The Purdue Life Sciences Business Plan Competition

By Mike Lillich

Don Blewett (MBA '02), associate director for the Burton D. Morgan Center for Entrepreneurship in Discovery Park, just might be pondering ideas for next year's competition as he watches the presentations.

Take a technological medical application, add a dash of entrepreneurism, and you have the makings of an entry to the Purdue Life Sciences Business Plan Competition. But you'd better have all your molecules in a row, because with $147,000 in prizes at stake - including $100,000 from founding partner Roche Diagnostics - these scientists mean business.

Walking the talk

They can spot and correct your eye disease, create a medical technology database that allows speech recognition, label molecules for gene profiling, prevent the onset of high blood pressure, treat multiple sclerosis, ensure the purity and low cost of your pharmaceuticals, and identify live bacteria to prevent the wrong critters from getting into the wrong places.

They're life sciences entrepreneurs, armed to the teeth with data, technology, and expertise. They're just looking for the right backing to make it all happen. Last April, they came to Purdue to get that backing - but they had to fight for it. Eight finalists, narrowed down from an original number of 46 business plan entrants, competed for only one first-place prize: $50,000 in cash, and $10,000 in legal and business services.

That prize was part of the $147,000 in total prize winnings offered during the inaugural Purdue University Life Sciences Business Plan Competition, held in the North Ballroom of the Memorial Student Union on April 23.

The hefty purse attracted 52 entrants from all over the nation - California, New York, Florida, Georgia, and Indiana - and yielded 46 complete business plans based on solid life sciences research at top research universities. Roche Diagnostics Corporation, the founding sponsor for the life sciences competition, put up $100,000 in prize money.

Getting serious

The eight finalists, who were selected by the 10 judges, were start-up enterprises at various rungs of the commercialization ladder. The finalists came to Purdue to give venture-capitalist-style pitches in front of the judges.

This was one of the first demonstrations of how Discovery Park, the multidisciplinary research center at Purdue, will work to encourage collaborative projects. Discovery Park is the outcome of Purdue President Martin Jischke's vision that the twenty-first century university must not only do basic research but also provide the entrepreneurial know-how to bring products to market.

The world, Jischke says, no longer splits neatly along an axis of public and private sectors. The future belongs to those universities and their states that combine public and private applications most creatively and nimbly. Purdue is taking a leadership role in that effort in Indiana. The Burton D. Morgan Center for Entrepreneurship, for which Krannert Dean and Leeds Professor of Management Richard Cosier is the director, will play a key role in helping those new applications and scientific breakthroughsget off the ground.

"We want this to be the best life sciences business plan competition in the world," Cosier says. "It will highlight the state of Indiana as a key location for life sciences activities."

With such a lofty goal and Discovery Park's focus on cutting-edge research and marketing, there was no room for dabblers, especially in a national entrepreneurial competition.

"There weren't any entrants with silk-screen genome T-shirts," says Don Blewett (MBA '02), associate director for the Burton Morgan Center, and the event coordinator. "This was serious technology, competing for serious money."

Logan Jordan, a competition judge and Krannert School associate dean, agrees. "This was clearly a national event," he says. "There was stiff competition, and that's exactly what we need if we're serious about nurturing the ideas that come out of Purdue research and making them a source of economic development."

What's the big idea?

The idea for a life sciences business plan competition began at a lunch, with plans at least figuratively sketched on the proverbial paper napkin. Present were Blewett; Cosier; Mike Fitzgerald, Roche Diagnostics' director of business development; and John Aplin, a member of the Krannert Dean's Advisory Council and managing partner of the Indianapolis office of CID Equity Partners, a venture capital company.

"Roche was intrigued with our Burton D. Morgan Entrepreneurship Competition, where Purdue students and staff pitch their ideas for start-up funding for their fledgling enterprises," says Cosier. "So their thought was to build something more focused on the life sciences that would jump-start both companies and technologies."

