2 Hot University Startup Technologies

At Osage University Partners, we see a lot of great early stage technologies from academic researchers around the country.  In this blog entry, I will review two such life science opportunities - a multivalent therapy platform from UC Berkeley and a medical device to treat severe asthma from the University of Minnesota.

Should investors or entrepreneurs be interested in either of these technologies, please feel free to email me at mlehr@osagepartners.com.

UC Berkeley

For years, linear polymers modified with bioactive agents have been incorporated into hydrogel networks to make long-acting therapies mostly for tissue engineering applications.  In a new twist, Berkeley researchers David Schaffer and Kevin Healy, have created a polymer-based scaffold that when coupled to multiple bioactive molecules creates a multivalent therapy with improved potency and durability compared to soluble bioactive molecules alone.  The two Berkeley researchers have completed preliminary proof of principle work where they have shown that by linking the Sonic hedgehog (Shh) protein to a hyaluronic acid (HA) backbone via an N-ε-maleimidocaproic acid linker, Shh potency can be increased by more than 100-fold over soluble Shh. 

The research by Schaffer and Healy hints at the ability to create multivalent therapies with improved drug properties without having to sacrifice efficacy due to linker tethering.  This could be a significant advance over existing growth factors that are administered as single soluble molecule forms, which can limit their potency and durability. A particularly interesting application of this technology would be to create better enzyme replacement therapies (ERT), a market that pharma companies have been aggressively pursuing.

A VC’s take:  Given the amount of interest in the enzyme replacement and rare disease space, the Schaffer / Healy technology is quite attractive.  Multivalent ERTs may be more potent and longer acting than existing ERTs, which could then drive down costs for manufacturers and require less frequent dosing for patients.  While the upside for multivalent therapies is quite large, there are a number of challenges associated with creating conjugates. 

As with all linker technologies, there is a risk that the linker is not as stable as one would like and causes side effects once cleaved.  Also, multivalent molecules come with some risk because side effects could be amplified.  To mitigate that risk, Schaffer and Healy are working with known chemistries (cysteine conjugation), linkers (N-ε-maleimidocaproic acid) and backbones (hyaluronic acid). 

Overall, this technology is pretty interesting, especially for those investors that are interested in dipping their toes into the ERT space.  In time, I would be interested to see if this platform could be extended to bifunctional therapeutics and antibody-drug conjugates.

University of Minnesota

Dr. Erik Cressman, a Professor in the Department of Diagnostic Radiology, has developed a novel device for the treatment of severe persistent asthma, a condition that afflicts over 6 million patients 18 years and older worldwide whose asthma is not well controlled with drugs such as Advair (GSK) and Symbicort (AstraZeneca).  Working with Mike Selzer, an experienced medtech entrepreneur, Dr. Cressman seeks to develop a thermal ablation balloon catheter comprised of a balloon coupled to the distal end of a catheter that conforms to the wall of an airway. Hot fluid is created from a safe and innovative exothermic reaction in the catheter and injected into the balloon to uniformly heat the airway.  Interestingly, a single balloon can treat various airway diameters and locations.

During the treatment, the balloon gently compresses and ablates the treated airway by cross-linking sub-mucosal collagen to stiffen the airway and destroy airway smooth muscle (ASM), which helps to reduce airway response to an asthma attack.  Balloon occlusion of the airway stops airflow during the treatment and allows lower treatment temperatures to reduce intra-procedural airway injury. The reaction by-product, a non-toxic salt, is safely expelled from the balloon/catheter following a treatment cycle outside the body through an exhaust channel without touching tissue.

A VC’s take: The use of ablation therapies has expanded from treating cardiac arrhythmias to treating pulmonary diseases such as COPD and asthma.  While adoption of cardiac ablation devices has been quite successful, devices used to treat asthma and COPD have struggled with development cost overruns and weak adoption.  Asthmatx, a venture-backed startup seeking to address severe asthma with a catheter-based system, provides a good case study on the promise and challenges associated with developing a med device for the pulmonary market. 

Alair, the Asthmatx device, uses heat to reduce excess smooth muscle in airways in order to limit airway constriction.  The company completed a double-blind placebo-controlled study that met its end points; however, the data indicated that the device performed marginally better than the sham control.  Major insurers such as Aetna, WellCare, BlueCross, and United Healthcare, have denied coverage of the Alair product as they currently consider the Alair device to be investigational and not medically necessary.

