There are many ways to fund a biotech company, and each one of them has its ups and downs. Which one is right for your company?
Three leaders in the biotech sector will discuss this issue in an NJ Economic Development Authority event on Monday, April 24 from 5 to 7 p.m. at the Commercialization Center for Innovative Technologies (CCIT), 675 Route 1 in North Brunswick. The panel of speakers includes Daniel O’Connor, CEO of Advaxis, an immunotherapy company; Scott Jackson, former CEO of Celator; and Kathleen Bloch, CFO of Cytosorbents, which manufactures a blood purification device. For more information, visit www.njeda.com.
Bloch’s company, Cytosorbents, makes a medical device that is designed to remove toxic chemicals called cytokines from the blood, treating a number of deadly conditions including septic shock and possibly the side-effects of some immunotherapy treatments. The device is approved for sale in Europe although not in the United States yet.
Founded in 1997, Cytosorbents, located at 7 Deerpark Drive, got permission to sell its devices in Europe in 2011. Bloch joined Cytosorbents as CFO in 2013 at a time when the company was seeking to raise capital by uplisting to the NASDAQ stock exchange. Before her current job, Bloch was CFO of Laureate Biopharma, and was previously COO and CFO of Silver Line Windows in North Brunswick, which was bought out by Andersen during her tenure. She has an MBA from LaSalle.
Bloch discussed biotech funding in a Q&A conducted by e-mail:
Earlier in your career, you were with a window company and an environmental service provider. Why did you make the move to medical device companies, and how is life science funding different from those other industries?
While I was in college studying accounting, I worked in a large hospital in Philadelphia, so in some ways it was going back to my roots. My earliest work as an accountant was in public accounting where I had exposure to a lot of different industries, including banking, manufacturing, publishing, and many others, and it was fascinating to learn about different businesses.
I moved to New Jersey from Philadelphia when I accepted the role of CFO at an environmental services company. This was a publicly traded company on the NASDAQ with about 10 small subsidiaries scattered throughout the U.S. performing environmental services. It was a great learning experience for me with regard to SEC reporting and fundraising.
Following that, I joined Silver Line Windows in North Brunswick, as the company controller, eventually becoming CFO and COO. This business was growing rapidly as a result of an aggressive marketing program with builders and a partnership with the Home Depot, growing from about $100 million in revenues to more than $750 million in the 10 years that I was there. It was an exciting atmosphere. Ultimately, the business was sold to Andersen Windows.
A banking contact told me about the CFO opening at Laureate Biopharma, a Princeton-based manufacturer of biologics. I was there for about three years and then the ownership (a venture capital company from San Francisco) decided to market the company.
From there, a recruiter told me about CytoSorbents, a small company with a blood purification device that was just approved in the European Union and was beginning commercialization of the product in Europe. As I learned more about the company, I became excited about the opportunity to utilize all my financial, organizational, reporting, and business experiences to help the company succeed.
What was behind the decision to up-list CytoSorbents to NASDAQ, and how did that work out for the company?
In my first interview with CytoSorbent’s CEO, he indicated that the CFO would need to lead the uplisting to NASDAQ for the company. The company believed that NASDAQ would provide a platform of credibility for serious investors that would help us raise capital to fund our operating strategy.
What has your greatest accomplishment been at CytoSorbents?
The uplisting was important because it put us in a position to be able to raise the money needed to expand our sales and marketing infrastructure over the past four years. We’ve had three successful capital raises — each more than $10 million — and that has provided the needed funding to provide the necessary infrastructure to allow us to grow our revenues from zero to $8.2 million in just a few years. We are now sold in more than 42 countries around the world, sales growth is strong, and we expect to achieve break-even within one to two years.
What’s the strategy for the future growth of CytoSorbents?
We are continuing to add countries around the world to sell our products, but most importantly, we are seeking U.S. FDA approval of the device, CytoSorb. We’ve just completed a preliminary trial that demonstrated safety and we will be approaching the FDA in the coming months to determine the final design of our pivotal trial in the United States in cardiac surgery. The trial is expected to be completed by 2019, with FDA approval possibly in 2020. While we will be profitable before this point, it will add significant value and is an extremely important milestone for the company.
How did you get into corporate finance?
I grew up in Philadelphia and my father was a plumber and my mother was a homemaker. I wanted to go to college, but had no idea what to major in, having had no prior exposure to businesspeople. While attending college at LaSalle University in Philadelphia, I worked at a nearby hospital doing administrative work. The director of fiscal affairs (a hospital’s equivalent to the CFO) took an interest in me and suggested accounting might be a good career move for me. Not only that, but he offered me an internship in the accounting department during the summer months. This was a very precious opportunity for me, I accepted the internship, which was the first step in my more than 30-year career in accounting.
What do you plan to talk about at the NJEDA?
The focus of the discussion is on the benefits of being a public company and the process of going public. But it’s a roundtable forum so I’ll try to be open to questions from people who are trying to understand this process better.
Do you have any general advice on biotech funding?
I think it’s important to think outside the box when it comes to fundraising. There’s equity, there’s debt, there’s venture capital, opportunities to partner with other business, and many other ways to obtain capital — and as a financial professional one needs to think creatively about this process and have alternatives. Just as important is the responsibility to be a good steward of the funds that others give to the company, making sure it is used in an effective manner directly related to meeting the corporate objectives and milestones.