Matthew Jenusaitis knows a little something about regional hotbeds of innovation in the med-tech space. Having spent 15 years at Boston Scientific Corp. (NYSE:BSX) in numerous executive marketing and general management positions, Jenusaitis once called Boston his home.
But when family lured him back West, he found himself ensconced in, dare we say, an even hotter space for medical device innovation – Orange County, a region of Southern California mostly known for postcard-pretty beaches, tourist attractions and MTV reality shows.
But the OC is about a lot more than fun in the sun. For the past decade, the area has served as an incubator for some of the hottest breakthrough technologies in the device space. The industry has taken notice of the pioneering spirit percolating south of Los Angeles.
Take a look at some of the biggest deals over the past 36 months and you’ll notice a particularly Orange County theme. Consider Covidien (NYSE:COV shelling out $2.6 billion for Irvine-based ev3 Inc., or Abbott (NYSE:ABT) dropping nearly $3 billion on Santa Ana, Calif.-based Advanced Medical Optics – a couple of the biggest deals in the med-tech space. And then there’s Medtronic (NYSE:MDT) spending $700 million for CoreValve Inc. – another Irvine, Calif.-based company – in a bid to compete with hometown favorite Edwards Lifesciences (NYSE:EW).
It’s the next generation of medical device innovations that has us looking West, however, particularly the upcoming Medical Device Investor Forum hosted by OCTANe, a non-profit organization dedicated to preserving Orange County’s technology eco-system.
Jenusaitis, the CEO of OCTANe since 2009, took some time to tell us about the conference, which is expected to draw some 1,000 to the Hyatt in Irvine in mid-November, as well as what he thinks is the secret to the success of the medical device industry in Orange County.
MassDevice: You go from one med device mecca to another? What’s unique about Southern California and Orange County specifically that makes it such a hotbed of activity in the medical device space?
Matthew Jenusaitis: I think medical devices have these regional innovation clusters, which pop up around different verticals.
Minneapolis has cardiac rhythm management, between Medtronic and Guidant. Boston, at one point, had a lot of the interventional cardiology makers with Boston Scientific and Bard.
I think Southern California has structural heart with Edwards and Medtronic’s CoreValve. It also has a strong ophthalmology sector with Abbott Medical Optics, Bausch & Lomb and Alcon.
Around the country there are these innovation pockets in specific verticals. The similarity is that the medical business is the same; the difference is the pockets of expertise. All those big companies create a plethora of start-up activity that generally get formed from the executives who leave those companies and start up something else, which is ultimately what keeps this cycle of life going in Orange County and other areas.
MassDevice: Tell us about OCTANe and how you see the organization fostering that development.
MJ: OCTANe was founded in 2002 by Tom Moebus, former vice chancellor of the University of California, Irvine, and Dwight Decker, former CEO and chairman of Conexant Systems.
Orange County’s economy was largely based on real estate and tourism. It’s a beautiful place by the ocean; Disneyland is here and there’s all kinds of things to do for fun, so people love to come here on vacation. Left alone, without any investment in the technology space, the evolution of Orange County could easily go in the direction of Miami Beach.
However, these guys had a vested interest in investing in the technology economy and they had the idea of putting together a non-profit that was invested in building an eco-system that supported that. OCTANe stands for “Orange County Technology Action Network.” We essentially operate in the three verticals which are active in this area. One of them is medical devices, one of them is information technology and the other is clean technology.
Over the last 10 years, our mantra has been that we’re trying to connect people with ideas to resource and capital. Really it’s all about helping start-ups. This is good for the start-up companies, because they get the funding they need to get going. It’s good for the economy, because the start-ups create jobs. It’s good for the feeder flow of new technology and the development of the workforce, and it’s good for the service providers that do business with these high-technology firms.
Unless we continue to support this eco-system, it can erode and die, but if we continue to invest in it, everyone benefits and we can build jobs for our kids.
MassDevice: You’re a medical device guy, so this conference must be near and dear to your heart.
