Physician Disclosure – Device CEO’s Should Take Action

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In case you missed it, on Monday 13 September 2010, the Archives of Internal Medicine reported that highly-paid physician-consultants to medical device companies did not disclose device company relationships in peer-reviewed journal articles.  In New York Times coverage,”Representatives from Stryker, Zimmer and DePuy had no immediate comment on Monday.”

That’s the wrong answer.  Here’s what medical device companies should do instead. Continue reading “Physician Disclosure – Device CEO’s Should Take Action” →

Do You Know Dr. Frances Kelsey?

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A great story from the NY Times yesterday:

The Public’s Quiet Savior From Harmful Medicines

This should be required reading for everyone in the medical device industry.

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CardioMEMS – An Earn-out With a Twist

Earn-outs – tying part of the acquisition price to the achievement of future milestones –  have become increasingly common in medical device M&A.  In April 2010, Start-Up Magazine reported that earn-outs were used in 9% of the medical device acquisitions in 2008, 13% in 2009 and an astounding 31% of deals in the first quarter of 2010.  As an example, in August 2010, Hologic completed its acquisition of Sentinelle Medical for $85 million, plus an earn-out tied to a multiple of incremental revenues over the next two years.

On 7 September 2010, St. Jude Medical and CardioMEMS announced a milestone-based deal with a twist.  St. Jude made a smaller than usual up-front payment, and received an option to purchase later, at a fixed price.  Why this deal structure? Continue reading “CardioMEMS – An Earn-out With a Twist” →

Coronary Artery Bypass Graft Surgery Report Puts Registries in the Spotlight

Yesterday, Consumers Union published quality rankings of 221 of 1,100 cardiac surgery programs in the US.  If you haven’t already, I encourage you to read the New England Journal of Medicine and New York Times coverage.  The underlying data come from a clinical registry developed by the Society of Thoracic Surgeons, and managed by Duke Clinical Research Institute.  I expect to see registries used more commonly  for the clinical, regulatory and market development of new medical devices.

Continue reading “Coronary Artery Bypass Graft Surgery Report Puts Registries in the Spotlight” →

It’s a Great Time for Medical Device Venture Funding

[NOTE: This post was first published in AccountAbility Outsourcing newsletter. AccountAbility is a strategic consulting firm that provides onsite outsourced accounting, finance, tax, and human resource solutions]

Raising venture funding for medical device companies has never been easy. Given the current economic environment, a more conservative FDA, and uncertainty about healthcare reform, the gloom index is at an all-time high. Bijan Salehizadeh of Highland Capital blogged recently of shrinking fund sizes and fewer med-tech deals closed. In July, Mark Heesen, president of the National Venture Capital Association (NVCA), lamented the “Darwinian environment in which the venture industry is operating.” One might think that the venture capital window is practically closed.

On the contrary, it’s actually a great time to raise money for medical device companies. Trend data from the NVCA and PricewaterhouseCoopers (PWC) indicate an increase in medical device venture funding in over the last four quarters, back to historical levels. Several life science venture firms have recently closed new funds and are beginning to invest, while several more are fund-raising and expected to begin investing later this year or early next year. While there won’t be a repeat of the 2006-2007 bubble, the next two years are shaping up to be the best in the past eight years.

Continue reading “It’s a Great Time for Medical Device Venture Funding” →

Early Customer Validation – Sell first, spend later

I just read Jason Cohen’s recent post on customer validation “Yes, but who said they’d actually BUY the damn thing?” (here).  Given all the startups I’ve seen recently, this post really struck a chord.  If you are starting a company or developing a new product, read Jason’s post and take his advice:  Find 10 customers who will say “If you build this product, I’ll give you $X.”  For medical device products, this is just a start towards early customer validation.

Continue reading “Early Customer Validation – Sell first, spend later” →

Stock options – everybody in the pool

My friend and serial CEO Dan McNulty encouraged me to write about stock options.  My experience is that stock options encourage employees to “think like an owner. ”  I have always found that my colleagues are motivated by the potential of their options, and are interested in the drivers of their stock’s valuation.  So it’s an important subject and I appreciate Dan’s suggesting it.

Stock options are a subject that has been extremely well covered on the web, particularly by VentureHacks and Mark Suster of GRP Partners.  So, in this post, I’ll mostly point you to other blog posts.  Read them.  I’ll also try to provide some helpful information specific to medical device companies, and share a couple of thoughts from my experience.

Continue reading “Stock options – everybody in the pool” →

Your addressable market? Bottom-up!

Over the past few months, I’ve been privileged to meet many talented scientists and physicians who have created wonderful technologies for improving patient care, but who have little experience determining whether their technology could be the foundation for a successful new business.  One recurring challenge is quantifying the addressable market – not a skill that is typically taught in science, engineering or medical school.  Here’s my approach, using a hypothetical example.

Continue reading “Your addressable market? Bottom-up!” →

Fresh money

Fresh money is the best money.  Fresh money means that VC’s and PE firms need to make new investments, to put their fresh money to work.

Here’s my list of Life Science VC and Private Equity Fundraising for 2009 and the first half of 2010, culled from news articles over the past 18 months.  Enjoy.

My list is likely not comprehensive, as firms don’t always announce new funds.  I plan to post updates to this list quarterly.  Also, I plan to make a table of 2008 and 2007 vintage funds for an upcoming post.  Leave a comment if I am missing a fund raise in this table, and I’ll update it.

Continue reading “Fresh money” →

Medical Device VC Funding: Slide Deck – Part 1

You need a great slide deck to raise funds for a start-up medical device company.  If your presentation would be right at home in a scientific or medical meeting, it’s not the right deck.  A great deck tells the story of how investors in your company will do well (financially) by doing good (improving medical care).  It’s all about the business, and only briefly touches on the technology.

VentureHacks totally nails the deck template for tech companies.  If you haven’t already read http://venturehacks.com/articles/deck, do it now.  Read the comments too.  Even better, read the whole VentureHacks archive, and buy their book at http://venturehacks.com/pitching.  Pay attention to their sage advice: “Put pictures in the slides and text in the notes,” so that your deck can be used as both a presentation and a handout.

Medical device companies are different, so the VentureHacks template isn’t quite right.   Today’s post provides a slide deck template for a company developing a single medical device product to address a single unmet need.  Later posts will describe a slightly different template for “platform” companies, where the company envisions several new products addressing multiple market needs based on a core technology platform.

I’m posting this template and asking for your feedback.  Convince me that you have an improvement, and I’ll update the template.  Let’s get started.

Continue reading “Medical Device VC Funding: Slide Deck – Part 1” →