A “Viral” Startup

A “Viral” Startup

Well-known to Georgia, but new to the West: how Phage Nutraceuticals’ founder & CEO Rati Golijashvili uses bacteriophages, viruses, to disrupt a global market.

The high ceilings of the early 1900s medical building, and the heavy metal doors, combined with old Georgian and Russian medical books on phage therapy and bacteriophage research may seem an unlikely spot for a hot high tech startup, but for the fast rising Phage Nutraceuticals, this is their homebase.

Forbes meets with the startup’s founder, Rati Golijashvili, in the heart of the century old research facility on bacteriophages, just off Saakadze square, in Tbilisi. Slightly out of breath, but full of energy, Rati runs into the office where we are waiting for him. He apologizes for being late, but the snowstorm hitting Tbilisi overnight had made the trip from his family home in the dacha town Saguramo, 30 kilometers outside of Tbilisi, a bit of a hurdle.

Born into a family of biotech entrepreneurs, with his father founding the only phage pharmaceutical company in Georgia in the early 1990s, Rati knows the field he is getting himself into extremely well. And by focusing on the US market, he has a clear competitive advantage: no one knows what phages are, and there is hardly any competition, let alone from a young creative entrepreneur from a country that has led the research on phages for almost a century.

PHAGES, WHAT ARE THEY, WHAT DO THEY DO, AND WHY DOES IT MATTER?

Rati calls phages the “black matter of the earth, which are the most abundant naturally occurring microorganisms on earth,” bacteriophages, or phages for short, target and destroy bacterial cells. Phages live in seawater, freshwater, soil and sewage slurries. There are around 1030 – 1032 phages in the biosphere and every 48h, phages infect and destroy about half the bacteria in the world. And different from antibiotics, phages only target particular bacterial species they are linked to.

But in the United States, after the discovery of antibiotics in the mid 20th century, the research into bacteriophages halted – antibiotics seemed an easier and more cost effective approach. Hidden behind the iron curtain, however, research and treatment continued. These studies were extensively published in non-English (primarily Russian, Georgian and Polish) journals.

And this is the field Phage Nutraceuticals is jumping into very cleverly. Not by offering pharmaceutical products replacing the well trusted antibiotics, but by offering preventive supplements and nutraceuticals for travelers, Travelphage™, and overall health improvement.
Rati was, already for years, contemplating new uses for phages in different fields, not just pharmaceuticals. While working at his father’s company Biochimpharm, he knew the implications of phages could potentially be huge. And this is where the innovation comes in.

One of the products Rati is developing is a supplement balancing out the good gut bacteria. A well-researched topic, it’s been known for decades that harmful bacteria in your stomach affect your overall health. As a countermeasure, probiotics were introduced. Unfortunately, probiotics only add healthy bacteria to the gut, but are not capable of eliminating the harmful ones. And that’s where phages come in. By combining several different phages attacking the harmful bacteria, probiotics are more likely to have a successful outcome, building a healthy microflora.

“It’s the door to your immune system and your overall health, even your mental health,” Rati says about the gut’s microflora, “and if it’s not balanced, your overall health won’t be too. And the balance depends on good and bad bacteria; with phages, you can easily eliminate, or control those bad ones.”

A STARTUP ROLLERCOASTER

When Rati founded his startup end of spring 2016, he couldn’t know the rollercoaster he would get himself into. Winning the startup pitch event Startup Georgia by GITA in July 2016, Phage Nutraceuticals was awarded with GEL100.000 in pre-seed funding, has been taking part in an intensive incubator program, with mentor advise from Silicon Valley, and is likely to take a trip to the heart of startups in Silicon Valley self, and pitch their products to investors in the States.

“As any startup, we are looking for a next round of investments, the seed round,” Rati says, “But we will already have our first products ready by the second half of 2017, even though we are really an early stage startup.” and they will start selling the products in the US, online.

And Rati is confident in his products, “the products we’re developing are a solution to actual problems, and they are doing so in a new, innovative manner.” That is why he believes his startup will get the attention of investors abroad.

BIG RISKS YIELD BIG RESULTS?

With phages being an unknown treatment course in the West, one of the major hurdles Phage Nutraceuticals has to take is a lack of trust. I ask Rati if he is not concerned consumers in the United States, the startup’s primary market, will have a hard time being convinced that viruses from the former Soviet Union can help with their health?

“We always fear anything that we don’t know,” Rati says confidently, and adds that “as information [about phages] spreads, more and more people will understand it’s safe, because it is.”
And that combined with a strategic online marketing plan, should mitigate for any distrust from the customers’ side.

A STRATEGIC LOCATION AND CONTRACTOR

Rati works with his startup from his family’s company’s office, and has full access to the whole team at Biochimpharm on a contractual basis. And for Rati, this is a major asset.

“This is such a unique product, and we have the knowledge right here. I see it as an advantage,” Rati explains, while adding that he is confident potential investors will understand this as well.
To my question if he would move his startup completely to the United States, including lab personnel, if an investor would request this as precondition, he tells me he can’t talk for everyone, and he is not sure.

“We have discussed this issue with our advisors several times and looking at the competitive advantages Georgia has in the field of phages, I think investors won’t be afraid to invest in Georgia.”

And while we finish our interview with a quick tour of the lab and the factory, Rati’s confidence his products will be a success, shines through. And confidence is maybe one of the most important factors in setting up a prosperous startup.

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