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The Evolution of Tennessee's Life Sciences Industry

Morgan interviews executive director of Life Science Tennessee's Mentor Network for BioTN, Steven King, and the winner of this year's Life Science Tennessee annual Venture Forum, founder and CEO of Hera Health Solutions, Idicula Mathew. They discuss the evolution of the life sciences industry in Tennessee has evolved and what sets Tennessee apart in the life science sector.


Morgan Ribeiro
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  • Transcript

    Morgan: This is Morgan Ribeiro Waller's Chief Business Development Officer and the host of the podcast. On today's episode, we are discussing the life sciences ecosystem in Tennessee and how that is changing. Life Science Tennessee is a statewide nonprofit organization whose mission is to advance and grow the life science industry in Tennessee through advocacy, partnerships and alignment with economic and workforce development.

    Joining me for this conversation today are Steven King and Idicula Mathew. Steven is the executive director for BioTN and the mentor network arm of Life Science Tennessee. He is a 20 plus year executive with diverse healthcare marketing experience across the continuum of care. He also has experience across a variety of companies from startup to fortune 100 in revenues from $1 million to $230 million. Accomplishments include pioneering a first to market non-invasive medical technology and a key role in a startup company's growth to $1 billion plus market valuation in just six years. Prior to his current role, he was the president and CEO of Restore Medical Solutions. So, a lot of insight to offer. A variety of different companies and experiences that he now brings to BioTN and to Life Science Tennessee.

    Idicula Mathew is the founder and CEO of Hera Health Solutions and the winner of the recent Life Science Tennessee Venture Forum. Hera Health Solutions is a pharmaceutical device company, specializing in the research, development, and commercialization of long-acting medications through a proprietary bioerodible drug delivery implant. He is a biomedical engineer from the Georgia Institute of Technology, AKA Georgia Tech, and he helped develop the technology behind Hera Health Solutions during his time as an undergraduate there. He has also been named a top 30 under 30 leaders in sustainable business by GreenBiz and has also presented to the United Nations.

    Steven and Idicula, welcome to the show.

    Idicula: Thanks for having us.

    Steven: Thank you. Glad to be here.

    Morgan: So, this is a somewhat different conversation. We've really not covered Just the startup community in Tennessee, but I think more specifically with life sciences, it's under the radar a little bit. I think it's coming to folks' attention. Tennessee, but I would say Nashville even more specifically, has a reputation for its healthcare industry overall, but when we talk about that, it's traditionally been kind of healthcare services. Idicula, I know you're in Memphis. Have great access to healthcare and providers there with systems like St. Jude that are known internationally. And with those, providers and health systems and academic institutions now has come this sort of offshoot of the life sciences industry. We talked about pharmaceuticals, medical device, and so I think with that introduction, Steven, I'd love to hear more from you just about Life Science Tennessee as a whole. I think that it's good to have that understanding as we go into this kind of deeper conversation about life sciences and medical device across the state.

    Steven: Life science when you talk about Tennessee, I would mention Memphis. Memphis is known nationally because of the large corporate footprint they have in medical devices. I think they're third or fourth largest in the country with companies like Medtronic, Smith & Nephew. So, they're well known for that.

    And in a Nashville, obviously, you can't miss the center of gravity in the healthcare space, which is Hospital Corporation of America, which has had a longstanding footprint, not only in Nashville, Tennessee, and then across the nation. But you mentioned a little bit of this, Life Science Tennessee is really a non-profit member-driven organization whose focus is to really grow the life science industry through advocacy, partnerships, and alignment with economic and workforce development. And you can't help but miss , at least in Tennessee, I think there are 1,500 companies that claim to be healthcare technology or healthcare service organizations, and I think the last count I saw that there are about 33,000 employees in that industry across the state.

    But Life Science Tennessee has a couple of parts to it. One part is the BioTN component. I know we're going to talk about it a little bit later on, but the BioTN component is where the mentor network that I'm involved with resides today. Previously, it resided in Life Science Tennessee a s part of a network to help raise up and build and support this early stage innovation, as they say in the economic development offices, to open the front door for innovation and creativity in Tennessee in the life sciences space.

