“Big Pharma won’t touch us”: University spin-out TDeltaS on inventing a new food group
17 min read
15 January 2019
How does an Oxford University spin-out TDeltaS, of fewer than five staff members, invent a whole new food group and become a trusted supplier to the US military, Tour De France cyclists, and NFL teams? We speak to Oxford University’s Professor Kieran Clarke on commercialising IP and the lessons along the way.
Forget the food pyramid and your five-a-day. An IP-heavy Oxford spin-out, TDeltaS has invented a whole new food group that supports the human body’s natural fuel source: ketones.
Following an abstract request from the US military to explore a fuel that could send soldiers into battle with optimum energy levels, TDeltaS created a way to optimise nutrition through a drink based on ketones that suppress feelings of hunger and enhances performance. If TDeltaS’ intellectual property sounds like a magic bullet for energy, weight loss, and metabolic performance, that’s because it kind of is.
The brains behind the operation, Professor Kieran Clarke of the Cardiac Metabolism research group at Oxford, tells Real Business how the R&D heavy business came to be.
“Throughout evolution, for thousands of years, people have always been semi-starved. We’ve lived through times where there’s plenty of food, and times when there’s no food. There was no form of storage, and you very well couldn’t freeze it for later. It’s in times when there’s no food that the body was protected by monopolising fat and raising ketones,” she explains.
Ketones are chemicals made of fat, produced to protect the brain. With the growing popularity of ketogenic diets and intermittent fasting, a small but scrappy demographic of dieters all around the world have changed their lifestyle to become ‘fat adapted’. It’s not a new concept that the human body can survive times of feast and famine, as Dr Clarke explains. The cult popularity of Dr Atkins of The Atkins Diet fame, and more recently Dr Fung extrapolated human and animal studies to reveal enhanced performance, sustained weight loss and autophagy that can potentially lead to cell rejuvenation that results from being in a ketone producing (or fasted) state.
In simpler terms, when human beings take a break from eating, a beautiful chemical process kicks into gear. The body stops relying on food for fuel, as glycogen depletes from the liver, and turns to its own fat. This isn’t without risks, most medical practitioners warn.
Additionally, ketosis can take days. It’s a bit of a slog as you switch from a carb-fuelled diet, usually with a 24-hour fast followed by eating ketogenic foods that are high in fat and protein. It can take 2 to 7 days to get into ketosis and weeks to become ‘fat adapted’. This is where TDeltaS has found its sweet spot.
“We’ve essentially invented a new food group. This allows you to have a normal balanced diet and have ketones, which have protected effect on the body.”
Today, most people in developed economies don’t really go without food for very long, she adds. “Intermittent fasting works because of this. Ketones protect against Alzheimer’s, Parkinson’s, cancer, epilepsy, and other metabolic diseases we now have in abundance because we eat too much all the time.”
Supporting the troops
“We’ve been studying this year for years at Oxford,” she tells Real Business. In 2003, during the Iraq war, Dr Clarke got a call for DARPA (The Defense Advanced Research Projects Agency) to support the troops. This is the very same DARPA that funded the world wide web and technology like GPS.
TDeltaS received $10m in funding to invent a new food group based on ketones. “It wasn’t easy, and we spent many years trying to find out how to do it. We finally came up with TDeltaS in 2005 to support all of the IP coming out of the work we were doing, and it was working so well, we’re now ready to commercialise it.”
“In 2003, absolutely nobody had thought of a ketone drink, except for a couple of eccentric scientists. We would have never received conventional funding. All DARPA’s research has led to things that are generally off the wall; things we wouldn’t have today if investors didn’t take a risk.”
In addition to the DARPA funding, TDeltaS uses non-traditional schemes, such as the Industrial Fellowship scheme of the Royal Commission for the Exhibition of 1851 to build a scalable model. The spin-out employs PhD students who are in it for the thrill of changing the world, while working on their own research at Oxford.
The Industrial Fellowship programme pays half the salary for a PhD student to join the organisation, as well as providing a generous travel allowance and wealth of academic connections through its fellowship network.
Growing a lean startup
“We’re built on the lean and mean principle,” Dr Clarke says. “We do everything on a shoestring. when TDeltaS was founded in 2005, I knew absolutely nothing about business. I had no idea what an agreement was, a licence was, a joint venture…nothing! I had to learn quickly. I was taught by generous people, including a few angels that came my way. People who’ve invested have really helped the company and helped me are a fountain of knowledge. We’ve kept lean and mean, but it really relies on people actually volunteering help.”
The key thing for TDeltaS is that being a spin-out means minimal overhead costs. “Not having fat salaries to pay, expenses, and more or less doing everything for free has helped us,” she adds.
TDeltaS now has a company in the US, HVMN (pronounced “Human”), taking the nutritional drinks to market. Like TDeltaS, HVMN is a “tiny SME from Stanford,” she explains. “When the angel investors come in, you don’t waste their money. You’re very careful, and you need to tell them exactly what you spend. The angels come in interested for one reason or other, usually interested in diet, ageing or a healthy lifestyle, and then you teach them. All of our angels now know biochemistry in a way, but they like it. They appreciate learning everything.”
