Venture Capital’s Pusherwoman

In her 12 years heading up Southwest Medical Ventures, Ms. Tuttle has raised $10 million in early-stage venture capital and founded four companies, and has been a leader in creating jobs and recruiting talented life scientists to the area. In 2003, Ms. Tuttle mentored a class of working entrepreneurs through the Next Generation Entrepreneurial Leadership Excelerator program, and she has just finished a $5.4 million first round of funding for her newest company, Exagen Diagnostics.

Exagen’s innovations may save millions of dollars in medical expenses by helping doctors know which patients will respond to treatment for some types of breast cancer (40,000 diagnoses each year) and resistant strains of hepatitis C (4 million diagnoses). With as many as half of hepatitis C patients exhibiting drug-resistant strands of the virus, knowing who will respond to what treatments could save health care providers from needlessly writing a $30,000 prescription.

Ms. Tuttle is helping to change New Mexico's business landscape, grooming its rich intellectual infrastructure to focus on small business development. The state is a burgeoning life-sciences research hub. We sat down with Ms. Tuttle to discuss her next frontiers, what makes a successful life-sciences startup, and biotech's next big thing.

Red Herring: What is the climate for growing companies in New Mexico?

Waneta Tuttle: There has been significant investment by the state of New Mexico in venture funds. That’s the model the state has used to increase the amount of available capital for startups.

Red Herring: What about other resources? Have you worked with the University of New Mexico?

Tuttle: They’re an important clinical partner for us. We’re moving to some other sites, probably in the next six months or so, but UNM is very important to us. And the three funds that are invested in us all have money from the state of New Mexico in their funds, so the state doesn’t directly invest in our company, it invests in the funds.

Red Herring: Aren’t those investment groups from out of state?

Tuttle: Yes, VSpring and Wasatch are both Salt Lake City headquartered – think of the Wasatch Mountains – and Tullis Dickerson is the lead investor and it’s based in Greenwich, Connecticut, but all three of the funds are required, because of the state investment, to have a presence in New Mexico. I’ve been doing this for more than a decade – somebody says why and I say, “Well, we were able to do it” and you do what you’re excited about doing. We’re entering a new wave of opportunity for startups and I think we’re going to see a lot of them.

Red Herring: Can you talk more about that?

Tuttle: There are 11 funds now that have investments from the State of New Mexico, they all have motivations to make investments here with others in the state and we’ve always had a tremendous technology base here – Sandia National Lab, Los Alamos National Lab, the U.S. Air Force Research Lab. A serious entrepreneurial infrastructure is growing and will take advantage of all of that. The availability of capital is, of course, the ingredient that makes it finally happen.

Red Herring: Which areas in and around New Mexico might be centers of growth in the future?

Tuttle: To tell you the truth, I’m so head’s down working on this startup that I’m not looking out on a day to day basis, but I’d certainly look at some cities in the Mountain West: Salt Lake City, Albuquerque, where the technology, and the capital looking for new opportunities, should spur new growth. It’s going to be a long-long time however, before we reach the volume of a Silicon Valley or Boston Area.

Red Herring: Why the Mountain West region? Why now?

Tuttle: The technology infrastructure has been here, often for many years because of federal investments from the Department of Energy and Department of Defense. This area of the country also happens to have very fine and relatively inexpensive places to live. So why now? One of the most interesting things for me in the last six to eight months has been the calls I have received from people who have figured out that the capital availability is the new piece to this story. They’re either people who were from here originally, have spent time here hiking in the mountains, or want to come back and understand that there may be opportunities for technology-based businesses.

Red Herring: What are the ingredients to a successful life-sciences startup?

Tuttle: There are a number of ingredients, but I guess I’d begin with people – that has to do with both technical and managerial talent. That’s first on the list. Second is a market opportunity that’s well understood, quantifiable, and achievable. Third is real innovation.

Red Herring: How important is it to pursue technology that doesn’t require approval Food and Drug Administration?

Tuttle: I think that shouldn’t be the driving issue. The driving issue is the unmet need and how that is approached. Sure, some of the most important innovations are ones that require FDA approval. You just have to be cognizant of the additional time and money involved.

Red Herring: Do you feel that doctors and the whole infrastructure around them are quick to embrace innovation?

Tuttle: They’re very excited about embracing innovation. At the same time, they live in a world that has tremendous pressures both in terms of what they’re doing from a quality standpoint and in terms of time and use of resources. So, if we’re going to give them a genomic marker for breast cancer prognosis, let’s make our marker work on tissues in the way they’re normally handled in the surgical suite and in the pathology lab.

Red Herring: What is the most compelling or interesting activity in biotech right now?

Tuttle: The most interesting thing – and we are a part of the story – is personalized medicine. What personalized medicine really captures as a term is the idea that you can tailor treatments to specific patients, specific conditions. It’s pretty well known that one drug doesn’t fit all. This is going to have a huge impact in a very positive way. And we’re a very small piece of a very big-sea change.

Red Herring: You say “very big,” but what kind of market are you looking at?

Tuttle: Well, the markets are all the same market: drugs and diagnostics. It’s really a reorganization of those markets – a major reorganization. Suddenly, diagnostics are becoming critically important because diagnostic products are needed to identify which patient to treat with which drug. That’s the specific part we’re playing. Reimbursement is going to be a big issue because for each drug there’s going to be a smaller patient population for whom it’s appropriate. There will be tremendous savings by not giving that drug to people for whom it is not appropriate. How does that all get reconciled around pricing?

Red Herring: It seems that the drug companies would be less than enthusiastic about anything that would shrink their markets.

Tuttle: Right, but at the same time, the discussions about personalized medicine have been going on for probably half a dozen years, at least. I think the pharmaceutical companies are now beginning to really embrace the opportunity.

Red Herring: So it may decrease their time to market?

Tuttle: I think the promise is there, yes. And it’s new for everybody in the field, but that’s my answer to what’s hot in biotech.

Red Herring: What other areas do you find exciting?

Tuttle: I am interested in what’s happening in the whole arena of nanotechnology. It’s exciting to really look at some of the things that can happen in medicine in terms of drug delivery, sensing, etc. Those are very exciting.

Red Herring: How do you know when to brush off your hands and say, “My work here is done,” and move on to something else?

Tuttle: There are two ways that might happen. One, we were just wrong about everything and it isn’t going to work. But more likely, it’s going to be when a company has gotten to a technology proof stage: proof of market, proof of concept, beyond proof of concept.

Red Herring: What do you look for when selecting a CEO for a company you have shepherded to that stage?

Tuttle: I am a firm believer that there are CEOs who are really terrific and are at their best at different stages of development of a company. So, as we begin to move into real, full execution in terms of the market at Exagen, we’ll be looking for a CEO who takes us to the next generation. When will that be? I don’t know. I’ve always been just adamant about saying, “I’m here until I’m not the right person,” and then move on.