land of Serendip. They “were always making discoveries, by accidents and sagacity, of things they were not in quest of.” What distinguished their “abilities” from simple luck was that they could see meaningful combinations where others did not.
We found the examples cited by Silverman a little gimmicky and unlikely to achieve reproducible results. Happy accidents may be more a matter of the right environment than the the right process.
- benefits from scarcity (forcing people to be creative) and from a degree of sloppiness, tenacity, and dissent
- depends partially on socialization (who you share offices and interests with)
- gets a boost from tinkering, especially when co-workers tinker with resources for things they care about personally
To this list we might add: maintaining a high-trust environment, allowing people to play with mistakes, encouraging trial and error, and accepting an “optimal degree of wastefulness” in which minds wander and activity can seem directionless.
We’ll close with an entrepreneurial analogy on the subject from Saras Sarasvathy, a professor at the Darden School of Business. She teaches that great entrepreneurs thrive on contingency and improvise their way to an outcome that only feels ordained in retrospect. She likens them to Iron Chefs, “at their best when presented with an assortment of motley ingredients and challenged to whip up whatever dish expediency and imagination suggest.”