EyeWorld Asia-Pacific March 2012 Issue

29 EW CATARACT/IOL March 2012 Pursuing invention by Enette Ngoei EyeWorld Contributing Editor certain that with the check also comes a network. While a venture capitalist will take an ownership in your company, said Dr. Ono, what he provides is the network you will need because chances are you have an incomplete management team, if you have one at all. It could be a virtual company with you as the ophthalmologist and maybe an accountant and another researcher, he said. Professional investors help increase the value of your holdings because they increase the value of the company with the contacts they have. There are other ways to raise capital as well. Aside from the venture capital model, many are looking at doing things more creatively, Dr. Ono said, like getting capital from angels or government funding, which prevents the dilution of your equity. He offered an example of a recent case where a company never took in any venture capital money and raised about 20 million dollars through four rounds of angel investment and government funding and sold the company to a major pharmaceutical company for over 500 million dollars, which allowed the original owners to retain 25% of the company. They would never have held 25% if they had gone the venture capital way. That’s why it’s so important, unless the inventor also has business savvy, to go with a business person who may already have played with these options and opportunities besides just going the venture capital route, Dr. Ono reiterated. Venture capitalist R. Dana Ono, PhD, offers a peek into the world of biomedical investing and how ophthalmologists can pursue their ideas O phthalmology is one of the fastest growing areas to make investments in right now, said R. Dana no, PhD, managing director, Life Sciences, VIMAC Ventures, Boston, Mass., USA. There are several reasons for this, he said, one being the growing patient population of baby boomers. Another is that there are still unmet needs for the treatment of diseases at the back of the eye as well as the front of the eye that could involve more devices and therapeutics. The clinical trial expense is probably not of the same order as some other areas like the cardiovascular space, for example, he explained. “Some of those require thousands of patients,” he said. “You could probably do it in ophthalmology for less total capital expenditure. That makes it very attractive.” Dr. Ono and colleagues at VIMAC Ventures, an early stage venture capital firm for life science investing, have looked at several ophthalmology assets and are currently invested in a company looking at a therapy for dry eye. A passion for creating start- ups A biologist by training, Dr. Ono worked on the business side of the life science biotech industry for several years. His passion for entrepreneurship led him to become CEO of several companies in the Boston area before he eventually became a venture capitalist. The toughest part about starting a new company around an invention, besides getting the technology license from whoever had it (the university or the inventor), getting human resources together, and getting a place to put the company, was getting capital, he said. After he sold his last company, he decided to continue to fuel his passion for putting companies together by creating a captive financing vehicle so that every time someone came to him with a good idea and he helped to start a company, he could have the fund right there. Advice for inventors Investors are looking for an insanely awesome technology or opportunity. “In other words, we don’t want just an incremental improvement on something, we want a game changer, something that’s really disruptive in the marketplace for an unmet need,” he explained. “High risk, high return—that’s the game here.” Every technology that comes through his door may seem cool at the beginning, but being able to convert that technology or research to a commercializable asset is essential, he said. If you’re an ophthalmologist with a great idea and you want to create a company around your invention, Dr. Ono’s advice is to first file an invention disclosure on your idea and protect it before you talk to anyone. Then bring in someone with business savvy, someone who has experience in doing this and knows how to put a business together. That person can help put together a plan and an executive summary to pitch to potential investors because you will need capital from the get-go, he said. “You have to be monitoring it all the time, you can’t just do it in absentia; you’ve got to be on it all of the time,” he emphasized. Raising capital The hardest thing about going forward with an invention is raising capital. The earlier you do it, the better, he said; raising money can take anywhere from 3 months to a year. “Go to a venture capitalist like myself or the professional equity people and you may get money but you’re going to get diluted in your ownership position, so there’s always a trade-off for taking capital,” Dr. Ono said. When accepting capital, make Investment milestones The first major inflection point in investment for a device is how much capital it will take for the inventor or founder of the company to get to first-in-man studies, to prove in human efficacy trials not only that it’s safe, but also that there’s some efficacy, Dr. Ono said. In the therapeutic area, it’s what would be called proof-of-principle trials. Timelines could be shorter for devices, depending on where it is, 510(k) or PMA or those designations, but it could also take as long as a drug, Dr. Ono said. Approvals for drugs could take anywhere from 7 to 10 years or longer from initial discovery, whether it’s NCE or biological, and the cost is anywhere from one half to a billion dollars, he said. Obstacles will come up, and an entrepreneur needs to have a team that is very resourceful and able to get up when you’re kicked and down, Dr. Ono said. “You don’t give up, you just have to keep fighting and you can’t be one that takes no for an answer,” he continued. “You’re going to hear ‘no’ a lot, but you’ve got to stick to it. That separates the successful entrepreneurs from the ones who want to be.” EW Editors’ note: Dr. Ono is managing director, Life Sciences, VIMAC Ventures. Contact information Ono: dono@vimac.com