When Covidien decided to spin off Hazelwood drug company Mallinckrodt in 2011, Rick Dorshow’s optical-imaging research became something of an orphan.
Dorshow, a PhD physicist, worked for Mallinckrodt here, but his research had been supported by a respiratory-products division that Covidien was keeping. His project, even though it showed promise for diagnosing a wide variety of diseases, was a casualty of the reorganization.
Dorshow could have stayed at Mallinckrodt, but he believed in the optical project, which involved developing both a sensor and fluorescent imaging agents. He teamed with Steven Hanley, the former head of Covidien’s imaging solutions business, in 2012 and formed a company called MediBeacon.
The initial step, licensing a handful of patents, wasn’t easy. Big companies are picky about who does what with their intellectual property, and Hanley says the negotiations took about two years.
Meanwhile, he and Dorshow needed to raise money. BioGenerator, the investment arm of industry group BioSTL, had just gotten federal funding to help “de-risk” early-stage companies, and MediBeacon got the first grant under that program.
BioGenerator also invested in MediBeacon, as did the state-run Missouri Technology Corp. and St. Louis County’s Helix Fund. The startup also used BioGenerator’s lab space for a time before moving to the county’s Helix Center in Creve Coeur, where it now employs 10 people.
The community’s help was crucial when the co-founders were getting used to life outside the corporate cocoon. “We needed the infrastructure that BioGenerator had set up, and we tapped right into it,” Dorshow said.
MediBeacon went on to raise more than $30 million in capital-haul-since/article_0b2dd0f0-3277-5966-8a54-64c953877bcb.html" target="_blank">venture capital, enough to secure 32 patents and advance its first product toward commercialization. That product, a skin sensor that monitors kidney function, is about to go into a pivotal clinical trial in the U.S. and Europe, the last research step before seeking Food and Drug Administration approval.
Nephrologists are excited about the technology, Dorshow says, because it provides immediate results and is non-invasive. The sensor also lets doctors watch how other treatments, such as chemotherapy, affect a patient’s kidney function.
The technology’s progress recently caught the eye of Huadong Medicine, a Chinese drug company, which agreed to invest $30 million in MediBeacon and fund clinical trials, plus regulatory and commercial activity in Asia.
“China is a very complicated market, so having a partner there is fairly typical,” says Charlie Bolten, senior vice president at BioGenerator. “By doing the deal at this stage, MediBeacon gets a capital partner as well as a development partner.”
Bolten, who worked with MediBeacon in the early stages of its existence, said the Huadong deal affirms the vision that Dorshow and Hanley had in 2012 — and validates Mallinckrodt’s decision to entrust its technology to a startup.
Other scientists who came out of big companies, Bolten says, are rarely able to gain control of patents.
“I give credit to Mallinckrodt and Covidien for doing this,” he said. “There were some people there who believed it was the right thing to do.”
MediBeacon probably has provided Dorshow a more stable career path than Mallinckrodt would have. The company sold its diagnostic imaging business in 2016 and was planning to spin off its generic-drugs business, which is based in St. Louis. Mallinckrodt put the spinoff on hold this week, but still plans to offload the unit eventually.
While leaving to found a startup certainly was risky, staying would also have been a risk —and it wouldn’t have had nearly as much upside.