“Growing New Cartilage” with Ben Holmes, PhD

Growing new cartilage in your knees is a dream about to become reality. Listen to Ben Holmes, PhD, co-founder of Nanochon, to learn about his promising technology. Shoutout to Richard Meiklejohn of M2D2 for the introduction.

Highlights:

• Sal Daher Introduces Ben Holmes

• What Problem Nanochon is Solving

• "... That's really what we're looking to do, is offer a solution that can be a much easier, much more cost-effective solution for providers, but also something that can really provide much better short and long-term outcomes for patients, and, ultimately, make the knee replacement obsolete..."

• The Solution: What it is, and How it Works

• "... We're seeing much better repair, and we're doing it with something that's an easy-to-use, off-the-shelf product..."

• What is I-Corps?

• Future Funding Plans

• Names and Numbers

• Ben's Entrepreneurial Journey

• Advice to the Audience

ANGEL INVEST BOSTON IS SPONSORED BY:

• Purdue University entrepreneurship

• Peter Fasse, patent attorney at Fish & Richardson

Transcript of “Growing New Cartilage”

Guest: Ben Holmes, PhD

Sal Daher: I am really proud to say that the Angel Invest Boston Podcast is sponsored by Purdue University entrepreneurship and Peter Fasse, patent attorney at Fish & Richardson. Purdue is exceptional in its support of its faculty, faculty that's top five engineering school in helping them get their technology from the lab, out to the market, out to industry, out to the clinic.

Peter Fasse is also a great support to entrepreneurs. He is a patent attorney specializing in microfluidics, and has been tremendously helpful to some of the startups, which I'm involved, including a startup, came out of Purdue, Savran Technologies. I'm proud to have these two sponsors for my podcast.

Sal Daher Introduces Ben Holmes

Welcome to Angel Invest Boston, conversations with Boston's most interesting angels and founders. Today, I'm really privileged to be talking to Ben Holmes. Say, hi, Ben.

Ben Holmes: Hey, how's it going, Sal? Hey, everybody.

Sal Daher: Ben is founder of Nanochon, N-A-N-O-C-H-O-N. I connected with him, thanks to Richard Meiklejohn of M2D2. It's the accelerator of UMass, where Nanochon and Ben Holmes are star pupils. Richard was very kind to connect us, and I'm very excited about speaking with Ben, who is physically in Washington DC, but he went through the accelerator here, and he's working on a problem that has implications for everyone, so I think this is a very interesting topic. Anyway, Ben, take it away. What problem is Nanochon solving?

What Problem Nanochon is Solving

Ben Holmes: Yes, absolutely. Thank you, Sal. Nanochon is focused on treating focal cartilage defects in joints, and we're starting with knee as the first joint we want to address. What focal cartilage defects are, is they're essentially potholes that form in the cartilage surface of the joint, and they can be the result of a traumatic injury, but they're also very commonly associated with the moderate to severe stages of osteoarthritis.

Osteoarthritis, very common problem. Really has a very deleterious impact on people's lives. As that disease progresses, cartilage loses its ability to stay durable. Once that happens, the cartilage degenerates, and then you get these potholes that form. That's also important because it's generally the point at which the disease becomes very symptomatic, so really causing people a lot of pain, and impact on their daily lives.

That's also the point at which people seek treatment. Once osteoarthritis is diagnosed at that stage, not that there's really good early interventions either, but once you have a big pothole, it's not going to heal on its own. Those people really require a surgery, in order to adequately address it. There really isn't a good go-to solution these days clinically.

When I say, a good solution, I mean something that truly gives people a full return to their quality of life, but also something that really halts the degeneration. Really, what you're finding now with existing treatments is, the worst ones will last for maybe one or two years before the disease progresses again. The best ones, typically, last for about five years. Really, the only option after that is, either be on pain meds for a very long time, or get a knee replacement, so a total joint replacement surgery.

"... That's really what we're looking to do, is offer a solution that can be a much easier, much more cost-effective solution for providers, but also something that can really provide much better short and long-term outcomes for patients, and, ultimately, make the knee replacement obsolete..."

