Medsider: Learn from Medtech and Healthtech Founders and CEOs - After Selling Their First Spin-out (Corventis) to Medtronic, this Team is Aiming for an Even Bigger Splash in the Wearables Space

Episode Date: March 31, 2016

When most people think of the wearables space, devices like the Fitbit or the Apple Watch come to mind. But over the past few years, there’s been a lot of development with respect to wearable devices that were designed for the traditional healthcare market. Medtronic launched the SEEQ device. Although implantable, St. Jude commercialized the...[read more]Related StoriesWhy Intersect ENT is an Example of Hope for the Medtech IndustryAre Medical Device Models the Key to Building a Lean Medtech Startup?Substantial and Sustainable – 2 Words That Medtech Companies Should Get Used To 

Welcome to Medsider, where you can learn from experienced medical device and med tech experts through uncut and unedited interviews. Now, here's your host, Scott Nelson. Hello, everyone, it's Scott Nelson, and welcome to another edition of MedSider. This is the show where I bring on experienced med tech and medical device thought leaders. And on today's program, we've got Daryl Drenan. Darrell is the CEO of Philo Metron, a tech accelerator based in San Diego that develops novel therapeutic solutions for chronic diseases. Philometron spun out Corventus in 2005, which was later acquired by Medtronic in 2014. Prior to co-founding Philometron in 2001, Darrow was the director of new program management for Braun Thermoscan, a subsidiary of the Gillette Company.

So without further ado, welcome to the program, Darrell. I appreciate you coming on. Well, thank you for the opportunity. All right. And I know before I actually hit the call, record button for this interview, I asked you how to pronounce Philometron. I'm pronouncing that correctly, right? That's correct, yes.

There's plenty of stories behind how other people have tried to pronounce that name. So that's a key point for any startup company is choose the name carefully. That's right. Advice number one from Dural, choose your name wisely. Cool. So let's start with, let's start on the topic of Corventus, because I think for most of my audience, that's what they're going to be most familiar with. And let's kind of go back to Corventus and how it was affiliated with your accelerator, Philometron. That was your first spin out, right? Corventus was back in 2005? That's correct. Yeah. The origins of the research behind Corventus started back when we created Phelope. Inelmetron in 2001, DARPA funded us to develop patches for soldiers to monitor various physiological parameters.

And we were successful in doing that through 2003. We then started to focus on how we would commercialize it for the military and realized that was a significant challenge. So we looked at the healthcare applications and found the cardiovascular region market. specifically to be the one that was going to be most receptive to the platform. And we met with Moore-David-Al first, and they wanted to do a deal with Kleiner Perkins, and we all got together and decided actually to create a spin-out because at the time we had a bunch of different research projects ongoing in various different

categories, and Kleiner and Morda-David-L only wanted to focus in on this cardiovascular. application. So we created a company called Amigo Therapy, which was the first name, the undercover name for Corventus, and closed the deal with those two groups in November of 2005. Okay. Great. And that's what became Corvente as we knew it before the Medtronic acquisition. That is correct, yeah. Great. I want to definitely break that apart here as we progress kind of throughout this conversation. But like I mentioned in the intro, Corventus was acquired by Medtronic in 2014, I think for a reported, you know, 150 million. I'm not entirely sure if that's accurate. But when you think about that acquisition, as well as how well I think Medtronic is doing

with the two devices, I think their seek and link, I believe, are their names. And I'm not entirely sure which one came first, I guess. But when you think about that acquisition and then the success of those product launches, especially here in the U.S., how does that make you feel? Well, of course, you're always proud to be involved with the success, but as the old saying goes, success has many parents and failures are orphans. So one of the many parents that created the Corventus platform, we weren't the only group. Obviously, there's a great group of guys there in Minneapolis, as well as in San Jose, that did some of the heavy lifting on the application that ultimately Medtronic acquired it for.

