Students to Start-ups

1. The Les Kilpatrick Students to Start-ups Entrepreneurial Skills Workshop Series

2. Chance, Choice, Change and Challenge* 5 “at-bats” Combination of base hits, strike-outs and homeruns Change = demographics Chance = personalities, priorities and interests Choice = personal goals and ambition Challenge = how to bring it all together How best to maximize your opportunity? What Animates Your Career? *Jonas Salk, Man Unfolding, 1972

3. Why this Series? Entrepreneurship is about making an impact An acquisition might be your career highlight Leveraging Orange County’s natural strengths Total estimated employment: 29,000 Total estimated wages and salaries paid: $2.2 billion Average wage: Nearly $76,800 Percentage of total California biomedical workforce: 11% Statewide ranking: Third

5. Medical Devices M&A 2006 150 Deals $53.3B 2007 191 Deals (+27%) $57.9B (+8.6%) Aggregate 2007 M&A = 90x Aggregate 2007 IPOs Source: Levin AssociatesHealthcare M&A Information Service, January 2008

7. Your Game Plan for Success February 17, 2009 How to Prepare Your Medical Device Company for Acquisition: an Overview February 24, 2009 Envisioning Milestones and Achieving Them March 3, 2009 The Art of Valuation March 10, 2009 What Makes a Great Investor Pitch April 8, 2009* Secrets to Presenting a Winning Investment Pitch May 5, 2009 Midcourse Corrections May 12, 2009 Executing the Exit

8. Our Speakers Tonight Ray Cohen, CEO,Symphony Medical & Fjord Ventures Greg Ruehle, CEO of Orange Coast Medical Ventures

9. Ray Cohen Slideshow

11. Flaming enthusiasm, backed up by horse sense and persistence, is the quality that most frequently makes for success. – Dale Carnegie Reasonable men adapt to the world around them; unreasonable men make the world adapt to them. The world is changed by unreasonable men. – Edwin Louis Cole

12. How to Prepare Your Medical Device Company for Acquisition Is it really a well understood business methodology? The secret is………positioning for sale requires the same basic effort and elements Financial Buyers vs Strategic Buyers Strategic buyers acquire either (i) fully baked businesses that are accretive or (ii) technology that fits with their product portfolio What is most important to strategic buyers? – “proof” Revenue is not a necessary element You and your people are probably redundant

13. Elements of a Successful Medtech Start-Up Company A highly motivated, effective and dynamic leader(s) that understands the concept of “enrollment” Novel concept or technology Experienced advisors from specific field of endeavor Physicians, Researchers, Executives with start up experience, Regulatory expertise Large under-served market and detailed market research & analysis How big is the market? what is indication for use? competition? Incremental product improvements create products not companies - there is a distinction btwn a “technology platform” and a “Product” Intellectual property protection Initial landscape analysis, filing provisional patents, enablement of invention A well conceived FDA regulatory strategy - 510(k)?, PMA?, Clinical Studies? Pre-clinical safety & efficacy data (bench data if device) A concise and easy to understand PowerPoint presentation No one reads business plans!, 5 yr projections are useless

14. Investment Capital Yes, you need it. Capital is the life blood of early stage and growth companies Rule – Things always take longer and cost more than you think Sources of Investment Capital Friends & Family, high net worth individuals Incubators - The new concept for start ups Professional “Angel” investors Venture Capital Not all VCs are created equal How do you get an introduction? The dilution dilemma They don’t teach you in B-School is how 100% can turn into 1% Preferred Shares, Common Shares, Stock Options

15. Growth Phase - Positioning the Company Enroll the right people Be lean, fast and capital efficient Good science is critical – don’t take shortcuts Focus on establishing proof that the product works Focus on filing patents Understand how and by whom similar products are sold to end users Most early stage companies only prove that adoption is hard and devalue opportunity. Hence, what are you alternatives? Consider an early sale of the Company!!!! Consider a strategic partner to take product to market Consider distributors (US vs Intl) Consider direct sales to a limited market or geography If you plan on taking product to market, Revenue is the key value creator. Profit is not

16. Critical Exit Elements Size of market must be clear Marketing survey of likely end users Proof of safety and efficacy Third party validation by key opinion leaders Intellectual property is protected issued patents are much more valuable than pending patents. If you have to buy someone’s issued patent that’s better than dancing around it Bill of materials must be well understood Gross margin of product will drive the exit price

