Gregory: Exposure to investors, not prize money, biggest gain from Gov's Biz Plan competition
To NovaScan, one of two companies that split the top prize of $55,000 in the Governor’s Business Plan Competition , the money is nice. Money is always nice when you’re a startup company that hasn’t paid a nickel in salary as you develop a medical imaging system that could someday rival x-ray mammography as a diagnostic tool by detecting breast cancer in an earlier stage.
But at this point in Milwaukee-based NovaScan’s young life, emerging from a field of 330 ideas to win $27,500 with the other winner, BioSystem Development of Madison, was the icing. The cake was exposure that introduced the company to potential investors.
NovaScan co-founder William Gregory, who is dean of the University of Wisconsin-Milwaukee’s College of Engineering and Applied Science, says winning is great. But he sees a long road ahead before the 18-month-old startup can say it has made it.
WisBusiness.com Editor Brian Leaf spoke recently to Gregory about NovaScan, the Business Plan Competition and the company’s future.
Leaf: So how’s life after winning the Governor’s Business Plan competition?
Gregory: Great. I haven’t gotten the check yet. It’s in the mail (laughs).
Leaf: Tell me a little about what NovaScan does. You’re an imaging company.
Gregory: We use the electrical properties of objects to create an image. Take, for example, a breast scan. The patient would lie on a table. The breasts would be in a container of salt water, a rectangular container with electrodes on the wall. We put small voltages on those electrodes and measure the currents, invert the data and get an image of the interior, based on the electrical properties. It turns out that the electrical properties of cancerous tissue and normal tissue differ by a factor of 100. So the cancer stuff really sticks out.
We’re working at St. Mary’s Hospital in Madison and St. Luke’s Hospital in Milwaukee, taking data for a database we want to build on the properties of the tissues, looking at tissues that have been excised as part of a mastectomy or a lumpectomy or a biopsy. At St. Luke’s they’ve assigned a research nurse to us. There is also a Ph.D biologist who is the research director who is there and helps with it. What we do is put leads into the tissue and measure the electrical properties. GE Medical Systems got us some 3D breast MRIs so we can build a computer model of what’s going on. It looks like we’ll get a great distinction between normal and cancerous material. There’s a whole raft of things that could be there that we could identify from data we’re getting from the hospital.
Leaf: So what this will do is replace mammography?
Gregory: There are no x-rays involved in this. There is no compression of the breast, which is very unpleasant. Talk to any women you know and they’ll tell you that. It looks like we have far more accuracy. And we get quite deep -- 4 1/2 inches in -- and can still see something 1.5 millimeters in size. It’s got the sensitivity and the specificity and lack of invasiveness behavior. It’s got a lot of good things going for it.
The other thing is it is a medical device and medical devices require FDA approval. We did start the process of communicating with FDA. The first letter we got back sounded like we were going to have to do a PMA – a pre-market approval -- which is very expensive and time consuming. I happen to be on the Wisconsin Technology Council board and Gene Saragnese, (vice president of Global Technology Operations for GE Medical Systems) is on there. He asked me how things were going and I told him about that. He said, "We have a whole division that does that. Give it to us and we’ll look at it for you." A week later he calls back and says, "Rewrite it this way and we think you’ll face less stringent approvals."
Leaf: Nice to have friends, huh?
Gregory: They’ve been very nice to us and deserve a pat on the back. They’re also the ones I called when we needed the 3D MRIs to do a model. Two days later they arrived.
Leaf: How long has the company been around? Eighteen months?
Leaf: And you got help from WiSys.
Gregory: Actually we had a grant from another foundation in West Virginia, where I came from. When I came here, WiSys picked up the patent. So they’re paying for all of the patenting costs. We only got the license to do this a year ago. We’ve built a company and doing the research, but we’ve only been licensed to carry it through since June a year ago.
Leaf: Now the $27,500 you won isn’t a lot of money for a company?
Gregory: Ah, it will buy me a Mercedes (laughs). The Technology Council probably won’t write the check now. I’ve got a weird sense of humor.
There’s nobody getting paid right now. We’ve got promises of stock in the company. We’ll bring one other person on for sure who has a lot of software that’s useful to us. And maybe another person, someone who is a real circuit guy. If we have some sweat equity and the $27,500, I think we can carry it along so that we get an angel group at least interested. We did get a couple of tickles at the conference. Larry Wells is the guy handling the business side of this.
Leaf: Larry is a cofounder, correct.
Gregory: Yes, Larry, myself and my son Chris, are the three cofounders.
Leaf: What was the value of this exercise, this Governor’s Business Plan competition?
Gregory: Even if we hadn’t shared the grand price, the exposure you get is very good. I’ve been to a lot of conferences in my day but at that one there were a lot of really great interactions. And it got us a couple of tickles. I think even before that, it does make you focus. We had a business plan that we originally put together – of course these things are always changing. We had a small grant from the Department of Commerce that we used with the Agave Group in Madison and they helped put together the original plan. The one we used in the contest, myself, Larry and Chris put it together, although the writer and presenter was Larry. He’s got a good background in the medical imaging game so it’s very good to have him around.
What it really does is make you sharpen your pencil and think very carefully about what you next best step is.
And then when you get into the whole idea of a contest like this, it really is the exposure.
If the dollars had been big enough so it was like an angel investment, it would have been great. But even at $27,500, with some sweat equity, we can stretch that and make it go farther. The money could be used to buy the parts and the sweat equity could be used to finish the design. What we have right now is a prototype that is two dimensional. You have to switch by hand from one electrode to another. When you get a three dimensional, you’re going to have that process automated and you’ll have to be spiffier with your electronics. So it would help pay the cost of getting it together.
What people are saying is we might get some angel money, but before we get to the point of government approvals and all, we’re going to have to have working prototype.
Leaf: How close to a working prototype are you? What would it cost and how close are you.
Gregory: You’re talking anywhere from $250,000 to $750,000 that range. And I’d like to have a year. The challenge is really one of automating the electronics and speeding up the software so we can make the measurements in a reasonable time.