This article was originally published on May 12.
A student team from the University of Illinois-Chicago's Liautaud Graduate School of Business has won first place in the Licensing Executives Society Foundation's annual business plan competition for its plan to develop a blood test to measure the effectiveness of ongoing antidepressant therapy.
The students have formed a company called Pax Neuroscience and are seeking $1.5 million in venture capital to help guide the technology through the regulatory approval process. They are pitching a 10-fold return to potential investors, a company co-founder said this week.
In addition, Pax is the latest company formed through the UIC Technology Ventures program, which pairs Liautaud MBA students with commercially promising technologies developed at UIC to provide the students with hands-on entrepreneurial experience and boost tech-commercialization efforts at the school.
The Licensing Executives Society Foundation announced that Pax had captured first place in its international graduate student business plan competition last week at the LES Spring Meeting in Montreal.
LES said that it received 60 entries from graduate student teams from around the world, up from just eight entries in 2007. The professional organization judged the plans on factors such as quality of intellectual property and licensing, attractiveness of the venture, quality of the product or service offered, market opportunity, and investment potential.
As the grand prize winner, Pax received $10,000 in cash provided by the LES Foundation, and will also receive in-kind prizes worth up to $50,000 from Knobbe Martens Olson & Bear; Finnegan Henderson Farabow & Dunner; and 24IP Law Group.
Pax co-founder Aben Cooper, who also serves as director of research and development for the company, told BTW this week that the LES award "is an extremely important boost to our confidence level, and helps us confirm that we do have a product that's … worth brining to the market."
Although the award is "just a drop in the bucket" in supporting Pax's quest of seeking US Food and Drug Administration approval for its blood test, "it may help provide patent costs," Cooper said.
"The networking at LES may be the most important thing that came out of this," he added. "Lots of people have shown an interest in this technology and this general area of health."
Pax's technology was developed in the laboratory of Mark Rasenick, a professor of physiology and biophysics at the UIC College of Medicine. Rasenick identified a biomarker called Gs alpha subunit that is associated with the effectiveness of ongoing antidepressant therapy, as well as fluorescence-based methods for assaying for the biomarker.
The resulting blood test, called Fast Indicator of Therapeutic Efficacy in Depression, or FITE-D, will be designed to "eliminate the guesswork involved in assessing a drug's effectiveness by using a Gs alpha biomarker to objectively measure the response or non-response of a patient's body to the anti-depressant within five days of the first dose," Christopher Shoemaker, co-founder and director of business management for Pax, said in a statement.
According to Pax, current antidepressants require two to three weeks to elicit a response, and respond in only 60 to 70 percent of patients. Less than 50 percent of patients achieve full remission, the company said.
FITE-D will be designed to help doctors "move patients to effective treatments more quickly, increase the likelihood of patients taking their medication as directed, and reduce the risk of suicide in complex cases," Shoemaker said.
It is unclear whether the test will be able to gauge the response of all classes of antidepressants or just select classes; however, patent documents filed by UIC regarding the underlying technology make no distinction between the effectiveness of the test for different types of therapies.
Cooper told BTW that Pax is seeking $1.5 million in financing and is "open to any type of investment." The company will use the funding to seek FDA approval for its blood test this summer, and Cooper said that it can offer its backers a significant return on their investment.
"We believe that for the price we will offer the test, they would be able to get back 10-fold on that investment," Cooper said. "From the market research we've done, we believe that is possible."
Cooper said that the investment would also go toward helping Pax find a CEO, and that the company would also be seeking non-dilutive funding such as Small Business Innovation Research grants.
Cooper, Shoemaker, and Pax's third co-founder and director of operations, David Miller, debuted Pax last year as part of UIC's Technology Ventures Program.
Rod Shrader, an associate professor of management and entrepreneurship in Liautaud's College of Business Administration, along with UIC's Office of Technology Management, created the Technology Ventures Program in 2005 to "create an intensive, challenging, real-world experience for MBA students" at Liautaud by providing them access to promising technologies managed by UIC OTM.
As part of the program, Shrader also coaches teams and their companies as they enter business plan competitions around the US to develop a pitch for potential investors.
In Pax's case, UIC owns a portfolio of patents related to Rasenick's biomarker discoveries, and has provided Pax with an exclusive option to license the IP for all diagnostic and therapeutic applications in the field of neuroscience.
Cooper told BTW that were it to license the IP, UIC would likely take a "small" equity position in the company and receive royalties on any future products of between 3 and 5 percent.
Colin James, a technology manager at the UIC OTM, said that as an option agreement, "there are a number of different ways to go about" potentially licensing the technology to Pax.
"Typically what happens is we look for upfront fees, and then we have developmental milestones," James said. "There's money involved with those, and sometimes we can do equity in lieu of an up-front payment."
Nancy Sullivan, director of the UIC OTM, added that the office "works with companies as they reach their milestones. In this case, we are incredibly proud of this company, and working with them and trying to find a way to help them be successful is absolutely our goal.
"We take into account all the situational pieces, have conversations with the company, understand their goals, and determine at what point to execute a license with them, and at what point we might offer them a second option as they work toward the next level," she added.
Sullivan and James said that OTM has worked with three other companies that started through the Technology Ventures program and are still in existence: OrthoAccel Technology, which is developing an orthodontic device to speed treatment of malocclusion; Sanogene Therapeutics, which is developing RNA interference-based biopharmaceuticals to treat incurable cancers; and medical device firm HeartSounds.