MJ: It really is. The conference started before I got here in 2009, but I’ve really tried to take advantage of my background in the space and the people I know to help guide the agenda of this meeting. It’s done well in the last three or four years. The conference has grown from a few hundred to now having close to 1,000 attendees. And it’s grown from being strictly regional to a program that has a national presence. Still, 80 percent that come are from Southern California, but now we’re getting more people from outside the area coming in.
MassDevice: What’s the agenda for this year’s conference?
MJ: The agenda changes from year to year. In 2009, when Abbott bought Advanced Medical Optics and Medtronic bought CoreValve, the markets were very volatile and the theme of the meeting was about M&A activity, strategic acquisitions and what was going on.
Last year we focused a lot on the different sectors of cardiology and ophthalmology.
This year we are focusing on regulatory and reimbursement, because those are the issues that are most germane to what everybody is working on. How do you get medical devices through the FDA? How do you get your product reimbursed? How do you get your product funded? These issues are always numbers one and two on an investor’s screen list if they’re looking to invest in a company.
The other issue we’re going to be focusing on is government affairs. There’s a lot going on with President Obama’s health care reform and the Affordable Care Act; it has implications, not only for health care, but for the medical device industry as a whole and the U.S.’s position as the global leader in this space. It’s easy for these policy changes to erode the U.S. position in the world economy.
Our keynote speaker, Dr. Josh Makower, is particularly suited to speak on this because he’s seen it from so many perspectives. He’s an interventional cardiologist. He’s been a start-up CEO and has run a medical device company, Acclarent, that he sold to Johnson & Johnson (NYSE:JNJ) for $800 million, and then into the venture capital world. He’s seen this from so many angles. I truly believe he will be the show-stopper.
Some of the other keynotes include Robert Grant, CEO of Bausch & Lomb, which since its acquisition by the private equity firm Warburg Pincus has really invested a lot in new technology – including their first acquisition, Eyeonics, which was located here in Orange County. It’s really going to be a big turnaround for Bausch & Lomb and will really underscore the importance of Southern California to the world of ophthalmology. Robert’s a really entertaining guy and a member of the board of OCTANe .
MassDevice:Tell us about the start-up companies that will be presenting.
MJ: What’s important about this meeting is that it underscores what OCTANe is all about, helping start-ups. We’re taking the best companies we’ve worked with and giving them a chance to showcase themselves in front of an audience of potential investors and business partners.
We generally have about 100 companies that apply to showcase. One thing that has underscored all the companies that are going to present here this year is value to the medical system. It’s one of the screening criteria we’ve used in deciding the companies that get to present. With all this public policy stuff, one of the criteria our companies have to have is reducing the cost of medical care. All the companies are California-based, with about 70 percent Orange County-based.
MassDevice: What’s the coolest technology we’re going to see at the conference?
MJ: One of the companies that I think is very cool is Stroma Medical Corp. out of Newport Beach, which has an aesthetic technology that allows you to change the pigment in your eye, so literally it turns brown eyes blue. One of the other regional clusters in the area is, not surprisingly, aesthetic medicine. There are a lot of plastic surgeons in Southern California. This is a cool technology that uses lasers to change the pigment in the eyeball. There is tremendous demand for this in international markets, particularly in Asia, which is a huge aesthetic market as well.
MassDevice: Is the goal is to have something that’s on the medical device calendar every year?
MJ: We’re trying to make this a national conference. Southern California has this regional innovation cluster and there are certain technologies that Southern California leads the world in, which is what we’re going to make this meeting about – much like how people who are interested in interventional cardiology go to PCR in Paris, or TCT in Washington and San Francisco.
Anyone who is into these clusters of ophthalmology, structural heart technologies – anybody who’s interested in that stuff comes to this conference, and that’s what we’re driving at.
OCTANe’s Medical Device & Investor Forum will take place November 15 – 16. You can view the website here: www.mdif2011.com.