    Morgan: That's helpful to have that understanding, and I know there are so many prongs to this. You mentioned BioTN and so in March, 2020 Life Science Tennessee announced it had formed a strategic partnership with BioTN, which is separately, a nonprofit foundation dedicated to expanding science and technology and engineering and mathematics, otherwise known as STEM, education. And that alignment harnesses BioTN's focus on STEM education with Life Science Tennessee's economic development and policy expertise which goes back to what we're talking about earlier, which is making Tennessee a major state for bio science, education and innovation.

    Tell me about how that has developed since this was announced in March 2020, over the last two years, what has happened with that partnership?

    Steven: It was actually an outgrowth and an idea that it's not just enough to have the larger corporate entities and others and academic universities creating the backbone of life science, but what we really needed was more of a ladder. So that's why if you look at programs today, they're really three components starting at the bottom end, the STEM and bio-sciences program, which is, I think, it's the stem preparatory academy. And then from there, as people who go through the program have an opportunity to matriculate, go into university. You have the academic Alliance. Now we're working with the universities. So these are primarily the post-docs. These are the graduates in the graduate programs. And this program is really designed to engage them. Not only the science side, which they're already working on, but the entrepreneurship side of it.

    They have a program, which actually was held last night, which is called Scipreneur. The Scipreneur Challenge. That program is based upon marrying up this hybrid of science and technology and also entrepreneurship. And it gives people in the program an opportunity to take an idea and to create a business plan around it and go through all the steps that you would normally go through to present a company as if it were your company and you were going out to take that company to market. So you do all the elements of it. You look at total addressable markets, you look at go to market strategies, you build portfolios on the financial side of it, and then you pitch that into a competition. And so last night was what they call the Scipreneur Finale. And so that program is multiple months long and it's incredible to watch.

    I say that coming from a commercialization side because what we witnessed last night – very impressive presentations. From that, I think as I shared before we started our recording, one of the companies wants to continue on into the mentor network so that they can take this exercise and really take it to fruition, which is a company. Which leads to the final rung on the ladder, which is the mentor network that I'm responsible for.

    This is really a stage gated, disciplined entrepreneurship program that we take companies through. So, it goes through multiple stages. It starts with an intake panel, goes through a marketing panel and various panels, whether it's regulatory, finance and so forth,. The idea and the overarching objective is to help the entrepreneur through this process, determine what gaps they have in their business model, fill those gaps, consider all the aspects of the business they'll need to truly go to market with it, and at the end, they graduate with a pitch deck that allows them to go out and articulate their company and their value proposition, and that opportunity to a perspective investor.

    Morgan: And when you say a panel, you mean a panel of experts who have volunteered their time to consult?

    Steven: That's actually a great question. The mentor network goes back to, I think it was 2014, 2015 – prior to my coming from California here to Tennessee, is that the Tennessee leadership in the economic development group in Launch Tennessee, I think at that time it was called Tennessee Technology Development Corporation, visited a number of programs across the country and they selected the organization in San Diego called the Connect Springboard, which was one of the nation's oldest accelerators in the country. They actually contracted with them, trained to it, brought it to Tennessee. So, it's predicated on a pro bono program. That is, it offers services for those who are elected to come into the program. They have a couple of things that they have to have as minimal requirements to be accepted into the program. It's run by an organization of mentors and these mentors are typically C-suite individuals. Some are investors, some are specialists from various service firms, which could be legal firms, it could be financial accountancy, commercialization backgrounds, regulatory, and so forth. So we try to surround the entrepreneur and the startup company with various experiences and opinions and feedback as they go through this program.

    So it's all pro bono. And the value is, as we say, if you get about a hundred thousand dollars’ worth of free consulting and you avoid the valley of death, which hits a lot of early stage companies. We say, " Hey, don't make the same mistakes we've made. You're going to make your own mistakes, but you won't make the same mistakes that we made."

    Morgan: That's great. And any success stories you want to note that have come out of the mentor network?

    Steven: I thought about that. Rather than naming specific companies, because the measure is, we want companies to go out, be successful, raise money, plant a flag here in Tennessee and delight customers and build their company, employ people.

