Focused Ultrasound Foundation helps startups find investment and expertise
One challenge of being a CEO with a new technology is finding investors who believe in it as much as you do.
“Raising money is a full-time job,” says Mike Blue, CEO of Michigan-based HistoSonics Inc., which is trying to bring to market a new kind of focused-ultrasound technology that destroys targeted tissue such as tumors using pulsed sound waves. “It takes constant effort to try to get in front of the right people.”
Lucky for Blue, the Charlottesville-based Focused Ultrasound Foundation already had the right people: its wealthy donors and an all-star board of directors.
Foundation leaders told them about Blue’s need for money, and, in about 10 days, the entrepreneur had what he needed: a $5 million convertible note from a group of investors led by an ultrasound foundation board member.
That money is helping to keep HistoSonics going as it works on its C-round funding, which Blue hopes to close by the end of this year. The goal is $30 million. He’s grateful for the foundation’s role in helping the $5 million deal happen. “I can’t overstate the power of an introduction to an audience who is already familiar with and believes in the potential of focused ultrasound,” he says.
The ultrasound foundation would like to see a lot more deals like that one. So, earlier this year it launched a formal effort, called FUS Partners, to make more connections — not just for financing but other initiatives such as collaborative partnerships or academic-research opportunities, all with the goal of advancing the development and adoption of focused ultrasound technology.
“The field of focused ultrasound is at a tipping point, where it’s transitioning from a research and development activity to a commercial activity,” says Dr. Neal Kassell, who started the Focused Ultrasound Foundation in 2006 and is its chairman.
Focused ultrasound is a noninvasive therapy using ultrasound waves to generate heat and destroy targeted tissue. It also has potential in drug delivery. Kassell began the foundation to speed development of the technology.
FUS Partners program is a logical next step for the foundation, Kassell says. “Ten years ago, there were five manufacturers in the field. Today, there are about 65,” he says. That’s a good trend, but those companies are relatively small and not making money, he says. “So, the first step that we see is to get these companies to be successful. The next step is to effect some consolidation.”
Kassell came to Charlottesville in 1984 as a professor of neurosurgery at the University of Virginia School of Medicine. He co-chaired the neurosurgery department there for 22 years.
Partnering with experts
The person leading the partners program is Dr. Emily White, who joined the foundation as director of operations in 2016. Besides her training in general surgery — she’s a U.Va. School of Medicine graduate — White also has experience on the business side, having held leadership roles with several startup companies.
The first step was going to investors already involved in focused ultrasound to test their willingness to continue investing, White says. Then she started asking ultrasound-related startups about their growth plans and what help they need.
“Our first phase was to go to incumbent investors and say, ‘Can we talk to you about why you decided to invest in this space? And do you have an appetite for more?’” she says. “The companies were obviously already out there knocking on doors trying to get meetings with investors. I think what we brought to the table is some efficiency.”
White also tries to make other contacts. “I want to introduce companies to whoever is the world expert in whatever they’re trying to do,” she says. For example, a researcher trying to use ultrasound to create a drug delivery therapy for bladder cancer would benefit from talking with a company trying the same thing. In its 12 years, the foundation has helped fund research efforts in the U.S. and abroad, and its leaders know a lot of people. “Yes, they need money, but sometimes they need strategic partnerships,” White says.
The key hurdle is winning approval of focused ultrasound treatments from the U.S. Food and Drug Administration. So far the leaders in winning FDA approval are ultrasound-based thermal ablation applications that use heat to destroy targeted tissue such as tumors. HistoSonics is developing a system without heat. Its pulse technology destroys tissue, the company says, without generating heat that can damage surrounding tissue.
Another approach is to use focused ultrasound to deliver drugs. That use “is still in its infancy” in terms of development and FDA approval, White says.
Immunotherapy for treating cancer is another application, with research in one area of that field showing that ultrasound treatment actually was stimulating the immune system. White says a researcher in Italy, using ultrasound for palliative care for pancreatic cancer, found that, somehow, leaving part of the tumor in place produced a stronger anti-tumor immune response. Research shows that approach works on about 30 percent of patients, but they don’t yet know which 30 percent, White says.
So, the foundation works with every kind of stakeholder — drug companies, startups, researchers and the rest. “If your whole thing is to accelerate the adoption of the technology, then all of that matters,” she says.
A board of heavyweights
A key resource for White’s efforts is the expertise of the foundation’s 14-member board. There are plenty of heavyweights. Among them are William Hawkins III, retired chairman and CEO of Medtronic; Stephen Rusckowski, chairman, president and CEO of Quest Diagnostics; Andrew von Eschenbach, a former FDA commissioner and former director of the National Cancer Institute; and Dr. Frederic Moll, chairman and CEO of Auris Health, a medical robotics company that he founded. When White has questions she can’t answer about technology or financial issues, she can turn to a bevy of experts. “This is the genius behind the way Neal put this together,” she says.
Moll is the board member who led the round of investment for HistoSonics. His interest with that supporting technology — called histotripsy — goes back a few years to when it was being developed at the University of Michigan. After Moll learned that HistoSonics was having a hard time raising money, he met with the company’s leaders at a J.P. Morgan conference in San Francisco and agreed to help. “It’s something I’m personally excited about, both as someone in the field who wants to see focused ultrasound get as far as it can go, and I thought it was a great investment opportunity,” he says.
It’s a tough fundraising environment for young companies, Moll says. “Most people don’t have the time or the background or interest to really understand the nuances of a technology like this.”
In late October, the foundation held its sixth International Symposium on Focused Ultrasound in Reston. The four-day event, which included some of the top researchers in the field from the U.S. and abroad, covered the latest advances in the treatment of a number of conditions in fields such as oncology, neurology and women’s health. The conference also explored the technology gaps and commercialization efforts needed to bring wider use to focused ultrasound.
White went into that meeting with plans to gather all the CEOs into a room and ask them what they need from the partners program. She’s having those talks with other stakeholders, too, and wants next year to produce a more detailed picture of the state of focused ultrasound. “We want to be market responsive,” she says.