The start in the US is often a shock for German startups. Annika Pierson, COO of the German Accelerator Life Sciences (GALS) on the East Coast of the United States, knows that.
She says, “In Germany, startups have a lot of visibility and their number is not that high either. But we are sitting here in a building with 800 startups. Some companies are struggling and happy to support them. You are a small fish in a very big pond. ”
Pierson is Managing Director of the state-run German Accelerator Life Sciences (GALS) in Cambridge, Massachusetts. According to her Massachusetts is the world’s largest biotech hub. There are more than 675 biotech companies, including five of the National Institutes of Health’s (NIH’s) top six hospitals, the country’s premier US agency biomedical research. Here she wants to support with the GALS young German companies who want to gain a foothold in the USA.
Help with internationalization
The GALS goes back to an initiative of the Federal Ministry of Economics in 2012, when the first German accelerator was founded in Silicon Valley. Two years later followed New York, 2015 Cambridge. The federally funded program is different from traditional accelerators. There is no money, startups do not have to pay company shares in return, and there are no fixed courses that need to be taken. In addition, the startups GALS works with are often too far. According to Pierson, to make equity for an accelerator program.
Navigation system for surgeons
Instead, four to eight young companies are individually cared for and networked with experts and investors. This would have resulted in $ 200 million in investments and three exits, according to the COO. Amongst the startups that have found a new owner with the support of the GALS is Scopis, founded in 2010. The spin-off of the Charité and the Fraunhofer Institutes has developed a kind of navigation system for surgeons that works with augmented reality. The surgeon has a screen at the same time endoscope and MRI images in view. The Berliners worked together with orthopedic specialist Stryker one year after the accelerator program and the establishment of a US subsidiary, initially as a partner. Then the Americans bought the startup for an undisclosed amount.
Exits also reach the immunotherapy company Rigontec. In 2017 for over $ 500 million including milestone payments to the US pharmaceutical giant MSD. Rigontec has found a therapy that activates the body’s immune system to eliminate tumor cells. The adhesive specialist Adhesys from Aachen was also sold in 2017 to the German pharmaceutical company Grünenthal. It has invented a biodegradable and synthetic tissue adhesive for surgery that seals wounds and stops internal bleeding.
Without clinical data it does not work
Also in German startups, the message has arrived that without clinical data in the Digital Health area. “No trophy to win. A few years ago, there was a wave of digital logbook apps measuring and documenting without clear user benefits”, says Pierson.
But that was yesterday’s technology. Today, this is shifting towards diagnostics and software based therapies. One focus of the GALS is on startups in these areas. Akili and Pear Therapeutics are examples from the US for this trend. Akili provides a digital therapy for brain disorders that affect perception and thinking. Pear is working on a software-based therapy for the abuse of opiates.
Twenty four startups have so far visited the Life Sciences Accelerator, including Ada Health, which a health chat, Mimi Hearing Technologies, which compensates for hearing deficiencies, and researcher’s collaborative platform, Labfolder. Currently, Hemovent, developer of a portable artificial lung, the research portal Kairos and the implant developer Syntellics are guests there.
China open to Digital Health
But how attractive is the US life science startup market? Pierson is also increasingly seeing investments from China in the biotech, medical devices and digital health sectors.
“A few years ago, it was thought that this would take forever to catch up with China. But that was a mistake. In China, there is a very different openness to digital health and digital therapies. This has to do with the very different notion of privacy and privacy, but also with the lack of conventional diagnostics and therapies. There is a willingness to try new things,” says Pierson. Nevertheless, the US continues to be the most important market for life sciences startups.
Stefan Beerhalter, Vice President of the GALS in Germany, advises German healthcare and biotech startups with international ambitions to reach out to the USA as early as possible. Because the approval of technologies is becoming increasingly difficult in Europe.
Stefan Beerhalter expressed, “The US Food and Drug Administration is planning a simplified approval process, which could be of interest to young companies”. His colleague added, “Startups in the US also have very different financial opportunities to develop their products.” The road to investors is short. Google Ventures, for example, sits directly opposite.
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