Medical Device VC Funding: Slide Deck – Part 2 – Platforms

VisiCalc, the earliest generally agreed exampl...
Image via Wikipedia

Platform technologies have a certain allure. Look at MicroCHIPS, poised to revolutionize glucose monitoring and drug delivery (starting with osteoporosis, diabetes and cardiology drugs). Look at Seventh Sense Biosystems, hard at work developing rapid, simple-to-use diagnostics that measure “several classes of analytes including small molecules, peptides, proteins, and nucleic acids.” Medical device geeks like me can’t help being impressed.

Broadly defined, platform technologies are families of IP that enable multiple distinct clinical applications for distinct patient populations. MicroCHIPS and Seventh Sense are great examples.

Because platforms address multiple market opportunities, the revenue potential of a company with a platform technology can be several times that of a single application company. Does that mean platform technologies are easier to fund?

Pitching platform technologies to VC’s can be challenging. First, cool new technologies need lots of explanation. Second, presenting multiple market opportunities takes lots of time. One of my most popular posts has been “Medical Device VC Funding: Slide Deck – Part 1,” which covers a company developing a single medical device product to address a single unmet need. How should companies with platform technologies present to VC’s?

Continue reading “Medical Device VC Funding: Slide Deck – Part 2 – Platforms”

The Patient Graph

Social Graph
Image by Matthew Burpee via Flickr

We all know social networking as a major time-suck, real-time news source, and practical job-hunting tool. We also know that patients can often get better health information from the web than they can from their health care provider (e.g. WebMD.com). When ‘social networking’ meets ‘the search for health information’ we get online patient communities. Facebook, Twitter and GetSatisfaction are just the tip of the social iceberg. PatientsLikeMe and CureTogether are just two of the best known of dozens of web-based social networks for patients. The NY Times calls patient-centered social networks a “Lifeline for the Chronically Ill.” For medical device companies, patient-centered social networks bring new challenges and new opportunities.

As online communities have evolved from BBS’s and usenet groups, to forums and yahoo groups, to social networks and blogs, the quantity and quality of direct patient-to-patient interaction has dramatically increased. In March 2009, an article in Forbes called these new patient-centric social networks a disruptive innovation in patient care (Disruptor of the Month: Creating A New Kind Of Health Care Community by Renee Hopkins Callahan). If you’re developing a novel device or a novel procedure, there’s a chance you are already the subject of an online patient conversation. The more patient-facing your product (either used-by or implanted-in a patient), the more likely patients will share their experiences with each other online.

Any day now, the FDA is expected to issue some of its long-awaited guidance on its approach to the regulation of social media and the internet. Social media, though, does not move on the FDA timeline. While this blog post may need an update when that guidance comes out, medical device companies are already way behind the social media curve.

What does online patient interaction mean for medical device companies? How can medical device companies interact successfully with patients online?

Continue reading “The Patient Graph”

Competition On Multiple Fronts

Juarez, fortification of adobes during battle ...
Image by The Library of Congress via Flickr

Most trade disputes between medical device companies involve intellectual property (IP). While the conflict between LightLab and Volcano is relatively small compared to others in the medical device industry (e.g. check out last year’s $1.7B battle between Boston Scientific and J&J), the lessons to be learned are large.

Briefly, Volcano is developing a competing product to LightLab’s OCT system, and accelerated their program by purchasing LightLab’s laser supplier Axsun. The dispute involves allegations of patent infringement, unauthorized disclosure of confidential information, and contract performance issues.

At the end of January, both LightLab and Volcano issued press releases claiming victory in the most recent rulings. Eric Swanson, LightLab co-founder and editor of Optical Coherence Tomography News, just posted an entertaining summary of the recent court documents. Despite these rulings, the legal skirmishes will continue, and the only safe prediction is that the lawyers will be the winners.

What are the lessons learned?

Continue reading “Competition On Multiple Fronts”

510(k) Action Items: FDA 25, Industry 0

Source: FDA-OCI
Image via Wikipedia

On 19 January 2011, the FDA unveiled its much-awaited proposal for changes to the 510(k) process.  Medical device industry representatives were generally pleased with the modest scope of the proposal. In a press release, AdvaMed president Stephen J. Ubl called the plan “clearly a good first step that will address some of the major problems with the program.” Mark Leahey, President and CEO of the Medical Device Manufacturers Association (MDMA) commended “FDA leadership and staff for working with various stakeholders in an open and constructive process to develop consensus proposals that improve patient access to safe and effective therapies.”  The NY Times quoted Medtronic CEO William A. Hawkins as stating “This is a more balanced approach that sends a positive signal to industry that the F.D.A. is engaged, listening and concerned.”

Patient safety advocates were underwhelmed. Public Citizen’s Sidney Wolfe stated “the FDA is not being forceful enough about improving the safety and effectiveness of new devices.” Dr. Rita Redberg (UCSF, Editor of Archives of Internal Medicine) told theHeart.org that she is “worried about the implanted high-risk devices that are getting cleared without any data. There are lots of examples of stents, inferior vena cava filters, heart valves, that are [cleared through 510(k) but] not low risk.”

