Sascan lands a Singapore surprise

February 27, 2024, started like any other day for Sascan Meditech CEO Subhash Narayanan. He had gone to his lab in Trivandrum and started his routine work, as nothing special was scheduled for the day.

But through a string of coincidences, by the end of the day, his company had closed a financing deal worth 2 million US dollars or 16 crore rupees with a Singapore-linked health tech company.

It is perhaps one of the most significant deals of recent times for the Kerala medical device manufacturing sector and provides Sascan with a long-awaited break.

The medtech startup hit the headlines a while back when they unveiled OralScan, a handheld scanner that can detect oral cancer. The toothbrush-like device was hailed as a significant innovation, as oral cancer diagnosis in India is difficult due to a lack of scanners.

Sascan came up with more such tools, and awards kept coming, but the firm, incubated at the Sri Chitra Tirunal Institute of Medical Sciences and Technology (SCIMST) and backed by the Kerala Startup Mission (KSUM), was not able to scale up its growth.

“We started the firm nine years ago, and I had done any number of pitches before investors in the last few years. Nothing seemed to come out of it. But this was like fortune came calling to our door,” says Narayanan.

“I was sitting on this very chair in my office that day when I noticed two people peering curiously into our lab,” said Narayanan from his lab last week. “I invited them over and started chatting with them. It turned out that the visitors were from Singapore-based Mercatus Capital and part of a delegation that was visiting SCIMST.”

Narayanan says he was not aware of the delegation's visit, which was initiated by the Kerala State Industrial Development Corporation (KSIDC).

“That chance meeting led to a hurriedly scheduled presentation at their hotel in the evening, and by the end of it, we shook hands on a deal before they flew out from Trivandrum that night.”

“God works in mysterious ways,” he says with a laugh, his face reflecting the immense satisfaction of achieving a goal he had been pursuing for almost a decade.

A couple of days after their meeting, Sascan received a term sheet, and the deal was formalised, leading to the exit of some early investors.

Unicorn India Ventures issued a statement saying they are making a partial exit with 6x returns but will continue their ties with the startup they had backed with 2 crore rupees in 2020.

Sascan says the new investment will come from Visakhapatnam-based Time Medical Digital Health and Imaging Ventures, which completed a reverse merger with BSE-listed Fischer Medical Ventures in December 2023.

The CEO of the new Fischer unit called Fischer Medical Ventures is Ravindran Govindan, who was the former Asia Pacific head of Fisher Scientific. He is now Chairman Emeritus of Mercatus Capital based in Singapore.

As part of the deal, Sascan will establish a manufacturing unit in Singapore, enabling the company to tap into the global market with a ‘Made in Singapore’ tag.

Another advantage of such a base would be the tax-free benefit that Singapore offers, as India imposes a duty of about 40 percent on imported components.

The new investors have also promised to help in establishing an R&D facility in Singapore and ensure collaboration with top universities there.

For Narayanan, the most important aspect of the deal is the validation of his conviction after the long period of frustration when many deals faded away like mirages.

While startups are often considered a field for fresh blood, Narayanan established Sascan in Bangalore in 2015, almost three years after he retired from the Centre for Earth Science Studies (CESS) in Trivandrum.

The master’s degree holder in Physics, who later obtained a doctorate, was known for his work with laser technology, with his research focusing on vegetation and coral reefs.

The idea to develop a cancer detection scanner came during a visit to a Swedish lab in his CESS days. The lab was exploring methods to detect mouth and cervical cancer using biophotonic technology.

Inspired by this, Narayanan proposed a similar project to the Indian government in 2005 and was awarded a grant. The research was conducted in collaboration with the Regional Cancer Centre in Trivandrum.

His work led to the Indian Council of Medical Research awarding him the Novartis Oration Award in 2010, an honour usually given to medical practitioners.

After he retired from CESS, Narayanan initially took two consultancy roles: one with a health tech firm called Forus Health in Bangalore and another with an aerospace company called Vinvish in Trivandrum.

