Austin, TX-based venture capital firm S3 Ventures has raised a $75 million fund to invest in information technology and medical device companies.

The fund is the firm’s fifth and largest to date, and is the first tech fund in Texas to announce a close in two years. “There are fewer and fewer local investors here, but we see a great opportunity to build a firm that’s going to focus on Texas,” says Brian Smith, S3’s managing director and a founder of the firm. “There are still great entrepreneurs here … and an increased opportunity along with less competition is pretty attractive.”

The new fund comes at a time when venture capital activity in Texas remains subdued. In the last several years, large out-of-state firms have shuttered their Texas outposts. Venture investments in the state declined last year to $934.4 million, compared to $1.59 billion in 2011, according to the first-quarter MoneyTree report from PricewaterhouseCoopers and the National Venture Capital Association. For the first quarter of this year, investment in Texas companies reached $533.6 million.

S3 is currently investing in 11 companies, with seven of them based in Austin. (Houston and Dallas are home to one each, with the remainder based elsewhere in the United States.) Investors in the new fund are primarily wealthy individuals.

Smith founded S3 in 2007 with a $20 million fund. So far, the firm has invested in a total of 17 companies. One investment being made out of its latest fund is in its second medical device company, TVA Medical, which is based in Austin. Smith says he expects that medical devices will eventually make up about 15 percent of the firm’s capital deployment. “There will be more opportunity over time,” he says. “It’s a learning curve for us.”

TVA Medical was founded in 2008 and received $9.5 million in Series B financing last week that was led by S3. The company develops minimally invasive therapies for end-stage renal disease, and the money will be used to do further research into the company’s endovascular technology and to complete additional clinical studies as it seeks to obtain worldwide regulatory approvals.

TVA’s technology would allow doctors to use a catheter-based system to join an artery to a vein in order to deliver blood dialysis to patients suffering from kidney failure. The technology is being studied outside of the United States and is currently not available within the U.S. TVA says it does intend to seek clearance from the Food and Drug Administration.

“The potential to significantly improve care for renal failure patients while decreasing the cost of dialysis delivery is substantial,” said Billy Cohn, TVA’s founder and director of minimally invasive surgical technology at the Texas Heart Institute at St. Luke’s Episcopal Hospital in Houston, in a press release.

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Santarus (NASDAQ: SNTS) CEO Gerald Proehl has been named as the 2013 Ernst & Young Entrepreneur of the Year for San Diego in the life sciences category, and EcoATM CEO Tom Tullie won as Entrepreneur of the Year in technology.

Both executives were selected from a list of regional finalists by an independent panel of judges, and will go on to compete at the national level at an annual Entrepreneur of the Year awards gala scheduled for Nov. 16 in Palm Springs, CA, according to Ernst & Young, which founded the program. The award is intended to recognize outstanding entrepreneurs who demonstrate excellence and high-growth success in various areas, including innovation, financial performance, and personal commitment to their businesses and communities.

EcoATM operates automated kiosks that enable consumers to recycle their mobile devices. The company has nearly 550 kiosks in 38 states since its first kiosk debuted in September, 2009. In a statement from the company, Tullie said the award really recognizes the hard work and dedication of the 160 employees “who work tirelessly to make EcoATM a great company.”

Santarus is a specialty biopharmaceutical company developing proprietary compounds for a variety of diseases and disorders. Proehl joined Santarus in 1999, and became CEO and director in 2002. In a statement from the company, Proehl says, “We have worked through some challenging times and have recently celebrated exciting successes,” including the commercial launch of budesonide (Uceris), an extended-release formulation of the steroid budesonide for treating ulcers.

The San Diego winners were selected in six categories by an independent panel of judges from a field of 16 finalists by an independent panel of judges and honored at a gala event last week in La Jolla. All of the regional winners will go on to compete at the national level at an annual awards gala in Palm Springs, CA, on Nov. 16.

There are 25 U.S. regional programs for Entrepreneur of the Year, which typically generate more than 2,000 applicants each year. About 250 regional winners are crowned in June and move forward to compete for the title of national Entrepreneur Of The Year in November. The winners in all six categories are:

—Business Services: Kim Reed Perell, CEO of Adconion Direct.

—Technology: Tom Tullie, CEO and board chairman, EcoATM.

—Consumer Products & Services: Gary Rayner, former CEO, LifeProof.

—Life Sciences: Gerald Proehl, CEO, Santarus.

—Medical Products & Services: Mary Fisher, Former CEO, SkinMedica of Carlsbad, CA.

—Family Business: Kelly Grismer, President, and Chad Grismer, CEO, The Wheat Group.

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In this “always on” era of online products and services, there is a time-saving appeal to the product introduced today by San Diego-based SlimSurveys. It’s designed to help businesses gather feedback from customers without sucking up too much of their time.

“We wanted to build a company from the perspective of the survey respondent,” CEO Sean Callahan tells me. So SlimSurveys has developed an online platform that limits each survey to just seven questions, enabling customers to quickly rate their satisfaction in various ways, so the survey experience will last no more than 30 seconds.

Think of it as the Twitter of surveys, Callahan says.

It’s not just a clever turn of phrase. Callahan, along with SlimSurveys co-founders Rodney Rumford and Daniel Marashlian, have been steeped in the ins and outs of Twitter at their previous venture, a photo-sharing platform that was founded in 2009 as TweetPhoto. They quickly expanded their TweetPhoto API beyond Twitter to include Facebook, Foursquare, MySpace, and other social media networks. Callahan says TweetPhoto empowered third-party application developers to quickly add media-sharing capabilities to their apps without taking on the job of building and managing the infrastructure themselves.

SlimSurveys for mobile

“We grew that company rather quickly, from zero to 30 million [users] in just 18 months—and that was just our website,” Callahan says. Now he is looking to follow a similar strategy with SlimSurveys.

In an e-mail this afternoon, Callahan writes that the startup’s ultimate goal is “disrupting the survey industry and turning it into a time-saving experience for millions of consumers…We want to build an amazing product people love to interact and express with on a daily basis.”

But there’s little doubt that the SlimSurveys founders hope to repeat the broader success of TweetPhoto as well. The photo-sharing startup raised $2.6 million in venture capital (from Qualcomm Ventures, Anthem Venture Partners, Canaan Partners, and Eastman Kodak) before changing its … Next Page »

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There’s a set of companies in Colorado that’s spinning off one innovative startup after another. Their products and unique style are having an impact across their industries, and some of the most influential people and organizations have roots in the area. Collectively, they’ve created an ecosystem that’s studied, admired, and even envied.

No, we’re not talking about software startups. We’re talking about the Colorado craft brewers that are in the vanguard of a movement that’s revolutionizing how and what Americans drink. In the process, they’ve created an industry that generates $446 million in economic impact for the state.

Their success and history offers lessons other industries including tech can draw on, and on Thursday night, the University of Colorado’s Silicon Flatirons Center will host a discussion that brings together leaders from Colorado’s craft beer and tech scenes. The event begins at 5:15 p.m. and will include beer.

