Revised 8/6/2015

FALL 2015 COURSE SYLLABUS HST.973/15.124 Evaluating a Biomedical Business Concept

Course Director

Richard J. Cohen, M.D., Ph.D. rjcohen@mit.edu Tel: 617-253-7430

Core Faculty

Richard Anders, J.D. randers@massmedangels.com Tel: 617-547-7200

Carl Berke, Ph.D. cberke@partners.org Tel: 617-954-9358

Josh Tolkoff josh@tolkoff.com Tel: 617-378-3962

Ali Haghighi-Mood, Ph.D. alihmood@comcast.net Tel: 978-761-8222

Peter Madras, M.D. pmadras@gmail.com Tel: 617-306-2680

Teaching Assistant

Sanjay Trehan strehan@mit.edu Tel: 617-543-5507

Course Secretary

Caitlin Burke cburke@mit.edu Tel: 617-253-0009

Schedule

September 9 – December 9 on Wednesday 2:30-5:30 PM in MIT Room E25-119

Date/Time Time Speaker Topic

09/09/2015 2:35 – 2:50 Richard Cohen Introduction

2:50 – 3:50 Todd Zion SmartCells

3:50 – 4:00 Break

4:00 – 5:25 Carl Berke & Faculty Sample Case Analyses

09/16/2015 2:35 – 3:20 Brian Miller Sentien Biotechnologies

3:20 – 4:05 Adam Collette VitaThreads

4:05 – 4:15 Break

4:15 – 4:35 Faculty Homework Discussion

4:35 – 5:25 Glenn Robertelli Admetsys

09/21/2015 7:05 – 7:50 Don Straus First Light Biosciences

MONDAY 7:50 – 8:35 Nancy Confrey Health Beacons

NIGHT 8:35 – 8:45 Break

8:45 – 9:30 Jeff Behrens Siamab

09/23/2015 2:35 – 3:45 Richard Cohen Evidence Trumps Common Sense

3:45 - 4:05 Faculty Homework Discussion

4:05 – 4:15 Break

4:15– 5:25 Ali Haghighi-Mood Cambridge Heart

9/30/2015 2:35 – 3:45 Allan M. Green Regulation and Clinical Trials

3:45 – 4:05 Faculty Homework Discussion

4:05 – 4:15 Break

4:15– 5:25 Ed Berger Reimbursement

10/07/2015 2:35 – 3:45 Richard Anders & Josh Tolkoff Needs Finding and Screening

3:45 – 4:05 Faculty Homework Discussion

4:05 – 4:15 Break

4:15– 5:25 Richard Anders & Josh Tolkoff Inventing a Solution to a Clinical Problem

10/14/2015 2:35 – 5:25 Students Team Presentations I

10/21/2015 No Class Sloan - SIP Week

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10/28/2015 2:35 – 3:45 Carl Berke, Richard Cohen, Faculty Technology Assessment and Intellectual Property

3:45 – 4:05 Faculty Homework Discussion

4:05 – 4:15 Break

4:15– 5:25 Robert LaRoche Sales and Marketing

11/04/2015 2:35 – 3:45 Richard Anders, Josh Tolkoff Pitching Your Story

3:45 – 4:05 Faculty Homework Discussion

4:05 – 4:15 Break

4:15 – 5:25 Bill Edelman Medical Devices – Strategy

11/11/2015 No Class Veterans Day

11/18/2015 2:35 – 5:25 Students Team Presentations II

11/25/2015 No Class Day before Thanksgiving

12/2/2015 2:35 – 3:55 Anders, Berke, Tolkoff Finance – Private Biomedical Companies

3:55 – 4:05 Break

4:05 – 5:25 Peter Kolchinsky Finance – Public Biomedical Companies

12/09/2015 2:35 – 5:25 Team Presentations III

Course Enrollment

This course is limited to an enrollment of 24 students.

Course Overview

This course will involve critical analysis of new business ideas. The course format will first be for inventors or principals of early

stage companies to present their ideas to the class and provide background material including scientific papers and patents. A

team of students will be assigned to evaluate each business idea. The students will develop and present a series of analyses

concerning the critical issues that each business idea may face. The goal of the analyses is to answer the question: Is there a

viable business proposition here? If yes, why and what is your level of enthusiasm for this business? If no, is there a

modification to the business that could change your answer to yes or enthusiastic yes?

In addition the course will host a series of speakers who will address specific relevant topics.

The critical issues may include the following:

Value Proposition

What is the problem addressed? How does the proposed solution to fulfill the unmet need? Who values the offering? Who benefits? Who is hurt? What is the magnitude of the problem? What is the cost versus the benefit of the solution? Is the product a replacement for an existing product? Does the product provide an incremental medical benefit or is it a paradigm changer?

