Medsider: Learn from Medtech and Healthtech Founders and CEOs - A Roadmap to Serial Medtech Entrepreneurship: Interview with SinglePass CEO Bill Colone

Episode Date: October 27, 2023

In this episode of Medsider Radio, we sat down with Bill Colone, the CEO and Chairman of SinglePass, a company developing an electrocautery device for deep tissue biopsies.Bill previously headed Spinal Singularity, raising over $11 million for product and clinical development. He was VP of R&D at Direct Flow Medical and the President of Endomed, which was sold in 2005. Bill also served in multiple leadership roles at Endologix and holds 13 U.S. patents with more pending. He earned his bachelor's in Chemical Engineering from Arizona State University, where he later served as an Associate Faculty Member and sits on the advisory committee for Chemical and Materials Engineering.In this interview, Bill shares invaluable insights and actionable strategies for building and leveraging an expansive network, optimizing fundraising, and strategically planning for both acquisition and independent growth. Before we dive into the discussion, I wanted to mention a few things:First, if you’re into learning from medical device and health technology founders and CEOs, and want to know when new interviews are live, head over to Medsider.com and sign up for our free newsletter.Second, if you want to peek behind the curtain of the world's most successful startups, you should consider a Medsider premium membership. You’ll learn the strategies and tactics that founders and CEOs use to build and grow companies like Silk Road Medical, AliveCor, Shockwave Medical, and hundreds more!We recently introduced some fantastic additions exclusively for Medsider premium members, including playbooks, which are curated collections of our top Medsider interviews on key topics like capital fundraising and risk mitigation, and a curated investor database to help you discover your next medical device or health technology investor!In addition to the entire back catalog of Medsider interviews over the past decade, premium members also get a copy of every volume of Medsider Mentors at no additional cost, including the recently launched Medsider Mentors Volume IV. If you’re interested, go to medsider.com/subscribe to learn more.Lastly, if you'd rather read than listen, here's a link to the full interview with Bill Colone.

80% of success is showing up. I do this 60 hours a week. Like I said, I do this from early morning. And even though I've done it for 41 years, I don't kick back them. So they've got to get out. They've got to put themselves out there. All the opportunities came in me because they've worked so hard on networking the relationships. And I showed up.

Welcome to Medsider, where you can learn from the brightest founders and CEOs in medical devices and health technology. Join tens of thousands of ambitious doers as we unpack the insights, tactics, and secrets behind the most successful life science startups in the world. Now, here's your host, Scott Nelson. Hey, everyone, it's Scott. In this episode of Medsider, I sat down with Bill Colon, CEO and chairman of Single Pass, a company developing a coterie device for deep tissue biopsies.

He previously headed spinal singularity, raising nearly $12 million for product and clinical development. Bill was also VP of R&D at Direct Flow Medical and the president of endomed, which sold in 2005. Bill also served in multiple leadership roles at Indologics and holds 13 U.S. patents with more pending. He earned his bachelor's degree in chemical engineering from Arizona State University, where he later served as an associate faculty member and sits on the advisory committee for chemicals and materials engineering. Here are a few of the key things that we discussed in this conversation. First, your network is an extension of your company. You can leverage it at every stage, from idea to development, to launch, and even to exit. Second, the Venture Studio approach

has proven to be lucrative for Bill's multiple startups. Maximizing the use of limited funds, effective outsourcing, and planning for an early strategic exit can be more profitable than the traditional venture model. Third, grounded in realism and continuous feedback, Bill has a systematic approach for being a serial entrepreneur, keeping risk at a minimum while utilizing capital extremely efficiently and strategically keeping the end goal in mind.

