To turn a good idea into a successful business, founders often need support. This can come in many forms, but one common way is from angel investors. Angel investors provide capital to startup companies during their early phases of creation and iteration, typically in exchange for equity ownership, and typically on an individual basis. Angel investing is notably different from venture capital in that it is done by individuals with their own capital, compared to venture, which involves a firm distributing capital pooled from LPs.
The Center for Venture Research reports that angel investments totaled $22.3 billion in 2022. Over 60,000 entrepreneurial ventures received that capital and are now putting it to use in an effort to increase the value of their early stage companies.
Take, for example, Cohesys, an emergent medical device development company based in Toronto that has created a new solution for fracture repair. BoneTape™ is a strong, flexible fixation device designed to mend fractures without traditional hardware like screws and plates.
The Cohesys Special Purpose Vehicle (SPV), issued by Alto Capital and available only on Alto Marketplace offers exposure to angel investing with the private, early stage medtech startup.
Cohesys was founded in 2018 by a team of researchers led by Dr. Michael Floros, PhD. They aim to disrupt the legacy orthopedic surgery-repair market with their new creation.
Dr. Floros leads the Cohesys team’s strategy, providing scientific and technical oversight as Co-Founder and CEO. His background in materials science and acute awareness of medical procedures sparked the invention and development of BoneTape™. The bone stabilization device is being developed to improve the treatment of fractures by holding bone fragments together until they fuse naturally. The material then resorbs to ideally eliminate the need for future procedures.
“Imagine you broke a vase, would you put it back together with screws and plates? Or would you use tape?”
Dr. Michael Floros,
Co-Founder and CEO of Cohesys
As the idea took shape, Dr. Floros joined forces with three other experts. Dr. Janaina Bortolatto, DDS, PhD, BCMAS is a dental surgeon and translational materials researcher who heads up the team’s regulatory, clinical, and pre-clinical operations. Michael Tessier, MS, MBA, brings his deep knowledge of venture capital asset management to lead the finance function for Cohesys. And Dr. Alex Lausch, PhD, a biomedical engineer, leads the product’s design and manufacturing. The team also brought on Howard Schrayer, a regulatory consultant who has cleared hundreds of products through the FDA in multiple device classes, to help guide the Cohesys product’s US and international regulatory approvals.
Dr. Floros and his group spent their first years exploring the fields of craniomaxillofacial (CMF) fracture repair processes and materials. They applied their biomaterial science expertise to their findings to develop the first version of BoneTape™.
Then they began iterating, testing the strength of BoneTape™ against force and user requirements and recording how it performed. The tests revealed ways to improve the device, which the team implemented before testing each new iteration again and again. Each cycle improved the product until it reached its current stage. BoneTape’s design for the initial application of the device is complete, but Cohesys intends to release additional products in the future targeting other orthopedic use cases with different properties.
The founders hope for high adoption rates — not because of aggressive marketing tactics but from word-of-mouth. “Clinicians who do between 100 and 300 of these procedures a year make up the majority of the use cases,” Dr. Floros says. “And that is a tight-knit community, where people speak a lot to each other. So as soon as they have a solution on the market that's easier to use and leads to the best patient outcomes, it'll be hard to suppress the use of BoneTape™.”
“Clinicians who do between 100 and 300 of these procedures a year make up the majority of the use cases...so as soon as they have a solution on the market that's easier to use and leads to the best patient outcomes, it'll be hard to suppress the use of BoneTape™”
Dr. Michael Floros,
Co-Founder and CEO of Cohesys
Today, surgeons use screws, plates, staples, and other hardware to repair broken bones. Even treating simple cases involves extensive equipment like drills and instrument kits, which require handling, maintenance, and physical space in an operation room.
Cohesys aims to eliminate all that with BoneTape™. Removing these tools and supplies from the high-pressure environment of operating rooms creates elbow room for more doctors and nurses to assist and improve procedures.
Furthermore, today’s fracture care and restoration processes require steps that can potentially be eliminated. Many bone repair procedures involve the surgeon:
Dr. Floros says that metal implantation also has a high complication rate. Hardware is inflexible, often causing discomfort and even chronic pain. “New data shows that up to 40% of those fracture repair surgeries that use titanium devices require second operations to deal with complications,” he says.
Metal materials never resorb, so many of today’s bone repair patients must come to terms with the finality of the complications they experience, especially if they are not severe enough to warrant reoperation.
BoneTape™ is a potential solution for these challenges. It anchors to the natural bone fragments without the cumbersome tools and hardware doctors rely on now. Plus, it eliminates extra steps and related complications, making procedures easier for doctors, who can then achieve better patient outcomes.
The device is flexible and imperceptible, and doesn’t loosen or grind against tissue the way existing hardware does. Its resorbable nature means it disappears within a year, eliminating the need to extract it later. And it’s invisible under the skin, so patients don’t need to worry about their healing device showing.
Dr. Floros says that there are two main groups of individuals showing the most interest in the Cohesys team’s work.
“One of those groups is those with a clinical background,” he explains. “These are medical professionals who understand the sector. Primarily, Oral and Maxillofacial, Otolaryngologists and Plastic and Reconstructive surgeons are our end users, but we've had great interest from adjacent groups like dentists, because they understand the medtech sector very well. They understand the challenges.” These experts interact with the sector’s demand regularly, and expect the product to perform well by filling urgent needs.
