University Times

Among the results of University research is chemical engineering professor Eric Beckman’s development of a tissue glue that’s being brought to market by a company he formed in 2005.

During the Office of Enterprise Development’s spring Limbach lecture, Beckman offered his insights on what he’s learned during his entrepreneurial leave from the University, including what he’s done right and what he’s done wrong on the path toward commercializing TissuGlue as co-founder of Cohera Medical.

In last month’s talk, “Culture Shock for Fun and Profit: Stepping From Academia Into a Start-up,” Beckman advised others that following in his footsteps might be for them if they have a product they passionately believe in and want to learn how the business world works from a small-company perspective.

Entrepreneurial leave, he noted, differs from a sabbatical in that the University pays no salary or benefits to those on leave and therefore, has no claim on new intellectual property (IP) developed during the leave.

“For me taking a leave ensured the IP stays at Cohera,” he said, noting that investors find that attractive.

Beckman said the company’s formation was “pretty much an accident,” noting that he and co-founder Michael Buckley ordinarily might never have met in the course of their University careers.

“Mike is an oral and maxillofacial surgeon. I make polymers,” he said. “Mike had been at the University for over a decade and me for 15 years and we had never come in contact.” The two were introduced by Peter Johnson of Pittsburgh Tissue Engineering Initiatives, who, Beckman said, “felt it was his job to bring people together who didn’t know each other who had complementary skills.”

The glue came about as an outgrowth of research related to a PTEI grant Beckman and Buckley received.

Beckman was surprised when Buckley noted that surgeons didn’t have a glue that’s easy to use, effective and safe even though consumers can find hundreds of adhesives on home improvement store shelves. Buckley got an MBA and wrote a business plan around the adhesive. “If we look back on that business plan now, it’s really more than a little naive,” Beckman said, “But it was critical he did it because it was the genesis of an idea for a company.”

Today, Cohera has nine employees and three products under development. In addition to the tissue glue there is a glue to affix mesh used in such applications as hernia repair and another to be used in repairing broken bones. (Investors often like to see a platform of products rather than a single offering, to broaden the market.)

Outlining how the company initially moved forward in fits and starts, Beckman said he learned that most of what was done wrong in the early days involved wasted time.

What they did wrong

In business, he said, “Time is the enemy, not money. It’s just the opposite of academia where money is always the enemy.”

Even before launching the company, early hurdles in the commercialization process caused delays. Among them was a Catch-22 prompted by Beckman’s membership on the committee that makes decisions on patenting University-developed technology. He couldn’t be present for discussions of his own technology, but if he left the room, he said, so did the committee’s expert on materials. “There was a multi-year delay before we could convince the University to patent it,” he said. Beckman said everything changed and the technology was approved for patenting after the Pittsburgh Life Sciences Greenhouse (PLSG) expressed interest in talking with him and Buckley.

Later, other delays came from not knowing the right people —including angel investors (individuals who help fund start-ups) — and the inability to hire people locally with the right business talent.

A search for a CEO took more than a year, and for varying reasons, the partners went through a string of four mentors in 15 months, Beckman said, likening the mentors to the ill-fated string of drummers who kept dying in the hard-rock documentary spoof “This Is Spinal Tap.”

“It’s very hard to get traction that way,” he said.

What’s more, they had the glue, but needed to decide what was the best business move to make in choosing its application. “Finding a right first indication was a real hurdle,” he said.

Beckman said he envisioned using it to glue injured Steelers back together mid-game so they could return to the field. “But that’s not really the way one runs a business. That’s the way one gets a really cool paper in a journal,” he said.

Looking back, Beckman said the company should have pursued economic development funds and gotten connected to the local entrepreneurial community sooner.

“We should have done everything faster.”

What they did right

On the positive side, Beckman said it was helpful that he and Buckley both were full professors, and didn’t need more publications for a tenure bid, so they never published anything about the adhesive. This both protected the innovation’s patentability and kept potential competitors in the dark.

Likewise, he said asking former OED director Carolyn Green’s entrepreneurial development unit to “adopt” them was an advantageous move, as was getting PLSG seed grant money for research that produced their first data on the glue’s performance, which were important for getting investors interested.

Beckman also counts as a plus meeting consultant Mel Pirchesky, who connected them with angel investors and introduced them to their CEO.

And, once they had a CEO, Beckman said, they didn’t micromanage, but let him run the show.

“Michael is an excellent surgeon. I can make stuff, but neither of us has the business experience needed to run a company,” he said.

Their best decision, he said: “We decided we needed a real business team if we were going to be a real company.”

Surprises along the way

Beckman said among his first surprises was learning what investors look for. “I always assumed they were investing in the technology,” he said, but he soon found that from an investor’s point of view, the team is at least as important as the product.

“When venture capital people visited, they wanted to meet everyone,” he said — and they wanted to be sure the team was all on the same page as far as where the company was going and how it planned to get there.

“It’s as if somebody came into your lab and started asking your grad students and postdocs about everybody else’s work. I mean, half my grad students don’t know what the others are doing most of the time. That wouldn’t fly with investors.”

Another surprise was the criteria for finding the right talent. “When you’re hiring, chemistry is probably as or more important than a resume,” he said. “When we hire postdocs, we look for publications, skill sets and everything. That’s nice but a small company’s like a marriage. So you need chemistry. In other words, at Cohera, do they pass the happy-hour test?”

