We recently sat down with Bob Paulson, the CEO of VentureMed, a peripheral vascular medtech startup. Bob has over two decades of medical device executive experience, as the CEO of NxThera and Restore Medical, and in leadership roles at Endocardial Solutions, Advanced Bionics, and Medtronic. Bob’s excited multiple medtech startups, and today, he’s going to share his vast expertise, including capital fundraising tips, keys to early-stage medical device product development, and best practices when it comes to clinical evidence and insurance reimbursement.
But first, here’s a bit more on Bob’s background:
In addition to being CEO of VentureMed, he serves as a Director for Veran Medical Technologies and Spineology. Before he got started in medtech, he worked for General Mills, got an MBA from St. Thomas, and went to law school at Vanderbilt. Bob got involved with medical devices at Medtronic in the early 90s and later was CEO of NxThera, which commercialized benign prostate hyperplasia therapies before it was acquired by Boston Scientific. Bob is one of the most knowledgeable executives in the field, and I’m excited to get his take on the business landscape in today’s rapidly-changing healthcare environment.
Listen to the Interview with Bob Paulson
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Read the Interview with Bob Paulson
The following interview has been lightly edited for readability.
Bob, it’s great to have you on Medsider. Let’s start with your medtech background.
I joined Medtronic in the mid-90s during the early growth period and fell in love with medical devices. I led the Sofamor Danek acquisition, which was a spinal technologies deal, and then became VP and General Manager of the surgical navigation business. That was my first opportunity to run a standalone medical device business and I loved it.
So I joined progressively smaller and earlier-stage companies. I had the chance to run the cochlear implant business at Advanced Bionics and then joined Jim Bullock at Endocardial Solutions, which we sold to St. Jude in 2005. After that, I joined Restore Medical as CEO. We treated snoring and sleep apnea with an implant, took it public in 2006 on Nasdaq and ended up selling that company to Medtronic. Next, I spent a great decade with NxThera, from the early days in 2009 all the way through acquisition by Boston in 2018.
After selling NxThera to Boston, I was contacted by Alex Schmitz of Endeavour Vision and Jay Schmelter of RiverVest, whom I'd known for years. They had this opportunity called VentureMed which had a very intriguing, simple product within the large and growing peripheral market that met a big unmet need for preparing blood vessels with minimal complications prior to delivering the definitive therapy. I joined the company and we relocated from Toledo to Minneapolis in 2019, built a team, redesigned the device, and have now launched the second generation of the product.
At VentureMed you recently received a new indication for the FLEX Vessel Prep System. Can you tell us a little bit more about how the idea for this device came to be?
Dr. John Pigott is our founder, CMO, and is a vascular surgeon. He practiced for 30 years in Toledo and is an expert in treating peripheral arterial disease. Because he performed all these procedures, John recognized there were significant challenges, both to traditional high-pressure percutaneous balloon angioplasty, but also atherectomy. It was a steep learning curve for new physicians. Atherectomy, by design, ends up having high rates of dissection and perforation with an inherent risk of embolization. Those dissections, or injuries, often lead to bail-out stenting. There's a high rate of fracture and collapse of stents in the peripheral which leads to restenosis or closure.
So, John had this idea: what do we need to do to improve vessel compliance and minimize the trauma to the vessel? So, he created this ingenious device that creates a series of controlled depth, circumferential micro-incisions along the entire length of any type of lesion, or any type of plaque morphology in a pullback procedure. So, the idea was just a really simple, safe, effective, easy to learn approach to modify the plaque.
Got it. So let’s take a native vessel that does not have a stent. Are most physicians using this in conjunction with atherectomy or they using it as a standalone therapy before placing a stent?
If you start with an occluded vessel, you have to open it up. With a PTA balloon, you are basically trying to compress the plaque. You're stretching the vessel to dissect it. The issue is most plaque is asymmetrical and the balloons, when they expand, expand concentrically. The only way to overcome the resistance is to over-expand by increasing inflation pressure. But this creates dissections and tears within the vessel wall. That starts that inflammatory response cascade that leads to restenosis.
