Neurotech Reports Staff Offers Advice at Neurotech Commercialization Workshop
July 2020 issue
About 70 neurotechnology industry professionals participated in the first annual Neurotech Commercialization Workshop, which took place on the Zoom platform earlier this month. The event was targeted at neurotech startups and existing neuromodulation device firms developing new product technologies.
During the workshop Neurotech Reports editors James Cavuoto, Jennifer French, Jeremy Koff, and Jo Jo Platt offered participants practical advice for launching a new product or a new startup in the neurotechnology industry. Cavuoto kicked off the event with an overview of the neurotech space, including some newly revised market data that takes into account the likely effect of the coronavirus pandemic.
Cavuoto projected a roughly 30 percent drop in SCS sales in 2020 because of the pandemic, but said that sales would likely return to 2019 levels in 2021. He mentioned some positive effects from the pandemic, including the impact on telemedicine and the use of bioelectronic medicine therapies for treating the cytokine storm that accompanies serious cases of COVID-19. Pre-pandemic, Neurotech Reports projected that Abbott had the largest share of the SCS market with about 26 percent, with Boston Scientific and Medtronic close behind. Nevro was believed to have a market share in the high teens.
NBR contributing editor Jo Jo Platt said that some of the projections for VC investment in 2020 hadn’t been adjusted dramatically, although the IPO market is shaky at the moment. She mentioned that CVRx’s recent closing of a $50 million round in the middle of the pandemic was a positive sign for the industry.
Platt gave attendees advice on preparing a pitch deck. She advised startups to look for their personal style in the pitch deck and all corporate communication. “Be true to who you are,” she advised. Platt cited a recent example of a neurotech startup who had just recruited an investor. The investor told the founder they were investing in the leadership of the individuals and their relationships with each other.
Some of the pitfalls to avoid in the pitch deck include inconsistent look from one slide to the next and fonts that don’t match. “It’s important that you’re comfortable with the look and feel of your deck,” Platt advised. She mentioned the 10/20/30 guideline: 10 slides max, 20 minutes, and 30-point font. “Eliminate everything from your deck that doesn’t serve a purpose,” she said.
If you build the presentation from scratch your creativity will shine through, but there is an opportunity for mistakes to creep in. As an alternative, you can download a template or consult with a graphic design professional. Platt said entrepreneurs would need to have several different versions of the pitch deck and that they should customize each presentation to the audience. A deck presented to an angel investor might stress different things than what is presented to a late-stage VC, for example. Key elements of a pitch deck include a statement of the problem being addressed, the company’s value proposition, a mention of their “secret sauce,” the business model, go to market plan, competitive analysis, management team, and financial projections. Platt strongly advised entrepreneurs to make sure they stick to the time frame they were given. She recommended getting feedback from potential investors, even it they decided not to invest.
NBR senior contributing editor Jennifer French offered advice on attracting early-stage investment for neurotech startups. She said that the number of deals and the value of investments had steadily increased until 2019 when there was a slight dip in valuations. French projected that valuations would likely go down because of the rocky road caused by the coronavirus pandemic, but downtimes are good times to start a new business. She cited the financial crisis of 2008-2009 as an example. “If you can get through this economic downturn, as a startup, you build a hard shell and you become much more capital efficient,” French said.
French mentioned the difference between accelerators and incubators, but also advised startups to look at the federal government—America’s seed fund—as a source of funding. French also discussed the concept of venture philanthropy, wherein nonprofit foundations adopt concepts and techniques from venture capital finance. A number of foundations are providing funding to healthcare startups to help them cross the “valley of death” between initial investment and commercial revenue. As examples, she cited the Cystic Fibrosis Foundation, the Michael J. Fox Foundation, the Crohn’s and Colitis Foundation, and the American Bionics Project.
French also mentioned pitch platforms such as MedCity Invest, Neurolaunch, and Medtech Innovator, that award prizes to promising startups. Some neurotech firms, such as Neurometrix and Tivic Health, have also used crowdfunding to raise early capital.
NBR senior consulting editor Jeremy Koff gave a discussion on financial modeling for new neurotech therapies. One of the first considerations in this process is whether to take a top-down or a bottom-up approach. The answer is both, he said. With the bottom-up approach, a neurotech firm might consider how many centers they can get on board, or how many implanters they can recruit. But a top-down approach based on incidence of a particular condition and likely market penetration can offer a reality check to confirm the viability of the model.
Koff advised attendees to look at how their projections compare to other successful neurotech firms. As benchmarks he cited Nevro, Advanced Bionics, Cochlear, Axonics, and ANS, noting where their revenues were after their first five years. Some of the pitfalls to avoid when building a financial model are unrealistic projections, underestimating the time and cost to get through clinical trials, and failing to account for scaling. “Make sure you know your numbers during investor pitches,” he advised. Koff also recommended executives protect themselves by including assumptions, disclaimers, disclosures, and forward looking statements in their presentations. “Balance investor excitement with your story,” he concluded.