XaTek raises $9M in under 90 days
CEO Zak says firm has cash it needs to get new med device to market
What: Raised $9.1 million in less than 90 days to develop a product that tests clotting ability of a person’s blood
Why it matters: John Zak hopes to prove that with planning, startups can raise all the capital they need in one big push
John Zak had the finish line in view from the moment XaTek Inc. was founded.
Rather than go back to potential investors again and again — and again — the president and CEO of XaTek planned to go out and raise capital just once for a product that provides new hope to physicians searching for a better way to assess the clotting ability of a person’s blood.
Time will tell whether his strategy worked, but receiving $9.1 million in Series A capital in less than 90 days has given his team valuable momentum.
The ClotChip sensor can measure a person’s clotting ability 95 times faster than current methods using only a single drop of blood. The technology was developed by researchers at Case Western Reserve University and could help more than 40 million people worldwide, as well as put a dent in the $5 billion spent each year on patients with hemophilia.
Zak is confident the product will be ready for use in hemophilia and anticoagulation therapy by 2021.
Smart Business Dealmakers caught up with Zak to learn more about his work, his team and his ambitious strategy to take this project across the finish line.
An urgent need
The new device is being developed in response to a new class of anticoagulant drugs that offer improvements over their predecessors, but also new risks.
“One of the issues with this new class of drugs is spontaneous bleeding,” Zak says. “The irony is there is no point-of-care diagnostic test that your physician can use to test your blood and get any kind of sense to how you are responding or not responding to the anticoagulant.”
In 2016, CWRU’s Technology Transfer Office granted an exclusive license to XaTek to develop the technology, which is co-owned by the U.S. Department of Veterans Affairs, for commercial use.
Zak went to medical school at Case and has worked in the department for several years. He is confident he has a team that can do what it takes to get the product to market in three years.
“We’ve done this rapid commercialization of medical technology before,” Zak says. “My fellow founders and partners are very versed in the medical device design field. We understand the pathway to get to the finish line. It’s more about execution and keeping it out in front of you than anything else.”
Despite Cleveland’s rise in the medical community, raising capital for medical device development in the region still presents some challenges. The fact that XaTek was able to land its haul in under 90 days provides a huge boost.
“When a capital raise drags out over time, it can be really distracting to the management team,” Zak says. “You’re making decisions for the wrong reasons when your focus is on giving that next pitch to raise funds as opposed to your focus remaining on the task at hand — rapid development of the technology. Hopefully we can free our minds and focus on what we need to focus on.”
To that end, Zak believes in a strategy of condensing the raising of capital as much as possible.
“We identified the budget that gets us all the way to the finish line,” Zak says. “In this case, that will be completion of all of our clinical trials, all of the device development and submission of that data to the FDA for clearance. We took a very granular approach identifying the budget that will be required to get us there and that’s what we raised to.”
When you take a piecemeal approach to raising capital, it can often lead to stress and disappointment.
“That’s where a lot of good intentions stall,” Zak says. “Maybe the environment for raising capital is not what it was two years or three years prior. Or the investor pool or mix changes significantly. Some of those earliest investors don’t have the capacity to keep pace with larger institutional dollar sources coming on board and dilution happens.”
While going to market in 2021 may seem like a long way off for some, it’s a perfect timeline for Zak and his team.
“There has to be science before sales and it has to be evidence-based medicine,” he says. “You have to do it the right way. Otherwise, you’re going to have erosion of the strategy, you’re going to have brand erosion and capital erosion. We do this in a very controlled fashion where we all understand the steps that need to be taken.”
The first of three patents for the ClotChip were issued in June, Zak said, adding that he and Case have been very conscious of protecting their intellectual property.
“We can now be laser focused on execution and doing everything that needs to be done to get a diagnostic device to the marketplace,” he says.
How to reach: XaTek Inc., https://frog-gerbil-86wx.squarespace.com/