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Michael Bolick, President of Lab21 Inc.

Micahel Bolick

Micahel Bolick

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MidlandsBiz:
What is your background and education?

Michael Bolick:
I attended NC State and received a degree in chemical engineering in 1991. Prior to Selah Technologies, my professional career centered on working with advanced materials manufacturing startup companies.  I increasingly became interested in health care and how advanced materials could help save lives.

Over the last ten years prior to Selah, I worked in contract manufacturing of pharmaceuticals at the Donaldson Center in Greenville.  In the last few years in this role, my entrepreneurial urge grew from dreaming of someday running my own shop to praying for enough wisdom to see an actionable opportunity.  My goal was to stay in Greenville, but I started to realize that if I wanted to find the right opportunity, I might have to move not only out of town, but also out of state.

MidlandsBiz:
When did you form Selah Technologies? 

Michael Bolick:
In 2006, I attended the annual InnoVenture conference in Greenville. One of the presenters at that conference was Matt Gevaert, a technology transfer officer from Clemson University.  Matt spoke about a Clemson technology licensing opportunity called carbon-based quantum dots which had potential as a tool in the fight against cancer.  This technology, now  known as Selah Dots®, was invented by a Clemson researcher named Ya-Ping Sun.  Before that presentation, I had never considered technology transfer from a university as the genesis for a business start up. As a chemical engineer with experience in technology transfer from major pharmaceutical houses into contract manufacturing facilities, I realized I had the ability to transfer and scale up a new technology.  I saw it as a possible answer to prayer!

MidlandsBiz:
What were your first steps?

Michael Bolick:
After an initial due diligence period, I secured an exclusive option on the Clemson technology. Shortly afterwards, an article on the technology appeared in the Journal of the American Chemical Society (JACS).  JACS is a leading publication for chemistry discoveries.  Right out of the block, the response to this article provided great confirmation that we were working with disruptive technology.  

MidlandsBiz:
How were you funded?

Michael Bolick:
We initially bootstrapped the company: I worked for no salary and my wife and I invested $250,000 of our savings.  SC Launch was the first external entity to invest in Selah. This program was of great benefit to our young company and has enabled a dramatic acceleration to an impressive knowledge economy landscape in South Carolina.  SC Launch initially invested $200,000 as a convertible note.   Later we were blessed to raise an additional $1.6M from accredited angel investors, including the Upstate Carolina Angel Network (UCAN). Overall, this is great case example of a number of determined entities working together to encourage and accelerate a growth mode start up business.

MidlandsBiz:
What is the technology?

Michael Bolick:
Selah Dots® are carbon-based nanoparticles that glow when you expose them to light.  We now have the ability to direct these materials toward targets such as cancer cells.  Think of Selah Dots® as nano-sized light bulbs that can help surgeons see cancer.

MidlandsBiz:
What hurdles did you face developing your company?

Michael Bolick:
The primary hurdles were those commonly faced by growth mode businesses.  The most acute challenges were related to a need for capital and focus. 

A growth mode business often develops a technology rather than initially selling a product or service.  Consequently we initially generate no revenue. We have to raise just enough capital to reach developmental milestones and then repeat the process with a higher valuation.  As you move the technology to market, you reduce the risk and your equity becomes more valuable.  By contrast, a well crafted lifestyle business will have customers right out of the box and may need very little in the way of outside investment.  The delayed gratification of a growth mode business can come in the form of outstanding jobs in the community and attractive returns on investment for investors.  For a life science focused growth mode business, accredited angel investors are typically followed by institutional investors such as venture capitalists (VCs).  So the first driver was to make sure we moved the technology fast enough to earn follow on investment from this type of investor.

The next area of risk was in having too much opportunity.  This probably sounds a bit odd but the bane of the entrepreneur is a lack of focus.  Instead of trying to boil the ocean, we needed to boil a smaller pot of water: to narrow our developmental efforts towards the best, most viable application for the technology.  Cancer diagnosis and treatment was an obvious longer term possibility, but we also had inquiries from consumer electronic and even cosmetic companies.

The greatest competitive advantage for Selah Dots® is the inert, non-toxic nature of carbon as compared to toxic heavy metal based quantum dots.  Someday we expect that Selah Dots®  will be used in the body in the fight against cancer.  The key question was how to get there without running out of capital. 

