MVS Presenter Updates: SanoGene CEO Caralynn Nowinski

June 17, 2008

Illinois Venture Capital Association: Your company, SanoGene, in 2006 won the first University Business Plan Competition at the Midwest Venture Summit. Please give us an update on SanoGene since that time.
Caralynn Nowinski: In late 2006 when we won the competition, we were actively speaking with consultants, VCs and angel investors to determine the most appropriate development path and funding strategy and whether that would be feasible.

Eighteen months later, we have structured a lean and mean approach to managing SanoGene as a virtual biotech company, defined a feasible path for company and product development, secured the exclusive rights to the technology platform, developed a strategic partnership with Cato Research (a globally recognized contract research organization) and obtained the financial support of Cato BioVentures to proceed with product development.

I am very grateful and humbled to have had the support of my firm and the entire community during this time.

IVCA: What does SanoGene do? What are the near-term and long-term capital requirements?
CN: SanoGene is leveraging a platform technology invented at the University of Illinois to develop novel therapeutics for cancer.

Our products are multi-targeted molecules designed to induce RNA interference (or RNAi) and shut down the function of specific cancer-promoting genes. Our lead program is developing a - œdrug-  for glioblastoma multiforme (GBM), which is the most common and deadliest form of primary brain cancer.

Notably this is the type of cancer with which Sen. Ted Kennedy was recently diagnosed. In the near term, our investment from Cato will assist us in fine-tuning our pre-clinical and clinical development and regulatory strategies and support initial studies.

We plan to begin fund-raising for an additional $3 million to $5 million in the fourth quarter of 2008, which will be used to complete pre-clinical development and advance our lead product into clinical trials in patients with GBM.

IVCA: How important to your business at that time was the $50,000 DCEO grant you were awarded at he 2006 MVS, along with the exposure to Illinois investors?
CN: At that time, we were facing a particularly critical question: Did we have freedom to operate? It was <i>the</i> hot topic in the world of RNAi and still is a major concern for companies in this space. We knew investors wouldn't consider us unless we had a good answer to that question.

The $50,000 grant supported our first independent patentability and freedom-to-operate assessment as well as other expenses. The promising feedback from this assessment was critical in our decision to move forward with development and license the technology from the university.

IVCA: You are unique as an entrepreneur in that you currently serve as interim CEO of a start-up while also working as an associate for Midwest Venture Partners. How does one function help the other?
CN: It's fantastic to be able to experience both sides of the table. Coming from an academic background, I have had limited prior experience in an operating role. Serving as SanoGene's interim CEO, though, exposes me to many aspects of running a start-up.

The hurdles I have faced along the way have strengthened me and certainly help me relate to entrepreneurs I work with at Midwest Venture Partners and ARCH Development Partners. On the flipside, I can better appreciate the milestones that SanoGene needs to hit to be ready for more traditional venture financing.

IVCA: What is your primary focus with Midwest Venture Partners?
CN: As an associate, my primary role is to support the partners with deal sourcing, due diligence and portfolio company management.

I am privileged to be a part of a team that encourages me to test my limits and get as involved as possible. Coming from a life sciences background, I tend to spend more time looking at these types of companies. However, my goal is to be able to add value to both our life sciences and IT investments.

IVCA: As an investor and an entrepreneur, how do you best leverage the IVCA and its resources?
CN: I have found the IVCA to be a great resource from both perspectives. Still being relatively new to the VC world, participating in IVCA events has been a very useful means of becoming acquainted with the community. It's a very strong and collaborative network. The IVCA does a remarkable job of bringing the community together.

Maura O'Hara herself is a fantastic resource. She has the pulse of the investor community and is truly supportive of promoting Illinois as a place to invest venture capital. From educational programming to entrepreneurial forums to public policy support, I have found that if you put the time into the IVCA you'll get two-fold back.

IVCA: What other local organizations do you participate in that foster early stage technological development?
CN: As a graduate of UIC's Tech Ventures Program, I am particularly supportive of that program. I have also spent time working with groups at the Chicago GSB and Kellogg. I am also an active member of iBIO and involved with TiE in its TiE Connections Mentor Program.

IVCA: What are the biggest elements the community is lacking?
CN: When we visit other Midwest communities like Cleveland, Indianapolis and Madison, we see programs in place to build early stage sources of capital. These vibrant investor and entrepreneur communities are supported by a range of public-private partnerships. Here in Chicago, early stage investors and entrepreneurs don't have that same level of support.

The Chicagoland community has not felt the pain that our neighbors have faced. Because of that, we don't have the necessary infrastructure and are beginning to fall behind in the amount of venture capital available here for early stage companies. If Illinois wants to maintain its level of competitiveness and innovation, we need new solutions.

Part of the answer lies in institutional investors recognizing the need to support local VC rather than putting money into coastal funds.

The experience of successful regions of innovation (such as the Research Triangle Park, Austin and San Diego) suggests that - “ without local and regional public-private partnerships - “ the ability by Illinois to maintain competitiveness is threatened. Public-private support of local VC investment is an important element that has thus far been lacking.

IVCA: What philanthropic endeavors do you support?
CN: I am most actively involved with groups that support research and patient advocacy for neurodevelopment disorders such as autism and cancer.

Specifically, I am vice president of the CHILD Foundation, which my mom founded several years ago to promote neurodevelopment and early childhood learning. I am also an active supporter of the Leukemia & Lymphoma Society's Team in Training Program.

IVCA: When you're not running a fund and looking at VC deals, what do you do for fun?
CN: Some would refer to me as a - œfoodie,-  which makes it quite helpful that I also really enjoy running. The experience of eating - “ especially with my fiancé, family and friends by my side - “ is truly my idea of a great time. A good deal of my time lately is spent planning our upcoming wedding, which is set to be a great big party at the end of July.