A NEW PARADIGM IN SKIN-GRAFTING

Healthcare Innovation & CommercializationOctober 8th 2014

Getting a Company off the Groundsameer.a.sabir@gmail.com

My Story…

• Currently CEO of SevenOaks Biosystems• Co-Founded with Dr Rox Anderson (MGH/HMS)

• previously..• Immunology undergrad, life sciences investment banker (2000-2006)

• Harvard-MIT Biomedical Enterprise Program (2006-2009)

• Started MoMelan Technologies with Dr Rox Anderson (Professor of

Dermatology, HMS) in June 2009

• Raised $5m in Venture Capital, acquired in Nov 2012

• MoMelan - 1st Venture-backed company• Novel enabling medical device technology for automated

epidermal expansion and transplant

• 1 full-time employee, 1 Rockstar scientific founder, 4 board-

members, 4 inactive founders, 5 consultants 2

General points about start-ups & people

• When starting out, keep it lean• Business vs Science Project

• Capital efficiency is key

• Impact on fundraising

3

Companies are continuously evolving at the beginning

Starting a company – key stakeholders

4

‘Rockstar’ scientist

‘Working’ Scientists Entrepreneur

Advisors• Stakeholder can be one, or more of each• Different motivations and desired outcomes

Motivation - Points to consider

• Assess risk profiles and weigh against contributions• Rockstar scientist is probably going to bring in the $$

• The ‘Entrepreneur’ (could be MBA, post-doc leaving to join

company, etc) bears significant risk

• Scientists remaining in their job – less risk but should be

compensated for job well-done

• Advisors – low risk profile but can be critical to success

• Stock is your primary currency • Utilize vesting

5

WithoutHow to break up the pie…

People, Evolution & Hiring

• Companies evolve quickly…• Sometimes month to month - Rapidly changing

• For Example…• First 12 months

• Early science

• ‘Rangefinding work’

• Next 12 Months• Critical path science

• Company-building

• Be mindful of personalities• Passion • Negotiate in good faith – be honest about aims and

expectations 6

Use Consultants

Hire – internalize talent

People, Evolution & Firing

• Obvious reasons to fire someone• Fraud

• Assault

• Corporate espionage

• Less obvious reasons to fire someone• Companys needs change

• Not as good as you thought they were

• Consultants with expectations

• You are attracting higher-quality talent

• Be honest, set aims and expectations, and don’t sugar coat bad news 7

Back to breaking up the pie

• Deciding how to break-up equity can lead to..

8

Class Exercise

• Break up into groups of 5

• Quickly choose a ‘company name’

• Allocate roles• 1 rockstar scientist

• 1 Entrepreneur type

• 3 post-doc types

• 1 is leaving to join the company

• 2 are staying

9

Class Exercise

• Scenario• Your Rockstar scientist has invented a new medical device• 3 of his post-docs have been working on this technology

for 2 years as part of their job• 1 post-doc is leaving to head the scientific effort at the

company, the other two are remaining in the lab• Your Rockstar has found an ‘MBA type’ to spearhead the

business effort

10 Minutes to decide how much each person gets!

10

The Company

MoMelan Technologies developed EpigraftTM (now called CellutomeTM)•Technology invented at the Wellman Center for Medicine, MGH, licensed from Partners Healthcare•Scientific Founder is R.Rox Anderson, MD – Professor of Dermatology, Harvard Medical School•Sameer Sabir – Co-Founder (& Student of Prof. Anderson)•designed to make epidermal skin grafting minimally invasive, simple and automated

Started the company with a concept, raised 2 rounds of investment capital, developed a commercial product, ran some clinical trials, cleared the FDA and

sold the company….all in 2.5 years

MoMelan Technologies

Timeline

► Co-Founded MoMelan with Prof Rox Anderson - Sept

► Series A Financing 0f $3.6m – June

► First patient treated – November

► Awarded $750k MA state award

► File with FDA – September

► ACQUIRED by KCI, Inc - November

► First financing of $1.1m – March

► First prototype complete – October

A NEW PARADIGM IN SKIN-GRAFTING

MoMelan Technologies - OverviewThe CompanyMoMelan Technologies is developing EpigraftTM •unique medical device platform that enables optimized mechanical autologous epidermal transplant•designed to make epidermal skin grafting minimally invasive, simple and automated •Point of care, few meaningful competitive approaches•$1.1m Seed round in February 2010•$750k Massachusetts Award

Simple & Rapid Regulatory Pathway► FDA 510k class 1 – exempt from pre-

market notification

The opportunityLarge potential market applications for unmet needs

► Wound-Healing, including complicated wounds ($3bn)

► Synergies with existing wound-dressings, NPWT

► Dermatology, including Medical ($500m) and Aesthetic ($820m)