With this in mind we narrowed our focus to in vitro diagnostic test.  In vitro basically means out of body test.  The cost to develop a test used outside the body is lower than an in vivo (in the body) test.  We were determined to get to revenue as soon as possible and then use those revenues to push towards an in vivo application. 

We decided to focus on detection of breast cancer.  There are around 180,000 breast cancer lumpectomy (or breast conservation) surgeries performed each year in the US.  Approximately 30% of the time, women have to come back for a second surgery because there was some cancer left behind.  Physicians have told us that it is sometimes difficult to determine the margins of the tumor - where the cancer ends and the regular tissue begins.  We realized that if we used Selah Dots® to light up the breast cancer cells on the surface of resected (surgically removed) breast tissue, we could provide the surgical oncologist with a means to visualize where cancer cells began and ended!  Physicians could use light to guide their surgery! 

A critical next step was to demonstrate an efficient targeting mechanism so the Selah Dots® only attached to cancer cells instead of lighting up everything.  I approached Tom Vogt, the Director of  the University of South Carolina's NanoCenter, for help.  We expanded our collaborative team to include folks from Tom's team.   These collective efforts were blessed: we were able to actively label cancer cells in a Petri dish in the early spring of last year.  

In the late spring of 2009, with this prototype / technology milestone in hand, I presented our investment opportunity at a well regarded life sciences VC investor conference in the financial district of New York City.  In general, the VCs expressed excitement over our prototype and progress, but were spooked by the second downturn in the US stock markets.  They wanted us to reduce our risk further by moving from the Petri dish to human tissue.  It was like going to the Wizard of Oz and delivering the broomstick, only to have to "come back tomorrow." 

So we needed to find a way to accomplish this next developmental hurdle.  Cancer cells are relatively straightforward to access and cultivate in a Petri dish; working with human tissue adds at least another level of complexity.  That is when we approached the Greenville Hospital System (GHS) to see if they could help us.

Larry Gluck:
Michael's technology was a perfect fit for our organization. We run a Phase 1 clinical research unit that performs trials on new drugs intended either to prevent cancerous tumors from growing or to get rid of them altogether. A major thrust for us at the GHS cancer center is translational oncology where we look for unique ways to apply new technologies and processes to the diagnosis and treatment of cancer patients. Gone are the days when you just approach cancer based on how it appears under the microscope.  The unique molecular signature of each cancer is different; therefore, there are possibilities for highly targeted or personalized treatments.  We were very excited about the potential that Michael's technology had for improving the care of our patients and helping to advance personalized care.

MidlandsBiz:
Describe the summer of 2009, your relationship with MUSC, and the lead up to the merger of Selah Technologies and Lab21.

Michael Bolick:
After the reception by the VCs in New York City, we were encouraged that GHS would help us develop a clinical trial with appropriate controls.  We were three years into the business and we were mindful that if we delayed any more we might run out of capital.  Providentially, at just that time, SC Launch announced that they were expanding their program to consider follow on investments in a small number of existing portfolio companies.  In this time of extreme risk for Selah, SC Launch came up with a second round of financing and provided a critical infusion of $200,000.

As we headed in to the fall of 2009, discussions with medicinal oncologists and pathologists led us to decide that we needed to find more robust biomarkers to ensure that our kit would be effective in lighting up breast cancer in human tissue.  Biomarkers are biochemical features that are used to measure the progress of disease or the effects of treatment.  Some of the most promising biomarkers identify genetic mutations that can be used to develop the next generation of personalized medicine.  The FDA is now pushing for the develop of theranostics (diagnostic tests that can identify which patients are most suited for a drug and provide feedback on how well the drug is working).

Through this search, we saw an opportunity to move to the forefront of personalized medicine by developing Selah Dots® enabled biomarker based assays.  We met with Chip Hood from MUSC with a goal of securing proprietary biomarker technologies which we could build into our assays.  Imagine an assay that started with a Clemson invention, improved with help from USC to allow conjugation to biomarkers from MUSC.  This could be a real success story for our state!

MidlandsBiz:
Chip, what is your role at MUSC?