17. Greg Ruehle Slideshow

18. Orange Coast Medical Ventures

19. Overview Orange Coast Medical Ventures Overview Orange Coast Medical Ventures

20. Orange Coast Medical Ventures Overview OCMV was the first incubator to be facilitated by OCBIN*, a public benefit initiative of the University of California at Irvine. OCMV was established to commercialize the inventions of the faculty and researchers of UCI's Medical School and the Southern California Medical Community. Orange Coast Medical Ventures * Orange County Business Incubation Network www.ocbin.org

21. Board of Advisors Greg Ruehle CEO – Orange Coast Medical Ventures Paul DeRidder, M.D. Tech Coast Angels Shiv Grewal Partner - Stradling, Yocca, Carlson & Rauth Jim Armstrong Managing Director, Clearstone Venture Partners Steve Wilson Finance James Hill, M.D. J.D. Partner – McDermott Will & Emery LLP Doug Bennett Oversight Committee Chair Orange Coast Medical Ventures

22. Media Coverage Getting Ready to LaunchThe Orange County RegisterMay 10, 2007 The New Device IncubatorsStart-Up MagazineJune, 2007 Incubator InnovatorsThe Frank Peters ShowOct. 1, 2007 Orange Coast Medical Ventures

23. About UC Irvine and UCI Medical Center Orange Coast Medical Ventures

24. UC Irvine Facts & Figures U.S. News and World Report: 13th Best Public University in U.S. 4 Nobel Laureates $3.6 Billion Annual Economic Impact on OC 27,000 Students 1,900 Faculty 8,800 Staff Founded in 1965 Orange Coast Medical Ventures

25. UCI Invention Productivity Orange Coast Medical Ventures

26. The OCMV Ecosystem Orange Coast Medical Ventures

27. The OCMV Ecosystem Investors U.C. Irvine Corporate Partners OCMV PortfolioCompany Mentors Economic Development Service Providers Orange Coast Medical Ventures

28. Corporate Partner Program Participate in OCMV ecosystem Benefits from relationships with all constituencies Interact with UCI faculty & researchers Orange Coast Medical Ventures

29. Preferred Provider Program Preferred provider to portfolio companies Limited # of preferred providers per category Participate in OCMV ecosystem Gain leads from other OCMV participants Orange Coast Medical Ventures

30. Mentor Program Consists of Experienced Executives Investors Service Providers Corporate Partners Individuals Pro Bono Guidance During Incubation Potential for Employment or Contracts Orange Coast Medical Ventures

31. Paths to Commercialization Orange Coast Medical Ventures

32. Investing In OCMV Orange Coast Medical Ventures

33. Investment Overview OCMV is a Limited Partnership Invests in UCI and community inventions Investors Own shares in OCMV’s LP Fund life: 3 years Share price: $125K Variable discount for founding partners Participation in OCMV ecosystem Orange Coast Medical Ventures

34. Investment Allocation and Return Series A, B… Investors Investment OCMV L.P. Seed Capital Portfolio Companies Returns Returns License and ContractFees License and ContractFees Salary Returns Government Agencies U.C. Irvine Salary Inventors Grants Grants Grants Grants Grants Grants Grants Inventors Shareof License Fees Inventors Shareof License Fees Inventors Shareof License Fees Inventors Shareof License Fees Inventors Shareof License Fees Inventors Shareof License Fees Inventors Shareof License Fees Inventors Shareof License Fees Inventors Shareof License Fees Corporate Partners Normal Flow Optional Flow Orange Coast Medical Ventures

35. Two Portfolio Models Virtual Company No payroll Possible equity for contractors No office/lab needs IT equipment & hosting Primary expense is T&E Transactional legal expenses Marketing expenses Budget up to $10K/quarter Traditional Company 2-3 paid staff May be directed research grant May need offices/lab space IT equipment and hosting T&E Transactional legal expenses Marketing expenses Budget up to $75K/quarter Orange Coast Medical Ventures

36. Vetting Process Admission Criteria Intellectual property Market size and growth rate Scalability of company and technology Sustainability Key individuals - experience and skills Evaluation Process Committee member becomes sponsor Sponsor works with company to create pitch Pitch delivered to full committee Committee accepts, rejects or defers Orange Coast Medical Ventures

37. Greg Ruehle, CEO c/o Office of Technology Alliances 380 University Tower University of California, Irvine Irvine, CA. 92697-7700 Office: 949-824-7295 Cell: 949-212-1983 Fax: 949-824-2899 E-mail: G355@aol.com Orange Coast Medical Ventures