SciTech Development Seeks Venture Capital to Commercialize its Promising Cancer Drug and Novel Drug Delivery System

Shannon Beeman
March 27, 2015

Serial entrepreneur Earle Holsapple III, the CEO of SciTech Development, faces a problem common to many start-ups, especially those focused on drug development. His Detroit-based biopharmaceutical company is pursuing the commercialization of a well-known anticancer agent, fenretinide, and a novel intravenous drug delivery system that uses nanoparticles to transport the drug to cancerous tumors safely and in the proper doses without unwanted previously existing side effects.

Initially, the anticancer agent/IV nanoparticulate delivery system, known as ST-001, is being developed for the treatment of T cell lymphoma cancer, because the drug already has cured several patients with this disease. But in the future, it could be used to treat prostate, lung, ovarian, pancreatic and other deadly forms of cancer. Also in the company’s pipeline is a fenretinide topical chemotherapy for curing precancerous and cancerous skin lesions. “The potential for saving lives is immense,” Holsapple says. “The reward for investors is very promising.”

The dilemma facing SciTech Development since it was spun off from the Karmanos Cancer Institute and Wayne State University in 2001 is that venture capital funding has been hard to come by. “We’ve been pushing a snowball uphill,” Holsapple says. “Drug development is an area where not too many people are succeeding. Big pharmaceutical companies want clinical proof first, and then they are willing to pay a big price. But they don’t want to fund the initial drug development phases.”

Bad luck and unfortunate timing have plagued the company’s fundraising efforts and development path. Local venture capitalists showed interest in SciTech after the company presented at the Michigan Growth Capital Symposium in 2007, but no VCs made a financing commitment. The company had a term sheet and deal with a private equity investor ready to go, but the financier backed out at the last minute due to misconceptions about the prospects for SciTech’s patent approvals. A “valley of death” bridge funding application to the National Cancer Institute fell through when, at the last minute, the venture capital firm that pledged matching funds ran short of money.

Despite this hard-scrapple beginning, Holsapple is more determined than ever to restart fundraising after the company’s patents cleared the approval process earlier this year. In June, he presented to venture investors at the 2014 MGCS in an effort to raise Series A through C rounds of financing of $8 or $9 million. Coaching and support from the MGCS and the Michigan Small Business and Technology Development Center helped Holsapple prepare and deliver an effective fundraising message. The Series A round would be used to finish preclinical testing work while the Series B and C rounds would fund Phases I and II clinical trials on the use of ST-001 for the treatment of T cell lymphoma cancer; funding also would support Phase II clinical trials to investigate the drug’s use in the treatment of other cancers. If separate topical and IV Phases I and II go well and the FDA fast-tracks its approval of ST-001, Holsapple estimates the topical version of fenretinide could be on the market in one year and the intravenous version in two or three years.

“Because of strong supporting data, there is broad consensus among researchers and clinicians who say this drug will work if delivered in adequate quantities without delivery-system side effects ─ and we have created a delivery system made from ingredients that are known to be safe and cause no such side effects,” he explains. “We’re ready to try to get this product back into use on humans in its new form and to provide an effective treatment for numerous cancers.”

Holsapple has a personal, as well as professional, reason for wanting to move ST-001 to market as quickly as possible. Several months ago, his newborn granddaughter was diagnosed with neuroblastoma and underwent traditional chemotherapy treatment that could adversely affect her neurological development. “Imagine how I felt, recognizing that without all the delays, this drug free of side effects possibly could have been available for my own granddaughter,” he says. “Obviously, I’m very motivated.”