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Growing medical technology bags major VC investment: Bloomington-based ProCure hopes to build national network of proton-therapy clinics after luring $35 million

April 30, 2007

If you're as smart as a fifth grader, you know that a proton is a basic particle in an atom's nucleus that has a positive electrical charge. What might be less well known is that proton therapy is becoming the preferred treatment for certain types of tumors.

But here's the real stumper: The man leading a mission to build and operate a nationwide network of proton-therapy clinics is a Bloomington researcher whose startup received a $35 million cash infusion in December.

The investment ProCure Treatment Centers Inc. got from McClendon Venture Co. LLC in Oklahoma City represents the largest amount of venture capital raised by an Indiana-based company last year. The money helped launch construction in late April of a $95 million proton cancer treatment center there.

"From an investor's viewpoint, there isn't the normal risk of whether there will be a market for it," said John Frick, an adviser to McClendon Ventures. "We are very confident that patients and physicians will want to use it."

Ready to take off

To be sure, only about 5,000 patients a year are treated with proton therapy. That's largely because there are just five centers in the United States that provide the treatment, including the Midwest Proton Radiotherapy Institute at Indiana University in Bloomington.

Dr. John Cameron, president of Pro-Cure, helped develop the Midwest Proton Radiotherapy Institute in 2004, but he is no longer affiliated with the center. Pro-Cure is building a training and development center for proton therapy in Bloomington that will open next year.

Proton's Oklahoma facility will be the first of its kind to operate as a private practice. Existing centers are all affiliated with academic research institutions and devote about half their capacity to research, Cameron said.

Cameron expects the 55,000-squarefoot center in Oklahoma City to treat its first patient in 2009. He has contracted with a group of physicians in Chicago and is searching for property there to construct his next facility. The plan is to build three a year in partnerships with private practices or community hospitals.

Local investors in the Oklahoma City venture are physicians affiliated with Radiation Medicine Associates and Radiation Oncology Associates. When completed, the center will create 100 full-time jobs with average salaries of more than $100,000.

"These private groups don't want to design and oversee construction of these buildings," Cameron said. "They're more than happy to leave it to us, and do the medicine. It's a clear delineation between us and them, and we're quite happy about that."

Proton precision

Cameron arrived at Indiana University in 1987 as a professor of physics and later became director of the university's cyclotron facility until retiring in 2005 to start ProCure Treatment Centers.

He explored particle therapy while at IU and began using protons to treat patients on an experimental basis in the 1990s. In 2000, Cameron received funding to start construction of the Midwest Proton Radiotherapy Institute in Bloomington.

But the study of protons and cancer therapy dates back several decades. A Harvard University researcher first proposed using protons to treat cancer in 1946 during his involvement in the design of Harvard's cyclotron laboratory.

In 1961, a collaboration began between the laboratory and Massachusetts General Hospital resulting in the treatment of 9,100 patients during the next 41 years. The laboratory closed in 2002 when the hospital opened its own center.

Twelve years earlier, in 1990, the first hospital-based proton treatment center in the nation was built at Loma Linda University Medical Center in California.

Proton therapy is effective because of its ability to accurately target and kill tumors, both near the surface and deep within the body, while minimizing damage to the surrounding tissues. For this reason, it is favored for treating certain kids of tumors in which conventional X-ray radiotherapy would severely dam- age surrounding tissues.

The therapy has had considerable success in treating choroidal malignant melanomas, a type of eye cancer for which the only known treatment was removal of the eye.

The development of the CT scanner in the 1970s allowed for the treatment of almost any site in the body.

"It doesn't help to have a rifle if you can't see what you're shooting at; that's where we were 20 years ago," Cameron said. "Now we can delineate where tumors are with a great amount of precision. Now we know where we want to hit."

Lots of cash needed

Cameron co-founded ProCure in April 2005 with Hadley Ford, a New York City investment banker who serves as CEO.

Ford first learned about the company in 2004 while head of East Coast technology for Bank of America. It was then that he received a call from a former client-Cameron's son-who divulged his father's idea and his desire to take it to market.

Although initially skeptical, Ford became convinced enough of the potential to quit his job and come aboard ProCure. Ford brings the financial expertise to complement Cameron's medical research.

"It sounded way too good to be true," Ford said. "You have a large patient base and you have doctors who already see these patients, so what's the missing ingredient? The missing ingredient is the huge barrier to entry. The sheer physical cost of a center is just daunting."

Indeed, the expense of building such a facility can run $100 million. ProCure's plan is to finance construction using a 20-percent equity stake and 80-percent debt. The large amount of necessary capital was too much for Indiana venture capitalists to consider.

In Indiana, Cincinnati-based Triathlon Medical Ventures has invested in West Lafayette-based Endocyte Inc. and Indianapolis-based Colucid Pharmaceuticals Inc. and CS-Keys Inc., all of which have developed medical products.

When Endocyte's device is approved, for instance, it will be sold to hospitals and cancer-treatment centers, said Carrie Bates, a Triathlon managing partner. The only property expense is a lease for an office or research and development center, unlike Procure's need for a fully equipped treatment facility.

"Even though this is a really good thing that they have, we just don't invest in treatment centers or services," Bates said. "It wasn't because we didn't think it was clinically relevant; it just didn't fit within our focus."

Enter the Oklahoma City group led by Aubrey McClendon, CEO and chairman of Chesapeake Energy Corp., the thirdlargest independent producer of natural gas in the United States. A Chesapeake engineer whose brother is a ProCure executive introduced McClendon to the proton therapy company.

For Oklahoma City, ProCure will be a nice addition to the city's development of a medical corridor on the northwest side of the city, said Roy Williams, president and CEO of the Oklahoma City Chamber of Commerce. The city of 580,000 already has the Presbyterian Health Foundation Research Park, which includes 600,000 square feet of space that is fully occupied.

"[ProCure] really fills a void, because we don't have an extensive cancer treatment center," Williams said. "We see it as being an attraction for neighboring states, because it's very unique."

ProCure has 25 employees in Bloomington, but expects to triple that number by the end of the year.

The company's training and development center in Bloomington is intended for medical professionals involved in proton therapy.

Most professionals participate in a sixto eight-week curriculum that includes a combination of on-site and Web-based training procedures. Eventually, many of those trained at the facility will go on to work at ProCure treatment centers.
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