MEDICAL INNOVATIONS NEWS
From the CEO's Desk
Welcome to the fourth edition of the Fogarty Institute e-newsletter. As always, we have exciting progress being made by our startups, and have enjoyed hosting an increasing pool of visitors who come to the Institute to learn about innovation, what it takes to create a successful startups and how to better serve the patients.
This month, we had the privilege of hosting Tanishq Abraham, a child prodigy, who at only 12 years of age, has accomplished more than many will achieve in a lifetime. One of his goals is to become a surgeon with the aim to help save as many lives as possible.
We are also very pleased to announce the strong progress made by company in residence Materna, which will greatly reduce the traumatic impact childbirth has on a woman's body. Materna has been conducting highly successful clinical trials here at El Camino Hospital and in Texas, and is looking to engage with the FDA in 2016.
We hope you enjoy this edition, and as always, we appreciate any feedback on our work and e-newsletter.
President and Chief Executive Officer
"Even though 80 percent of women suffer from tearing and 50 percent from permanent pelvic muscle damage during childbirth, there have been no noticeable advances to stem these numbers. We need to raise awareness and find solutions to these issues." – Mark Juravic, Founder and CEO of Materna
Fogarty Institute for Innovation Updates
Child genius Tanishq Abraham was excited to meet Dr. Fogarty at the Fogarty Institute.
The Meeting of the Minds
Last month, Dr. Fogarty, one of the most accomplished medical icons and entrepreneurs, and Tanishq Abraham, one of the brightest young minds in the world, met at the Fogarty Institute for Innovation to share ideas on medical innovation and discuss Tanishq's future educational plans and career aspirations.
Tanishq is a 12-year-old boy with an abnormally high IQ – he is the youngest American member of MENSA, a high IQ society, where he scored in the 99.9 percentile. His accomplishments are already numerous and quite impressive, including graduating from the American River College in Sacramento in one year with degrees in Mathematical and Physical Sciences, General Science and Foreign Language Studies with a GPA of 4.0; speaking at a NASA conference and writing articles for the organization; appearing on the Queen Latifah Show to discuss his solar discoveries; and speaking at a TED conference explaining the exoplanets and supernovas he has already discovered and discussing climate change.
Tanishq wants to study bioengineering and become a surgeon, among other aspirations. During his meeting with Dr. Fogarty, he received great career advice, including the benefits and challenges of becoming a surgeon, the importance of surrounding yourself with strong team members and to always keep the end goal in mind: to serve and benefit the patient.
The young man also had an opportunity to meet with some of our startups and learn about the incredible work they are doing to solve some of the most critical health issues. Surbhi Sarna, founder and CEO of nVision, shared her experience studying bioengineering at Berkeley and what it takes it takes to launch a successful medtech startup; EchoPixel gave Tanishq a test drive of their innovative 3D imaging technology; and G-Tech showcased their technology for the early diagnosis of gastrointestinal diseases and disorders.
Michael Stewart, Materna's VP of Research and Development, and Mark Juravic, Materna's Founder and CEO.
New Device Shows Strong Promise to Solve Common Childbirth-Related Injuries
Giving birth to a child is perhaps one of the most anticipated, happiest and most celebrated moments of a woman's life. Unfortunately, it is also one of the toughest physical stressors on a woman's body. Surprisingly, it has not received a lot of attention – until now.
Studies have shown that more than 80 percent of women who have a vaginal delivery suffer from some degree of tearing, and about 50 percent suffer permanent pelvic muscle damage that leads to serious health issues later in life, including incontinence and prolapse, a condition in which pelvic muscles can no longer adequately support organs in the pelvic area.
Pelvic floor disorders among women are very common. Approximately 11 percent of all women in the United States will undergo surgery to treat a pelvic floor disorder, and more than one third of all women currently suffer from symptoms.
Mark Juravic, a Stanford Biodesign graduate with an engineering background, noticed that nobody was focusing on this problem, which affects billions of women worldwide and committed to developing a solution.
Mark launched Materna in 2010 to reduce the incidence of childbirth-related injuries by developing a device that prepares the pelvic soft tissues for delivery. This not only prevents tears and pelvic muscle damage, but also reduces the time of delivery, reduces the need for instrument deliveries and improves maternal postpartum quality of life.
The startup is undergoing clinical studies at El Camino Hospital and at Baylor College of Medicine in Houston, Texas. Early results have been incredibly encouraging: 26 women have used the device thus far, and the first 12 patients have returned for their follow-up appointment three months post vaginal delivery. Out of these patients, NONE suffered pelvic muscle injury. Without the Materna device, approximately 35 to 50 percent of these women would have sustained long-term damage.
Materna plans to finish enrolling patients by the end of the year and start discussions with the FDA in early 2016. In the meantime, they continue to perfect their device, for ease of use and comfort.
