Posts Tagged Mir Imran

WSGR 2014 Medical Device Conference – Funding Strategies for Early Entrepreneurs


Medical Device industry has been facing enormous and unprecedented challenges during the last several years.  Only now it is emerging from the dark tunnel of funding dryout, layoffs, and lackluster job scenario.  The 2014 Wilson Sonsini Medical Device Conference reflected some cautious optimism based on recent uptik in the industry.  The challenges are not gone but companies have learned to work with the complexities.  The conference this year focused on understanding the challenges still facing the Medtech startups and the new strategies that are emerging as response to these challenges.  The conference was a sold out event with 600+ attendees that included CEOs, venture capitalists, investment bankers, market analysts, and industry strategists.  Below are the highlights from one of the panels.

Funding Strategies for Entrepreneurs

Dried up funding continues to be a challenges for medtech start-ups.  This panel was moderated by Casey McGlynn, Partner, Wilson Sonsini Goodrich & Rosati.  McGlynn said he is increasingly seeing companies getting funded, even PMA projects are getting funding.  One of the strategies for PMA is to have a believable path to an existing market in Europe that will adopt the product.  Building product is not the challenge, but for these, the regulatory approval process in the US, becomes a big hurdle.  For bite size consumer facing, wearable type, or health IT projects, crowdsourcing could be a good strategy, said McGlynn.  image003

The panelists included CEOs who shared their experiences in search for capital.  The panelists also discussed how interests of the investors are changing.

Laura Dietch, President and CEO, BioTrace Medical, shared about the technology that emerged from the Stanford BioDesign program.  BioTrace is developing a temporary cardiac pacing device to treat reversible symptomatic bradycardia, during general surgery for percutaneous valve procedures.  This is a 510K device.  BioTrace raised $3.5M from 5 investors.  Dietch’s advice to the entrepreneurs?  “You have to be tenacious, have good target partners, be willing to take a lot of rejections, be organized, and be creative.  She also advised entrepreneurs to stay lean, whenever possible, have a physician on the team, and be clear from the beginning regarding the exit strategy.

Qool Therapeutics offers patented cooling technology to induce therapeutic hypothermia.  This minimally invasive technology has applications in stroke, cardiac arrest, traumatic brain injury, sports injuries and so on.  President and CEO, Beverly Huss shared how the company raised $1.5M from small investors that included COO at American Airlines, General Counsel at EBay, an executive at Dish Network and so on.  She said these relationships were developed over the years.  “Early stage investing is a labor of love and can come from people who believe in your ability to deliver on a technology they like”, said Huss.  She also advised that entrepreneurs be relentless and follow every path and see where it takes them, and be open to learning the lessons from each path they pursue.  What has changed is how we are bringing therapeutics devices to a consumer market, said Huss.

Dr. Daniel Burnett, President and CEO at TheraNova also talked about how the climate has changed.  With his first company, they raised funding without any animal or human data; next company required huge clinical data and since then most companies need some human data, before money can be raised.  TheraNova turned to corporations and also had 4 SBIR grants.  Since 2006, Burnett raised or helped raise, over $95M for six venture-backed TheraNova spinouts, BAROnova, Novashunt, Velomedix, EMKinetics, Channel Medsystems, and Potrero Medical.  For Channel MedSystems, he partnered with Mir Imran’s Venture Health Crowdsourcing platform.  His advice to entrepreneurs was to be lean and mean and to focus on both cost saving and improved outcome.  Burnett said he avoids PMAs.  Angel investors have been beaten up badly and still recovering but he advised that entrepreneurs can go to crowdsourcing platforms like Venture Health or DealLabs.

Doug Wall, Managing Director, Volcano Capital talked about some of their portfolio companies.  All in all, market for early stage investors is pretty lonely, said Wall.  There was virtually no competition from 2009 to 2011 but that is now changing.  There are some VC funds now taking an interest in early stage deals.  Most successful companies are the ones that think outside the box.  Answering the question regarding what would be more important market or people, Wall said, “we are flexible on market size, but most important thing to us is the management team, and then we look to see if the milestones are thoughtful, and if the team shares the strategy to be capital efficient”.  He said, they avoid PMS entirely to mitigate the regulatory risk factors.