    Sometimes you get companies that are very good and they for whatever reason, their lead investor may take them elsewhere. So we've had companies here that have been successful. We've had companies go outside of the state and be successful, but we still stay in touch with them through somewhat of a graduate program. An alum program.

    But we've had companies that have been involved in everything. A number of them in vascular products. We've had companies involved in diabetes. We've had companies involved in platforms for revenue cycle management, which you would be surprised by here in Nashville, that has an orthopedic flare to it. We've got one that was a company that launched an online virtual experience for pediatrics. So they had a pediatric consultancy there. So we've seen a lot of different flavors and versions of companies that have come through the network.

    Morgan: Hera Health, which I mentioned earlier won the Life Science Tennessee Venture Forum, which I always find to be really fun. It's great to hear from companies across the state what they're doing. Maybe you can tell us more about the Venture Forum and what takes place there.

    Steven: The Venture Forum is an annual event. It usually is held in conjunction with the Life Science Tennessee annual conference. Each year we have the Venture Forum in which the idea is to find the very best startup companies in the state. We call it the cool technologies and the cool companies and invite them to participate. It goes through a rigorous screening process where we try to net it out to four or five of the best companies out there. We send invitations out to them. They have the opportunity to come in front of the Life Science Tennessee Annual Conference, and they get a chance to pitch in front of their peers, service providers, and the one that everybody really looks for our perspective investors. And then from that, what we do is we have two candidates that one is judged by the panel of judges as the best most investible company. Hera Health was that this year. So, congratulations. And then we also have kind of a people's favorite where they have a chance to vote. That's based on the presentation. Maybe not necessarily the most investible product. Sometimes it goes to an early stage promising company. But I would be remiss if I didn't mention that we couldn't do these without the sponsorship of great organizations like Waller. Waller has every year been there supporting it, and then this year offered the supporting grand prize.

    Morgan: Awesome. Of course we love being a part of it. And that's a good segue over to you, Idicula. I know you've been very quiet, very patient here. What with that kind of the background and the lay of the land. This was mentioned earlier, but I'm just curious for our listeners sort of more about your background and how you became a medical device entrepreneur.

    Idicula: Yeah. Thanks for having me here again. So name's Idicula Mathew co-founder CEO of Hera Health Solutions. Interestingly enough, Hera Health Solutions was never intended to be a startup company. We actually started out as a research project at the Georgia Institute of Technology. And I was actually working in a material science lab, looking at novel implications for extende d drug delivery. We really stumbled upon the technology innovation behind Hera Health Solutions because we were just an eager group of students kept asking why can something be done this way? So a little bit of background about the technology, what we're actually doing is a utilizing currently existing biodegradable, biocompatible materials that are, very prevalent in the product space today. You might be familiar with biodegradable bone screws, biodegradable sutures. We're actually taking that exact same material. We really asked ourselves, can we utilize this material to deliver a drug to the body? One of the biggest problems that we really uncovered here in the pharmaceutical industry is, as we know, there's hundreds, billions of dollars that are invested every year for the development discovery of novel therapeutics, active pharmaceutical ingredients, but oftentimes when we're looking at how are these ingredients delivered to the body. Maybe they just formulate it into a pill, and that is usually not the best way for the intake of that medication, especially for long acting therapeutics.

    And those are essentially therapeutics that are best delivered, steady state, constant release into the body and it works best if it's constantly present in the bloodstream. So there has been a lot of innovations that are upcoming. You're talking about subcutaneous implants, hydrogels, pellets, but each of them have different issues with each of their form factors. Some of them are very invasive. Subcutaneous implants that are currently on the market are ethyl vinyl, acetate based, silicone based. They need to get removed.

     It was just a clear indication as, Hey, there's gotta be something better. A better way to do this, a better way to deliver drugs to the body. So we again, we're undergraduate researchers. A lot of it just came with us asking, Hey, what did we utilize this material for this platform? And then one thing led to the next. Pretty soon we started realizing that we have embarked on a nanotechnology journey. And that's the initial scope.

