March 27, 2006 2:51 PM PST
Cancer cure company wins business plan challenge
On Saturday, graduate students from the University of Illinois at Chicago convinced a panel of prominent Silicon Valley financiers that their experimental cure for brain cancer was deserving of millions in venture funding. In doing so, the aspiring entrepreneurs won the $10,000 first prize in the 2006 International Business Plan Competition here at the University of San Francisco, the contest's organizer.
The $10,000 prize is a token compared with the millions the winning company, SanoGene Therapeutics, will need to launch human drug trials before releasing a cure commercially in the next 10 to 15 years. But the graduate student founders see its value differently.
"The exposure to the VCs here is the biggest benefit," Chirag Patel, the 25-year-old director of business management for SanoGene, said Saturday while attending a luncheon at the Lone Mountain campus of USF, just before the winners were announced.
The three-day competition, sponsored by Pacific Specialty Insurance, Microsoft and others, brought together 20 different graduate business school teams from all over the world, with ideas ranging from tropical fruit smoothie stands in Switzerland to carbon-nanotube-powered batteries for laptops and personal digital assistants.
Over the three days, teams pitched their ideas to roughly 60 judges and venture capitalists from the San Francisco Bay Area. Judges included Intuit Chairman Bill Campbell, Kleiner Perkins Caufield & Byers partner John Denniston, and Joshua Raffaelli, an analyst at Draper Fisher Jurvetson.
In its fifth year, the contest can either deliver new companies into the market or--at the very least--give an M.B.A. graduate a handful of business cards and a line item on his or her resume. Last year's winner, an upstart out of the Radio Frequency lab at the University of California at Berkeley with a solution for consolidating cell phone components, never panned out. Spark Parking, the second-place team, is now operating in San Francisco.
Five finalists--out of 20 teams selected to participate in the weekend competition--convened Saturday morning for a last round of pitching their businesses in front of 12 final-round judges, who were seeing the pitches for the first time. The teams were given 15 minutes to deliver a business plan, with financial projections and monetary needs. Judges had another 15 minutes to grill teams about specifics.
SanoGene received almost unanimous praise among the judges, who were expected to vote for the team most likely to receive venture funding, while also considering the company's social impact.
SanoGene draws on a discovery by University of Illinois researcher Jasti Rao regarding a new technology called ribonucleic acid interference (RNAi), which blocks gene expression (the process by which a gene's DNA sequence is converted into the structures of a cell) by preventing the formation of proteins. RNAi is so new only three companies are experimenting with drugs based on it, but none are targeting cancer. Unlike other drugs on the market, SanoGene's experimental drug targets multiple cell origins of brain tumors, blocking the invasion of cells into other tissue. So far, it has shown extremely positive results for the drug in animal models, according to its founders.
In its pitch, the company said it was looking for $7 million to get to human trials within two years. Once its drug is validated, SanoGene plans to get acquired by a large biotech company for commercial release.
"This is about something the world hasn't solved," one venture capitalist said about the company.
The second-place winner was Cytex Therapeutics, a team out of Duke University's Fuqua School of Business, which took home a $3,000 prize. Cytex came in close behind SanoGene with a process for creating bio-artificial cartilage for hip replacements.
Cytex may be in a risky realm, however. The company's specialty is tissue engineering, which drew some considerable investments from venture capitalists in the late 1990s. But many investors eventually got burned when business plans didn't pan out.
"We know this company is going to happen, it's just a matter of when," said Curtis Mina, a 26-year-old doctor who's getting his M.B.A. at Duke. "If Ani (Worlikar, his partner) has to go to the corporate world and I have to go be a doctor for a while, that's what we'll do."
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