That's really what we're looking to do, is offer a solution that can be a much easier, much more cost-effective solution for providers, but also something that can really provide much better short and long-term outcomes for patients, and, ultimately, make the knee replacement obsolete. Of course, that would be many years after treatment, but that's the ultimate goal here.

We are focused on treating younger and more active patients first. Our ideal first patient is not someone who is a candidate for knee replacement, but somebody, as I said is starting to have serious pain for the first time, is diagnosed with a focal defect, and we have what we feel like is a much better treatment option, than the things that are done today.

Sal Daher: Excellent. Arthritis is an immune disease, but it's also highly associated with age, because your immune system tends to go haywire as you age. Basically, as you get older, a lot of people start having trouble with these potholes in their joints, and the cartilage just wears away. This is a topic of tremendous interest to me, [chuckles] in my 60s and the second half of my 60s.

I feel it, every time that if I step the wrong way, I get a little pain until I warm up. I think my cartilage is getting thin. I welcome and I look forward to a potential good solution to this. Can you explain how your solution, how it works? What it is and how it works?

The Solution: What it is, and How it Works

Ben Holmes: Yes. Absolutely. The actual product itself, if you were to be holding one at your hand right now, it's essentially a coin-sized implant. It's a flexible patch, roughly, with the thickness of cartilage. We also have a couple thicknesses, so it could also go a little bit to bone, because some bone loss and degeneration is also typically associated with these lesions.

We're talking about the devices will come anywhere from 2 millimeters thick, potentially, up to 10 millimeters thick. Basically, a flexible coin-sized implant, which can be inserted into the knee, and then in a standard arthroscopic procedure, can be used to fill in the pothole. That's really what the device is, and what it's doing in the short term. Really, the beauty of it is, what's going on inside the implant.

The technology is really based on two key components, the material itself, and a manufacturing process. The material is a proprietary polymer composite, but the main component of it is a biodegradable nylon. This composite, actually, has a highly organized micro and nano porosity. It's like a sponge, but it's actually highly aligned, and it mimics the collagen bundles that exist in cartilage.

That gives the material cartilage-matched mechanical properties, and then it also acts as a really good bioactive substrate for cell growth, and the development of cells into cartilage tissue. Then, the other component of the technology is 3D printing. I do want to be clear upfront that we're not using 3D printing to do a patient-specific device. We really envision this being a standardized off-the-shelf product, but 3D printing is a very cost-effective and efficient way for us to take this material, and manufacture it into a complex pore environment.

Basically, the 3D printer allows us to print this grid shape. Then, as it prints layer-by-layer, it stacks the grid. You end up with this very well-organized, interconnected structure. That basically allows the body to grow into the implant very, very quickly. This is actually a really classic challenge in biomaterials, and scaffolding approaches for tissue engineering. It's a challenge that's uniquely plagued cartilage regeneration as well.

People will develop very good micro or nanomaterials that work well in two dimensions. They work well in a petri dish experiment, but then when they try to scale that up into an implant, and do this in an animal model, or even sometimes in humans, the body doesn't respond to the material in the same way. For us, 3D printing allows us to take that material, our material, and create an environment that the body responds to, and can interact with very quickly.

What we've seen in a number of our experiments is, you get this interaction of cells and material very quickly. You see it throughout the volume of the implant. That's really what's critical. Then, you also see it with native cell populations. What I mean is that, we don't have to pre-seed or pre-culture our material with cells in a laboratory environment. We're seeing this rapid cell migration and interaction, and cartilage development just with the cells that are at the implantation site.

That's really one of the key innovations of what we're doing is, we've been able to achieve a really high level of bioactivity, and a really high fidelity with the cartilage that we regrow, with something that as a product is totally shelf-stable, and an off-the-shelf product. That's really unique in this space right now. Those more invasive interventions that are done prior to knee replacement, really, are cadaver tissue grafting, and cell therapy products.

"... We're seeing much better repair, and we're doing it with something that's an easy-to-use, off-the-shelf product..."

