March 7, 2005
Capital steps | How three companies use Maine Technology Institute funding to develop new products
By Sean Donahue
Betsy Biemann, the new president of the Maine Technology Institute, sees a big similarity between her organization and the companies it's charged with funding. Like many tech firms, MTI has made it through the shakiest days of its startup period and is poised for expansion, she says. To help guide that growth, Biemann wants to find new ways MTI can work toward the mission set down by the Legislature when it created MTI in 1999 ˆ to stimulate Maine's technology-based industries and create jobs.
But even as she looks for new programs or services, Biemann says MTI's biggest role will remain helping finance Maine companies through its seed grant and development award programs, which together have invested more than $8 million since 2000. "Those two programs are really the core of what MTI provides," says Biemann. "It's early-stage, very patient capital for research and development."
Thanks to a report released at the end of 2004 by the Center for Business and Economic Research at the University of Southern Maine, Biemann has numbers to justify her assessment of those programs. The report found that companies receiving seed grants and development awards added about 300 jobs a year in both 2003 and 2004, an 11% growth rate. Meanwhile, 24% of MTI-funded projects have resulted in products for sale.
But while the report offers a macro-level assessment of MTI's statewide impact, the numbers themselves don't show how the awards affect individual companies' day-to-day R&D process. To that end, Mainebiz decided to look at how entrepreneurs and companies in different markets, and at various stages of their own development, are using MTI funds.
What goals are they trying to accomplish with the state's R&D money, and where do they plan go next to turn an idea into a commercial product or self-sufficient company?
Planting a seed
First, though, it helps to have an overview of the two programs: In terms of number of awards (though not dollar value), seed grants are MTI's largest program. Awarded six times a year, the $10,000-or-less grants are designed to support targeted activities ˆ a patent application, prototype development or initial market research ˆ early in the R&D process. On average, MTI receives about 40 seed grant proposals per round, ultimately funding between 30% and 50% of them, says Seed Grant Program Manager Elizabeth Crabtree. Award winners must match the MTI grant on a dollar-to-dollar basis, with entrepreneurs often raising money from outside investors or friends and family. (See p. 33 for a list of MTI's 2004 seed grants.)
Since seed grants are such early-stage capital, it's understood that not every award will result in a viable product or business, Crabtree says. Instead, the grants help entrepreneurs or companies determine whether it's worth it to continue pursuing a project. "Seed grants are really the first step ˆ it sounds like a good idea, let's do more testing to find out if it does have legs and can walk," says Crabtree.
If the project continues to show potential, many seed grant companies go on to apply for an MTI development award, which is intended to help fund complex, multi-stage tasks aimed at bringing a product or service to market. "Development awards are basically designed to take product-development risk," says Joe Migliaccio, MTI's development award program manager. "It's a set of money that typically provides bridge funding between R&D and actual sales."
Because they address larger goals, such as advanced market research, product beta testing or assistance with regulatory submissions, development awards are substantially larger investments than seed grants, ranging between $30,000 and $500,000. MTI gives out development awards three times a year ˆ characterized as far-to-market development awards, for companies more than three years away from a commercial product, or near-to-market awards for those within three years of commercialization ˆ and receives on average 18 applications per round. Of those, MTI typically funds about six, says Migliaccio, with an average $298,000 award. (See page 33 for a partial list of MTI's 2004 awards.)
Larger investments also come with more conditions. For starters, the development award is doled out in installments, determined by recipients meeting pre-established project milestones. And unlike the seed-stage program, development awards are not grants. If the project results in a commercial product, recipients must begin paying back MTI's money within one year of making its first sale. "We feel we get higher-quality applications when we require payback," says Migliaccio. "They treat it more like their own money, when, as venture capitalists like to say, the awardee has some skin in the game."
The following case studies offer a look at how MTI programs are helping three different recipients ˆ an entrepreneur, a startup and an established company ˆ play the technology development game.
Alteva LLC, Orono
Founded: 2001
Product: A Neighborhood Electric Vehicle powered by a hydraulic motor
MTI funding: $10,000 seed grant, 2005; $10,000 seed grant, 2004
Bill Stevens is the stereotypical American inventor. He had his eureka moment under mundane circumstances ˆ namely, while putting together a wet bar for an outdoor spa in the mid-1990s. He then spent years tinkering with his project, at one point working in an unheated shed behind the hardware store where he was employed part-time.
