Karmic Life Sciences, a Mumbai based oncology focused contract research organisation (CRO), has raised $500,000 in its first round of funding from Indian Angel Network (IAN). IAN members Avinash Singh and Rusi Brij along with Sanjay Vatsa, a Citi Bank executive in the US, have invested in the company. Avinash Singh, who has contributed $180,000 towards the funding, is currently the CEO and MD of Excel Ventures, an early stage private equity fund. Rusi Brij is the Vice Chairman of Hexaware Technologies.
The investments have been made for minority stakes in the company. “Less than 15% stake has been diluted,” Nidhi Saxena, Founder and CEO, Karmic Lifesciences told VCCircle. The company plans to use the proceeds of the fundraising towards building a deep domain expertise by hiring very senior medical professionals, expansion of infrastructure and business development in the US markets.
Avinash Singh, who was also a founding member of Birlasoft and worked with the company as its Asia COO till last year, invests only in technology, healthcare and education sector. He says that he chose to invest in Karmic Lifesciences as it is in line with the portfolio that he wants to build.
“I chose to invest specifically in Karmic Lifesciences because their business model is differentiated from the regular clinical research outsourcing companies,” said Singh.
The firm, that started its operations in June 2008, conducts clinical studies as per the DCGI (Drug Controller General of India) regulations, for pharmaceutical companies looking at launching new drugs in the Indian or foreign markets. It finds the sites for hospitals for its clients on a pan India basis, recruits patients, ensures GCP (Good Clinical Practices) compliance by monitoring the sites and creates a final study report which goes for the submission and approval for the drug for marketing in any part of the world.
The fee that Karmic charges its clients forms its main revenue stream. It also draws revenues by charging referral fee. This comes from its partners who provide biology and chemistry and bio-analytical services for drug development. It is also setting up a training model wherein it would train industry professionals and certify them. This is also expected to contribute to the company’s revenues.
Though Karmic is revenue generating, it hasn’t yet reached the break-even point. “We are very close to break even and will be operationally profitable by March 2010,” says Saxena. The firm has a team of 30 full time professionals and 10 part time consultants. It currently provides its services to eight clients, which includes domestic as well as global pharmaceutical majors.
According to Avinash Singh, Karmic Lifesciences scores over other CROs as “instead of going to the hospitals in the major cities like Mumbai and Delhi, they go to tier II cities like Pune or Lucknow.” The company is not just looking at succeeding in the areas of clinical trials and research but also plans to build IP. “I want to build IP through core development deals by partnering with R&D companies and taking a molecule from start to finish, claim IP on it and get royalties on its sales. That’s my differentiator,” says Saxena.
She decided to focus her company’s research on oncology as she feels that oncology is currently the fastest growing sector and is expected to be a 100 billion plus market by 2012. “India has about a million cases per year in different types of oncology so it is easier to do research here,” she says. Besides this, a death in her family due to cancer compelled her to wonder why there were no cures for the disease till now and hence she decided to make oncology the focus area of Karmic Lifesciences.
Prior to launching Karmic Lifesciences, Saxena worked with WNS, North America as it Vice President, Financial Services. The company plans to raise its next round of funding in about 6 months to 1 year from now. According to Saxena, “Raising the second of funding will be very tough because of the investor sentiment. Also the valuations will be low.” The company plans to first turn operationally positive and then raise the second round of funding at higher valuations.
The company’s expansion plans include moving to a state of the art 15,000 sq feet facility from the current facility of 3,000 sq feet. It also plans to set its own bio-analytical lab to support its research, besides setting up local offices in US and Europe. It also aims at setting up a pre-clinical/animal testing unit.
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