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On “Building a Pearl” – Story of Pearl Therapeutics from Concept to Acquisition by Astra Zeneca for $1.15B


Pearl Therapeutics is a huge success story in the biotech world.  At www.bio2devicegroup.org event, Dr. Sarvajna Dwivedi, co-founder of Pearl Therapeutics talked about his own professional journey and about Pearl team, technology and products, that brought the company to pearly stunning $1.15 Billion exit.  Pearl Therapeutics was acquired by Astra Zeneca in June, 2013.

Dwivedi began the talk by paying tribute to his mentors, his father, Professor Rewa Prasad Dwivedi, his first role model and a reknowed Sanskrit scholar and poet, his professor Dr. Alan Mitchell  at University of British Columbia who imparted important lessons on staying true to fundamentals and understanding the properties of nature, and Silicon Valley’s prolific inventor Mr. Mir Imran, who told him long before he needed to raise money, “don’t ever take investor’s money, unless you can treat it as your own”.  Dwivedi said he carried all those valuable lessons in his professional journey.

After his education where he worked on tablets, Dwivedi was invited to join Glaxo to work on inhalation products.  When he was concerned about making a jump from tablets to inhalation products, he was told “you know how to keep particles together, you would know how to keep them apart too”.  From Glaxo, he went on to Dura, where he worked on an electromechanical inhaler system, a complex 50 part device.  Then at Alkermes, Dwivedi put together a team which designed a device with a precessing capsule inside.  Each of these opportunities contributed to giving him a stronger grounding into fundamentals.

Eventually, his career journey brought him to Nektar Therapeutics.  Nektar was focusing on systemic conditions like diabetes, to be treated by inhalation delivery of drugs like insulin, and on anti-infective therapies for lungs.  Dwivedi and his colleagues were looking at delivering drugs uniformly into the lungs for diseases such as asthma and COPD, and especially make drug combinations with standard metered dose inhalers.  Global COPD or chronic obstructive pulmonary disease and asthma market is projected to reach $47 billion, by 2017.  These were compelling clinical problems that Dwivedi and his colleagues were trying to solve, but Nektar chose to stay focused on other opportunities.  Eventually, Dwivedi and his co-founder Adrian Smith formed Pearl Therapeutics and spun it out as a separate company.

Image representing Pearl Therapeutics as depic...

Image via CrunchBase

Pearl Therapeutics has combined two bronchodilator drugs in one inhaler, and put it into Phase III.  Pearl has now demonstrated that it can also combine three drugs, to treat the fatal lung condition, COPD.  These drugs typically do not mix well together in a common inhaler and that leads to less than ideal distribution of the drugs in the lungs.  Pearl’s secret is its proprietary technology.  Dwivedi said the lessons he learned earlier in life regarding staying true to fundamentals and to not fight nature, were most useful in navigating these challenges.  The nature of particles is to coalesce, and therefore it’s very difficult to keep them separate for aerosolization purposes.  This can be achieved easily with liquid propellant suspensions, such as those in commonly used metered dose inhalers.  Pearl creates these suspensions with a proprietary technology utilizing specially engineered phospholipid porous particles.  When these inhalers are actuated then the porous particles go back from liquid to vapor, facilitating consistent and uniform inhalation delivery. The porous particles traverse the back of the throat easily and spread aerosols throughout the lung.  Astra Zeneca saw the tremendous promise in this technology, the product progression achieved by Pearl, the value of the product pipeline at Pearl, and the Pearl team assembled by Dwivedi and his co-founder, Smith.  AZ forked over $1 B+ and acquired Pearl, with a promise to enable Pearl to continue to operate independently.  This was very interesting talk and generated a great deal of discussion.

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Crowdfunding – New Source of Capital for Medical Industry


Wilson, Sonsini, Goodrich, and Rosati 2013 Medical Device Conference (www.wsgr/news/medicaldevice.com) focused on understanding the challenges that Medtech startups encounter in the current environment, and the emerging strategies to respond to these challenges.  It was heavily attended by industry CEOs, venture capitalists, industry strategists, investment bankers, market analysts, and life science industry professionals.

Wilson Sonsini Goodrich & Rosati

Wilson Sonsini Goodrich & Rosati (Photo credit: Wikipedia)

Below are some highlights from panel on crowdfunding.  Crowdfunindg is emerging as a source of potential new source of capital for early stage and emerging growth companies.  The panel was moderated by Phil Oettinger, partner at WSGR and the panelists included Andrew Farquharson, Managing Director at InCube Ventures, Scott Jordan, Partner at S. Jordan Associates, Greg Shearer, Managing Director at Healthios, and Ben Lee, Director of Business Development at CircleUp.

