Entrepreneurship 101: Dancing in the Gap

Entrepreneurship 101: Dancing in the Gap

October 10th, 2006, MaRS Discovery District, Toronto

Michael H. May PhDPresident & Co-FounderRimon Therapeutics Ltd

If medicine is the next driver of wealth…

Juan Enriquez, As The Future Catches You, 2000

Knowledge-Driven Wealth

Companies like Rimon will be the vehicles

According to Enriquez, wealth can be measured by thenumber of people it takes to generate a patent:• USA – 5,000• Canada 8,000• Mexico 1.2 million• Rimon – 0.6

Companies like Rimon and science-basedentrepreneurs like you will drive future wealthgeneration for Canada

Dancing in “The Gap”

Excellentscience

Viableproductsthat helppeople

Business

Scie

nce

“The Gap”

“The Gap” is a all about…

$

timeThe GapHigh Risk of Failure

1 in 3000

…risk mitigation, survival and endurance

The value of your “idea”….

Market Size - $1 billionGrowth – 5 % annuallyLicensing partner’s share – 33 %Adoption rate – 75 %License fee – 20 %Number of key technologies – 2Cost to market - $4 million over 3 yearsTimeline – 10 yearsNet Present Value (NPV) - $30 million

Example: Rimon’s focus in “The Gap”

PolymerDesign

ProductFocus

Pre-clinicalValidation

ClinicalValidation

Proof-of-conceptmaterial development

Proof-of-applicationmaterial development

Proof-of-productmaterial development

Execution lowers uncertainty

PolymerDesign

ProductFocus


ClinicalValidation




p < 25 %

p < 50 %

p < 80 %

There is much uncertainty (risk)

PolymerDesign

ProductFocus


ClinicalValidation




p < 25 %

p < 50 %

p < 80 %

IP ProtectionFreedom to Operate

Bench studiesAnimal efficacyAnimal safety

Scale-upManufacturingRegulatoryRe-imbursementLicensing deal

p < 10 %

p < 10 %

p < 80 % p < 50 %

True value is discounted by risk

• NPV of idea discounted for risk (80%) - < $200,000• NPV is negative with less than 1 year delay in plan• NPV is negative if costs underestimated by < 10%

$

timeThe Gap

RISK

1 in 3000

“The Gap” is about risk mitigation

• Value creation is risk mitigation• Execution mitigates risk• One idea/technology/product is not enough• Ideas are worth very little – don’t get greedy• If you can get early stage financing – take it• One financing will not get you out of “The Gap”• Survival is a great accomplishment

Step 1: Generate a business plan

• Understand your audience• Keep it simple, clear and brief

– Create a 1-page strategic plan first• Focus on people, plan, cash and the wow!• Focus on products• Under promise and over perform• Note: BP are easier to craft when something has

been accomplished – execution brings credibility

Step 2: Execute, execute, execute

Do you what you said you were going to do!!!

• Make milestones achievable and measurable

Step 2: Execute, execute, executeThis is difficult when you are responsible for…• Business plan and vision• Financials and budgeting• Human resources and team-building• Financing• Management and administration• Business development and deal-making• Research and product development• Intellectual property protection• Regulatory and re-imbursement• And everything else that must be done…

Step 2a: Know that you don’t know

And focus your first sales pitch on those thatcan help:• Lawyers• Accountants• Directors• Investors• Service providers• Anyone that has done it before

Step 3: Be innovative

There is always a way…

Build scientific and business “metaphors”

ofondisenregneristehfogsarsthefnceeoreth

Of on side greener is of fence the grass other the

The grass is greener on the other side of the fence

• Scientists are great at reduction, less skilled atinnovation

• Metaphors contain the greatest amount of valueusing the least number of resources

• Metaphors are built, not discovered

Step 4: Strategize for survival• Much assistance is available for

start-up companies

• The stakeholders, rules, andconstraints are often the focus ofdiscussions about commercialization(e.g., money, people, facilities, IP)

