Start-Up

Why Medtech Founders Should Not Over-Focus on Dilution: Interview with Renee Ryan, CEO of Cala Health

We recently caught up with Renee Ryan, the CEO of Cala Health, a bioelectronic medicine company that’s focused on wearable neuromodulation therapies that deliver individualized peripheral nerve stimulation. Renee has 25 years of experience in healthcare as an executive and investor, and in this episode, she shares her expertise with the Medsider community.

Renee will discuss some common mistakes that medtech startups make, and talk about what she looks for as an investor in early-stage companies. She shares tips on navigating the regulatory waters and obtaining insurance coverage & reimbursement. Renee also gives us some key learnings from her time at Johnson & Johnson, and talks about what’s new at Cala Health, including their recent FDA breakthrough device designation.

But first, here’s a bit more on Renee’s background:

She has 25 years of experience in the healthcare space. Previously, Renee led the medical technology investments for Johnson & Johnson Innovation on the West Coast and Asia Pacific for 8 years. While at J&J, she made over 15 new investments, including the Series A for Cala Health. Prior to her time at J&J, she was a healthcare investment banker at RW Baird, Jefferies, and Goldman Sachs. Renee has a great eye for innovation, and we’re excited to welcome her to Medsider today.

Listen to the Interview with Renee Ryan

Read the Interview with Renee Ryan

Renee, please tell us a little about your personal background as well as Cala Health.

In many ways, I feel like I am on my third career life -- first investment banking, then venture investor, and now CEO. But the underpinning of everything I have done revolves around a keen focus on healthcare innovation and a passion for improving patient’s lives. As an investor at Johnson & Johnson, the world’s largest healthcare company, I had a great catbird seat on impactful innovation. So when I met the Founder of Cala Health, Kate Rosenbluth, I jumped on the opportunity to help start the company! I have been on the Board since the beginning and came into the CEO role in August 2019.

You recently received a breakthrough device designation from FDA for the Cala Trio device. Can you tell us how the idea for it came about?

The FDA breakthrough designation for our Cala Trio label expansion into action tremor in Parkinson’s patients is really exciting. Our scientific insight upon founding the company was the ability to deliver electrical signals through a wrist-worn neuromodulation device to affect the exact location in the brain where the action tremors initiate. This target in the brain is exactly where electrodes for deep brain stimulation for both essential tremor (our first indication) and action tremor in a Parkinson’s patient are placed.  

Throughout your career as a healthcare investor, I’m sure you’ve seen a wide variety of early-stage medtech concepts. When designing and prototyping the alpha or beta versions of a medical device, what do you think is the biggest mistake most start-ups make?

Although I don’t frequently see the flaws being made in the prototyping phases, many of my experienced counterparts are trained to get user and customer input in the early phases of design work. Where I see many companies stub their toes is around the go-to-market and reimbursement assumptions. Many companies try to take shortcuts in these areas and I think that limits their ultimate commercial opportunity.

When it comes to navigating the regulatory waters, what 1-2 pieces of advice would you give to other start-up leaders that are in the same boat?

Jump in, the water is warm! Ha, just kidding!

I think my advice includes a much broader lens than just regulatory. Hire the best team (internal or external) that you can. And invest in the relationship. Earlier this year, we added an external regulatory firm to our roster, and during those first few months, we took a lot of time to bring them up to speed on our technology, our science, and our approach. That upfront investment has paid off tremendously as we now have seamless integration with this external group and our internal teams.

Tell us more about your approach to scientific evidence. What’s your best counsel for other early-stage companies that are building out their clinical research roadmap?

At Cala, I stress our “science first” approach. And that dictates how we scope our budget and time in both fundamental mechanism-of-action science and our early clinical studies. Since our founding, we have had well over 500 patients in clinical studies with our technologies, which includes real patients providing feedback for our hardware and digital developers. This has been really valuable.  

I’m sure your team at Cala Health is working hard on obtaining private insurance coverage for the Trio device. What are a few of the most important lessons you’ve learned over the years when it comes to this topic?

