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Bonutti Technologies Effingham, IL BONUTTI TECHNOLOGIES CONFIDENTIAL Wright Brothers - Success to Failure

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Bonutti Technologies Effingham, IL BONUTTI TECHNOLOGIES CONFIDENTIAL Wright Brothers - Success to Failure “Innovation Through the Eyes of the Inventor-Entrepreneur” – Peter Bonutti, M.D. Peter Bonutti MD, FACS CEO Bonutti Technologies Effingham, IL BONUTTI TECHNOLOGIES CONFIDENTIAL Wright Brothers - Success to Failure Bicycle Mechanics that Pioneered of Heavier Than Air Flight 1904 Wright Brothers - Success to Failure In 1905 the Wright brothers enjoyed a complete monopoly on heavier-than-air aviation. They had the world’s only working airplane, were the only two pilots able to fly it. They were unwilling to show the machine to anyone who might steal its design. Having conquered flight, they wanted to cash out before going any further. Wright Brothers - Success to Failure During this time, many inventors and engineers began designing aircrafts: In July 1909 Blériot crossed the English Channel in his innovative monoplane. In August 1909, Glenn Curtiss won the Bennett Trophy by setting a speed record of 47 miles per hour. He also sold the first consumer airplane, for just $5,000, compared with the Wrights’ asking price of $25,000. Wright Brothers - Success to Failure The Wrights chose not to fight back with technical innovations. Instead, in August 1909, they sued Curtiss with a long-threatened patent-infringement lawsuit. Orville – “We have been compelled to spend our time on business matters…during the past five years. When we think what we might have accomplished if we had been able to devote this time to experiments, we feel very sad, but it is always easier to deal with things than with men, and no one can direct his life entirely as he would choose.” Refused to show their plane/technology to US Department of Defense and continued a litigation strategy. Wright Brothers - Success to Failure By 1913 the Wright Model C was obsolete–slow, unstable and hard to maneuver, with a strong tendency to nose up and stall. By the spring of 1914 the Curtiss Aeroplane Company had surpassed the Wrights and grown into the largest aircraft manufacturer in the United States. In 1914 the U.S. Circuit Court of Appeals upheld the Wrights’ patent suit, agreeing that Curtiss had infringed. Curtiss ignored the decision and forced Orville to take him to court and enforce the decision During World War I, a consortium of aviation companies banded together and brokered an agreement by which all members could pay a fee to license the patented technology. In return, Curtiss and Wright-Martin each received $2 Million in a one-time settlement and agreed to lay the patent issue to rest Wright Brothers - Success to Failure In 1915 Orville sold the company for 1.5 million ($35 million in 2016) to Curtis. Curtiss then began to sue others to protect his interest. -The Wright-Martin Company, which was reorganized in 1919 as the Wright Aeronautical Company, became a world leader in aircraft-engine design not aircraft manufacturer. -Wright Aeronautical merged with Curtiss Aeroplane and Motor, becoming Curtiss-Wright to become the 2nd largest aircraft and engine manufacturer but it had had to merge with its archenemy, Curtiss, to achieve this stature. And put its name second. Wright Brothers - Success to Failure Takeaways 1. Stopped interfacing with colleagues and designed in a vacuum. 2. Stopped innovating and only focused on litigation. 3. Let others become market leaders in the industry by remaining hermits and not collaborating. 4. Ultimately sold at a loss to their arch enemy despite winning in court. 5. Despite being a household name their technology became rapidly obsolete and they had minimal long term impact on air flight. Peter M. Bonutti, MD FACS Orthopedic Reconstructive Surgeon Residency Cleveland Clinic: George and Grace Crile Award. International Travelling Fellowship, Canada, Australia and New Zealand. Pioneer of Minimally Invasive Arthroplasty. Active Surgical Practice approximately 1,000 Surgeries annually since 1989. Senior consultant Stryker Orthopedics for 20 years. BRI PTech IP Holding Entity Operating Companies Joint Active Systems Trauma Fixation OsteoWeld Ultrasound for Sinus Treatment Ultrasonic Welding IP Creation, Licensing and Product Development Bonutti Research was founded in 1990 Purchased Assets Cleveland Research Institute Licensed 280 patents 742 licenses with major medical device companies >$150 million in licensing revenue and royalties. R & D Collaboration – Product Development Stryker – UKA / TKA / TSA / Robotics Zimmer – MIS UKA / Gender TKA / Robotics Kyphon – Balloon Fracture Repair US Surgical – Expanding Access / Balloon Dissection Hitachi – Kinematic MRI Biomet – Anchors – Deform / Locking / All Suture BONUTTI TECHNOLOGIES CONFIDENTIAL Technology Development & Intellectual Property Established 3 product companies with total product sales over $200 million. Co-development projects with Synthes, Biomet, Kyphon, Stryker. 