July 8, 2004 -- When Dr. Adam
Katz first joined the staff of the
University of Virginia hospital, he had already heard about a special treatment regularly used by the doctors there. At first, he was highly doubtful of the product’s effectiveness, but he did not remain a skeptic for long.

For more than a decade, UVA
Plastic Surgeon Dr. George Rodeheaver had been using TAG—short for topical antimicrobial gel—to treat burn and open wound patients. TAG combines several antibiotic agents delivered via a
water-soluble, pluronic gel, and through its use on over a thousand patients, had been proven to reduce pain, lower costs, shorten hospital stays, improve patient comfort, and deliver superior antibacterial protection.Yet despite its incredible track record, the gel had never been used outside of UVA. In the early fall of 2002, Katz approached Rodeheaver with a proposal.

“I told him I didn’t want to reinvent the wheel or anything, but that I believed TAG was a product that could be commercially marketable,” says Katz. Rodeheaver agreed to give the idea a try, so Katz began by placing a call to an acquaintance—Andrea Alms, General Manager at Spinner.

Created by the UVA Patent Foundation in 2002, Spinner provides start-up support to fledgling ventures— in particular to those begun by UVA faculty. It didn’t take long for the doctors and their concept to find a home at Spinner, and so began a series of events that would take the product across UVA Grounds—and set the stage for its introduction into the marketplace, en route to hospitals across
the country.

Darden Business Project Team, from left: Daniel Goodall, advisor Tom Cross, Cynthia Lozu, Mehul Vora and Wengang “Larry” Li

Meanwhile, Across Grounds
When Mehul Vora entered Darden in the fall of 2002, he brought with him several years of start-up experience and an itch to stay active in entrepreneurship even as he juggled the responsibilities of Darden’s First Year curriculum. Earlier in the year, he had met Andrea Alms at a technology
transfer showcase at Virginia’s Center for Innovative Technologies, so after settling into Charlottesville, he gave her a call, inquiring about opportunities at Spinner.

At the time, the organization was seeking an intern, and Vora was quickly brought into the fold to work with the business accelerator on a for-credit basis. His first project? The concept proposed by Drs. Katz and Rodeheaver.

“I met with the doctors every week—sometimes twice a week—for the next eight months,” recalls Vora.“ My specific deliverable was a comprehensive business plan. I spent hours building the outsourcing versus insourcing model to help determine the best product manufacturing option. I visited the lab and learned how the product was made. I did my best to learn everything about the product and market so I could guide the team.”

By mid-February 2003, the business plan was in final stages, and the company had been incorporated and given a name, PluroGen, which combines a common biotechnology term—genesis— with a nod to the pluronic carrier that is a main component of TAG.

Enter Batten

At about the same time, talk began around Grounds about the Batten Institute’s upcoming UVA Business Plan Competition. Open to any team involving a UVA student, staff, or faculty member, the event is designed to promote the development of new business ventures within the university community. Vora thought PluroGen had a strong shot and recommended to the doctors that they enter.

Remembers Vora, “The next three weeks were full of brainstorming and plan refinement sessions,” as the team—now including UVA Plastic Surgeon Dr. Raymond Morgan— prepared to present the opportunity to the judges.

In April of 2003, “PluroGen Therapeutics: Simple Solutions for Complex Wounds” took first place in the UVA Business Plan competition, securing the company a $10,000 top prize and a spot in the Darden Progressive Incubator (DPI).

Next Stop:
Progressive Incubator

“After we won the Business Plan competition, we didn’t realize that we got all these extra bonuses through the Incubator,” says Dr. Katz. While in the DPI, PluroGen would receive three months of infrastructure support, office space and reimbursement of certain business expenses, and feedback and guidance from an advisory board. The DPI would also provide a monthly stipend of $1,500 with which the doctors could hire a summer intern.

Through learning teammate Vora, then rising Second Year Wengang“ Larry” Li learned of PluroGen’s DPI opportunity and was intrigued. Li had worked for an Internet startup in China before coming to Darden and had experience both writing business plans and raising funding.

“I was impressed with the products and the enthusiasm of the two founders,” says Li, who soon took over where Vora had left off. For the next three months, Li “conducted thorough market research, identified competitors, estimated potential markets, confided the competitive advantages, and recommended the best business strategies for the product.”

PluroGen’s progress over the summer had been impressive by all accounts, but the growing venture still had a ways to go. At this point, yet another Darden program would step in to take the reins.

Home Stretch:
Darden Business Project

At the beginning of the 2003 academic year, PluroGen participated in an informational evening with other PI companies, presenting their concept and explaining how students could help the venture proceed. “We hoped the students could contribute their business savvy and skills to model and pick a strategy for us,” explains Dr. Katz. “We needed them to do all those business-related tasks that are foreign to George and myself as doctors.”

Second Year Daniel Goodall, a former consultant with Booz Allen Hamilton, attended the evening’s presentations, and he says he “was impressed with the two doctors, with their candor about their lack of business expertise, and the concept for the company.”

“I liked the fact that they were from UVA and were obviously experts in this
field,” he adds. “I could also easily see how as an MBA student I could provide
value.”

A Darden Business Project (DBP) developed around PluroGen’s necessary next steps, and Goodall joined classmates Larry Li and Cynthia Kozu on the DBP team, charged with developing a marketing pitch and a plan for raising $1.7M in funding to cover initial clinical trials for FDA approval.

Darden’s Senior Director of Executive Education Tom Cross acted as the DBP’s advisor, suggesting the timing of deliverables and helping the students to set objectives, expand their thinking, and structure their analysis.

“They filled all the holes in the business plan, developed complete financial statements, studied the business expansion options, and developed an investor presentation and an executive summary,” explains Cross. “They did a huge amount of work in less than three months and nailed every assignment.”

In December 2003, the students presented their conclusions and suggestions to an audience of founders, advisors, and invited guests. “We were very impressed,” says Dr. Katz. “The students are all bright, dedicated—they were phenomenal.”

Darden Professor Susan Chaplinsky, who teaches Entrepreneurial Finance and Private Equity, was also on hand for the final presentation and had provided guidance to the DBP students on certain valuation aspects of the strategy.

“Entrepreneurship can be a very time-consuming process, and in a caselike this, you have a conflict between the doctors still needing to be doctors and the urgency and speed required by investors,” observes Chaplinsky. “You have to know what you’re doing, and this project put students in a position to explain to someone not familiar with this area how the rest of the world looks at the concept and how to
take it in the right direction. The processes in place at Darden greatly facilitated this rollout.”

Although the doctors have since decided to make a 180 degree turn on the direction of the company, Dr. Katz is quick to stress that the change is actually the result of—not in spite of—the students’ research and hard work.

“The students used assumptions we provided, and based on those assumptions, we originally made what we believe was the best decision on a path to pursue,” he explains. “But now we have concrete numbers, and by feeding these numbers into the models and forecasts the students created for us, we can see that a different
path would actually work better.”

Armed with the tools and recommendations from Darden students, faculty, and advisors, the doctors are prepared to take their next steps independently. However, “George and I don’t exactly want to quit our day jobs,” acknowledges Dr. Katz, adding that PluroGen is currently seeking a CEO/COO with the experience and the time necessary to take the company to the next level.

“We maintain connections with the students who have helped us along the way, but we don’t want to interfere with their studies and other pursuits,” he says. “We’re on our own now, but their blood and sweat really went into building this.”