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Saturday, May 28, 2022

Mann’s Bionic Man

In the offices of the Alfred Mann Foundation, the walls are covered with gold-and-wood plaques, each representing a U.S. patent. The Santa Clarita non-profit has about 300 of them and a few bear the name of Chief Executive David Hankin. Yet Hankin has no scientific training – he’s a lawyer and former movie studio executive. Nevertheless, he presides over an organization that has produced breakthrough medical devices, including the cochlear implanted hearing aid, components of the insulin pump and neurostimulators for paralyzed limbs. Hankin became chief executive in 2007 at the request of Alfred Mann, the billionaire biomedical entrepreneur who founded it in 1985 with a donation of $1 million. (See story page one.) Since then, the research foundation has spun off numerous companies including neurostimulator maker Bioness Inc., bionic eyeball startup Second Sight Medical Products, advanced battery maker Quallion Inc. and most recently Medallion Therapeutics Inc., a maker of implanted pumps that gradually dispense medication. The foundation has grown substantially over the years, benefiting financially from the $3.7 billion sale of insulin pump maker MiniMed to Medtronic Inc. in 2001 and the $740 million sale of Advanced Bionics Corp. to Boston Scientific in 2004. The organization has about 100 employees and assets of $127 million. Mann, who spends most of his time at his home in Las Vegas, maintains an office at the foundation, as well as at nearby MannKind Corp., a publicly traded company developing inhalable insulin. Hankin met with the Business Journal at his office to talk about the process of innovation, his journey from law to medical research and the prodigious intellect of Mann. Question: Is the Alfred Mann Foundation a non-profit research organization or a business incubator? Answer: Our mission is to develop medical devices to address unmet medical needs. Beyond that, it’s to make sure those devices are available to the public. But we are thinking from the beginning of how to get the device to the public. Oftentimes we address issues that for-profit entities won’t take on. Sometimes the risk is too high, or the technical challenges are daunting. Other times, it’s just the dearth of R&D spending at these companies. Those are the economic realities of our business right now. How did it get started? Originally, Al gave $1 million and his son Brian gave $500,000. So we got $1.5 million. That’s it. How have you sustained yourself since then? Sustained? We’ve grown. Because we built the Cochlear implant. We built assets that were sold to Boston Scientific in 2004. We had assets in the MiniMed deal. All those gave us great opportunities to capitalize. I have to credit Al. He was tremendous at making sure we did quite well in those very large deals. We walked away with significant amounts of capital. In the spin-outs we just did, we expect that will happen again. What prepared you for this job? I’m an attorney. I started out doing intellectual property transactions. My work was where entertainment and technology intersect. I never was a science guy, but I’ve been fascinated by technology my entire life. I was a studio executive at Sony Pictures. Then I ran a small technology company for Hyundai – not the car company, but the conglomerate. How did you connect with the foundation? I was consulting for media and technology companies, doing pretty well as a consultant. A former law partner called and said he had a new client – the Alfred Mann Foundation. He said, “They need licensing work, and I don’t do that.” He asked if I could handle it, and attend a meeting that Sunday. What happened at the meeting? So at 8 o’clock Sunday morning, the former head of business development is sitting there with a little micro stimulator device. A light comes on, and he says, “This is going to cure paralysis.” I thought, “I could do that with my Erector set when I was 12.” But I worked on some rudimentary agreements for them. About two weeks later, they called about a deal with a university in Japan. Then what? For about two years, I was external counsel for them. The last deal I worked on was the spin-out of Bioness Inc. in 2003. I started here in late 2003 as counsel. Was there a learning curve? The second week I was here, I went to a surgery and passed out. Fortunately, the former head of regulatory affairs caught me. It turned out I had the mask on wrong and was hyperventilating. How did you become CEO? As part of the Bioness deal, we took two of our executives and sent them out with the company. I was here a couple months, and I was one of the most senior guys. When they left to start Bioness, I did a lot more. In 2005, the board asked me to become CFO. And in 2007, Al asked me to become CEO. How involved is Mann in the foundation? Al lives in Las Vegas. He has a residence here, but he’s not there very often. He has an office in the third floor of this building. He also has an office at MannKind. He spends a good part of his time over there because he’s CEO of that company. I see Al two or three times a month, and talk to him more often than that. Great guy. So tell us how a project gets started here? On the front end, we look at the idea and ask if it addresses a problem. There’s a tendency when you work with brilliant people to lose discipline and develop cool technologies because you can. That’s counterproductive. We have to make sure the cool technology addresses a significant problem. What’s the next step? We have a strategy group that works on understanding the market, the reimbursement process, the competitive landscape. Do we think this is going to fly? If the answer is yes, we take a deeper dive. I talk to doctors. Then we might talk to patients in a focus group or one-on-one. Then we look at the intellectual property landscape – will we bring something to the table that’s novel enough to get patent coverage? We want to make sure that if we put our resources into a project, we can get back what we put into it. Can you give an example? We announced the Medallion spinoff a few weeks ago. Medallion Therapeutics makes implantable infusion pumps. Imagine you had intractable back pain, and you needed a constant drip of morphine. The pump is implanted in you and it dispenses the pharmaceutical. How? You do it with a remote control. The patient has control, but not complete