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1. Merck, J&J Back Stanford Student Incubator as Farm Team | Xconomy
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Merck, J&J Back Stanford Student
Incubator as Innovation Farm Team
Bernadette Tansey
10/3/13
Follow @tanseyverse
A veteran biotechnology reporter once
complained privately that covering the industry
was like watching grass grow—companies
seemed to inch by slow degrees toward products
and profits, sustained by a dwindling stream of
funding.
For an antidote to that dreary picture, consider
the swift developments at StartX Med, a life
sciences accelerator program founded by
Stanford University students in 2012. It’s a health
care-oriented offshoot of StartX, the original
student-initiated incubator program for
researchers and others affiliated with Stanford.
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The 25 startup companies that have passed
through StartX Med’s two accelerator classes
over the past year have raised a total of $81
million, and one company, Gauss Surgical, has
scored FDA clearance to market a medical
device, says StartX Med co-founder Divya Nag.
“Every one of the top 10 pharmaceutical
companies is a paying customer of at least one
StartX company,” says Nag, 22.
Now, StartX Med has signed up two New Jersey drug giants as its first corporate
sponsors: Whitehouse Station, NJ-based Merck (NYSE: MRK) and Johnson &
Johnson Innovation, a sort of talent scout unit of New Brunswick, NJ-based
Johnson & Johnson. The J&J innovation unit opened an outpost close to
Stanford’s medical school in June.
http://www.xconomy.com/san-francisco/2013/10/03/merck-jj-back-stanford-student-incub... 2/27/2014

2. Merck, J&J Back Stanford Student Incubator as Farm Team | Xconomy
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Both drug companies are pitching in financial support for the non-profit campus
accelerator—though the amounts have not been disclosed—and are eagerly
offering mentorship and feedback to the students, professors, and other
entrepreneurs who are launching companies under StartX Med’s guidance.
“The opportunity was too good to pass up,” says Dr.
Sachin Jain, chief medical innovation officer at
Merck. The drug giants stand to gain as well as
give.
Dr. Sachin Jain, chief medical
innovation officer at Merck
Jain’s innovation group at Merck is on the hunt for
entrepreneurs developing new ways to improve
health care or enhance the value of the company’s
drugs. That could include digital health technologies
to nudge patients to stick with their drug regimens,
or to monitor their own symptoms, Jain says.
Fledgling companies might also find ways to help
doctors make treatment decisions, by tapping into
the vast banks of stored medical data.
“This is the next frontier of clinical care,” Jain says. He said he was impressed by
Gauss Surgical’s invention, which tracks the amount of blood loss during surgery
or childbirth. He says the system could prompt surgeons to administer
transfusions.
Merck experts can help young, healthy entrepreneurs understand the complexity
of delivering health care to patients who may suffer from multiple disorders, take
multiple medications, and face difficult family and social issues that can interfere
with treatment, Jain says.
Diego Miralles, who heads J&J’s new California Innovation Center near the
Stanford campus, says his unit’s contributions to StartX Med will give the
company greater access to Stanford’s entrepreneurial culture, including the
students who are dreaming up ideas for new companies between their classes.
“It’s really innovation in its most raw expression,” Miralles says. “Young students
have irreverent ideas; they have not been shaped by life yet, so they can perhaps
think more freely.”
http://www.xconomy.com/san-francisco/2013/10/03/merck-jj-back-stanford-student-incub... 2/27/2014