His big idea: a small electric vehicle powered by a hydraulic motor. Instead of using an electric motor to turn the vehicle's wheels ˆ like a typical electric vehicle ˆ Stevens is using a small electric motor to power a hydraulic pump, which in turn circulates fluid through a hydraulic motor that drives the wheels. The hydraulic drive train, he says, offers more torque than an electric motor alone. Using that concept, he hopes to create a new type of Neighborhood Electric Vehicle, an alternative to regular cars that is legal to drive in most states as long as it has basic safety features such as lights, seat belts and turn signals, and is limited to a maximum speed of 25 mph. Stevens envisions the NEV being used at resorts and retirement communities, or in rental fleets in tourist destinations; he also plans to develop a utility model for campuses, military bases and municipalities.
Stevens, operating under the name Alteva LLC, in January received a $10,000 MTI seed grant to build a chassis to test the concept. That award followed another MTI seed grant he received last year to develop the hydraulic power train. Now, after four years of development and computer modeling, he's ready to road test those equations. "Engineering only goes so far," says Stevens. "Then you just have to build it and find out how it works in the real world."
If not for a coincidence, Stevens likely would not be testing the Alteva NEV on Maine's roads. A Michigan native, he was struggling to find technical and financial support for the project in his home state. An engineer at hydraulic motor supplier Parker Hannifin (Stevens' design uses as many off-the-shelf components as possible) suggested Stevens contact the engineer's former University of Maine electrical engineering professor, Tom Christensen, for advice about the project. After a phone conversation, Christensen, who also is the associate director of the university's Advanced Manufacturing Center, invited Stevens to Maine, and in March 2003 the two met and began discussing research assistance offered by the state.
Stevens moved Alteva to Orono a few months later and began applying for his first MTI seed grant. The move allowed him to abandon his lone-inventor-in-the-shed approach to development: Since arriving in Maine, he's partnered with Eastern Maine Community College in Bangor, enlisting students in the electrical and automation program for technical assistance and moving the project to EMCC's space inside the Advanced Manufacturing Center. EMMC student Phil Harvey has been working on the Alteva power train as his senior project since last October, and in March an entire class will begin helping Stevens build the chassis. "I'm not an engineer, so working with students allows me to be the project manager, which is really where I need to be," he says.
That's because Stevens hopes to start commercial production as soon as next year, but he knows that meeting that goal will require he do less tinkering and more business development. The chassis he's building ˆ a combination of homemade frame and auto parts salvaged from a junkyard ˆ is really just a "rolling workstation," he says. He plans to begin working with the EMCC students this spring to develop a true prototype chassis and body that can be "dolled up," as he puts it, to attract potential investors.
Along the way, Stevens says it's likely that he'll take advantage of a new piece of the seed grant program that allows companies to apply for a third and final grant of $5,000 to perform more market research for his NEV. After that, though, he believes private investors will be key to further development, since he's still far from answering questions about production techniques and component costs. Such details, he believes, would be required in an MTI development award application, and he'll need a financial bridge to help get him there. "Twenty thousand dollars [in seed grants] doesn't go too far when you start a program like this," Stevens says. "But a development award is such a huge leap."
Intelligent Spatial Technologies, Orono
Founded: 2003
Product: iPointer, a GPS-enabled handheld device and content delivery system
MTI funding: $208,000 far-to-market development award, 2004; $7,000 seed grant, 2004; $10,000 seed grant, 2003
Intelligent Spatial Technologies has the kind of story that Maine's tech industry boosters love to tell. A UMaine graduate student working on a research project sees an idea with commercial potential. He applies for a patent and gets accepted into Orono's Target Technology Incubator. A new startup is born. Eventually, the company could begin selling its product or service and providing well-paying jobs.
The day-to-day reality, however, isn't quite as seamless as the story, says IST founder Chris Frank. For IST, which is developing a GPS-enabled handheld device that lets users point toward buildings and other landmarks and receive information about them, spinning a research project out of academia has been harder than expected. "There are lot of potential markets, but the question is finding the right market," says Frank. "That's been the difficult part, and it's a lot more difficult than most people think when doing a technology transfer from the university."