323 Issued US Patents. 210 Pending US Applications & Foreign Applications. 276 Licensed Patents 742 Total Licenses, includes cross licenses. Product sales of licensed technologies in excess of $4 billion. SELF-FUNDED (>30 MM) THROUGH MEDICAL PRACTICE/ROYALTIES. BRI- Technology Incubator Multidisciplinary Engineering Team -Mechanical -Electrical -Biomedical Regulatory Affairs & QA/RC. Legal and Intellectual Property Group. Business Development. Production Prototyping and Manufacturing • CNC Hurco Knee Mills • CNC DynaMechtronic Machining Centers • CNC Hyundai Lathe • CNC Doosan Turning Center • OMAX Waterjet Cutting Machine • Formech Vacuum Forming Machines • Ultrasonic Welding Machines BONUTTI TECHNOLOGIES CONFIDENTIAL P Tech IP “In House” Intellectual Property Team IP Attorney / Engineering / Support Staff 550+ Patents / Applications File Approximately 50+ Annually BONUTTI TECHNOLOGIES CONFIDENTIAL BONUTTI TECHNOLOGIES CONFIDENTIAL Peter’s Laws for Success in Innovation • Invest in yourself • Your Time AND Money first • Always Question Status Quo • Problem Solving in a Nonlinear Fashion • Innovation is a Long-term strategy (5-10 years) and IP is Integral to Success • Multi-disciplinary team to complement skills • Respond to failure and adversity actively Moved to Rural America to fund R&D In 1989, Bonutti acquired the Cleveland Research Institute (Acromed) Lab. Effingham Bank co-signed the loan under the condition that an orthopedic clinic be established. Bonutti Research was Started in 1990 3000 square ft. facility 1 Machinist Goals: Develop Innovative Medical Devices. Explore New Paradigms in Rehabilitation space. Focus on Minimally Invasive Technologies. Control and License Intellectual Property. Failure to Success Case Study I – Medical Adhesives Residency – 1983 Started work on Surgical Adhesives for Soft Tissue Repair Superglue – Cyanoacrylates Basis was used in Vietnam as a Vascular Sealant - No Study as a Surgical Adhesive First Research Use for Medical Grade Cyanoacrylates as a Surgical Adhesive Repair of Rabbit Achilles Tendon -First Publication – 1985 -Isobutyl Cyanoacrylate Comparable to Suture Repair Failure to Success Case Study I – Medical Adhesives – Cyanoacrylates Numerous Research Awards Success in Animal Studies Translation to Human Applications?? -Challenging -Regulatory Pathway Problematic: Degradation to Cyanide -Optimal Human Application Unknown -Scientific Research from 1983-1989 ----------------------------------------------------------------------------------------------------- Product Launch 1998 by Closure Medical -Dermabond – Octyl-Cyanoacrylate -Topical Adhesive -15 Years from Animal Research to Non-affiliated Company Product Launch -Closure Medical Acquired by Ethicon -Another 15 Years Before Market Acceptance Failure to Success Case Study I - Take Away Message (1983-2007) Research to Product Launch Takes a Long Time. Lack of IP – Lose Control of the Technology. Understand Barriers to Entry -Regulatory Pathways -Costs -Best Clinical Application -Marketing and Sales Critical !!! ---------------------------------------------------------------------------------------------- Dermabond created by Closure Medical an independent company. Failure to Success Case Study II – MIS Access Technology 1991 Patents Filed on Balloon Dissection Technology. 5 Years Development and Refinement of Pneumatic Technology. Tom Fogerty, MD Vascular Surgeon and Venture Capitalist. Purchased Technology and Patents with Contract to Further Develop and Promote Technology (75k Upfront). Failure to Success Case Study II – MIS Access Technology Patents were assigned to Fogerty – GSI. No Effort to Develop / Refine Technology. Fogerty Only Used IP to Enforce his Company’s (GSI) Rights in a Lawsuit with Origin. GSI was sold to US Surgical for 100 million Based Solely on Balloon IP and Litigation Success. Result – Bonutti – Contract Litigation with US Surgical. Failure to Success Case Study II – MIS Access Technology Continued Technology Refinement and IP Prosecution Lead to Exit (24 patents) Lead to complex Three Way Settlement. US Surgical – Kyphon – BRI. US Surgical Licensed Spacemaker Balloons for Hernia Repair & Saphenous Vein Dissection. Kyphon Licensed Balloons for Kyphoplasty. US Surgical Licensed MIS Access – Versastep Expanding Cannula. Failure to Success Case Study II - Take Away Message (1991-2001) Continued Technology Refinement and IP Prosecution Lead to Success Exit. Assignment vs. Licensing – “Fields of Use- Allowed IP to be licensed to multiple firms.” Just because Partner is Another Physician Doesn’t Mean They Have your Interest at Heart. Contract Language Critical. Failure to Success Case Study III – Multitak Challenges-Soft Tissue Repair in an Arthroscopic Environment. Suture Anchors – S&N
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