    I graduated shortly after and had the crazy idea of saying, Hey, let's see if we can commercialize this technology. We were in Atlanta at the time. Definitely had the startup bug in myself. Was really just engaged in conversations with so many advisors and networks. And one thing led to the next – huge believer in serendipity – continue those conversations. That's how we somehow got connected to Memphis, Tennessee. We have got some grants, when we were first out in Atlanta, but our first investor check actually came from the network out in Memphis, Tennessee, which we're so excited about which is what allowed us to really kickstart our journey with translating our project, our undergraduate research project, into what Hera Health Solutions is now developing.

    Morgan: That's awesome. I love that story. It just goes to show exactly what we talked about with Life Science Tennessee and putting the state on the map. This technology that you created in Georgia, and now you think, okay, let's commercialize it and you get connected with this program and Memphis. So tell me more about that ZeroTo510.

    Idicula: That's correct, yes. So I think this is about now a year after I had graduated. We had really scraped up most of our grant funding that we had received, and we had a very minimal buyable working prototype. we were actually connected with the ZeroTo510 network. So we had some introductory meetings, and it was honestly amazing. I still remember because usually when we are talking about startups, we're in the startup ecosystem. Many times healthcare is an anomaly. You start to talk about biodegradable implants, you started to talk about the pharmaceutical industry, ethyl-vinyl acetate, silicone based implants, invasiveness, hospital care systems. These kinds of things are completely going above a lot of the people's heads that we talking about. And, we're just really diving into this atmosphere where it's completely a different hat that you have on where you are in your research mode publication mode versus commercializing this technology.

    And as soon as we jumped on phone calls with folks in the network within Memphis we started to realize that people were speaking the same language. People started to ask us questions that were really allowing us to enable our technology to be commerciable. And I think that was the chain which allowed something that is a technology, something that's an innovation, something that's I P, to really be able to translate into a product. What's your product market fit? So ZeroTo510 was an amazing program where it not only helped develop our technology, but it really helped us develop as founders. Where we started to really analyze, Hey, what is the market for our technology? We were essentially forced to go out and speak to a minimum of, I think it was 50 people or a hundred people that are going to be able to actually utilize our product. And that's a real big game changer, right? Because there's a complete big difference between having a publication released with new research attributes versus thinking about who's actually going to use our product. Who's actually going to pay for the product? How are we going to sell it? Is it going to be reimbursable? And those are the questions that are really important if you really want to commercialize and take a technology forward.

    Those five, 10 people that we spoke to, we started to uncover so much information about our industry that we actually three, four years later now we still continue those discussions. So we are constantly out networking with our future customers and networking in the space. That's something that at Hera Health Solutions is very key. That sort of thought process was really enabled in us through the ZeroTo510 program. An amazing sort of hundred days is what they call it, where we were able to really take our technology. From zero to be able to commercialize it. Super grateful to have had the opportunity to be connected to the program and still have the amazing mentors that we have as a result of the program.

    Morgan: And you all are still in Memphis, right?

    Idicula: That is correct. Yes. So, ZeroTo510 is an accelerator program. Crazy stories, right? Like we found out that we got accepted to the accelerator program. Two weeks, a week and a half, before it started. So think about, moving in a moment's notice, all of the crazy stories that come with that. But we moved out for only a hundred days.

    So the program is a hundred days. It was the summer. And pretty much just taking a chance. We didn't really know what all to expect when we moved to Memphis. Never even been to Memphis before. The few advisors, honestly, when we told them that we're moving to Memphis, we got some raised eyebrows. Like, why are you moving to Memphis of all places? But I think it's a real testament to Memphis and Tennessee because we're still here. I think we were there for a hundred days. We were blown away by the network and the opportunity. Some of the stuff that Steven mentioned, I think most people don't realize that Memphis has such a strong ecosystem for medical devices and the healthcare industry. So, it was a real big game changer for our company and for our technology to be able to get this grassroots investment. Not just capital, but also the interest from some of these key networks and these key partners that, are a strong part of our company.

    Morgan: So you've mentioned some of this, but just curious, what the upside of being in just the state in general. I know Memphis in particular where you're based, but just access to investors, the entrepreneur network, healthcare providers, you've mentioned some of the meetings that you have continued to have. So maybe speak more to that component of it.