Got it. Well, cool. Certainly a cool story in today's med tech world, which I think everyone listening to our conversation now understands that it's certainly a challenging environment, not just from a funding standpoint, but also, you know, the regulatory environment, you know, can present various challenges as well as just, you know, the insurance coverage and reimbursement as well. So certainly a very cool story. And before we kind of go back to that, you know, that pre-2005 era with Corventus and how that technology came to fruition, let's talk about wearables in general because it's certainly a hot space. Seems to be,

you know, if you keep up with, you know, the healthcare scene or med tech in general, there's lots of investment, a lot of M&A activity, even consumer brands like, you know, Apple and Under Armour are, you know, are making significant investments in wearables. I think Fitbit's IPO was, what, last year in 2015, I think. My memory serves me right. So when you think about, you know, wearables, is it justified that that space is, you know, is so trendy right now? What are your, what are your general comments about, about wearables? Well, I think that, yeah, a broad way to look at that is in the healthcare space, the wearables are, yet to emerge other than a couple of small applications such as diabetes and cardiovascular

ECG monitoring. In the consumer side of the business, it's a different approach, whereas life sciences typically have a very narrow vertical focus on an application in the consumer side of the system, like Fitbit, for example, or jawbone, etc. They're trying to reach a large, large audience. And there's very few applications that meet that large, large audience. And so they've started with fitness, and as we all see now, that there are some challenges to that focus in terms of clinical efficacy,

the relevance to using something. And then, of course, the device itself, the wrist span devices are going to have some challenges picking up clinically relevant parameters. So I think all of those will be constrained, constraints on the consumer side of the market. I don't believe the technology guys really understand health care, so they stuck with things that they do understand. And fitness is one of them. So if you look at it in that context, I think there's challenges in that market in terms

of future growth opportunities, incremental value, price points. Whereas in the health care market, it's very clear there's needs. They're very clear opportunities, as I mentioned. And we look at the continuous glucose sensing capabilities, the mobile cardiac telemetry, which of Corventus's with, are two of the early vertical applications and have very high value to not only a patient, but the payer and the providers. So if you look at it in the context, the margins are obviously going to be higher in the health care side of the market.

Got it. And are there other, you know, when you think about the health care side of the market versus, you know, the consumer play, are there other areas that you think wearables will make a lot of sense or will make a big impact? Again, I think we try to keep them bend in those two categories because if you start to get into this middle category, if you will, or you get into a gray area. You know, some people have talked about wellness programs. They're now using another term called population health programs. But it comes back to is the data clinically relevant and is it actionable. So in the fitness side, it's self-actionable. You could do it yourself, whereas in the health care side,

you typically need a clinician of some sort to help you understand the value and begin monitoring it. I think the area that is severely underserved but challenged in terms of a price point to be able to do it technically or is the weight loss category. Because weight loss, weight management is simply a behavioral issue. You need a diagnostic that tells you the problem. And for the most part, the problem is very simple, and that is you eat too much. and you exercise too little. So if you were able to monitor those two parameters,

you probably could then create some type of effective interventions, behavioral modifications. But the challenge to date has been the calorie intake side, and that is the ability to determine how many calories a person has consumed is very difficult to do manually, let alone because of compliance and estimation errors as well as the variance in what we eat. The calorie expenditure side is very clear that there are devices, including risk bands, that gets you to a certain level of accuracy that's more than adequate.

So a group called, he'll be attempted to do that with a risk-based device telling you how many calories you burn. But I think from what we're reading is it looks like the values, that they're providing to their customers are suspect in terms of how they're actually measuring it through a risk-based device. So our next spin-out, we spent the last six years developing algorithms and technology, patch technology, to actually measure that particular parameter of calorie intake. And we've gotten it to what we call a two-sticker bar error and that's more than adequate in the market right now.

