I recently attended two regional events showcasing innovation, and while certainly not as polarized as Dickens’ “best of times” and “worst of times,” they displayed innovation from two very different focal points. Both the Coulter@Pitt advisor presentations meeting and Innovation Works Alphalab and Alphalab Gear Demo Day were fantastic, but each event had its own feel and appeal. One was very medically-oriented, by its very design, and the other, not so much… at least not this year.
Translation In Transition
I have had the privilege of serving as an advisor to the Coulter Program since shortly after the Wallace H. Coulter Foundation awarded a $3.5M Grant to the University of Pittsburgh in the fall of 2011. The 5-year translational research program began in 2012 and concludes its funding this year. However, with development of the university’s Innovation Institute, and the leadership of founding director Marc Malandro, translational research and development will continue as the program transitions to become fully self-funded by the university. A previous editorial on the Coulter Program included some specifics about its success at the University of Pittsburgh. I’m sure the success of Pitt’s Coulter program — helping to transition a fledging technology transfer office into the dynamic Innovation Institute — has been a win-win for all involved.
The Coulter@Pitt advisor meeting provided the opportunity for 11 teams to present their technological solutions to resolve unmet clinical needs. These teams of professors, medical professionals, industry experts, and student researchers provided brief overviews of their potential products (some included demonstrations of their prototypes). It was interesting and gratifying to hear the commercial sense they brought to their projects. Yes, there was tremendous science and medicine on display, but so much more, as well. These teams were telling us their likely regulatory pathways, including time and cost estimates, as appropriate. They also discussed the likely reimbursement landscape for the device, biologic, or pharmaceutical.
I have heard directly from some of our industry leaders — like Michael Mahoney, chairman and CEO of Boston Scientific, as well as keynote speaker at Healthegy’s MedTech Conference in Minneapolis — that reimbursement is the biggest challenge to solve in bringing new technology to market. Mahoney even puts reimbursement uncertainty ahead of typical concerns like regulatory risk and burden.
It also was interesting to listen to the teams talk about the business side of their technologies, discussing market size and potential capture rates over five or more years. It was clear they understood what potential investors and acquirers would want to know.
Being a huge fan of HGTV (Home & Garden Television), especially Chip and Joanna Gaines, and having a son who recently purchased his own “fixer-upper,” I love the annual Innovation Works (IW) Alphalab and Alphalab Gear Demo Day! I even thought of showing up to Demo Day with safety glasses and a sledgehammer, though I don’t know if IW CEO and President Rich Lunak would have appreciated my sense of humor. Obviously, the IW event is about demonstration, not demolition, and what a showcase it was!
The venue – the Carnegie Library Music Hall in Homestead, PA — was spectacular. The energy in the building was palpable. Hundreds of people filled the floor seating and balcony to listen to 12 companies pitch their innovative startup companies. This was a slick and polished event. The softly lit theater and brightly lit stage drew your eyes to the presenters. Each was introduced by one of their mentors or a member of the IW staff, and arrived on stage to their individual “walk-up” music with just a few minutes to share their creative venture. It’s all about quality, not quantity, and IW’s Demo Day delivered a high-quality experience for all involved.
Still, one thing I couldn’t help but notice was the lack of life science companies at Demo Day. I understand that IW, as the Ben Franklin Technology Partner in Western Pennsylvania, is market and technology agnostic. The 12 companies chosen to present were worthy of the opportunity and had compelling stories to share. But I do wonder whether changes in Washington, D.C that have the potential to significantly impact life science regulations and reimbursement are making device, diagnostic, and drug startups seem less attractive. I know that incubators try to provide as much support to as many startups as possible, but they have to be responsible with their investments. There certainly is evidence in the IW portfolio of a good balance across industries; their life science investment has included regional success stories like ALung, Circadiance, Rinovum Women’s Health, and PECA Labs, which are growing nicely, as well as many other device, drug, and biologic ventures. Maybe this was just a different year for Demo Day.
Medtech investment always has been different. In his article A Checklist for Successful Medical Technology Investment, Stephen D. Simpson wrote, “Would you be interested in investing in a sector that boasts above-average historical returns, strong returns on capital, government-enforced restriction on competition and products that can be essential to maintaining people’s quality of life? Would you still be interested if you knew there were huge up-front development expenses, a high failure rate, a constant stream of would-be rivals and a federal regulatory body that enforces strict, and sometimes arbitrary, standards?” This is the classic question. Are our answers changing? What do you think about medtech investment in 2017?