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UCT Spin-Out Companies

CapeRay

Innovative CapeRay to revolutionise breast cancer detection

A pioneer in medical innovation and a former senior UCT academic has been instr umental in establishing a company that is on the cusp of prototyping a ground-breaking medical device that is set to change the way medicine is practiced in the future.

Professor Kit Vaughan, former head of Biomedical Engineering at UCT and an internationally acknowledged expert in medical imaging, took early retirement at age 56 to spin out the company, CapeRay Medical, that is committed to developing world-class, but cost-effective methods of medical imaging.

With funding from the Industrial Development Corporation of South Africa ("IDC"), Vaughan officially launched CapeRay on 18 August of 2010.

Together with his research and development team, Vaughan is developing a revolutionary approach to breast cancer screening by using low-dose x-ray technology combined with ultrasound.

The Hyman Goldberg Professor of UCT Biomedical Engineering from 1996 until his retirement last year, Vaughan explained that internationally there is ample evidence that screening programmes dramatically curb mortality rates related to breast cancer. However women in remote regions of the world, and especially in rural Africa, often cannot participate in screening programmes as clinics in remote areas clinics are often not properly equipped with the appropriate mammography technology.

He is thrilled with the progress of the novel mammography device and the implications it has for women in Africa and elsewhere. "I am more convinced than ever that we have the technology with the potential to save many lives, both here in South Africa and elsewhere in the world," he exclaims.

Now on the other side of 57, Vaughan demonstrates an inexhaustible energy and an insatiable curiosity about all things - factors that he feels have contributed to his well-catalogued success in the research and innovation arenas. He is enjoying the challenges and opportunities that his new business career are presenting him.

"I have realised that I am at heart an entrepreneur, and that I'm still young enough and have sufficient energy to pursue another career," he says.

Vaughan estimates that the product will be launched within a year to 18 months. He is grateful to the University and the IDC for their ongoing support. The IDC has initially invested R15-million (US$2-million) in the new venture.

The IDC funding comes as a welcome boost at a crucial stage of the development process as the prototype is now being refined, with additional new IP created and advanced prototypes developed.

The IDC is a self-financing, national Development Finance Institution (DFI). The primary objectives are to contribute to the generation of balanced, sustainable economic growth in Africa and to the economic empowerment of the South African population. The IDC achieves this by promoting entrepreneurship through the building of competitive industries and enterprises based on sound business principles.

"In early 2000 UCT and De Beers secured funding from the Innovation Fund to develop low dose x-ray (LODOX) technology. De Beers subsequently spun out a company called Lodox Systems towards the end of 2002 with funding from the IDC. Lodox Systems focuses on whole body imaging and they are now an established company that sells systems all around the world."

Vaughan explains that the Lodox systems are particularly versatile and are used in emergency wards on trauma victims as well as in mortuaries on bodies where the cause of death has to be established. "It's also been used in paediatrics where they can take an image of a whole child and assess various things, including for example lung cancer, or a lung disorder such as tuberculosis."

"Ultimately Lodox Systems came about because of the early funding we got three years prior to that from the Innovation Fund - so I think that's another success," he adds.

While CapeRay is a spin out company, it still retains strong links with the University who owns shares in the company along with Vaughan and the IDC - other shares are retained by an "employees trust" which will incentivise and reward employees for their efforts in building CapeRay.

While not a direct shareholder in CapeRay, the Innovation Fund will accrue some share of the profits through a royalty agreement.

CapeRay retains strong UCT links through two of its directors, Professor Tania Douglas and Professor Jonathan Tapson. Douglas, who took over from Vaughan as head of the MRC/UCT Medical Imaging Research Unit, and Tapson from UCT's Electrical Engineering department contribute to continuing technical and product development. Tapson also brings with him a wealth of entrepreneurial experience through his own journey along the innovation pathway.

CapeRay is also making use of Department of Trade and Industry's THRIP and TIPTOP programmes to leverage their research spend on further work with the university and in-house development.

How the IDC Venture Capital Business Unit operates

The main objective of the Venture Capital Business Unit is to encourage and facilitate development and commercialization of novel, technology-rich, SA products that could be considered unique from an international perspective.

The Fund makes the distinction that the uniqueness must lie with the product itself, not in the way the business operates, and only considers investing in companies that own their Intellectual Property.

The Venture Capital unit invests in early-stage projects. Unlike standard venture capital investments, the IDC does not have to exit within a specific period, providing equity funding of between R1-million to R15-million per project, in exchange for a minority equity stake of between 25% and 50%.

CapeRay is the first UCT venture to receive this funding, although the IDC has invested in the commercialisation of several other universities' technologies.

The IDC's Dr Paul Johl explains the Venture Capital Business Unit requires a "meaningful financial contribution" by participants. For universities this contribution may be a capital investment or the sponsorship of research for a certain period.

Visit here to read more about the IDC VC funding or see the IDC website[link not working/outdated]