Medical Device Innovation & Commercialization
The Renal Solutions Story;
From Concept to Exit
Peter M. DeComo
Prior Co-Founder, Chairman & CEO
BME-IDEA
October 7, 2009
Establish trust & credibility with the audience!
"They never open their mouths without subtracting
from the sum of human knowledge."
Thomas Brackett Reed
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Who is this guy?
• Not an engineer
• Not a physician or scientist of any kind
• Has a dated clinical background
• Has been a tinkerer/modifier of medical devices
• A past purchaser & user of medical devices
• Currently a serial entrepreneur, founder & CEO of both
failed and successful medical device startups
• Has raised over $80MM in private equity
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What I am currently involved with?
Renal Solutions
ALung
ClearCount
ThermalTherapeutics
CardioRobotics
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Why do we Innovate?;
Can You Do Well and Do Good?
The End of the Story First:
• An interest in solving a significant problem & need in a market
• In late 1999 RSI was a concept
• Raised $40MM in private equity
• Developed a disruptive & transformational device
• Cleared all regulatory hurdles
• Sold for $200MM on a pre-revenue basis
• The technology will make life better for hundreds of thousands
of patients with CKD!
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Magnitude
Lucky or Good?
$$
Gold Zone!
Time
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When should we Innovate?
• A great opportunity exists for disruption of
equilibrium
• To solve a significant problem or need
• The product/service can be differentiated
resulting in a competitive advantage
• The financial model illustrates that potential
revenue, margin & profits are substantial
• The customer is willing to pay a premium price
• Sources of capital are willing to fund
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The Goal of Innovation should be:
To develop & commercialize a better product
or service for customers who are consuming
an existing product/service that is NOT
solving their specific problem or meeting their
existing need.
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The Renal Solutions Vision
To develop and commercialize a hemodialysis system
suitable for the patients home environment.
In the home setting the goal is to facilitate;
• Self Administration – More Dialysis!
• Improved clinical, quality of life and cost outcomes
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The Allient® System
Transformational!
• Required only 1 ½ gallons of tap water
for an 8 hour treatment
• Designed for patient self administration
• Treatments anytime & anywhere
• Uniquely safe & gentle blood movement
system
Resulting in:
• Significantly better clinical & quality of life
outcomes
• Reduced total cost of care by 30%
annually
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Allient – the Convergence of two unique technologies
Unique Pulsar Blood Pump
Sorbent-based toxin separation chemistry
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Renal Solutions – Disruptive Considerations!
• $60 Billion Worldwide Dialysis Market
• Incumbents providing an inadequate dialysis dose – 24%
mortality rate in the US
• Current technology is too complex and costly for the patient
• Home Dialysis (more dialysis) is an underserved market with
<1% at home
• We have Innovative and Transformational technology
• Domain Experienced Management Team
• Reimbursement is Well Established
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So What Happened??
• Raised a total of $40MM in Private Equity
• Completed development of the Allient®
• Commenced a controlled market launch
• Was acquired for $200MM in November 07’
 5X return for investors
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“Tangible” reason’s for Renal Solutions’ Success
• RSI had met the criteria for successful innovation,
commercialization & value creation:
 BIG market with current providers “Asleep”
 Significant clinical impact with an Innovative & disruptive
Technology
 Potential of a HIGH franchise value
 Strategic need of the current incumbents is present
 Execution & implementation is meticulous
 Enabling Capital was obtained
 Sustainability of revenue growth & profitability was
evident
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Where we really that good, was it that easy?
ABSOLUTELY NOT!
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What were the Pitfalls we encountered?
• We over-engineered the product with features the
customer did not care about
• As a result, the project took too long and cost too
much
• We complicated the regulatory pathway with our
stated intended use
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Pitfall #1 - Remember the Blood Pump!
• The perspective of the customer was they didn’t need it
• Added 2 years and $20MM in cost
• If the company had only raised $20MM (not $40MM) the
return multiple would have doubled from $5X to 10X
• Those who realized $5MM ROI would have earned $10MM
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Pitfall #2 – We complicated the regulatory pathway
• We stated an intended use previously not cleared by
the FDA for a substantially equivalent 510k device
• Resulted in a clinical trial requirement that added 2
years and an additional $2MM in cost
• Delayed our entry into the home market resulting in
significant unquantifiable lost opportunity
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Key elements of success
• Focus on markets with problems, needs and nonconsumption
• Do not over-engineer or try to significantly change use
patterns, just make it easier
• Do not target markets with established sustaining
competitors
• Segment the market appropriately
• Build a business model that can support the innovation and
subsequent disruption
• Focus on team building; no founder, entrepreneur or
innovator accomplishes success without talented people
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Keep Innovation Simple
“Some say the cup is half empty, while others say it is half
full. However, in my opinion both are wrong. The real
problem is the cup is too big.
Sometimes all we need is a new perspective on an old
problem.”
- From the book "Foundation design", by Donald P Coduto,.
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Pete’s “TOP TEN LIST” of Start-up Fallacies:
1. You have a great idea and raising money will not be a problem
2. You can get it done faster and cheaper than the competition
3. Dilution is a bad thing
4. You have the best talent on the street
5. You do not need patent protection, the trade secrets are significant
6. Success in the market is totally based upon technology superiority
7. It is a low risk and expedited regulatory pathway
8. Scientific founders are all wonderful and should stay forever
9. Management and VC Boards are strategically aligned
10. Venture Capitalists like risk
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The Moral of the Story for Innovators/Entrepreneurs
•
Believe when others Do Not
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Persevere when others Would Not
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Know the market, the problem and the solution; others Will Not
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Take calculated risk when others say you Should Not
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Be humble when others Cannot
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Focus, Focus, Focus …. Competitors Forgot

•
Foot Note: Spend Less than 1% of your time thinking Exit!!!
Have fun, love your family, friends & employees … It’s only a job and
Worry Not!
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One last thought!
“Anything's possible if you've got
enough nerve.”
- J.K. Rowling
Thank you!
Peter M. DeComo
pmdecomo@consolidated.net
Mobile – 412.475.2262
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