RealBio: startup sees growth

By Nathan Peck | LabWork

KALAMAZOO — How much does a Petri dish resemble your lung?

If you answered, not much, you are on the right track. For decades scientists have had limited options for using tissue cultures for research and pharmaceutical testing. They could either grow cell cultures in a Petri dish or use animal subjects.

But a Kalamazoo-based life sciences startup, RealBio Technology Inc., is hoping researchers and pharmaceutical companies will look to their device that models tissues in three dimensions as an alternative to traditional testing methods.

Neeb
Wrapping up a $3 million round of seed financing, RealBio President and CEO Paul Neeb recently met with LabWork to discuss the growth of the company as it ends its first year in existence and prepares to bring its RealBio Culture System to market. The system’s technology allows cells created in the lab to grow as they would in normal human tissue. Neeb believes the systems cut down on contamination, reduce labor costs and allow for better research.

“If you believe the whole goal of cell cultures is to mimic in-vivo tissues, the Petri dish is not the best model,” Neeb said. “Researchers don’t have a good model, other than animal models, but it is not cost effective.”

Using technology licensed from Aastrom Biosciences in Ann Arbor, RealBio partners with Grand Rapids-based contract medical manufacturer Medbio Inc. for the production of the systems. RealBio operates outside the Food and Drug Administration regulatory structure as the devices are used for research purposes only. By partnering with Medbio, an ISO 13485:2003-certified facility, the systems can later be licensed for therapeutic use by the FDA.

Brought to the Southwest Michigan First Life Sciences Fund in 2009 as part of the Executive In Residence program, Neeb was charged with finding intellectual property that could be accelerated into a viable business. Neeb, a former executive in a variety of biotech companies including Monsanto and Pfizer, decided on the technology behind the cell-culture systems from Aastrom Biosciences to build the company around. RealBio was formed in June 2009, with Neeb as president and CEO. The company now has four employees including Neeb and expects to pick up another six employees by the end of the year.

“It is a long process to take an extremely early stage idea, really, and take it through to investment, a business plan, licensing and bringing a product to market,” Neeb said. “It is a really exciting time right now. We are starting to take orders and will have a working model out May 1.”

The company is looking to the drug development process and university research for its first orders. The opportunities are huge in the $12-15 billion drug selection market where 90 percent of drug compounds never make it to market, Neeb said. By providing a more accurate model for in-vitro tests before Phase I trials, pharmaceutical companies should be able to reduce that figure.

“Why is there a 90 percent failure rate? Because there are no good models to predict safety and efficacy (before trials),” Neeb said.

RealBio is currently marketing to university researchers and hopes to have research using their product published in peer-reviewed journals. Neeb sees opportunities for researchers looking to grow functioning tissues in-vitro, as well as those studying the development and growth of stem cells. The company is looking to market through connections within the pharmaceutical industry, and is currently working to develop and educate a sales force for the product, rather than sell to a larger distributor.

“The majority of tools are delivered by large corporations, but we don’t want to end up a line item in a phone book,” Neeb said. “Most importantly, our technology is so unique that when we engage researchers, they are extremely intrigued. It would be different if we had a ‘me-too’ product. But reaching out to big and small pharmaceutical companies is going to be a challenge.”

Neeb looks to begin Series A fundraising of $4-5 million in venture capital late in the year, which should take the company until it is cash-flow positive, sometime in 2011. Neeb expects to be generating upwards of $5 million in revenue in year five. At that point, venture capital may be looking for an exit.

“Whether we exit or not, we will have a viable company. Exit sometimes scares folks, (but) we need that to help attract more venture capital to the area,” Neeb said. “If we don’t find the right exit opportunity, we will still be able to provide impressive returns. By year five, generating $4-5 million in cash is a significant annuity for investors in a company who put $7-8 million into it.” LW

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