The Kepley BioSystems Story
Professor Chris Kepley and Terry Brady met while working for a technology company that had been struggling to translate science and innovations into competitive commercial applications for many years. Mr. Brady served as an external strategic consultant for fifteen years acting mostly as an executive coach and as an early board member during the transition to becoming a publicly traded company. Dr. Kepley headed up a nano-biochemistry group focused on fullerenes, or Buckyballs. They both came away from that experience with new insights into the nexus of invention and business practicalities. Professor Kepley was recruited and welcomed back into academia with the understanding that he had enterprise ambitions and became a tenured professor at the Joint School of Nanoscience and Nanoengineering (JSNN). Dr. Kepley, who earned both his PhD and MBA, was concerned about both business and academia as having structural and philosophical shortcomings.
Mr. Brady’s early background was on the commercial side of science, which served as the foundation for his subsequent, patented inventions driven by unmet customer needs. Often frustrated by the shortcomings of business processes, he gravitated further into the discipline and scholarship of academia. With skills honed in his patent research, Mr. Brady ultimately concluded that enterprise requires dynamic business scholarship and falls short, or fails, without it.
This friendship evolved during a dinner in which the two shared a vision for an alternative approach to the business of science. The two postulated that graduate science programs needed to do more to orient and ground PhD candidates towards entrepreneurship, especially for those students so inclined. They believed that with the right ideas it would be easier to teach business skills than to teach scholarship, and they recognized the importance of the university’s institutional framework for seeking grants to fund such endeavors.
In short, they envisioned having PhD candidates simultaneously matriculate toward earning their doctorate degrees, while developing world-class grant writing skills for preliminary funding and assuming leadership roles in startup companies with significant equity shares. At first, this particular aspect may not sound like a significant breakthrough, but it is. Young scientists are disillusioned far too often by the specter of operating within a corporate environment with limited, vague pathways for ideas to become products – compounded by the customary practice of signing away any rights (and prospective rewards) related to their creativity and scientific potential the day they are hired.
Thus, Kepley BioSystems was established, PhD candidates were identified, and invention and grant writing ensued. The business model encompassed Kepley acting first as the innovation incubator, followed by an independent product company poised for organic growth, and led by the first doctoral graduate. The initial grant submitted to the NIH was not awarded funding.
However, the second invention yielded early state funding and went on to be awarded an SBIR (Small Business Innovation Research) Phase I grant from the National Science Foundation (NSF) early in 2015. NSF SBIR grants require participation in a highly competitive program that encourages small US businesses to engage in Federal Research/Research and Development with significant potential for commercial success. In keeping with the NSF milestones, Phase I and IB funding coincide with the first two milestones intended to help recipients achieve proof-of-principle as a precursor to the more robust product development and business planning required to qualify for Phase II federal grant submission and consideration. Moving from the first to the second milestone in this process also affords an unparalleled synergy for the PhD candidates to apply and prove their research in defense of their theses and then graduating as company Presidents. The first test of the Kepley model is already accelerating toward market entry of the synthetic crustacean bait, leveraged by the US Government through the NSF program.
In fact, a small backlog of inventions has already been building for subsequent start-ups based on this model, while additional ambitious, promising graduate students willing to embark on new endeavors are identified and recruited. However, this NSF Phase II grant will be invested by one such capable, committed new doctoral graduate leading the effort, Anthony Dellinger. Dr Dellinger will be maintaining an adjunct relationship with JSNN and otherwise dedicated to full development of the first Kepley innovation. Additional grant efforts have been pursued for this technology to help secure any additional resources needed to achieve successful commercialization and provide a foundation for future organic growth.
Another significant benefit of this “science to business” model is in the development of grant writing skills that can be employed to obtain start-up and expansion capital. Grant funding provides non-dilutive resources in sharp contrast to the funding options typically available to start-
ups; whereby, venture and even “angel” investors usually demand large equity transfers while pressuring the founders to discount the value of the enterprise in order to further leverage their shares. Before seeking external and secondary funding, this Kepley BioSystems business unit will also undergo the development of a new identity as a new corporation. In that case, early outside investors could become (new) company founders at a later stage, when the ultimate market potential and company value have been further established.
Ultimately, the synthetic crustacean bait product, initially positioned as “OrganobaitTM” will address a $20 billion market – while building on a key component of the research and development phase. That is, the field work to validate the product is based largely on the pharmaceutical industry model for clinical trials. Specifically, the NSF Phase II development plan calls for hiring field trial monitors to oversee “in-the-water” testing of the bait. This will help to ensure the quality of the data necessary to optimize product formulation for an array of settings that characterize regional, environmental and species-specific customer needs. Upon product finalization, these “monitors” would be uniquely qualified to become field representatives responsible for marketing and sales support.
Also in keeping with the pharmaceutical industry framework, highly influential distributors and globally respected members of the culinary sector (whose businesses depend on reliable crustacean supplies) could be more readily identified and engaged in the refinement of the final product design. Indeed, there is a body of “crustacean thought-leaders” from fishermen to regulators shaping the practices and standards with regard to the industry and the environment, many of whom have already been consulted – and all of whom have been readily disposed toward the Kepley BioSystems product and keen to assist in its progress. OrganobaitTM is a product that replicates the biochemistry of decaying fish that mimics odorant-
based attractants for crustaceans.
Crustacean olfaction relies on groups of olfactory receptor neurons (ORN) arranged in clusters and housed in cuticular extensions called aesthetascs found on two, paired antennae. It has been previously shown that the magnitude of stimulation of these neurons in response to stimuli is indicative of the attractive or repulsive nature of the stimulus. The Kepley BioSystems product is an entirely synthetic material that can effectively mimic the attractant properties of bait fish, yet has been developed using no fish or other animal by-products. This synthetic bait not only replicates bait fish chemistries, but it also offers a controllable, sustainable, and ultra-concentrated formulation.
The Kepley BioSystems product is projected to be profitably manufactured and sold at a lower end-user cost than with established forage fish baiting techniques. This technology therefore addresses customers’ and environmental considerations, because it is sustainable, innocuous, cost-effective, and can be consistently available. In fact, the product should achieve broad acceptance once the most potent chemo-attractants are confirmed and delivery matrix solubility chemistries are finalized for use in widely different global crustacean ecosystems. Regulators and environmentalists will also have compelling reasons to support this product for its potential to help avert ocean ecosystem collapse from overfishing, especially using drift-net practices.