Diagnostic firm Tiro Lifesciences first to get new repayable grants for start-ups

Tiro Lifesciences, an early-stage medical diagnostic company, has received the first repayable grant of $450,000 from Callaghan Innovation under its expanded business incubator network.

The repayable grants, announced last month, are available only to start-up businesses commercialising technology through one of the new private-sector led technology incubators.

Christchurch-based Tiro Lifesciences is being incubated through Powerhouse Ventures, one of eight incubators approved by Callaghan Innovation in August. Powerhouse Ventures had to add its own funding to provide at least a quarter of the start-up company’s costs on a one-for-three basis in order for Tiro to get the grant. It has provided the funding in exchange for a 20 percent stake in the start-up.

Science and Innovation Minister Steven Joyce said the technology-focused incubators were aimed at getting more high-growth start-ups off the ground which was “crucial to maintaining a strongly-growing economy”.

Tiro Lifesciences will initially focus on developing technology for the detection of breast cancer in radiodense tissue, which can be difficult to find under normal mammography screening. It has been given $450,000 over two years to develop a pain and radiation-free medical-imaging tool though acting chief executive Marcus Haggers said it would take at least two to three years to get regulatory approval in Europe and a year longer than that in the US.

He said the company hopes to develop a broader platform of tools with breast cancer being the first off the block. The major shareholder in Tiro Lifesciences with a 24 percent stake is Geoff Chase, a distinguished professor at the University of Canterbury, whose team of researchers are understood to have been working on the technology for eight years.

Haggers, who previously worked Powerhouse, has been made acting chief executive in order to kick off the business plan to commercialise a product. The grant can be used to fund any of the costs associated with further developing the start-up’s intellectual property, including up to a quarter on research and development. Haggers said one of the necessary steps was clinical trials in Christchurch and then nationally.

Cabinet agreed in last year’s Budget to allocate $31.3 million in new funding over four years for the repayable grants. Repayment is based on a three percent royalty on the incubated firm’s gross revenues until it's repaid rather than over a set time period. Joyce said in late October that international experience had been a repayment rate of around 60 percent. A Cabinet paper on the grants said they would be unsecured and rank behind all the other obligations of the company apart from equity.  That means the repayable grant is seldom recovered when the start-up fails, the paper said.

They include clawback provisions, also present in other Callaghan Innovation research and development funding, designed to ensure the value of the taxpayer-funded investment in the firm is not lost through things like its sale or relocation overseas. In those instances, the funding would have to be returned to the Government.

(BusinessDesk)