Before we jump into this episode, I wanted to let you know that the latest edition of Medsider mentors is now live. Volume 4 summarizes the key learnings from the most popular Medsider interviews over the last several months with folks like Rob Ball, CEO of Shoulder Innovations, Kate Rumrell, CEO of Abolative Solutions, Dr. Christian Ramdo, CEO of Tempe Health, and other leaders of some of the hottest startups in the space. Look, it's tough to listen or read every Medsider interview that comes out, even the best ones. But there are so many valuable lessons you can glean from the founders and CEOs that join our program. So that's why we decided to create MedSider mentors. It's the easiest way

for you to learn from the world's best medical device and health technology entrepreneurs in one central place. If you're interested in learning more, head over to medsiderradio.com forward slash mentors. Premium members get free access to all past and future volumes. And if you're not a premium member yet, you should definitely consider signing up. In addition to every volume of Medsider mentors, you'll get full access to the entire library of interviews dating back to 2010. You'll also be able to see all of our playbooks, which are handpicked collections of the most insightful interviews with the brightest founders and CEOs. Whether you're looking to master capital fundraising, navigate early stage development, tackle regulatory challenges, understand reimbursement, or position your venture for

a meaningful exit, MedSider Playbooks have you covered. And last, considering that fundraising can be one of the most daunting tasks for any startup, we created a meticulous database of investors right at your fingertips. Explore a wealth of VC funds, private equity firms, angel groups, and more, all eager to invest in medical device and health technology startups. Access to this database is a premium member exclusive, so don't miss out. Learn more about Medsider Mentors and our premium memberships by visiting MedsiderRadio.com forward slash mentors. Again, that's MedsiderRadio. com forward slash mentors. All right, without further ado, let's jump right into the interview. All right, Bill, welcome to Medsider Radio. Appreciate you coming on, man.

Thanks, Scott. Appreciate you having me. Yeah, ever since Derek Herrera introduced us, I've been looking forward to this, eventually doing an interview with you on the program. So glad that moment's finally here should be a fun conversation. So with that said, I recorded kind of a brief bio on yourself, but it was very brief at the outset of this interview. I always like to kind of start there. If you can kind of give us an elevator pitch for your professional journey leading up to, you know, you're spending most of your time with single paths these days, probably amongst other projects. But yeah, give us a high level kind of overview of how you got to this stage, I guess, in your professional career. Sure. So this stage started 41 years ago when I got out of

school, every degree in chemical engineering, but the entire 41 years has been in medical device development. And the majority of it is products for vascular surgeons or interventional biologists, interventional cardiologists. So always along that way, just doing one project or one company, then leading to the next big project. And through that comes years and years of connections. When you do anything for so long, you create a lot of relationships. If you've done a reasonably good job, some folks like you, and then you get outreach. And so single pass actually came about from something that I did 15 years ago. I was in Phoenix, and a hand surgeon somehow got a hold of my name,

and he was very famous, a very high-volume guy. He had a clever idea for this tended retriever for doing hand surgery. So I just worked with him independently, and we created a product a relatively short period of time we sold it to Striker. So what comes out of that is every time any of his physician parents have a product idea, he refers them to me. So that's part of the deal flow, and there's others as well, so that's how the deal flow comes to me. And in parallel, one of my current partners on Dave Chouerra, I actually hired Dave out of college in 1991. Dave went more than neurovascular route, so once we separated, but basically has the exact same background as I do developing products for neurovascular procedures.

years, but it's the same thing. A little over three years ago, November, 2019, Dave said, hey, you get deal flow for peripheral vascular, I get deal full for neuromascular. Why don't we do something together? Why don't we, you know, take this deal flow and form companies. Right at that time, the doctor in Phoenix made an introduction to 200-inch radioologists in Phoenix, who had this idea for this biopsy closure device using cottery. And that was the initiation of, of single pass. Dave and I did diligence. We said, hey, this looks like it could be a company. So we formed a company with the positions as co-founders, raised the first batch of money. And now we believe we're close to the end, three years later.

