National Science Foundation Funding A Solid Option For Start-Ups - Insera

Article preview from "The Gray Sheet"- June 7, 2010

Stroke treatment developer Insera applied for a $150,000 National Science Foundation grant in 2009 after concluding that more traditional capital sources remained out of reach amid the economic downturn. The funding route stands as a good model for other device start-ups as well, Insera says.

National Science Foundation Funding A Solid Option For Start-Ups - Insera

Article preview from "The Gray Sheet"- June 7, 2010

Stroke treatment developer Insera applied for a $150,000 National Science Foundation grant in 2009 after concluding that more traditional capital sources remained out of reach amid the economic downturn. The funding route stands as a good model for other device start-ups as well, Insera says.

The NSF Small Business Innovation Research Phase I grant, which was awarded in January, has been crucial to the development of Insera's Shelter transcatheter system for blood clot retrieval to treat stroke, CEO Vikram Janardhan said.

"We went for [NSF/SBIR funding] as an alternative to other options," Janardhan said. "And there is a lot of value added above and beyond the $150,000 you get."

Venture capital investment in medical device and biotech firms declined 22% in 2009, mirroring broader VC trends, and investment levels continued to be depressed in the first quarter of 2010.

That leaves options such as NSF's $120 million annual SBIR program as a viable alternative, NSF says. Funding of $150,000 is typical for Phase I awards while Phase II awards are usually about $500,000, according to NSF.

Applications for NSF's SBIR program have grown substantially over the past year, NSF notes.

NSF SBIR Phase I applications totaled about 3,000 across all industries during the two most recent application cycles, which come twice a year in June and December; this is nearly double the usual average of around 1,800 applications, according to Joseph Hennessey, a senior advisor with the NSF SBIR program. About 20% of applications are accepted, according to NSF.

A relatively small number of device firms, however, have turned to NSF for SBIR funding. During an average cycle, the agency considers roughly 30 proposals from the device sector, and about the same number for biomedical instrumentation, according to Greg Baxter, an NSF SBIR program director who handled the Insera grant. This may be due in part to perceptions about which of the 11 federal departments that handle SBIR funding are best suited for device-related applications.

NIH's SBIR program, for example, funds most human health-related technology, Baxter said, while NSF considers ideas from a wide variety of health and non-health-related sectors encompassing "high risk, high payback" projects.

"Often times the biomedical community hasn't thought of NSF as a source of SBIR funding," Baxter said.

NIH notes that it too has seen a recent increase in SBIR applications.

Insera Fit With NSF's SBIR Criteria

Baxter said Insera fit NSF's SBIR criteria, which focus on projects that attempt to break new ground while having high potential for commercial success. "If it is just a simple development project we are not interested in [providing] funding," he said.

Insera, which was founded in 2007 in Sacramento, Calif., secured its SBIR grant to further develop its Shelter device and demonstrate proof-of-concept. The transcatheter embolus retrieval system incorporates microwire, catheter and umbrella-like components, which are inserted through the femoral artery. Once the device reaches the brain, the umbrella portion opens to grab clots and debris.

While Janardhan and Insera co-founder/brother Vallabh Janardhan have otherwise raised about $850,000 in seed money from family and friends, the firm hopes to raise $5.5 million in "Series A" financing to support a pre-pivotal clinical trial and subsequent 510(k) and CE mark applications within the next few years.

During a May 27 NSF webcast highlighting the company's technology, CEO Janardhan said he hopes Insera can present its bench test data to FDA later this year.

Insera notes that its progress report is due to NSF at the end of June. "NSF cares about your success well beyond the scope of research product funding," Janardhan said. "I don't know of any other organization that has done that."

- Mark Hollmer

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