Guest Q&A — Ted Kucklick, CEO of Cannuflow
Ted Kucklick, founder, CTO and CEO of Cannuflow, at a recent lunch-n-learn with Gabriel Sanchez, founder and CEO of Zebra Medical Technologies, and Shu Uemura, Senior Mentor at the Fogarty Institute.
Making the Jump from Seed to Angel – Q&A with Ted Kucklick
As part of the Institute's ongoing educational series for its startups, we recently had the honor of hosting Ted Kucklick, founder, CEO and Chief Technical Officer of Cannuflow, a company that designs, manufactures and markets high-performance and cost-effective medical devices to help healthcare professionals better address chronic arthroscopic surgical problems.
Ted is a medtech veteran, having been involved in the early-stage and development process of numerous devices for companies such as Vidamed, Oratec, Neomend, Somnus, Curon, Starion Instruments, Sleep Solutions and RITA Medical. He is a regular contributor to Medical Design Magazine and a frequently invited speaker and panelist on medical device innovation. He is also author of the best-selling Medical Device R&D Handbook.
Ted shared his thoughts on how to stage your startup to attract angel financing, elements to a good pitch and how to get investors to write the checks.
Q. Are VCs/angel investors still interested in medtech?
A. Raising money in the 1990's was pretty straightforward – there was a well-functioning small cap IPO market and active VC's and you could sometimes take a company public with little to no revenue. Today things are different: There are fewer VC's investing in medical device. The small cap IPO market is not there, but there is funding out there – you need to make sure you look for it every step of the way, or you won't survive.
Companies such as Uber, Airbnb and Snapchat have made headlines with the millions of dollars they have raised. While medtech companies don't offer as lucrative and fast returns as technology apps, perhaps that money they make in tech will eventually trickle down to our industry! Money does seem to be flowing to pharma and biotech. Take Avoxant for example: They raised $315 million without clinical data and no patients enrolled in any clinical trials. Why were they able to grab this attention? They had a "hot" product, an Alzheimer's disease drug.
The reality for the majority of medtech startups who want to "make it big" is to look and be prepared for merger and acquisition opportunities, especially if they don't have revenue. Standalone companies are also possible, but they must show strong value to their customers.
For a device to get sales traction in the current environment, and for an investor to be interested, the device must have at least some of the following characteristics:
- If cost is higher, the device must improve patient care at least three fold.
- The device should be reimbursable.
- The device offers the same performance of an existing product, but for half the price.
- The device has 10-fold performance improvement over an existing technology. Then, as Peter Thiel says in Zero to One, you have the makings of a monopoly.
Q. Have angel investors taken over the role of VCs in medtech?
A. Yes, angel investors are doing what VCs used to do and are can be the only "game in town" for some medtech startups. It is not unusual for these young companies to tap a couple of angel investor groups to reach the funds needed to move the startup to the next level. Deals are coming to angels that would have been taken by VC's in times past.
Angels have become much more organized and sophisticated. There are also now individual high net worth "super angels" and family offices, in addition to the regular organized and solo angel investors.
Outside of angel funding, there are also other ways to raise money, including grants, such as national government grants and Small Business Innovation Research (SBIR) grants. Small amounts of money from different sources can take you a certain distance.
Q. What do angels look for when investing in a startup?
A. They look for similar attributes as VCs might, including:
- Above market returns in a reasonable time
- A team with sector knowledge and a clear line of sight for how to achieve an M&A liquidity target or next round of funding
- Solid technology
- A strong team that can execute on technology, operations sales and marketing
- Strong industry relationships
- The ability of the team to sell the company first, the technology second
Q. How do you find the right angel group?
A. There are many angel groups, and you need to find ones that are likely to invest in your space. Be aware, and prepared, that some groups can charge presentation fees, which can range between $300 and $3,000! Some don't charge fees, but may expect equity, warrants, or commissions. Make sure these make sense for you. Once you find the appropriate group, you must diligently follow up with the interest list they create for you – or you will be wasting your money. Good angel groups will help you schedule follow up calls.
Examples of angel groups that are applicable to medtech companies, include:
- Life Sciences Angels
- Keiretsu Forum
- Pasadena Angels
- Mass Medical Angels
- Golden Seeds
- More information on angels: Angel Capital Association (www.angelcapitalassociation.org)
Q. What are the key steps after you meet with the angel groups?
A. After you present to an angel group, it is essential to recruit a due diligence lead within the angel group. Look for someone who has the credibility and ability to put together the due diligence package that goes out to the member angel investors. This is key. You need to find the appropriate lead person and team who are willing to put in the 50 to 60 hours of work to vet your opportunity.
Keiretsu Forum (www.keiretsuforum.com) has a comprehensive due diligence handbook you can review.
