U of M Medical Valuation Lab with Jessica Haupt and Steve Parente

Frank Jaskulke  01:26

Good morning, good afternoon and good evening to everyone out there in Medical Alley. This is Frank Jaskulke, your host for the Medical Alley Podcast. And I'm so glad you joined us today for what will be I think both both a very interesting episode and a useful episode for many of the companies that are out there listening. I'm joined today by two people from the University of Minnesota Medical Valuation Lab, and they'll tell you a bit more about what that is and how you can engage with it. But I'm joined today by Steve Parente and Jessica Haupt. And I might just ask you all to start with a quick intro on yourselves. And then we'll introduce medical valuation lab, and Steve, might start with you tell us a little bit about you.

 Steve Parente  02:07

Sure. So Steve Parente, I'm a professor at the University of Minnesota and the Carlson School of Management. My home department is finance. But I'm really a health economist by training. And I've been doing basically stuff in the medical industry at this school since coming in 1999. 

 Frank Jaskulke  02:21

Wow. All right. And Jessica, how about you?

 Jessica Haupt  02:25

I'm Jessica Haupt. I'm the managing director of the Medical Industry Leadership Institute at the Carlson School. And I've been with MILI just about since it started almost 20 years ago.

 Frank Jaskulke  02:35

Wow. Very cool. Alright, so maybe just before we talk about the medical valuation lab, would you talk about MILI real quick, because I think that's also important for people to know about.

 Jessica Haupt  02:46

Sure. MILI is the Medical Industry Leadership Institute we started about 20 years ago. And we're really focused on educating students that want to go into the medical industry after they graduate. And we do this through a number of courses and activities. But the one thing I think is really unique is we do a lot of community and industry engagement. So we have an affiliate group of over 800 students, or 800 alumni, who partner with us on educational programming. They have a mentorship program with our students, and they do a lot of activities that really help out. We also have executives and residents and industry councils and just a wide range of people who are interested in contributing to what we do and contributing to the students growth.

 Frank Jaskulke  03:36

Really a great network and a great part of this community. Really appreciate it. Then Steve, maybe you want to tell us real quick, what is the valuation lab?

 Steve Parente  03:45

Yeah, it's an interesting concept. I mean, the notion of having a valuation, normally you think of finance in a lab. You wouldn't necessarily put together. So what we do in the medical valuation lab is looking at early stage medical technologies. And this really came from actually the very beginning of MILI, people saw the title "Medical Industry Leadership Institute" and are like, "That's so audacious, calling yourself an institute. What are you really doing?" And they then got to us and said, you know, if you really want to do something useful, help us with all the intellectual property at your university and everybody else that's on the cutting room floor. It just doesn't get seen fast enough through various technology commercialization units. And we thought about it for a while. We actually talked to people you know as esteemed as the former CEO of Delta, Richard Anderson, when he was between Northwest and UnitedHealth Group. And we came with this idea originally called it Assessment Inc., but then we later turned it into the valuation lab and the thought was, what if we got students that are heavily mentored to look at some of these early stage med tech, usually something that's where you need money to go to like series A or something else like that, and had them do not just the financials, but like all the other things that are choke points that are going to get you there. Is your intellectual property okay? Is the technology even possible? What's the regulatory pathway? What's reimbursement? Basically eight major things, and put them all together in warp speed. Five weeks from meeting the inventor to putting out a report, white paper, PowerPoint, just like the real world, and then have them pivot and do it all over again three times over a semester. That was our origin story in 2008. 

 Frank Jaskulke  05:19

Oh, it's very cool. And for either of you maybe to talk a bit about the the range of technologies and kinds of companies that have come through, like, what kinds of stuff do you see coming through the lab?

 Jessica Haupt  05:31

Sure. So we've done nearly 500 projects since we began. They're local, national, global projects, and they really span all sectors of the industry. So it's not just focused on device. We've done biologics and business opportunities. We look at different sectors like cardiac space, oncology, just really a bit of everything.

 Frank Jaskulke  06:01

Oh, that's very impressive, and 500 companies, that's pretty darn impressive. It's a pretty wide swath of the innovation that might be happening during that time. This might be an obvious thing. But I find sometimes the obvious aren't. What is market assessment? Why is having a market assessment like this important for these companies?  I think one of the biggest things we do there's a value back is that there's the people that generally do this are super smart people that are clinical scientists, or they're engineers, or somebody else like that. They know their domain space, they live their domain space, they literally sleep in their domain space all the time. But going to market and all the things that they might need to do is not something they've ever been trained to do, or seen unless they've done it before and now they're a serial entrepreneur. But for those who are just starting out, what we do is like all those sort of the missing pieces, like did you know, do you have clear intellectual property or not? We actually train the students to do patent searches. They're not patent attorneys, but they at least,  They get a starting point. 

