Orasi Medical, a University of Minnesota software startup that was marketing its technology to drug companies, has closed its doors.
That is an astonishing collapse for a company that had inked licensing deals with the pharma giants like Novartis, been named by Red Herring magazine to its list of Top 100 private companies globally and raised at least $8 million since 2007 when it was founded.
The company’s basic technology came from the University of Minnesota, where its founder and previous chief executive Shawn Lyndon was CEO in residence. According to his LinkedIn profile, he left the company sometime in January 2011 and a new CEO Rajiv Khosla took over the reins in May. Lyndon is now based in Australia.
It appears that the company closed in December, according to the LinkedIn profile of Sarah Haecker, who was Orasi’s vice president of pharmaceutical business development between October 2009 and December.
It wasn’t exactly clear what led to the company’s demise. A University of Minnesota spokesman referred comment to the company’s board and CFO Dallas Steiner. Steiner did not immediately respond to an email seeking comment. Mike Jerstad, a board member and partner with Prairie Gold Venture Partners, a major investor in Orasi, did not return a call seeking comment.
Frank Jaskulke, director of member services at LifeScience Alley, a Minnesota trade group, said the company was in the process of selling its intellectual property — the parts that were not licensed from the University — to other companies. He said the startup did not fail because of “bad management” but because it had reached that inflection point in the life of all young firms where a decision has to be made whether to move forward or not.
“For them it was a no go,” Jaskulke said, declining to comment further.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Orasi began life in 2007 when it licensed an imaging technology from the University. The goal then was to develop the country’s first U.S. Food and Drug Administration-approved device to diagnose Alzheimer’s by using software that analyzes data from magnetoencephalography (MEG), which measures small electromagnetic signals from electrical activity in the brain in real time. The idea was to scan the brain of a suspected Alzheimer’s patient and contrast it against an image database of normal brain activity.
At one point the company said it owned the largest commercial database of magnetoencephalography (MEG) scans and was the only provider of MEG biomarkers — those critical, genetic clues that scientists use to identify diseases.
Later, the company changed course having realized that its technology would be valuable to drug companies who could use the database to determine whether or not to pursue a therapy instead of spend billions of dollars on a drug that has a high likelihood of failure. That led to partnerships with Novartis and Danish drug maker H/Lundbeck A/S.
Five months before its apparent demise, the company published results of a clinical trial measuring the severity of Alzheimer’s that showed the promise of its technology.