Okay. Not quite three years. So relatively short timeline on, for this company. Right. So we are so April and June to buy August. So we are a 28 month old company. Okay. Okay. Yeah. So yeah, definitely, definitely young. Uh, and, by comparison to most stars from the device base. So I'm looking at the website now, singlepass.co, just as it sounds, singlepass.com, if you're listening to this and don't get a chance to read the full summary article on MedSider. But let's pretend that I'm an eighth grader, like maybe freshman or something in high school. Help me understand what's the major challenge here that you're trying to solve for with the single pass device.

True. Pretty straightforward. When you have a solid organ biopsy, mostly they suspect you potentially on the most of the, tumor or some type of disease. So mostly talking kidney, liver, lung, breast, prostate. In order for a doctor to get a tissue sample to do pathology, they have to poke you with a large hollow needle under ultrasound guidance or CT guidance until they reach the target area. Then they reach through that needle and grab a chunk of your tissue and rip it out. And then they pull the needle out and apply pressure and send you to a recovery room or a waiting

room or even sometimes they even admit you to a hospital to check and make sure you haven't been bleeding internally before they send you home. So what's happened over the years, the needles are small, they're relatively sharp, but there's really no way to guarantee that the patient is not bleeding internally. So there's a certain percentage of patients, impossible to predict who's going to have a problem, but they can be minor complications as you just need to more pressure or just stay in the hospital flow out, all the way to major complications, where you would require. require open surgery because you hemorrhage.

And occasionally, rarely this happens, folks die after the biopsy procedure because they had post-biopsy bleeding that wasn't detected by the center. So there was no way right now to ensure before you leave the procedure room that you're not bleeding until this device. We simply go in after the tissue sample is removed, we cauterize the tissue with this really clever new device and the doctors can do my ultrasound to ensure there's a no bleeding before they send the patient to the recovery room and send them home. Got it. So massive market, right, considering the sheer number of biopsies that have done,

at least in the US, I assume that's probably the case worldwide. But thinking about like the vast sort of reasons why someone would want a biopsy, every time, like I'm presuming like, I'm just kind of walking through like, you know, how this device functions. And is there a downside to using cottery for every single biopsy then? No, not at all. The tissue that's damaged for several other procedures, especially local procedures, is a thousand times more. So our cottery effect only goes about a half a millimeter deep in the tissue.

So it basically prevents bleeding if it hasn't started or if there's bleeding has started, it will stop the bleeding. So there's zero downside, you know, other than cost of the device. You know, it is added to the procedure. but other than the cost of the device, there's no downside to the patient. Got it, got it. It seems like it's one of those devices where it's like, how is this not been invented before, right?

I'm sure you probably maybe gotten some of that reaction before. Like, that's really clever. Why don't we have this already? So with that said, you mentioned the company's about not even two and a half years old. You said 28 months or so. So not even two and a half years old at the time that we're recording this in almost September of 2023. Where are you guys at in terms of life cycle of the company, you know, development,

Ray Klin, commercialization, et cetera? So we're close. So in early May, we actually received verbal approval for our CE mark under EMDR. So we are really close to commercialization. Interestingly enough, though, we haven't received our CE certificates three months later, simply because they got to their summer holiday period. So we reached out multiple times the last few weeks, the notified body. probably any day we'll get those certs.

So we'll be commercial in Europe or anywhere where they need to see Mark, probably in September. For the FDA, we did a DeNovo application thinking we had a new indication. And after a little bit of back and forth, the FDA said, hey, you know what, just switch this to a straight IPN case submission. We're just going to say you're equivalent to other cottery devices. So there's a little bit of a process to withdraw the original application to submit a new one. While we're nearly complete with that, so we will be submitting our 510K within the next two weeks. So we expect to be commercial in the U.S. in January. So probably September, October, outside U.S., January, and the U.S. would be full-on commercial.