    Idicula: Yeah, totally. We started this company now it's been four years. We have had the opportunity to get raised capital within Tennessee. We've also raised capital in other states, even internationally. So, I've had the glimpses of different states, different parts of the world, and I think what is special to Tennessee is I call that Tennessee hospitality. It is definitely special because Tennessee is the one place where when you have an engaging conversation, and you tell them about what you're working on, you tell them about what you're doing, people are honestly, just excited to help. And I think that mentality of, Hey, maybe I'm not the best fit, but I know somebody that maybe could help you. I don't care if it is, but let me just connect to you to this person just because. That's actually very unique. I don't know what it is, but there's definitely something special within Tennessee that I can give a testament to.

    Morgan: I know. I've tried for a while to come up with the word for it, but I just feel like across the state and people are just very friendly about connecting you with folks and no one is protective of their relationships. And I think people are also willing to have those meetings, right?

    Idicula: It's not just people willing to connect you, it's the people that you're being connected to just so willing, so excited to be like, yeah, let's jump on. I think now people are starting to be in person again, but, Amazing how just excited people are to welcome you. I think that's what's exciting because like you mentioned, we're not from Tennessee. I've never even been in Tennessee, but I think it's that welcoming aspect that has allowed us to stay and we're proud to call Memphis home.

    Morgan: So what's next for you guys?

    Idicula: Yes. We have been up to a lot of amazing growth here at Hera Health Solutions. We closed our sort of seed round, call it back in 2019, and we have literally been geeking away. We have expanded our team and, 2020, 2021, we were able to make some immense growth with the research and development with our technology, and uniquely enough we've actually uncovered that our technology is very expandable. What I mean by that is, we were essentially, when we first raised our seed round, our primary goal was to commercialize one product for the market, but as we kick-started our R&D we've very quickly realized that, Hey, our device essentially can be utilized as a platform technology. what that means is, there's a lot of interest. We've also started gap and garnering large amounts of early interest from larger pharmaceutical companies asking us, Hey, what's your utilizing with your product? Can we use for our API, our active pharmaceutical ingredient? We are really, really excited.

    We actually hired a new chief scientific officer who is a wizard in our nanotechnology space in 2021. We're actually anticipating opening up our series a round later this year. For a next round of expansion, growth we anticipate partnering with and kicking off some pilots with some pharmaceutical companies so that we can start gathering data and really looking to expand our platform to other long acting therapeutics. We really see this as a game changer in the industry, and we're very excited about the next months, years coming up at Hera Health Solutions.

    Morgan: Awesome. It's great to hear that you were able to continue that momentum through the pandemic because I think so much of what you do requires that face-to-face and being in person and just to be able to continue that even in such an odd environment.

    Idicula: could not have been nicer to us because we closed our series seed round bright before the pandemic. And what we had told people when we closed is we're going to get ready to go into major R&D. It was amazing timing, super grateful for our investors. It definitely worked out really well because exactly what you just said, Morgan. You need face-to-face time, but luckily randomly, just so happened, when the pandemic started, we were doing preclinical testing. All we needed to do was get animals, get lab space and get ready to work. So it was great timing for us to put our heads down and get to work.

    Morgan: So I love this question. And for me, it'd be hard to answer. I'm sure you have plenty of good stories. What's the most memorable moment?

    Idicula: This is very tough to answer. Because I feel like every day is a high or a low, it's like high highs and low lows.

    I'll tell you about something that was really big for us. It's actually was a low. We started our preclinical testing 2020. We started kicking off small batches of manufacturing for our core products implantables. We went into put them through trials for extended trials, one month and two months. Again, these are extended release therapeutics that we're testing. So we've got to make sure the efficacy points, the elution points, are hitting correctly. We got back our first quick data points, and we realized that we were having batch to batch error. We were having batch to batch failure, even though they're supposed to be behaving exactly the same. And we are scratching our heads, trying to figure out what's going on, going back to our manufacturer. And that's when we sort of realized, oh my gosh, we're not able to successfully scale the manufacturing because again, we're having batch to batch quality control error. Oftentimes that could potentially be the end. This is a novel technology nanotechnology, and if you deem it not scalable, then how are you ever going to be able to commercialize it? And so I think, again, timing was perfect. We were connected with one of the pioneers in the space. And we started to realize that, Hey, we need to look at about 25 plus parameters to incorporate into our manufacturing. That has really been a game changer for the way that we have approached the company. Before we were looking at around a $2 billion addressable market. Now we're looking at an $800 billion addressable market. And I think that is what startups do. I think it's constantly evolving. And now we can't be more excited, because we realize that the same issues that , we had with our product are the exact same issues that any pharmaceutical company will have when they're looking to utilize nanotechnology to develop their long acting product.