Science or Technology

What does the product/service do? How does it affect clinical decision making? How does it fit into the clinician’s

workflow? What product does it replace? How is the product enabled? What is the underlying science and

engineering? How is it different from the alternatives? What is the status of the technology development? Is there

a proof of principle? Are there publications? Is there validation ‐ in vitro/in vivo data? Is a prototype available?

What is the development plan? How can you evaluate whether the technology actually does what is claimed –

other than taking the word of its proponents?

Intellectual Property

What are the barriers to competition? Have patents been applied for and/or granted. Will the claims in fact

provide adequate protection against competitive threats? What is the likelihood that pending claims will be

granted? Can a third party’s intellectual property block the use of the enterprise’s technology (freedom to

operate)? Does additional technology need to be licensed and is it available? What is the status of prosecution? If

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in‐licensed, are the terms support a viable business? What is the likelihood of legal proceedings related to

intellectual property issues?

Competitive Threats

What is the basis for sustainable competitive advantage? What existing or emerging technologies or products pose

competitive threats? Compare features and performance characteristics of perceived competitors. What are the

barriers to entry of a competitive product in terms of intellectual property rights, regulatory and reimbursement

approvals, and market positioning? Can competitors piggy‐back on regulatory and reimbursement achievements of

the enterprise? Once clinical utility of the product is demonstrated, can a larger organization with greater financial

and marketing resources displace the product with a competitive product?

Business Model

What are the sources of revenue and product economics? Cost of goods? Margin? Modes of distribution?

Partnerships?

Potential Return on Investment – Exit Strategy

What are the alternative endgames for the enterprise (e.g. development into a mature multi‐product public

corporation, buyout by an established firm, licensing the technology to an established firm, merger) and which

endgame plan is most appropriate to prepare for? What is the exit path for investors? Is there a realistic financial

model that provides for an attractive return on investment? Does this financial model realistically take into

account the time required to develop the product, pass regulatory and reimbursement hurdles, and establish the

product in medical practice? Who are target acquirers? What are the most recent relevant examples that could

be used to establish an acquisition value?

Financing

What are the financing requirements to get to key milestones and value inflections? What financing vehicles (angel

financing, venture capital, private placements, public stock offerings, licenses, strategic partnerships, loans, etc)

are likely to be available and will be most advantageous at different stages of development of the enterprise? Are

the founders’ valuation expectations reasonable for next round investors?

Management

Does the entrepreneur understand the array of challenges one faces in starting a new biomedical enterprise, and

has he/she demonstrated the technical and personal skill sets required to meet these challenges? What are the

initial and future personnel requirements for making this venture successful, and are the needed personnel

already on board or can they be recruited? What will the role of the inventor be in this enterprise, if any? Can the

entrepreneur raise the necessary funding? Are key staff properly incentivized with founders shares or options?

Does the company have a strong board of advisers, scientific and business?

Regulatory Issues

What will be the product indications for use and the anticipated regulatory pathway? What is the clinical trial

design and what are the costs? How can the trial be designed to achieve the scientific, regulatory, reimbursement

and/or marketing objectives. Issues to be addressed include dollar cost, time cost, bioethical issues, biostatistical

considerations, protocol compliance and monitoring, and publication strategy.

Clinical Validation of the Concept

What is required to validate the clinical utility of the product? If a clinical trial is required how can it be designed to

achieve the scientific, regulatory, reimbursement and/or marketing objectives? Issues to be addressed include

dollar cost, time cost, bioethical issues, biostatistical considerations, protocol compliance and monitoring, and

publication strategy.

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Reimbursement Strategy

What is the mechanism by which the product will be paid for, e.g. Medicare/Medicaid, private insurers, patient

self‐ pay, physicians, laboratories, or hospitals? Are there applicable CPT codes? Are they adequate to cover the

pricing? What are the strategies to secure electronic billings codes and adequate coverage policies from third party

payers? What will third party payers require in terms of proof of clinical benefit and cost‐effectiveness in order to

provide reimbursement?

Marketing Challenges in Changing Medical Practice

Within what sector of the medical market place does the product fit (drugs, devices, services?) What is the go‐to‐

market strategy? Who makes the purchase decision? How can the decision makers be best influenced to

encourage utilization of the product? What will the chief causes of resistance be to utilization of the product

including competitive products and regulatory and reimbursement issues? Which health care providers,

manufacturers and payers will be helped or hurt by the product? What is the time likely to be required to

incorporate the new product into medical practice?

Student Team Presentations

The students in the course will be divided into teams to analyze critically each of the business ideas presented. There will be a series

of presentations by each team. The presentations should focus on in depth analysis of specific critical issues related to each business

concept. The first presentation should present an overview of the specific business concept being studied (which may be all or part

of the original concept presented by the inventor/entrepreneur) and present an overview of what the team has identified as the

most critical issues for further investigation. The final presentation should include a summary of the conclusions of the team and

answer the question, Is there a viable business proposition here? If your answer is yes, explain why and indicate your level of

enthusiasm. If your answer is no, is there a modification to the business that could change your answer to yes or enthusiastic yes?

