disclaimer!and!explanatory!note! client:!dr.!christopher ... · 2! disclaimer!and!explanatory!note!...

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Disclaimer and Explanatory Note Please do not cite or quote this report, or any portion thereof, as an official Carnegie Mellon University report or document. As a student project, it has not been subjected to the required level of critical review. This report presents the results of a one-‐semester university project that is part of a class offered by the Department of Engineering and Public Policy at Carnegie Mellon University. In completing this project, students contributed skills from their individual disciplines and gained experience in solving problems that require interdisciplinary cooperation. Acknowledgements We wish to express our thanks to the following individuals for their advice during the project: Client: Dr. Christopher Bettinger Advisors: Dr. Deborah Stine & Dr. Enes Hosgor CMU Alumni (FDA Staff): Sara Eggers, Mara Morgan, Neil Stiber Project Team Biographical Information

• Jessica (Wan-‐Ting) Kou Carnegie Mellon University M.S. Biomedical Engineering Candidate M.S. Engineering and Technology Innovation Management Candidate

• Mengxing Gao Carnegie Mellon University M.S. Mechanical Engineering Candidate

• Cathey (Can) Wang Carnegie Mellon University M.S. Biomedical Engineering Candidate

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Table of Contents Page

1.0 Executive Summary 4

2.0 Technical Overview 5

3.0 Challenge & Opportunity Identification 9 3.1 Challenge Identification 9 3.1.1 Market Clearance 3.1.2 Environmental Impact of Cuttlefish Demand 3.2 Opportunity Identification 10 3.2.1 Intellectual Property Opportunity 3.2.2 Funding Opportunity 4.0 Policy Context 12 4.1 Market Clearance Options 12 4.1.1 Status Quo 4.1.2 Biosensor Startup with FDA Approval Process (US market only) 4.1.3 Biosensor Startup with both FDA and CE Marking Certificate (US & EU) 4.1.4 Licensing 4.2 Funding Options 17 4.2.1 Status Quo 4.2.2 Sponsors with Interest in Specific Application (US) 4.2.3 Sponsors with Interest in Specific Application (US & EU) 4.2.4 Sponsors with Interest in Basic Science (Licensing) 5.0 Policy Forum 20 5.1 Forum Locations 20 5.2 Organizations likely to support action on some options 20 5.2.1 Competitors Edible Electronics Device 5.2.2 US Department of Defense 5.2.3 Potential Partners/Collaborators 5.2.4 Local Hospital & Institutes 5.3 Organizations likely to oppose action on some options 21 5.3.1 Competitors Edible Electronics Device 6.0 Range of Outcomes 22 6.1 Market Clearance 22 6.1.1 Effectiveness 6.1.2 Efficiency -‐ Time 6.1.3 Efficiency -‐ Cost 6.1.4 Summary 6.2 Funding Opportunity 25 6.2.1 Effectiveness 6.2.2 Efficiency 6.2.3 Summary 7.0 Bargaining Context & Spreadsheet 29 7.1 Market Clearance 29 7.1.1 Responsiveness 7.1.2 Equity 7.1.3 Summary

8.0 Strategy & Arguments 31

Appendix 36

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1.0 Executive Summary Electronic medical implants have been emerging in the field of biomedical engineering in the

past few decades. Along with the great inventions came a few challenges, including infection and inflammation risks, and the costs for the surgical implant procedure. The idea of edible electronics, or electronics devices consumed through the digestive system to achieve certain diagnostic or therapeutic goals, was proposed as a solution to these problems. A new technology featuring a gastrointestinal (GI) tract monitor device powered through the melanin-‐based battery has been developed by our client, Dr. Christopher J. Bettinger, in collaboration with Dr. Jay Whitacre at Carnegie Mellon University. The potential market for this product in its early years of commercialization consists of the US military and professional athletes, and is expected to expand in the field of medical diagnostics over time. This technology has the potential for several business opportunities either as an independent company or as a licensed patent to another company.

While the future of this technology is promising, various challenges in the non-‐market

environment should be addressed for successful commercialization. Major issues include the market clearance challenges, funding limitations, and possible environmental concerns since the melanin used in the battery unit is derived from cuttlefish. Along with the market clearance issue, the Food and Drug Administration (FDA) will be the primary institution addressing this issue if the device will be commercialized in the US market. Other institution outside of the US investigated in parallel with the FDA was the Medical Device Directives (MDD) of European Union for pursuing the CE Marking certificate (Conformité Européenne) to enter the European market. While both institutions emphasize the importance of safety concern, the FDA also requires sufficient clinical trials to address the efficacy of the device. Giving that the market clearance process is both time consuming and costly because of the high expense in series of required clinical trials, a well-‐planned funding mechanism is necessary. Funding mechanism not only aligns with sponsor’s interest, but also relates to applicant’s future business direction, and therefore it is crucial to evaluate different funding mechanisms along with corresponding business opportunities. Lastly, the potential market size also raises a concern due to the demand of cuttlefish, which may bring the opposing voice from environmental activists; however, this issue has been proved to be unsubstantial after careful calculation and analysis on the global supply of cuttlefish.

After a thorough analysis on several proposed alternatives regarding the identified issues, the team recommends our client to form a startup company for the GI tract biosensor when the technology is ready, and to license the edible electronic patent to other firms at the same time with careful selection of partnership. The company should seek both the FDA (US market) and CE Marking (EU market) approval simultaneously for maximum efficiency, and it should actively apply for funds from suggested institutes, including National Institutes of Health (NIH), National Science Foundation (NSF), and some local venture capital firms. These proposed non-‐market strategies should provide the best return for client’s efforts and investments.

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2.0 Technical Overview

Edible electronics make possible many medical applications that are only dreamed of today by

the wildest minds. In the future, many surgical procedures may be eliminated in favor of edible solutions, and the possibilities will grow as time and technology advances. Current products in this area are summarized in Table 1 below with their descriptions in terms of functionality and its origin. Table 1. Commercially available predicates (existing device that referred technology is based upon).

Helius PillCam-‐COLON2 IntelliCap

Patient compliance with pharmaceutical dosing, activity and rest patterns. Monitors events and sends information through simple external communication.1

PillCam-‐COLON2 is a non-‐invasive imaging device for colon diagnosis. The main function includes image acquisition and data transfer.2

A compact capsule that incorporates a microprocessor, battery, pH sensor, temperature sensor, RF wireless transceiver, fluid pump and drug reservoir, allowing for direct assessment of candidate drug or functional food performance to be organized and completed quickly.3

The battery used to power these devices limits the performance of edible devices. Electronic

materials offer feasible solutions, but they commonly exhibit undesirable traits such as toxicity or short operational lifetime. Biologically derived materials are preferred for the low risk and bio-‐degradability combined with desirable performance. Research conducted by Dr. Bettinger has shown that biologically derived organic electrodes composed of natural melanin pigment extracted from common cuttlefish (Sepia Officinalis) ink may serve as an ideal power source for certain types of medical devices. An 8 mg

1 Proteus Helius Info Page. Retrieved from http://www.proteus.com/technology/digital-‐health-‐feedback-‐system 2 Given Image. PillCam-‐COLON2. Retrieved from http://givenimaging.com/en-‐us/Innovative-‐Solutions/Capsule-‐

Endoscopy/pillcam-‐colon/Pages/default.aspx 3 Phillips Intellicap Info Page. Retrieved from http://www.research.philips.com/initiatives/intellicap/index.html

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anode is capable of supplying 0.7 V voltage at 10 uA current for a duration of 2 hours, giving a specific capacity of 16 mAh/g.4

The edible battery that the Bettinger Group is currently developing will be first used as a power

source to drive Dr. Jay Whitacre’s gastrointestinal (GI) tract body biosensor. Figure 1 illustrates the design of the GI tract biosensor; however it has not yet included the melanin-‐derived battery from the Bettinger Group.

Figure 1. Schematic of the apparatus of the edible GI tract biosensor developed by Dr. Whitacre.5

This biosensor could measure biomarkers or monitor gastric problems. One of the sensor’s optimal uses is to detect core body temperature since oral thermometers can be inaccurate. It could also be used to measure heartbeats, as well as pH levels in the small intestine to predict or detect ulcers. Currently, the Bettinger Group is seeking acquiring intellectual property (IP) to protect the individual device components, and to build a startup company to advance the monitoring device for the GI tract. The Bettinger Group has acquired its provisional patent for the battery in July 2013, and the team is working to submit the utility patent by July 2014. Since the technology of the edible battery is fairly attractive to many participants in the industry, it is also possible to license out the IP for other product space (e.g. drug delivery companies).

The potential customers of the GI tract monitor include medical institutions (hospitals, medical

4 Kim, Y. J., Wu, W., Chun, S., Whitacre, J. F., Bettinger, C. J. (2013). Biologically derived melanin electrodes in aqueous sodium-‐

ion energy storage devices. PNAS. 12.9.2013. 5 Shiells, E. (Apr 4, 2013). Power-‐up with edible electronics. Chemistry World. Retrieved from

http://www.rsc.org/chemistryworld/2013/04/edible-‐polymer-‐electrode-‐sodium-‐ion-‐electrochemical-‐cell

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schools, etc.), the US military and some athletes (both professional and amateur/student). The core temperature sensing function of the device is useful in detecting overheating or overworking problems with soldiers and athletes. These features are very hard to detect from the body surface, which makes in-‐body sensing necessary. In addition, ingestible devices are favorable over surgical procedures because of the much lower degree of invasion to the patient.

Provided below is an overview of the Bettinger Group’s edible batteries and the GI Tract Body

Temperature Biosensor’s status on the following issues:

● Potential Market: The GI tract biosensor will target the following markets primarily: medical diagnosis, professional athletes, and the military. The in-‐body thermometer will aid athletes or soldiers in monitoring and controlling training load. In terms of market size, there are approximately 14,900 professional athletes in the US, and approximately 1.37 million members on active duty in US military.6

● Technology Transfer: Although currently the battery and the biosensor are both in research and development stage, Dr. Bettinger may wish to found a startup around the biosensor. He may also opt to license the IP to potential partners and collaborators such as a pharmaceutical company for wider applications of the battery in the future.

