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Public session: Lessons learned from successful medtech entrepreneurs - CRAASH Barcelona 2018

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Panel discussion: Being a successful healthcare entrepreneur: lessons from Boston to Barcelona, with numerous experts from CIMIT, Boston, in economics, development and strategic planning of medical devices; in prototypes and patents and founders of several startups.

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Public session: Lessons learned from successful medtech entrepreneurs - CRAASH Barcelona 2018

  1. 1. Lessons Learned from Successful MedTech Entrepreneurs By: John Collins Mike Dempsey Eric Evans Paul Tessier Josh Tolkoff Wolfgang Krull Joel Weinstein
  2. 2. Agenda  The CIMIT Context  The CIMIT Accelerator Team  Lessons from >250 collective years of experience  Discussion Page - 2
  3. 3. CIMIT is a growing network connecting and supporting healthcare innovators and ecosystems Page - 3 1998 CIMIT Founders 2000 2002 2004 2006 2008 2010 A Center at VA Boston CIMIT Members Competitive Cooperative Agreements 2012 2014 2016 International Affiliates 2018 NHLBI NIBIB National Affiliates
  4. 4. by: Facilitating collaboration among: Clinicians, technologists, entrepreneurs & Co’s in: Creating novel HealthTech products, services and enabled procedures to: CIMIT’s mission is to … Accelerate the healthcare innovation cycle Improve patient care Page - 4
  5. 5. Innovation Experiences: Image Reality An innovator starts on a challenging journey that: • They are often not prepared for • Requires many steps • Presents frustrating barriers • Needs a wide range of expertise and capabilities A innovator has an idea that changes the world! … then changes the world! Page - 5 It is harder than it looks…
  6. 6. Innovation and Research … Page - 6 Research Innovation Money Knowledge/Value … Are not the same!
  7. 7. Treating “Innovation” as an extension of “Research” is a main reason for the “Valley of Death” Page - 7 PrivateFunding ~100% PublicFunding ~100% Basic Research Translational Research Start-up Companies Growth Stage Companies “Valley of Death” (e.g. No Funding) Where the Basis of Funding Decisions Change Funding based on scientific merit: • Technical Funding based on investment potential: • Clinical • Market • Business • Reg’try
  8. 8. Follow To study and improve the outcomes as well as the process Find The CIMIT Model to improve translational research Page - 8 Fund Facilitate  “Follow” first implemented in 2010 Clinical Impact Study (CIS): • Self-study of all projects supported since CIMIT’s founding in 1998 • Have repeated the study several times since • Shows significant results in clinical, academic and commercial dimensions and extracted several key take-away’s/lessons learned
  9. 9. Key lessons learned from the CIS:  Innovation in healthcare is a learnable, teachable process that – like any other – should be quantified and measured to improve  Most academic investigators have no training in innovation and “learning by trying” is a very inefficient way to learn in healthcare  Actively facilitating teams (pre- and post-funding) with experts in the process results in: • Improving commercialization success rates • Speeding the process • Providing efficient learning opportunities for team members Page - 9 Action: CIMIT established its Accelerator Team of experienced HealthTech executives
  10. 10. CIMIT Accelerator Exec’s: Asked for Lessons Learned from >250 Years of HealthTech Entrepreneurial Experience Page - 10  Dempsey: Founder & CEO – Radianse, Caduceus Wireless & Secora.Care  Evans: CEO – Targeted Cell Therapies & Growth Analytics  Hansen: Founder – PNP Research Corporation and four others  Krull: Founder – Breakaway Imaging & VTI  Loose: Founder – Semprus BioSciences and Frequency Therapeutics  Magnin: Founder & CEO – LightLab Imaging & Novelis  Muller: Founder & CEO – InfraRedx  Tessier: Founder – Radianse; Founder & CEO – Technology Innovators  Tolkoff: Founder & CEO – Seedling Enterprises & ACT Medical  Weinstein: Founder – Hologic, Assurance Medical & VueSonix
  11. 11. www.CIMIT.org/Lessons Page - 11 Mike Dempsey Joel Weinstein John Collins Paul Tessier Wolfgang Krull Josh Tolkoff Eric Evans
  12. 12. #1: Focus on important unmet needs and who pays Page - 12 The solution (the product) needs to be compelling both from a customer and competitive perspective (needs to have a sustainable competitive advantage). The product and business model need to fit into the healthcare ecosystem—reimbursement, workflow, vested interests, and distribution channel all pay a large roll. The key is that the product needs to fulfill an unmet need with a compelling solution that fits into the healthcare ecosystem. Fully understand your economic buyer. Who will pay and why? It’s clinical need, and not the niftiness of the solution, that counts. It's better to have a modest solution for a major need than a major solution for a modest need.
