Neurotech Executives Discuss Past and Future at 10th Annual Leaders Forum
About 65 executives and investors from neurotechnology companies attended the 10th Annual Neurotech Leaders Forum, held in San Francisco, CA earlier this month. Though attendance was down from last year, the two-day conference featured lively discussion among panelists and attendees on a number of issues affecting the industry.
On the first day of the conference, Neurotech Reports editor James Cavuoto gave an update on the state of the neurotechnology industry, highlighting key events and milestones over the last 10 years. Keynote speaker Elliot Krames, former president of the International Neuromodulation Society, gave an address on the future of neuromodulation, in which he highlighted several promising new application areas for therapies such as DBS and spinal cord stimulation.
In a panel discussion on the investment outlook for neurotechnology, Manuel Lopez-Figueroa of Bay City Capital described the challenging fundraising environment and changing attitudes from venture capital professionals about the CNS space. He noted that some have come to question the clinical predictability of CNS animal models and he mentioned the current uncertain exit strategy as negative factors affecting startups in this field.
Lopez described a new VC paradigm taking shape to make the chances of a new venture’s success higher at the outset. In this new paradigm, entrepreneurs bring in a large medical manufacturer as a corporate investor/partner from concept to acquisition. The large company would make a relatively small investment—about $5 million—and have an observer seat on the board but otherwise not be involved in day-to-day operations. Lopez is optimistic about neurogenesis plays and optogenetics, but pessimistic about diagnostics based on EEG biomarkers.
Dominique Durand of Case Western Reserve University offered attendees a tutorial on DBS technology, highlighting some of the new electrode, targeting, and imaging technologies that will bring greater product differentiation to this product segment in years ahead.
In a session on noninvasive neuromodulation, industry consultant Tom Hughes discussed the surface stimulation market, including CMS national coverage decisions for products such as TENS, neuromuscular stimulation, and pelvic floor incontinence stimulators. He mentioned that the industry is currently planning to fight an FDA proposal to exempt low-output surface stimulation devices from the PMA process. Kim Tietz from Neuronetics gave an update on his company’s transcranial magnetic stimulation system for depression. There are currently 224 systems in use. The company is looking at new markets for the technology, including anxiety, bipolar disorder, and PTSD.
In a session devoted to partnering opportunities, Milton Morris from Cyberonics and Chris Chavez from St. Jude Medical gave examples of the type of firms they like to partner with. Kevin Wasserstein from Versant Ventures offered his views on how neurotech startups could work with larger firms. Echoing Manuel Lopez’ earlier comments, he described a “no rights” equity deal where the strategic partner gets a seat at the table as the startup firm develops. He also said that earnout clauses—not popular four years ago—are now part of 90 percent of recent exits.
On the second day of the conference, keynote speaker Reese Terry, a cofounder of Cyberonics, gave his observations on the growth and maturity of the neurotechnology industry. Commenting on parallels drawn between the advent of neurotechnology devices and the earlier development of the cardiac device industry, Terry noted there were some distinct differences. Cardiac pacing works every time, he said, while neural stimulation works much of the time but not always.
Executives and founders of several startup and emerging neurotechnology companies presented at the conference, including Ben Pless, CEO of Autonomic Technologies, which is developing an RF stimulation device for treatment of migraine. The device is implanted trans-orally in the sphenopalatine ganglion. The patient controls the timing and amplitude of the stimulation with a cell-phone-sized device placed in proximity of the face. Other presenters included Andy Gotshalk, CEO of Blackrock Microsystems, Paul Meadows of ImThera Medical, Lynn Elliott from Spinal Modulation, Inc., Ingela Danielsson from Trifectas Medical, Michael Grant from Medical Interconnect LLC, and Steven Stupp from Trigeminal Solutions.
In an afternoon session devoted to reimbursement, Tom Hughes, who cochairs the Life Science Alley special interest group on reimbursement, gave attendees an overview of how health care reform stands to impact reimbursement for neurotechnology devices. Gretchen Benko-Mruk from Concentric Medical also shared some of her company’s experiences dealing with private insurers.
In the final session, former Victhom executive Nader Kameli offered his advice on designing new clinical trials to maximize the chance of success. Daniel Chao of NeuroPace also contributed to the discussion.