But is the FDA’s modest proposal really a good outcome for the device industry?

Continue reading “510(k) Action Items: FDA 25, Industry 0”

Venture Capitalist Bloggers

Sand Hill Road Sign
Image by Mark Coggins via Flickr

You can’t be a credible social media venture capitalist if you’re not an active social media user.  Blogs and twitter are the social media of choice, and VC’s have created a lot of content worth reading.  On my blogroll I’ve included some of my favorites, but now you can find the comprehensive list of all VC blogs at the Venture Capital (VC) Blog Directory – 2011 Edition, put together by Larry Cheng of Volition Capital.  Thanks to Ty Danco for pointing it out.

Note that only a handful of life science VC’s have blogs.  Savvy tech VC’s have figured out that blogging and tweeting can help build their VC (and personal) brand, creating dealflow and entrepreneur interest.  Life science VC’s are once again behind the curve.  Let’s hope for a change in 2011.

Medical Device Entrepreneur Readings

Illustration of Porters 5 Forces. Illustrates ...
Image via Wikipedia

Over the weekend, a friend asked what one book I would recommend to guide a first-time entrepreneur. I replied that just one book was not sufficient. My friend suggested Michael Porter‘s Competitive Strategy, which I agreed was an excellent choice. I also told him I’d address the question more fully on my blog, so that’s today’s post.

The Launching Tech Ventures Reading List

Fortunately, local entrepreneur and investor Ty Danco recently pointed out an amazing reading list for first time entrepreneurs. Harvard B-School Professor Tom Eisenmann is developing an MBA class called Launching Tech Ventures, and he posted his well-curated course reading list on his blog Platforms and Networks. As Ty says, the list makes me wish I was back in school.   While you’re working through the list, don’t skip Eisenmann’s earlier compendium of the web’s best advice for entrepreneurs.  For tech start-ups, Eisenmann’s recommendations are unsurpassed.

For medical device entrepreneurs, Eisenmann’s list isn’t quite enough, so I’ve put together a few suggestions from my own experience. Leave me a comment telling me what I missed or if you disagree with my choices.

Continue reading “Medical Device Entrepreneur Readings”

A Changing Landscape in Medical Devices

Asia Population Density Map
Image by jeffmcneill via Flickr

The usual suspects (Medtronic, St. Jude, J&J, Boston Scientific, Olympus, Stryker, Zimmer, Covidien, GE Healthcare, Hologic and others) continued their usual growth-via-acquisition strategies in 2010. Last year I wrote about two of the more notable medical device exits: St. Jude’s option to purchase CardioMEMS, and Medtronic’s deal to acquire Ardian.

However, a less-noticed acquisition in December 2010 may turn out to be the most notable medical device deal of all. This relatively small acquisition heralds the entry of a significant new player into the medical device industry, and marks the beginning of a shift in the geographic landscape of the medical device industry.

Continue reading “A Changing Landscape in Medical Devices”

Ardian – A Case Study in Value Creation

Image representing Ardian as depicted in Crunc...
Image via CrunchBase

I’m surprised that there hasn’t been more written about Ardian since their sale to Medtronic last month. It may be the largest venture-backed medical device exit to-date. Ardian’s $800M-plus-milestone-payments may end up being larger than Medtronic’s purchase of CoreValve for $700M-plus-milestone-payments in 2009. Even more unusual was Ardian’s relatively early-stage. At the time of sale, CoreValve had implanted devices in 2,600 patients at 125 centers in 25 countries. Ardian exited much earlier, with about 150 patients treated.

Overnight sensations don’t happen overnight. While Ardian seemed to come out of nowhere in 2009 and exited large in 2010, the truth is that the company had been hard at work for almost 10 years. Ardian achieved more than 10X return on $66M invested – at least $732M of value created, before milestones. While the end of the story is still unwritten, Ardian’s first few chapters form a great case study for medical device entrepreneurs and investors.

Continue reading “Ardian – A Case Study in Value Creation”

Hospital-Employed Physicians and Medical Device Opportunities – Update

Steen Doctor and His Patient
Image via Wikipedia

A few weeks ago I wrote about the growing trend of physicians being employed directly by hospitals rather than in private practices, and how this trend impacts medical device opportunities.  Last week the Wall Street Journal published an article “Medical-Device Firms Lose Clout As Hospitals Buy Practices” which is well worth reading.  This week, PWC released a report “Health Reform is Driving Hospitals and Physicians Together.”  Have you analyzed the impact of this trend on your medical device market over the next few years?

Stock Options – Wilson’s Rules

Fred Wilson of Union Square Ventures
Image by aquababe via Flickr

One of my most popular posts concerns employee stock options  (see Stock options – everybody in the pool).  Last week, Fred Wilson of Union Square Ventures described his formula for granting employee options, on his blog AVC. Everyone gets options, according to his transparent formula.  Makes a lot of sense to me, and I’m sure it will for you.  Read his post here.