First, here’s a rough introduction for those who associate Colorado beer with the major brand so proud of its “pure Rocky Mountain spring water” and those cans that turn blue.

The triangle bounded by Denver, Boulder, and Fort Collins has been lauded as “the Napa Valley of Craft Beer” by beer fans and the national media. One aspect of that is the sheer number of craft breweries opening throughout the state—the latest estimate puts it at 188 licensed breweries, with 50 more in the planning stages. They include industry heavyweights such as New Belgium and Odell in Fort Collins, Oskar Blues in Longmont, Great Divide in Denver, and Avery in Boulder, which have helped introduce new styles and new technologies to the American drinking scene.

Denver also is the proud home of the Great American Beer Festival every fall, which is the premier brewing festival in the country—and one of the biggest in the world. The Boulder-based Brewers Association runs the GABF. Oh, and Colorado’s governor, John Hickenlooper, made his name as a former craft brewer himself.

In Boulder, Denver, and many other places in Colorado, craft beer has become part of life.

“If we weren’t discussing this topic at CU-Boulder on a Thursday night, I suspect some significant percentage of the attendees would otherwise be at a local craft brewery,” said Brad Bernthal, Entrepreneurship Initiative Director at the University of Colorado Law School’s Silicon Flatirons Center. “We hope to capture some of that energy.”

Comparing the two scenes is a fun way to understand “economic geography,” and how a core group of startups that cooperate can create something bigger and lasting, Bernthal said.

While Boulder has been called the quintessential “Startup Community” because of its tech entrepreneurs, the name also is apt for craft brewing. Fans and employees of breweries founded in the 1990s and early 2000s have moved on to create a second and third generation of craft breweries and a lively home brewing scene.

There are other similarities.

“Information sharing and economies of specialization almost certainly benefit both scenes. And something about the Front Range seems to facilitate mutual help across companies—even competitors—in both sectors,” Bernthal said.

Colorado Brewers Guild executive director John Carlson believes tech entrepreneurs and craft brewers share common personality traits. He’ll speak at the event.

“I think there are some similarities and parallels we’ll try to draw over the course of the evening,” Carlson said. “Some craft brewers, but not all, have a technical background, but I think the creativity is the uniting factor.”

The creativity lets coders or brewers create something new or put their own twist on something that’s been developed. Hackers and home brewers also must master what can be challenging technical processes.

They also embrace trying new things and taking risks, with an ability to “see opportunities no one else sees,” Carlson said.

If the past few years have been a good time to be a tech entrepreneur in Colorado, they’ve been even better for beer aficionados.

“It’s a golden time to be a craft beer drinker in Colorado,” Carlson said.

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Time travel. Invisibility cloaks. Quantum supercomputers?

QWave isn’t doing any of that stuff. But it’s a good way to begin a story that involves investments in quantum physics and materials science companies.

QWave, aka Quantum Wave Fund, is a young venture firm based loosely in Boston and Moscow. Started last year, it has raised nearly $40 million on its way to a targeted $100 million fund for investing in physics-based tech companies. And it’s announcing its first three investments today, totaling $7 million: in Estonian power electronics firm Clifton; optical-materials startup Nano-Meta Technologies in Indiana; and Centice, a North Carolina company that has technology for doing chemical substance recognition (of interest to both doctors and police).

The man behind QWave in Boston is a tad mysterious. His last name is Kouzmine, and his first name is either Sergey, Sergei, or Serguei, depending on whom you ask. (Sounds like a quantum superposition to me—I’m going to go with Serguei.)

Asked whether he’s based in Moscow or Boston, he says he’s based in airplanes. By the standards of the IRS or government agencies, he says, “I’m not resident of any country.” Translation: he spends a lot of time going between the U.S., Europe, and Russia.

Well, any mathematician or theorist will tell you airplanes are a pretty good place to get work done. In Kouzmine’s case, that means taking a top-down approach to identifying important trends in physics and technology; then figuring out who is doing the most commercially promising work in those areas; and then making contact with them.

In addition to the newly announced companies, he says, think of areas like materials for next-generation touchscreens and displays, solar panels, batteries, computer chips, security systems, and medical diagnostics.

Kouzmine (pictured) is a physicist by training, but he has amassed quite a bit of experience in startups and big companies, as well as in banking and investing. Plus he grew up in the Ural Mountains of Siberia, so anything is possible.

He is the managing partner of QWave, where he has three other partners. The team takes pride in understanding both the scientific and business/entrepreneurial sides of new technologies. “I love science, but we’re in the business of making money,” he says.

Of course it’s too early to say if their approach will work out financially. But their idea is to invest primarily in Series A rounds, typically putting in $3-5 million, for companies that are “capable to deliver technology and products to customers,” Kouzmine says. The companies should be able to be cash-flow positive in about three years, and be sellable in about five years, he says. The biggest value QWave brings, he adds, is to companies that are at the stage where they need to scale up production and development and do marketing.

A big challenge would seem to be that physics/materials companies need a lot more time and money than, say, software startups to potentially get big and profitable. It will be interesting to watch if Kouzmine’s firm finds a quantum path around that.

Although QWave hasn’t announced any investments in the Boston area, that might change soon. Kouzmine hints that some discussions are in the works. And he says Boston is a technical stronghold for his firm, especially with all the technologies coming out of MIT, Harvard, and other universities.

By contrast, he says Silicon Valley is “already overhyped,” at least in terms of materials science. “The East Coast is better than the West Coast” in that field, he says, especially in the Boston-DC corridor.

And thinking more globally, he says, “Americans tend to disregard European high tech” to their detriment. Meanwhile, he says Russian companies represent less than 5 percent of QWave’s pipeline, mostly because the culture of entrepreneurship is much stronger in the U.S. and Europe—and at least in the latter case, governments are very supportive of startups.

As for the more speculative, long-term quantum ideas out there, Kouzmine enjoys talking about them as much as any physicist. But he cautions that scientists don’t understand the basic nature of things like time, teleportation, or quantum computing well enough to make commercial bets yet.

“Maybe our competitors,” he says, “but not us.”

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It has been a busy morning for Nina Nashif.

The CEO and founder of Chicago-based Healthbox is in town for the accelerator program’s second “innovation day” in Boston. Nine health IT startups will present their pitches this afternoon to a crowd of healthcare industry executives, entrepreneurs, and investors at the Revere Hotel near Boston Common.

You could be excused for not knowing who these startups are or what they represent. After all, dozens of healthcare accelerators have popped up in the past year or so, and with all the startups nibbling at the edges of truly gigantic problems in healthcare, it’s a super noisy sector.

That’s why I wanted to get to the top and see what Nashif (pictured) is seeing. Her training is in health administration and she’s a longtime business executive, having led international services and growth strategy at a Texas hospital, co-founded a wholesale business in New York, and served as vice president of Sg2, a healthcare analytics firm in London.

That was all before joining Sandbox Industries, a business incubator and venture capital firm in Chicago, and spinning out Healthbox as a separate entity.

Healthbox got started in Chicago in 2011-12, and in the past year it has expanded its three-month accelerator programs to Boston and London. Next up, interestingly, will be new programs in Jacksonville, FL, and Nashville, TN. And Nashif plans another session in Boston for early next year.