The stenting occurs because you've created dissections and you need to repair them. The whole idea behind creating these circumferential micro-incisions along the entire length of the occlusion is that it improves vessel compliance. You are improving compliance, reducing barotrauma, and you don't need atherectomy.
I’d love to talk about your time with NxThera. After leaving Medtronic, like most entrepreneurs, you went from startup to startup. But then you spent a decade at NxThera. Why did you stay that long at one company?
I joined NxThera at the beginning of 2009. We had benchtop data and series A funding. The technology used vapor or steam, wet thermal energy, to ablate tissue to treat benign prostate hyperplasia in a really simple, office-based procedure. We took it through the entire pre-clinical process and a randomized control trial. Then once we got FDA clearance, we commercially grew the company. It was a ten-year overnight success and Boston acquired the company in 2018. Ten years is just how much time it took. We raised our B round in 2009/2010 when it was really tough to get capital. We learned that we were going to have to do a randomized control trial, in large part because a lot of the devices that preceded us in the space had failed. So, it took that much time to get through the trial, follow-up, get regulatory clearance, build a commercial team, and begin to see the adoption utilization that caught the attention of Boston.
Let's talk fundraising. What’s your advice for raising capital, whether it's in the early stages or later on in the company’s lifecycle?
Make sure that you've honed your value proposition and make sure it’s reflected in the market opportunity, the unmet need, and the pathway of getting there is clear. The second piece is it's always about the people. It's about the team that you build. If an investor has an opportunity to invest in the greatest idea ever with a mediocre leadership team versus a middle-of-the-road idea, but an absolute rockstar leadership team, more often than not, you're going to bet on the people.
Raising money is always hard. Especially today in medical devices because so much money has moved into other investment opportunities. It's a buyer's market and you need to really understand the investment thesis of the funds that you're talking to. How does your idea fit with what's important to them?
What is your best advice for folks who feel like they have a good solution to a big unmet need, but aren't even sure how to get out of the starting blocks?
It's really important to always be building relationships and looking for opportunities to expand your network. You have to know what inflection points are going to be important to the investors who would come into an A round because most people can't get there with angel money or seed money. That gets you to proof of concept, but then you can put together a syndicate at the A round that will be able to fund you through the B round. That's the ideal world. If you can’t follow that model, then you have to be creative and find the investors who are willing to do A-round deals. You have to sell them on the vision, on the opportunity, and what's important to them.
Let's chat about product development and alpha-beta versions of a device. What do you think is the biggest mistake that people make at this stage?
In my experience, there are three kinds of primary mistakes. One is not beginning with the end game in mind. You need to know what the outcomes should be and you need to build your team around those endpoints. Second is failing to get physician user input early on. You need both engineers and physicians with a clinical perspective. You're baking these inputs into the design of the device that is then going to be used in your clinical study. Because once you get FDA clearance, it's based on that data and that design. The third point is that perfection is the enemy of good enough, especially when you're developing a new product. Sometimes you have to start with what you have, get early commercial experience, and get the feedback to figure out what you need to change so you can then step into that second-generation product in a very deliberate way.
How have you approached building a clinical data plan? What lessons have you learned along the way that impacts your decision-making with VentureMed?
It’s crucial to match the data requirements with the skillsets and experience of the clinical investigators that you're affiliated with. Then, make sure that whatever data you're collecting is not only going to be leverageable with FDA, but it can be part of your commercial story as you move forward. You want to definitively be able to say, “Here’s, what we proved with the pilot study.”
As you move into your clinical study phase, inevitably, you need to have a certain number of key opinion leaders, or KOLs. These are most often thought leaders at the academic center sites. You're competing for mindshare with these KOLs, but you need to have them on your team. You're going to need other high-volume sites that are experienced in doing clinical studies so they can gather data and enroll patients rapidly and collect good data. But they're not going to be your podium speakers.