3. Merck, J&J Back Stanford Student Incubator as Farm Team | Xconomy
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Nag herself co-founded a company, Stem Cell Theranostics, with three lab
colleagues when she was a 20-year-old Stanford sophomore studying human
biology. She was a student researcher with a lab group at the Stanford Institute
for Stem Cell Biology and Regenerative Medicine that created cultures of beating
heart cells derived from the skin cell samples of 150 patients. The co-founders
saw the cell cultures as a resource that could be used to test experimental drugs
for cardiovascular disorders, rather than trying the drugs out too early in humans.
Stem Cell Theranostics was one of the first startups admitted to the original
StartX accelerator program, which was founded in 2009. Nag says her young
biomedical company gained immensely from the accelerator session in 2010,
even though the other startups were consumer IT developers and other high-tech
innovators. To help spread the benefits, she and her business partner, Stanford
MD-PhD student Andrew Lee, decided to found StartX Med the following year to
meet the particular needs of other companies in the fields of digital health,
medical devices, and biotechnology.
Under the StartX umbrella, Nag
and Lee created a six-month
StartX Med accelerator program
and recruited volunteer industry
advisors in areas such as FDA
regulation and grant funding.
Startups admitted to the sessions
get free office space, instruction on
business formation and financing,
StartX Med Co-founder Divya Nag
and industry mentors. Like StartX
itself, StartX Med doesn’t ask for
any ownership stake in the companies it nurtures.
Experts from both Merck and J&J had already been contributing their time
informally when StartX Med started talks with the two companies about a
corporate partnership early last year, Nag says. The companies’ financial support
will allow StartX Med to hire more staff, expand its office space, and admit more
fledgling companies into the program, she says. For the accelerator’s second
session starting in January, there were 80 applicants for fewer than five slots.
http://www.xconomy.com/san-francisco/2013/10/03/merck-jj-back-stanford-student-incub... 2/27/2014

4. Merck, J&J Back Stanford Student Incubator as Farm Team | Xconomy
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“There was such a huge demand,” says Nag, who dropped out of college when
she started her career as a co-founder of new enterprises. She is now chief
product officer for the StartX organization.
Another StartX Med startup is Analytics MD, which analyzes data on the
workflow in hospitals to improve their efficiency. For example, it can track the
amount of time spent by hospital frontline staffers at each stage of patient care, to
detect bottlenecks that might increase costs or lower the quality of treatment.
Another of the accelerator’s startups, Medwhat, is developing a service that
allows patients to ask health questions in their own words, such as, “Why does
my stomach hurt?’’ The platform searches medical databases to come back with
answers.
For StartX Med participants and alumni, the new link to two major pharmaceutical
companies could open up a host of opportunities. Miralles says Johnson &
Johnson’s California Innovation Center will be looking for talent in drug
development, medical devices, and health IT. It’s possible that some graduates of
the StartX Med program might be invited to join the Janssen Labs incubator
program at San Francisco’s Mission Bay complex that is being set up by J&J unit
Janssen, Miralles says.
Both Merck and J&J also have venture capital arms that might consider making
investments in the StartX Med companies, the executives say. These startups
already are candidates for investments from the new Stanford-StartX Fund
announced this month, through which Stanford University and Stanford Hospital &
Clinics will join venture firms and angel investors in early financing rounds for
startups that emerge from the StartX and StartX Med programs.
Meanwhile, Stem Cell Theranostics, the company co-founded by Divya Nag,
Andrew Lee, and Stanford professors Robert Robbins and Joseph Wu in 2010, is
pulling in revenues by supplying its beating heart cultures to the big drug
developer Gilead of Foster City, CA, and two other large companies that also use
them for testing, but don’t want their names disclosed. Because the startup was
already reaping some revenues, it was able to bypass the step of seeking initial
financing from angel investors and retain a greater ownership stake for its cofounders, Nag says. Stem Cell Theranostics is just now raising its seed round of
funding from investors.
http://www.xconomy.com/san-francisco/2013/10/03/merck-jj-back-stanford-student-incub... 2/27/2014

5. Merck, J&J Back Stanford Student Incubator as Farm Team | Xconomy
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Nag says experienced industry folks tell her things don’t usually move so fast.
But, she asks, isn’t that the point of an accelerator?
“We’re all about speed,” Nag says.
Bernadette Tansey is a freelance journalist based in Berkeley, CA.
Follow @tanseyverse
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