Another segment of interested individuals is the world’s impact investors, who want to help fill current gaps in care and the lack of sufficient innovation in the medical field. “These investors look for financial returns, yes, but they also look for impact,” says Dr. Floros. “They're interested in putting their investments into a space where they can make a difference. They can see their money do more than just produce financial returns. It's a nice investor story, especially in cases where people have family members or friends who have plates and screws put in and the procedure was very invasive, complicated, or it’s undesirable to live with hardware implanted in them their whole life.”
“Investors look for financial returns, yes, but they also look for impact. They're interested in putting their investments into a space where they can make a difference. They can see their money do more than just produce financial returns... especially in cases where people have family members or friends who have plates and screws put in and the procedure was very invasive, complicated, or it’s undesirable to live with hardware implanted in them their whole life.”
Dr. Michael Floros,
Co-Founder and CEO of Cohesys
Whatever your motivation to get involved, the opportunity to angel invest in Cohesys with Alto Capital’s SPV is intriguing to a variety of investors for a range of reasons, explored below.
The need for skeletal repairs is on the rise. Why?
Experts at the Orthopedic Associates of Hartford (OAH) confirm that this has indeed led to more fractures. They report that in the US, “...more fragility fractures occur [each year] than heart attacks, stroke, and breast cancer combined.”
Compounding the trend is the increase in conditions facing all ages. Rising instances of obesity, diabetes, and even chronic stress, which all reduce bone quality, are increasing the number of fractures clinicians encounter each year.
As the need for these surgeries grows, more people are burdened with the extra costs that arise when bone repairs don't go to plan. Infection-related complications from current bone fracture repair cost patients an average of 6-7 times more than a successful procedure. BoneTape™ reduces the occurrence of these complications, saving everyone from unnecessary costs.
People from all walks of life can appreciate the simplicity of “bone tape.” After all, nearly everyone has used a piece of tape before.
When investors face the choice between owning equity in a business that builds products requiring deep expertise versus a simpler and more widely practical one, they’ll often go with what the public can understand more easily. Studies show that more complex designs require more time to earn public trust and thus, adoption. As BoneTape™ inspires evangelization among patients and their clinicians, people will require little to no expertise to explain it to friends and family members in a straightforward way.
Cohesys also expects regulatory institutions and leadership groups like hospital safety committees to understand BoneTape™, because Dr. Floros’ team has incorporated material compounds that these experts have already seen and approved. The familiarity supports everyone involved.
Once BoneTape™ has been adopted for its initial use with CMF, it can potentially be applied to other areas in the body. As surgical professionals increasingly embrace BoneTape™, it has the ability to become a new standard and even expand its utility from human to veterinary applications.
Scalability turns a mere product into a platform technology. In biotech, a platform is a technology upon which multiple other products and processes can be developed.
Typically, the platform technology designation is used to describe drugs. But increasingly, medical device companies and industry analysts use the term to describe novel instruments, implements, implants, and other articles intended for medical use.
Angel investors and venture capitalists at Andreessen Horowitz recently described this startup characteristic by saying that “...if successful therapeutics are the golden eggs of the biopharmaceutical industry, platforms are the geese.”
Cohesys operates in a sector with a well-defined regulatory pathway, so they can plan their product’s application for FDA approval. Since the compounds used in BoneTape™ were selected and built from well known components and materials, regulators have records of each one and can easily understand proposed new uses like fracture repair.
While some medtech innovations require entirely reworked procedures, BoneTape™ aims to improve a well-worn path in fracture repair treatments. The review boards are likely already familiar with the current practices, so the Cohesys team expects the decision-makers to quickly understand an improvement to those practices.
Dr. Floros also strategizes long-term scenarios beyond the upcoming trials. Cohesys works to maintain multiple potential exit opportunities as they march toward approval, clearance, and adoption in the market.
Dr. Floros and his team could pursue a merger or acquisition at some point, or they could grow and file for an IPO to trade stocks publicly. Forward-thinking investors will enjoy watching the company navigate future growth stages while balancing a range of liquidation possibilities.
Investors have taken note of the Cohesys team’s flagship product and gotten involved financially. Their support enables Cohesys to make plans to promote BoneTape™ in a variety of ways. Accelerators and business angels like UTEST, the Creative Destruction Lab, and Barney Pell — individuals and groups who say they champion innovative tech, and then finance creative initiatives to back up those declarations with action.
Cohesys is currently exploring the possibility of distributing BoneTape™ to environments like war zones, where injured service members currently get inadequate care because of the complexities of CMF injuries and treatments. The Department of Defense (DoD) with the Medical Technology Enterprise Consortium (MTEC) awarded over $1.6M for clinical validation to Cohesys to continue developing ways they can promote BoneTape™ to use in critical care events and help more people.
The Cohesys SPV is a vehicle that allows individuals to invest in a major change to medicine as we know it. As BoneTape™ sees adoption, the complexities and complications of traditional bone repair will ideally diminish and both clinicians and patients will experience improved outcomes. Meanwhile, investors like those introduced to Cohesys on the Alto Marketplace will continue to support and cheer on the company’s impact on lives as well as the entity’s value growth.
You can use qualified SDIRA funds to invest in the Cohesys SPV alongside other investors — without being part of an institutional group or verified among typical participants like UHNWIs. For more information, explore the Cohesys SPV on Alto Marketplace.
Investing in early-stage medtech companies involves significant risks, including potential delays in regulatory approvals, market adoption challenges, and the possibility of financial loss. Cohesys is preparing an FDA application for BoneTape, but there is no guarantee of approval. While Cohesys is in the process of early tests for the application of BoneTape, individual results may vary, and long-term outcomes are still uncertain. Investors should carefully consider these risks before investing. Individual results may vary, and long-term outcomes are still being studied.
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