In 2010, Boston Scientific acquired Asthmatx for a relatively modest upfront payment of $193 million.  Reimbursement risk and product adoption concerns contributed to the somewhat disappointing acquisition price for the VCs that invested almost $100 million to support the development of the Alair system. 

While the travails of Asthmatx will give some investors pause, it does provide a blueprint for similar devices to follow.  Because of the work completed by Asthmatx, follow-on devices like Dr. Cressman’s will have a far greater understanding of the regulatory path, data that insurers require for reimbursement, and capital needed to get an effective product to market.  Additionally, Dr. Cressman’s device is intended to plug into the existing ablation architecture, which should help ease product adoption and conserve capital for investors.  

Current VC Medtech Investing Trends

Before stopping by the University of Minnesota to check out some of their startup companies, I had the pleasure of attending the 10^th Annual Medtech Investing Conference in Minneapolis.  During the conference there were a bunch of great medical device panels led by VCs, entrepreneurs, and corporate folks.  I thought I might share a couple of interesting subjects that were brought up during those panels and my thoughts on them.

Building to Flip

The build-to-flip concept for medtech startups is something that sounds fantastic but is hard to execute, especially for medical device companies.   The reality is that there aren’t that many ideas that require as little as $5-10 million to develop and can reasonably project a $50-75 million return for investors.  After listening to the various panelists, there are some clear hurdles associated with the build-to-flip model. 

Here are some of the thoughts expressed by the panel:

VC challenges:  Build-to-flip companies require very little capital, which limits the ability for large, and even moderately sized, funds from participating in their financings. 

Funds that are smaller than $50 million can efficiently deploy $5-7 million across 8 investments, but doing so requires each Partner to sit on 4 boards.  Sitting on 4 boards means that in any given week each Partner will have to spend 2-3 days on the road for board meetings, leaving little time for much else (finding new deals, diligence, LP management, etc.).  To limit the distractions produced by board travel and maximize the usage of a small partnership’s time, small funds are typically regionally focused (to make travel less of a time burden) and have an investment niche (to make diligence easier / faster). 

As funds get larger, build-to-flip investments provide considerable bandwidth challenges.  The graph above shows that for a $500 million fund, a Partner will sit on roughly 2.8 boards under normal circumstances, but the number of board seats increases to 5 when the fund starts making a number of build-to-flip investments.  A Partner can theoretically sit on 5 boards in any given fund, but if that large fund goes on to raise another fund then that same Partner will likely need to sit on another 4-5 boards.  No single person can effectively sit on 8-10 boards at any single point in time.  

Another challenge for large funds is that they typically like to lead their deals, and they complete the same amount of diligence regardless size of their intended investment.  Given the same amount of effort required to lead a deal, it is far more time efficient for larger funds to put more capital to work.

Requires tremendous discipline:  Capital efficient companies typically have very tight budget plans and slight delays can have a significant impact on a company’s operations.  Execution risk is a real hurdle for investors as build-to-flip companies are typically single product companies, which means there is no second shot on goal.  Investors have to be very comfortable that there is typically minimal downside protection in a build-to-flip investment.

Cost of doing business:  It costs more to build medical device companies today that it did 10 years ago.  A typical 510k for a run-of-the-mill idea costs at least $20 million, making it challenging for investors and entrepreneurs to identify true build-to-flip product ideas. 

Strategic planning:  Build-to-flip companies typically get to market rather quickly, which is both a blessing and a curse.  Obviously, investors want the product to get to market as fast as possible, but that also means that a lean operation must efficiently change gears from an R&D shop to a commercial enterprise.  Most startups start with an R&D team and then a commercial team (CEO, full-time CFO, VP Sales / Marketing, etc.) is later brought in, but with build-to-flip there is usually little time for such transitions meaning that the initial team must wear multiple hats.  Finding talented managers for build-to-flip companies is no small feat, as capital constrained companies typically do not have the budget flexibility to hire rock star managers.  This creates a considerable execution risk for investors, as the management team must quickly figure out how to sell the product and scale operations with minimal resources.