It's the delivery of a live tissue, or live cells into the lesion, to try to get some repair. We're seeing much better repair, and we're doing it with something that's an easy-to-use, off-the-shelf product. That's really important because, one, we're able to dramatically lower the cost of this treatment. That's something that really will make it accessible to everyone, not cause potential problems with the reimbursement and coverage process, and also be something that's easy for clinics to pay the material costs, and then do a high volume of these procedures.

Whereas right now, if you're going to get a tissue graft, or a cell product, you're diagnosed, and then the clinic has to source that treatment. The cell therapy products usually take one to three months. Cadaver tissue can take six months or more to source. What we're saying is, we've got something that can be sitting at the point of care in the store room, ready to be used just like any other consumable.

Just like a suture or a screw, or anything else that surgeon's already using. That's something that the surgeons really respond to as well. I'll just use cadaver tissue grafting as an example. A typical surgeon probably does a dozen of those procedures a year. Our clinician advisors think that they could easily do 200 Nanochons a year. It's really an opportunity for the surgeon to dramatically increase the volume through their practice.

As I said, for the patient, it's really making it accessible, and also really making it a much more feasible treatment. Instead of having to wait anywhere from months to a year to be treated, when you have debilitating arthritis, this is something that you could get in a matter of weeks after being properly diagnosed. Just huge advantages for both providers, and also for the patient.

Sal Daher: Presumably, you have fewer rejection problems, if you're not using human tissue, human-to-human problems, contamination problems, and all these kinds of things.

Ben Holmes: Yes. It dramatically simplifies the cost of goods and the manufacturing and delivery process. Yes, you're right, it also is just a much better safety profile compared to complex tissue and cell products.

Sal Daher: Let's revisit the material itself. You said there's a grid, and there's another type of material that the body absorbs, or wastes away somehow, and then the cells form on the grid. Is that how it is, or is it just the grid?

Ben Holmes: Yes, it's basically the cells grow on that porous character of the material itself, and then the grid further directs that alignment, and also has some additional signaling effects.

Sal Daher: Okay, so there are two types of material, the material for the grid, and then there's another porous material that's between the grids?

Ben Holmes: No, it's all one material.

Sal Daher: It's just one material? Okay. That material eventually wears away, or is absorbed in the body, or does it stay there as a matrix of the material that's formed?

Ben Holmes: Some of it does degrade, but it's mostly being integrated with the new tissue. What we're seeing on histology is basically something that looks like cartilage, but it's a mix of what's left over material, and new cartilage.

Sal Daher: Fantastic. You're growing new cartilage, and the evidence you have for this is from implantation in mice, in goats, and in horses.

Ben Holmes: That's right. We basically-- It's very typical for implantable medical devices. You go through this stepwise development process, where the small animals just really, like I said, that's your opportunity for the first time to see how this interacts in a complex environment, because in vitro cell culture experiments are usually extremely targeted. You're probably only working with one type of cell, and it's really a very simplified environment.

The small animal, it's your first opportunity to see how does this interact in a complex environment, you can get a baseline for what the effects are. Then, large animal experiments are extremely important, especially, for orthopedics, because that's what the FDA wants to see ahead of using human trials, and it's certainly what any experienced clinician that's going to do clinical trials, wants to see large animal data.

In the goats, we were able to do an iterative experiment, where we had a couple of different versions of the implant we were looking at. Then, the horse study really was the rigorous efficacy test of what we intend to treat human patients with.

Sal Daher: Outstanding. This is a topic of great interest to me, as I said, because I'm in the second half of my 60s, and my joints hurt sometimes. I walk four to six miles every day. Maybe someday I'm going to be using Nanochon products on my knees. Hope not, but who knows? Fingers crossed. Let's talk a little bit about the challenge that you had from going from a scientific idea, to a product that is on track for clinical trial next year. Explain to me a little bit that process and how-- I understand you went through I-Corps, and they helped you mature your idea.

Ben Holmes: Actually, we went through I-Corps the same year that I graduated 2016, and--

Sal Daher: Step back, and tell the audience who may not be familiar what I-Corps is, please.