Answering that market question is the goal of IST's $208,000 far-to-market development award, which the company received from MTI last spring and matched with federal grant money through the University of Maine. The company already had done general background research on potential markets for its device, called iPointer, thanks to an earlier seed grant. But that research turned up dozens of potential applications ˆ ranging from self-guided college tours to assistance for visually impaired travelers ˆ most of which seemed too small to support a full commercial rollout. "We need to find a money-making market and then come back to those other things," says Frank.
Now, IST is using its development award to research the market Frank believes can be a lucrative launching pad for the company: large theme parks such as those in the Disney empire. Frank envisions guests at a Disney park paying, say, $15 to rent the device for the day, then using it to guide themselves through the park. The iPointer could identify the various rides, give out information on wait times and suggest restaurants and shops to visit, all while giving Disney valuable data on how visitors flow through the park.
Since it's a development award, the process is broken out into specific milestones that IST must meet. Its first milestone is to finish building its prototype and defining its market strategy. At this point, the cost of equipment for the prototype is negligible ˆ about four percent of the total $416,000 budget ˆ while paying consultants for market research and other commercialization assistance accounts for 39% of the total budget. Second, IST must design a beta test, while also landing some of the partnerships it needs to crack its chosen market. For example, all of Disney's corporate applications run on SAP software, says Frank, which means IST is adapting iPointer's content delivery application to work on SAP. The final milestone is to complete the beta test and have a signed agreement with its first customer ˆ if not Disney, then another company.
But since this is an 18-month project, expected to finish this fall, Frank says the company already has seen expected milestones shift as ongoing research and development reveals new information. For example, IST is moving faster than expected in the technical aspects of its prototype development, having already sent a unit out for testing in mid-February. But the company is further away from achieving some of its market goals, Frank says. "That's the way it is in this environment. Things are going to change, and you're going to learn a lot about what works and what doesn't along the way," says Frank. "You're not going to be right on your milestones as you envisioned them a year ago."
So far, MTI has been flexible with IST, says Frank, recognizing that the details of milestones can change slightly as long as the company is still on track to meet the bigger-picture goals. IST plans to run a beta test for the iPointer in May at the UMaine campus in Orono, offering it as an interactive tour guide for prospective students. That trial will help IST get feedback from actual users and test how well its database and wireless content delivery applications work.
Those results also will put IST in a better position to land a paying customer like Disney, says Frank ˆ which is important for more than just potential revenues. "A large customer is key to getting private investment," says Frank.
Maine Standards Co., Windham
Founded: 2001
Product: Lipid control product for biological laboratories; the company's main product is calibration verification test kits
MTI funding: $409,000 near-to-market development award, 2005; the company also received a $98,000 near-to-market development award in 2003 to develop a lipid calibration verification test
Every day, laboratories across the country test thousands of human blood samples for one of 120 known components such as cholesterol, glucose or sodium. To make those tests accurate, though, labs have to ensure the machines they're using are properly calibrated.
Enter a group of lab supply companies, which offer materials that help labs establish standard ranges for testing equipment. The process starts with a so-called calibrator, which is a sample of a specific compound in a blood-like solution that allows labs to calibrate their equipment. Then, each day ˆ or at the start of each shift for large labs that run tests around the clock ˆ the lab must run a so-called quality control material through its testing equipment to check that the equipment is indeed reporting normal and abnormal levels for the compound being tested.
Maine Standards Co., a four-year-old Windham-based company, offers a third piece of the calibration process ˆ calibration verification test kits. Every six months, state and federal laws require labs to demonstrate that their equipment is properly calibrated, and Maine Standards sells a test material and provides the subsequent data analysis that provide that confirmation.
But with help from an MTI near-to-market development award, Maine Standards is trying to create a new product that founder Tom Happe ˆ a 20-year industry veteran who previously founded Casco Standards and sold it in 1995 ˆ says could double the company's revenues within five years. "We're in a niche here. Customers use our calibration verification products twice a year," says Happe. "We want to get into the control market, which would have customers using our products every day, two or three times a day."