As Roche's Fitzgerald explains, "While a company like ours needs access to new ideas, with general business plan competitions, we have to sift through so many proposals that aren't relevant or applicable to our industry that it made it difficult to get engaged." Fitzgerald says Aplin related that in the venture community, there tend to be more industry-specific conferences. "And the conversation and the concept just evolved from there," Fitzgerald says. "It became a very productive business luncheon."

Subsequently, Roche Diagnostics became the founding sponsor, contributing $100,000 to the competition.

"This is new for Roche," Fitzgerald says. "We had never done anything at that level of cooperation with another entity before. But the number and quality of the entries exceeded our expectations. At the competition on Purdue's campus, we saw eight high-quality life sciences business opportunities, six of which we would not have known about."

Fitzgerald says Roche Diagnostics has had conversations with "at least three of the finalists," but cautions that the medical device and pharmaceutical industries are always looking for new ideas and technologies, and conversations don't necessarily mean that acquisition of companies or technologies is imminent. But Roche is convinced from its first year of sponsorship that the company will sponsor next year's competition.

"We're looking forward to having time on our side next year," Fitzgerald says. "We were working on a short time schedule this year, and we may have missed some entrants. We've already started planning meetings for 2004."

Fitzgerald says it may be possible to expand the competition next year and include other pharmaceutical, biotech, or other life science companies and initiatives. However, while the competition may grow, its roots are planted firmly in Indiana.

"We want to be open to the best entrants and ideas from around the world," Fitzgerald says. "That said, we like partnering with a world-renowned Indiana school. After all, Indiana is where the bulk of our 3,500 employees live and work.

"Here in Indiana we're not going to be the next Boston or San Diego," he says. "But Indiana can be a significant force in the life sciences. We have great resources - in addition to Roche, there is Eli Lilly & Company, Guidant Corporation, and Dow Chemical. We have two tremendous universities, and we have Indianapolis.

"It's critical that, as thought leaders, we collaborate and 'connect the dots,' " he adds. "Indiana can be a significant player in the life sciences - not in every area, certainly, but we can pick our spots and be world-class in some areas."

In order to stimulate interest from within Indiana, the Central Indiana Corporate Partnership and the Indiana Health Industry Forum each added $10,000 in prize money for the top-finishing Indiana team. Indianapolis-based law firm Baker & Daniels and its health technologies consulting affiliate, Aventor, contributed $10,000 to support the competition and $12,000 in services to the top three finishers. Clifton Gunderson LLP, a national accounting firm with an office in Indianapolis, contributed $5,000 to support the competition and $12,000 in services to the top three finishers. Therefore, an Indiana team winning the competition would receive an impressive $80,000 in prize money.

The pitches

Finalists made 20-minute venture-capitalist-style presentations and then fielded 25 minutes of questions from the judges. Judges' queries ranged from basic science questions to predictions on the state of company management three years out.

Jordan says the judges evaluated teams on the strength of their technologies, the potential market size, their time to market, their probability of success, the management team, and the amount of capital needed.

"Almost every plan had someone on the judges' panel who didn't like it," Jordan says. "So we threw out the high and low scores."

This led to what another judge, David Denis, Burton D. Morgan Chair of Private Enterprise, terms "a degree of consensus that surprised me. There was even a strong correlation between the preliminary rankings we did before the presentations and the final scores."

And the winner is …

Iris AO, a start-up company formed by principals from the University of Rochester (New York) and the University of California, Berkeley, won the $50,000 first prize. Using the same optical technology as that in the Hubble telescope, the company has developed an application called SmartMirror, which allows early detection of eye diseases and has the potential to correct vision to 20/10. In addition to the first prize, Iris AO won $10,000 in legal and business services.

Matthew Campbell, chief operating officer of Iris AO, ended his presentation to the 10-judge panel by saying: "Our goal is to build our reputation as a world-class optical company. We're at the stage where we have some customers, and we'd like to go out and hire more people. The prize money will help us do that."

Two months after the competition, Campbell described his team's win as "perfect timing. The $50,000 has gotten us over the hump. We've made a number of contacts with significant companies. We're hiring five PhDs, and we've been written up on smalltimes.com, which everybody in our industry reads."