What is I-Corps?

Ben Holmes: Absolutely. I-Corps is the National Science Foundation's Early Stage Accelerator. Sometimes they even call it a pre-accelerator. The idea of this program, and many other federal agencies, and also other accelerators and incubators have adopted the model. The idea really is that, it takes people that are in the company ideation phase. You haven't typically already formed the company.

It really focuses on taking inventors and technical background people, who have developed the idea and the technology, and teaching them how to think like an entrepreneur, and how to really build a business case that supports a proper application of the technology. I think the clearest way to understand that is one of the requirements of I-Corps is that, you actually have to go out and do 100 in-person customer interviews. These interviews are not a sales pitch. You don't go and plop down your product in front of somebody, but the idea is really to talk to the people that you think are your potential customer, and just really engage them in a dialogue, and understand what their pain points are.

I think in our case, the critical example of this was when we were first starting out, we assumed that this was going to be an alternative to the knee replacement. That we were going to compete with the knee replacement directly. Our idea of what the device would look like, while it was 3D printed, and using the same material, looked very different as a product. Our assumption was just, "Well, people don't want to get knee replacements. They're all these known issues, and so we'll basically make a better knee replacement."

Then, after talking to probably about 20 surgeons, which are knee replacement specialists, what we learned was, they don't want a new solution essentially. They're very, very good at doing knee replacements. From their perspective as clinicians, the outcomes are good for the geriatric general population that's getting them. They said when pressed that, they'd consider using new technology, but there are extremely high thresholds for what would basically incentivize them to change.

I think part of that is, because knee replacement and hip replacement have a lot of, both training expertise and also equipment invested in them, and the surgeons are really, really good at doing a lot of them a year. It's really frankly, especially for big hospitals, it's a big money maker. The incentives to do something other than a knee replacement just really weren't there.

That's when we pivoted, and started talking to surgeons in the sports medicine area. For those who aren't familiar, sports medicine, it's still very much orthopedic surgery, but you're really talking about specialists, primarily arthroscopic specialists, so they're doing minimally invasive procedures under camera guidance. They are really attempting to treat these injuries, primarily, the soft tissue and in joints sooner, much close to the point of diagnosis, and in sort of a -- We define it as a younger and more active patient population, but that's really anyone from ages 20 to 65, is what's considered a younger and more active population.

They're really looking for ways to, not just allow them to be mobile, but allow them to continue to exercise, to continue to play sports, to continue to work. We're talking about people that really don't need just a marginal return of function to their knee, they need full return of function to their knee. Those surgeons, really, at the time, and continue to be really definitely searching for better solutions for focal cartilage defects.

That was really what we learned was that, they're primarily treating these with surgical techniques, which don't have very good short or long-term outcomes. Then, as I touched upon, there are some alternative treatments now just the purely surgical, but they are things that are, again, because of their associated cost, because of the difficulty, and even in issues with the workflow, more complicated, more time-consuming workflows that eat into procedure time, or the ability to do more procedures.

All of those are really affecting how the sports medicine surgeon think about their practice, and think about what they want from a solution. That's really why we decided to, for a variety reasons, we sussed all those reasons out over the period of the program, and doing a lot more interviews in sports medicine, really had it pivoted in that direction.

It shows to rethink the product as well. I think that was really critical. Basically, turning it into this. This sort of a arthroscopically-administered patch that can address localized cartilage damage, rather than something that might look like a knee replacement, or a partial knee replacement. I think, for us, that was really a critical change in our path. Since then, we've been really dedicated to sports medicine.

The enthusiasm both from surgeons in the space, and also our potential strategic partners down the road, has grown, because again, there continues to be lack of good solutions, and a real opportunity for something like Nanochon to make a big impact in that space.

Sal Daher: Awesome. Awesome. Scientific founders frequently have a hard time gauging how far from the market their product is, or even how far from working. [chuckles] I think this discipline is really outstanding. I'm sure that you have a great deal to learn as you go through clinical trials in humans. This is very exciting. Do you want to talk a little bit about how you've been funded so far, and what your future funding plans are?