The chance to break into the control market happened by accident. While developing a lipid calibration verification test in 2003, Maine Standards noticed that the lipid compound it was using was remarkably stable, says Happe. Lipids are notorious for starting to break down in about a day or two when not kept frozen, says Happe, but Maine Standards noticed that its lipid compound had stayed the same after several weeks at room temperature. The company immediately patented the compound and began thinking of other commercial uses.
Maine Standards imagined a lipid control product that was more user friendly than anything currently on the market. Today, lipid controls typically are shipped in a freeze-dried form, offering small quantities that the lab must reconstitute by mixing with a liquid. Once the compound is unfrozen, it must be used within a week. But with the better stability of its lipid, Maine Standards wants to create a lipid control that can be kept in solution in a regular freezer or even a refrigerator, and that could last at least 30 days.
The problem, though, was that Maine Standards didn't have the cash flow to support the development project. The company had six products on the market and was just breaking even, says Happe. Predicting that the 27-month project would cost $800,000, Maine Standards turned to MTI and in February received a $409,000 award, which it matched with its own funds.
Using that money, Maine Standards has begun expanding its Windham location, adding 2,000 sq. ft. of new office and lab space. The company already has hired one new researcher, and is looking for a second to help develop the material. But as it gets rolling this spring, the development process will be a classic hurry-up and wait situation. Once Maine Standards finalizes its prototype control material, expected in the next six to nine months, it must let it sit in a freezer or fridge for 24 months to test its stability and longevity, charting when and how it degrades. Then it must send the material for testing in outside labs before it can be submitted to the U.S. Food and Drug Administration to be cleared for market.
That long lead time means there's a risk that another company could develop a similar product, but company officials say they're not aware of any such projects in the pipeline. "Labs have been doing lipid testing for more than 20 years, and no one has come out with anything better yet," says Dean Miller, Maine Standards' director of marketing.
The company also is confident it will get some kind of product out of the 27-month process ˆ if not a lipid control that can be kept in a fridge, then perhaps one that can be kept in larger quantities in a regular freezer, which still would be an improvement over existing controls. And once it settles on a product, Maine Standards knows it has a year to sell it before the company must begin paying back its MTI award. "Biologicals love to decompose. Our job ˆ our art and science ˆ is to stabilize biological compounds," says Happe. "If we're good at that, we'll succeed."
But even as she looks for new programs or services, Biemann says MTI's biggest role will remain helping finance Maine companies through its seed grant and development award programs, which together have invested more than $8 million since 2000. "Those two programs are really the core of what MTI provides," says Biemann. "It's early-stage, very patient capital for research and development."
Thanks to a report released at the end of 2004 by the Center for Business and Economic Research at the University of Southern Maine, Biemann has numbers to justify her assessment of those programs. The report found that companies receiving seed grants and development awards added about 300 jobs a year in both 2003 and 2004, an 11% growth rate. Meanwhile, 24% of MTI-funded projects have resulted in products for sale.
But while the report offers a macro-level assessment of MTI's statewide impact, the numbers themselves don't show how the awards affect individual companies' day-to-day R&D process. To that end, Mainebiz decided to look at how entrepreneurs and companies in different markets, and at various stages of their own development, are using MTI funds.
What goals are they trying to accomplish with the state's R&D money, and where do they plan go next to turn an idea into a commercial product or self-sufficient company?
Planting a seed
First, though, it helps to have an overview of the two programs: In terms of number of awards (though not dollar value), seed grants are MTI's largest program. Awarded six times a year, the $10,000-or-less grants are designed to support targeted activities ˆ a patent application, prototype development or initial market research ˆ early in the R&D process. On average, MTI receives about 40 seed grant proposals per round, ultimately funding between 30% and 50% of them, says Seed Grant Program Manager Elizabeth Crabtree. Award winners must match the MTI grant on a dollar-to-dollar basis, with entrepreneurs often raising money from outside investors or friends and family. (See p. 33 for a list of MTI's 2004 seed grants.)
Since seed grants are such early-stage capital, it's understood that not every award will result in a viable product or business, Crabtree says. Instead, the grants help entrepreneurs or companies determine whether it's worth it to continue pursuing a project. "Seed grants are really the first step ˆ it sounds like a good idea, let's do more testing to find out if it does have legs and can walk," says Crabtree.