● Intellectual Property: The Bettinger Group has acquired its provisional patent for the battery in July 2013, and has up to one year to submit and upgrade it to the utility patent by July 2014. The Bettinger Group is currently working on the application for its patent before the expiration date.

● Product Liability and Safety: The edible battery designed by the Bettinger Group uses naturally derived melanin pigment from living cuttlefish at a minimal dose at 8 mg. This material is studied to be non-‐toxic and highly biocompatible. Moreover, it is widely used as a food ingredient. Thus, our client assumes that the battery is likely to be safe for humans. Also, similar existing products had obtained FDA approval and hit the market in recent years, giving our client more faith in this product. However to date, no animal experiments of our device have been conducted for FDA approval; hence more evidence is yet to be obtained in order to prove for patient safety.

● Federal, state, or local agency approval for use: The U.S. Food and Drug Administration (FDA) will be the main federal agency involved in the approval process, especially if the target market is in the U.S. Currently, the prototype has not yet entered the FDA approval process. Nonetheless, if Dr. Bettinger is to begin a startup around the biosensor, he will need to apply for market clearance from FDA in order to get the device commercialized.

● Government Incentives: One of the potential markets might involve military, meaning that our client might want to seek government incentives to introduce the product to the military. Currently there have been no actions taken in this regards.

● Environment and health: Since the melanin used in the battery is extracted from live cuttlefish, there might be some environmental impact on the ecosystem. Based on the forecast of the potential market size, the amount used of melanin can be estimated in order to evaluate whether

6 Bureau of Labor Statistics, US Department of Labor, Athletes and Sports Competitors, Occupational Outlook Handbook, 2014-‐

15 Edition. Retrieved from http://www.bls.gov/ooh/entertainment-‐and-‐sports/athletes-‐and-‐sports-‐competitors.htm

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or not such product will impose a substantial negative impact to the natural environment. The client has not provided the anticipated amount used for the potential markets, and the calculated estimation will be one of the goals of this project.

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3.0 Challenge & Opportunity Identification 3.1 Challenge Identification 3.1.1 Market Clearance

Although both the edible battery and the supported GI tract monitor device are still in early stage of research and development, it is important to look ahead to the market clearance requirements that the device must go through before commercialization. Initiating a startup around the biosensor and licensing the patent are both presumable, but it is necessary to receive FDA approval in order to address the safety and efficacy concern to the public in the United States. For different market regions, different premarket approvals are required, but these procedures are often complementary in combination. For example, CE marking is required for the EU market, but sometimes it may help speed up the clearance with the FDA. The market clearance process is indeed costly and time-‐consuming, and giving the fact that edible electronics is relatively new to the medical device industry, the approval process may be even more challenging.

3.1.2 Environmental Impact of Cuttlefish Demand

The naturally derived melanin used as anode for this battery comes from the common cuttlefish (Sepia Officinalis), which is native to the Mediterranean Sea, North Sea, and Baltic Sea (Figure 2).

Figure 2. Geographic distribution of cuttlefish (highlighted in red).7 The cuttlefish is a close cousin of the squid, and its ink gland has traditionally been regarded as a most convenient model system for the studies of melanogenesis. Historically, its dark-‐brown ink was once

7 Food and Agriculture Organization of the United Nations. Species Fact Sheets – Sepia Officinalis. Retrieved from

http://www.fao.org/fishery/species/2711/en

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used extensively for writing and drawing.8 Based on the forecast of the potential market size (military and professional athletes), the amount used of melanin can be estimated in order to evaluate whether or not such a product will impose a substantial negative impact to the natural environment. The calculation and estimation suggested that the annual cuttlefish demand for the edible battery will be approximately 842 tons per year for the given market size (US military and professional athletes). On the other hand, there are about 2.5 million tons of cephalopods (family of squid, octopus, and cuttlefish) harvested each year in a global scale.9 Our demand is relatively insignificant compared with the annual consumption (< 1%) (Detailed calculation is provided in Appendix 1).

In addition, it should be noted that the demand of cuttlefish ink does not conflict with the existing demand for cuttlefish meat in the seafood market. Rudolf Kreuzer, a German scientist who wrote the book Cephalopods: handling, processing and product, stated that it would be economically beneficial to convert the non-‐edible parts into products of higher value.10 Therefore, the demand of cuttlefish ink from edible medical devices would have a positive impact to the existing suppliers of cuttlefish. Farmers and fisherman should be willing to sell the ink sac which would otherwise be wasted before. Although the demand for the ink as well as the fish may rise as the market expands in the future, it is unlikely to become a further concern unless the number reaches a major proportion, since it may be difficult to reach out to the private small-‐scale suppliers. Considering the fact that our current estimated maximum demand is very small compared to the global consumption, it is safe to assume that our project is minimally threatening to the environment and the cuttlefish species.

3.2 Opportunity Identification 3.2.1 Intellectual Property Opportunity The edible battery is still in its early research stage. The provisional patent was filed in July 2013, while the utility patent is scheduled to be filed by July 2014. Details regarding the patent are kept confidential at the moment. To make revenue out of the intellectual property, the patent could be used for either building a startup company for Dr. Bettinger and his collaborators, or licensed and sold to another company. These two options are not mutually exclusive, since the edible battery exhibits the potential to power various devices other than the GI tract monitor which our client is primarily interested in. Therefore, the battery technology is able to benefit other companies without creating adversaries to our own startup.

8 Monterey Bay Aquarium. Common cuttlefish. Retrieved from http://www.montereybayaquarium.org/animal-‐guide/octopus-‐

and-‐kin/common-‐cuttlefish 9 World Fisheries: Declines, Potential and Human Reliance (Jan 04, 2006). Retrieved from

http://www.globalchange.umich.edu/globalchange2/current/lectures/fisheries/fisheries.html 10 Sykes, A.V., Domingues, P.M., Correia, M., & Andrade, J.P. (2006). Cuttlefish Culture – State of The art and future trends. Life

& Environment, 56 (2), 129-‐137.

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3.2.2 Funding Opportunity

Giving that the edible electronics have opened a new chapter of medical device with tremendous opportunities and potential applications, the invention of the melanin-‐based battery offering better performance would possibly attract a variety of sponsors for financial support. Acquiring funding is indeed an opportunity for our client, and it is also necessary to gain sufficient financial support for future market clearance -‐ gaining the FDA approval is usually very costly.

Once the utility patent application is completed and granted, our client will have an advantage of obtaining more investment from his partners to further enhance the performance of the battery, as well as to aid its clearance with the FDA. As an exciting new technology, edible electronics is likely to gain funding from government agencies such as the National Institute of Health (NIH) or the National Science Foundation (NSF). Moreover, venture capitalists such as Birchmere Ventures or Innovation Works may be interested because the business potential for the GI track monitor seems promising. Moreover, the Department of Defense (DoD) might be interested in investing in the biosensor to monitor soldier’s body condition in real time. In other words, the funding opportunity may be acquired by introducing to the government the technology of edible electronics and its potential benefit to soldiers’ health.

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4.0 Policy Context 4.1 Market Clearance Options 4.1.1 Status Quo

Currently there are pending patents that will protect the invention of the melanin-‐based battery.

The GI tract monitor is still an on-‐going project jointly developed by our client and Dr. Jay Whitacre at CMU. The project is still in its early research stage where only in-‐vitro tests for the raw materials are present, no prototypes are developed yet. As a result, there is yet no action taken in response to medical device regulation and market clearance in terms of the safety issue. According to the researchers, there are still another 3 to 5 years before the device is ready to start with the testing experiments for the FDA clearance. However, long-‐term vision and strategy for this product might be wise to develop in advance. The status quo in this case is to remain as an academic research project without taking further actions for market clearance and commercialization.

4.1.2 Biosensor Startup with FDA Approval Process (US market only)

One future business direction is to build a startup company around the device. The product by the startup company will need to go through the FDA approval process in order to commercialize the device in the US market. The general FDA approval process for the GI tract monitor will be described as follows, including its classification and the related procedure for the path it may take. The estimated timeline and cost will be illustrated in later sections for further analysis (6.0 Range of Outcomes).

In the United States, medical devices are subject to the General Controls of the Federal Food

Drug & Cosmetic (FD&C) Act, which are contained in the final procedural regulations in Title 21 Code of Federal Regulations Part 800-‐1200 (21 CFR Parts 800 -‐ 1299). These controls are the baseline requirements that apply to all medical devices necessary for marketing, proper labeling and monitoring its performance once the device is on the market. There are three steps to obtaining marketing clearance from the CDRH (Center of Drug & Radiation Health Department of the FDA). First of all, the product to market needs to meet the definition of a medical device in section 201(h) of the FD&C Act (See Appendix 2). The monitor, designed to detect diseases of the digestive system by monitoring various physiological parameters of the GI tract and excreted afterwards without interacting chemically with the body or being metabolized during the process, fits these definitions.

The second step of the process, classification, determines the level of regulatory control that is

necessary to assure the safety and effectiveness of it. FDA’s Center for Devices and Radiological Health (CDRH) has 3 regulatory classifications of medical devices: Class I, Class II, and Class III. The classifications are assigned by the risk the medical device presents to the patient and the level of regulatory control the FDA determines is needed to legally market the device. In particular, the Premarket Notification 510(k) is required for Class II devices, and Premarket Approval (PMA) is necessary for Class III devices,

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while Class I devices are typically exempt from premarket notifications.11 Based on the specific features and functions of the imagined device and our investigation on the

predicates (Proteus Helius, Olympus Capsule Endoscope, and Pilips IntelliCap), we suggest the GI tract biosensor to be classified as Class II Medical Device. The subsequent classification assumption is based on the feature that of the biosensor that our client has previously described. We concluded that its medical specialty is Gastroenterology & Urology, part 876. subpart B -‐ Diagnostic Devices. Existing products also in this category are listed in Table 2 (obtained from FDA official website):12 13

Table 2. Existing products listed under Subpart B – Diagnostic Devices according to FDA official guideline.