Okay. That's a super helpful overview. And I definitely want to ask you about the EUMDR thing because that's unique. A lot of startups these days are not sort of like forgetting about Europe, right, and just going straight through the kind of the DFDA pathway and whatever form that looks like, right, 510K, de novo, et cetera. So definitely want to circle back around to that. So that's super helpful. And again, for everyone listening, highly encourage you to check out the full summary right up for this interview on Medsider. But if you don't get that chance, singlepass.com is the

website. You can go learn a little bit more about the clever device, as Bill accurately described it, I think. Singlepass.com is the website. And we'll certainly link up to it in the full summary on Medsider for sure. So with that said, let's kind of transition some more functional topics, sort of rewind the clock, learn a little bit more about kind of maybe recent lessons learned with single pass or just other kind of key learnings that you've had throughout your journey and various, you know, all kinds of various startups. So let's start first with development, right?

You mentioned that you're kind of a chemical engineer by training has spent a lot of your career with early stage development. When you think about trying to be as capital efficient in the early days, trying to get some semblance of product market fit with not a great amount of money typically, you know, for most METTX startups. What do you think are probably some of the key things that, you know, first time or newer device entrepreneur did to keep in mind when they're at that stage with their startup? You know, I think things have changed, especially with COVID, but what we decided to do, now we have what we call Ventry Studio, the group that I work with.

We co-founded three companies in 2021, and we did them all the same. So we always have a single employee, which is a CEO. Everything else has contracted out. We have some CMO partners that we work closely with. So we do not rent buildings. We do not our full-time employee staffs. So we'll use consulting, advisors, sometimes through option agreements, sometimes through reduced fees, but then organizations that are exists.

The fact that we didn't have to rent a building, build a clean room, our full-time employees, that probably took a year off the timeline and saved millions of dollars. So we think this new business model, I think others have done in the past, but now we applied that to every one of our startups. So to get to a point where we literally took us 25 months from starting the company, receiving the first dollars, to getting our notified bodies, giving us a verbal approval of the CE mark under EUMD. And that's super fast. And we've only done two funding rounds.

And we're hopefully, if things go well, we can make it to the finish line without meeting another one. So it is this new model. So to be capital efficient, we don't care about building big organizations and having lots of folks working for you. All of us that are involved are working managers. We do a lot of design, development, outreach. And the group that I work with is because we all are experienced kind of the same way. All entrepreneurial mindset. We don't really care about managing large teams.

We contribute to workload. And I think that's what it takes to get there with less time and less money. So I love the model. And it's very similar to like, you know, how we're running fast wave as an example, right? With a reasonably lean internal team, but highly, you know, highly leveraging our, not only our CDMOs, right, but also kind of our key functional key functions as well, right, through kind of consultant leads, if you will. But someone might say, well, look, my device, you know, it's more complicated, it's more sophisticated, or it's a big, it's a different market. need to build out these big teams. Do you think almost nearly every single device startup should probably look like this in the early days? Maybe the early days. So I'm not sure. I mean, I know

my devices. I know we make, you know, we mostly make catheter base stuff for implants. So maybe for the stuff we do. And I don't know about more complex devices. So I wouldn't say every company should start like this. I think we found a model that works for us. All three companies have made a lot of progress. They all are true. Their second round of funding. They're all really on very fast tracks comparatively to other startups that are similar. So we believe in the model. But again, since I only kind of know my one lane, I really can't speak for outside. Yeah, maybe I'll speak for you then.