  13. 13. What is the #1 reason new ventures fail …? Page - 13 ?#1 No Market Need 42% Top 20 Reasons Startups Fail (Based on an Analysis of 101 Start-up Post- Mortems)
  14. 14. Startups Companies 14 Startups Versus Large Companies A startup is a company that is confused about what its product is, who its customers are, and how it makes money. – Dave McClure, 500 Startups co-founder
  15. 15. The Typical Model: De-Risk the Product FirstVALUE TIME Market Risk Physician and Patient Adoption Reimbursement Distribution Regulatory Risk Safety & Efficacy Technology Risk Execution/Management Risk 15
  16. 16. A Better Approach: De-Risk the Market FirstVALUE TIME Market Risk Physician and Patient Adoption Reimbursement Distribution Regulatory Risk Safety & Efficacy Technology Risk Execution/Management Risk 16
  17. 17. Attack this Question in Priority Order 17 1. Who… • Define a real person, or title, not “the insurance company” • Talk to these real people – a lot of them • Not who uses your thing (although they are important), but who pays for it 2. …Will… • What level of uncertainty do you need in defining “will”? • Ultimately this is only answered when you’re in the market • This is also very dependent on competitive circumstances 3. …Pay… • What does “pay” mean? How much? Up-front? Monthly? Consumable? 4. …You? • Is “You” your company? Or a distributor? Or a licensee?
  18. 18. #2: Listen, listen, & listen to users/customers, and then listen again … (don’t just talk) Page - 18 You need to prove it by objectively querying all of the stakeholders and proving that there is a need and that somebody is ready to pay for a solution. Customer is always right (even when wrong)—talk to him. Make sure you understand why customers will NOT buy. Understand the risks you will need to manage. Make certain that you are solving a real problem and don’t take your own word for it.
  19. 19. The characteristics that many “expert” innovators have need to be held in check to make them good interviewers! Page - 19 Experts tend to: • Tell/Sell Good Interviewers tend to: • Be prepared, but flexible • Provide answers • Correct mistakes • Listen • Ask open ended questions • Explore misperceptions • Drive the agenda • Talk with everybody• Talk with experts Good Resource: Talking to Humans by Giff Constable
  20. 20. #3: Apply the “discipline” of healthcare innovation Page - 20 You shouldn’t go too far down one area (say technical) without derisking the others.” Failures can be more instructive than successes … if you learn from them Just because you are smart … does not mean you know everything! You need to advance four areas (clinical, market/business, technical and regulatory) in parallel.” Innovation and research are not the same thing – treating them that way will leave you stranded in the Valley of Death Plan, plan, plan … and be ready to change
  21. 21. Codifying the experience: C Innovation: The process by which an unmet need is addressed by stimulating and then translating ideas and/or technologies into sustainable products or services. Idea Proof of Concept Proof of Feasibility Proof of Value Initial Clinical Trials Validation of Solution Approval & Launch Clinical Use Standard of Care Clinical Need The Healthcare Innovation Cycle
  22. 22. What often really happens … Inexperienced teams often make mistakes that doom, derail or stall promising innovations Too Complicated Inexperienced Team Published & Lost IP Too Expensive Resistance to Change Lack of Awareness Too Good, Too Special Does not fit Workflow Regulatory “Wall” No IP “Freedom to Operate” No Advocates, “Lead Users” Idea Proof of Concept Proof of Feasibility Proof of Value Initial Clinical Trials Validation of Solution Approval & Launch Clinical Use Standard of Care Clinical Need Wrong Data CRAASH BCN 2018 Page 22
  23. 23. Navigate the Healthcare Innovation Cycle while constantly balancing perspectives … Page - 23  Start with an unmet clinical need  Follow a sequence of milestones (modeled on the DoD’s TRLs)  Complete deliverables at each milestone in four key domains  Use best practices to complete each deliverable Key Concepts
  24. 24. #4: Practice (informed) “irrational persistence” Page - 24 Be prepared to take turns that you didn’t expect. It takes unbounded commitment and energy to prevail. Be prepared to pivot based on customer and buyer feedback Building a company is a long race, not a sprint. Developing a successful business is a journey. Be prepared for plenty of ups and downs. Failure is more instructive than success... If you survive Many have the head and heart for start- ups, not all have the stomach.
  25. 25. Commercializing any product takes persistence Thomas Edison – ultimate example of success through persistence • 10,000 unsuccessful attempts at inventing the light bulb • 2332 patents worldwide • 30 companies & 100’S of products under Thomas A. Edison Industries “I have not failed. I've just found 10,000 ways that won't work.” “Many of life's failures are people who did not realize how close they were to success when they gave up.” “The three great essentials to achieve anything worthwhile are, first, hard work; second, stick-to-itiveness; third, common sense.” “When you have exhausted all possibilities, remember this - you haven't.”
