Oct. 7, 2013
Source: Knoxville News Sentinel
By: Amy Nolan
ProNova's possibilities draw local entrepreneur Joe Matteo out of retirement
Knoxville company ProNova Solutions developing next-generation proton therapy
SAUL YOUNG/business Journal Joe Matteo, division president for research and development and manufacturing at ProNova Solutions LLC.
Joe Matteo couldn’t say no to Terry Douglass.
The two had worked together at CTI Molecular Imaging, the Knoxville company that developed PET imaging technology, which Douglass and three other local engineers founded. Matteo describes Douglass and the others as mentors who hired him and promoted him to lead CTI’s manufacturing and research and development efforts, and then encouraged him when he started his own imaging technology venture in 2004.
The two are neighbors on a remote ridge near Walland, where the “tinkerers” adapted technology to pump water from a well to their homes and their neighbors. During one of their walks in the woods, Douglass asked Matteo what he knew about proton therapy, the advanced cancer treatment that Douglass planned to start offering in Knoxville.
“I said, ‘You need some help, don’t you?’ because he was probing pretty specifically,” recalls Matteo, who headed CTI’s cyclotron business, machinery that also powers proton therapy. “He said, ‘I would love to have you come up and help us.’”
Matteo soon found himself driving up Pellissippi Parkway to the Provision Center for Proton Therapy that was under construction in West Knoxville.
In a reversal of roles, Matteo says when the team began talking to vendors, “Every company that came in here asked for help with imaging and eventually asked us for help with manufacturing.
“Within a couple of months a group came to us with a piece of technology and said, ‘We can’t develop this but we want to buy it from you if you can develop it.’ ”
Douglass, Matteo and Mary Lou DuBois, president of Provision Center for Proton Therapy and a 20-year CTI veteran, created a business plan. And then Matteo had to decide whether he wanted to join the effort.
“I went home to talk it over with my wife, Debbie, because we knew how much work it was, how it would change our lives,” says Matteo, who had been consulting and biking since selling NanoTek LLC in 2007. “I was really thinking of just staying on as a consultant and she said, ‘You know it’s going to happen. And if it’s going to happen in Knoxville, there’s no way you are going to keep yourself out of it, so you might as well run it.
“I came in the office the next day, sat down with Terry and said, ‘I am in. Let’s do it,’ and that was it, off we went,” Matteo says.
To say their timeline is aggressive is an understatement. The new venture, ProNova Solutions, expects to ship its first system in 2015.
“We call this a startup business, but this is a startup business on steroids,” Matteo says. “We are building a major product and major company in a very short period of time.”
While acting in many ways as a big company in preparation for Federal Drug Administration clearance, ProNova is still a startup that’s financed like one — albeit with founders with deeper pockets because of their earlier success.
Douglass, Matteo and DuBois financed the first year, 2012, when they conducted engineering tests and firmed up collaborations with the Indiana University Cyclotron Operations and Indiana University Health Proton Therapy Center, both of which are deeply connected to John Cameron, a physicist who is among the pioneers in proton therapy. Cameron’s recent work has focused on deploying superconducting magnets, and ProNova will incorporate that technology in its designs.
This year, other employees have bought stock, and many have been granted options — a scenario that generated wealth among CTI employees a decade ago.
“Our first raise was totally internal, employees and a few close collaborators,” Matteo says. “Similar to CTI, we are promoting ownership and involvement.”
Money is being raised from outside investors now.
“It’s a lot easier to do here because of Terry’s track record, and my track record,” Matteo says of raising capital. “The community is familiar with us, and a lot of the folks here are familiar with us. This is a really unique startup, and anybody who comes here knows it right away.”
Blount County, where the foundation is being dug for ProNova’s new facility, has essentially given the company 26 acres at Pellissippi Place Business Park, and waived its property taxes for the first eight years. The state will chip in with nearly $4.3 million in grants to build out the park’s infrastructure and train employees.
Matteo expects ProNova will be in its new building in May 2014.
While ProNova may be unique, Matteo acknowledges, “We make comparisons to CTI all the time. It’s a very parallel business, very similar, just bigger.
“I describe it as CTI times 10 — it’s 10 times bigger, it’s 10 times more expensive and it takes 10 times more effort,” he says.
Many entrepreneurs reach a stage in their life that they want to give back to the community that’s helped them achieve success. Matteo says he gets a similar sense of satisfaction from ProNova.