Second place went to Medical Reporting Solutions, from Indiana University-Purdue University Indianapolis. The company has developed automatic speech-recognition technology for medical technology databases. Medical Reporting Solutions won the $20,000 second prize plus another $20,000 as the top Indiana entry. The team also won $8,000 in legal and business services.

NanoString Technologies, from the University of Washington in Seattle, which uses a probe to label unique molecules for gene profiling, took third place and won $15,000 plus $6,000 in legal and business services.

The next step

The expectations for life science startups are high, both on the Purdue campus and in the state. And lessons for both came out of the competition.

"This is not just about Purdue," Jordan says. "The top finishers all came out of universities with medical schools. So, here at Purdue, we can do life sciences problem recognition, drug development, and animal trials through our veterinary school. But if you want to migrate from idea to solution to business, somewhere the road will take you through a med school."

At this writing, the steel beams of the superstructure are in place for the Burton D. Morgan Center for Entrepreneurship on the west side of campus. The center is the first structure going up in Discovery Park; other buildings will include the Bindley Bioscience Center and the Birck Nanotechnology Center. The entrepreneurship center will provide the entrepreneurial support to turn Purdue professors' high-level scientific research into products and prosperity.

With the entrepreneurship center's first success under his belt, Blewett can afford to reflect and philosophize a bit before starting to put next year's competition together. It's perhaps no surprise that he's looking at the big picture, and how the competition will affect more than just the competitors.

"The competition was a vehicle to engage both public and private sectors," he says. "And for the state of Indiana, it could be one of the answers to the state's search for jobs and economic development."

A Purdue engineering grad, Blewett was an entrepreneur himself before returning to Krannert to get his MBA at an age when most people are slowing down, not starting up. He doesn't have any romantic notions about entrepreneurship.

"Entrepreneurship is not mysterious, unique, or brand new," he says. "It's creatively and aggressively applying standard business principles and making decisions quickly for the right reasons. It's saying what you're going to do and doing what you say.

"You can get most ideas to fly. It's just a question of how high. It's lemonade stands and the thought processes you go through in a startup. Entrepreneurship is the real-life application of business principles, which is what we saw in the life sciences business-plan competition."

Blewett says he's ready for next year.

"This competition was our center for entrepreneurship's successful startup," he says. "We were working on a short timeframe, but we did it well. We're going to do it again, and we're going to do it better."

The 2004 Purdue University Life Sciences Business Plan Competition will be held April 20-21. Executive summaries are due by January 5, 2004. For more information, contact Don Blewett, associate director, Burton D. Morgan Center for Entrepreneurship, (765) 494-4485, blewett@mgmt.purdue.edu.  You will find details on the competition web site:  www.purdue.edu/discoverypark/lifesciencescompetition/

The judges for the 2003 competition
Dan Boeglin, JD Chair, Business and Finance Team, Baker & Daniels
David Denis, PhD Burton D. Morgan Chair of Private Enterprise Krannert School of Management, Purdue University
Logan Jordan, PhD Associate Dean of Administration Krannert School of Management, Purdue University 
Juergen Flach, PhD Vice President and General Manager, Applied Science, Roche Diagnostics Corporation
Yassir Karam, JD, CPA, MBA Senior Manager, Valuation and Forensics Team, Clifton Gunderson LLP
Peter Kleinhenz, CPA, MBA Leader, Life Sciences Group, CID Equity Partners
Gary Noonan, MBA Director, Corporate Business Development, Eli Lilly & Company
Gerald Richardson Founder and CEO, The Anson Group (a member of Aventor, LLC)
Claire Roberts, CPA Chief Financial Officer, Central Indiana Corporate Partnership Project Manager Central Indiana Life Sciences Initiative
Joerg Schreiber, PhD Vice President, Special Projects, Roche Diagnostics Corporation

Founding Sponsor - Roche Diagnostics Corporation

Associate Sponsors - Central Indiana Life Sciences Initiative (part of the Central Indiana Corporate Partnership), Indiana Health Industry Forum, Baker & Daniels (law firm), Aventor, and Clifton Gunderson LLP (accounting firm)