Need plan B:  When startups are not quickly acquired, management teams often turn their attention to building a sales force and selling their product.  While this may work in select circumstances, the reality is that selling a product takes a lot of money, which most build-to-flip companies do not have.  A suggestion is for build-to-flip companies to work with distributors with an eye towards a structured acquisition.  Such practices do limit future upside potential, but also enhance the chances of investors and management receiving a positive financial outcome.

Attractive investment areas:  Despite boohooing build-to-flip companies, there are some attractive investment areas to pursue.  There are some indications that are bought pre-approval and 510k, such as the Embrella Cardiovascular team, which raised only $9 million and was recently sold to Edwards Lifesciences for $43 million, proving such models can be successfully executed.  Build-to-flip does not necessarily have to be a medical device; it could also be in non-regulated areas, research instrumentation, and services.    

Strategic Investors as VCs    

Strategic investors are quickly becoming the go-to syndication partners for all life science venture capitalists.  With VC dollars in short supply, strategic investors such as SR One, Roche Ventures, Medtronic Ventures, Covidien Ventures, and more, are pumping dollars into early stage companies, even Series A financings.  It is not that these groups are suddenly becoming altruists, but more so that they are concerned that their parent entities will not have hot startups to acquire in the coming years. 

At Osage University Partners, we have felt a substantial uptick in the interest level of strategic VCs in university startups.  Over the last 18 months we have completed 5 life science investments alongside strategic investors.  Below is a chart outlining investments we made alongside strategic VCs, other VCs that participated, and stage of development at the time of our initial investment. 

With strategic investment activity moving at a frenetic pace, it might make sense to stand back for a second and think about what this all means for entrepreneurs, startups, and VCs.

Company benefits: Having a strategic invest in a startup sends a strong validation signal to the market and other potential investors.  Strategics typically focus their diligence efforts on two key areas, the underlying science and intellectual property.  While a VC might only hire a handful of consultants to look under the hood of the science, a strategic can leverage entire R&D groups with deep domain expertise to vet the science.  With regards to intellectual property work, strategics typically have in-house counsel which can provide the startup with “free” pointers on where to shore up the intellectual property.  Scientific and IP consulting work typically costs VCs and the company tens of thousands of dollars, so having it done gratis is a big advantage.

Working with VCs:  For now, it appears as though strategics are more than willing to work with VCs, and view their activity largely as a hedge against a shrinking VC market.  Strategics are negotiating investor and company-friendly deal terms to ensure that they are a welcomed member of the investor syndicate. 

Potential risks:  Investing alongside strategics does come with its risks.  As Mike Carusi of Advanced Technology Ventures noted, having strategics involved in company activities enables them “to see how the sausage is made”.  It is rare that a startup will execute directly on plan, so there is some risk that the strategics will see company missteps that might give them pause when thinking about acquiring the company down the road. 

If the strategic investor does not choose to acquire the company, there is a chance that other potential bidders might get spooked.  To provide some downside protection against such situations and promote an active auction process, VCs have worked hard to create deal structures where the strategic investments come with no strings attached (no Right of First Negotiation, Right of First Refusal, distribution rights, etc).  In the end, with so many strategics investing in life science companies right now, such risks are probably not as large as some might be let to believe.

The medtech world is clearly going through a transition period.  While there have been a number of recent splashy exits by Ardian, CoreValve, and others, the overall number of exits in the medtech space has decreased substantially.  Regulatory burdens have put a damper on sector enthusiasm, and many sector analysts estimate that there will only be 10 PMA approvals in 2011.  Big ideas that can provide serious revenue generation for strategics will continue to be acquired, but build-to-flip and PMA products that address modestly sized markets might struggle to attract capital.  Strategics could fill the funding the gap, but even they have limits to their checkbooks.

Biotech & Med Device M&A Trends for Private Companies

Five years of startup exit data can tell an investor, entrepreneur, or technology transfer professional an awful lot about current trends in the life science market.  But where does one get such data?

Thankfully, Jonathan Norris and the folks at Silicon Valley Bank (SVB) publish a quarterly missive that aggregates and analyzes M&A numbers for biotech and med device companies.  In this blog entry I will focus on two graphs, one directly from Jon’s analysis and one that I made based upon Jon’s raw data, from SVB Capital’s recent article “Private Life Science M&A Analysis”. 

