The RetroSense Story: A Life Science Journey to Success

By: Cheryl Isen, Media Relations for Angel Capital Association

Retrosense Therapeutics is one of three companies that won the Luis Villalobos Award for innovation that also had an exit within one month in 2016.  Details on each of the exits are included in three blog posts on October 10.

RetroSense is developing life-enhancing gene therapies designed to restore vision in patients suffering from blindness due to retinitis pigmentosa and advanced dry age-related macular degeneration. There are currently no FDA-approved drugs to improve or restore vision in patients with these retinal degenerative conditions. The company's approach to using optogenetics in vision restoration is based on pioneering, proprietary research conducted at Wayne State University and Massachusetts General Hospital. RetroSense has worldwide exclusive rights to the relevant intellectual property from both institutions. 

Lead investor Ken Kousky shares the backstory on the deal:

CEO Sean Ainsworth was working to raise very early seed money, when he and I were both invited to present at a local TEDx conference. I had just finished presenting the reasons why there is so little available for startups—especially in areas of complex science and emerging technologies. Then Sean gave his pitch and wowed us all with their amazing Star Trek-like science. He convinced us all that his vision was actually plausible, but I have to admit it still seemed part science fiction.

Even though the technology was amazing, the company required very expensive clinical trials—meaning a lot of money would be needed. The potential for dilution is one of the key reasons angels often stay out of these deals. BlueWater Angels got involved because the science behind the technology was very specialized, the virus (delivery vector) was already tested, and we believed in Sean. As an investor you quickly realize what life science investments are all about—complex, rigorous clinical trials with unpredictable outcomes that can put proof of efficacy at risk.

Relative to raising funds, there were a number of critical breaks. One came when Sean presented to a group of scientists—Mass Medical Angels in Boston. After the presentation a student asked—is this really possible? The Director of the Eye Clinic answered, “This will work.” We had the validation we needed from a large hospital that used their professional staff to aide in our diligence.

In terms of syndication, another break came when Sean made contact with ACA group member, Tech Coast Angels. Jeff Friedman played a critical role leading us to other interested groups with critical contacts and investments. Cam Gallagher eventually took over the business development work and eventually opened the door to Allergan.

In terms of moving toward an exit, we didn’t leave any rocks unturned. With Sean’s leadership we found the best talent in the world. He traveled to Russia, Japan and elsewhere to ensure we had the most outstanding experts in the field, and built a virtual team and dynamic organization.

During the journey, as angels we provided a lot of moral support and traveled extensively with Sean to expand the network. We talked to analysts who began to track our progress. We knew from banker solicitations that an IPO was possible, but also knew that it would be long, expensive road subject to external market conditions. We identified about six companies that could be strategic investors. One invited and took a board seat. Once Allergan decided to move forward everything moved fast. They knew how to structure and lead this type of deal. They had strategic solutions and always found a path forward. A deal with Allergan made sense to both sides—it was advantageous to our investors and to Allergan’s strategic commitment to eye care.

The deal was pretty standard and included Allergan purchasing all RetroSense assets for an initial upfront cash payment of $60 million. This will be followed by potential regulatory and commercialization milestone payments we feel confident about achieving, which could add up to hundreds of millions, significantly increasing the payout to investors. We couldn’t have pulled this off without having the best and brightest people we could find. Never underestimate the brainpower required.