Most people who grew up in the 1960s cite two events they can vividly remember. The first is when President John F. Kennedy was assassinated in 1963. The other is when the U.S. landed on the moon in 1969. I will never forget the day Kennedy was killed. But another memory takes precedence over the moon landing for me. It took place two years earlier in 1967, when a Cape Town surgeon — Dr. Christiaan Barnard — performed the world’s first human heart transplant. Soon after — despite the procedure being only temporarily successful — surgeons around the world began doing transplants.
Heart surgery has advanced leaps and bounds since then. And since the early 1970s, there has been no bigger driver of groundbreaking innovation than Manny Villafaña — a brilliant inventor who found a way to impact the world without a college degree to his name.
We owe Manny a lot. He’s spent the last 50 years founding medical device companies and developing life-changing coronary devices. And he doesn’t owe us a damn thing. But now he’s gifted us with an opportunity to invest in his latest invention — one that addresses by far his biggest market yet.
The company I’m recommending today — Medical 21 — is the first company of Manny’s that everyday investors can invest in at such an early stage.
An Ingenious Solution to a Huge Problem
Medical 21 is solving a huge surgical problem with a product that countless other companies have tried and failed to develop. The company’s technology replaces traditional cardiac bypass surgery procedures that require blood vessel harvesting — a grueling and painful process — with an artificial graft. Other companies trying to develop similar grafts are making little headway. In general, they’ve adopted a dead-end approach. In an attempt to allow nutrients to enter and flow through the graft, they’ve made the graft too weak to last long enough.
Hearts are strong. They pump about 40 million times per year, putting incredible pressure on the vascular system. An artificial graft needs to be just as strong but also flexible enough to bear the contractions and constant movements of the circulatory system.
Medical 21’s MAVERICS graft addresses this “strong but flexible” problem head on. It’s a small, flexible tube encased in a meshed scaffold of ultra-thin wire that is half the thickness of a human hair. It makes the tube very strong while also allowing nutrients to pass through it. After cells grow around the graft, the material disappears and the scaffold remains to hold the form.
Medical 21’s market is huge. The company’s transformative technology can be used in 1 million surgeries a year. Its technology is so compelling and its FDA pre-clinicals have gone so well that the former head of the world renowned Mayo Clinic has agreed to present a white paper on the technology at the 59th annual conference of the Society of Thoracic Surgeons in January.
Medical 21 offers an ingenious solution that addresses a big unmet need existing in a huge market. It has all the elements of a classic high-upside investment opportunity. While already compelling, its superstar founder — Manny Villafaña — elevates this opportunity from compelling to irresistible.
A Trailblazer With Proven Returns
Listen, no investment is a no-brainer. Every investment comes with risks. But Manny is a force of nature — a tech genius and trailblazer with an incredible track record of success.
Manny has founded eight companies. Seven have resulted in successful liquidity events — either buyouts or IPOs. Early investors have grown enormously rich off of Manny’s successful track record. Manny told me that one of his early investors in St. Jude — who put in $16,500 — would be worth $92 million today because of the modest check he wrote.
In other words, we have an outlier founder on our hands. Of the 118 startups in the First Stage Investor portfolio, none have come close to Manny’s track record of impactful innovation and entrepreneurial success. If you’ve never heard of Manny, you may have come across some of his companies. Here are Manny’s three most well known companies.
- Cardiac Pacemaker Inc. (CPI)/Guidant – Manny founded CPI in 1972. At the time, implantable pacemakers lasted only 18 months. He wanted to make one that lasted 10 years. People said it couldn’t be done. But both Manny and his detractors were way off the mark. He developed pacemakers that lasted 30 to 40 years instead. The technology he invented in 1973 is incorporated into virtually every pacemaker and defibrillator today. Boston Scientific bought CPI for $27 billion.