Subpart B -‐ Diagnostic Devices

§ 876.1075 -‐ Gastroenterology-‐urology biopsy instrument § 876.1300 -‐ Ingestible telemetric gastrointestinal capsule imaging system § 876.1400 -‐ Stomach pH electrode § 876.1500 -‐ Endoscope and accessories § 876.1620 -‐ Urodynamics measurement system § 876.1725 -‐ Gastrointestinal motility monitoring system § 876.1735 -‐ Electrogastrography system § 876.1800 -‐ Urine flow or volume measuring system

From the above list, we suggested that our ingestible body temperature biosensor for GI tract monitor should be closest to “Ingestible telemetric gastrointestinal capsule imaging system” and its filed process. Technical risks to be cleared for FDA pre-‐clinical and clinical testing would be easier to anticipate and identify from predicates’ file.

Lastly, after acquiring the pre-‐submission feedback from FDA, the research group will start collecting and developing data and/or information necessary to obtain FDA clearance to market. For some 510(k) submissions, clinical performance data is required to obtain clearance to market -‐ our GI tract monitor is likely to fall into this category for the level of safety concern associated. In these cases, conduct of the trial must be done in accord with FDA's Investigational Device Exemption (IDE) regulation, in addition to marketing clearance. Clinical evaluation of devices that have not been cleared for marketing also requires the following:14

● An investigational plan approved by an Institutional Review Board (IRB). If the study involves a

significant risk device, the IDE must also be approved by FDA;

11 US Food and Drug Administration (Jan 20, 2010). Draft Guidance for Industry and FDA Staff: Heart Valves – Investigational

Device Exemption (IDE) and Premarket Approval (PMA) Applications. Retrieved from http://www.fda.gov/medicaldevices/deviceregulationandguidance/guidancedocuments/ucm193096.htm#1

12 US Food and Drug Administration (Dec 13, 2012). Device Classification Panels. Retrieved from http://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/Overview/ClassifyYourDevice/ucm051530.htm

13 US Food and Drug Administration (Jun 01, 2013). CFR – Code of Federal Regulations Title 21. Retrieved from http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfcfr/CFRSearch.cfm?CFRPart=876

14 Subhan, A. (2009). Part XI: Investigational Research (Human Use). Journal of Clinical Engineering, 34 (4), 166-‐167)

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● Informed consent from all patients; ● Labeling stating that the device is for investigational use only; ● Monitoring of the study and; ● Required records and reports.

An approved IDE permits a device to be shipped lawfully for the purpose of conducting investigations of the device without complying with other requirements of the FD&C Act that would apply to devices in commercial distribution. In other words, it allows the device to be applied in clinical experiments prior to obtaining FDA market clearance.

A typical timeline for the 510(k) pathway is depicted as follows (Figure 3): regardless of the duration of concept and design, which is the stage that the Bettinger Group is currently in, the pre-‐clinical engineering development may take 2 to 3 years before IDE submission. After IDE submission, the applicant should begin the clinical trials, which typically take up to 9 months for the 510(k) pathway. Once the clinical trials and the experimental data meet FDA’s criteria, the applicant can submit the report to FDA for review. Usually the 510(k) application review will take 3 to 5 month before clarification. To sum up, the total time needed from pre-‐clinical engineering development to final FDA review is around 4.5 years. The estimation of each stage does not include any unexpected delay, which is very common to the FDA. The delay is typically thought to be ranged from 1 to 3 years, compare to other regulatory systems in other region, such as the EU.15

Figure 3. Estimated timeline for FDA approval process (Illustrated by Jessica Kou).16 4.1.3 Biosensor Startup with both FDA and CE Marking Certificate

The general business direction is the same as described in section 4.1.2, but instead of obtaining the FDA approval only, the startup company may pursue both the CE Marking certificate and the FDA approval processes, which may allow the device to enter both the US and the EU markets. Although approval from other countries cannot be directly transferred for FDA approval, the experimental data can be used as a subsiding material, and the faster foreign approval process can eventually help the

15 Chi, C. (Feb 07, 2012). Which Way to Go: CE Mark or FDA Approval?. Medical Design Technology (MDT). Retrieved from

http://www.mdtmag.com/articles/2012/02/which-‐way-‐go-‐ce-‐mark-‐or-‐fda-‐approval 16 Pikov, V. (Mar, 2012). PMA approval process is now required by FDA for Cranial Electrotherapy Stimilator devices. Retrieved

from http://neurotechzone.com/posts/1096

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client speed up the FDA approval process if the design of testing and clinical trials is outlined strategically to meet requirements of both the FDA and the foreign system.

In general, if the device is to sell to the European Union (EU) or to European Free Trade Association (EFTA), it has to receive the CE Marking from the Medical Devices Directive of the European Commission. One of the purposes of setting this unified standard in the Europe is to facilitate trade by removing barriers between participated countries. While some companies might be able to register themselves for the CE Marking due to the low safety risk of their products, there is a list of product categories that are not able to be self-‐certifies, which include the medical device (93/42/EEC).17

Under the Medical Devices Directive (MDD), medical devices can be categorized into four different classes, based on the degree of risk they may induce, which is somewhat similar to the classification of the FDA. Class I devices are non-‐invasive. Class II devices contain IIa and IIb types, but in general Class II devices are invasive or implantable into human subjects. Lastly, Class III devices cover those which will affect the functions of vital organs.18 Based on the description of each category, the biosensor that the Bettinger Group is currently developing is considered a Class II medical device because the “electrical pill” will enter subject’s body, but it will not affect the functions of any vital organs since it will only remain inside the body for a short period of time for monitoring purposes.

After the classification, the company that wishes to apply for the CE Marking certificate to their

devices governed by directives will need to first implement the Quality Management System (QMS) for its manufacture facility according to the Annex II guideline of MDD, and the ISO 13485 standard is the most frequently applied standard for QMS implementation. Similar to the FDA clinical trials, the company must prepare a Technical File that provides detailed experimental design and testing results to demonstrate the compliance with MDD 93/42/EEC. One highlighted procedure after completing these two steps, the company must find a Notified Body, which is an organization appointed by the EU to inspect products and quality systems under the directives. There are also many ISO registrars in the US specializing in the CE Marking process.19 An overview of the entire CE Marking certification process is illustrated in Figure 4.

17 Hoover, S. (Jan 1999). CE Marking: Do I have to? BMP Media. 18 Bright, J. (1999). European medical device regulatory law and product liability. Journal of Hospital Infection, 43. S169-‐S173.

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Figure 4. Overview of CE Marking certification process (Illustrated by Jessica Kou).19

To summarize, if our client wishes to pursue this pathway, he and his group must ensure that

the device has been designed to meet the safety requirement by minimizing the risk of infection to the patient, user, or third parties.20 In other words, unlike other types of products such as machinery, medical devices originated from the US usually have a simpler journey acquiring the CE Marking certification since the FDA requires much more clinical trials and experimental results that are enough to address both the safety and efficacy issues, while the MDD emphasizes mostly on the safety issue only.

The reason why the second proposed option includes acquiring CE Marking certificate for the EU

market rather than other market clearance for other countries is because the review time after final

19 Emergo Group (2013). The medical device regulatory approval process in Europe. Retrieved from EmergoGroup.com/europe 20 Bright, J. (1999). European medical device regulatory law and product liability. Journal of Hospital Infection, 43. S169-‐S173.

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submission is similar to the FDA review time, approximately 6 months, regardless of all the preparation prior to submission.21,22 Furthermore, the EU is the second largest medical device market worldwide, with around 30 percent of the market share compare to the US.23 It is more convincible to enter a comparable market as a strategic move. Most importantly, according to Dr. Chi, the CEO for Vitalwear, a developer and distributor of hot-‐cold therapy systems for pain management, if the company seeks approval in Europe before entering the final FDA review, the FDA cannot exclude clinical data used for the European process even though the FDA might not prefer this pathway. Dr. Chi also suggested that some venture capitalists might require medical device companies to prepare and develop multiple regulatory strategies before sponsoring.22 As a result, we hypothesize that if the entry of both regulatory process is strategically planned, the CE Marking certificate may not only help accelerate the approval process for the FDA, but also help expand the market eligibility for global commercialization. 4.1.4 Licensing The client may also consider licensing the battery technology to one or more biotech companies to generate profit. “Licensing only” business strategy may reduce the risk and hassle of entering regulation for our client. However, licensing can also be coupled with initiating a biosensor startup company since they are not mutually exclusive. Licensed companies do not require our client’s participation in any market clearance process, which gives a relatively facile income with minimum actions required after the patent is granted. Regardless of the multiple possibilities with licensing, the analysis in later section comparing among alternatives will primarily focus on “license only” business model in order to clearly identify both the advantages and disadvantages of such approach. 4.2 Funding Opportunities Options 4.2.1 Status Quo

Currently there is no major funding for this particular project. The major funding source that our client may apply for is either from basic science foundations such as National Science Foundation (NSF), which is more interested in the fundamentals of the technology, or federal agencies such as Department of Defense (DoD), which is more interested in the specific application of the GI tract biosensor. Some minor funding sources in hand generally come from private foundations that are interested in pursuing new ideas, such as The Shurl and Kay Curci Foundation. The goal in terms of funding opportunity will be to propose various funding mechanisms with designated grant programs and details that the Bettinger Group may look into according to the business direction that they may pursue because different business directions may reflect different interests of specific funding sponsors.

21 Emergo Group (2013). The medical device regulatory approval process in the US. Retrieved from

http://www.emergogroup.com/services/us 22 Emergo Group (2013). The medical device regulatory approval process in Europe. Retrieved from

http://www.emergogroup.com/services/europe 23 Chi, Charlie. (Feb 7, 2012). Which Way to Go: CE Mark or FDA Approval? Medical Design Technology (MDT). Retrieved from

http://www.mdtmag.com/articles/2012/02/which-‐way-‐go-‐ce-‐mark-‐or-‐fda-‐approval

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4.2.2 Sponsors with Interest in Specific Application -‐ US Market

For the first proposed business direction aside from the status quo and its market clearance strategy, the research group is looking for not only applying for intellectual property to protect the invention, but also building a startup around the biosensor that is currently under development, and the company will need to take charge in entering the FDA approval process. For this circumstance, sufficient funding is required in order to successfully commercialize the device. The potential funding sources and their designated grant programs for this option are summarized in Table 3 (the detailed description of each program is provided in the Appendix 3, 4, 6):

Table 3. List of potential funding sponsors that are most likely to provide financial support if the business direction is to found a startup and entering on the US market.

