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Medical Device Valuation in the Age of Health Reform
Wednesday, April 10, 2:00-3:30, Meridian Ballrooms 3 & 4, The Commons Hotel

Organizer: Stephen T. Parente, PhD, Minnesota Insurance Industry Chair, Director, Medical Industry Leadership Institute, University of Minnesota
Susan Alpert, MD, PhD, Executive In Residence, Medical Industry Leadership Institute, University of Minnesota

"A Case Study of Failed, Venture Funded, Medical Device Start-Up Companies"
Adrine Chung, MBA, Fellow, Medical Industry Leadership Institute, University of Minnesota
Beth Lindborg, MBA, Fellow, Medical Industry Leadership Institute, University of Minnesota

Q&A Panel:
Susan Alpert, MD, PhD, Executive In Residence, Medical Industry Leadership Institute, University of Minnesota
Mike Finch, PhD, Adjust Associate Professor and Department of Insurance and Finance, University of Minnesota
Randy Nelson, Adjunt Faculty, Medical Industry Leadership Institute, University of Minnesota


Session Organizer Bio:

Stephen T. Parente, PhD, MPH, MS, Minnesota Insurance Industry Chair, Director, Medical Industry Leadership Institute, University of Minnesota 
As a Professor in the Finance Department, he specializes in health economics, information technology, and health insurance. Dr. Parente has been the principal investigator on large funded-studies regarding consumer directed health plans, health information technology and health policy micro-simulation. He is currently on the governing board of the Health Care Cost Institute. He is the Founding Director of the Medical Valuation Laboratory, a nine college interdisciplinary effort to accelerate medical innovation from scientists, clinicians and entrepreneurs. Dr. Parente was a health policy advisor for the McCain 2008 Presidential Campaign and served as Legislative Fellow in the office of Senator John D. Rockefeller IV (D WV) in 1992/93. He has a doctorate from Johns Hopkins University.

Susan Alpert, MD, PhD, Executive In Residence, Medical Industry Leadership Institute, University of Minnesota
Having recently retired from Medtronic, where she served as senior vice president and chief regulatory officer, Alpert is also one of the founding members of MILI’s National Industry Council and is now MILI’s executive in residence. In this new role, Alpert helps foster MILI’s close working relationships with global medical industry leaders and shares her expertise with students and affiliates.


Speaker Bios:

Adrine Chung, MBA, Fellow, Medical Industry Leadership Institute, University of Minnesota
Adrine Chung is a 2011 graduate of the Carlson School of Management, and was selected as a MILI Fellow. As part of the 2011-2012 MILI Fellows Program, Ms. Chung assessed potential factors that contributed to the closure of venture funded, medical device companies under the guidance of program advisors, Mike Finch, Randall Nelson, and Stephen Parente. She has professional experience in managing oncology, nephrology and cardiology research and is currently the Director of Business Operations in the Chronic Disease Research Group, a division of the Minneapolis Medical Research Foundation, responsible for the operational success of a portfolio of public health research and surveillance.

Beth Lindborg, MBA, Fellow, Medical Industry Leadership Institute, University of Minnesota
Beth Lindborg is a research scientist at the University of Minnesota's Stem Cell Institute. She completed her BS at the University of Michigan-Flint and her MS and MBA at the University of Minnesota. She was selected to take part in the Medical Industry Leadership Institute Fellowship program in 2011-2012 where she researched factors that led to closure of venture funded medical device start-up companies. Ms. Lindborg also works part-time with the newly formed Medical Device Innovation Consortium.

Michael Finch, PhD, Principal, Finch & King, Inc.
Finch brings a wealth of industry experience to his role as an adjunct associate professor with MILI. Through his work here, Finch influences industry by helping create its up-and-coming leaders in the Medical Industry Valuation Lab. Randall Nelson. As the president of Evergreen Medical Technologies, LLC, Nelson has first-hand experience in developing and manufacturing innovative products for the medical industry—and as a lecturer in MILI’s Valuation Lab, Nelson puts that experience to work in helping other inventors navigate a difficult market.

Randy Nelson, Adjunt Faculty, Medical Industry Leadership Institute, University of Minnesota
Randall Nelson is founder and President of Evergreen Medical Technologies, Inc., a contract medical device development, testing, and manufacturing company located in St. Paul, MN. Mr. Nelson is also an Adjunct Faculty member of the Carlson School of Management, University of Minnesota. He has a Mechanical Engineering degree from the University of Minnesota and an Economics degree from Willamette University.


Presentation Abstracts:

"A Case Study of Failed, Venture Funded, Medical Device Start-Up Companies"
In December of 2010, the developer of a novel treatment for congestive heart failure, Acorn Cardiovascular, shut its doors after failing to receive FDA approval. The closure of the company marked an end to a battle with the regulatory agency that lasted nearly a decade. In October of 2011, venture capitalists and lobbyists for the medical device industry called for reforms to the FDA and its process for review of medical devices in time for the re-authorization of the Medical Device User Fee and Modernization Act. [1] Acorn Cardiovascular was cited as an example of the devastating impacts the FDA’s unpredictability and regulatory barriers could have on a company and ultimately, the economy. [2]

Though the FDA has become the visible scapegoat for the failure of medical device startups, any number of miscalculations or missteps can have an irreparable effect on a startup. The underlying cause for failure of a medical device startup is far more complicated than simply assigning blame to the FDA or to management. The medical device industry operates in a dynamic environment in which market and regulatory constraints are intricately woven with management’s execution rendering it difficult for startups to navigate. Medical device startups are not immune to the obstacles that other venture-backed companies face in developing a new product, such as changes in market conditions, the economic environment, and the need to generate revenue as quickly as possible. But there are forces that are unique to this field that elevate the risks and magnify the costs of failure for new entrants. Some of these are external to the company; some are internal.

A thorough understanding of these external and internal forces is necessary to detangle the speculated from the underlying cause of a medical device startup’s failure. 

In addition to Chung's work, the paper was developed by the team of MILI fellows, which included, Justin Paur, Beth Lindborg, Kyle Spears and Jason Humphrey.  


[1] Hay, Timothy. VCs Take Their Case For FDA Reform To Capitol Hill. WSJ Blogs. Oct 6, 2012
[2] The Committee on Energy and Commerce: Internal Memorandum. Oct 14, 2011.

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