If the project continues to show potential, many seed grant companies go on to apply for an MTI development award, which is intended to help fund complex, multi-stage tasks aimed at bringing a product or service to market. "Development awards are basically designed to take product-development risk," says Joe Migliaccio, MTI's development award program manager. "It's a set of money that typically provides bridge funding between R&D and actual sales."
Because they address larger goals, such as advanced market research, product beta testing or assistance with regulatory submissions, development awards are substantially larger investments than seed grants, ranging between $30,000 and $500,000. MTI gives out development awards three times a year ˆ characterized as far-to-market development awards, for companies more than three years away from a commercial product, or near-to-market awards for those within three years of commercialization ˆ and receives on average 18 applications per round. Of those, MTI typically funds about six, says Migliaccio, with an average $298,000 award. (See page 33 for a partial list of MTI's 2004 awards.)
Larger investments also come with more conditions. For starters, the development award is doled out in installments, determined by recipients meeting pre-established project milestones. And unlike the seed-stage program, development awards are not grants. If the project results in a commercial product, recipients must begin paying back MTI's money within one year of making its first sale. "We feel we get higher-quality applications when we require payback," says Migliaccio. "They treat it more like their own money, when, as venture capitalists like to say, the awardee has some skin in the game."
The following case studies offer a look at how MTI programs are helping three different recipients ˆ an entrepreneur, a startup and an established company ˆ play the technology development game.
Alteva LLC, Orono
Founded: 2001
Product: A Neighborhood Electric Vehicle powered by a hydraulic motor
MTI funding: $10,000 seed grant, 2005; $10,000 seed grant, 2004
Bill Stevens is the stereotypical American inventor. He had his eureka moment under mundane circumstances ˆ namely, while putting together a wet bar for an outdoor spa in the mid-1990s. He then spent years tinkering with his project, at one point working in an unheated shed behind the hardware store where he was employed part-time.
His big idea: a small electric vehicle powered by a hydraulic motor. Instead of using an electric motor to turn the vehicle's wheels ˆ like a typical electric vehicle ˆ Stevens is using a small electric motor to power a hydraulic pump, which in turn circulates fluid through a hydraulic motor that drives the wheels. The hydraulic drive train, he says, offers more torque than an electric motor alone. Using that concept, he hopes to create a new type of Neighborhood Electric Vehicle, an alternative to regular cars that is legal to drive in most states as long as it has basic safety features such as lights, seat belts and turn signals, and is limited to a maximum speed of 25 mph. Stevens envisions the NEV being used at resorts and retirement communities, or in rental fleets in tourist destinations; he also plans to develop a utility model for campuses, military bases and municipalities.
Stevens, operating under the name Alteva LLC, in January received a $10,000 MTI seed grant to build a chassis to test the concept. That award followed another MTI seed grant he received last year to develop the hydraulic power train. Now, after four years of development and computer modeling, he's ready to road test those equations. "Engineering only goes so far," says Stevens. "Then you just have to build it and find out how it works in the real world."
If not for a coincidence, Stevens likely would not be testing the Alteva NEV on Maine's roads. A Michigan native, he was struggling to find technical and financial support for the project in his home state. An engineer at hydraulic motor supplier Parker Hannifin (Stevens' design uses as many off-the-shelf components as possible) suggested Stevens contact the engineer's former University of Maine electrical engineering professor, Tom Christensen, for advice about the project. After a phone conversation, Christensen, who also is the associate director of the university's Advanced Manufacturing Center, invited Stevens to Maine, and in March 2003 the two met and began discussing research assistance offered by the state.
Stevens moved Alteva to Orono a few months later and began applying for his first MTI seed grant. The move allowed him to abandon his lone-inventor-in-the-shed approach to development: Since arriving in Maine, he's partnered with Eastern Maine Community College in Bangor, enlisting students in the electrical and automation program for technical assistance and moving the project to EMCC's space inside the Advanced Manufacturing Center. EMMC student Phil Harvey has been working on the Alteva power train as his senior project since last October, and in March an entire class will begin helping Stevens build the chassis. "I'm not an engineer, so working with students allows me to be the project manager, which is really where I need to be," he says.