The biggest lesson learned so far, she says, is that “healthcare entrepreneurs need access to the industry, but just giving them access isn’t enough. We really need to help them refine their business model in the context of the industry.”

That means solving real problems, not going after perceived needs or operating at the fringe. “How do you make sure you’re building for the right stakeholder and you have a business model that will scale?” Nashif says.

One answer to that is pretty interesting and not obvious—especially for an accelerator. Healthbox is looking to diversify in terms of the stage of companies it accepts, Nashif says. I took this to mean admitting more established, later-stage companies as well as seed-stage startups—and it sounds like this is happening already.

As Nashif explains, Healthbox (and other programs) got started in part because of a seed-stage funding gap for young companies. … Next Page »

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It’s time for the video game industry to grow up.

No longer the purview of introverts on the sidelines of the creative arts, gaming is a global business worth tens of billions of dollars, and its practitioners need to become as savvy business-wise as they are in the creative and technical realms.

That’s the perspective of Warren Spector, a 30-year gaming veteran and one of the brains behind the new Denius-Sams Gaming Academy at the University of Texas at Austin. “There’s innovation, and we still desperately need that, but we also require leadership,” he says. “How do you innovate in a commercial context? You have to work efficiently, especially when you start talking about the kinds of dollars we’re spending.”

The academy has enlisted some of gaming’s top success stories to lead the effort. Spector, who will be part-time faculty at the academy, will be joined by Paul Sams, COO of Blizzard Entertainment, which has produced some of the industry’s most recognizable games, including “Diablo” and “World of Warcraft.”

UT says it’s the first video-game program in the country led and taught by gaming industry professionals. And Fred Schmidt, who, along with Richard Garriott, founded Portalarium, says he’s excited to see how the academy can create a corps of junior executives for the next generation of gaming companies.

“People just sort of evolve in our industry, if you’re there long enough,” he says. “You’re never really taught like you would be if you’re getting an MBA in finance about how the banking industry works as an industry and as a business. How do you manage your project through market transitions? How to fund projects? How to keep on schedule and maintain accountability when you’re dealing with billions in budgets?”

Schmidt is keen to have the academy provide what is, essentially, an “MBA in gaming” that adapts the pedagogy of a graduate business program to suit the needs of the gaming industry.

Spector agrees, saying skillsets related to leadership are under-taught in current game development schools across the country. “In 30 years, we’ve gone from one person alone in a room somewhere creating a game to teams that often have hundreds of people,” says Spector, an Austin native known for his work on the “Deus Ex,” “Disney Epic Mickey,” and “Ultima” games. “We’re entrusting more and more money to more and more people and, frankly, those people learn on the fly.”

UT’s academy, which will enroll its first class in the fall of 2014, has just 20 spots. The students will receive a post-baccalaureate certificate, instead of a graduate degree, which would have more academic restrictions. Students will receive free tuition and a $10,000 living stipend. The program is a joint effort sponsored by UT’s Schools of Communication, Fine Arts, and Computer Science.

… Next Page »

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We do it once a year. And every year, it’s one of the big highlights of the day.

I’m talking about the “Startup Xpo,” a showcase of some of the most intriguing young companies around Boston. It’s all part of XSITE, our fifth annual innovation conference happening this Wednesday, June 19, at Babson College. The overall theme this year is “Boston’s Tech Revival.”

The idea behind the Xpo is to give our audience of mainstream business leaders a glimpse of the depth and diversity of young startups bubbling up in the local ecosystem. These companies are all seed-stage, bootstrapped, or pre-VC round; they’re not household names, but they might be someday. Other than that, the main criterion is that I found them personally interesting.

They are a mix of consumer, enterprise, and science focused. A mix of software and hardware, Internet and mobile, healthtech and robotics.

Our emcee is Meredith McPherron, the director of the Rock Center for Entrepreneurship at Harvard Business School. Meredith helped revamp the HBS business plan contest this year (now called the New Venture Competition), and she’s got her eye on all things entrepreneurial.

Without further ado, here are the 10 Xpo startups:

—SnotBot, represented by Andrew Bennett of Olin College. OK, this isn’t really a company yet, but I like the project (and the name). It’s a multicopter flying robot that collects mucous samples from whales.

—Price Intelligently (Patrick Campbell). Software for doing scientific pricing of products. In other words, what should you be charging for that software or gizmo?

—Kibits (Matt Cutler). This company started out as a micro-social network, but it has moved into collaborative software for businesses. Stay tuned for more.

—ThriveHive (Max Faingezicht). This is marketing software and services for small businesses. Yes, it’s a noisy sector, but the company seems to be quietly onto something.

—Cloze (Dan Foody). Solving the classic inbox problem for e-mail, social, and mobile. Enough said.

—CareSolver (Shana Hoffman). If you’ve ever worried about coordinating healthcare for an aging parent or relative, you might want to check out what this company is doing.

—Flume (Eric Kelsic). This team is working on Web tools for opening up the collaborative study of the human genome on a global scale.

—Wanderu (Polina Raygorodskaya). This Web startup wants to be the Kayak of buses and trains (intercity ground transportation). Many have tried; few will win.

—Crunchbutton (Judd Rosenblatt). This company provides one-click food delivery via smartphones and Web.

—Leaf (Aron Schwarzkopf). This company has developed tablet-based technology for payments, business intelligence, and customer loyalty programs for retail, restaurants, and other businesses.

So there you have it. Ten speakers. Ten companies/projects. Let’s do this.

XSITE is this Wednesday, and a few tickets are still available (check out the startup and student rates). See you all soon.

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Words like “schizophrenia” and “bipolar disorder” have guided psychiatric treatment for decades, but they may be meaningless labels that mask a lack of real knowledge about the molecular events behind these related constellations of symptoms. That’s the critical view that greeted the latest edition of the psychiatrists’ “bible,” the Diagnostic and Statistical Manual of Mental Disorders, or DSM-5, published by the American Psychiatric Association in late May.

Among those critics is Thomas Insel, director of the National Institute of Mental Health, who highlighted the debate about the DSM-5 in an April blog post. Insel called for the discovery of biomarkers that could both re-categorize common mental illnesses and open doors to better therapies. This work has already begun at companies such as Austin, TX-based Myriad RBM, a subsidiary of diagnostic testing company Myriad Genetics (Nasdaq:MYGN) of Salt Lake City, UT.

Myriad RBM, formed in 2002 as Rules-Based Medicine, was an early developer of protein assay panels that test not only for known disease biomarkers, but also for other proteins that might be unsuspected troublemakers. As a partner with researchers at the University of Cambridge, UK, RBM developed an experimental test for schizophrenia in 2009. That led to an ongoing collaboration with Roche—one of a number of notable partners RBM gained before it was acquired in 2011 by Myriad.