Future Funding Plans

Ben Holmes: Yes, absolutely. I think we had a pretty-- Well, I think it's a pretty typical med tech kind of funding story. When we first started the company, we got a little bit of grant money. The NSF I-Corps program does come with some money as a grant. Then we also got a small research grant from an orthopedic foundation, that's what allowed us to do that initial rodent study.

Then, after that, we got an SBIR from the NSF. SBIR is a term that's, I would hope, very familiar to anyone who has already developed a med tech company, but for those that aren't familiar, it's the Small Business Innovation and Research Grant Program. All of the federal agencies are mandated to have some kind of an SBIR program, but the NIH and the NSF are major funders of biotech and life sciences.

We ended up getting that funding from NSF. Then, after that, we were gearing up to do our first institutional raise. I mean, really going after professional investors, and the pandemic happened. We had just started to ramp that up at the end of 2019, and then everybody stopped returning phone calls in early 2020, but I think the fortunate thing, looking back on it is, being an early-stage company, we didn't have a very big burn-- We virtually had no burn rate, because we weren't renting space. We didn't have staff. We didn't have any ongoing projects. We didn't have ongoing clinical trials that we had to hold or cancel.

Sal Daher: Oh.

Ben Holmes: We weren't going into a sales cycle either. It's not like we had a product we were actively trying to sell that all of a sudden, all the hospitals, basically, shut down everything but essential work and COVID-related work. We were basically able to just wait it out. I think, psychologically, that was very stressful, but the business actually was able to, like a fast, nimble little boat, navigating the waves.

Towards the end of 2020 when investors started to poke their heads out again, and we resumed some of those conversations, we quickly generated a lot of traction. Then, by the spring of 2022, we had a lead investor, and then by the end of the summer, we were able to pull together our seed round. That's the funding that's really been carrying us to date, and has allowed us to, as we talked about, really do that equine trial to really look at really showing efficacy, and then also, has allowed us to do a lot of other essential things ahead of our first human clinical trials.

We were able to set up and establish manufacturing, have documented manufacturing protocols, build our quality system, build our history file. Also, do a lot of work on the regulatory side. We actually got FDA breakthrough device designation in early 2022, and also continue to do other things like our patent work, a little bit of work on reimbursement strategy. All those things that start to actually be really important for pushing the device forward, not just from a regulatory standpoint, but potentially, from a commercial standpoint.

Really allowed us to really build up the company very quickly. Then, now we're at the point, where we're getting ready to do our first human trial, and because we were able to do a lot of these key activities that you really need to have in place, we're now at the point where with additional funding, we'll be able to move very quickly into a human trial, and we're planning on starting that in the first quarter of next year. Hoping by the end of March of 2024, we will have successfully treated our first human patient.

Sal Daher: Outstanding. Do you care to put some numbers to this, and also put some names to your funding?

Names and Numbers

Ben Holmes: Yes, absolutely. Well, I'll go all the way back. The I-Corps Grant was $50,000. I'm actually not sure if that's still the funding amount, but I believe it is, or close to it. Then, the research grant was $39,000. That was from the Pediatric Orthopedic Society of North America. The SBIR was from NSF. Then, we also got some additional grant funding from Johnson & Johnson through their QuickFire Award Program. Then, the seed round ended up being $2.7 million in total.

Sal Daher: Oh, wow.

Ben Holmes: The UBA seed fund actually led the round, but we also had participation from Virginia Tech's funds. Another VC firm called Mountain State Capital was one of our major investors. Then, we also actually got a really sizable check from a company called BICO, which is one of the leaders in 3D printing technology for healthcare, and then the rest of the round was pretty typical gathering together of angels, a couple of angel groups. Mass Medical Angels is one of our investors in Boston area.

Sal Daher: Okay, yes.

Ben Holmes: Then, also got quite a bit of money just from surgeons investing individually.

