Turning Clinical Ideas into Market Opportunities Howard R. Levin, M.D. MDTX Presentation April 4, 2018 25 MIN
Goals of Presentation Explain how ideas are moved from academics to industry Explore the issues/difficulties in working with physicians Illustrate a pathway that can successfully move something from academics to commercialization Talk about what a patent is and who is an inventor to allow you to be able to protect yourself with University Tech Transfer offices 2
Serial Entrepreneurs with Long Track Record of Successful Innovation Founded 6 companies of our own - all already acquired, in clinical practice or in clinical trials Provided seminal IP for others products are in US/OUS sales and/or acquired by a strategic Functioned as CEO/CMO/CSO/CTO of companies while undertaking the whole cycle of device development, approval and sales We now focus on from back of the napkin to first in human / proof of concept studies 15 years of joint innovation as 120 + patents issued $100 MM funding raised >$1.4 B returned to investors 3
Some of Our Inventions and Companies Founded 2010, recent Series B from SVLS & TRV in 2013 Founded 2003, Acquired by Medtronic for $800mm in 2010 Seminal patents, Acquired by Abbott for $410 million in 2010 Founded 1999, Acquired by Gambro for $77 million in 2010 2006, Strategic Investment by Abbott & LivaNova Seminal patents, product on sale in Europe 4 CardioLogic Systems Founded 1992, Acquired by ZOLL Medical in 2004 Seminal patents, product on sale in Europe
Worked Both in Academics and Industry Undergrad BME (JHU) Masters in BME MD, Internal Medicine Residency Cardiology fellowship with training in HF/Transplant (JHU) Ran mechanical cardiac assist program at Columbia Really enjoyed clinical medicine but also enjoyed research, physiology, engineering and developing new ideas Left academics to join my first company 5
Relationship of Physicians and Engineers Relationships between physicians and industry have led to life-saving innovations, such as steerable cardiac catheters and certain artificial heart valves Physician innovators also developed the first reliable pacemakers in the 1950s and 1960s, with medical device makers later introducing additional refinements Device manufacturers considered physician to have a central role in identifying the needs for the industry 6
Relationship of Physicians and Engineers However, at that time, physicians on the leading edge of medical knowledge also found it necessary at first to build the tools they need Starting with the Medical Device Amendments in the 1976 and Safe Medical Device Act in 1990, physicians could not just glue things together in their basement In large part, this led to the start of the development of closer relationships between physicians and engineers Especially today, it has become increasingly important for both physicians and engineers to better understand each other and how each other works and thinks 7
Common Example of a Today s Physician Invention An idea is conceived by a physician no access to engineering and come up with what they think is a good approach Inventor wants to publish the early (likely preclinical) results and present them at a conference University files one U.S. or carbon copy PCT application where inventor describes the clinical implications of the idea in great detail (not patentable) and supplements it with a single hypothetical design embodiment that serves as an illustration University secures narrow claims reflecting the initial armchair design of a medical device. They now have issued claims that they will try to license When they try to get it licensed, they then get surprised by the response of industry 8
What Happens Then? Industry commonly finds the seminal patent disclosed an unworkable design (they did not work with an experienced engineer). However, this initial patent is now prior art that hinders later patenting Thus, the physician inventor has just prevented anyone from owning the field and locked themselves out of being able to capitalize on their specific embodiment (unless is the absolute best way to do it) Although the initial intellectual heavy lifting was done by academia, industry can ignore the seminal patent and picks up on the invention process They generate hundreds of patents disclosing more sophisticated, better engineered designs IP estate is now fragmented into multiple, often overlapping, portfolios claiming various solutions to the problem. First inventor has to be content with making but I was First statements. 9
Let s Say They Could Raise Enough Money to Start a Company Academic clinicians/scientists came up with an idea for a device and started a company. They found they did not understand and could not perform all of the required functions to commercialize their idea in humans Execution team was hired to make commercial device, do clinical trials, start sales, etc. Companies commonly failed after this transition because of gap that exists in translating scientific, clinical, market, etc. issues to execution teams Lead to the development of incubators that helped to bridge this gap GAP Research/Clinical Concept Team INCUBATOR Execution Team Sales and Marketing Team 10
Physician Standard Device Idea Assessment Process They have been working on an idea that has been NIH/other funded for several years it looks like it works well in animals and may have clinical benefit While placing stents, they notice that if the catheter they used had a specific curve, some of your hardest cases would become faster and easier They noticed that if pacemakers implemented your new stimulation algorithm, it would improve cardiac output in your most difficult patients Are these good ideas? How do you tell which it is? For Mankind, Yes. For a Business, Maybe 11
Mankind vs. Business Things that are a business means that there are enough patients to use it in, simple enough to use widely in those patients and can be developed in an appropriate amount of time and money invested for the investor to make a return on their investment Fundable Fundable ~ It works great clinically and I personally need it frequently How much better your device therapy is than existing ones How hot your idea, specifically at the time you shop it Finding the 1 in 10 VCs that already believe in concept How good a job you do presenting a rational plan How lucky you are to be at the right place at the right time Things that are good for mankind are primarily funded by NIH/Foundation/ other non-profit sources of money Things that are businesses are funded by VCs or strategics: How should one choose what ideas to work on? 12