No, no. Joking aside, I've asked myself that question, right? And that's the reason I brought it up is like regardless of the market, the device, the system that you're working on, I like, I absolutely think that this is an ideal model for MedTech startups, you know. And at some point, don't get me wrong, like at some point, you know, when you're on to like a series B and a series C or have reached a different value in flexion point for the company, certainly you're going to need to probably bring in or it makes more sense to bring in kind of more internal team members. If you want, the company's going to look a little bit different stages. But like, gosh, in the earliest stages, I just don't, I just, I don't know. It's hard for me to see like a different model being better, right? Then, you know, kind of the one that the one that you described. I mentioned this because I see so many other device startups that that follow that. more traditional path where they look to rent the building and rent the clean rooms and bring on a team of five or six people right out of the gate. It's like, why would you do that? You know what I mean? And so, anyway, I think it's certainly interesting. There's so much

downtime. I mean, we do a lot of work. And then especially with supply chain issues now, so you've got your folks sitting around. So right now, I don't get charged unless I have the CMO doing work for me. If I had the full-time employees, you know, I'm paying them even while we're waiting six weeks for something to come in, you know, and that isn't the greatest. And I just, I just, I guess if you start the company with the intention of growing a large organization because you want to keep it for 20 years, maybe you do out of the gate have a brick and mortar facility and hire full-time employees. We want to develop technology. We want to get regulatory approvals and then we want to be acquired.

So our model is we're not going to build organizations because what we try to do once you're acquired, people are going to pull the product waste on the same way. So it doesn't make any sense for us to be stuck with the lease and know that folks, you know, Maybe they'll cash out, but they'll lose their jobs because it's going to go to wherever the acquire is. So we'd rather just stick with this model. Yeah. No, I think it makes a lot of sense. And for those listening that are like, you know, having doubts around whether this works.

I mean, Bill just mentioned, like, this is what your third or fourth company that you've kind of followed this sort of framework and seem to be making. Three started in 2021 and two others underway and three others under consideration. Yeah, yeah. It definitely works. And I don't know. I'm bullish on this approach. And yes, I think it's fair to say, does it work for everyone? You know, maybe not.

But I think it should be default right out of the gate, at least. You know, and if you're working on something that's just, you know, dramatically now are different in some form or fashion and you can't make this model work. I think obviously that's maybe a bit of a unique, unique situation. But like I'm remembering a conversation I had on the program, gosh, it's probably even five or six years ago with Paul Buckman. You may be, you know, Paul, he was early at Symed, then he went to Boston and then has done a, I know the name. I don't know personally, but I know the name. Yeah, really, really nice guy. I actually got to know his daughter, Annie, fairly well when I was at

Cavity and Medtronic. But Paul, serial entrepreneur, but he mentioned something. He's like, you know, one of the things that I see a lot of startups and stake, or startups make is that they can be leaner, right, and they don't have to raise enough money, but look for maybe an earlier exit, right? Don't think that you have to like commercialize and drive all kinds of, you know, top line revenue to get a multiple because you've raised so much money. It's just a, it's a, it's a model that oftentimes doesn't work out in the best. In fact, he said, you know, instead, what I'm encouraging a lot of, and this was, this was probably back in like 2017, 18. So quite a while ago, he's like, instead, I'm, you know, I encourage a lot of founders to think about how can I get

to the next, you know, value inflection point, you know, in this company with it, and in as lead a fashion as possible without, you know, diluting ourselves. And instead of, you know, getting a $200 million exit, a $250 million exit, no, be fine with a $50 million exit, a $75 million, a $75, $25 million exit, right? And if you've got less capital in at that point, it can still be a really, really big win for all of the founders and early investors. And so I'm assuming you kind of have a similar kind of thought process around how these, how these, you know, could play out. Yeah, exactly. What we like to do with the first round of funding, we like to get to first in May. So we believe there's a value in flexion. And a lot of the C rounds are convertible notes

because it's really hard to value stuff. And once we get to purse a man, that'll drive value. then we'll do the first priced round. And then with that, for especially Class 2 products, like SinglePass, the price round will get us through both regulatory approvals and a limited market release. So single pass has raised $4 million total. We're going to get to FDA clearance, a market release in the U.S., plus a CD mark, and a limited market release in the CE countries.