• Heavily constrained systems can be “played” an infinitenumber of ways

• Strategy is critical

• Control the centre and think three steps ahead

Step 5: Manage stakeholder risk

Scientific

Business

Financial

Entrepreneur

Step 5: Managing Stakeholder Risk

Important considerations:• Determine stakeholder risk tolerance, objectives,

limitations and agendas• Manage expectations

– Under promise, over perform• Communication is key

– Disclose everything (good and bad) quickly– Interact regularly

• Include stakeholders in solutions and decisions• Stay calm

Everyone Will Take Risks…

…it just depends on the song and the partner…

Step 6: Network

• Networking is difficult, but gets easier over time• It is a great way to get help (which we all need)• Buzz = success = air time

– “The medium is the message”– Example: http://rimon.blogware.com

• “Small world phenomenon” depends on:– Inner network built on trust (e.g., links through

volunteerism)– Broad network created by few highly linked individuals

(e.g., Kevin Bacon)

Rimon Started from …

…a single experimental observation

A New Paradigm – Polymers that Heal

Theramers™ are novel medical polymers that havedrug-like properties

– Next generation materials that are active - not simplydrug delivery vehicles

Theramers™ are regulated as devices– Drug-like products in 2-5 years for a fraction of the

development cost of conventional therapeutics

Rimon’s portfolio of Theramers™ target largemarkets with significant unmet needs

– Initial targets are all multi-$ billion markets– Versatility of polymer chemistry enables broad

application

The Theramer™ Company

Unique Value Proposition

Drug-likeDrug-like

MarginsMargins

DeviceDevice

TimelinesTimelines

Versatility ofVersatility of

PolymersPolymers


Corporate Overview• Spun-out of the University of Toronto in 2000;

strong ties to local biomaterials centre of excellence• 5 core technologies, 4 products in development• Potential partners engaged for all product concepts• 11 patents issued or pending, own rights to all IP• Revenue generation through licensing• Extensive research network:


Commercial Strategy

Advance a robust pipeline that offers products atvarious stages of development:• unique medical products that are close to market

• novel polymers that enhance the value of existingmedical devices, and

• novel polymers for co-development of partner-defined product concepts


Core Technologies

• MI Theramer™Activity: Inhibits the degradation of tissueMechanism: Binds matrix metalloproteases (MMPs)

selectively and stronglyApplications: Wound healing, joint injectables for

osteoarthritis and rheumatoid arthritis, coating forstents and ophthalmology products

• AM Theramer™Activity: Kills bacteria without harming human cellsMechanism: Disrupts bacterial cell membraneApplications: Medical device related infections (e.g.,

wound dressings, in-dwelling catheters, contact lenses)


Core Technologies

• Angiogenic Theramer™Activity: Induces development of new blood vesselsMechanism: Stabilization of endogenous growth factors,

stimulation of macrophagesApplications: Wound healing, regenerative medicine, and

implant integration into tissue

• ThermaGel™Activity: Changes from liquid to soft gel reversibly

around body temperatureApplications: Wound healing, biological filler, drug

delivery


Initial Focus on Chronic Wound Healing

Rationale:• Significant unmet needs in wound care market• Best prospect for validating Theramer™ concept and

generating revenue in the near-term– Fast track to human trials and the market

Theramer™-based wound care “toolkit”

AM Theramer

Angiogenic TheramerMI Theramer


MI-Sorb™/MI-Gel™ Dressings

• Inhibit enzymes (MMPs) that chew apart woundsfaster than they can heal

• Positive preliminary clinical data

MI-Sorb™ MI-Gel™


MI-Sorb™ Clinical Trial

Objectives:• Safety• Reductions in MMP activity• Trends towards healingWound Types:A) Venous stasis ulcers (VSU)B) Diabetic ulcers (DU)C) Pressure Sores (PS)D) Miscellaneous (Misc)

A

B

C

D


MI-Sorb™ Clinical Trial Design

Measure (versus baseline):• MMP levels in wound fluid (weekly) and tissue (as possible)• Wound size, characteristics of exudate and quality of wound bed• Bacterial colonization by swab and biopsy• Nurse and patient satisfaction