Department of Defense

Congressionally Directed Medical Research Programs (CDMRP): § Peer Reviewed Medical Research Program:

Technology/Therapeutic Development Award § Defense Medical Research and Development Program:

Applied Research and Advanced Technology Development Award

The Defense Advanced Research Projects Agency (DARPA) – Biological Technologies Office (BTO) § Autonomous Diagnostics to enable Prevention and Therapeutics (ADEPT)

National Institutes of Health (NIH)

Small Business Technology Transfer (STTR) Small Business Innovative Research (SBIR)

Venture Capitals

Birchmere Ventures Innovation Works Meakem Becker Venture Capital Chrysalis Ventures Ben Franklin Technology Partners

We first looked at the related funding programs offered by the Department of Defense (DoD).

We found that the Therapeutic Development Award and Applied Research and Advanced Technology Development Award were two possible grants that highlight the detection and diagnosis technology application in military members. Moreover, the Defense Advanced Research Projects Agency rooted under Department of Defense is also willing to sponsor diagnostic devices for the army. Since one of the potential markets is assumed to be the military for monitoring soldier’s body condition, the possibility of raising fund from DoD is promising. Besides DoD, we consider the National Institute of Health (NIH) as another potential funding source. In particular, the Small Business Technology Transfer (SBTT) and Small Business Innovative Research (SBIR) hosted by NIH are potential candidates as they sponsor startup companies. Finally, we investigate a variety of venture capitals in Pittsburgh, PA. We found that there

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are two local venture capital firms, Birchmere Ventures and Innovation Works, have specific interest in medical device and may be willing to provide seed funding for startups and to support product development for companies in early stage. 4.2.3 Sponsors with Interest in Specific Application -‐ US & EU Markets

For the second proposed business direction and market clearance alternative, we suggested

applying for both the FDA and CE Marking certificate to accelerate the entire approval process. DoD, having minimum interest in other countries’ access to the technology, might be less likely to invest or less generous to provide the funds, since they may not be interested in covering expenses for testing procedures required for market clearance in Europe. In addition, since DoD is a US federal agency in national security and military, they may not be as supportive as to the first option described above. Therefore, our second proposed option would solely come from small business programs and venture capitalists interested in investment, excluding the funding from DoD. The list of potential sponsorship has been outlined in the previous section (Table 3).

4.2.4 Sponsors with Interest in Basic Science -‐ Licensing

The third proposed business direction is simply licensing the patents of technology to potential collaborators, such as a pharmaceutical company. In this case, the amount of money needed to push the project forward is much smaller, since our client would not need to go through the market clearance phase directly. Basic science foundations such as National Institutes of Health (NIH) and National Science Foundation (NSF) should still be interested in supporting the research because the research group will remain focusing on exploring the fundamentals of biomaterials and advancing the performance of the battery. In this case, DoD would be less likely to be interested, since there are no real world applications in development anymore. Under this circumstance, we accumulate potential funding sources and list their designated grant programs in Table 4 (detailed descriptions for each program have been included in Appendix 4 & 5):

Table 4. List of potential funding sponsors that are most likely to financially support the Bettinger Group if the business direction is to license the technology to future potential partners.

National Science Foundation (NSF)

Smart and Connected Health (SCH) NSF/FDA Scholar-‐In-‐Residence at FDA Biomaterial (BMAT)

National Institutes of Health (NIH)

NIH Research Project Grant Program (R01) NIH Clinical Trial Planning Grant Program (R34)

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5.0 Policy Forums 5.1 Forum Locations

The national or regional institutes responsible for market clearance are the main opposing forces for the product in its pre-‐clearance stage. The experiments and data required to gain their approval are essential to the project. In the US, the issues to be addressed to the FDA include safety and efficacy concerns of the device. On the other hand in the countries within the European Union, the issues that the Medical Devices Directive (MDD), which is responsible for European market clearance and granting CE Marking, includes device safety. Once these issues are addressed and cleared, we would be able to bring our product to the designated market area and start making revenue out of it. 5.2 Organizations likely to support action on some options 5.2.1 Competitors -‐ Edible Electronic Device

While the existing and emerging pool of edible devices competes in the market of medical diagnosis, this new generation of battery technology may be beneficial to all the players in the industry (refer to Table 1 for existing devices). At the current state, the batteries that these devices are using are all silicon-‐based. The performance of these batteries compromises between battery lifetime and risk of adverse events. Both the PillCam from Given Image and Intellicap from Philips have long battery operation times, but they also have relatively higher risk. On the other hand, Proteus’s Helius has less risk but very short battery lifetime. The invention of the melanin-‐based battery offers a combination of high battery lifetime and low risk, which would be beneficial to these companies. For this reason, we would expect the competing companies to support our invention, and possibly sign licensing contracts in the future if they feel the need to upgrade their battery. 5.2.2 The US Department of Defense

The US Department of Defense has always been interested in front-‐edge technologies that may benefit the US Army in terms of monitoring and communicating with its soldiers, which may also make them interested in our research. If DoD becomes one of our funding sources, we would expect them to not only financially sponsor the research and development of this particular project, but also possibly allow us to recruit its soldiers for clinical trials. 5.2.3 Potential Partners & Collaborators

As mentioned earlier, some pharmaceutical and medical device companies may be open for licensing contracts and collaborated projects. In addition, the Department of Defense is possibly open for collaboration on FDA entry. We also expect the local medical institutes (e.g. University of Pittsburgh Medical Center, Allegheny General Hospital) and universities (e.g. Carnegie Mellon University, University

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of Pittsburgh) to be open for subject recruitment during the clinical trial stage. These higher education institutes are often full of students on a low budget who are looking for casual money. We expect many students to be willing to serve as human subjects if the procedure looks generally risk-‐free. 5.2.4 Local Hospitals & Institutes

University of Pittsburgh Medical Center (UPMC) is a local institution that enjoys worldwide fame. The Office of Clinical Research of UPMC offers a variety of services to investigators and research staff at the University and its affiliated institutions. These services are targeted to facilitate the conduct of clinical research by providing resources for volunteers, sponsors, and research staff. Dr. Bettinger's group could seek collaboration with this office and conduct clinical trials under its assistance. It would greatly reduce the difficulty and cost of recruiting volunteers. Clinical trial cost would be a major challenge for FDA approval of edible battery.24 5.3 Organizations likely to oppose action on some options 5.3.1 Competitors Edible Electronic Device

Entry of a new device in the edible device industry is also likely to negatively affect the existing competitors. Of all the existing products mentioned above, the only device targeting at a completely different field is Phillips Intellicap, which is used for drug delivery. Given Imaging’s PillCam device offers in-‐body imaging of the gastrointestinal tract, while Proteus Helius monitors pharmaceutical dosing. Though the purposes are not exactly identical, there is a certain amount of overlap between the solutions. Therefore, the entry of our GI tract bio-‐sensing device is likely to increase the market competition for both Given Imaging and Proteus, especially since at the current stage, our product is both safer and more lasting. In summary, these companies are likely to both welcome and oppose the entry of this product and our still unborn company.

In addition, traditional colonoscopy, a more invasive procedure involving insertion of a tube through the anus that allows a doctor to examine the insides of the bowels, may be challenged. The procedure is not favorable by some patients for the pain associated and some emotions associated with the procedure itself. Since edible devices offer an alternative, traditional colonoscopy may be challenged if the sensitivity and specificity of these devices are proven to be on par with the traditional procedure in future research. However, this should be more of a concern of Given Imaging, since PillCam and colonoscopy catheters both serve to image, which makes PillCam a closer substitute than our GI tract biosensor.

24 University of Pittsburgh. Office of Clinical Research. Retrieved from https://www.clinicalresearch.pitt.edu/IRS/Services

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6.0 Range of Outcomes In Section 4.0 Policy Context, we have listed and described both the status quo and proposed options for one identified challenge and one opportunity -‐ market clearance challenge and funding opportunity. In order to anticipate the outcomes of each alternative, we examine the outcomes in the context of effectiveness and efficiency. By definition, effectiveness means how likely a particular strategy is to achieve desired outcome, whereas efficiency means how much investment of time and cost will be necessary for each alternative. The goal is to identify the option that is most likely to achieve the outcome, as well as to be most time and cost efficient. 6.1 Market Clearance

For this identified challenge, the status quo and proposed options are recapitulated as the following:

● Status Quo ● Option 1: Biosensor Startup with FDA Approval Process ● Option 2: Biosensor Startup with both FDA and CE Marking Certificate ● Option 3: Licensing

6.1.1 Effectiveness With the identified major challenge being the safety concern and the associated regulatory process, we evaluate the effectiveness, or the likeliness of obtaining the market clearance for each option, including the status quo. In other words, the desired outcome in this case is “to receive market clearance for commercialization”, mostly targeting the US market.

First of all, the status quo receives a score of zero because it simply sets the edible battery and biosensor project under academic research, meaning that effectiveness of obtaining market clearance will be neutral because future of the project remains uncertain and the result of market clearance can be either successful or interrupted. Both the first and second options, which are both about initiating a startup company and applying for one or more market clearances, will effectively to achieve the outcome, though it is possible that option 2 will require less time investment. The third option, licensing to a potential partner, will be neutral for this analysis because our client will not be involved to have control of the FDA approval processes associated with the licensed company’s product, although the desired outcome is likely to be achieved accordingly because it is better for the Bettinger Group to ensure their technology will meet FDA’s requirement in advance in order to secure potential partnership.

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6.1.2 Efficiency -‐ Time

Along with effectiveness, we also examine the efficiency for each option in terms of the time required and the cost that each option may spend. First of all, for the status quo, the efficiency is not applicable because the desired outcome will not be achieved. For the first and second proposed options, the main difference distinguishing these two is the strategy of gaining market clearance. The first option is to seek FDA approval only for entering the US market. We proposed the second option to acquire both the FDA and CE Marking certificate because the CE certificate may be able to accelerate the FDA review process.