Sal Daher: Okay, individual surgeons. That makes a lot of sense. That's validation from individual surgeons. Would you say again, the name BICO, how is that spelled? The 3D printing?

Ben Holmes: BICO, B-I-C-O.

Sal Daher: B-I-C-O. Excellent. Very good. You're looking now for some funding for the clinical trials which are ahead. That is outstanding. Very good. Let's see if there's anything else that you want to say about the founding of Nanochon, the problem it's addressing, and so forth. Because what I thought we'd do, I just do a very brief promo for the podcast, and then get a little bit into your entrepreneurial journey.

Why instead of being a highly remunerated scientist at one of these large companies, why you decided to start a company on your own? Is there anything else you want to say about the company at this point?

Ben Holmes: I guess, one thing that I just want to touch on, I think with anything in med tech and med devices, specifically, it's a marathon, not a sprint.

Sal Daher: [laughs]

Ben Holmes: It's a long and sometimes arduous road, but in an effort to maybe give aspiring med tech entrepreneurs a ray of hope here, there are these inflection points in value whenever you hit a critical milestone. I think what I found is that, any time I hit one of those milestones, the pace of how the company is developing, increases exponentially.

Even though things might seem like they're very far way off, or that it's going to take a very long time to get these companies off the ground, it really is almost, I feel like an exponential curve, in terms of speed. If you can really stay the course, and really be committed to it, you will see that progress, and it will be very apparent. It could be very gratifying as well.

I would just give those words of wisdom and encouragement to anybody who's thinking about doing this, or anybody who's doing it currently, and struggling. Especially, in the current funding climate, it's already difficult to raise money for med tech, and everything that's going on in the economy right now, is not making it any easier for sure, but if you've got a good idea, and if you've got really good technology, people will recognize that.

Sal Daher: Well said, well said.

Ben Holmes: Well, thank you. [laughs]

Sal Daher: What year did you go through the I-Corps program?

Ben Holmes: We did I-Corps in 2016.

Sal Daher: 2016, and we're recording in the summer of '23, so that's seven years ago. It's been a long road, but you've made a lot of headway. Very impressive.

Ben Holmes: Yes. Well, thank you very much. Appreciate that.

Sal Daher: At this point, what I'd to do before going on to how you got caught up in this whole business of founding a company, I just want to reach out to listeners and viewers, if you are finding this conversation of value, and you'd like other people to find it, do a couple of things. First, follow us on the streaming app that you use, or the podcast app that you use, because that means that content like this would show up every week, and then consider a review, and a rating of the conversation.

The rating says that this is good content, and a review, a written review, it doesn't have to be much, a few sentences, a subject line that is appealing. That says to the algorithm, "This is content that people care about," and it tends to get it highlighted. As a matter of fact, for you, Ben, the week that this launches, the day it launches, if you can arrange one or two reviews on the Apple Podcast app, it will guarantee, probably, 40%, 50% more downloads from people who are discovering. Not the regulars, but people who are discovering the podcast, because it gets shown more widely.

Ben Holmes: Got it. Well, I can definitely do that.

Sal Daher: That's a plug for the podcast. Now, let's say, how did you decide to do this full thing of starting a company?

Ben's Entrepreneurial Journey

Ben Holmes: [laughs]

Sal Daher: Why did it occur to you? A PhD in biomechanical engineering, you could have been earning a very nice salary at a large company. Why didn't you decide to just go that route, instead, you've decided to bang your head against the wall, seven years, labor really hard. How?

Ben Holmes: [chuckles] It's a question I still ask myself often, [chuckles] but, no, I think that this journey really started for me all the way back in undergrad. I did mechanical engineering at the University of Virginia for my undergrad, and I had a keen interest in biomedical engineering, and knew I wanted to do something in the medical space, but wasn't necessarily majoring in biomedical. One of the things that was really formative was, in my last year, we had a standard senior design class, as a lot of engineering programs do, but the professor actually brought in some of his former students to give lectures on different things, and focusing on professional development. One of the students he brought back was actually someone who had done a medical device startup.