Baseline

2 wk Visit 6 wk Visit

Secondary Dressing

N=32

MI-Sorb* & Secondary Dressings* N=24

Secondary Dressings* N=8

* Dressings changed every 2-3 days


Clinical Data Summary – P19

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

0 1 2 3 4 5 6 7

Time (weeks)

Wo

un

d V

olu

me

(c

m3)

Baseline MI-Sorb™ Treatment


• Male, 43 yrs old, MVA paraplegic• Pressure sore – 2 years old• Multiple previous clinical trials• 85% reduction in wound volume• 52% reduction in MMP activity• Enhanced wound bed quality• Strong endorsement from patient,

primary caregiver and study nurse

Trends Towards Healing

Patient MMP-2 intissue

(brown stain)

MMPactivity inexudate

Presence andappearance of

collagen (blue stain)

Week 0 Week 6

↓3DU

4DU ↑

↓14VSU

Week 0 Week 6


Trends Towards Healing

Patient MMP-2 intissue

(brown stain)

MMPactivity inexudate

Presence andappearance of

collagen (blue stain)

↓15VSU

26Misc

27Misc

↓

↔

Week 0 Week 6 Week 0 Week 6


Pipeline Products

MMP-Inhibiting Joint InjectableMarket:• Potential revenues of ~ $30-60 million in 2-4 years with single partner

Competitive Advantages:• Compatible with existing products• Should not compromise device designation of existing products• Clear and testable therapeutic effect

Key Results:• Validation from wound healing application• Demonstrated enhancement of existing products in vitro• Demonstrated activity using human synovial fluid


Pipeline Products

Anti-Microbial Catheter CoatingMarket:• Potential revenues of $12-15 million in 2-4 years based on a single

catheter product (e.g., venous access catheters)

Competitive Advantages:• Long-lasting• Compatible with medical device regulatory and technical experience• Non-toxic to human cells

Key Results:• Up to 99.9% reductions in viability of gram +ve and –ve bacteria (for

up to 60 days)• Low hemolysis, and good blood compatibility• Synthesized numerous versions with varying physical properties• Independently validated by a potential partner


Pipeline Products

MMP-Inhibiting Stent CoatingMarket:• Potential revenues of $60 million with single partner

Competitive Advantages:• No drugs (regulatory and commercial advantages)• More compatible with medical device culture and processes• Less expensive• Enables other stenting applications (e.g., peripheral stenting)• Compatible with drug delivery, if multiple targets are required

Key Results:• Synthesized materials with excellent mechanical properties and

durability• Demonstrated in vitro inhibition of relevant MMPs


Key Milestones Achieved

With $3.5 million, we have executed our plan to:• Scale-up and manufacture clinical batch of MI-Sorb™• Commence clinical trial of MI-Sorb™ with world-

renowned dermatologist, Dr. Gary Sibbald• Obtain device designation for MI-Sorb™ from the

USFDA and commence regulatory approval in Canadaand US

• Build pipeline through invention, in-licensing andinitiating product development

• Demonstrate pre-clinical efficacy and safety of all coretechnologies

• Engage partners in product development


Key Upcoming Milestones

During the next 12 months, we plan to:• Conclude the MI-Sorb™ clinical trial• License MI-Sorb™ to global wound care company• Raise $5 million• Advance and expand pipeline products through co-

development/licensing agreements with partners• Generate new Theramers™ and build Theramer™

brand


Summary

• Building a company is hard and is not a part-time job• Mixing science and business is exhilarating• The role of entrepreneur is to manage risk and survive

“the Gap”– execution– innovation– networking– persistence

Business

Scie

nce

Summary

• Take care of hard science first• Seek out coaches and help from others• Polish communication skills• Learn to negotiate• Develop a thick skin

Business

Scie

nce

Need Inspiration?

Quotations from Helen Keller:

• “Life is either a daring adventure or nothing”

• “No pessimist ever discovered the secret of the starsor sailed an uncharted land, or opened a newdoorway for the human spirit”

• “The most beautiful world is always entered throughthe imagination”

Entrepreneurship 101

Imagine the possibilities if some of you try“Dancing in the Gap”….

MaRS circa 2010


Michael H. May416-977-6363

[email protected]