Chip Hood:
I am the Executive Director of the not-for-profit MUSC Foundation for Research and Development. Our mission is to improve lives and to help create economic opportunity for the local and state economy by facilitating technology transfer out of the university. 

We were introduced to Michael Bolick and separately Lab21 out of the UK through NEXT in Greenville. We are always looking for potential partners to license technology and to assist with the commercialization of products. Lab21 is a perfect partner to help us move technology through the pipeline. Lab21 is a worldwide leader in providing testing services to healthcare providers and the pharmaceutical and biotechnology industries. They are also at the forefront of this movement towards truly personalized care for patients. 

When we met with the team from Lab21 and Michael Bolick, it became very clear that these were people with whom we wanted to do business.  I can't stress enough the importance of relationships when it comes to making a deal in the life sciences space.  We always do our due diligence and involve lawyers and financial experts to analyze any potential deal, but in the end it comes down to relationships. 

MidlandsBiz:
As the Executive of the MUSC Foundation, what are your short-term and long-term goals?

Chip Hood:
One of our primary goals is to build infrastructure. At MUSC, our main focus is on Life Sciences and Healthcare. As we do not have an engineering school, this limits our ability to move technology out of our labs. We have broken ground on a bioengineering building where we can house engineers from USC and Clemson. We have also built a drug discovery building, and in partnership with the City of Charleston, the university and SCRA, we constructed an Innovation Center with wet lab space for startup companies.  These are all critical pieces of the puzzle when it comes to building a successful life sciences company. 

MidlandsBiz:
How has the approach to university research changed over the past decade?

Chip Hood:
Traditionally researchers at the major universities have not thought much about whether or not their knowledge has commercial application. Changing this mindset is a challenge, but also a very rewarding process.  In Charleston, I have been working with a physician to help move his idea to the next level.  We put him in touch with patent attorneys who furthered the exclusivity of his product and engineers who took his vision and helped turn it into prototypes. The doctor recently came up to me and said: "This is the most fun I have had in years." That is the type of feedback that makes me most proud and evidence of the type of mindset that we need to develop not just at MUSC, but across the state.

The overall strategy of building what we call the knowledge economy is good policy for the universities.  What could be better for the colleges than local companies (often locally owned) that can hire the universities graduates and pay them high wages! 

MidlandsBiz:
What are some of the other hurdles or challenges that you face as you look to achieve these goals?

Chip Hood:
The state budget cuts have taken a toll on all of the universities.  Everybody is struggling in this economic environment and I don't envy the legislators the tough decisions they face when it comes to the state budget.  One of my favorite quotes came from the CEO of Texas Instruments who, I believe, correctly states that the Bell Labs of yesteryear are today's research universities.  Research is a major driver of America's greatness and we have to become more effective at finding critical applicability for the brilliant ideas that come out of our universities. This is especially significant to the economic future of South Carolina; it is a potential game changer for South Carolina.

We also need to attract more venture capital money to the state. We need experienced entrepreneurs and leaders to step up and run these companies.  Charleston is a very attractive place in which to do business so that helps to attract talent, but finding top level executives may still be our biggest challenge. 

MidlandsBiz:
What role should the business community play in this process?

Chip Hood:
We can't do it alone – business needs to jump in and lead the way.  State government can facilitate the process, universities can be the engine, but the business community has to steer.

MidlandsBiz:
Michael, how did you meet Lab21?

Michael Bolick:
I am the current board president for SC BIO (formerly the Palmetto Biotechnology Alliance).  SC BIO is South Carolina's Life Science Industry Affiliate for the international BIO organization.  In this role, I met Dr. Edwin Snape, one of the founders of Nexus Medical Partners, a venture capital firm with a long history of successfully investing in life science firms.  He asked if I would be willing to meet Graham Mullis, CEO of Lab21, a British diagnostics company that was looking to establish a foothold in the United States. I had been looking for a partner in the diagnostic industry who could help us accelerate the development and commercialization process for our Selah Dots® technology so I was eager to make a connection. 