How Do Doctors Approach This Very hard for a clinician or scientist to competently evaluate all of the marketing, clinical, engineering, IP, reimbursement, regulatory, etc. on their own Just not trained/have the experience to do all of the required tasks well They need to: Partner with someone/group of people who has already been through it License to incubator take royalties So, what areas should physicians be focused on 13
Breakthrough Therapies Tend To Start In Academics/ Better Tools Developed In Industry or By Clinicians 14
What Should You Know Before You Decide to Move Ahead With Starting A Company Issue Unmet Clinical Need and Therapy Goal Physiological Mechanism Initial Device Design Description What is the specific clinical indication we are going after What overall clinical benefit are we trying to achieve Is there a known but unexploited physiological mechanism that will allow one to address an unmet clinical need that is a drug failure Is there at least one potential device design that can be used to implement our proposed therapy Proposed Technology/ Technical Risk Do you have to develop a totally new approach. Can we repurpose some existing technology? Can you limit the novel issues (every risk) to < XX% of the project Clinical and Regulatory Risk Is there a known trial design or are you the first to work in this area Number of patients required Inclusion/exclusion criteria What measurable and accepted clinical and/or physiological endpoints exist in both the shortterm (immediate to 3 months) and long-term (3 months to 2+ years) that will justify moving ahead with the study, continued funding or future acquisition Required duration of follow-up IP Risk Reimbursement What is potential to own therapeutic space and core or enabling technologies Freedom to Practice Is our device novel Does it exist, can we piggyback on existing reimbursement 15
What Should You Know Before You Decide to Move Ahead With Starting A Company Issue Time From Idea to Approval Sales and Marketing Risks Exit Strategy Potential for early investment/exit Description How long before you get acquired or become cash flow positive Is that an acceptable Return On Investment (ROI) for your potential investors For each of the indication(s), what is the base and maximum market size and what factors are related to that Who are the potential users of the proposed embodiment(s) How does it fit their existing skill set? Who owns the patient Is it a normal referral pathway between the user and referrer? Who are the logical acquirers for the proposed therapy What information would be needed by the acquirers to make an early strategic investment or acquisition possible and when would that data be available Need for sales ramp to exit Does the proposed therapy need to enter sales to be acquired Within our core competence Key Issues to resolve Potential for early risk reduction Is the proposed therapy within our existing expertise or are we comfortable extending to that clinical area because of the overlap of physiological expertise What are the major issues that need to be resolved prior to starting moving to next phase of preclinical trials, basic embodiment development/testing, etc.? What can be done to quickly reduce risk? What logical milestones exist for company financing? 16
Important Take Away Points Comparatively easy to come up with an idea that if it works, will have a significant impact on the clinical care of patients Very hard to find a commercially viable project that will meet all the criteria necessary for success Synergy of physicians and engineers is essential. Working with an experienced team helps a lot. Use physician input to reduce both physiologic & clinical risk Provide engineering input to avoid physicians trying to break the laws of physics such as asking you to make a catheter that has an inside diameter bigger that the outside diameter 17
What Is A Patent? Historic need to protect and preserve trade secrets was already recognized in ancient Greece Royal patents were given to craftsmen during the time of the plague granting them monopoly for period of time in return for sharing trade secrets Republic of Florence gave architect Filippo Brunelleschi a three-year patent for a barge with hoisting gear, that carried marble along the Arno River in 1421 Dual nature of patent law: protect the inventor from copycat competitors & protect public from being abused by the monopolist Resolved by limiting scope and time of the patent Even today fundamentals didn t change. Scope of the monopoly is negotiated with the Patent Office and life of patent is set to 20 years 18
What Patent Does And Doesn t Do It does not give inventor rights to manufacture and sell the covered product Gives inventor rights to exclude others Thus, first and foremost: inventors need to understand the IP landscape think real estate What is owned by them, owned by others, owned by community? Patents are bought, sold and rented like any other property Inventorship is a legal definition while ownership is contractual not necessarily related 19
What Is Patentable? Devices, processes and methods (in the US only) Abstract ideas and scientific discoveries of natural phenomena are not patentable need some reduction to practice/ be enabled Of paramount importance are the concepts of novelty and non-obviousness Novelty is relatively self explanatory and well defined. You cannot invent something that already exists. Obviousness is defined by invoking a ordinary person skilled in the art. Imagine a fresh BME graduate armed with library card but not inventive. Would it be obvious to him to combine all the elements? 20
Invention Favors the Prepared Mind Look for surprising, counterintuitive results in your experiments and record them Work with your counsel to write the specification while avoiding many obviousness pitfalls If your patent is valuable, its obviousness will be challenged by competitors with 100% probability! 21
What Makes You An Inventor? Contribution to conception and reduction to practice of the claim Merely assisting in reduction to practice (such as giving information you could find in the literature or providing resources/effort) is not inventorship Common reasons for patent invalidation: claiming invention by somebody else, not including a contributor Bottom line: Inventorship is defined in legal terms and is better left to your legal team. Work with them closely 22
Summary Physicians have the ability to identify unmet clinical needs or improvements They do not have the ability to develop those ideas into a practical device Don t believe their propaganda kill projects quickly, even if they have some exceptional strengths. To get funded you need to answer all questions with YES Do find and learn to work with physicians who are willing to use a structured approach to device development 23