Startup NICO Corp. hopes to commercialize brain surgery device

April 21, 2008

Economists call it a "virtuous cycle" when successful entrepreneurs plow their gains into new businesses. Jim Pearson calls it another day on the job.

The former Suros Surgical Systems Inc. CEO is attempting to repeat what he already has done: Build a company to bring a promising medical device all the way from the drawing board to the market.

"The biggest mistake people make is thinking that because they're good at one thing, they're good at a lot of things," he said. "I'm not good at much, but the few that I am good at, I'm very good at. I'm good at putting together a team, raising money and executing."

"I actually think this will be better, from a patient-assistance standpoint, than what we did at Suros," Pearson added.

Founded in 2000, Suros was one of the fastest-growing life sciences companies in Indianapolis history. Doctors embraced its minimally invasive breast biopsy device. Suros' sales skyrocketed, drawing suitors. In 2006, Bedford, Mass.-based Hologic Inc. acquired the company for $248 million. It's continued to grow since, with the local operation intact.

Now, Pearson has formed another local startup, NICO Corp. His partner is Joseph Mark, a Suros co-founder who remains its vice president of technology. Pearson stepped down from Suros in December. The pair are NICO's only employees and, for now, are developing the business out of their homes.

NICO, for Neural Introventional Co., has a purpose similar to Suros'. But this time, rather than extract tissue from women's breasts, the goal is to remove tumors from human brains and central nervous systems in a less invasive way. NICO's high-speed device would be based on the same technology as Suros', which the pair licensed from Hologic.

NICO's first priority is to build a prototype. To finance it, Pearson said, he's returning to the 45 local investors who underwrote Suros when it launched. He expects to close on $1 million from them within 90 days.

"I can't say that every dollar came exactly from the Suros deal. But everybody we're talking to came from the Suros deal," Pearson said. "We won't go to venture capitalists unless we're getting to that round that you can't raise the money from the home family."

Current technology for brain excision requires doctors to cut a hole in the skull the size of a bottle cap, Pearson said. NICO's device would need a hole only the size of a pencil head. And its scope, Pearson said, is less intrusive than the mechanical graspers currently on the market.

That would mean less trauma and a quicker recovery for patients. It would also require them to spend less time in the hospital. Most brain surgery now requires about 10 days in the hospital, Pearson said. NICO's product might cut that down to a night or two.

Pearson is quick to point out that, for now, NICO is simply an idea. Many people claim they offer products with medical benefits, he said. The key is proving it in the clinic and before regulators. Pearson said NICO will spend most of the next year getting its "ducks in a row" as it builds its prototype. Commercialization then will take years, he said. And despite Suros' blockbuster precedent, there's no guarantee NICO will repeat that success. Pearson said it's just as risky as any other medical-device startup.

Others aren't so modest about NICO's prospects.

Indiana Venture Center President Jim Eifert worked with Pearson and Mark when Suros was in its earliest stages of development at Rose-Hulman Ventures, an incubator in Terre Haute.

"There's nobody in the world who knows how to do it better than they do," Eifert said.

NICO's attorney, Ice Miller partner Harry Gonso, added: "They have already engaged in enough communication with experts in the field to realize that their ideas and proprietary information would be a very significant competitive advantage, with benefit to patients and practitioners alike. "It's early-stage, but I think they're hopeful in being well along the way in 2009."

The biggest challenge for life sciences startups is raising money, a task that will be eased by Pearson's and Mark's success at Suros, said Colleen Hittle, managing director of Anson Group, a consulting firm that helps life sciences firms interact with regulators.

After that, she said, NICO's challenge will be attracting talent.

"I certainly wouldn't bet against them, given their initial successes with Suros," she said. "They have set the bar very high. But they've got a lot going for them, when you look at other startups and compare. That puts them in a very good position to duplicate."

NICO is exactly the kind of company Indiana needs in order to build a self-sustaining life sciences sector, said David Johnson, CEO of the BioCrossroads initiative.

"The people who built the first business are all here and want to do it again," Johnson said. "If you look at places like San Diego, that's exactly how they've built this sector."

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