To validate our suggested options, we looked at the timeline of two existing predicates, the PillCam-‐COLON2 from Given Image and the Helius from Proteus. These were both classified as Class II medical device with special control, and they were both within the edible electronics category. PillCam-‐COLON2 adapted a timeline that is similar to the first proposed option -‐ FDA approval only, and Helius had a strategy that is closely related our second option -‐ FDA and CE Marking certificate together. Although we could not find the entire journey of PillCam-‐COLON2 with FDA, we noticed that Given Image submitted the application for 510 (k) Premarket Notification in November 2012, and obtained FDA clearance in the end of January 2014.25 In other words, it took 14 months for FDA to final review the 510(k) Premarket Notification, an 8-‐month delay from the general estimated time of 6 month for final FDA review. On the other hand, we were able to find more pieces of puzzles to have a clearer idea of the market clearance process taken by Helius (Figure 5). Proteus started to work with the FDA since 2008 to determine the regulatory pathway for the device, and finally acquired FDA clearance in July 2012; it took about 4.5 years from consultation to final clearance. Throughout their FDA approval process, Proteus also earned CE Marking certificate in Aug 2010.26 Although we could not identify when Proteus started to interact with the MDD for CE Marking, the 4.5-‐year of FDA approval process is within the general estimated time for FDA approval process without any delay (as previously described in Section 4.1.2).

Figure 5. Predicate’s Timeline -‐ Helius from Proteus (illustrated by Jessica Kou). Based on the preliminary research, as well as the timeline that these predicates have gone through, the efficiency in terms of time for the first option might be slower than the second option. The

25 Given Image. Given Image Receives FDA Clearance for PillCam COLON in Patients Following Incomplete Colonscopy. Retrieved

from http://www.givenimaging.com/en-‐us/Innovative-‐Solutions/Capsule-‐Endoscopy/pillcam-‐colon/Pages/COLON-‐Press-‐release.aspx

26 Proteus. Press Releases. Retrieved from http://www.proteus.com/news/press-‐releases/

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third option, licensing, received a neutral score since again, our client will not have the control for market clearance. 6.1.3 Efficiency -‐ Cost

While the FDA approval process may take up to several years with unexpected delays, medical

device manufacturers need to survive through the long, rigorous, and expensive processes of testing and regulation in order to push the product into the market. What really makes the FDA approval time-‐consuming and expensive is the series of clinical trials in order to prove both safety and efficacy of the device plus the nontransparent process. To determine which option is the most cost-‐efficient, a qualitative analysis may be sufficient to validate the scoring. For the status quo, the cost is still not applicable because the desired outcome will not be achieved. Option 1 will be cheaper than Option 2 because Option 2 requires the cost for CE Marking process in addition to FDA review fee. As a result, we gave Option 1 a neutral 0, meaning it is relatively better than Option 2. Option 3 will be the most cost-‐efficient option since our client will not be in charged for the cost of any market clearance process. 6.1.4 Summary

Both the effectiveness and efficiency of each option have been analyzed and summarized in Table 5. Based on the scoring and the arguments provided above, both Option 2 and 3 seem promising with different advantages and drawbacks, which will be addressed in the section where recommended strategies are provided (Section 8.0).

Table 5. Analysis of Range of Outcomes in terms of Effectiveness and Efficiency for the identified challenge -‐ Market Clearance.

Effectiveness

Efficiency Time Cost

Status Quo 0 n/a n/a

Option 1: Startup & FDA + -‐ 0

Option 2: Startup & FDA + CE + + -‐

Option 3: Licensing 0 0 +

Key: “+” = metric goal is likely to be achieved; “-‐” = metric goal is not likely to be achieved; “0” = neutral

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6.2 Funding Opportunity

The proposed funding options correspond to the first factor: business direction and market clearance. In other words, for each business direction and its possible market clearance approach we suggested different combination of funding sources and mechanisms based on different interests that each sponsor may have. The options are listed as follows:

● Status Quo: Minor funding from private foundation(s) ● Option 1: Sponsors with Interest in Specific Application -‐ US Market ● Option 2: Sponsors with Interest in Specific Application -‐ US & EU Markets ● Option 3: Sponsors with Interest in Basic Science -‐ Licensing

6.2.1 Effectiveness

In order to evaluate the effectiveness of each funding option, a desired outcome should be first defined. Since the identified challenge under investigation in this report is the safety concern of the product and its market clearance process, we assumed that the expected outcome for funding of Option 1 and 2 is to raise enough money to complete the market clearance. The expected outcome for funding of Option 3 was getting enough money to support the research. We investigated the estimated cost for submitting FDA approval application, including the review fee for the FDA, as well as an estimated cost for clinical trials for predicates, in order to get a better sense of the minimum funding amount which the Bettinger Group should raise. As for the Fiscal Year of 2014, the fees for 510(k) applications are $5,170 for Standard Fee, and $2,585 for Small Business (less than $100 million in gross receipts or sales).27 Regarding clinical trials in both the US and the EU, the estimated average cost of a human subject participating in a medical device clinical study ranges from $1,000 to $2,000, and usually a study will need between 60 to 100 participants.28 The total cost of clinical trials varies depending on the type of device. To be more accurate on the cost of FDA approval process, we investigated one of the predicates, the PillCam-‐COLON2 from Given Image. In their case, there were 844 patients and 16 sites involved for series of clinical trial studies. Based on these numbers we simply obtained the estimated cost range for PillCam-‐COLON2 to complete all the required studies to be from $844k to $1.68M. Therefore, the desired amount of funding should be set at a minimum of $1.68M.

After setting the desired outcome for funding, we tended to estimate the amount of grants that

each option may possibly generate. Table 6 summarizes the potential funding sources for both Option 1 and 2, whereas Table 7 collects a different set of potential sponsors for Option 3. To determine the total amount of the potential funding for each option, we selected the maximum possible amount funding from one program of each organization or federal agency (as highlighted in bold blue font). We also

27 US Food and Drug Administration (Mar 18, 2014). Premarket Notification [510(k)] Review Fees. Retrieved from

http://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/HowtoMarketYourDevice/PremarketSubmissions/PremarketNotification510k/ucm134566.htm

28 Given Imaging (2008). Given Imaging: The Quest for Quantum Leap. Case Competition. Retrieved from http://recanati-‐bs.tau.ac.il/Eng/_Uploads/dbsAttachedFiles/Given2008.pdf

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assumed that the funding period can be extended to maximum years, typically 3 years. Based on the estimation, we concluded that all three options are able to reach the desired outcome at a minimum of $1.68M. Therefore, in terms of effectiveness, all proposed options received a positive score, meaning that all options are likely to achieve the outcome. It is important to keep in mind that usually the success rate for the various grants is relatively low, and therefore the option with higher estimated funding amount will be more favorable.

Table 6. Summary of funding programs for each potential sponsor for both Option 1 and 2 (the total amount for Option 2 was simply calculated by subtracting the funding from Department of Defense). Note: the estimated amount of venture capitalist is $1M rather than the maximum of $5M from Birchmere Venture because that investment was rather an extreme case. To get a more relevant estimation, we use the maximum amount of Innovation Work instead.

Funding Source Interest Funding Amount Time

Department of Defense (DoD)

Peer Reviewed Medical Research Program -‐ Technology/Therapeutic Development Award

To improve detection, diagnosis, treatment, and quality of life for military members

~ $1.0M (max. $1.5M) 3 years

Defense Medical Research and Development Program -‐ Applied Research and Advanced Technology Development Award

To discover and explore innovative approaches to protect support and advance the health and welfare of military personnel, families, and communities. To accelerate the transition of medical technology into deployed product.

$1.6M (max. $2.25M)

3 years

National Institutes of Health

Small Business Technology Transfer (STTR)

Stimulate cooperation between small business and research institutions

$150k 1 year

$1M 2 years

Small Business Innovative Research (SBIR)

Support research and development for for-‐profit institutions

$150k 6 months

$1M 2 years

Venture Capitals in Pittsburgh

Birchmere Ventures29 Medical Devices $500k -‐ $5M -‐

Innovation Works30 Biotechnology Healthcare Medical Devices

$100k -‐ $1M -‐

Option 1: Total ~ $3.75M 3 years

Option 2: Total ~ $2.15M 3 years

29 Pittsburgh Venture Capital Association. Investment Resources. Retrieved from http://www.thepvca.org/investment.php 30 Find the Best. Innovation Works. Retrieved from http://venture-‐capital-‐firms.findthebest.com/l/1097/Innovation-‐Works-‐Inc

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Table 7. Summary of funding programs for each potential sponsor for Option 3.

Funding Source Interest Annual Funding Time

National Science Foundation

Smart and Connected Health (SCH)

To develop next generation health care solutions such as sensor technology $170k -‐ $370k 1 – 4 years

NSF/FDA Scholar-‐in-‐Residence at FDA

To investigate issues concerning emerging trends in medical device technology $25k -‐ $150k 3 – 12 months

Biomaterials (BMAT) To support fundamental materials research related to biological materials $100k -‐ $500k 1 – 3 years

National Institutes of Health

NIH Research Project Grant Program (R01)

Support a discrete specified circumscribed research project

$500k 3 -‐ 5 years

NIH Clinical Trial Planning Grant Program (R34)

Permit early peer review and support development of a clinical trial $100k 1 -‐ 3 years

Option 3: Total $1M/yr ~ $3M 3 years

6.2.2 Efficiency To evaluate the efficiency of each option, we simply compared the maximum amount of funding each option can get. Option 1 appears to have the highest amount of potential funding because it has the most potential funding sources, including Department of Defense, National Institutes of Health, and venture capitalists. Option 2 has the smallest amount of potential funding, and the total was estimated by simply subtracting the DoD funding of Option 1 because as stated earlier, we assumed that the tendency of acquiring CE Marking certificate and entering European market may not favor the interest of DoD. Option 3 may raise up to approximately 3 million dollars for research purpose from NSF and NIH. We concluded that Option 1 is the most efficient option among the four, including the status quo.

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6.2.3 Summary Table 8 summarizes the scoring of the status quo as well as the three proposed funding options. All proposed options reveal an equal degree of effectiveness in terms of raising enough funding for market clearance process for Option1 and 2 or conducting research for Option 3. Option 1 seems to be the most efficient option since it may possibly raise the most amount of money up to $3.75 million dollars. (In addition to the proposed funding sources, there are also some corporate strategic investors such as Siemens Ventures, GE Ventures, and Intel Ventures to look into giving the fact that collecting funding is competitive. However, in this analysis we only provided detailed information related to local venture capitalists.)