“There is probably nothing I can do that would have a bigger impact on this community than to make ProNova successful,” he says. “We are generating a huge number of high-paying jobs and we are putting an enormous amount of manufacturing business into the community. At this point in the economy, around the country and locally, people really appreciate bringing that kind of technology here.”
By the time ProNova is at full steam in 2018, the company is expected to have invested $52 million in the project and employ 500 people, many of them engineers, software developers and other highly skilled and high-paying professions.
Current technology will be in use when the Provision Center for Proton Therapy begins accepting patients early next year. But ProNova is reserving two of the five vaults to install its own technology.
Milestones were marked in September when multiple components of its lightweight gantry were installed in one vault, and its unique superconducting magnet elements were tested.
According to announcements from the company, the gantry and magnet assembly is one-third the weight of similar machines and operates at half the power.
“We really believe in the proton therapy business model,” he says. “We think it’s the right technology. We think the timing is right, and we think we can solve the things that have it held it back — size and cost.”
The collaborations with Indiana University are a big reason for his confidence, as well as the experience of the team.
“Our team is probably a little more experienced and of the size of an FDA structure, but we are also an an R&D company that is developing a new product, so we don’t want to introduce that structure too soon,” he says. “We are pretty careful about balancing that — we want to be creative and we want to move fast, but we also know that we need to transition to a medical production manufacturer.”
Matteo says one of his colleagues joked that ProNova “lives in dog years. One of our years is like seven years for everybody else. We are just going so fast and it’s just really exhiliterating.”
He tells his team that 2015 — when ProNova hopes to have FDA clearance — is not the end, but just the beginning.
“If you think about the kind of people we attract here, they always want to be generating new technology,” he says. “We are going to be developing that for years and years, and we are going to be building relationships with world-class research institutions, which we are already doing.”
Much like CTI continued to advance positron emission tomography and revolutionized cancer diagnosis, ProNova will continue to refine proton therapy and make it more accessible for cancer treatment, he says.
“We are very much technology focused and we want to be the technology leader. That was CTI’s role in PET. They were the innovators,” he says. “I think that’s the fun part too.”
The company estimates that about 30 percent of cancer patients who receive traditional radiation therapy would benefit from proton therapy instead. That amounts to about 320,000 patients annually. Only 12,000 can be treated in the United States with proton therapy’s current capacity.
“So there’s a huge gap,” he says.
Talk to Matteo about his journey as an entrepreneur, and you’ll hear little about education and technical skills, and a lot about relationships.
He and his wife Debbie, who would later retire from Oak Ridge National Laboratory, arrived in Knoxville from Baltimore. Joe Matteo had applied for a job at a San Francisco maker of cyclotrons — he was working in robotics, at the time — that CTI had purchased.
He toyed between job offers in Los Angeles and Knoxville, which the couple preferred over L.A., but the selling point was the people, Matteo says.
“I always felt like I wanted to have my own company,” he recalls. “I didn’t know what I wanted to be, but I knew being around guys like that was a good thing.”
He had already garnered Small Business Research Innovation Research Grants, and CTI’s founders encouraged him to explore his own research ambitions.
Several years before he would launch NanoTek, he told Kelly Milam, a CTI co-founder who led its cyclotron business, that he was considering leaving. Milam said he was too, and he asked Matteo to succeed him.
Matteo turned to another mentor, Lee Martin, a local entrepreneur who shared his interest in robotics, for advice.
“And Lee said, “I think you should take the opportunity and don’t look back. So I gave up the small business thing, and I literally made a very conscious decision I was going to take that job and build the skills I needed.”
At 53, Matteo says he’s since come to believe that “life-changing opportunities blow past us all the time ... I think the challenge is to have the skills to recognize it and the courage to take it. So that’s consciously what I did, and I really had an opportunity to run the business unit and learn the financing side of running the business.”
By 2004, he and Debbie were ready to strike out again with NanoTek, which was developing systems for rapid production of biomarkers, a critical tool for drug discovery and detection of cancer, heart disease and other chronic diseases.
The reaction of CTI’s Ron Nutt and Douglass was “when are you going to start?” he says.
He also cites a number of other mentors, including former ORNL scientist Mike Ramsey, who is now at the University of North Carolina. He was consulting with Ramsey, as well as working in his home’s R&D lab — “I did a couple of patents and was developing a few ideas” — when the ProNova opportunity arose.
Joining Douglass and Dubois again, he says, “was a big step, but it’s a lot more than a job.”