The road less travelled: Becoming an entrepreneur
For Dr Clarke, entrepreneurship just happened. “It never occurred to me I’d be an entrepreneur,” she says, remembering her 16-year journey.
“At each stage of the venture, getting through the FDA and so on, you think surely it’s going to fail now. Maybe we’ll run out of money. But you keep going, and you become resilient.”
“In the end, it’s going to be such a huge benefit to the world that you have to keep going or it’ll get lost. So many things are invented in science that never see the light of day. People publish it and that’s it! It gets lost. If you think you’ve got something worthwhile, even if you’re wrong, you’ve still got to do it. It’s our gift to the world. It’s like penicillin. No one ever dreamt it would work, and look at it now. It has saved so many lives.”
The drink in question looks like a slightly more viscous type of water. Healthy individuals can have a drink a day and function optimally. People with metabolic conditions may drink 3 to 4 drinks a day to maintain ketone levels, she explains.
Mistakes make an entrepreneur
It hasn’t been all rosy for Dr Clarke. Sure, the research was funded, and there are many schemes in place for her team, but she finds the move from academic to entrepreneur a constant educational journey. “I’m still learning, I must say. I’ve made a lot of mistakes and lived through it, but only just. I tell myself I’ll never do that again, as I survive. I think by talking to people has been the biggest lesson.”
“People give you advice, and most of them are trying to be helpful. That said, there are a few con people who try to rip you off, but most people are kind and generous, and you just trust them. You’ve got to know who to trust though…”
The biggest risk for Dr Clarke was before the product was commercialised. Since then, the risk has decreased as she has seen interest steadily grow. “Before, scaling up was a risk we weren’t sure we’d be able to do. Now I know we can do it. The next thing is selling it commercially, and HVMN is doing that, and well. The price is very expensive but we know how to get that down.”
Big Pharma and food companies aren’t natural allies
Another eye-opener for Dr Clarke was the industry. Inventing a new food group is unprecedented, and possibly not going to happen again in the near future. “Large companies, especially Big Pharma, have absolutely no interest in this. They don’t do food. They like nice tablets and capsules. They’re really not interested! I’ve talked a lot of big companies, food and pharma. It’s not the path we want to take anyway,” she adds.
Food companies too cannot see themselves backing the business, opting for a wait-and-see approach to swoop in for an acquisition. “They want us to go out and sell the product. ‘You make it popular and we’ll buy you.’ So they want us to do the hard work and take the risk. Fair enough! I’ve learned my lesson. I know their attitude and either way, I prefer working with small companies. They’re adaptable.”
That’s how the licensing relationship with American distributor HVMN came about. Dr Clarke published a paper in Cell Metabolism, a top-tier journal in the industry. “Geoffrey Wu, the CEO of HVMN emailed me. He has a small company that sells vitamins and minerals that are quite interesting. He’s got the same idea as me and he keeps his company lean. Plus he knows digital marketing which, I, of course, don’t. He knows how to get out there. People who buy this first are going to be people who can afford it and interested in health. You can’t get people any more interested in health than people in California. So we partnered with them.”
Entering new markets
The next big stage for TDeltaS is taking the product global. This involves passing through regulatory hurdles in various geographies, which can be a barrier. “We’re selling to the US, which was relatively easy. I must say I enjoyed working with the FDA. Some countries are more difficult than others, but you just have to do it. We’re going around the world doing what we have to do.”
Dr Clarke met with the FDA and found that face-to-face interaction much easier. “They’ll tell you what to do, and you go off and do it. It takes years but you’ll get there. Europe won’t meet you at all, so you have to guess what they need. It makes it very difficult but you just hope you’re on the right path. They send you a letter if it’s not right yet. They don’t speak to you face-to-face, so you have no idea what they’re thinking!”
Her biggest takeaway from entering new markets is to understand the culture in each geography. “China is very different to the US, for example,” she explains. “You have to know what they look for and how they operate. They do the testing themselves to prove whether your IP works or not. In the US, they believe what you publish in journals, and you’re much more likely to get through the FDA if you do what they tell you.”
The hardest part when growing a business of its kind is knowing how to benchmark success. “You can’t do it with a high tech firm or any other kind of university spin-out. If someone who makes a specific type of equipment wants to grow their business, it’s about getting it out there before someone makes a similar thing or better. With food and pharmaceuticals, you have to be very careful not to get it wrong. The standards are a lot higher because human lives are involved.”
The biggest barrier is perception
The diet food and nutrition market is saturated. Every new product out there comes with its own studies and proof of concept, but there’s a fundamental lack of understanding about the way our bodies function that makes it hard to market innovation in the space.
“I’m sure that people are not educated about their bodies or about food. It’s a psychological thing and an inherited thing,” Dr Clarke says. “Most of us are raised with the concept that we have to eat everyone on our plate because food was scarce at a time. Now we have an excess of food, but we’re still programmed to think it’s scarce.”
“People don’t think about what they’re eating; they just eat. We need a whole seachange to be responsible for our own bodies.”
Alzheimer’s is basically a form of type 3 diabetes. Other metabolic illnesses like Parkinson’s and type 2 diabetes are preventable, according to Dr Clarke, but we’re not doing anything about it. “It’s scary for people, but also for healthcare workers. There’s no magic bullet.” Except maybe what they’re cooking up in Oxford.