Graham and I first met early in the spring of 2009, around the time we had reach the Petri dish prototype / technology milestone for the Selah Dots® technology.  Through these conversations, I came to know Lab21 as a vertically integrated diagnostics firm, with a proven capability to identify promising biomarkers, develop and clinically validate assays, and then manage the regulatory submission process.  Just as important, Lab21 has a worldwide test kit distribution network and are well generating growing revenues.  They also operate a very well regarded molecular diagnostics focused reference lab in the UK.  In short, Lab21 had everything we needed to realize not only the narrowed focus of Selah, but much more.  In the fall, we started into serious negotiations about a potential merger between Selah Technologies and Lab21.  Lab21 was the perfect fit.

MidlandsBiz:
What is the ownership structure of the new company?

Michael Bolick:
Selah was integrated into Lab21 Limited in December.  We now operate as Lab21 Inc. a wholly owned US subsidiary of Lab21 Limited.  I now serve as the President of Lab21 Inc., headquartered here in Greenville. Lab21 Inc has received funding from SCRA's SC Launch program, Nexus Medical Partners and other private investors, all of whom will have an ownership stake in the new company.  

MidlandsBiz:
What infrastructure will you have in South Carolina?

Michael Bolick:
We will have four business units.  We have a temporary office currently located in the NEXT Innovation Center and are planning for our headquarters and a molecular diagnostics focused CLIA lab (Clinical Laboratory Improvement Amendments) to be located there as well.  We intend to continue operation of our Clemson based products development lab, and to start up a test kit distribution center that should grow into a manufacturing facility over time.

Larry Gluck:
Michael's initial nanotechnology has opened a door into an arena that could lead to technological advances that could help worldwide.  Teaming up with a company with the intellectual resources of a Lab21 is a tremendous opportunity to advance our knowledge of molecular biology.  We are excited about the potential this has for other diagnostic and therapeutic tools for cancer.

MidlandsBiz:
Does GHS have an ownership in the new company?

Larry Gluck:
This is an academic and research opportunity for the GHS; it is not a business deal.  Bringing biotechnology to the cancer research arena is a huge priority of mine. In wanting to take Greenville and SC to further heights in cancer research, the interaction with Lab21 will hopefully be powerful enough that it will attract interests from around the world to collaborate and focus energy here in Greenville. If you bring high quality forces together around a project, it will pay dividends in terms of the medical care that can be delivered here. 

Chip Hood:
South Carolina has to compete with places like the Research Triangle in North Carolina where they have a much tighter cluster of schools in one area – and a thirty year head start! The cool part of the story of Selah Technologies is how it interfaced and leveraged the unique skill sets of three SC universities: a Clemson spinoff that works closely with USC to develop its technology that MUSC will help to commercialize. How cool is that!  We may have strong rivalries on the playing field, but we have to band together at the research level. The result is something that may have worldwide applicability in the life sciences.

Michael Bolick:
I am humbled by the success that we have achieved to date with Selah Technologies and now Lab21 Inc.  We have a lot of work ahead of us, but the pieces have come together very nicely.  We now have a stewardship responsibility to protect and grow this new opportunity set.  We look forward to working closely with physicians who are fighting cancer and infectious disease.

I want to underscore that Selah Technologies would likely have failed were it not for the seed funding that was provided by SCRA's SC Launch program during critical inflection points along Selah's path.  Entrepreneurs, despite rumors to the contrary, do not generally revel in risk; on the contrary, we are often risk averse, willing only to accept a calculated risk with an eye on the potential for reward.  To be clear, it is incumbent on entrepreneurs to do the hard work necessary to put together a build solid business plan and to make a compelling case for investment.  South Carolina initiatives, such as SCRA's SC Launch, have freed up private capital to provide seed funding and other means of support for growth mode companies.  This provides entrepreneurs with additional incentive to make the leap and start a company. 

With respect, South Carolina has great momentum and must continue to lower the barriers for entrepreneurs. We need to work together to encourage more funding, more forums, more mentors, and an even larger network of support for entrepreneurs.  We need to learn to embrace entrepreneurs whose businesses fail due to adversity alongside those who are blessed with success.  What better source for insight than experience?     

I am thrilled that folks see the Selah / Lab21 story as a win for the whole state of South Carolina.  We are but one example in a growing body of evidence that we are on the right path for developing knowledge-based companies as an engine for economic growth. These are very exciting times for our state.

 

 

BONUS: Bill Mahoney, President of SCRA, on the importance of the Lab21 announcement to the development of the knowledge economy in South Carolina.