The Growing Divide: Upfront Payments vs. Milestones

This graph by SVB does a really great job of quantifying the growing disparity between upfront and milestone payments (also referred to as contingent payments, earn-outs, or biobucks).  While there is a clear trend toward milestone-laden deals for both medical devices and biotech companies, the divide between upfront and milestone payments is significantly larger for biotech companies.  While I think this graph is effective at getting the point across that milestone payments are currently trendy, it does not really sum up the entirety of the situation.

Some other points to consider:

• The decrease in overall deal size (upfront + milestone) for biotech M&A exits for private companies has been significantly impacted by pharma company consolidation.  Thanks to consolidation, Pfizer, Abbott, Merck, Sanofi, and Eli Lilly have literally become HUGE companies.  Purchasing a private company for a couple of hundred million dollars does little for the bottom line of such large entities, which is why many of their BD groups have been spending the bulk of their time on the lookout for small and mid-cap companies.  With pharma companies largely out of the game, valuations have come back down to earth creating an opportunity for mid-cap biopharma companies to become much more acquisitive as evidenced by the recent purchases of venture-backed companies by Gilead and Cephalon.
• Biotech companies typically have larger milestone components because they are purchased earlier on in their life cycles and acquirers want downside protection to protect against the possibility of clinical failure or unanticipated regulatory challenges.  While milestone-driven deals are currently wrecking havoc on VCs, it is actually somewhat surprising that such deals took so long to come into vogue.
• Med device companies now take longer to get to exit than biotech companies due to a combination of increased FDA pressure and the fact that a lot of the low hanging fruit has been picked (stents, aortic valves, access devices, etc.).  Devices are becoming increasingly complex leading to longer development times and increased regulatory scrutiny (PMA versus 510K).  A rash of post-market device failures and weak long-term results in outcomes-based studies has also not helped things.  Taken together, acquirers are much more willing to wait until med device technologies mature before they purchase them.  Because the companies are older and more de-risked, there is less of a need for milestone payments.
• While the stock market did crash in 2008, it probably had little effect on the considerable decrease in both biotech and med device M&A activity.  The underlying reason most likely had more to do with the considerable amount of M&A between large publicly traded companies (Pfizer / Wyeth, etc.) and the resulting stagnant activity of their BD groups.

Developing A Winning Biotech Investment Strategy

Whenever I get a core dump of great information like that from the SVB report, I always try to see if I can reduce the data to a series of bullet points that will enable me to make better investment decisions and provide pointers to my portfolio companies.  Jon’s analysis, by therapeutic indication, contains a bunch of great data that a VC would value, such as average years to exit by lead product, number of exits, capital invested per exit, and average multiple on invested capital.  While Jon provided a feast of data, I wanted to see if I could apply additional metrics to tease out which therapeutic indications would have been the best investment bets for VCs over the last five years.

My scoring system is pretty simple, 1 being the best and 11 being the worst (as there were 11 therapeutic indications in the study). 

As you can tell, my analysis confirmed a few common investor beliefs held among VCs but also produced some results that made me scratch my head. 

Confirmed Investor Beliefs…

• Anti-infectives: Performed better than all other therapeutic indications.  It was not too long ago that anti-infectives were on the “Do not fly list” for VCs.  As recently as the early 2000s anti-infectives were a generic market that had no real need for innovation – that is, until the so-called “superbugs” started sprouting up in hospitals.  With hospitals being paid a flat procedure rate by Medicare, there was all of a sudden a real need for good anti-infectives to reduce complication rates and people were willing to pay for new drugs.  Pharma companies had all but abandoned this area of drug development, leaving the door wide-open for startups.  On top of all those considerations, VCs generally like anti-infectives because animal models correlate pretty well with human trials, making pharma companies much more willing to purchase young companies.
• Target Generating Platforms:  This really speaks to how hot biologic drug discovery technologies were from 2005-2010.  Established biologic companies, as well as traditional pharma companies that were looking to get into biologics, were willing to pay steep multiples in order to get their hands on great platforms.   Small companies like Facet, GlycoFi, and Adnexis were purchased as well as large publicly-traded companies (not listed in the SVB report) like Cougar and Medarex.  The go-go days of antibody platform plays are probably over, but there is a chance that the dance party will continue for those companies developing antibody-drug conjugates (see February 23 blog entry).  Newer startups will have to find novel ways to differentiate themselves in order to entice acquirers to scoop them up early.
• Oncology:  I expected oncology to be the winner instead of anti-infectives, which is a relatively new investment area for a lot of VCs.  Oncology is a logical investment area because there is a huge unmet need, lots of validated targets, and a growing patient population due to people living longer.  Also, oncology products are typically reimbursed at a pretty high rate thanks to guaranteed Medicare coverage for approved FDA products.  However, with 900 oncology products currently in development, product differentiation will become increasingly challenging.  On top of that, the FDA continues to raise the bar for oncology, and will make overall survival data versus progression free survival the primary endpoint for most clinical studies, making success both harder and more expensive for drug developers.  While challenges abound, I for one, am quite excited about the prospects for great new oncology products getting to market.  There is so much exciting drug development going on right now in episomal regulation, DNA repair, antibody-drug conjugates, etc. – all of which could contribute to improved outcomes for patients struggling with cancer.