Where to find the talent also played a part. Beckman said Pittsburgh is good on clinicians, but short on science, engineering and business talent. The region’s declining population means “we’re out of bodies,” he said, advising, “When you’re hiring, cast your net broadly.”

Beckman said he also learned that having a good board makes a company better. Rather than stack a board with agreeable friends and relatives, find the people with the expertise to complement the scientists.

Likewise, he advised, “Do big-company things when you’re a small company.” For example, he said Cohera gets a full audit every year. “It’s nightmarish when it’s going on, but it makes us a better company.”

Moving a product forward

Beckman cautioned that there is a huge gap between a lab technology and a product.

For instance, in the lab, a researcher makes something in the morning and uses it in the afternoon. A real product must have a shelf life of months. In business, the clinical application of the need sets the properties of the product, he said. “You let the desired customer outcome determine exactly how this thing should function.”

In the case of TissuGlue, he admits he wouldn’t have thought first of using it for abdominoplasty — tummy tuck surgery — but gluing the tissue eliminates the gap that fills with fluid after traditional surgery, minimizing or eliminating the need for uncomfortable drains to allow the fluid to escape during healing.

Cohera worked with a marketing firm to ask plastic surgeons what qualities they wanted in such a product and found doctors were looking for a product that was strong and had a low rate of complications. They also wanted it to be cost-effective and easy to use with no preparation time or capital equipment required, as well as sprayable and absorbable by the body.

Time is money

“Speed is everything,” Beckman said. In business, he said, it’s “Spend more now to shave time,” versus in academia, “Spend less now and don’t worry if it takes an extra year or two.”

In business, investors want to see their investment grow quickly, so they’re very interested in seeing the company’s timeline for generating revenue and getting products to market.

“Generating revenue early is very important,” Beckman stressed. Among Cohera’s strategies is going overseas for its initial clinical trials as a time-efficient way of getting product approval. A small clinical trial is required to get the European CE marking that indicates a product conforms with health and safety requirements. Once the mark is received, the product can start generating revenue, he said.

Meanwhile, the company is using FDA-approved labs to conduct required testing for U.S. approvals.

“There’s no sense in a company of nine people trying to do everything themselves,” Beckman said, touting the advantage of working with partners.

“The things we need to be good at, we are. The things we can outsource effectively, we do,” he said, adding, “We’re trying not to reinvent the wheels we don’t have to.”

Cohera has outside companies synthesize the glue and fill and package the disposable applicators. “We’re not going to do it. We just invent stuff and get it approved,” Beckman said, adding that they also have to manage their collaborators. “It’s our job to make sure they’re all on time.”

Beckman said that being pennywise is not always the best way to go. “You might as well hire the best because time is more important than money.”

Intellectual property issues

“The way I find out about my competitors is I look to see what they’ve published and what’s in their patents and I can usually figure out what they’ve got very fast,” he said.

Beckman advised would-be entrepreneurs to stay ahead of their own patent filings by having something new in the works before others can see those patent filings.

Applications are published 18 months after they’re filed. In the case of TissuGlue, he has until next January. “Each time people can see what I’ve done, I’ve got something else in the pipeline that makes it even harder for them” to profit from his work, Beckman said. The recipe for the current product isn’t in the published patent, he said.

“If you try to use our issued patent to make TissuGlue, I guarantee you will fail,” he said. “That’s the trick. Always stay ahead of your own patents.”

He also advised listeners to be prepared for others who want to follow on their coattails. “People will look at our stuff and then try to carve off little pieces, so we have to be ready for that,” he said. Their strategy: “We have to make it easier for people to buy us rather than steal from us.”

Miscellaneous wisdom

Beckman closed his talk with more of the insights he’s accumulated during his foray into bringing a product to market.

• Not all venture capital firms are good, he said, but good ones can be of value in helping entrepreneurs make connections.

•Early-stage companies can raise millions of dollars locally. Cohera raised $7 million in an angel investment round in spite of naysayers who told Beckman it’s impossible to find even a tenth of that. On a similar note, he said, companies need not limit themselves to looking locally for funding.

• If you have a good product, large companies will be tracking you and will call, he said. Even if it’s disconcerting to discover people are watching, he said, “You need to be ready. Are you interested in doing a development agreement with these people? Is it okay for them to visit? How ready for them to visit are you?”

• Small business innovation research funds are a great way to get extra cash, he said, cautioning listeners to make sure they align with the business plan instead of being a distraction.

• Be careful of too many bells and whistles. They might be good for National Institutes of Health R01 research and National Science Foundation grants, but for product development, adding too much to a product all at once can become too time-consuming and costly and can lengthen the regulatory process.

• Be prepared to teach. Investors have business and financial experience but often lack science or engineering knowledge, he said. “You’re going to need to be able to explain maybe complicated technology in a way smart people who don’t have a scientific background can handle,” he said.

On Pittsburgh

Beckman cautioned his audience in the unique challenges of getting a start-up going locally.

“Pittsburgh’s a great town but they really don’t know how to create a vibrant environment for start-ups,” he said. There are too many economic development organizations, too much paper work and too many rules, he said.

“Be patient,” he advised. “They mean well.”

—Kimberly K. Barlow