Do You Want to Start a Company? or Lessons from Babs’s Excellent Adventure Babs Soller, PhD Founder, President & Chief Scientific Officer Reflectance Medical Inc. Prof Emeritus of Anesthesiology, UMass Medical School

How does it start? There has to be an important unmet need 1.Standard vital signs are inadequate in identifying patients in compensated shock. 2.Standard vital signs are not sufficient as guides to resuscitation. 3.The solution has to be small, lightweight, portable, noninvasive and easy for first responders to use. This problem was presented in a grant solicitation from the US Army in 1995 and it’s still a huge unmet need.

The big idea

Why a company? Needed money to build hardware and develop software. Medical products require clearance from the FDA before they can be sold. A corporate framework is needed to achieve this. Large monitoring companies rarely support research into new vital signs, only investing after the company has brought the product to market and shown acceptance by the medical community.

The first product: CareGuide Oximeter (2012)

Starting a company 1.Protect your technology with patents. 2.The right time to think about a company. 3.Begin to develop your business plan. 4.Getting help. 5.Decide how involved you want to be. 6.Sources of funding. 7.Landmines. 8.Last words.

1. Protect your technology with patents Novel technology should be protected by US and in many cases international patents. When you receive federal research support you have an obligation to disclose the invention to your employer, who reports it to the funding agency. Under the Bayh-Dole act, UMass owns, or is assigned the rights to the invention. The UMass Office of Technology Management oversees the patenting process.

Patents continued UMass can choose to proceed with a patent application, or give the technology back to you. Under the Bayh-Dole Act, universities can profit from inventions made under federal research grants and most seek to license patents to private entities. Patents are the currency of commercial investment. A patent portfolio can be the basis of a start-up company.

2. The right time to start thinking about a company For medical devices –Working prototype –Some clinical data –Good idea about the market

3. Begin to develop your business plan Market –Unmet clinical need –Market size (> $1 billion for VC investment) –How your technology will address target market Competition –Who else is out there and why you are different and better. Technical –How your invention works, written for someone with no technical background. Intellectual property –Issued and pending patents.

Business plan continued Regulatory –The FDA regulations you have to meet to sell your product and your strategy to achieve them. Business model –How you are going to make money with your technology? –What it is you are actually going to sell and for how much? Sales and marketing –Who’s going to sell it? –To whom are you going to sell it? –How are you going to convince them to buy it? –Sales projections.

Business plan continued Reimbursement –Who’s going to pay for the product when you sell it? Management team –Key personnel with expertise in all areas of the business plan, or plan on how & when you will get it. Use of funds –Your expenses. –Key milestones that add value to the company Exit strategy –How is the investor going to make a profit on their investment?

4. Getting help to get started At UMass –Office of Technology Management –Massachusetts Technology Transfer Center –M2D2: Massachusetts Medical Device Development Center Local, national and international entrepreneur groups –In MA:, MassMEDIC IGNITE, MIT Enterprise Forum, MedDevice Group –SBIR/STTR education sessions –TiE

find a good mentor to work with you Well connected. –Can help you fill out your team with experienced professionals (CEO, regulatory, marketing, manufacturing). –Make introductions to potential investors. Has extensive experience with start-up companies. Knows your market and technical space. Understands the issues working with universities. Someone you can call to ask stupid questions.

5. How involved to you want to be? License your technology to a large company and wave goodbye. License your technology to a large or small company with a consulting contract or sponsored research agreement. Start your own company. all approaches require you to articulate your product and the market

6. Sources of funding – getting started University programs –Small grants, resources for prototypes, access to clinicians – business plan competitions State & local programs –Matching funds –Loans –Incubators Federal programs –CCAT, Navy funded program

Sources of funding – serious money – you need a company SBIR/STTR grants – one of the few types of federal grants that can be used for commercialization activities –Every federal agency (percentage of their budget) –Phase I: $100K, usually 6 months –Phase II: $750K, usually 2 years –NIH has more flexible rules Angel investors & angel groups –~$100K to $1-$2 million –Angel investors often provide mentoring –Bridge to venture funding Venture capitalists (VC’s) –Few to tens of million dollars –Early stage VC’s mentor entrepreneurs

7. Landmines Conflict of interest. –make sure you understand the policies –Individual & institution conflicts –Financial and human subject conflicts Bad advice is plentiful, trust your sources. Understand early, what is required to obtain your FDA approval. Understand the financial transactions and how they impact you. Raising money for commercialization takes a lot longer than you think.

8. Last words Excitement is important, if you are excited about your technology, so will prospective investors. Investors will “give you the science”. They have confidence that you will get the technology to work. Investors want you to be successful, because that’s how they make money. They will help you. A “business plan” is really 30 powerpoint slides. Consultants, lawyers and CEOs who work with entrepreneurs may initially work without pay in exchange for equity & an opportunity to work with an exciting start up company.

Last words, really It really is an adventure, take the plunge! Contact Info: Babs Soller, PhD Reflectance Medical Westboro, MA x223