Table 8. Analysis of Range of Outcomes in terms of Effectiveness and Efficiency for the identified opportunity – Funding opportunity.

Effectiveness Efficiency

Status Quo: Private foundation 0 n/a

Option 1: Sponsors with Interest in Specific Application – US Market

+ +++

Option 2: Sponsors with Interest in Specific Application – US & EU Markets

+ +

Option 3: Sponsors with Interest in Basic Science -‐ Licensing + ++


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7.0 Bargaining Context & Spreadsheet After a parallel analysis for both market clearance challenge and funding opportunity, we examined another two indicators, responsiveness and equity, from our client’s perspective. Evaluation of the responsiveness gave us an understanding about the feasibility of the status quo and alternatives, namely, the likelihood that each option to be adopted by both the public and the policymakers. Equity, by definition, shows the resulted impact and fairness the policy is likely to cause on different players. In other words, who might be the winner or the loser as the result of the action that our client may take. We only analyzed the proposed alternatives addressing the market clearance challenge for safety concern because both responsiveness and equity are less relevant for the funding options, unless we were to pursue industry funding in our proposal. 7.1 Market Clearance 7.1.1 Responsiveness In terms of responsiveness, or the feasibility as well as adaptability, the status quo receives a neutral score because the safety issue will not be addressed, as the project will only remain as an academic research. In other words, the status quo will not have direct interaction with either the public or the policymaker. The listed alternatives other than the status quo are equally responsive in this case because the safety concern will be fully addressed as the device receives market clearance from either the FDA in the US, or the MDD in the EU. 7.1.2 Equity To evaluate equity, we looked at two different players for each proposed option -‐ public and competitors. From the perspective of the public regarding the safety issue of this particular device, the status quo again remains neutral or unaffected because the biosensor is not commercialized, and the public will not have access to it. For the other 3 options, the public will be positive, or considered the winner, because the safety concern will be addressed by different regulatory agencies prior to the market. Patients will have more choices for medical diagnosis. For competitors that are also developing or selling similar products (i.e. ingestible electronic medical device), their equity may differ. The competitors will be more equitable in response to the status quo because Dr. Bettinger’s edible battery or the biosensor will not be a market threat. However, if Dr. Bettinger begins a startup with the biosensor, the competitors might not be in favor with his entry, as the competition becomes more intense. The licensing option received a neutral score because the competitors will not compete directly against Dr. Bettinger, but rather against the future pharmaceutical company. As a result from our client’s standing point, the equity of competitors for the third option remains neutral.

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7.1.3 Summary Table 9 summarizes all the scores of each option for both the responsiveness and equity. Despite of the status quo, the three proposed options received the same scoring for responsiveness, as well as the equity for the public. The main driving force in this analysis appears to be the equity of the competitors under different circumstances. However, at the moment, it is hard to quantify and conclude the degree of positive or negative impact that the potential competitors may add on our client for each option.

Table 9. Summary of Bargaining Context & Spreadsheet in terms of responsiveness and equity for the identified challenge -‐ Market Clearance.

Responsiveness

Equity

Public Competitors

Status Quo 0 0 +

Option 1: Startup & FDA + + -‐

Option 2: Startup & FDA + CE + + -‐

Option 3: Licensing + + 0


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8.0 Strategy & Arguments

Based on the evaluation of status quo and the three possible alternatives, we consolidated two recommendations for our client to choose from different perspectives on both the market and nonmarket factors.

Recommendation 1: To found a biosensor startup and acquire both the FDA approval and the CE Marking certificate, and to raise funding from sponsors with interest in specific application, such as the small business programs under NIH and venture capitalists.

We suggested our client to enter both the US and the EU markets at the same time with

properly planned experiments for required clinical trials, and to reach each milestone of two regulatory systems in parallel strategically. As mentioned earlier, the criteria for FDA clearance cover more sets of clinical trials because unlike the CE Marking certification process, FDA emphasizes both safety and efficacy. We were able to determine the classification of the device, as well as to anticipate a list of technical risks and requirements of clinical trials from predicates so that our client will be able to be prepared in advance, which can possibly reduce time for both the consultancy and FDA’s review process (see Appendix 7 for the list of technical risks that the Bettinger Group may need to prove to be safe for the FDA).

The purpose of going through both the FDA and CE Marking process is to avoid

unexpected delay with the FDA so that the device can be commercialized as soon as possible, and therefore the point of submission of different documents for both systems will be critical. If we look at the timeline and procedure for both the FDA and CE Marking as illustrated in Figure 6, the first thing to do is to determine the classification of the device in compliance of both systems, which we have provided our insights on the classification of the biosensor -‐ a Class II medical device. Besides determining the classification, both systems require to implement a Quality Management System (QMS) for qualified manufacturing practice, and therefore the QMS implementation for both system can be achieved at the same time. Starting from the classification stage, the applicant can begin to interact with the FDA staff for feedbacks. There will be an approximately three-‐month consultation review window with the FDA staff before getting the official Pre-‐Submission feedback. This consultation and feedback is pivotal because it not only confirms the classification of the device, but also sets the future goals for the following clinical trials. Namely, a list of identified risks regarding the device will be provided in the feedback. After acquiring the Pre-‐Sub feedback, there will be a time period for the applicant to prepare for applying the IDE if clinical trials are required. The projected time needed for this preparation phase before submitting the IDE application ranges from 2 to 3 years, but it varies case by case. After the submission of the IDE, the FDA reviewer will also provide feedback and gives permission to the applicants to pursue the protocols for the clinical trials they have designed during that preparation stage. Clinical trials may begin upon receiving the IDE approval.

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Figure 6. Combined tim

eline for both the FDA approval and CE M

arking certificate (Illustrated by Jessica Kou).

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The CE Marking guideline has to be taken into consideration during both the preparation prior to the submission of the IDE and the clinical-‐trial stage for FDA. This information will be useful to prepare the Technical File for the CE Marking certificate. The Technical File required by the MDD is similar to the final application for the FDA that includes all the experimental results of clinical trials, except that the Technical File requires only the data addressing the safety concerns (see Appendix 8 for Technical File requirement for CE Marking). Since the amount of experiments required for completing the Technical File is relatively less than the requirements from the FDA, we suggested that once the expected testing results and data are generated to meet MDD standards, the company should submit and proceed to the next step of acquiring the CE Marking certificate, while the clinical trials will still be continued for further validation on the efficacy concerns. We argued that if the company will be able to receive the CE Marking certificate prior to the final submission for FDA clearance review, the certificate will be a strong piece of evidence supporting all their testing results, which may in turn avoid or reduce the unexpected delay that the final review of the FDA may cause. The expected outcome of this strategy is that the device can be certified and approved by both the US and the EU regulation at the same time with minimum delay.

Throughout this entire journey with two parallel procedures, there are some helpful

sources for our client to consult with in order to accelerate the process, and these “helpers” exist for the ultimate goal of global harmonization of healthcare.31 For example, the Accredited Persons Inspection Program is a third party qualified by the FDA to help the applicant to ensure that both the quality and compliance are in accordance with FDA throughout the process. Currently there are officially 16 firms worldwide listed, and more importantly, some of them are also the qualified Notified Bodies for the EU, which is a critical source if one is to pursue both the US and the EU regulatory clearance.32 However, this will be a separate application process if the applicant wishes to seek such help for inspection. In addition, another assisting source is the International Medical Device Regulators Forum (IMDRF). The IMDRF consists of a group of voluntary medical device regulators from the globe that is trying to not only lower the barriers across different medical device regulatory systems, but also to accelerate the harmonization of diversity.33 Applicants may consult with such organization for more feedback in order to fast-‐forward the process for the best outcome.

In terms of cost, we have previously estimated the total cost that one of the predicates,

the PillCam-‐COLON2 sold by Given Image, spent approximately $1.68M (max.) for conducting clinical trials required by the FDA. Based on our corresponding option for fund raising, the maximum amount of funding that our client may get is around $2.15M, which is considered feasible for the given estimation on cost. Since pursuing both approval processes is much costly

31 Eidenberger, R. (2000). Medical device registration, agreements on mutual recognition -‐ a step forward to global

harmonization? Radiation Physics and Chemistry 57, 539-‐542. 32 US Food and Drug Administration (Mar 12, 2014). Accredited Persons Inspection Program. Retrieved from

http://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/PostmarketRequirements/ThirdPartyInspection/ucm125410.htm

33 International Medical Device Regulators Forum. About IMDRF. Retrieved from http://www.imdrf.org/about/about.asp

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compare to other options, we also suggested to seek an active collaboration with the Office of Clinical Research (OCR) of University of Pittsburgh during the clinical trial stage. The OCR provides assistance in recruiting volunteers for clinical trials and follows a set of rules to guarantee the authority of clinical trial results. The potential collaboration could both lower the cost and convince FDA for faster review process.34

Recommendation 2: To use multiple IP protections on multiple components of the device, including the enhanced melanin-‐derived battery, and license the technology to a potential pharmaceutical company, and to raise funding from sponsors with interest in basic science and medical research, such as NSF and NIH.

Regarding the related nonmarket factors, this option minimizes the direct responsibility of acquiring market clearance for our client. As a result, this recommendation may possibly avoid a huge cost required by passing FDA while maintaining the potential to get various funding from NSF and NIH. We have a rough estimation of approximately $1M potential funding raised annually during research stage, and the funding may last up to 3 years (i.e. $3M total). Minimal efforts should be put into FDA or CE regulations so that the group could focus on researching in advancing the technology, as well as seeking more IP protections on the whole biosensor, or the various components. In addition to eliminating market clearance challenge, the controversy about cuttlefish protection could also be avoided because it will be the responsibility of the pharmaceutical company to respond to the parties with environmental concerns. From market perspective, by licensing the technology to a pharmaceutical company for partnership, our client and his startup may avoid direct competition in the market.