That's because Stevens hopes to start commercial production as soon as next year, but he knows that meeting that goal will require he do less tinkering and more business development. The chassis he's building ˆ a combination of homemade frame and auto parts salvaged from a junkyard ˆ is really just a "rolling workstation," he says. He plans to begin working with the EMCC students this spring to develop a true prototype chassis and body that can be "dolled up," as he puts it, to attract potential investors.
Along the way, Stevens says it's likely that he'll take advantage of a new piece of the seed grant program that allows companies to apply for a third and final grant of $5,000 to perform more market research for his NEV. After that, though, he believes private investors will be key to further development, since he's still far from answering questions about production techniques and component costs. Such details, he believes, would be required in an MTI development award application, and he'll need a financial bridge to help get him there. "Twenty thousand dollars [in seed grants] doesn't go too far when you start a program like this," Stevens says. "But a development award is such a huge leap."
Intelligent Spatial Technologies, Orono
Founded: 2003
Product: iPointer, a GPS-enabled handheld device and content delivery system
MTI funding: $208,000 far-to-market development award, 2004; $7,000 seed grant, 2004; $10,000 seed grant, 2003
Intelligent Spatial Technologies has the kind of story that Maine's tech industry boosters love to tell. A UMaine graduate student working on a research project sees an idea with commercial potential. He applies for a patent and gets accepted into Orono's Target Technology Incubator. A new startup is born. Eventually, the company could begin selling its product or service and providing well-paying jobs.
The day-to-day reality, however, isn't quite as seamless as the story, says IST founder Chris Frank. For IST, which is developing a GPS-enabled handheld device that lets users point toward buildings and other landmarks and receive information about them, spinning a research project out of academia has been harder than expected. "There are lot of potential markets, but the question is finding the right market," says Frank. "That's been the difficult part, and it's a lot more difficult than most people think when doing a technology transfer from the university."
Answering that market question is the goal of IST's $208,000 far-to-market development award, which the company received from MTI last spring and matched with federal grant money through the University of Maine. The company already had done general background research on potential markets for its device, called iPointer, thanks to an earlier seed grant. But that research turned up dozens of potential applications ˆ ranging from self-guided college tours to assistance for visually impaired travelers ˆ most of which seemed too small to support a full commercial rollout. "We need to find a money-making market and then come back to those other things," says Frank.
Now, IST is using its development award to research the market Frank believes can be a lucrative launching pad for the company: large theme parks such as those in the Disney empire. Frank envisions guests at a Disney park paying, say, $15 to rent the device for the day, then using it to guide themselves through the park. The iPointer could identify the various rides, give out information on wait times and suggest restaurants and shops to visit, all while giving Disney valuable data on how visitors flow through the park.
Since it's a development award, the process is broken out into specific milestones that IST must meet. Its first milestone is to finish building its prototype and defining its market strategy. At this point, the cost of equipment for the prototype is negligible ˆ about four percent of the total $416,000 budget ˆ while paying consultants for market research and other commercialization assistance accounts for 39% of the total budget. Second, IST must design a beta test, while also landing some of the partnerships it needs to crack its chosen market. For example, all of Disney's corporate applications run on SAP software, says Frank, which means IST is adapting iPointer's content delivery application to work on SAP. The final milestone is to complete the beta test and have a signed agreement with its first customer ˆ if not Disney, then another company.
But since this is an 18-month project, expected to finish this fall, Frank says the company already has seen expected milestones shift as ongoing research and development reveals new information. For example, IST is moving faster than expected in the technical aspects of its prototype development, having already sent a unit out for testing in mid-February. But the company is further away from achieving some of its market goals, Frank says. "That's the way it is in this environment. Things are going to change, and you're going to learn a lot about what works and what doesn't along the way," says Frank. "You're not going to be right on your milestones as you envisioned them a year ago."
So far, MTI has been flexible with IST, says Frank, recognizing that the details of milestones can change slightly as long as the company is still on track to meet the bigger-picture goals. IST plans to run a beta test for the iPointer in May at the UMaine campus in Orono, offering it as an interactive tour guide for prospective students. That trial will help IST get feedback from actual users and test how well its database and wireless content delivery applications work.