Oettinger gave a background on Crowdfunding.  He also discussed impact of JOBS act that is expected to enable advertising for private investment offerings and allow unaccredited investors to participate in online equity crowdfunding.  Thus far, crowdfunding has not lived up to the hype of being a startup panacea.  It caps an amount an issuer can raise to $1M, in any 12-month period and caps the amount a person can invest in all crowdfundings over a one year period at 10% of annual income or net worth of the investor.  Shares issued in crowdfunding transactions are subject to a one-year restriction, and there are other restrictions that render non-US companies ineligible to participating in crowdfunding.  Crowdfunding also must be done through a registered broker-dealer or registered “funding portal”, who cannot solicit investments and law requires extensive due diligence, including background checks on management and large stockholders.  None of the challenges however, have dampened the enthusiasm.  SEC has already stated that equity crowdfunding portals are exempt from certain restrictions and more changes are on the way.

Scott Jordan is an accomplished life sciences business development and investment banking professional with over 20 years of corporate experience in negotiating strategic corporate alliances, securing international licensing agreements, building national sales teams, and contributing to successful product development, approval, and launch.  In partnership with Greg Shearer, Managing Director at Healthios Capital Markets, and CrowdConnect, Jordan and Associates, launched Healthios Xchange fund, with an aim to assist emerging growth healthcare companies raise capital from accredited investors, and non-dilutive financing from foundations.  It offers three large value propositions, said Shearer.  Open access eliminates selection bias and does not curate the deals going on the site.  “Crowd” anchors the continuum.  H/X scoring based on sophisticated algorithms, makes it heavily data centric, similar to LinkedIn.  Healthios charges fees to companies that raise money on its portal, except in certain cases where it offers carry-free, fee-free feature allowing investors an opportunity to directly invest in companies, eliminating transaction expenses.  The fees will likely fall in the 5-10% range.  The fee structure will be different for non-profits.  Each company gets a company pitch page.  Several features including e platform button, e signature of docs, e regulatory assessment etc., enhance ease of use.

Ben Lee, a developer of innovative teeth whitening products at GoSmile, and founder of TaskRabbit, an online services marketplace, joined CircleUp, which offers consumer companies an access to funding through passionate, sector focused investors.  “Very simply, crowdfunding is a numbers game and it offers an opportunity to reach out to large number of people, who are looking to invest”, said Lee.  CircleUp has launched a highly active, fast growing portal and has gained considerable credibility.  Lee said, “We are 100% focused on branded consumer products” where there is little institutional investment.

Prior to his current role at Incube Ventures, Andrew Farqharson, a serial entrepreneur had co-founded Operon with no venture capital and sold it for $150M.  He also had launched a company in microfludics, Innovadyne, and had held several roles in research operations at Genentech.  At InCube, with Mir Imran and Talat Imran, Farqharson co-founded VentureHealth, a crowdfunding portal, to enable physicians and other accredited investors to invest in “compelling biomedical inventions”.  Farqharson said, this emergence of crowdfunding is very exciting and enables entrepreneurs to be less dependent on VCs, while it unlocks a lot of latent capital, and also gives investors more degrees of freedom.  Unlike other equity crowdfunding portals on the panel, VentureHealth has adopted a carried-interest business model.  They do not charge fees to the companies that raise capital but charge the investors; just like a venture fund.  In this model being driven by carried interest, they make money only if their investors do.  Clearly, they have an incentive to only support the most promising companies, unlike many broker/dealer sites that may have lesser interest in screening for quality, as their primary incentive may be to raise capital for as many companies as they can.  It will be interesting to see which approach holds more long-term promise.  My initial thoughts are, if I, as a rather naive investor, were to risk my money, specifically in the complex class 2 and class 3 devices, with many regulatory, reimbursement, and marketing challenges, I would prefer to risk it where some prior due diligence is done by seasoned and serial entrepreneurs like Imrans and Farqharson.  Explaining the success of InCube Ventures, Farqharson said, despite the challenging environment, they have had 3 exits this year.  BodyMedia was acquired by Jawbone, NFocus Neuromedical was acquired by Covidien and most recently Spinal Modulation was acquired by St. Jude.  Exists led to $700M+ in 2013, said Farqharson. They are actively screening investors.

Image representing Spinal Modulation as depict...

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