The Medical Device Commercialization Playbook event in Vancouver was a great opportunity to discuss the topic with Vancouver’s vibrant medical device community.  In fact, the dialog was so lively that Scott Phillips requested an article based on my talk to share with StarFish Medical readers.

There is a fundamental Canadian insecurity– that Canadians can’t be global players in the medical technology industry.  Canadians have already done a number of them.    So let’s explore how we can work towards a common purpose: To build a sustainable medtech industry here in Canada.

Before I get started, here’s my background in Medtech.  I’ve been involved in a dozen start-ups in various stages as a CEO, Chairman, or investor.  Eight of the twelve successfully built value and exited–far above the industry norm of three.  The exit values ranged from $20 – $400 million in growth. Of the other four, I’m actively involved with two that will eventually exit at bigger values than any before.  Only two have had to be written off at exit.  Extraordinarily lucky to have succeeded in two thirds and of the others two will be successful.   I’ve been very fortunate, lucky, and good at picking the right things to get involved in.  I’ve lived it all …

As you can see, I’ve been around for a while and learned quite a bit.  The only thing I’ve mastered from building and selling a number of medical technology start-ups is that no two are the same.  There’s no real common formula.  That’s what is really neat about what serial entrepreneurs do.  So instead of trying to make up a formula, let’s look at a three case studies.

Working and learning on the way up the Totem Pole.  Smith & Nephew Orthopedics Advanced Med care went from $6M to $100M Canadian Revenue in 17 years.   It was pretty cool and a lot of fun. Loyalty and hard work can work.  Customer intelligence is powerful.  Don’t be afraid of entrepreneurial innovation when in a big company.  This frustrated the entrepreneurs to no end at Smith & Nephew.

At one point while listening to the customer on an advance wound dressing, a very significant key opinion leader out of the Cleveland Clinic said, “If you just cut it differently, I would use it ten times more.”  That feedback took two years to get through the bureaucracy of a multinational.  The entrepreneurs said, “Out of here.”

Lessons learned at Smith & Nephew:

• Loyalty and hard work can work
• Customer intelligence is powerful
• Don’t be afraid of entrepreneurial innovation
• Advance on your own merits
• Politics are not a requirement

CryoCath, the ride.  This was a ride.  10 years and it was a roller coaster to say the least.  Canada’s first ever Pre-Market Approval (PMA) transforming the world of Atrial Fibrillation (AF) ablation was “Ahead of the Curve.”

The roller coaster ride actually began on a plane carrying a prototype catheter—a cryo-catheter. Delivering at 14 atmospheres pressure through a flexible noodle into the left atrium of a beating heart of a conscious person refrigerant that goes down to minus 75 degrees centigrade to freeze tissue on the inside of a heart.  That plane took the prototype on a cross country demo tour.

An American doctor summed it up best at the first visit.   After he listened, he put his arm around the demo guy and said “Son, it’s like trying to build a snowball in hell.  You’ll never do it.”  Uh oh.

A subsequent meeting was with another electrophysiologist who happened to be the chief at the Mass General in Boston out of Harvard.  He also put his arm around the demo guy after the spiel.  And the guy thought, “Oh, God, not two days in a row.”

But the doctor said, “It’s about time somebody brought something like this to the world.”   All of the sudden the team was flying high.  They dared the “strategics”– J&J, Medtronics, St. Jude.  These American industry leaders all accused little CryoCath of being crazy.   “Radio Frequency energy is the way to go.  Freezing is stupid.  Stupid Canadians.”

To the chagrin of industry leaders, CryoCath did it. And it was a heartbreaker.  There were actually two heartbreakers where clinical trials were stopped about $4M into each.   Yet the product survived them both. A book could be written just about that.  The IPO was one of the biggest ever on the Toronto stock exchange during the dotcom bubble bursting.  Walking down Wall Street people were jumping out of windows while CryoCath was telling them about this great new technology.