We also recommended that the group applies for intellectual protection for each part of

the device as early as possible because there are more and more research groups targeting similar area since the concept of edible electronics becomes more trendy in the medical device field. The competition not only lies in the performance of each device but also in the period of securing IPs. Finally, we suggested the group to actively seek funding and awards from various sources. We have selected several related programs and awards such as BMAT of NSF and the R series funding of NIH for reference. CMU is another potential source for academic support.

Ultimately, these two recommendations described above are not mutually exclusive. It is

possible to execute both strategies for the most optimal outcomes. In particular, there are several critical points to keep in mind. To minimize opportunity costs, it is important to ensure that the licensed companies do not directly compete with the GI tract monitor or other potential products that our company may develop in the future, potentially jeopardizing our revenues and market share. Pharmaceutical companies working in fields such as drug delivery are recommended, since their market has minimum overlap with the market of our GI tract monitor. Also recommended for future consideration are companies working toward technology for personal identification or therapeutic

34 University of Pittsburgh. Office of Clinical Research. Retrieved from https://www.clinicalresearch.pitt.edu/IRS/Services

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procedures that does not share any fields of operation with our device. Moreover, since starting a biotech company is a risky investment that requires a lot of time,

effort, and financial support, while licensing the technology does not require much input after the patent is granted, the client may opt to only license the patent(s) to companies that are able to offer nice contracts if he is not willing to wait for the returns on the investment. It is advised that the client hires experienced personnel to calculate the Net Present Value (NPV) and Return On Investment (ROI) of the startup company. This would help determine the profitability of building the company, and the time expected to receive the revenues. At the moment, we expect roughly 10 years (3-‐5 years before entering FDA, 5 years clearing FDA approval) before the product hits the market If the client does not wish to commit 10 years of research and fund-‐searching effort into the project, he may choose to license the technology to generate quick and easy income as soon as the technology is ready. In this case, it is perhaps most profitable to license the technology to as many parties as he can find. If he considers that it is worthwhile to pursue his own company, he should be more cautious in licensing the technology, in other words, be more careful not to help his competing firms.

In summary, both of our recommendations may serve different purposes and interests of our client separately, or they may be executed together for the greatest outcome. If Dr. Bettinger is willing to put his career emphasis on having a company with his innovation in the future, taking actions for both recommendations may serve that need by providing a strategy for reducing time and cost for market clearance challenge, as well as maximizing the profit from selling the invented product to both the US and the EU markets, and finally earning money from licensing. The higher risks it may take, the higher profit it may generate. On the other hand, if Dr. Bettinger is still willing to focus more on research and academia, the second recommendation offers a low-‐cost and low-‐risk solution, and the profit generated from it may be lower compare to the rest.

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Appendix Appendix 1: Estimation & Calculation of Annual Cuttlefish Demand for Edible Battery

In each ¼ cup of cuttlefish ink, there is 9 g protein, and we assume that most of the protein is melanin.35 A medium size cuttlefish weighs around 10.5 kg, and it has an ink sac that contains approximately 1 cup of ink, and therefore, a cuttlefish can provide roughly 36 g melanin.36 An edible battery needs 8 mg melanin to build the anode, meaning that a medium sized cuttlefish can produce the raw material for 4500 batteries. In terms of market size, there are approximately 14,900 professional athletes in the US, and approximately 1.37 million members on active duty in US military.37 We assume that each professional athlete and military member takes the pill five days a week, one pill per day to monitor his/her training load. The resulted annual cuttlefish demand will be:

1.37𝑀 + 14,900 𝑢𝑠𝑒𝑟𝑠 × 1 𝑝𝑖𝑙𝑙

𝑝𝑒𝑟𝑠𝑜𝑛 ∙ 𝑑𝑎𝑦 × 5

𝑑𝑎𝑦𝑠𝑤𝑒𝑒𝑘

× 3657𝑤𝑒𝑒𝑘𝑠 ×

1 𝑓𝑖𝑠ℎ4500 𝑝𝑖𝑙𝑙𝑠

× 10.5𝑘𝑔𝑓𝑖𝑠ℎ

= 842,480𝑘𝑔𝑦𝑟

= 842𝑡𝑜𝑛𝑠𝑦𝑟

Appendix 2: Definition of a Medical Device

An instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other

similar or related article, including any component, part, or accessory, which is (1) Recognized in the official National Formulary, or the United States Pharmacopeia, or any

supplement to them, (2) Intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation,

treatment, or prevention of disease, in man or other animals, or (3) Intended to affect the structure or any function of the body of man or other animals, and

which does not achieve its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of its primary intended purposes.

35 What Nutrition is in Squid Ink? Retrieved from http://weightloss.answers.com/nutrition/what-‐nutrition-‐is-‐in-‐squid-‐ink 36 How much ink is in an Octopus. Retrieved from http://www.santharia.com/dev/index.php?topic=13048.0;wap2 37 Bureau of Labor Statistics, US Department of Labor, Athletes and Sports Competitors, Occupational Outlook Handbook, 2014-‐15 Edition. Retrieved from http://www.bls.gov/ooh/entertainment-‐and-‐sports/athletes-‐and-‐sports-‐competitors.htm

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Appendix 3: Department of Defense (DoD) Funding Congressionally Directed Medical Research Programs (CDMRP)

● Peer Reviewed Medical Research Program -‐ Technology/Therapeutic Development Award Funding Opportunity Number: W81XWH-‐13-‐PRMRP-‐TTDA Link: http://cdmrp.army.mil/funding/pa/13prmrpttda_pa.pdf

● Defense Medical Research and Development Program -‐ Applied Research and Advanced Technology Development Award Funding Opportunity Number: W81XWH-‐09-‐DMRDP-‐ARATDA Link: http://cdmrp.army.mil/funding/pa/09dmrdparatda_pa.pdf

● Defense Advanced Research Projects Agency (DARPA) – Biological Technologies Office (BTO) Possible Contact: Alicia Jackson ([email protected]) Dr. Jackson is currently the Deputy Director of the Biological Technologies Office at the Defense Advanced Research Projects Agency (DARPA). The focus areas include Industrial Biotechnology, Synthetic Biology, Neurotechnologies and Unconventional Electronics. Previously at DARPA, Dr. Jackson launched the Living Foundries and VAPR programs. Prior to DARPA, Dr. Jackson served as Professional Staff on the U.S. Senate Committee on Energy and Natural Resources for the Chairman, Senator Jeff Bingaman, where her focus was on advanced energy technology policy.

DOD Research Programs Amount for Research

Application Received

Application Funded

Success Rate

Unit Funding

Peer Reviewed Medical Research Program $512.80 M 6,036 493 8% $1.0M

Defense Medical Research and Development Program

$176.63 M 575 113 20% $1.6M

Appendix 4: National Institute of Health (NIH) NIH Research Project Grant Program (R01)

● Used to support a discrete, specified, circumscribed research project ● NIH's most commonly used grant program ● No specific dollar limit unless specified in FOA ● Advance permission required for $500K or more (direct costs) in any year ● Generally awarded for 3 -‐5 years ● All ICs utilize ● See parent FOA: PA-‐13-‐302 (http://grants.nih.gov/grants/guide/pa-‐files/PA-‐13-‐302.html)

NIH Clinical Trial Planning Grant (R34) Program

● Designed to permit early peer review of the rationale for the proposed clinical trial and support development of essential elements of a clinical trial

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● Usually project period of one year, sometimes up to 3 ● Usually, a budget of up to $100,000 direct costs, sometimes up to $450,000 ● Used only by select ICs; no parent FOA


● Intended to stimulate scientific and technological innovation through cooperative research/research and development (R/R&D) carried out between small business concerns (SBCs) and research institutions (RIs)

● Fosters technology transfer between SBCs and RIs ● Assists the small business and research communities in commercializing innovative technologies ● Three-‐phase structure:

I. Feasibility study to establish scientific/technical merit of the proposed R/R&D efforts (generally, 1 year; $150,000)

II. Full R/R&D efforts initiated in Phase I (generally 2 years; $1,000,000) III. Commercialization stage (cannot use STTR funds)

● Eligibility limited to U.S. small business concerns ● Project Director/Principal investigator (PD/PI) may be employed with the SBC or the

participating non-‐profit research institution as long as he/she has a formal appointment with or commitment to the applicant SBC

● Multiple PD/PIs allowed ● All ICs utilize except FIC ● See parent FOA: PA-‐12-‐089 (http://grants.nih.gov/grants/guide/pa-‐files/PA-‐12-‐089.html)


● Intended to stimulate technological innovation in the private sector by supporting research or research and development (R/R&D) for for-‐profit institutions for ideas that have potential for commercialization

● Assists the small business research community in commercializing innovative technologies ● Three-‐phase structure:

I. Feasibility study to establish scientific/technical merit of the proposed R/R&D efforts (generally, 6 months; $150,000)

II. Full research or R&D efforts initiated in Phase I (generally 2 years; $1,000,000) III. Commercialization stage (cannot use SBIR funds)

● Eligibility limited to U.S. small business concerns ● The primary employment of the Project Director/Principal investigator (PD/PI) must be with the

small business concern. ● Multiple PD/PIs allowed. ● All ICs utilize except FIC ● See parent FOA: PA-‐12-‐088 (http://grants.nih.gov/grants/guide/pa-‐files/PA-‐12-‐088.html)

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NIH Research Programs Interest Time Funding

NIH Research Project Grant Program (R01)

Support a discrete specified circumscribed research project 3 -‐ 5 years

$500k (Max Annually)

NIH Clinical Trial Planning Grant Program (R34)

Permit early peer review and support development of a clinical trial 1 -‐ 3 years $100k

(Max Annually)


Stimulate cooperation between small business and research institutions

1 year $150k

2 years $1M


Support research and development for for-‐profit institutions

6 months $150k

2 years $1M

Appendix 5: National Science Foundation (NSF) Smart and Connected Health (SCH)38

“The goal of the Smart and Connected Health (SCH) Program is to accelerate the development and use of innovative approaches that would support the much needed transformation of healthcare from reactive and hospital-‐centered to preventive, proactive, evidence-‐based, person-‐centered and focused on well-‐being rather than disease. Approaches that partner technology-‐based solutions with bio-‐behavioral health research are supported by multiple agencies of the federal government including the National Science Foundation (NSF) and the National Institutes of Health (NIH). The purpose of this program is to develop next generation health care solutions and encourage existing and new research communities to focus on breakthrough ideas in a variety of areas of value to health, such as sensor technology, networking, information and machine learning technology, decision support systems, modeling of behavioral and cognitive processes, as well as system and process modeling. Effective solutions must satisfy a multitude of constraints arising from clinical/medical needs, social interactions, cognitive limitations, barriers to behavioral change, heterogeneity of data, semantic mismatch and limitations of current cyberphysical systems. Such solutions demand multidisciplinary teams ready to address technical, behavioral and clinical issues ranging from fundamental science to clinical practice.”