Myriad, a genetic testing pioneer founded in 1991, built its business around its early flagship test, BRACAnalysis, which looks for variations in two genes that significantly elevate a woman’s risk of breast cancer. Myriad controlled the market for BRACA gene testing due to its portfolio of gene patents, but some of those have now been invalidated by the US Supreme Court in its June 13 ruling. The market impact of the ruling on BRACAnalysis is yet to be seen, but competition is likely to increase among providers of tests based on single genes that powerfully increase disease risk. However, many diseases result from an interplay of multiple gene mutations, and diagnostic companies are using their knowledge of those interactions to add value to their diagnostic products.

Myriad moved in that direction when it acquired RBM for $80 million, augmenting its DNA and RNA screening repertoire with proficiency in protein detection.

“Few other companies have expertise in all three,” says Craig Benson, president of Myriad RBM. “We sort of used to say we complete the Triple Crown of molecular biology diagnostics.” The company’s protein assay panels now cover a range of focus areas including oncology, cardiovascular disease, and inflammation.

Myriad RBM’s primary customers are pharmaceutical companies and research institutions that are looking for help in drug development and clues to the core mechanisms of disease. Benson, who joined Rules-Based Medicine at its birth as a spin-off from Austin, TX-based Luminex (NASDAQ: LMNX) says the company had to persuade clients at first that they should look beyond the biomarkers that were already known to be associated with the diseases they were researching and use RBM’s fuller “multiplexed” assay panels.

RBM’s founding principle was that complex diseases such as neuropsychiatric disorders would only be fully understood by examining multiple molecular factors, and the relationships among those factors in different individuals.

“We almost forced customers to think about things in a different way,” Benson says. “It was a little bit of evangelizing in the early days.”

… Next Page »

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In Texas, school is already out and the lazy days of summer have begun in earnest. But things are not slowing down in the Texas startup scene, with companies this week making announcements of fundraising and product upgrades for customers as far-flung as in China and low Earth orbit.

—NanoRacks, the Houston space-science startup located a stone’s throw away from NASA, announced today it has raised $2.6 million. Emerge, a Brussels-based venture capital firm focused on early-stage startups in telecom and e-commerce, is the lead investor to the tune of $1.5 million in the Series A round for NanoRacks. Chris Cummins, NanoRacks’ CFO, says the remainder of the investment is largely from individuals from Texas and California.

He added that the money will be used to fund development of the company’s external platform—a test bed for advanced electronics and materials experiments—that is mounted outside onto the International Space Station. It would be located on the “back porch” of the station’s Japanese module.

Being outside in space “gives you an entirely different environment for radiation; there’s a vacuum,” says Jeffrey Manber, NanoRacks’ CEO and founder.

NanoRacks next plans to return to space in April 2014.

—Austin, TX-based Appconomy, which provides mobile marketing and e-commerce platforms for Chinese retailers, announced on Thursday that it has made a significant upgrade to its Zhangyingbao service. This allows users of its consumer-to-consumer mobile platform—which is called Taobao—to be able to create branded mobile apps on their smartphones without any technical skills and in less than five minutes, the company says.

The Zhangyingbao service will help merchants on Taobao, which functions similarly to eBay where individuals and small businesses are selling items to other individuals. Now, these sellers can have as many as 200 products on display, versus the previous limit of 50 products. This gives each Taobao merchant more content to put in front of potential customers. Appconomy says Taobao is the biggest consumer-to-consumer online shopping platform in China.

Steve Guengerich, a co-founder of Appconomy, says Taobao currently has 6 million merchants signed up, of which 1 million are small, virtual-only shops. “For them, having a no-tech, no-cost mobile app is a no-brainer,” he says.

In May, the company, which is based in Austin and Shanghai, unveiled its “Smart Shopping App” in a soft launch in Shanghai. Customers use the app to upload shopping lists that the app then matches to maps of the store in order to plot out the most efficient route, among other services.

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Welcome to the Mile High Roundup, a fortnightly review and recap of some of the interesting things that have happened over the past two weeks in the tech scene in Boulder, Denver, and around Colorado. It’s no secret tons of cool stuff is happening around the state, and this is a chance to catch up. Also, it’s a chance to use the word “fortnightly,” and how often can you do that?

In this edition, startups get graphic, Boulder Denver New Tech gets unreasonable, Denver Startup Week gets started, Rally gets published—and robots!

START PLANNING: Denver Startup Week is back and is looking for hosts, sponsors, presenters, etc.

Last year was the inaugural event and it was a pretty huge success, with more than 3,500 people going to 70-plus events. Planning is underway already for this year’s event, which is scheduled for Sept. 16-21.

The organizing team is in place, and now it wants help coming up with events in five tracks: business, design, tech, manufacturing, and social enterprise.

BDNT GETS UNREASONABLE: The July Boulder Denver New Tech meetup will be turned over to the Unreasonable Institute, the Boulder-based accelerator for startups trying to solve global environmental or social problems. Reich said it will be a two-day event, with meetings on July 1 and 2.

The meeting will give BDNT a sneak peak at the startups. It also will be a chance to grill their founders and help them improve their pitches for the Unreasonable Climax on July 10.

TechStars companies will get their turn at the August BDNT.

BRAINS FOR BOTS: The standout presenter at the June BDNT was Brian Shucker, an engineer and founder of Talos Robots, which is based in Superior.

“Building robots is actually kind of hard,” Shucker said. Just ask well-known nuclear physicist Homer Simpson.

Talos Robots is developing control systems for robots that will be affordable for hobbyists and educational STEM programs. The Talos Controller is an advanced system that runs Ubuntu and is powerful but also easy to use because it streamlines a lot of the assembling process.

“The idea is to make the bridge from high level software, all the things you do on a PC, down to the real word,” Shucker said.

The vision is for the Talos Controller to let robot builders focus on the fun stuff—designing the robot, assembling key components, programming it, and getting it to do stuff—and not have to focus on tracking down parts and soldering.

“We’ve eliminated most of the effort in finding the little bits and getting them together, and for me that’s 90 percent of the time,” he said.

Robot controllers already are out there, like the BeagleBone Black and Lego NXT. The BeagleBone is considerably cheaper than Talos, which Shucker said will sell for $299. Shucker says the Talos will be worth it because of its greater power and ease of use. Talos has been through a few rounds of prototype testing, and its taking preorders on its website with the expectation they’ll ship later this month or early in July.

Oh, and about the name “Talos.” Initially, I wondered if it was a character from a 1950s or 60s sci-fi movie that got lampooned on MST3K. The movie part is right, as it was one of the characters in the classic “Jason and the Argonauts.” This awesome blog post explains more.

RALLY WRITES THE BOOK: Fresh off its $170 million IPO, Rally Software Development (NYSE: RALY) hosted its annual RallyON conference in Boulder.

The event extolled all things agile, including the software development and the management style. (Rally builds software and project management tools that help developers use agile methods.) It also marked the publication of a book produced by Rally named “Agile Business: A Leader’s Guide to Harnessing Complexity.”

“Agile Business” is a collection of short essays on the topic compiled by Rally’s Bob Gower. It’s less a book about how software developers can be agile than about how they can convince their managers and CFO’s it’s worth trying and spending some money on.

“One of the big frustrations it seems agile champions have is explaining what they’re up to, why its important, and why people should join them,” Gower said.