Similar to my answer above, I can’t stress enough that you need to hire great talent. Short and sweet, but that’s my best advice.

Taking an idea from concept to commercialization is notoriously expensive in medtech. Considering you’ve sat on both sides of the table as an investor and leader of a start-up company, what’s the most important piece of advice you’d give to other entrepreneurs that are trying to raise early rounds of capital?

No one ever died from dilution. I see so many founders over-focus on dilution and selling a certain percentage of their company. The focus should be on seeking value-add investors where their input is worth way more than the dilution suffered in any given round of funding.

During your tenure at J&J, you helped start a number of companies built around the hypothesis that data is incredibly valuable for the future of medtech. Do you still believe this to be true and why?

Wow, the value of data. Yes, it's all about the data! I feel this even more strongly today than I did several years ago. I am an advisor to a number of companies -- both actual board seats and casual "help/advice" type of relationships -- and the only type of companies that get me excited today are those with data-driven therapies. That is the common thread. Clearly, Cala is at the core of this theme. We are able to not only monitor and measure our patient's hand tremors, but then treat, measure, and track the benefit as well. No other technology can do this today. I love that!

Renee, what’s next for Cala Health? What are you most excited about over the next few years?

We are very excited about the platform nature of our technology and see a number of very interesting opportunities to deploy wearable neuromodulation therapies. But we are completely committed to the success of our patients who suffer greatly with movement disorders.

Pre-Covid, we ran an on-site clinic, the Cala Clinic, where we were able to interact directly with patients really struggling with hand tremors. We hear stories of embarrassment when eating out, the frustration of not being able to get dressed, or even the isolation because some days are just too hard.  

The Cala Clinic sounds like an innovative concept. Can you tell us more about the impetus for it as well as some of the value -- expected or unexpected -- your team was able to glean?

One of the first things we did when starting Cala was establish an on-site clinic. Our device is deemed a non-significant risk (or NSR) device by the FDA so we had the flexibility to set up a clinic, receive IRB approval, and see patients. We love having the flexibility to do healthy subject testing, patient preference work, and full clinical studies. When Covid hit in March 2020, we worked with our IRB to quickly move to "virtual care" mode, which meant enrolling patients with telemedicine and shipping our devices to patient’s homes. We have had to pivot to different types of outcomes, but we are very active now with three clinical studies through the Cala Clinic!

Where can readers or listeners go to learn more about Cala Health?

We have a few fun podcasts and videos that can be found on our website at www.calahealth.com.

Let’s transition to some fun, rapid-fire questions, Renee. For someone that is starting their entrepreneurial journey in the medtech or healthtech arenas, what’s the most critical thing they should know?

Hire the best people, both internal and external, that you can. Be impatient, but know that it likely will take twice as long and cost you two times as much.

What influential books, podcasts, or resources have been most helpful in your entrepreneurial adventures?

Beyond all of the Dr. Seuss books (which are full of life-long lessons!), I would suggest The Hard Thing about Hard Things by Ben Horowitz, which I have read twice. And I just finished No Rules Rule by Reed Hastings, which is super inspiring, even though regulated industries like healthcare do require some rules. And then finally, Shoedog, by Phil Knight. OMG, I laughed, I cried, and I think every entrepreneur must read Phil’s book.

Renee, are there any medtech or healthcare entrepreneurs that you find particularly inspiring?

It’s not good for me to pick a favorite since I was a service provider and investor for 20+ years. And believe me when I say I include AMAZING, storied leaders in my circles! The one common theme that all of these people taught me, and I carry with me even today, is this: patients are our true north. Doing right by patients is always good business. So even through the tough days of the financial crisis in 2009, or even when the pandemic first hit, when the early-stage financing markets got tough, I told entrepreneurs to focus on delivering real value, real benefit to patients. Make a difference!

Renee, starting over in your mid-20’s, knowing everything you know now, what would you do differently?

Nothing. I have loved my career and all its twists and turns. I have always been excited to learn and grow.

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