That's not a cumulative error. That's just an error. So on day one, most people burn between two and three thousand calories a day. And as a result, you know, none of us are rapidly expanding and rapidly contracting. So on day two, then if you're looking at it as a trend over time, you're at, you know, two to four thousand calories and so on and so forth. So our error of a Snickers bar, is well within the accuracy needs of the market

then to drive a behavioral change over a two to three month period where, as you can see, the whole premise of Weight Watchers is to count points that are assigned to a food group that give you the number of calories you consume. But if you take that responsibility away, just take that compliance component completely away, take the technique component completely away, and have the patient focused not on the counting of calories, but on their behavior,

suddenly now you have a much more focused system and perhaps a far more effective system. Yeah, very cool. And that's what you're doing at BioRibbon Health today? BioRibbon is, yeah, BioRibin has got 12 different families of parameters. It will be the most comprehensive monitoring platform in a single device out there today. and it'll be useful in both health and health care applications, as we described it. So it could measure the usual suspects of heart rate and ECG and respiration and temperature and motion. But on top of that, we can tell you your body fat, lean mass, hydration, net weight, emotional status,

calorie expenditure, calorie intake, meth, calorie balance, et cetera, et cetera, that you can with all of the parameters. And it's in a small chest-worn patch that uses Bluetooth to go through your phone up into the cloud. That's very cool. Sounds incredibly promising, and I mean that in all sincerity. And I do really want to circle back to the problems

that you initially were trying to address with bile ribbon shortly after, you know, Corventus there. But before we dig into biarrhythm, you know, with too much depth there, but let's go back to, let's even go back, rewind the clock even further, to even, you know, kind of earlier in your career. Because I would imagine there was probably some mentors along the way, maybe some lessons learned, especially as you, you know, it sounds like you had some great experiences from, you know, your time at, at thermoscan with Gillette. and then on to the UCSD, I think it's wizard program. Is that how you pronounce that? Yeah.

Which is very cool. So maybe talk a little bit more about your earlier career. And then is there anything, any experiences or any people that you really could point to, whether it's people or experiences, that, you know, you were able to really, you know, kind of propels you moving forward into your experiences with Philometron and Corventus and Al-Biorebin? Yeah, I think some that stand out in my mind through all of these programs, whether it's my Gillette Braundays or helping a couple of different programs. UCSD, I was also a part of the Army Medical Research Command's TATRIC group in terms of reviewing

extramural programs. So what I found consistently and problematic is that people were developing technology in absence of focus on the problem. And that creates a number of problems for you as you move forward. So if you start with a clinical problem or a life science, health care related problem, and understand it well and focus on that, your intellectual property portfolio is going to be far deeper because you're going to identify not one but many different potential solutions. You're going to see the ability to do a SWAT or other types of analyses on those, and thus your IP is going to be broader and more robust to capture a field of use that is meaningful into the market.

And you'll understand all of the challenges that others have had. So when we were at Gillette, we were studying this category of body composition very heavily. and we developed a mindset that says don't drink your own Kool-Aid. And that came from my design teams in San Diego and Germany. We started to do focus groups, and what the focus groups was telling us was completely different from the device that we were developing. So I made my guys go to these focus groups.

And for the most part, they were stunned because the market for those types of devices at the time was predominantly women who were making the purchase decisions. So we were looking for in those focus groups in San Diego, Paris, Frankfurt, and Boston, we were looking for specific feedback of why they would buy it and why they wouldn't buy it. And I'll be candid and tell you that some of the design options that we had to implement weren't even in the same unit. universe of thought that the testosterone-based design team that I had could even contemplate. That's because they weren't the market. So drinking your own Kool-Aid is a huge problem.

You don't talk to your customer, you don't know, and you're developing it for perhaps the wrong customer, especially again in the healthcare space. The other thing that we always had at Gillette was this rule that if you had to do three things in a device, a diagnostic home-based device, you would fail. So if you would have to, the patient would have to be compliant, there was a technique involved with that device, and then there was education of the value that would fail in the market. So let me give you an example of that. The technique would be a blood pressure cuff.