Brent Barton, former president of Agile Advantage before it was acquired by Rally, put it another way.

“Has anyone tried to explain agile to the CFO? Did you last 10 minutes?” he said.

SUMMING IT UP: If you’re the “tl;dr” type and want a 10-second explanation of what’s going on in Colorado, start here. It’s an infographic developed by Built In Denver that sums up all that happened in 2012.

It pretty much speaks for itself, but new Colorado Technology Association boss (and Xconomist) Erik Mitisek put together a helpful write up.

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The next frontier in fighting cancer is using the body’s own immune system to fight the disease, an approach that will supplement traditional radiation and chemotherapy treatments.

So says the chief executive of Cell Medica, a London-based life sciences startup that’s put down roots in the Texas Medical Center.

As the keynote speaker at a BioHouston breakfast Thursday, Cell Medica’s CEO and founder Gregg Sando described treatments his company is working on to help recruit patients’ own immune systems to fight tumors. Key to the process is replicating disease-fighting T cells with receptors on their surfaces that let them home in on the cancer. “The T-cell receptor is nature’s best weapon,” says Sando (pictured.)

The London-based biosciences firm opened a Houston office six months ago, specifically to work on its program for therapies in Epstein-Barr Virus-associated cancer, which causes 18 percent of all cancer, he says. “All humans have EBV on a latent basis,” Sando says. Cell Medica’s aim is to treat cancer as a disorder of the immune system, and its expansion into the United States comes as the spotlight has fallen on investigational immunotherapy, as was seen at the American Society of Clinical Oncology’s recent conference.

“This is the next step in the cancer battle,” says Jacqueline Northcut, BioHouston’s president and CEO. “I think Texas could be the capital of immunotherapy.”

An ecosystem is forming, she says, citing the presence of the Center for Cell and Gene Therapy at Baylor University College of Medicine, the Center for Innovation in Advanced Development and Manufacturing at Texas A&M University, and the recruitment last November of James Allison, the director of the Ludwig Center for Cancer Immunotherapy at Memorial Sloan-Kettering Cancer Center in New York, to the University of Texas MD Anderson Cancer Center.

For local economic development boosters, Cell Medica’s move to Houston is also further proof of the international reach of the Texas Medical Center. Other British life sciences companies with a presence in the state include AstraZeneca, BSI, GlaxoSmithKline, and Smith & Nephew, according to the British Consulate-General in Houston.

Cell Medica, which has an office in Berlin, opened in Houston because it was drawn to the city’s central location in the United States. “But also, one of the biggest challenges for companies like us is, can we find the technical people here? And we can in Houston,” Sando says. “Nothing happens without people.”

It also didn’t hurt that the Cancer Prevention and Research Institute of Texas gave Cell Medica a $15.5 million grant last year, he added. The state funds make up two-thirds of the $25 million that the firm has raised, which has largely come from European institutions, such as Imperial Innovations of Imperial College in London.

(Cell Medica received the CPRIT funds months before Texas Gov. Rick Perry announced a moratorium on the institute’s activities following allegations of irresponsible actions related to grant awarding. State legislators have proposed a series of reforms to the institute, which is pending gubernatorial action.)

Sando will continue to be based in London but says his firm has seven employees in Houston, and it plans to hire as many as four more people this year. The company has a total staff of 31.

Founded in Great Britain in 2006, Cell Medica has a more advanced business and research project in Europe, which is related to the treatment of infections that result from bone marrow transplants. (Its European operations are expected to generate revenue by the end of this year, Sando says.)

In May, Cell Medica announced the treatment of the first patient in its Aspire trial, an Phase I/II clinical study investigating the safety and efficacy of their proposed therapy for the treatment of adenovirus infections in pediatric patients after bone marrow transplants. The treatment is currently being tested on three patients—with plans to include 12 more—in two randomized controlled studies across 15 centers in the UK.

“Ninety percent of the work on immunotherapy so far as been academic,” Sando says. “We have a better technology platform today to take it out of the lab and commercialize it.”

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Unless they’re insanely lucky, pretty much every worker bee out there has a horrifying tale of a despicable boss.

They rule through threats, intimidation, and political gamesmanship. They’re unpredictable. And when they’re on the rampage, nobody’s job is safe.

If you don’t like it, tough—that’s the price of greatness, right?

Jason Jacobs would like to squash that idea. Jacobs is the founder and CEO of RunKeeper, a top fitness app for smartphones and other connected devices.

As one of the startup leaders building a new generation of tech companies in the Boston area, Jacobs says he’s trying to nurture a corporate culture that rejects the hard-bitten, scorched-earth template of some legendary CEOs of the past.

“It feels like, of late, conventional wisdom has almost been that in order to build the next Apple, you need to have Steve Jobs’s leadership style,” Jacobs says. “I’m of the school of thought that there is no one way to get there, and you need to find what feels best for you and surround yourself with others who ascribe to that same school of thought. And that you don’t have to be a ruthless jerk to get there.”

Jacobs

It’s certainly an idea that, deep down, you’d like to see succeed. And we’ve discussed this before with CEOs around Boston who are trying to do things differently.

But a nagging part of me wonders if it’s wishful thinking when you’re talking about companies of a truly grand scale. It could be that the great-culture CEOs will just get chewed up and spit out by Wall Street and more sharklike competitors.

This is one of the big ideas we’re diving into next week at XSITE, our annual all-day Xconomy Summit on Innovation, Technology, and Entrepreneurship at Babson College. Sign up here to get tickets—I’ll be moderating a talk with Jacobs and three other super-smart entrepreneurs about the lessons they’ve learned building their companies.

A Generational Change?

For his part, Jacobs thinks there doesn’t have to be a tradeoff between lasting company success and being a decent human. And, he says, a positive company culture actually is becoming an imperative for growing companies that want to hold onto younger workers who crave more autonomy and creative freedom.

“This new, emerging crop of workers is very different in terms of what is fulfilling to them, what their expectations are, what they’ll tolerate,” Jacobs says. “I think the whole concept that you’re going to follow instructions and bring something to life and leave the creativity to someone else—it’s just not going to fly.”

He says that cultural shift, particularly among valuable knowledge workers, is an outgrowth of the technological advances of the past 15 or so years, which have made side projects and even full-blown companies easier, cheaper, and faster to get off the ground.

“You don’t need to go raise $30 million in capital and have a huge team of people to get a product to market. You can do it with a handful of people in a coffee shop and 10 grand,” Jacobs says. With that as the backdrop, “everyone wants to be an entrepreneur in some way, shape, or form. And everyone wants to be an owner.”

Nice, But Not Soft

There doesn’t have to be a tradeoff between being a good-guy CEO and having high standards, Jacobs says.

“I’m a big believer, for example, in bringing in really strong personalities who can work independently, don’t want to be micro-managed, and really empower them to spread their wings and take ownership. So in that regard, I don’t believe in dictatorship at all,” he says.

Maintaining that culture, on the other hand, is worth getting ruthless about.

“If you want to achieve greatness, you need to be very clear about what your company stands for, what your culture is, and what your values are. And where there are elements of the company that don’t ascribe to those values, then you need to be ruthless about them getting the fuck out,” he says with a laugh.