- St. Jude Medical – Manny founded St. Jude in 1976 and co-developed the St. Jude heart valve with Dr. Demetre Nicoloff. Everyone else was making heart valves out of metal, hoping to create strength in the valve. Manny made his out of glass (pyrolytic carbon). It quickly became the “gold standard” for heart valve technology. It is still the most commonly used mechanical prosthesis today, serving about 5 million patients. Abbott Labs bought St. Jude for around $30 billion.
- ATS Medical – Manny founded ATS in 1992. The company developed a next-generation open-pivot heart valve that enhanced blood flow and decreased the risk of blood clots. Medtronic bought ATS for $370 million.
You read those acquisition numbers right: Manny’s companies have had buyouts of $27 billion, $30 billion and $370 million. Manny boasts a track record of unparalleled entrepreneurial success driven by innovative technology that has dramatically improved the treatment of heart-related disease. Time and again, his technology has been widely adopted — driving whopping valuation increases and leading to windfall profits for early investors.
A Short Wait for Early Investors
And now, Manny’s latest company — Medical 21 — is making steady progress toward FDA approval. Human clinical trials for the graft will soon begin in the U.S and Europe. With 85 to 100 animals tested so far, pre-clinical testing has shown encouraging results. The grafts in some of these animals have lasted 250 to 300 days. Typically, one year in an animal translates to six years in a human. So these results indicate that five years in humans is within reach. Manny believes 10 years is doable.
He adds that animal tests don’t always predict human results. So let’s not forget there is still risk here.
But if Manny’s belief in the product proves correct, the investment opportunity is almost unprecedented for crowdfunders. How big? Manny says, “This is the single biggest product ever developed to be put into the body. It’s bigger than all of my other companies combined.”
And early investors won’t have to wait long. European approval is expected in about two years. If approved, sales would begin in 2025-2026 and initiate serious revenue right away. U.S sales would begin in 2027-2028.
The market for both areas is huge. The global market sees 1 million procedures performed per year. Each procedure requires multiple grafts. So there is an established need for more than 3 million grafts a year. Globally, graft surgery generates $8 billion to $10 billion annually. The U.S. is roughly half that, with Europe taking up a slightly smaller piece.
A Huge Win for Crowdfunders
Your ability to invest in Medical 21 marks, in my opinion, crowdfunding’s coming of age. As much of a win as it is for the crowdfunding space, it’s an even bigger win for you. Just think: You have a chance to get into Medical 21 before the venture capitalists.
They may never get the opportunity. If they do, it will be at a much higher valuation than the $100 million price tag Medical 21 is going for today. Because — like Manny’s other companies — Medical 21 is setting up to be an appealing takeover target for the larger medical device companies.
To that end, Manny has been down this road before. He’s done it many times: develop the technology, complete animal studies, secure funding, complete the regulatory steps, perform clinical trials, then distribute the product throughout the world — and make early investors a ton of money.
I see no reason why Manny can’t do it again.
Deal Details
Startup: Medical 21
Security type: Common equity
Price per share: $5.80
Valuation: $100 million
Minimum investment: $116
Where to invest: Rialto Markets Raise Page
Deadline: April 27, 2023
How to Invest
Medical 21 is raising up to $40 million on Rialto Markets. If you don’t already have a Rialto account, you can sign up for one here by clicking on the red “Invest Now” box on Medical 21’s deal page. Please be sure to look over all the information presented on the deal page. It is highly recommended that you also read the company’s offering circular. It will contain useful details not found on the company’s raise page.
If you’re ready to invest, click the red “Invest Now” box. Enter the amount you want to invest, starting as low as $116, and proceed through the required steps. Be sure your investment is confirmed, then you’re good to go.
Risks
This opportunity, like all early-stage investments, is risky. Early-stage investments often fail. Medical 21 will likely need to raise another round of funding in a year or two, if not sooner.
If it executes well, this shouldn’t be a problem. But that’s a risk worth considering when investing in early-stage companies. The investment you’re making is NOT liquid.
Expect to hold your position for two to 10 years. An earlier exit is always possible but should not be expected.
All that said, I believe Medical 21 offers an attractive risk-reward ratio.