And we think that should get a sense. That will be the next big value inflection. And we have both regulatory approvals. And we do have some, I'll say, commercial feedback from some product advocates. So that's it. We don't have any dreams about getting a big series B to build a sales force. So we think that will prove the value, that will eliminate the risk or reduce the risk dramatically for strategics. Both regulatory approvals, some commercial uptake.

And you know, that you're right. The number can be low. If we get another round and we've got to sell for five times. more just to get the same return on investment. Yeah, that framework makes it, makes a ton of sense. So just if I understand it or just to kind of summarize, you'll raise convertible notes, right, in terms of the kind of the first sort of capital into the, the first significant capital of the company, convertible notes, kind of seed money to get to first in human, right?

So that's your vector with that initial, initial cash development in the first of human. And then the next sort of price round, I'm not sure if you'd call that a series A, but the next sort of price round would be to get to your, your key kind of regulatory miles leading up to eventual commercialization, right? Right. For class two devices, we can get through regular approval. We do have one company that's class three device and that's just to get the IDE approved and have the pre-sum with FDA. So we know the path board because you know ID, PMA takes a bunch more money. Probably unlikely anyone's going to acquire you, but at least we will have a well-defined path.

So single pass, this was always a plan. So it was a series A that was the second one. C round was a million and a half. The series A was two and a half million. And hopeful if we're, if we can withstand diligence, that maybe that'll be it. Got it. Got it. Yeah, that's, you can do it, you can do a lot with a relatively small amount of money for sure. And I think you're, you're proving that out. One quick follow-up question, since we're on this topic of kind of capital raising. So you mentioned your first seed money, typically convertible notes, right, that will then convert upon that first price round. Like, from a process standpoint, you sort of leave, you tend to

leave sort of that open, are you always sort of raising over that period of time until you get to that price round? Or do you kind of, you know, do you intentionally try to, you know, close those, that round of convertible notes, so to speak, within a defined time frame? We pick a closing time. Well, also, more importantly is we have a pretty solid budget. What will it take for us to get the first man? And we've almost always been really close to that. So we'll close the C round once we get those dollars. Got it. Okay. You know, it made, I think we did rolling closes.

Once we started collecting money, it took us 90 days to collect the seed ground. So it was like April through July of 2021 was the seed wound for single pass. Got it. So that was raised in the first million and a half bucks. And then we sat tight until we started getting some clinical feedback. And then then we went for the series. Got it. So the seed realm, you know, because the convertible notes are really

beneficial to investors. I mean, our seed run people more than tripled their value. Okay. From the from the seed stage to the price series A. Okay, got it. Yeah, that's nice. I mean, nice 3X on, on, you know, in a really, really short amount of time for sure. I think anyone Yeah, so that really within 18 months, they actually, their value in a 3.3 times. Okay. Yeah, nice. And are you giving them, are you typically with your seed convertible notes, are you typically giving them some sort of value discount on the first price around them? Yeah. So we usually, well, what's typical is 6% interest,

which then applies towards, you know, more equity and a 20% discount. Got it. That's really all. I know it's kind of in the weeds and a little bit tactical, but I think it's helpful, right, for people that are considering, you know, that's oftentimes that I think is that, unless you have maybe a vast network like you do, like oftentimes the hardest money to raise is that seed money, right, just to get something out of the starting blocks. Yeah, it's the highest risk.

I mean, we didn't have any proofs yet. We did have one issue back already from the clinicians. Another patent pending. They had a working prototype, but we knew it needed some design change. So it's super risky money. So you've got to make it appealing to investors. Even though we have a large network, you still need to make it appealing. I mean, these folks are smart with how they spread their money around.

So they're willing to take risk very early if they think the returns can be pretty big. Hey there, it's Scott. And thanks for listening in so far. The rest of this conversation is only available via our private podcast for MedSider Premium Members. If you're not a premium member yet, you should definitely consider signing up. You'll get full access to the entire library of interviews dating back to 2010. This includes conversations with experts like Renee Ryan, CEO of Cala Health, Nadine Miarid,

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