Peers and Role Models

I’ve wondered about this leadership phenomenon myself, particularly how the news media builds up the mythology around smart, ruthless, insufferable success stories in business—Steve Jobs, Larry Ellison, Michael Eisner, Jeff Bezos, and more are celebrated as part of this phenomenon. (Meanwhile, Bill Gates has turned his early techno-brat image around through years of enormously generous personal philanthropy.)

You can find counterpoints if you look close enough. My favorite is probably Jim Sinegal, the co-founder and longtime CEO of Costco, who recently stepped down after grooming his successor for years from within the company.

Sinegal famously wore the discount business-casual clothes sold on pallets in Costco warehouses, visited nearly every store with a standard nametag that just read “Jim,” paid his employees very well (even when Wall Street wanted more profit), and didn’t have a public relations department, insisting that he and other top executives just answer their own phones.

The company’s employees tend to be highly enthusiastic about Costco as a career—almost as rabid as Costco’s dues-paying members get about shopping for enormous cartloads of merchandise.

There are some up-and-coming examples of this kind of leadership, too. San Francisco-based Dropcam has a “no assholes” hiring policy, sends its employees home at 6 pm to eat with their families, and has never lost a worker in one of the most competitive hiring environments in the country.

But stories like those seem to be spread a little more thin compared with the tales of domineering, intimidating captains of industry.

Jacobs says that, in his career, he’s had a hard time finding role models who have put the anti-Steve Jobs pattern into practice. “In fact, I wish I had more clear role models so I could bring them on as an independent director,” Jacobs says.

But what he has found are peers who want to change the way companies are run. In fact, I thought of this interview topic after seeing Jacobs tweet that he’d been discussing the “ruthless jerk” conundrum with Kinvey CEO Sravish Sridhar.

“It’s tricky, because it feels like we’re building a different kind of company than a lot of the companies that have been built around here before,” Jacobs says. “I don’t know if that’s because I’m a weirdo, or the landscape’s changed a lot, and it requires a different recipe for success.”

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[Corrected 6/15/13, 11:45 pm. See below.] It seemed to be a week of positive news for San Diego’s life sciences community. We have the details wrapped up here.

—CalBio 2013 convened at the San Diego Convention Center yesterday with an opening keynote talk by J. Craig Venter, the human genome pioneer and founding CEO of San Diego’s Synthetic Genomics. In response to a question about the U.S. Supreme Court’s unanimous decision to prohibit patents on naturally occurring genes, Venter said, “It sort of reaffirms what all of us thought was the situation, which is that naturally occurring DNA, natural human genome sequences, natural genes, are not patentable material.” Venter called the ruling, which says synthetically created DNA strands are patent-eligible, “a very positive position for the biotech industry.” The conference ends today.

—San Diego’s Arena Pharmaceuticals (NASDAQ: ARNA) began marketing lorcaserin hydrochloride (the long-awaited weight-loss drug known as Belviq) this week, with the help of Japanese pharmaceutical company Eisai. Arena submitted its new drug application for the compound in 2009. Arena said it has received $65 million in milestone payments from Eisai and is eligible to get almost $1.2 billion in purchase price adjustments and other payments based on annual net sales of the drug. Eisai has estimated that Belviq sales could amount to $150 million over the next six months.

—[Corrects spelling of Tamar Howson] San Diego’s Organovo, which has been developing technology for a 3-D bioprinter, said a couple of recent changes on its board has made the company eligible to move from the over-the counter-market to a listing on the New York Stock Exchange or Nasdaq. The company named Tamar Howson, a well-known pharma business development executive, as a board member. Organovo also said that SternAegis Ventures CEO Adam Stern, who joined the board in early 2012, had resigned—leaving a majority of directors classified as independent.

—As a case study in frugality, San Diego’s Orphagen Pharmaceuticals has run counter to the conventional business model for a drug development startup. Instead of raising hundreds of millions of dollars to fund R&D for drugs that target orphan receptors, Orphagen has scraped by on federal grants and one crucial pharmaceutical partnership.

—Isis Pharmaceuticals (NASDAQ: ISIS) of Carlsbad, CA, said Vancouver, BC-based Xenon Pharmaceuticals has exercised an … Next Page »

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The decline of venture capital investments in life sciences startups has provoked a lot of angst in the U.S., with many experts predicting a shortage of new drugs for the pharmaceutical product pipeline.

Life sciences startups typically require hundreds of millions of dollars before they can show that an experimental drug might work in clinical trials with real patients. But San Diego’s Orphagen Pharmaceuticals runs against the conventional wisdom. As a case study in frugality, Orphagen has survived as an independent drug discovery company for over a decade, scraping by on grants and one crucial pharmaceutical partnership while enduring a mixed bag of challenges, risks, battles, and rewards.

Orphagen CEO and founder, Scott Thacher, says he believes the freedom to explore and rapidly respond to discoveries makes their independent research path worth the extra adversity.

The company, with fewer than 10 employees, aims to discover molecules that bind and regulate so-called orphan nuclear receptors—a high potential field with a lot of interest in academia. Yet Orphagen is focused on a stage of discovery that many consider as “too early” for venture capital. So why did Thacher position the company as a translational lab, outside the resources of an academic institute?

Scott Thacher

“You do different things in different environments,” Thacher says. “Incentives really aren’t there in pharma to do high-risk, early stage work, and the incentives aren’t there in academia to do the high-risk translational work.”

For Thacher, “the whole concept of a small company is exciting,” He says a staff of 8-10 is ideal for ingenuity and invention. “In our small company, our backs were against the wall. We had to find compounds for these unexplored orphan receptors, there was nothing else we could do.” In terms of production, he says startups are uniquely compelled to generate new value. “There really is a big focus on invention, versus marketing and development.”

Still, it hasn’t been easy. Orphagen began operating in 2003, with funding from three federal Small Business Innovation Research (SBIR) grants Thacher had written, after he resigned as … Next Page »

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Dyn is one of those boring-but-important players that make the online economy possible.

Big names like Twitter, Tumblr, and Netflix rely on it to connect millions of users with their digital services, in the blink of an eye and without a hiccup.

So it makes perfect sense that Dyn’s CEO is really a frustrated jazz trombonist.

Sure, that might sound a little far-fetched in the tech world, where startup founders are typically imagined as precocious teenage computer wizards or visionary leaders with a ruthless streak.

But Jeremy Hitchcock, the CEO and co-founder of Dyn (pronounced “dine”), has turned his particular blend of interests into a very compelling story.

Founded in 1998 and headquartered in Manchester, NH, Dyn has grown right along with the Web by providing domain name system (DNS) services to some of the biggest names in tech.

Hitchcock

In 2010, the company added e-mail services to its product list, with more notable customers including Box. And after bootstrapping its way to multimillion-dollar yearly revenues, Dyn raised a $38 million slug of venture financing last fall.

What’s the secret to this under-the-radar success story? Hitchcock, who played jazz while studying computer science and founding Dyn at Worcester Polytechnic Institute, says there are some serious parallels between business and the great American art form.

