Neurotech Leaders Forum Attendees Discuss Obstacles to Commercialization
The 2006 Neurotech Leaders Forum, held in San Francisco, CA September 28-29, offered an opportunity for neurotechnology industry entrepreneurs to interact with executives from more established medical device firms and the financial professionals who will help grow the industry. It also offered attendees a sobering look at some of the challenges confronting them as they endeavor to move from research to commercial development.
Keynote speaker Skip Cummins, chairman and CEO of Cyberonics, Inc., related many of his personal experiences as a pioneer in the neurotechnology industry, including several hurdles presented by regulators, reimbursement agencies, and the expectations of Wall Street. “Pioneering is not a quarter-to-quarter phenomenon,” he said.
Cummins said he originally thought the effort to market the firm’s VNS device for treatment-resistant depression would be easier than the previous epilepsy launch, but discovered it was actually “10 times worse. It’s not fun,” he said of his efforts to change the status quo.
In a session devoted to the new competitive landscape of the neurotechnology industry, Lothar Krinke, vice president of business development at Medtronic, Inc., offered his thoughts on how smaller neurotechnology firms could best pursue partnership deals with larger companies. He cautioned entrepreneurs to be cognizant of how their technology platforms might complement or conflict with the larger company’s offerings. Krinke also mentioned that there was a good market opportunity for developers of tools or adjunct systems that might complement an existing player’s neurostimulation products, citing as an example neurosurgical tools that might improve the DBS implantation process.
Todd Whitehurst, a vice president at Boston Scientific Corp., outlined the company’s neuromodulation and neural prostheses product lines acquired from Advanced Bionics. He shared his experience going through the transition from Advanced Bionics to Boston Scientific, commenting that the parent company keeps sufficient distance from the new unit’s employees while offering the benefit of its experience in medical device marketing. As an example, Whitehurst related how the company was able to boost sales of its cochlear implants significantly by modifying the aesthetic packaging of the device—insight gleaned from corporate marketing efforts.
The clinician’s perspective panel featured presentations from James Campbell, a neurosurgeon from Johns Hopkins Hospital, Michael Keith, an orthopedic surgeon from MetroHealth Medical Center in Cleveland, OH, and Evan Rosenfeld, formerly a physiatrist at the Rehabilitation Institute of Chicago and now an executive at Bioness Inc. Keith related his experiences developing an implanted hand grasp stimulator for quadriplegic individuals, pointing out that being a pioneer in a new technology such as this does not necessarily translate into enormous financial gain.
Rosenfeld itemized many of the reimbursement difficulties confronting new medical technologies, particularly in the area of neurorehabilitation. He spoke of the numerous Catch-22 situations at the Centers for Medicare and Medicaid Services, such as the agency’s firm requirement for “evidentiary support” and their refusal to accept scientific evidence.
In the Friday afternoon entrepreneur panel, executives of five startup or emerging firms gave an overview of their technologies, products, and markets. David Hable, CEO of Afferent Corp., described the company’s efforts to boost deficiencies in sensory activity following stroke, diabetes, and other disorders. Philip Kennedy, founder of Neural Signals, Inc., briefed attendees on the opportunities for a new neural prosthesis for speech restoration. Other presenters during the session were Alvaro Fernandez, managing director of Sharpbrains, Souhile Assaf, CEO of Medtrode, Inc., and Jagi Gill, CEO of Sage Medical.
The new technologies panel featured a presentation from Joe Pancrazio from the National Institutes of Health, who apprised attendees of recent activity in the agency’s Neural Prosthesis Program. Ted Berger from the University of Southern California gave an update on his efforts to build a neural prosthesis for lost cognitive function. And Dan DiLorenzo, founder of BioNeuronics Inc., shared his personal experiences going from a researcher on a shoestring budget to a startup neurotech firm with venture capital financing.
The conference concluded with a session devoted to venture capital firms’ perspectives. Panelists included Ellen Koskinas from InterWest Partners, Michael Goldberg from Mohr, Davidow Ventures, and Paul Grand from RCT BioVentures. Koskinas related her firm’s investment in several neurotech startups. Grand advised neurotech entrepreneurs to consult with VC’s early on in the funding process to get feedback and advice that may prove helpful later when submitting a formal business plan. He also advised attendees not to be too discouraged by some of the stories about reimbursement difficulties heard during the conference. “A well run clinical trial is the best antidote,” he said.
Goldberg advised entrepreneurs to “follow the biology” and said his firm looks for “disruptive” market opportunities, as indicated by market size, as well as the management team and financial risks when considering an investment. Each of the panelists expressed some concern about consolidation currently going on in the neurotechnology industry, since merger and acquisition activity represents a viable exit strategy for investors.