They did a spin out from UVA, had gotten it funded. They were only like a couple years out of their undergrad, so very impressive person. They just talked about their journey in entrepreneurship, and working on this device when they were an undergrad in a lab, and not being able to get the idea out of their heads. Going to work for a company for a couple years, and just not being able to let it go, and deciding they want to do this startup.

I heard them speak, and I thought, "Wow, that just seems so exciting. That seems like such a unique thing to do with our talents, as engineers and scientists and technical people, but I don't have any good ideas. I guess I'll never end up doing that." [laughter] That quite literally was the thought I had. I let it go. I didn't really think about that moment again for a while.

I also left undergrad. I knew that maybe I would go back to grad school one day, but after four years of engineering, I was really sick of school, and I just wanted to go out and work. I actually did go and I worked for a big design build firm that basically did big construction projects like office buildings, infrastructure projects.

Sal Daher: Wow.

Ben Holmes: My plan was, "I'm going to work for a company like that. I'm going to goof around, make a bunch of money, and then maybe I'll think about going back to grad school in five years," was my plan. Probably, after about a week on the job, just hated it immediately. It was not what I wanted to be doing with my life. I could barely stand to be in that office. No fault of that company or anyone there. I think it was very much a personal thing.

I thought, "I better accelerate this plan I have to pivot, and go into the medical field." I didn't really know exactly what I wanted to do, but tissue engineering was one of the things I was really interested in just academically. It just seemed like really the forefront, and the next generation of medical technology. I was lucky enough. Of the programs that I applied to, one of them had a really, really good investigator working on tissue engineering.

That was Dr. Yin-Lin Shen at George Washington. I ended up accepting and going to school at George Washington. Started as a master's student. Again, I had this plan of, "I'm going to get a master's degree, I'm going to work for Medtronic, or Stryker, whatever." I had the opposite experience. I ended up surprising myself because I really fell in love with the work.

I found it so interesting and so enjoyable. I was very, very lucky that Dr. Shen was happy with the work I was doing, and so said, "I absolutely would love it if you stayed, and became a PhD student." That put me on this path of research and development. Then really, it was when I transitioned from master's to PhD, that I really got exposed to entrepreneurship again.

At that time, the university was really starting to invest in, and build up their resources for entrepreneurship. Fast forward to today, GW is nationally recognized as one of the best universities for graduate entrepreneurship. At the time, they were just building those capabilities. It was amazing because what often happens is, they brought in really phenomenal people.

They started to structure really great programs, but there was nobody competing for those resources. I wanted to meet with the Vice President of Entrepreneurship. He had an open calendar. If I wanted to meet the Director of the Tech Transfer office, he was available. I was able to really get a lot of resources and mentorship, and it really molded me to someone who I saw entrepreneurship as something that was possible.

I was going through this process of really just talking about developing, and licensing the technology I was working on. I remembered all the way back to that experience in undergrad, and having that moment of like, "Wow, I would really love to start, and lead a company, but I don't have any good ideas." I now was at a point where I had put a lot of work into developing my skills and my creativity, and I had good ideas.

I thought, "Wow, may maybe this is something that really is possible, and something that I could really do." I think, from there, my co-founder in the lab, who I'd been working on a lot of similar projects with, also was on board for this idea of doing the startup. I think we've always had a natural relation, because he actually has a like for many scientists.

Sal Daher: Give us the name of your co-founder then.

Ben Holmes: Oh, yes, of course. My co-founder is Dr. Nathan Castro. We met because we both were working in the same tissue engineering lab at George Washington. He also had an interest in entrepreneurship.

Sal Daher: Is he full-time with the company also?

Ben Holmes: He's full-time as the Chief Technical Officer.

Sal Daher: Awesome. Shout out to Dr. Castro.

Ben Holmes: Yes, absolutely. He is indispensable. Every time we have to go through a design review, or update the quality system, or do onsite training with our contract manufacturer, I'm endlessly thankful for him, and his involvement with the company. I think that's what I was getting at is that, I think we actually had a very natural partnership and collaboration, because I always wanted to be the one talking about the business, and talking about the company and pitching the company, and he really likes doing the science and the engineering.