…And a Few Surprises

• Ophthalmology:  I would have pegged ophthalmology as a top performer, yet it performed the worst!  From an investment standpoint, ophthalmology has some very attractive characteristics: reasonable reimbursement and regulatory hurdles, low side effect risk (drugs applied topically or via direct injection into the eye), huge markets such as glaucoma and acute macular degeneration (AMD), and patients require chronic care.  So why did ophthalmology perform so poorly?  First, Xalatan (glaucoma) and Lucentis / Avastin (wet AMD) are really good drugs that are challenging to best in head-to-head trials.  A lot of drug programs have been shelved after lackluster clinical data, meaning that they were not counted in the SVB study.  Second, there are relatively few acquirers for ophthalmology products, giving such companies moderate incentive to “jump” on high-rising startups.  This means that VCs hold onto ophthalmology investments comparatively longer than other therapeutic areas.  This is not a huge issue for VCs though, since ophthalmology products typically move through clinical development rather quickly.  This means the companies are bought at later stages and therefore typically at higher valuations.  A final point is that 2005-2010 was relatively quiet with regards to M&A events for ophthalmology companies, so one should not read to much into this data set.
• Metabolic:  Despite the fact that I recently wrote a blog piece that said VCs are hesitant to invest in metabolic companies right now, the metabolic indication performed 2^nd best.  Diabetes, among other metabolic disorders, is such a huge market that any pharma company would be willing to pay a huge multiple for a phase III asset that produces positive results.   And according to the SVB data, they did just that – but that doesn’t really tell the whole story.  Remember, the SVB data only focuses on positive outcomes – the M&A events of private companies.  What it does not mention is how many companies failed, had partnerships terminated, or got through Phase III with positive results only to have the FDA ask for more data to quantify the risk of cardiovascular side effects.  The reward for metabolic disorders will always be there for VCs, the question is which VCS are willing to stomach the risk?

I enjoyed studying Jon’s data and pulling together this blog post.  It confirmed, as usual, that I know far less than I think I know.  More importantly, it also provided data to say that the life science investment community is doing better than the current negative sentiment would suggest.  While life science investing is not experiencing the current explosive growth that consumer internet is having, it is moving along at a solid pace – enough to provide reasonable returns to investors and to get products into the hands of patients who deserve the best care possible. 

I should also take a second to provide a quick shout-out to those who are working hard to ramp up excitement for life science startups.  First, to Bruce Booth who continues to tell the world about how great the biotech IPO class of 2010 is performing.  That is not an easy task given the amount of hype and press coverage currently being directed toward LinkedIn, Facebook, Twitter, and Zygna.  And second, to Canaan Partners and Safeguard Scientifics for finding an asset (see FierceBiotech press release) that no one believed in and turning it into one of the best investments ever made by a life science fund.

Q1 2011 Life Science VC Investment Report

It is no secret that early stage (Series A & B) life science investing was way down this past quarter, 50% year-over-year to be exact.  The question is, why? 

Some possible reasons include: 

• VCs are short on money / number of new funds is way down
• Hostile regulatory environment making VCs sit on the sidelines
• Too much capital pumped into companies over last 5 years, VCs waiting for valuations to be adjusted
• Partners sitting on too many boards, need to sell existing companies before making new investments
• Lack of early stage deal flow

Despite the challenging investment environment, a bunch of great therapeutic, device, and diagnostic startups were funded during the last quarter and I compiled those financings into two lists (therapeutics and device / diagnostics) below.   