 Steve Parente  06:52

Exactly. And fortunately, the tools are getting better and better. To do that, as well. We look at the regulatory pathway that some of our executives and residents used to run the device division of the FDA like Susan Alpert. 

 Frank Jaskulke  07:09

Shout out to Susan Alpert, she's great. 

 Steve Parente  07:11

She's wonderful. And she's she's always on call for the students, no matter where they are worldwide to kind of help out and give some advice.

 Frank Jaskulke  07:17

Folks, if you don't know her, that is reason alone to get involved in the program. Dr. Alpert is a legend and a wonderful human. 

 Steve Parente  07:25

And then just the reimbursement pathway, like, who's gonna pay for this thing? Is it bundled as part of like, the hospital payment and the DRG? Does it come by a different procedure code? How hard is it to get like a HCPC, because like, all that world is like, not what an inventor thinks about. We train the students to think about it. We go through a whole boot camp process. And then the thought was like, it all comes together. And what's cool about it, too, is that when it starts off, they have to make an assessment right up front: does an investor investor not? So that was the other last thing that's unique about it. They are working in part for the inventor to tell them stuff, but they're working mostly put the mindset of for an investor, you know, there's only so much money someone has, whether it's series A or something else like that. You know, is this a good idea or not? 

 Frank Jaskulke  08:11

And so coming out of that, I'm a company, I go through this, I get the report. What do I do with it? How do the companies — how have the companies use the results?

 Steve Parente  08:20

Well it honestly depends what the results are. So I mean, a lot of times the students are so earnest about what they're trying to do, like if they actually come back and say, do not invest, they struggle to find a pivot, like, what else could you do with this thing? Do you really have to put us through class three? Could it go through class two? And some of the pivots they've come up with are honestly ingenious ideas that the inventors don't necessarily think about. But the thought is, there's different paths. One possibility is like, just stop, you know. It's an interesting technology, you're super smart. Here's some of the things you'd haven't thought about. A lot of times, it could fail on intellectual property or regulatory, where it's like you're fenced in, or your breakeven point is going to be 50% of market share. And it's super fragile. The other thing is like, what if it's like a slam dunk, then a lot of times, if it's really a slam dunk, they just take the report, run with it and go to investor groups and say, this group h has helped us out. And then usually a lot of it's halfway in between, which is like, we don't say invest, but you gotta like there's like two or three other things you got to do. And depending upon what we say, sometimes even projects come back to the lab for a second or third reading and say, like, Did we get it better this time? Did our grade go up from like D+ to essentially B+ or A- to get funded?

 Frank Jaskulke  09:37

Oh, I love that. And, and in my experience, that is incredibly valuable. I have seen a number of companies where they figure those things out, but they figure them out after they've spent five, seven, 10 years of their life pushing against a wall, only to realize, oh, there was an IP issue they didn't uncover, the market isn't as large as they thought, or their path to market is so crowded. I'd rather find that out early on when I could do something about it versus after I've blown through time and money and energy and maybe the best years of my life, like, that's fantastic.

 Steve Parente  10:14

Exactly. And there's one other thing too, the thought is like, let's say it is a no, but there's always a learning from the no. They're super smart folks, so invent something else where you now know, in the back of your mind as the inventor, like, Oh, I do need to worry about IP, I do need to look at regulatory, maybe I should, like, take a look a little bit myself early on to know, are these things clear to get to a path?

 Frank Jaskulke  10:37

Right, you're gonna make that entrepreneur help that entrepreneur to be better for the next and the next and the next. There's also then the students that are involved in it. And as I understand, one of the unique things, one of the many unique things about the program is you involve students in the program from across many disciplines, many backgrounds, different colleges. What's the rationale there? What's the mix of students that are involved in the projects? And why have it as more than just that one slice out of see CSoM? 

 Jessica Haupt  11:07

Yeah, so I think this started, you know, when Steve first began the valuation lab, realizing that this activity would be beneficial to students in a number of different colleges. And those students also contribute their own expertise and their own backgrounds. So having a law student help with intellectual property, or engineers look at can you actually build this? Med students explaining the anatomy to some of the MBA students or others that don't understand it. Bringing them all together in the classroom and working on a project together really adds to the richness of the report that the inventors get.

 Frank Jaskulke  11:49

And I have to imagine to the experience the students get, but clearly they're students, they might have varying levels of experience outside of the classroom. So I think you had mentioned the mentors and the executives and residents. How do you bring, you know, other knowledge or fill the gaps that the students might have and what is clearly very important to the company? 

