MassMEDIC Building Successful MedTech Companies

1. MassMEDICBuilding Successful MedTech Companies Waltham, Massachusetts 22 June 2007

2. Company Snapshot • Founded in 2000; Providence, RI • 8 full-time employees • 2 administration; 6 technical • Exclusive license to core technology from Boston University • Stage of development: R&D and pre-clinical studies • Capitalized with equity and NIH grants • Strategic partnership with Stryker Corp.; 1/2007

3. Management • David Hable: CEO • 24 yr J&J veteran; world-wide president of Codman; CEO of BrainsGate; board member & chairman of ONI • Jason Harry, PhD: EVP and CTO • Founding CEO of Afferent; VP of Research Engineering at NMT Medical, 25 years of academic and corporate medical device experience • James Niemi: VP Research • General Manager Image Technologies; 15 years of medical device research experience (animals and humans) • Scott Kellogg: VP Product Development • VP R&D of Sontra Medical; Manager of Engineering of Ultracision; 15+ years of medical device product development experience in early-stage environment

4. Treatment of Motor Deficits Shortfall of Stroke Therapy

5. Neuroplasticity & Cortical Remodeling Focus: Motor Function

6. Financing Trajectory

7. Money is money Often less demanding deal terms Often less demanding of management Sometimes can provide up-market connectivity “Passing the hat” chews up vast amounts of time Hard to generate a substantive financing Starts company with a “bridge” financing; zero runway Sometimes saddles management with “help” Sometimes creates “former friends” and “former family” The Good The Ugly Angel Financing

8. Non-dilutive capital Imprimatur of NIH speaks to investors and clinicians alike Can allow exploration of “fringe” applications If done well, the grant document itself has other uses Long timelines Man-weeks to months of preparation 9 months in review More months to cash “We’re not doing that anymore!” Not that much money NIH is cash-strapped Record keeping overhead + audit The Good The Ugly SBIR Grant Funding

9. First validation from “real” investors Typically provides some “wiggle room” … some “runway” Real help with business development and networking (staffing, future capital) Serious accountability New task on your plate: “board management” Changes financial dynamic of enterprise Rarely the last money in; get ready to do it again The Good The Ugly The A-Round

10. Important business imprimatur “You guys are on to something …” If you’re lucky, get access to more than capital Potential product channel Potential acquirer The “open kimono” feeling Potential distractions A different kind of board member Potentially discrepant alignment of objectives Complications in the exit strategy The Good The Ugly Corporate Investment

11. Lengthy process … longer than you think possible Exquisite diligence, with different focus than pure financial players Significant real cost to prosecute a deal Uncontrollable factors Unknowable corporate agendas Important to monitor heartbeat of partner “We love research projects!” —The Big Guy Products vs. projects Stronger commercial focus “We can drive a better deal if we get a bidding war going!” —The Mgmt “Give them whatever they want; we need the cash.” —The Investors Identify the real “deal breaker” issues early Expect Don’t Expect Corporate Investment

12. Corporate Investment—Take Away Messages— • The big guy will not share your sense of urgency. • They have other things they can go do, easily. • You must earn a passionate advocate inside their organization. Learn their role in company. • Biggest impediment to rapid deal progress is likely to be their consensus-building process. • Connecting with their embedded strategy really does mean something to them. • There will be surprises and twists that you cannot anticipate, understand, or make go away. Don’t take that personally!

13. Thank you!