I should note that the inclusion criteria for my lists were somewhat subjective, as I compiled them from FierceBiotech press releases.  I also did not include Seed rounds because they are not often picked up by major news outlets and can therefore be quite hard to track. 

While my therapeutic financing list is somewhat short (reflective of the overall activity in Q1), some trends can be pulled from the data: 

• The most active VCs (Clarus, SV, Third Rock, etc.) are the funds that most recently raised capital.  Not a shocker, but it is important for startups to know which funds have money before they go out and fundraise.
• Cancer, cancer, cancer.  It is, and will continue to be, a sure thing for investors.
• Omega-3s are hot.  Lots of companies are working on novel Omega-3 formulations or creating agonists that bind to putative Omega-3 receptors.  Also, inflammation is a growing and poorly served market, and pharma is actively looking for inflammation modulators that have improved side effect profiles.
• Cosmetics.  VCs are branching out into consumer, IT, service, and generic plays in an effort to find products that get to market faster, with less risk, than traditional therapeutic plays.  Don’t be surprised if you see a lot more consumer plays over the next year.
• Immunotherapies continue to be hot.  Many startups are leveraging Dendreon’s success to raise capital in a tough financing environment.  Genocea, Gliknik, and Kite Pharma all raised rounds to finance the development of immunostimulatory programs.  Cancer vaccines and infectious disease therapies continue to be the main thrust of immunotherapeutic drug development.  I should also mention that Dendreon did something of incredible value (I actually covered this in my last blog post) to investors, which is to show the investment community that CMS will cover immunotherapies that are used to treat cancer.

Investors hate uncertainty, and by sending mixed signals regarding how it intends to tweak the 510K approval process, the FDA is causing VCs to think hard before making a new medtech investment.  The rumor is that the FDA will provide new guidelines for 510K approvals sometime this summer.

Here is a list of other trends I am seeing:

• VCs are looking for niche products that can be taken to market with less than $20 million of invested capital. 
• Most device startups are now choosing to run their clinical trials in Europe, which has a far more defined regulatory path than in the US.  The new paradigm seems to be, hit CE Mark then come back to the US to go for IDE.
• VCs are looking at a wide array of medtech opportunities, not just orthopedic plays.  Orthopedics used to be the bread-and-butter investment for VCs, due to a simple approval process, high reimbursement rate, and the fact that orthopedic surgeons were likely to buy/try a new product.  All of the reasons why VCs used to love orthopedics are now under regulatory and reimbursement pressure.   Advanced Animal Diagnostics, a diagnostic to rapidly identify disease in farm animals, is a good example of the lengths that VCs are going to find medtech opportunities that have appropriate risk / return profiles.
• European VCs are getting in the game.  While many US-based funds have closed their Europe offices, it would seem to me that now is a prime time for US venture firms to open small European outposts to leverage European medtech talent and clinical trial access. 

Negative Innovation > Medtech

Negative innovation relates to technologies that are being developed with the sole purpose of being an incremental advance on an existing technology.  Incremental improvements are not necessarily bad, but when market forces incentivize incremental advances over innovation, a real problem emerges. 

In the medtech industry doctors have been price insensitive for decades and awarded companies for technologies that were slightly better than their predecessors.  Insurance companies and doctors were willing to support expensive products if they could provide incremental improvements in clinical outcomes.  That paradigm is slowly changing due to several trends.

Insurers are less willing to pay for expensive new devices without convincing clinical data that indicates improved outcomes over the existing gold standard.  Also of note, comparative efficacy studies have not been kind to the medtech industry and have given insurers reason to question the pricing and/or need for certain products. 

Doctors increasingly have less power to choose which devices they prefer to use.   Many heavy device users such as interventional cardiologists and orthopedic surgeons are opting to join hospital groups instead of the more traditional independent practices.  As hospital employees, doctors often have less leverage to select their favorite devices because hospitals typically approve the use of a small basket of devices in order to achieve volume discounting necessary to lower hospital costs.

In the coming years, medtech companies will increasingly develop products that can both improve clinical outcomes and provide a cost savings over the total life of the patient.  This trend will encourage positive innovation as companies will seek to develop novel technologies that substantially reduce lifetime costs incurred by insurers in order to cover patients.  While price premiums have started to come down, there is still enough money to go around to entice medtech companies to continue to develop new and innovative products.