Dr. Yuval Binur Orchestra Medical Ventures The Innovation crisis or How to finance your CV startup in the fast changing environment Dr. Yuval Binur Orchestra Medical Ventures

The world has changed…

Are we loosing the ability to innovate? The three components of innovation: entrepreneur IDEA The problem is in the gas supply

What kills Medical innovations? The classical venture capital model is dead The corporations are focused on EPS – no longer big acquisitions without contribution to the bottom line Commercialization is beyond the financial mean of venture investors No IPO market to companies without revenues left only M&A as an exit Almost no traditional funding for early stage

Each has a different financing strategy So What we do? Two categories of startups: defined by the cost of the regulatory approval Small product Under $3M Large product Over $3M Each has a different financing strategy

Case example – small product InSeal Ltd. - large hole closure Define unmet clinical need and simple solution Run on minimal budget to get prototype – 4 engineers, no infrastructure and no complex BOD Spend $1.5m to complete FIM and IP - no big VC Spend $1.5M to complete CE - no big VC Sell for $18M with 6x return in 3 years

Why this make sense? Avoiding the trap and problems associated with large VC financing Capital efficiency minimize risk Angle investors provide huge added value Run it as a “project” Ensure returns to founders (no layers of preference)

Case example – large product MitraLign – mitral valve repair Very complex product that address very complex disease Ensure corporate strategic unmet need in addition to clinical unmet need Secure very large VC fund as anchor investor with the ability to invest over $50M in multiple rounds Ensure deep pocket to post approval Build a strong management team Get corporate support as early as possible Create curve out for management at exit

In addition: Think globally as the US traditional market is nearly saturated and regulatory barriers are increasing by the day Leverage non or minimally dilutive funding: grans and venture debt when appropriate Do multi year planning with financial buffers to cover for delays and be capital efficient Identify your patient population (disease and geography)

So are CV innovations dead ? No, however the climbing became harder, the slope to the top became steeper and it became more challenging to find technology solutions for the remaining unmet CV needs

Can they effort $30,000 valve replacement? The emerging market needs Require different kind of medical innovations