  26. 26. Medical products can take irrational persistence More barriers than most industries • Complex regulated process (CE, FDA, EN/ISO standards, registration) • Resistance to change - providers are vested in current technologies and practices • Multiple customers and decision makers with conflicting interests (users, buyers, payers) • Slow acceptance by payers • Shift to evidence-based medicine- looking for more clinical studies - incremental features and benefits do not justify change • Costly development – more fund required • Requires a wide range of expertise and capabilities
  27. 27. Persistence for the long haul Development 3-8yr Adoption 4-8yr Standard of Care
  28. 28. Persistence = Unchanging • Can ignore most critics / naysayers • Should never ignore stakeholder feedback – especially from users and buyers • Be prepared to pilot (change plan) or even quit • Better to quit fast than waste time and money – can start your next venture sooner • In Thomas Edition’s words, common sense applies Failure is a big part of success. Failure is neither positive nor negative. Failure is an opportunity to sharpen my skills and develop as a human being.
  29. 29. #5: Be paranoid, explore what will “kill” your business Page - 29 Spend time designing a real “killer” experiment. Define the most creative, quickest, and least expensive way to confirm that what you want to do works as advertised or kill the project early. Your company will fail when you do not have sufficient funding to solve the last problem encountered – know what it is The “killer” experiments should be both technical AND economic. Evaluate your solutions as early and inexpensively as possible. Discover “fatal flaws” before your investors do … and fix them! Keep your burn rate low. Assume unexpected problems will occur and ensure you have funding to solve them..
  30. 30. Good investors can quickly finding reasons NOT to invest Page - 30 < 5% Generate 10x Return Exits > 2/3rd Fail to Return Investment Screening Investment Committee Due Diligence Terms & Closing Scouting~1,000 ~100 ~10-20 ~5 1-2 Typical Deal Flow
  31. 31. What is a Killer Question • A “question” meant to “kill” a project before significant resources are put into developing and perfecting the technology • An experiment or set of experiments intentionally aimed at pressure testing critical features/attributes/requirements of your envisioned product in as little time and as few resources as possible o Can be an technical, economic, or process oriented o Tests the claims of superiority over current methods o Can be pre-clinical or clinical study • Depending on the stage of your technology, it is the burden of proof required to demonstrate feasibility, economic viability, regulatory strategy, etc. • There is more than one Killer Question and associated experiments throughout a project/program. 31 ‘KILL” early: Reduce risk before significant resources spent: Time, People, Funding
  32. 32. Innovators need to be able to answer the “Killer Questions” investors have … and often just think Page - 32 Investor: How could this idea fail? Innovator: This is why my idea is so good … Listen/Explore “Killer Questions” – Don’t just “sell” Design and quickly run “Killer Experiments”
  33. 33. #6: Surround yourself with a team of great people and nurture a strong culture Page - 33 Higher overqualified people for each position as you grow in the start-up phase because you will need to have capacity and creativity in reserve when unexpected problems arise. In real estate it’s location, location, location. In start-ups it’s management, management, management. Great CEO’s use their resources well, communicate well, and delegate. Hire the right people and trust them. Great projects get done by great teams. Culture eats strategy for breakfast; create the right team culture. Culture matters. Looks matter—get design help.
  34. 34. What is the most important factor for investment selection? Page - 34 Ability to add Value Source: How Do Venture Capitalists Make Decisions? By: Paul Gompers, William Gornall, Steven N. Kaplan, Ilya A. Strebulaev NBER Working Paper No. 22587, Issued in September 2016 Business Model Fit Industry Market Product Team Valuation
  35. 35. What is the most important factor for investment selection? Page - 35 Ability to add Value Source: How Do Venture Capitalists Make Decisions? By: Paul Gompers, William Gornall, Steven N. Kaplan, Ilya A. Strebulaev NBER Working Paper No. 22587, Issued in September 2016 Business Model Fit Industry Market Product Team Valuation
  36. 36. #9: Engage investors in the “story” Page - 36 As you start to develop your plan, recognize that investors don’t invest in great ideas. They invest in people who will make them money. Show them how they are going to make money. Recognize that in general trust must be established between the entrepreneur and the investor before the investor parts with their money. You need to be totally honest and frank with potential investor. Investors are investing in your commitment to “the story” as much as the story itself. A lot of time and money goes into projects that are doomed to fail… listen to investors Transparency is valuable.
  37. 37. Think like an investor and tell the whole story up and down the “Investment Staircase” Page - 37 Not all good technologies make good products: • Need? • Cost? • Value? Not all good products make good businesses: • Profit? • Scale? • Protection? Not all good businesses make good investments: • Cash needed? • Time to exit? Science/ Technology Product Business Investment ? ? Funding for: • Novelty • Quality Innovator Investor Different Perspectives ? Idea/ Hypothesis
  38. 38. www.CIMIT.org/Lessons Page - 38 Mike Dempsey Joel Weinstein John Collins Paul Tessier Wolfgang Krull Josh Tolkoff Eric Evans
  39. 39. Thanks! Questions? Page - 39

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