On a wrist-based cuff, if you don't have your wrist above your heart, you can have 10 points of mercury or more air injected into the value. So as a result, you're not going to have an accurate device. So that's technique. There's a compliance component to that too. And that is if I have to remember to do this at 8 o'clock every day or 5 p.m. every day, suddenly, I have to be.

So I've got two there. The third component that makes blood pressure possible is people understand what normal is, 120 over 80 or what's defined as normal. So that makes the blood pressure possible. But imagine these emerging categories where you don't know. And I'll give you an example of that is the headband device called Zio. When they came out, it was a compliance issue. You had to put it on.

There was a technique issue. If you didn't put it on the right spot of your forehead, it wouldn't work. And the third is they created a brand new value called the ZQ score, which was related to the quality of your sleep. People didn't understand what a normal value was. So as a result, you had all three, and of course they did fail. They weren't able to penetrate the market because of that. And that's a good example of how you can or cannot fail in the consumer side of the market.

On a prescriptive device, there's a little bit more complicated. because you can have somebody help you understand those values and guide you. And I think with the way that digital health is going now with these automated feedback loops, it's becoming more and more possible to use, create values and feedback off of data that the patient may or may not understand. Got it. That's great stuff. I'm going to nickname that the Drinan 3, you know. Yeah, there you go. That's good stuff. And I want to come back to that because I think, it deserves maybe some follow-up questions about, in essence, what you're saying is you can't ask

the end user or the end customer to take three steps, especially if, you know, two out of the three or at least one out of the three is, you know, it forces them to learn something, you know, new altogether. But before, well, let's stay on there. And I want to ask you a little bit more about the focus group concept. But do you see that, I mean, you mentioned the Zio, which I think is a great device. And I do recall that device, you know, getting quite a bit of attention. And there was definitely some hype around that. But also as it sort of faded off, you know, there wasn't certainly enough. There certainly wasn't the same, that same sort of, you know, attention to the lessons learned with those with those founders of the Zio device.

But do you, you know, when looking at like those three issues that you mentioned, can you get away with, with two? Or is it really just that, you know, you can only really ask the end user or two to make one adjustment on their end. What are your thoughts about that? I think you can get away with devices with only two of them. Two of them, okay. As I said, I think blood pressure is a good example. They understand what normal blood pressure is, and there's a compliance, and there's a technique

involved. So how about standing on a bathroom scale? You understand what weight is, so there's no education component. There is a compliance component, and there is potentially a technique. if you rock around on the scales or you don't have the scale properly on the floor, it could be an influence. Got it. Yeah, no, that's another really good example. And I could see your point about why it's not as big of the deal. You know, when there's a, you know, in more the traditional healthcare setting, when there's a provider involved to sort of coach that patient along, so to speak. But it's certainly good advice, though, for any, you know, any product development team that's even focused just exclusively within the health care setting that, you know,

once they kind of hit those three points, they're asking that patient to do all three. That may present quite a few challenges, even with a coach along the way. Right, right. Good stuff. Now, kind of going back to your comments about focus groups, and I love that you went there. And I guess my follow-up question is, is how do you balance that with, you know, the kind of the Steve Jobs concept of, you know, of having to design products, you know, with focus groups because, you know, people don't always, you know, don't always know what they want until you show it to them that whole, and I'm not kind of paraphrasing that Steve Jobs quote, but I think you get the hint.

So how do you balance the two, you know, focusing on really the problem through focus groups versus using focus groups when they may not know entirely what they want? Yeah, I think that, again, coming back to the difference between a consumer device, like a phone or a computer, or I'll describe it as technology. device in a consumer market versus a healthcare market or two different things. If you have a Steve Jobs that wants to create a market for a new solution, how do you get people to use that? Well, you have to tell them what the problem is that you're solving for them. You also have to make it appealing. So the cool factor is a way to market that.

You know, I have to have that. It's cool. If you look at clothing, that's a good example. Well, you know, do I really need a new shirt with a new logo on it? Perhaps not. But if it's part of this trend and the cool trend, then I think you can introduce that and solve a problem that they didn't know they had. On the health care side, it's a different animal.