You’ll get to hear Hitchcock and other founders riff on that idea and much more on June 19 at XSITE, our fifth annual Xconomy Summit on Innovation, Technology, and Entrepreneurship. Sign up here to get your tickets for this must-attend all-day gathering at Babson College.

But for now, check out these two big ideas from the jazz world that, in Hitchcock’s eyes, translate directly into running a tech company—including one that keeps some of your favorite online services humming right along.

Same Tunes, Different Flavors

No art exists in a vacuum. And musicians in particular are always remixing and updating the tunes of their predecessors.

This is obvious even for someone who isn’t a big music nerd—from the Beach Boys lifting Chuck Berry’s “Sweet Little Sixteen” as the music behind “Surfin’ USA,” to the endless number of hip-hop songs that have sampled breakbeats from the Incredible Bongo Band’s “Apache” or James Brown’s “Funky Drummer.”

Jazz players have their own famous example of a musical idea that spread and changed, inspiring many others. The chord progression that George Gershwin put together when he wrote “I Got Rhythm” was used as a blueprint by countless other composers, including Thelonious Monk, Charlie Parker, and Duke Ellington, all of whom played with different melodies to create new songs based on that same series of chords.

The same is true in technology and in business, Hitchcock says—software and systems built by other people serve as the foundation for new services and applications, while executives are forever altering and adding to the leadership ideas developed and perfected by their predecessors.

“If you take a look at the Great American Songbook, you have some greats who wrote some great material (Gershwin, Ellington, Porter, Van Heusen) and then some modern interpreters (Harry Connick, Diana Krall),” Hitchcock says. “What that lesson teaches is how free ideas are … and how execution matters. In all of our businesses, we’re running playbooks of others in a way that’s novel and interesting for our own audiences.”

The Beauty and Messiness of a Team

Miles Davis had already been a successful musician—and gone through a period of personal downfall—when he linked up with an up-and-coming John Coltrane. Eventually, they both became titans of American music, producing Davis’s “Kind of Blue,” an iconic jazz album.

“When you bring together musicians or different players (bass, drums, piano), they have to be good but also gel—otherwise it’s a solo act,” Hitchcock says.

That kind of chemistry and creativity can’t be bottled, prototyped, or designed. But it’s just as important to business success as producing the right product and serving customers, he says.

“You’ve seen the all-star team get together, and sometimes it’s dominating and sometimes it’s a disaster. I’m more of the Billy Beane/Moneyball mentality—it’s about execution and getting things right,” Hitchcock says. “[Having a] shared vision about featuring everybody, having a good time, and entertaining an audience to boot.”

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Texas state leaders have approved legislation that would revive and reform the embattled Cancer Prevention and Research Institute of Texas, but have left one question unanswered: What about the companies with pending grant applications?

CPRIT (pronounced “sip-rit”), was created by a 2007 amendment to the Texas state constitution with the mission of funding cancer research and prevention efforts in the state. With $3 billion to dole out over 10 years, CPRIT is the nation’s second-largest supporter of cancer research, behind the National Cancer Institute.

Last December, following allegations of conflicts of interest and that grants were improperly awarded, a moratorium was placed on the institute’s activities. A Texas State Auditor’s report the following month detailed some significant issues, including questionable or inappropriate activity in three grants totaling $56.2 million.

One of those grants was a $25.2 million research grant awarded to the Statewide Clinical Trials Network of Texas, also known as CTNeT. The auditor’s office found, among other things, that CPRIT’s executive director, chief scientific officer, and a member of its commercialization review council were members of CTNeT’s board of directors, creating a potential conflict of interest.

“CPRIT’s lack of controls for ensuring there are not any business and professional relationships between its peer reviewers and grantees impairs CPRIT’s ability to assure the public that its award decisions are not improperly influenced,” the auditor’s report stated.

As the Texas Legislature met this spring to discuss ways to reform the institute, CPRIT’s top three officials resigned, and the Travis County District Attorney’s office began a criminal investigation into activities at CPRIT.

Now, Texas Gov. Rick Perry is considering legislation that could pave the way for CPRIT to resume its operations. But the fate of the companies that were in the middle of the grant-application process when the institute’s activities were halted is still unclear.

“With the new leadership coming in, they will have their hands full with getting it running again, and with the [new] grant cycle coming up, I fear we would fall through the cracks,” said Walter Klemp (pictured), founder and CEO of Moleculin, a Houston company that is researching a drug to fight a deadly skin cancer, cutaneous T-cell lymphoma. “There has been no provision, from what I can tell, for essentially salvaging the hard work and money that was appropriately spent for the limbo companies. My wish list is, don’t forget the people who spent years counting on this process.”

Klemp’s company applied in March 2012 for $5 million in grant funding, which he plans to match with $2.5 million in private money, to fund the first two phases of a clinical trial. Moleculin was included in a group of 10 that was selected from 30 applicants to go to the due diligence review, which was then completed in Moleculin’s favor, he says.

“We were literally weeks away from final board approval when the freeze was put into place,” Klemp added. “We were told, ‘We’ll get back to you.’ That was in January. From there, things essentially went dark and we have had to put the project on indefinite hold.”

Wayne Roberts, CPRIT’s interim executive director, said he hopes to be able to provide guidance to companies awaiting grant decisions soon. “We are going to be prioritizing these people that are in this position so that they can either move forward or start making other plans,” he said.

His preference, he added, would be that the companies be able to resume their places in the application process. But, first, the governor must lift the moratorium on CPRIT’s operations. Lucy Nashed, a Perry spokeswoman, said he has not yet decided when to allow CPRIT to resume giving out funding. “He wants them to get back to work as soon as possible,” she said.

The bill is now on Perry’s desk, and his office says he will support it. The legislation includes provisions such as setting up a five-person panel that has final say on which applications are brought before the CPRIT board, prohibiting donors from receiving grants, and prohibiting the institute’s employees and board members from serving on the board of an applicant company. The bill also allocates $595 million in funding for basic research, cancer prevention, and commercialization projects over the next two years.

… Next Page »

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The mysterious Wayne Chang won’t tell me much these days, but he’s got a message for Boston-area startups: Talk about distribution.

If you’re a software startup, he says, your product is obviously important. But equally important is figuring out how to get people to use your product—and spread the gospel to others.

That’s one of the issues Chang is going to talk about when he shares the stage with Miguel de Icaza and Izhar Armony at Xconomy’s flagship innovation conference, XSITE, on Wednesday of next week (6/19) at Babson College (a few student and startup tickets are still available).

Chang spoke on the phone from San Francisco, where Apple’s developer conference is going on and the Crashlytics kickoff party is happening tonight. He’s the co-founder of Crashlytics, the mobile crash-reporting startup in Cambridge, MA, that was bought by Twitter for $100M+ in cash and stock in February.

As Chang sees it, distribution is a startup’s biggest problem. So at Crashlytics, his team spent more time cultivating its network of developer customers than its product. “Most startups that fail, they only focus on the product. We nailed the core of the product, but then spent most of the time figuring out how to get it everywhere,” he says.

