Dr. Lisa Crossley says she's being conservative when predicting that her new biotechnology company will be worth $100 million within five years. It's an ambitious goal for a start-up whose founders were still refining a technology for a new biotech separation process just two and a half years ago at McMaster University in Hamilton, Ontario.
Nysa has developed a revolutionary technology that will dramatically improve the safety and economics of the biotechnology separation processes required to purify proteins and other life sciences compounds. With the technology, Nysa plans to create novel, high value products for specific applications, including large-scale bioprocessing, blood processing, and food and beverage processing, among others. Separation products developed with Nysa's technology will deliver significant improvements in performance over existing separation means, and will do so at low cost, in a
pre-sterilized, disposable format.
"We were below ground zero early in 2005. The technology still belonged to the university and wasn't even at the proof-of-principle stage. We had no staff and no offices. But we had enough data from Drs. Ron Childs' and Alicja Mika's research to know we had something with significant commercial potential," says Crossley, president and CEO of Nysa Membrane Technologies.
Why is her company succeeding where so many other biotech companies have failed? Having a proven technology is a good start – and so is having the right investors.
When Nysa's founders sought venture capital financing, MDS Capital and BDC Venture Capital worked to share the risk by syndicating the investment. "This was invaluable. Instead of $500,000 they together provided us with $2 million. It put us in a much stronger position to build the company quickly so that when we did go out to raise more funding, we found ourselves oversubscribed," she says.
That initial investment may also have helped to keep the home-grown biotech star in Canada. Several of the venture capital companies Crossley was considering would have required her to move operations to the United States.
BDC is one of the most important early stage investors in Canada. Robert Inglese, BDC's vice president of Technology Seed Investments, explains that in 85 per cent of these cases, BDC is the only investor because the companies are too early-stage for the venture capital industry. It's usually afterwards, on the second and third rounds of financing, that other venture capitalists will come on board.
BDC has invested $90 million in 42 seed-stage companies over the past five years, including 24
spin-offs from university and government research labs. Those companies have since gone on to raise an additional $210 million from 44 other venture capitalists.
"But it's not just the money we're investing," adds Inglese. "Our group will spend a lot of time and effort to help companies move from a research project in the lab to become a company, and where needed, to bring in directors who have strong business experience."
Production begins in 2008
The past two years have proven highly productive for Nysa. The company acquired the technology from McMaster, leased 2,400 square feet of space in Burlington, Ontario, built a state-of-the-art lab, and grew its staff from six to 20 people, including sales and product managers in the United States.
But that was only the beginning. This fall, BDC and JovFunds Management (transferred from MDS Capital) announced that they would provide second-round financing in a tranched investment of up to $12 million – enabling Nysa to move into a 23,000 square foot space in Burlington and build a
$2-million full-scale commercial production line for its next-generation membrane separation technology.
The company's two main product lines (chromatography membranes and membranes for size-based separations) work better and cost less than current separation technologies. The products target a wide range of applications, including bioprocessing, bioanalytics, food and beverage processing and water treatment – an estimated $2 billion global market.
Product testing is currently underway with early adopter customers in the United States and Europe. The first sales are expected in the first quarter of 2008.