So, a lot of times, the clinical investigators want to interact with either the senior leadership team or the CEO, and that's fine. But at the end of the day, who is really enrolling patients on a day-by-day basis in the study? It's the nurses. If they don't believe in your product, they can absolutely slow enrollment. You need to own all these relationships.
What is your best advice for other medtech leaders trying to navigate the regulatory waters?
Build a great team. Folks that you hire as employees, but also the clinical and regulatory advisors you bring on. Look for people who have been there and done it in your space based on the regulatory, clinical, commercial, and reimbursement pathways you're on. If you have a PMA product, you don't hire somebody who's only had 510(k) experience. It’s a bonus if you find people who have gotten products through in the same divisions of the FDA, which means they have existing credibility and relationships there.
If you have people that FDA respects, that's a huge benefit. If they brag that they've won the battle, but they scorched the earth in the process, guess what? Next time they come before that review panel with another client, you may be the unanticipated recipient of retribution. Focus on the cross-functional implications and the credibility of the folks you're building with.
Having someone who understands the regulatory process and clinical requirements to design the study may not be the same person who runs the study. That's a very different skill set. But if you're going to do that in-house versus doing it through a CRO, a lot of times you can run a study a lot more cost-effectively in addition to the added benefit of keeping those relationships within the company.
If you don't have a clear reimbursement pathway, you can have the greatest device in the world, but you're not going to see adoption. Any suggestions for pursuing insurance coverage and reimbursement?
From the beginning, you need to determine whether you fit under an existing code or are you going to have to get a new code. That decision affects how you design your clinical study, how you design your publication strategy, who the investigators are, etc. If you're going to have to bring a new code forward, that means people have to be involved in your study who are both credible and influential in their respective societies. For peripheral procedures, it's a combination of vascular surgeons, interventional cardiologists, and interventional radiologists. You need support from all three to move forward and it's critical to understand how societies work together. Are they competitive or collaborative?
You have to understand the reimbursement landscape with respect to your competitors too. Is this product going to be disruptive? Is this a new procedure or are you taking share from an existing therapy? What did they do to get coverage under the existing policies? You have to understand what your competitors had to do.
Code plus coverage policy equals payment. Even with a code, if there aren’t coverage policies in place, you're not going to get paid. So, what's it going to take to get those coverage policies? Do you have to go to each individual MAC or are you going to go for a national coverage determination? If you have to go through each individual MAC or your procedure isn’t for Medicare age patients, then you're going to have to go through the process of getting individual payers to buy into providing coverage. That's so important to know upfront because it determines the clinical study design.
Let’s transition to some rapid-fire questions, Bob. For someone that is starting their entrepreneurial journey in medtech or healthtech, what's the most critical thing they should know?
Three things. One, be honest and candid in everything you do. You only have one reputation. Don't ruin it. Two, show humility and respect no matter how contentious a situation is. Life is short, memories are long, and it's a small, interconnected world, so don't burn bridges. Last, is passion and perseverance. You're always going to run into hurdles.
What influential books or podcasts or any other resources have been most helpful in your entrepreneurial adventures?
Geoffrey Moore’s Crossing the Chasm and Matthew Dixon’s book The Challenger Sale.
Are there any other medtech or healthcare entrepreneurs that inspire you?
Bill George was Medtronic’s CEO when we acquired Sofamor Danek, and he is a brilliant Harvard scholar. The CEO of Sofamor Danek was a guy named Ron Pickard, who was educated in the school of hard knocks. His first job was as a custodian and he ended up running a world-class spinal implant company. It was really fun to have a chance to work with both men at the same time, who had very different backgrounds, but both became very successful.
If you had to start over in your early thirties, knowing everything you know now, what would you do differently?
Don't be afraid of making mistakes or failing. Embrace the journey, understand that everything in life is a tradeoff. If you wait for perfect information, you'll never get there. The last thing is a lesson I learned at Medtronic. When you're inside a big company, that becomes your network because you spend a lot of time matrix-managing across the organization. Never get so focused on your immediate work responsibilities that you stop looking outward to build new relationships.
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