Chuck Lannon has known Irfan Khan since Khan was a practicing cardiologist.
Over the years, Khan left active medical practice to become a startup entrepreneur, building a company that runs clinical trials through local physician’s offices.
It took awhile, but Circuit Clinical has become one of the hottest startups in town, raising $29 million this March to support its national expansion.
Lannon and his network of Buffalo-based investors – a group that’s followed him through numerous deals in Buffalo – have backed the company three times to the tune of several million dollars. They invest together under the singular LLC, CirClin. About 60 have been involved in the Circuit Clinical deals.
Lannon now resides in Florida and recently passed on leadership of his group to S2 Venture Partners, but remains heavily involved in Circuit Clinical as a board observer.
He talked about why Circuit Clinical remains a compelling investment.
How did you get introduced to Circuit Clinical?
I met Irfan many moons ago when he was still a practicing physician and we worked out at the same gym. He came to me with the idea of Circuit Clinical about six to seven years ago but I wasn’t interested.
I got reintroduced through Kevin Christner, who was doing some consulting for the company at the time. Our first investment was a convertible note round and we’ve been engaged in a total of three investments since then.
What convinced you to invest?
First and foremost I look at the governance structure of the company and their board, and they’ve got some tremendous people on the board. Their executive chairman is Kerry Hicks, the founder and former CEO of Health Grades, which scaled beautifully. He’s got an outstanding board with people from the industry and that’s what intrigued me initially.
Are we getting to your oft-stated ‘bet the jockey, not the horse’ investment mantra?
Irfan is a very articulate guy and, if you didn’t know he was a doctor, you would think he’s a businessman who knows a lot about medicine rather than a medical guy who knows a lot about business.
He’s gone through the growing pains and come out the other side of those growing pains. This is a company with a great board and a really strong jockey, and now it’s a question of your product and your ability to scale that product in the market.
The recent Series C raise was a vote of confidence from investors in the company’s ability to achieve that scale.
The biggest problem drug companies have is that people are constantly opting out of clinical trials. But if you run them through the physicians’ offices, you get a higher participation rate. You can enter the less privileged communities in our country – where they don’t trust big pharma and often for good reason – and reach out through the physicians whom they do trust.
Circuit has brought in some big players like Medidata and Labcorp (both strategic partners and investors), which are pretty darn good partners to have. They’re at the stage right now where they’re attracting national attention, and once you’re at that stage, anything can happen.
So what needs to happen?
The proof is in the pudding. The biggest challenge the company faces is execution. They have the money to execute the plan. Now the question comes down to are you making the right bet with the right management team to bring this across the finish line. If you ask me, they have a reasonable shot.