The presentations should be in PowerPointTM

format and uploaded to the course stellar site under the “Homework” tab by 12:00

noon on the day of the presentation for loading onto the laptop used for presentation. We will adhere to strict time limits for the

presentations and the team should be prepared to answer penetrating questions. Each team member must participate in each

presentation. The entire team is responsible for adhering to the presentation time limits.

There will not be time to address all of the relevant business questions for each business concept. The students are encouraged to

address more narrowly crafted specific questions in detail rather than to attempt to address all issues superficially.

It is anticipated that for each technology‐based project that one of the presentations will focus on intellectual property. This

presentation should be an in depth analysis of the intellectual property protection provided with respect to blocking competitors

and also an analysis of the enterprise’s freedom to operate. You will need to analyze the claims (particularly the base claims) of

patents held by the enterprise and those held by third parties in order to perform this analysis.

The focus of the discussion should be the original business concept, and not the decisions already made to date by an early stage

business. For example, if the entrepreneur has chosen to set up a free standing company to develop a concept, you should still

consider whether it would have been preferable to have pursued the concept by means of license to an existing entity. Similarly

decisions made to date such as intellectual property, regulatory, reimbursement, product development should not at all inhibit the

analysis of alternative strategies that could have been pursued to make the business investable.

Information Sources

Students are encouraged to pursue all relevant sources of information for their analyses. This may normally involve further

discussion with the original presenter and other members of the company and any other sources that company can provide.

Scientific literature, patent literature, clinical literature, and marketing materials are fair game. Interviews with experts in the field,

users, payers, potential competitors, and other faculty are highly encouraged.

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Texts

Biodesign: The Process of Innovating Medical Technologies by Stefanos Zenios, Josh Makower, Paul Yock, Todd J. Brinton, Uday N.

Kumar, Lyn Denend ,Thomas M. Krummel. Cambridge University Press, 2010.

Selected readings and an excellent reference for topics you need to probe more deeply for your case analyses.

The Entrepreneur’s Guide to a Biotech Startup by Peter Kolchinsky. Available online at:

www.evelexa.com/resources/EGBS4_Kolchinsky.pdf

You should read this document in its entirety. Readings are keyed to topics discussed in class. You should read sections relevant to

your case analyses as soon as needed.

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Class Attendance

It is expected that every student will attend every class. Class attendance will be recorded. Please advise the teaching assistant in

advance if you expect to miss a class.

If a student misses one of his/her team’s case presentations, in lieu of his/her participating in that presentation he/she is required to

submit the PowerPointTM presentation that he/she would have presented had he/she not missed the class in addition to a 1000

word paper containing a critical analysis of the topics covered in the presentation. The presentation and paper are due one week

after the missed class and should be uploaded to the course stellar site under the “Homework” tab. At the discretion of the faculty

the student may also be required to provide an oral presentation arranged outside of normal class time.

If a student misses more than one class not involving his/her team’s presentation, then for each incremental missed class the

student must submit a 750 word paper related to the topics discussed in class on the day of absence. A suitable paper might be a

critical review of a published article related to the topic (in this case a copy of the article should be submitted with the paper). The

paper will be due one week following the absence and should be uploaded to the course stellar site under the “Homework” tab.

The student may be required to revise unsatisfactory submitted papers/presentations.

Sloan Professional Standards

We subscribe to the MIT Sloan professional standards and MIT’s standards of Academic Integrity. Please arrive on time for class with

uninterrupted attendance for the duration of the class. Furthermore, please maintain a professional atmosphere. This includes, but

is not limited to, silencing and not using computers or mobile electronic devices during class.

Grading

Students will receive a letter grade for the course on the basis of (1) oral presentations and presentation materials, (2) response

papers and (3) classroom participation (papers submitted in lieu of missed classes are counted as part of classroom participation).

Response Papers

For each class involving assigned reading, response papers will be due. These papers should involve a short response to the

question posed. Content, not length, is valued. The maximum length is 500 words – this length is a limit not a target. Text

copied from questions, is not considered part of total word count. You may use bulleted format if appropriate. All response

papers should be uploaded to course stellar site by 9am the day of class. Response papers are individual assignments –

collaboration is not allowed unless specifically specified to be a team project. Grading will be on a +, , - basis.

Website

Course materials available in electronic format will be posted on the course’s website located on the MIT Stellar Course

Management System. All presentations and papers are to be submitted on the course’s website under the “Homework” tab.

Providing Feedback to the Outside Presenters

The outside presenters, who make the initial presentation of each case in this course, are not invited to attend the student

presentations in order that the students and faculty feel uninhibited in discussing the biomedical business concepts. However, it is

required that the student members of each team make arrangements with the outside presenter to meet and share the results of

their analyses before the end of the course. Also, post a brief summary of that meeting to the stellar site.

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