First product from new business center: reversible vasectomy that eschews 'snip and scorch'
Jim Stice is trying to jumpstart two small Elliot Park medical device companies: Shepherd Medical, which is developing a reversible vasectomy procedure using a silicone plug; and Twin Star Medical, which will soon market a catheter to reduce swelling and prevent tissue damage from broken bones.
Stice's two companies are among the first to sign leases in the Elliot Park Lifesciences Institute (EPLI) incubator, 700 10th Ave. S. The incubator's Grand Opening is Dec. 16.
With city support, Shepherd and Twin Star are also the first to apply for new state tax credits aimed at helping businesses in the city's newly designated "Life Science Corridor."
City Councilmember Lisa Goodman (7th Ward) said while Shepherd and Twin Star won't create many new jobs, the ones they create pay well. (A city report said Shepherd Medical would create 2.7 new jobs in 2005, paying an average of $50 an hour.)
"It is more a bigger-picture strategy of the neighborhood going out its way to work with and recruit good paying jobs, in an industry that is up and coming in a neighborhood that could use good paying jobs," she said. "The strategy is working."
Stice said the new state tax credits help, but they are not the difference between whether a company gets off the ground or not. "It is an incentive to locate here and stay put," he said.
Incubating an incubator
Earlier this year, the city designated the Life Science Corridor and the state recognized it for certain tax advantages. The medical alley stretches from the Metrodome to the former Sears tower on Lake Street -- 1.5 miles long, a half-mile wide, with 19 health and medial institutions and 61 research and clinical labs.
Those who created the "Life Sciences Corridor" designation say it will help promote collaboration within its borders and help attract private investors and public money.
EPLI is one small part of the corridor but also a catalyst. It bought its building Aug. 31 for $1.9 million, said Dave Durenberger, who has helped spearhead the project.
Allina Health Systems owned the building and used it for central billing, he said. The Midwest Orthopaedic Research Foundation (MORF) had basement space and wanted to stay in the building, which is on the edge of the Hennepin County Medical Center (HCMC) campus.
MORF and its founders, Dr. Richard Kyle and Dr. Ramon Gustilo, created the for-profit EPLI, along with Genesis Business Center, which will manage the business incubator, and United Properties, which will manage the building, said Dave Durenberger. Durenberger spearheaded the building's purchase.
Genesis President Harlan Jacobs said two other companies have signed incubator leases: Dynamic Spine, Inc., which is working on artificial discs, and Surgeon Solutions, which is developing a line of orthopedic products.
More leases should be announced soon.
Stice has worked out of a MORF basement cubicle since 2003. His two companies will rent 1,000 square feet of the 10,000-square-foot incubator, which will include business support, such as an accountant and attorney.
Durenberger said MORF would keep its basement space, and the incubator would have the first floor. EPLI would lease the three upper floors to "anchor tenants" to make its mortgage payment. It is already looking at an Elliot Park expansion for more incubator space.
Developing new devices
On paper, Stice's new companies look promising. For instance, Twin Star literature said the catheter's U.S. market potential is $100 million.
One use of Twin Star's catheter is preventing "compartment syndrome," the severe swelling that can occur around a broken arm or leg, Stice said. The tissue swells to the point where it cuts off blood flow to the muscle, killing tissue.
If a patents gets compartment syndrome from a broken tibia, doctors have to cut open the leg and leave it open for a couple of days, a process called a "fasciotomy," he said.
His research said doctors see 200,000 at-risk fractures each year that the catheter could prevent.
Twin Star's catheter technology was developed at HCMC. Federal grants totaling $850,000 paid for clinical trials, and the product now has U.S. Food and Drug Administration approval, he said. He expected to launch the product in the second half of 2005.
Shepherd's reversible vasectomy is about to start its clinical trials in Seattle next year, funded by a three-year, $1.4 million federal grant.
Stice described the traditional vasectomy as the "snip and scorch" method. It causes sterility by cauterizing shut the small, sperm-carrying tube, the vas deferens. Shepherd has what he calls a "nick and insert" procedure. Using and inserting tool, doctors place a thin silicon thread in the tube, blocking sperm flow, without permanent damage.
Stice has received some significant federal grants to pay for clinical trials. However, for the day-to-day cash, he has relied on family, friends and "angel money," (another term for wealthy individual investors, separate from institutional venture capital.)
The state tax credits give him a small break on research and development investments, and, for Shepherd, a rebate based on payroll increases. However, he won't get the first checks until 2006, he said.
A city memo estimates Shepherd would get $44,200 in state tax credits for a two-year period.
A bigger pot of money is in the works to help startups Jacobs said he and others are talking to banks, utilities and private investors to develop the Minneapolis Life Sciences Capital Fund, which would be "the investor of first resort" for new businesses making a long-term commitment in the corridor.
The fund would provide between $50,000 and $250,000 in startup equity per company, Jacobs said. He hoped to raise the first $2 million in three months and eventually raise $10 million.
The city has also applied for $130 million for New Market Tax Credits for corridor businesses, which give investors a tax credit for investing in businesses in low-income areas.