Here is a rough timeline and approval steps to receive funding:
- Application (30 to 50 are reviewed a month)
- Screening and presentation (roughly 10 startups are selected)
- Approval (final five companies or so)
- Presentation by startup to the angel members
- Initial interest list (people who sign up and indicate interest)
- Follow up (startups need to do this)
- Due diligence
- Term sheet
- Soft circle (those who are still interested after due diligence)
- Hard close (collect the checks!)
Lastly, realize that you may end up with 20 to 60 angel investors. Shareholder communication and management of shares can become a real chore in this instance. You can use a tool like eShares (www.esharesinc.com) to make your life easier, or hire a lawyer, but that can get expensive.
Thoughts from the Board
by Thomas Krummel, MD, Chairman
Formula One support teams aim to change four tires in two seconds in the pit stop. Hospitals should be just as prepared in the event a newborn needs to be resuscitated.
Hospitals Need to Treat Neonatal Resuscitation Like a Formula One Car Race
One of my favorite things to do at the Fogarty Institute is visit the Fog Shop, where our medtech startups brainstorm innovative solutions to solve some of the most critical health problems. Not only are these entrepreneurs a great source of inspiration, but they bring to my attention many of the health needs that still need to be addressed, and, unfortunately, often go unnoticed.
During a recent chat with Peter David, CEO of MedicalCue, one of our startups developing technology that guides medical teams during newborn resuscitation, I was reminded of some statistics that are truly disturbing: One in 10 babies globally needs to be resuscitated at birth – that's roughly 420,000 babies here in the United States alone. There is one "Golden Minute" of opportunity for a baby to start breathing properly according to the American Academy of Pediatrics, or the infant is at risk of brain damage, or worse, loss of life. Babies need to be promptly and correctly resuscitated, but unfortunately errors are all too common, depriving infants of a chance at a great life.
We can do much better.
Neonatal Resuscitation Needs To Be A Priority
"Formula One is the pinnacle of motor sport, and that's partly because the teams are always trying to cut down on the time it takes to do specific tasks during a race, alongside innovating with technology to make the cars go ever faster on less fuel." (Geek.com).
While babies don't need to go faster on less fuel, they do need all their brain power to achieve maximum potential. We need to increase awareness, improve processes and make neonatal resuscitation a priority for hospitals. If a baby is not breathing after birth, EVERY second counts.
Currently, resuscitation experts and tools can be minutes away from the newborn and his or her mom. Formula One support teams aim to change four tires in two seconds in the pit stop, and they are getting very close. So why does it take hospital staff 150 seconds to reach an unresponsive baby? They should be within four steps.
Hospitals Need to Leverage Technology
Currently, hospital staff relies on a 317-page instruction manual to resuscitate a baby. Imagine remembering the steps, let alone looking through 317 pages of text, under extremely stressful circumstances. Errors are bound to occur, and they do, about 50 to 55 percent of the time. MedicalCue is working towards streamlining the resuscitation process and has done so with great success, raising accuracy to 95 percent. And that is just one technology – certainly other new and different medical devices can tackle additional issues we have not thought of yet.
As a society, we are needlessly losing a lot of talent. We have made so much progress on pregnancy nutrition, research to stimulate babies' brains, and offering the best tools to educate our children, but little has been done to address those first few seconds of life, which perhaps the most crucial in a human's life. This needs to change.
Wine with Heart – A Success for MedTech Innovation
The 19th annual Wine with Heart event was a strong success with more than 150 of Silicon Valley's medtech pioneers and supporters in attendance. This annual event, which benefited the Fogarty Institute's programs and its startups, took place at the breathtaking Thomas Fogarty Winery and was hosted by the Santa Cruz Mountains Winegrowers Association.
Dr. Krummel, our Chairman, kicked off the event by highlighting the Institute's top accomplishments, which include having already successfully launched five companies; hosting seven startups focused on women and child's healthcare, one of the most underfunded and underdeveloped medical fields; partnering with the FDA in a first-of-its-kind educational pilot program to bring life-saving devices to market faster; adding three new innovative startups targeting women's healthcare; the successful clinical trials of InPress Technologies, whose technology promises to revolutionize women's healthcare and save millions of lives; and highlights from our summer internship program, one of the cornerstones of our organization; among others.
Dr. Fogarty with Nao Yokoi and Masa Kawaura, Terumo Medical, Inc.
An autographed Star Trek photo was among one of the most popular silent auction items.
Incredible food by Chef Mike Mashayekh of Le Papillon Restaurant was served, along with some of the most sought-after wines by the smallest producers in the Santa Cruz Mountains.
We are thankful for the interest in the Institute and our startups by so many of our industry's leaders. If you would like to be added to our invitation list for next year, please email email@example.com.
In the News
Becker's Health IT & CIO Review: 25 hospitals with innovations centers
The World News Network: AdvaMed Honors Dr. Thomas J. Fogarty with Lifetime Achievement Award
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