Two classes of proposals will be considered in response to this solicitation: ● Exploratory Projects (EXP): One or more investigators spanning 1 to 3 years. ● Integrative Projects (INT): Multi-‐disciplinary teams spanning 1 to 4 years. ● Estimated Number of Awards: 15 to 25 per year ● Anticipated Funding Amount: $15,000,000 to $20,000,000

38 Useful links for SCH-‐NSF: http://www.nsf.gov/funding/pgm_summ.jsp?pims_id=504739 http://www.nsf.gov/pubs/2013/nsf13543/nsf13543.pdf http://www.nsf.gov/pubs/2013/nsf13543/nsf13543.pdf

40

● Two sizes of projects are expected to be funded under this solicitation: ○ 1. Exploratory (EXP) projects: One or more investigators may propose projects to be funded

up to $170,000 direct cost, plus applicable indirect costs, per year for up to three years. ○ 2. Integrative (INT) projects: Multidisciplinary teams of investigators may propose projects

with funding between $170,000 and $370,000 direct cost, plus applicable indirect costs, per year for up to four years.

NSF/FDA SCHOLAR-‐IN-‐RESIDENCE AT FDA39

“The National Science Foundation (NSF), through the Directorate for Engineering's Division of Chemical, Bioengineering, Environmental, and Transport Systems (CBET), and the U.S. Food and Drug Administration (FDA), through its Center for Devices and Radiological Health (CDRH) have established the NSF/FDA Scholar-‐in-‐Residence Program at FDA. This program comprises an interagency partnership for the investigation of scientific and engineering issues concerning emerging trends in medical device technology. This partnership is designed to enable investigators in science, engineering, and mathematics to develop research collaborations within the intramural research environment at the FDA. This solicitation features four flexible mechanisms for support of research at the FDA: 1) Faculty at FDA; 2) Graduate Student Fellowships; 3) Postdoctoral Fellowships; and, 4) Undergraduate Student Research Experiences. Undergraduate student participants supported with NSF funds must be citizens or permanent residents of the United States.”

● Estimated Number of Awards: 3 to 10 per year ● Anticipated Funding Amount: $500,00 ● For science, engineering, and mathematics faculty to conduct research for three to twelve

months at FDA. Budget: Awards from NSF will range from $25,000 to $150,000 for up to one year and may include 85 percent of faculty salary and fringe benefits during the FDA residency period.

Biomaterials (BMAT)40

“The Biomaterials program supports fundamental materials research related to (1) biological materials, (2) biomimetic, bioinspired, and bioenabled materials, (3) synthetic materials intended for applications in contact with biological systems, and (4) the processes through which nature produces biological materials. Projects are typically interdisciplinary and may encompass scales from the nanoscopic to the bulk. They may involve characterization, design, preparation, and modification; studies of structure-‐property relationships and interfacial behavior; and combinations of experiment, theory, and/or simulation. The emphasis is on novel materials design and development and discovery of new phenomena.”

39 Useful links for NSF/FDA Scholar-‐In-‐Residence at FDA: http://www.nsf.gov/funding/pgm_summ.jsp?pims_id=5605 http://www.nsf.gov/pubs/2003/nsf03525/nsf03525.pdf 40 Useful links for BMAT-‐NSF: http://www.nsf.gov/funding/pgm_summ.jsp?pims_id=13699 http://www.nsf.gov/awardsearch/advancedSearchResult?ProgEleCode=7623&BooleanElement=ANY&BooleanRef=ANY&ActiveAwards=true&#results

41

“Projects involving in vitro demonstration of biological compatibility and efficacy are appropriate, but the program can support only limited in vivo studies. Tissue engineering and drug/gene delivery projects must have a specific focus on fundamental materials development and characterization. Studies of the mechanical behavior of hard and soft biological materials and tissues and projects in molecular biophysics may be more appropriate for one or more of the NSF programs listed below under Related Programs. Projects with an emphasis on device design and fabrication are generally more appropriate for a program in the NSF Engineering Directorate.”

● Estimated Number of Awards: 30 per year ● Award Amount:

○ Less than or equal $50,000(7) ○ Between $50,000 -‐ $100,000(2) ○ Between $100,000 -‐ $500,000(175) ○ Between $500,000 -‐ $1,000,000(24) ○ More than $1,000,000(1)

NSF Research Programs Interest Time Annual Funding

Smart and Connected Health (SCH)

To develop next generation health care solutions such as sensor technology

1 – 4 years $170k -‐ $370k

NSF/FDA Scholar-‐in-‐Residence at FDA

To investigate issues concerning emerging trends in medical device technology

3 – 12 month

$25k -‐ $150k

Biomaterials (BMAT) To support fundamental materials research related to biological materials

1 – 3 years $100k -‐ $500k

Appendix 6: Venture Capitals Birchmere Ventures* Birchmere Venturesis a venture capital firm. Its main office currently resides in Pittsburgh, Pennsylvania. Birchmere Ventures primarily grants Startup/Seed and Early Stage funding. Innovation Works* Innovation Works is a venture capital firm founded in 1999. Its main office currently resides in Pittsburgh, Pennsylvania. Innovation Works primarily grants Startup/Seed and Early Stage funding. Meakem Becker Venture Capital Meakem Becker Venture Capitalis a venture capital firm founded in 2005. Its main office currently resides in Sewickley, Pennsylvania. Meakem Becker Venture Capital primarily grants Early Stage and Later Stage funding with an investment range of <$5M.

42

Chrysalis Ventures Chrysalis Venturesis a venture capital firm founded in 1993. Its main office currently resides in Pittsburgh, Pennsylvania. Chrysalis Ventures primarily grants Early Stage and Expansion funding with an investment range of $2M -‐ $15M. Ben Franklin Technology Partners Ben Franklin Technology Partners is a venture capital firm founded in 1989. Its main office currently resides in Pittsburgh, Pennsylvania. Ben Franklin Technology Partners primarily grants Early Stage and Expansion funding with an investment range of < $2M.41

Venture Capital in Pittsburgh Related Investment

Interest Investment Stage Investment Range Fund Size

Birchmere Ventures* Medical Devices Startup/Seed Early Stage

$500k -‐ $5M $200M

Innovation Works* Biotechnology Healthcare Medical Devices

Startup/Seed Early Stage

$100k -‐ $1M $1.5B

Meakem Becker Venture Capital

Biotechnology Healthcare

Early Stage Later Stage

$2M -‐ $4M $75M

Chrysalis Ventures Healthcare Early Stage Expansion

$2M -‐ $15M $400M

Ben Franklin Technology Partners

Biotechnology Healthcare Medical Devices

Early Stage Expansion

$500k -‐ $2M $500M+

41 Ben Franklin (Aug 1, 2008). BFTP Gap Fund: Critical Financing for Early-‐Stage Companies. Retrieved from http://benfranklin.org/news/bftp-‐gap-‐fund-‐critical-‐financing-‐for-‐early-‐stage-‐companies

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Appendix 7: Anticipated Risks for FDA Clearance Requirement

Anticipated risks to health and mitigation measure required by FD are listed in the following table to give an overview of what concerns and risks that the FDA may be interested in. This list is modified and consolidated from the Premarket Notifications received by both PillCam-‐COLON2 (Given Image) and Helius (Proteus) from the FDA as a published document.42,43

Identified Risk Mitigation Measure

Adverse Tissue Reaction Biocompatibility Labeling (dose limits)

Systemic toxicity Toxicology Testing Labeling (dose limits)

Equipment, malfunction leading to injury

Electrical safety, thermal and mechanical safety Software validation, verification and hazard analysis Non-‐clinical testing Labeling

Interference with other devices and with this device (e.g. patient information compromised)

Electromagnetic compatibility testing Software validation, verification and hazard analysis Non-‐clinical testing

Abdominal pain, nausea, vomiting, choking Clinical performance data Labeling

Failure to excrete Animal testing Labeling

Poor data acquisition* Optical imaging performance testing Non-‐clinical testing Labeling

42 FDA Archive. De Novo Classification Request for PillCam Colon 2 Capsule Endoscopy System 43 FDA Archive. Evaluation of Automatic Class III Designation (De Novo) for Proteus Personal Monitor Including Ingesting Event

Marker.

44

Appendix 8: CE Mark Technical File contents The following list is the requirements for completing the Technical File before receiving CE Marking certificate.44 The key difference between the FDA and CE Marking is that the CE Marking certificate primarily emphasizes the safety concerns, while the FDA will focus on both the safety and the efficacy of the device.

Technical File Content Requirements

Description of the product family and justification for why each product falls within the product family

Detailed account of the intended use of the device(s) including how the medical device(s) functions, what it does, where the device is used, what it is used with, and who uses it

Description of components, specifications, packaging and literature

The manufacturing process

Listing of accessories

Location of design responsibility and manufacturing facilities

Classification of the device and rationale for classification

The chosen route to compliance according to the applicable Directives

Declaration of Conformity that states the manufacturer's compliance with applicable Directive(s)

Lifetime/shelf life of products and environmental limitations

Retention of QA, Competent Authority and Notified Body records

Vigilance reporting and Medical Device Reporting procedure

How and when to contact Competent Authorities

Name of, and contract with, your Authorized Representative in Europe

Subcontractor names and addresses, if applicable

Essential Requirements checklist

Design input specifications

Application and references to Standards and Guidelines

Testing results and clinical evaluations

Risk analysis

Instructions for Use and Labeling.

44 Emergo Group. CE Marking Technical File or Design Dossier Compilation for European Medical Device Registration. Retrieved

from http://www.emergogroup.com/services/europe/technical-‐file-‐preparation

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