 Steve Parente  12:10

Yeah, so one thing we do, we try to level set them all at the very beginning of a bootcamp, a really intensive experience. So they start the class like get to know each other. The classroom, actually class has a dedicated space at the Carlson School where they all kind of come together, which is kind of nice. And it's, you can only get in with key locks, so everything gets to sort of be secured. But then shortly thereafter, we do like an all day Saturday bootcamp. And what's great is the community comes out for us. So like Schwegman comes out and does a whole intellectual property pursuit. Some of the folks who do venture cap come and do trade secrets. Susan Alpert, no matter where she is in the world, will beam in live and kind of tell them all the things about regulatory. And that at least gets them in the right set. Then the next step is to really construct teams where you, you know, you don't put all the engineers and all the finance people on just separately, you put them all together as a blend. And what's been surprising and wonderful is that the median age of the students doing this is like 30. So they're not, you know, normally when you think of students you're thinking like, they don't know that much. But, you know, you have someone there, that might be at Medtronic for like 12 years. They're doing engineering, they're getting their MBA because they want to basically get mentored to do product management. They have a lot of experience. You could have a nurse that wants to do upper level management. She knows voice of the customer about clinician stuff cold, and she gets to engage in a different way as well. And the other thing we do is when the students are actually doing these projects together to the point of like, how can we make this professional, we then after two or three weeks, we do a dress rehearsal. And that dress rehearsal is like, we've talked to students who've done it, like the harshest thing ever because we're getting them ready for the next week of like putting on a suit, presenting it to the inventor, and basically trying to make sure that they're putting their best foot forward to the best due diligence they can. We also one of the secret sauces is there's three projects a semester that each group will do. Sometimes 15 projects in a semester get done, basically, because of the multiple groups that are in play. And we don't give them the hardest projects on the first round. And another thing is we let students take the class over again. So we actually have alumni to kind of come back in and kind of like, you know, train the younglings, basically on what they have to do.

 Frank Jaskulke  14:25

Very cool. I really love that. It's a great example of this community rallying around to support each other to support the next generation. Keep building the capabilities, right, like this is an industry where we are very fortunate in Minnesota to have a concentration. And what I hear over and over again from the companies, our secret sauce is the ability to translate an idea to a commercial product. What your program is doing is building up that capability and a knowledge base for the next generation. So the students are getting this incredible experience that they can then bring out into their work, the companies are getting a lot of value. So then just a really practical question. Where can companies do to find out about this, if they might want to participate?

 Jessica Haupt  15:15

We have a website on the Carlson School of Management's page, the specific address is z.umn.edu/vallab, or they can email us for more information, which is vallab@umn.edu. 

 Frank Jaskulke  15:35

Perfect. And folks, we'll put that in the show notes. So it's easy to find. And of course, you can always reach out to your Medical Alley staff members, and we'll get you connected to then. Maybe just the last thing I'd ask both of you. Is there a message you'd like to tell out there? Are there any things that you're looking for that would help enhance the program, or resources or just a message you want to give to the companies? Well, I mean, the sad truth of is, is we actually are dependent on funding to kind of keep this operational.  We all gotta pay the bills. Yeah. 

 Steve Parente  16:07

So it is a course. But that to a certain extent, the whole existence of MILI and even the val lab is actually usually corporate donations going in from project money. So we try to bring the best value back. So that's the message back to the company, we now have a fee associated with this of $2,450.

 Frank Jaskulke  16:24

That I would say is a pretty darn fair price for what you're describing. Like, that's not bad.

 Steve Parente  16:28

Right. And then we also have an option for someone who just doesn't have the money, we even found like a nonprofit now, that will stake them, but for a small basis point transaction of 20 or 30 basis points. And like a simple fast agreement, and then they will pay the fee for them. And so that, but it's also helpful for that group, too, then maybe like, like, here's a portfolio of stuff that maybe not everything is great, but it's almost like it could be potentially sold as like this is innovation that if there's more resources, we'll go. I mean, we typically never take anything that we think is never going to actually work. I mean, it's like we do sort of weed out so at least it has to have a chance, right. But I think the message to the community, both in the Twin Cities and globally is we are open. And we expanded out to many different countries now to offer this program as well. And we welcome to see as many stuff as we can.

 Frank Jaskulke  16:32

Heck yeah. Right on. Well, good. Well, thank you both. I really appreciate that. I've had the good fortune of being around the activities that the University of Minnesota has put on in support of the healthcare and health technology industry for many years now. And I continue to be amazed by the breadth and the depth that's out there. So Steve, Jessica, thank you both for spending a little bit of time with us today and sharing the story.

 Jessica Haupt  17:48

Thank you, Frank. 

 Steve Parente  17:49

Yeah, we really appreciate it.

 Frank Jaskulke  17:51

And folks, that's been another episode of the Medical Alley podcast. If you're not already a subscriber, make sure to get on to medicalalley podcast.org. Or you can find us on Apple, Spotify, or even on our YouTube channel. Just look for Medical Alley. And hey, would you do me a favor? Would you share this episode with at least one other person, maybe even two other people this is an important one, help spread the word so that more people know about the opportunities that exist in your community. I'd really appreciate it. Until next time, have a great day.