That product is sold today by Medtronic and it is the highest priced disposable product in the world.  It sells for $5,000 USD.  That’s a lot of money.  That’s why Medtronic spent $400M and got a deal. There was no way in hell that product could have been conceived at the beginning of CryoCath. Nobody in the world knew enough about atrial fibrillation.  Nobody knew enough about how freezing tissue inside a beating heart works.  Nobody knew enough about what was needed.

Lessons learned at CryoCath:

In some cases you have to go through a couple of iterations before you get to the ultimate product.  The CryoCath team might have waited until someone dreamed this up from day one, but then they might still be waiting.

• Being “ahead of the curve” demands visionary creativity
• Supportive, functional Science Advisory Board (SAB) is critical
• Titration is better in therapeutics
• International funding strategy is needed
• KISS (Keep It Simple Stupid) to the user

CardioInsight was interesting.  Another atrial fibrillation play, this time it was about the mapping of AF.  Like CryoCath, CardioInsight was ahead of the curve because it claimed to investors that it were going to be able to map AF when nobody in the world knew what AF was, and what kind of signals were happening, and what kind of short circuits were going on, and whether there were rotors or ectopic foci or trigger points.  This time the medtech entrepreneurs were crazy Americans (and a crazy Canadian) in Cleveland.

CardioInsight’s vision was simple: We’re going to map something that nobody knows how to map now and we’re going to do it non-invasively.  We’re not even going to put a catheter in the heart.   We’re going to do it in a vest.

The concept was to put a vest on a patient’s body with 256 electrodes on it and to capture simultaneously body surface electro grams.  Then slip the patient into a 3D CT scanner, image the heart, image each electrode with respect to the external heart surface called the epicardium, and then through the inverse problem and crazy wild physics and mathematics immediately create a 3D anatomical map of the heart that tells the physician where to go in and ablate.  And that’s what CardioInsight did in 3 years.   There were 4 iterations of vests before the very sexy one that you see on your right that Medtronic is now selling for close to $2000 per vest.

Lessons learned at CardioInsight:

• No business plan/model…..no money
• Working with technology founders is tricky
• Go with the best….no compromise
• American VCs are brutal on their own
• Get the “strategics” involved early

What next? There is a huge gap between the US VC model and Canada when it comes to building true critical mass medical companies with world class opportunities.  In Canada a lot of people are into incubators, accelerators and generators and whatever.  Starting that early stuff seems not to be a problem.

A lot of great companies and technology get through a seed round and show real potential.  And then where are they?  The American VCs are saying “Too Early” and the Canadian VCs are saying “Too Early.”  There’s nobody there to lead them through that early commercialization process.  Latitude 49 is going to be the first knowledgeable leadership medtech venture fund to carry our best through that critical Series A.  I hope you join me in saying that this is what we need to do in order to build a sustainable industry.

Fundamental principles from my career as an entrepreneur in the medtech start-up arena:

• Try to predict the next “curve” (try to predict it before the next guy).
• Be fully cognizant of “unmet needs”.
• Spend more time with Key Opinion Leaders than your staff.
• Know your technology as well as the engineers.
• Always address the “weakest link” in your team.  They are the delimiting factor to your success.
• Practice salesmanship to obsession.
• Humility helps.

My vision?   To building Canada’s medtech silicon valley, we need to:

Have fun while creating value!

Get off the “learning curve”.

Capitalize on our successful entrepreneurs (like Paul Geyer).

Educate our Limited partners and institutional investors across the country that we’re missing the boat on the medtech side.

Coordinate balkanized initiatives.  Stop thinking what’s good for BC, Alberta, Ontario.  Why can’t we come up with an integrated trans-Canada initiative with centers of excellence at the regional level promoting regional development that has some sort of coordinated element to it.

Develop a focused VC effort.

Enable our institutions especially our teaching hospitals and universities with engineers and show them how to transform technology into business opportunity.