control. The physician can program it so you can only have a certain amount of drug per day. Why did you spin off Medallion now? We are somewhat opportunistic when we spin these companies out. We ask, “Is this company fundable at this stage of its development?” We put together a package. If we have done our homework in the beginning, we know a device will be attractive in the marketplace. You might ask, “Why spin them out, why not take them through FDA approval?” It’s very expensive and risky. It’s nice to lay off some of the costs and risks to we can have a broader palette of projects. Where is Medallion? It’s still in this building. It won’t be for much longer. We are in a critical 75-patient trial on the device. To date, we have done 56 patients. This device will likely complete the clinical trial this summer. So it’s the ideal time to spin it out because we know there will be commercial interest in it. Our clinical team is helping with the trial; that’s why it’s still in this building. How do you capitalize these ventures? Back in the day, Al would help us out with funding. We would provide the technology, we would select management, and Al would participate by providing money – not to us, but to the for-profit entity. What about now? The difference is that Al has his capital elsewhere these days. So we seed fund these companies and then go out and raise capital. Axonics Modulation Technologies just closed a round of $30-some million. It’s all venture capital, both in Europe and China. Interestingly, not much interest in the United States. What’s your next company? Monolithics. They are taking a chemical-based polymer that we built and using it to prepare samples for genetic testing. It turns out there’s a rich market for that right now. It’s very low-cost and quick to manufacture. They will likely be cash-flow positive within a year. We seed funded it with a small amount of money and sent some of our employees to work there. They will start sales in July. Will police use it for DNA testing? Yeah, it helps process a sample. A lot of people are trying to figure out their genome. But there are many uses for the product – environmental testing and food testing, for example. What was the turning point of your career? Pete Cooley was a lawyer I worked for. He really taught me the importance of being thorough, of not acting precipitously and considering a problem from many angles, rather than a one-dimensional fashion. I worked for him for about six months, but that was the most important time for me. What do you like about your job? When I get up in the morning, I go to work with brilliant people who want to use their talents to improve the human medical condition. I love what I do. When I have the opportunity to meet patients who have our devices, it’s an unbelievable feeling. I live for that. Can you share any of those experiences? Marine Staff Sergeant James Sides. I can talk about him by name because he’s been covered in the media. This guy is a poster child for these guys who went over to Iraq and Afghanistan. He literally gave his right arm for our country. Not only did he lose his arm, he also lost sight in one of his eyes. To achieve what he has with a prosthetic arm is amazing. He rides a skateboard on the Venice boardwalk, he does home repairs – he doesn’t let anything stop him. To work with someone like that is pretty cool. What’s the hardest part of the job? The commute. I live in Beverly Hills. Anything else? My eyes are bigger than our stomach. There are so many projects we could pursue, but we have limited resources. I’m not here to make gobs of money. My charter is to build great devices that help people. But I have to keep the lights on. What qualities in your personality make you good at this job? I’m tenacious. I’ve picked up a lot of that from working with Al. He’s the most tenacious person I’ve ever met. You need tenacity in this business because the risks are incredible. You have to compartmentalize them and just move forward in the face of adversity. What can people learn from your career? Don’t be afraid of change. When I see people apply here who have had different careers, some people scoff at it, but I think this person can adapt to change. We live in a fluid environment, so that’s one of the most important qualities. What is your favorite Al Mann story? We were in the negotiations to form Bioness. One guy at the table was a very cagey man. There was a lot of “moving the ball around” during the negotiation. Watching Al control the room was fascinating, in light of all the cageyness that was attempted. He didn’t miss a beat. How did it end? The best part of the meeting was when a 35-page spreadsheet was presented. Al spent about five minutes thumbing through it. He goes back and forward again. Then he says, “All right. There is a mistake. Page 13, column five, line four. The number is wrong. There’s a problem here.” Why does that stick in your memory? It’s a 35-page document and he finds the mistake. Unbelievable. He is so facile with numbers. I’ve never known anybody like him. And he’s still like that at age 88. He has a mastery over numbers that I’ve never seen. There’s a reason why the guy is a billionaire. David Hankin Position: Chief Executive Organization: Alfred Mann Foundation Born: Chicago, 1961 Education: B.A., economics, UCLA; J.D., Vanderbilt University Career Turning Point: Learned thoroughness while working as an attorney for Pete Cooley Most Influential People: Pete Cooley, Al Mann and Claude Mann, Al’s wife. Personal: Married to film producer Devorah Moos-Hankin; two sons, one a freshman at Syracuse University, and the other a sophomore at Beverly Hills High School. Lives in Beverly Hills. Rocky the dog is a soft-coat Wheaten terrier. Interests: Cooking (“you get a result very quickly”), wine collecting, watching son’s high school baseball games.

Joel Russel
Joel Russel
Joel Russell joined the Los Angeles Business Journal in 2006 as a reporter. He transferred to sister publication San Fernando Valley Business Journal in 2012 as managing editor. Since he assumed the position of editor in 2015, the Business Journal has been recognized four times as the best small-circulation tabloid business publication in the country by the Alliance of Area Business Publishers. Previously, he worked as senior editor at Hispanic Business magazine and editor of Business Mexico.

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