    I think it's that sort of constant grind. And that grit, that we have as a team to say, Hey, this is a problem. How can we readdress it? So I think it was a blessing in disguise that we uncovered these issues, and that's constantly what we're working through.

    Morgan: Great. So last question for both of you. What are you most hopeful about for the future of the life science industry in Tennessee?

    Steven: Tennessee's reputation as a business friendly environment. The low tax rate, low cost of living, the great schools, plentiful water, plentiful land, all those things lead to a place where you can manufacture, build.

    We've got FedEx in Memphis, Tennessee. To the north of us we've got the competitor, but you can ship products around. You're in a great hub, so that if you're a startup company, you can almost drive or reach any of your potential customers. If you're selling to the hospitals or if you're selling to Pharma Allies up to the north in New Jersey and Pennsylvania. So that's fairly close by.

    But the other part is that because of all those factors, we're starting to see new talent and new ideas come to us, not just organically grown, but they're coming from the Northeast are coming from the west coast. I'm originally from Tennessee, but I came back after 20 plus years of working in San Diego and living there. But I'm also encouraged because I'm starting to see more investment firms, be the hedge fund management or venture capital, coming to Tennessee.

    And , as you know, talent and idea's the first part of it, but you've got to have the fuel that runs the engine and that's money. Putting all these together, I think creates a better environment for us to start opening that door to innovation and growing our healthcare economy even greater. So those are macro trends.

    The micro trend is that I'm starting to see a number of healthcare practitioners change the lab coats off, change the stethoscopes off and starting to cast their lot as entrepreneurs bringing their experience and their ideas into the arena of startups. So right now I've got about three or four MDs, not just PhDs, but MD's practicing physicians, who have ideas that they believe will change the way healthcare is delivered.

     So from my perspective, that's exciting because that looks like some of what you might see in a Boston and you might see in a bay area or in a San Diego area. As we all know, success breeds success. That's what I'm optimistic and hopeful for and to get past all of the pandemic so that we can connect again, because if you're trying to commercialize into hospitals, you have to have face-to-face communication. Particularly if you're going to install or sell and implement a product.

    Idicula: Yeah. I echo a lot of what Steven has said. I think this network is very supportive. We started out as a research project. It's figuring out and getting aligned with these networks of advisors and mentors that have successfully done it before, and really being able to get questions from them, tough questions from them, saying how are you going to do this? How are you going to do that? What is the regulatory pathway look like? What does the commercialization pathway look like? And getting those really important feedback sessions with these amazing mentors is really what's helped guide the light in terms of helping us navigate this pathway because innovative pathways are always tough. And I think it's particularly tough for healthcare because for us, we are FDA regulated, right? Our technology is FDA regulated. There's no going around that regulation. That's what we're aiming to go towards. Of course you got to prove that your technology is safe and effective, right? That's that sort of difference of year that we are constantly playing as innovators in healthcare. Where to a general investor network, right? You are talking about how your technology is so crazy innovative, but when you're going around and talking to regulations and regulatory environment, you're talking about how your product is exactly as safe and as exactly as effective as what is already existing on the market. There's obviously two sides of that coin, right? And I think that just goes back to one of our niches, right? In terms of what we're developing, we are utilizing the exact same materials that are already approved, and I think we learned that we need to do that through this amazing network and we continue to be able to learn through this network for the next milestones that we're looking to hit with our company. We are so grateful for having been invited to be a part of this network alongside our advisors, investors based out of Tennessee. We look forward to growing both the technology and commercializing as we continue to hit our next milestones.

    Morgan: Awesome. I appreciate you both being on the show today and also very much appreciate what you're both doing for the life science community in Tennessee.

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