When you have diabetes, you have to solve it. Otherwise, you die. And so there is a different metric that you're going to put on the health care-related side is there isn't need. There's a very clear life sciences is in a sense easier to address because the problems are known. You're bleeding. You have high blood pressure. Your glucose is out of control or your insulin levels aren't being properly.

You have your obese. Your hair is falling out. your teeth, I mean, there are many, many, they're very concisely defined. And that's why the pharmaceutical side of the world is so very narrowly focused on a drug. MedTech is very narrowly focused on a problem, whereas you turn right when you go across the consumer because you have to create the demand on some of these. And that's very, very challenging to do. I mean, how long has it taken the Internet to become such an integral part of our life that

we can't live without it, 25 years, trillions of dollars. So that's an example of I didn't know I needed it. Now I need it and now I can't live without it. Sure. Your cell phone, et cetera. Got it. No, that's good stuff. That's good stuff.

Thanks for kind of the examples. I like how you use those to describe the issues. Very good. So let's, I know for the sake of time, I know we probably only got another, you know, 10 minutes or so. And I want to somehow talk about, if you can, contrast maybe your early days launching, you know, through the kind of the product development with Corventus versus what you're doing with BioRibbon. I guess what I mean by that is, you know, at Corvintus, it seemed like you really honed in on, on, you know, cardiac monitoring versus now with biolibbon, it seems, you know, from the limited

information that you shared earlier, it seems like you're expanding, you're expounding, you know, a lot further, you know, in terms of what you're monitoring. So talk a little bit about, you know, what you learned from Corventus and how you're applying that to BioRiven, just in terms of addressing certain problems through the, through product design and kind of how you envision going to market with, you know, with what you're developing at BioRiven. Well, remember, when we started Corvintus or we started to commercialize the underlying technologies for Corventeus in 2004, and funded it in 2005, there was no iPhone.

There was no iOS. There was no Android. So that impediment in that pipeline, or that platform and that pipe, and the cloud, Amazon Web Services, didn't exist. All of that exists now. So now we can make it invisible. Like the analogy I often draw is to,

do you really know if your phone is, a CDMA or a GSM phone, you really care. Okay. So it has gotten to that UI, U.S. interface and how I use it in my daily life versus it being a technology difference. And that's where I see the health care market moving. I see the fitness market doing one thing, staying on the wrist, trying to figure out if they can get any meaningful clinical data off of your wrists or those types of devices.

But I think the health care wearable market is going vertical. And those verticals are going to be very problem focused like we talked about before with a particular solution in mind. But to do that and to do that across a large population, you need many different sensors to mitigate variances in physiology, variances in use patterns, variances in body motion and what we call noise artifacts. So by adding more sensors to mitigate that noise,

you suddenly now have the ability to provide a more robust value than a single sensor platform, such as the Corventus's, the Vital Connects, or even MC10 stuff that they introduced at the CES, where they're basically an accelerometer and a voltage pickup, and they're limited to variations of that. Whereas our bio-Ribbon platform decided to go put everything we needed in there and be able to provide all of that data

so that new observations can be made on things that we've never knew about. We have a number of different trials that will be utilizing the platform for things that we couldn't have even imagined the platform, but the clinician or the researcher has said, hey, I need to figure out if this particular parameter has some influence on the underlying condition. I can't go into too much detail, but I'll just say, take an example. that at around age 55 to 60,

most humans lose their thirst complex. So they're unable to tell whether or not they're hydrated. Well, what is the clinical manifestations of that? Could it be the effectiveness of drugs when you take them if you're chronically dehydrated or acutely dehydrated, perhaps? could that cause dysphenia dizziness in elderly patients, ultimately having them go into the hospital for an IV, perhaps? So there's a whole bunch of different yet-to-be-discovered applications