Those results also will put IST in a better position to land a paying customer like Disney, says Frank ˆ which is important for more than just potential revenues. "A large customer is key to getting private investment," says Frank.
Maine Standards Co., Windham
Founded: 2001
Product: Lipid control product for biological laboratories; the company's main product is calibration verification test kits
MTI funding: $409,000 near-to-market development award, 2005; the company also received a $98,000 near-to-market development award in 2003 to develop a lipid calibration verification test
Every day, laboratories across the country test thousands of human blood samples for one of 120 known components such as cholesterol, glucose or sodium. To make those tests accurate, though, labs have to ensure the machines they're using are properly calibrated.
Enter a group of lab supply companies, which offer materials that help labs establish standard ranges for testing equipment. The process starts with a so-called calibrator, which is a sample of a specific compound in a blood-like solution that allows labs to calibrate their equipment. Then, each day ˆ or at the start of each shift for large labs that run tests around the clock ˆ the lab must run a so-called quality control material through its testing equipment to check that the equipment is indeed reporting normal and abnormal levels for the compound being tested.
Maine Standards Co., a four-year-old Windham-based company, offers a third piece of the calibration process ˆ calibration verification test kits. Every six months, state and federal laws require labs to demonstrate that their equipment is properly calibrated, and Maine Standards sells a test material and provides the subsequent data analysis that provide that confirmation.
But with help from an MTI near-to-market development award, Maine Standards is trying to create a new product that founder Tom Happe ˆ a 20-year industry veteran who previously founded Casco Standards and sold it in 1995 ˆ says could double the company's revenues within five years. "We're in a niche here. Customers use our calibration verification products twice a year," says Happe. "We want to get into the control market, which would have customers using our products every day, two or three times a day."
The chance to break into the control market happened by accident. While developing a lipid calibration verification test in 2003, Maine Standards noticed that the lipid compound it was using was remarkably stable, says Happe. Lipids are notorious for starting to break down in about a day or two when not kept frozen, says Happe, but Maine Standards noticed that its lipid compound had stayed the same after several weeks at room temperature. The company immediately patented the compound and began thinking of other commercial uses.
Maine Standards imagined a lipid control product that was more user friendly than anything currently on the market. Today, lipid controls typically are shipped in a freeze-dried form, offering small quantities that the lab must reconstitute by mixing with a liquid. Once the compound is unfrozen, it must be used within a week. But with the better stability of its lipid, Maine Standards wants to create a lipid control that can be kept in solution in a regular freezer or even a refrigerator, and that could last at least 30 days.
The problem, though, was that Maine Standards didn't have the cash flow to support the development project. The company had six products on the market and was just breaking even, says Happe. Predicting that the 27-month project would cost $800,000, Maine Standards turned to MTI and in February received a $409,000 award, which it matched with its own funds.
Using that money, Maine Standards has begun expanding its Windham location, adding 2,000 sq. ft. of new office and lab space. The company already has hired one new researcher, and is looking for a second to help develop the material. But as it gets rolling this spring, the development process will be a classic hurry-up and wait situation. Once Maine Standards finalizes its prototype control material, expected in the next six to nine months, it must let it sit in a freezer or fridge for 24 months to test its stability and longevity, charting when and how it degrades. Then it must send the material for testing in outside labs before it can be submitted to the U.S. Food and Drug Administration to be cleared for market.
That long lead time means there's a risk that another company could develop a similar product, but company officials say they're not aware of any such projects in the pipeline. "Labs have been doing lipid testing for more than 20 years, and no one has come out with anything better yet," says Dean Miller, Maine Standards' director of marketing.
The company also is confident it will get some kind of product out of the 27-month process ˆ if not a lipid control that can be kept in a fridge, then perhaps one that can be kept in larger quantities in a regular freezer, which still would be an improvement over existing controls. And once it settles on a product, Maine Standards knows it has a year to sell it before the company must begin paying back its MTI award. "Biologicals love to decompose. Our job ˆ our art and science ˆ is to stabilize biological compounds," says Happe. "If we're good at that, we'll succeed."
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