Attractive economic dynamics► 85%+ projected gross margins

Reimbursement► Patient pay or existing

reimbursement, depending on application

Office or outpatient procedure► <1 hour procedure time in total

The Momelan Team

Sameer A SabirChief Executive Officer

10 years experience in life sciencesJPMorgan, Commerzbank Securities,

Cinnabar Consulting

Andrew ZieglerLead Engineer

25 years experience in mechanical engineering design and prototyping

Design Continuum, iRobot

Robert LaRocheVice President of Market Development26 years experience in medical device

sales and marketingCR Bard, Cambridge Heart, Candela

Jeff CerierProject Manager

30 years experience in device project management

Co-Founder, TDC

Management

Board of Directors

Sameer A SabirChief Executive Officer, MoMelan Technologies

Robert Forrester (Chairman) – COO,

Verastem

Bill McCullenGeneral Partner, Launch Capital

Josh Tolkoff Managing Director,

Ironwood Equity

Sridhar PrathikantiMember, Life Science

Angels

The Momelan Team – Scientific Advisory Board

Roy Geronemus MDDirector, Laser & Skin Surgery Center of New York

Clinical Professor of DermatologyNew York University Medical Center

New York, NY

Rebat Halder MDProfessor and Chairman

Department of DermatologyHoward University College of Medicine

Washington, D.C.

Professor Rox Anderson, MDProfessor of Dermatology, Harvard Medical School

Director, Wellman Center for PhotomedicineMassachusetts General Hospital

Boston, MA

David Armstrong DPM, MD, PhDProfessor of Surgery and Director

Southern Arizona Limb Salvage Alliance (SALSA)University of Arizona College of Medicine

Tucson, AZ

Thomas Serena MD, FACSCo-Founder & CEO, Serena Group

Vice-President, American College for Hyperbaric Medicine

Meeting a Significant Need

Enabling epidermal skin grafting

Problem Innovation SolutionEpidermal skin grafting is

effective for many skin disorders, but is rarely

utilized-imprecise-inefficient-invasive

MoMelan’s automated device can

precisely and reproducibly generate

an optimized epidermal skin graft

A fast, minimally invasive, cost-effective solution for repigmentation & wound

healing

► Minimally Invasive► Repeatable & Reliable► Biomechanically Precise

EpiGraftTM – How it Works

Large US Market OpportunitiesMedical Dermatology ($500 million)

• Vitiligo (3-6m pts)• Skin cancer wound repair

(800k cases/yr)

Aesthetic Dermatology ($820 million)• Post Laser Treatment Hypopigmentation

(500k cases/yr)• Scar Revision – Including hypopigmented scars (1.6

M cosmetic surgeries/yr)

Wound Care ($2-3 billion)• Diabetic foot and venous leg

ulcers (3.4m cases/yr)• Pressure sores (1.9m/yr)• Burns & Trauma (600k cases/yr)

Low Regulatory Hurdle – Class 1 FDA Device

Product Concept

Prototype Clinical Testing

Notification Path

► Autologous tissue► Purely Mechanical► No Chemicals,

Biologics, Enzymes

► “Non-Significant Risk” Designation by multiple IRBs for case studies

► No IDE from the FDA Required

► Conclusion is That Device is FDA Class 1

► Predicate: Electric Skin-Graft Mesher

► Needs Only General Quality Controls, Not Marketing Release by FDA

MoMelan does not need FDA 510K Concurrence before selling a Class 1 Device

Financial Incentive to Adopt EpiGraftTM System • Patient Insured

► For acute and chronic wounds► Existing epidermal grafting CPT codes► Facility fee where applicable

• Patient Pay Out of Pocket► For aesthetic applications► Vitiligo, hypopigmentation, scar revision► Patients willing to pay to look better

Physician Fee/Gross Profit

Facility FeeGross Profit

EpiGraft Disposable Price

Physician Gross Profit

EpiGraft Disposable Price

EpiGraft Disposable Price

In O

ffice

In F

acili

ty

Physician Gross Profit

$200$145

Differentiated disposables will separate self-pay/out of pocket markets

Intellectual Property

Method Patents4 Patent Applications

Protects key processes encompassed in EpiGraft

Approach

Method Patents4 Patent Applications

Protects key processes encompassed in EpiGraft

Approach

Device Patents 4 Patent Applications

Protects key features of EpiGraft Device

Device Patents 4 Patent Applications

Protects key features of EpiGraft Device

Design1 Patent Applications

Protects key design features including interface between control unit and disposable

Design1 Patent Applications

Protects key design features including interface between control unit and disposable

Manufacturing Patents1 Patent Application

Protects key disposable production process

Manufacturing Patents1 Patent Application

Protects key disposable production process

BARRIER TO ENTRYBroad series of 10

commercially relevant patent applications

BARRIER TO ENTRYBroad series of 10

commercially relevant patent applications

Exclusive Worldwide License to MGH IP & 9 additional ‘MoMelan’ patent applications

Class Exercise

• Break up into groups of 5

• Quickly choose a ‘company name’

• Allocate roles• 1 rockstar scientist

• 1 Entrepreneur type

• 3 post-doc types

• 1 is leaving to join the company

• 2 are staying

23

Class Exercise

• Scenario• Your Rockstar scientist has invented a new medical device• 3 of his post-docs have been working on this technology

for 2 years as part of their job• 1 post-doc is leaving to head the scientific effort at the

company, the other two are remaining in the lab• Your Rockstar has found an ‘MBA type’ to spearhead the

business effort

10 Minutes to decide how much each person gets!

24

Find your niche, find what you are good at, and focus on that. And be a good person along the way - if you try to take shortcuts it will just come back and haunt you… Thomas Flohr Aviation Entrepreneur