I also think that, from a personality perspective, it was always a great partnership. I think that's also something that's really helped the company succeed, that I think we've always been able to really support each other-

Sal Daher: Excellent.

Ben Holmes: -and really have collaborative efforts, as opposed to the horror stories you hear about co-founders hating each other, and really growing to resent each other, or fighting over roles or dominance or whatever. I think we're very lucky that we haven't had those issues.

Sal Daher: When it works out, it's really powerful. It adds to the likelihood of success for the startup.

Ben Holmes: Yes.

Sal Daher: Having a co-founding team increases the chances of success. Very good. Very good. At this point, is there anything else that you would like to convey to this audience of founders, of angel investors, about the experience you had? You touched a little bit on, gave us some advice to founders at the end of the first section, but if there's anything else that you want to say, perhaps, you could address investors?

Advice to the Audience

Ben Holmes: Yes, absolutely. I will say that, especially, with implantable devices like ours, it's a long road to, not just developing the products, but also to really getting to liquidity. In our case, we are what's called a PMA device, so that requires clinical trials, essentially, to get approved by the FDA. I think that can be viewed as a difficult, or a high-risk path, but I think the way you de-risk a path like that is, one, you really beat the heck out of the tech.

You really show that it can perform, and do what you think it can do. I think we've done a really good job of doing that with really rigorous experiments. The other way that you mitigate that risk is, I think, as I also talked about, you spend a lot of time talking to the customer, in our case, sports medicine surgeons, to make sure that you're really addressing a big need, have a big market. Our initial market just in the knee is $2 billion annually in the US.

Making sure that it's a big opportunity, and that there's a really clean line to adoption when you are going to market. Then, I think the other thing is really getting buy-in from the strategics as well. We're still a little too early to actually direct investment from strategics, but we did get a non-dilutive grant from Johnson & Johnson, and we are in their incubator.

We've also started to generate a lot of interest from, I'd really say all of the major strategics that are in orthopedics that are interested in sports medicine, and I think that we've also done a really good job of applying that rigorous customer discovery process to talking to those companies, and understanding what they're looking for, how they view the market. I just think we have a really great winner here.

There's a big potential upside when this thing does get through trials. Really, PMA devices have a path of liquidity that looks like a drug. You show really good clinical performance, you get FDA approval, and then you get acquired by one of those strategic stacks, you take the product to market. That's the path we're looking to replicate. We're hoping to have FDA approval, and be at that point of an acquisition sometime in 2027.

We're closer to 2027 than we're to 2016. I think, again, whenever I talk to surgeons, they really love what we're doing, and I've been asked multiple times if people can start using it now, I have to patiently explain, "No, we're not FDA approved, we need to get some clinical data, but definitely, would love to stay in touch with you." Then again, like I said, just the strategics also continue to really validate that, that they're looking for a product in this space, and also they're looking like a product with a profile of Nanochon.

Sal Daher: The regulatory consultants, what do they tell you is the budget, and the time for approval by the FDA?

Ben Holmes: Yes, if you look at just the trials alone, that's probably $15 million cost, and then additional funding to support the company and support other activities, we're planning on raising $4 million to cover this trial, and then up to $30 million in a Series A to be raised sometime at the end of next year. Once we have some clinical data to really cover the pivotal trials, and really carry the company through the rest of its life cycle.

[music]

Sal Daher: Right. Outstanding. Ben Holmes, Co-founder of Nanochon, I'm very grateful that you made time to be on the podcast, and to explain excellent work that you're doing, and to provide incentive and encouragement to other med tech founders out there that it can be done, despite all the obstacles. I thank you for being on.

Ben Holmes: Yes, it really was my pleasure. Thank you for having me on Sal.

Sal Daher: This is Angel Invest Boston. Thanks for listening, I'm Sal Daher.

I'm glad you were able to join us. Our engineer is Raul Rosa. Our theme was composed by John McKusick. Our graphic design is by Katharine Woodman-Maynard. Our host is coached by Grace Daher.