For Crashlytics, he says, that boiled down to three things:

— “We don’t engineer solutions, we engineer emotions.” Chang, who would be a psychologist in another life (and maybe this one), says he thinks deeply about what motivates developers, and that “emotions drive conversations.”

— “Deliver a ‘wow’ experience.” One part of that is making it super easy to start using the product. “There’s an icon that jiggles, you click it and drag it into your app, and it’s that simple,” he says.

— “Virality begins with one.” Word of mouth spreads when customers are passionate about what you’re selling. But instead of thinking about how to reach the masses, Chang says, think about how to reach one person (or type of person)—and make it so there’s a “greater than 50 percent chance” that he or she will tell someone else about your product.

Twitter has 20 offices around the world, and the Boston-area outpost will be the biggest outside of San Francisco headquarters, Chang says. Its focus will be the future of mobile and the future of TV; Twitter acquired Bluefin Labs along with Crashlytics this year. “We will be aggressively hiring,” says Chang.

You can hear much more from Chang and Miguel de Icaza (of Mono and Xamarin fame) about their considerable efforts with mobile developers—and the trials and tribulations of building companies in the post-PC era—on June 19 at XSITE. Hope to see you there.

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For Gary Walters, the entrepreneurial brainstorm came while mowing his lawn on a hot San Antonio day.

An Iraq war veteran, Walters lost his right leg below the knee in a bomb blast eight years ago, and he has suffered from excessive heat and sweating where his prosthesis is joined to his leg, a common problem for amputees. “It gets close to 100 degrees in there,” he says. “It’s just like having your hand under water all day. Your skin starts to break down, you get friction blisters, heat rash, open sores.”

Walters says that the heat builds up even when he’s sitting still indoors. He would constantly ask his doctors and prosthetic manufacturers: “Why hasn’t anyone come up with a fix for this?”

This past winter, his bubbling frustration dovetailed along with an assignment in his engineering design course at the University of Texas at San Antonio. The result is what he calls the Aquilonix Prosthetic Cooling System, a ceramic plate that uses battery-powered thermoelectric components to pull the heat from inside the socket of the prosthesis and eject it outside the limb. The device is embedded into the socket and has an on/off switch.

In January, Walters, along with three other engineering students and four business students, formed a company, Leto Solutions. And last month they won first place in the $100,000 Student Technology Venture Competition sponsored by the university’s Center for Innovation and Technology Entrepreneurship. The prize was a combination of cash and in-kind services such as legal services and free office space.

“We are excited that our first prototype worked exactly as expected,” says Becky Arianas, a longtime pharmaceutical and medical device consultant in San Antonio who served as the students’ industry mentor.

She’s now signed on as CEO and is leading the company’s efforts to transform a university project into a commercial product, including replacing its provisional patent with a general one, securing FDA approval, and fundraising.

“We have been meeting with potential investors, and we have a couple who are very interested,” she says. They are speaking to angel investors to raise an initial round of $750,000, she says. The money will go toward making some refinements to the device and building additional units for more testing. At the same time, the company will be pursuing grants from the National Institutes of Health and the Veterans Administration.

… Next Page »

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Biotech is a long-term business, in a world that places more value on short-term thinking. Pharma companies often cut long-term R&D budgets, or do disastrous mega-mergers, mainly to juice their profits for a quarter or two.

But sometimes people come along who are willing and able to buck the trends. They have a strategy for the long term. Not only that, they have the guts, the monomaniacal intensity it takes to carry out their plan, and the resilience to achieve something of lasting significance.

These are people I’d like to write about in this space occasionally under the banner I just made up, of “profiles in long-termism.” Chris Garabedian, the CEO of Cambridge, MA-based Sarepta Therapeutics, is one of these long-termers. He hasn’t really accomplished anything of truly lasting significance yet, but if you’ve followed what he’s done the past two years, it’s remarkable, and he’s taken a company that was going nowhere fast and turned it into one of the most intriguing biotech drug developers you’ll find.

Sarepta (NASDAQ: SRPT) exploded on the scene in the past year. One year ago, its stock was worth 69 cents. Today, it will open trading at more than $37. Many smart people now believe that Sarepta has come up with the first effective drug for treating Duchenne Muscular Dystrophy, a disabling and deadly neuromuscular disease. The product is a molecular-targeted drug that is designed to help boys with the disease who can’t make enough dystrophin for proper muscle function because they have an abnormality in part of the dystrophin gene called exon 51. About 13 percent of Duchenne Muscular Dystrophy patients have a form of the disease caused by this genetic variation. The company is competing in this field with GlaxoSmithKline and its partner Prosensa, but most observers see Sarepta as the leader.

Chris Garabedian, CEO of Sarepta Therapeutics

How in the world did this turnaround happen?

I’ve been privileged to see this story unfold up close, as I did the first in-depth interview with Garabedian in the spring of 2011, when he was still settling in as CEO at what was then known as AVI Biopharma. I wrote a lengthy feature story in June 2011, with the following headline:

“AVI Biopharma CEO Chris Garabedian Seeks to Avoid Quick Flip, Build Enduring Drug Company.”

In that story, he audaciously invoked a comparison to Cheshire, CT-based Alexion Pharmaceuticals (NASDAQ: ALXN), an $8 billion company at the time. Garabedian declared, “We could make this a breakout biotech. It will take some time. It’s not going to happen in a year. But I think this could be a company valued in the multi-billions in the next several years.”

Given the history of AVI, readers would have been excused for chuckling at what looked like pure hubris. Garabedian had been a dealmaker at Celgene (NASDAQ: CELG) and Gilead Sciences (NASDAQ: GILD), but he was young (44 at the time), and a first-time CEO.

Worse, AVI Biopharma looked like a complete mess. The company had been around since 1980, and it was built on a technology, RNA-based antisense drugs, that few people in the industry believed in at the time. The company’s track record was awful. It had spent 30 years on R&D, and burned through more than $250 million of investor cash, with no FDA-approved drug to show for it. Nothing was even within hailing distance of a Phase III clinical trial. The company had about $33 million in the bank at the end of 2010, about enough to operate for another year. Shareholders pushed out the previous two management teams, frustrated at the lack of progress.

Garabedian joined AVI’s board in June 2010. He says he considered it a diamond in the rough. As a young executive, he learned a lot at Gilead and Celgene about what it takes to be successful as an independent biotech, and he vowed that if he ever got a shot to be a CEO, he wanted to build an enduring company that did something really important for patients.

When the board asked him to consider joining as CEO, Garabedian said in a recent interview at his office, he had three conditions. First, the company needed to retain whole ownership of its Duchenne Muscular Dystrophy candidate, and not sell off most of the commercial rights to a partner. Second, he needed the freedom to bring in his own management team. Third, he needed the board’s blessing to raise more money (therefore diluting the value of their existing shares).

“I said to the board, ‘This is a program that every company in the industry would love to have, why would we partner it? Why don’t we bring it forward ourselves and create value?’” Garabedian recalled.

He got the job. Before he officially started on Jan. 1, 2011, Garabedian was already … Next Page »

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