During this time, Narayanan formed Sascan and managed to secure funding worth 50 lakh rupees from the Biotechnology Industry Research Assistance Council (Birac).

But family responsibilities forced Narayanan to shift back to Trivandrum in 2018, effectively relocating Sascan to Kerala. This led to many in the original team, including cofounder Ruhi Agarwala, gradually parting ways with the startup.

The move proved beneficial in some ways, as SCIMST and KSUM provided funding for the startup, which was achieving encouraging results. Soon, Unicorn Ventures, with its focus on the Kerala tech scene, offered Sascan a 2-crore rupee investment.

“This came to us at an opportune time, as the funding helped the company navigate the difficult Covid lockdown period without layoffs or scaling down research,” says Narayanan.

In 2021, OralScan was awarded the top prize in the Pharma and Medical Devices Grand Challenge, a competition jointly organised by the central government's Department of Pharmaceuticals, Startup India, and Investindia.org.

Using the same technology, Sascan later developed a cervical cancer scanner, which is currently undergoing clinical trials. It detects cancer by mapping changes in tissue autofluorescence and oxygenated haemoglobin absorption by utilising multispectral imaging technology. It uses intuitive software along with a cloud-based machine learning algorithm to give real time feedback.

The oral scanner was hailed as a breakthrough tool by the media and technical experts, especially given that India reports around 80,000 new cases of oral cancer each year. The disease can be fatal if not detected early.

However, the lack of facilities in India means oral examinations are often conducted using torchlight, making the detection of early-stage mouth cancer nearly impossible.

Despite this, Sascan found the going tough as the private sector was not focused on early detection and prevention of diseases, while governments that promised action often failed to deliver.

A quantum leap for a medical device manufacturer is difficult, especially for a new and innovative product. Everyone wants to conduct their own tests on its effectiveness because it is a new method that has not existed before.

The device also received approval from European authorities. However, penetrating the global market proved even more challenging, as India is not exactly known for its innovative technological products in the health sector.

“To achieve this capability, we need to get reputed health institutions to use the device, document its effectiveness, and publish their findings in respected journals,” says the Sascan CEO. “This would also raise the standing of the institute as a research centre. Unfortunately, there aren't many institutions doing this in India, and many experts shy away from such work.”

Sascan had donated OralScan to some prominent hospitals in Kerala, and they reported good results. Yet, a bulk order failed to materialise.

The startup showcased its products at various international healthcare exhibitions and got listed on MedZell, a platform that helps Indian medtech firms market their products. This visibility led Japanese electronics giant Panasonic to engage them for product development, as the company was exploring entry into the medical devices sector.

The Panasonic project couldn’t run its full course as time constraints necessitated a smaller sample size, and the results didn’t meet the Japanese company’s expectations.

“But that project had also come to us unexpectedly and at a time when we were looking for a funding boost. Moreover, the work we did helped us develop new tools, which are now in progress.”

The new tools being tested can detect the progression of cancer in the spinal cord and brain. The probe can be used during surgeries to measure oxygenation levels in affected areas, providing vital data.

Diabetic foot is another area that Sascan is now exploring. Currently, it is treated with antibiotics, but sometimes the problem worsens as the drugs prove ineffective, leading to use of more potent drugs. Patients can then develop resistance to these drugs, which may ultimately result in limb amputation.

Sascan has developed an antimicrobial photodynamic therapy device for treating diabetic foot and it is currently undergoing tests. This tool could also be used to kill cancerous cells, paving the way for early-stage treatment of the disease.

“Most companies focus all their efforts on one successful product, but we have plans for expansion into different areas. That probably impressed our investors,” says Narayanan.

With investment secured, Sascan plans to build a research facility at Bio360, the Life Sciences Park that is being developed in Trivandrum.

The company is also in discussions about a future project with the Kerala Medical Technology Consortium, a government body responsible for promoting Kerala as a global destination for medical technology and devices.

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