Starting a Medical Device Company: A Case Study Gerard L. Cote’, Ph.D. Department of Biomedical Engineering Texas A&M University

Introduction- Where do you start? l Money l Personal l Type of company l Location of company l NO!!! l IDEA! l (I started with a patent that my advisor & I wrote when I was a grad student that we pitched to two companies and one funded it as a grant to the Univ.)

What are the ways to fund a company? l Venture Capital l Angel Investors l Bank Loans l Friends and Family l Personal Savings l Federal/State Grants (SBIR/STTR) l How I started my first company as a faculty member with my Ph.D. students l Regardless of the path, writing requests for support are common, if not integral to getting the money.

What are the Pro’s and Con’s of the various funding mechanisms? l Risk versus reward. l Who owns the company? l How much are you personally liable for? l How long are you willing to wait?

Who do you need or want to start this company with you? l Board of Directors? l Scientific Advisory Board? l Employees l Engineers l Scientists l Business people l Marketing l Secretarial l How much experience is required of each and how much education?

Where do you want to be located and why? l Big City l Small Town (started here for convenience) l East Coast, West Coast, Mid West, South, International? l Where is the money? l What is your family status/values? l Do you need to travel a lot? l What resources does the company need (personnel & goods)? (Ended here for resources/travel)

What type of industry do you want to become? l Manufacturing, R&D, consulting? l Large company or small company? l Bioelectronics based, biomechanics, biocomputers/software, biochemical, consulting-think tank?

Getting Started- Requests for Support How do I request support from the government, private foundation, or VC’s? Know your audience: High Tech versus Mostly Business?

The Case Study: BioTex/Visualase

The Case Study: BioTex, Inc. l Formed in 1997: The mission of BioTex is to explore, develop, and commercialize novel optical technologies for medical, biomedical, and environmental applications. l Founders (G. Cote’, A. Gowda, R. McNichols, S. Rastegar) l Currently roughly 15 employees (4 Ph.D.’s) l Focus – Early Stage Product Development using Biomedical Optics including Diagnostics, Therapeutics, Biosensing, and Imaging l Funding – Over $20M, primarily through SBIR funds

Where BioTex started l Mailing address – P.O. Box at Mailboxes etc. in College Station, TX l Working address listed as my home address; garage + office space in the house. l After our first funded grant in the glucose area we rented space in an old Bank building above the Subway in Bryan l Drs. McNichols and Gowda finally got paid but not well for Ph.D.’s l We quickly got more funding and more Space in that Building with more pay too!! l We hired our first BME UG student part time while he was finishing his B.S. and also hired other part time technical help UG’s in BME and my wife to keep the books.

The first Big Move for BioTex l BioTex was working very collaboratively initially with the TAMU Vet School and then with M.D. Anderson Cancer Center and UTMB in Houston, TX l In about 2000 the studies in Houston and Galveston became more time intensive and so we decided to relocate to Houston by the medical center

Current Facilities of BioTex, Inc. l BioTex currently maintains a 4300 sq.ft. research and development facility located at 8058 El Rio St. within the Plaza Del Oro Business Center in Houston, TX. l The space includes a full array of engineering and fabrication tools including dedicated areas for optics, lasers, chemistry, spectroscopy, electronics, and machining capabilities. l The facility is minutes away from the Houston Hobby Airport and The MD Anderson Cancer Center with convenient access to collaborators at other surrounding institutions including Texas A&M University and The University of Texas Medical Branch at Galveston.

The Technology l Laser Therapeutics – Heart/Brain/Spine/Prostate/Liver l Laser Diagnostics – OCT Fluorescence l Biosensing – Glucose

The first spin-off: Visualase n Visualase, Inc. was founded in 2005 as a spin-off from BioTex, Inc., the original developer and current manufacturer of the Visualase technology. Visualase, Inc. is currently a privately held VC funded company located in Houston, Texas. n MRI guided Laser Therapy

The Companies Future The Plan l More Spin Off Companies – with VC or Angels for the more mature technologies l Maintain the primary company to continue multiple early stage product developments Potential Problems l Personal issues for the spin offs l All assets regarding spin offs

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