that say, if I monitored this and I had an alarm go off and say, hey, drink eight ounces of water, would that solve this problem? perhaps. And there's a whole slew of things that will come out of this. So we're not suggesting that someone look at all this data naked, as we would call it. We're developing what we call signatures or biolribbon signatures, and these are the combination of these different parameters

as they're correlated to that particular endpoint or truth, and those data points will allow an individual or a group of individuals to make decisions upon and drive those decisions from that data, that clinical quality data set that they can do it remotely. And we think that's going to address a huge market in a underserved population, and that is the population that's not in the hospital and the population that isn't healthy. It's in between, it's the unhealthy group in between the east, are and all the way back to your healthy that are elderly or have multiple comorbidities that are driving the expenditures in the U.S. Got it. Yeah. Very, I mean, very cool. So thanks a ton for that

explanation. And before we get to kind of the last, the last three, very, very short, very quick question and answer segment, one follow-up question to that. So when you think about what, you know, the activity, the development, potentially, you know, the clinical trials that you have in mind for, you know, for what you're doing with BioRibbon health. And then contrast that to, you know, your experience is at, you know, through the core Ventus progression, you know, progression. Is there something that, that is there like one, one key thing that, like, that stood out during your time of the core vintus that you're like, this is how we're doing it differently at BioRiven? Or one major lesson. Yeah. Yeah, I think the number of fencing parameters, as I say, is going to, is the difference

between us what Corventus is doing or Vital Connect or MC10 are doing currently or even Preventus for that matter. All those groups that have the voltage pickup and the temperature and accelerometer, this is a more complex platform because the data needed to mitigate the... just positional changes or temperature changes or seasonal changes or grandma's heart rate is 62 in San Diego on Tuesday and she's at 91 on Wednesday while she's in Denver. Got it. Yeah.

She went to fly to her kids. How do I know that? Well, I have data coming off the device and the phone that I can calculate that and thus I can mitigate any intervention if that's true or I can intervene because I can't intervene because there may be something going on there. Got it. Cool. Very good.

So thanks for, thanks for kind of explaining that in more detail. Appreciate it, Daryl. And let's get to the, you know, for the sake of time, let's get to these last three questions. If you can just, you know, feel free to answer them in sort of brief fashion. Or if you want to expand a little bit, feel free to do that as well. But let's start with the first one. What's your favorite nonfiction business book?

Or maybe one that really stands out? Yeah, I think the Lean Startup series and I think NESD Blank's books are, if you haven't read them as an entrepreneur, you are going to fail unless you read them. They are not close, not nearly accurate. They're perfectly accurate to the experiences and the needs, what you need to focus on because they have such relevance to what I just describe of a problem focus, talk to your customer, don't drink your Kool-Aid. I think they're brilliant. Yeah, and if that's, I'll go ahead, sorry. And as I said, in terms of a business leader, you know, Steve Blank is pretty far up there on the pecking list of people

that have solved some really, really challenging problems. I think the other side of this key, whether it's the industrial design side of the equation here, that these devices need to not be, traditional medical devices. So they have to have some industrial design. And so you're looking at guys like Max Burton at Matter or the IDO folks or Frog for that matter and have some relationship and have an empathy and appreciation for what they do because it's subtle to the engineers. They don't get it, but it's extraordinarily important. And what you're getting at there is the

component of these devices, it can't be something that that is very challenging for the end user to use. It's got to be designed in a way that is so simple. Like, you know, comparing iOS versus Android. You know, everyone common to iOS just works. You know, an Apple phone, you open it up, it just works, you know, not always the case with Android phone. So I'm glad that you mentioned that. And hearing you kind of dive into the, you know, the really extreme focus on, on the problem and not necessarily your technology or your solution reminds me that um i think it's albert albert einstein maybe that that quote of like if i had an hour to solve a problem it's been you know 55 minutes you know thinking about the problem and and the remaining time you know five

minutes i guess thinking about the solution so i'm glad that you mentioned that so um so good stuff and i also find it ironic that you mentioned you you call out steve blank uh you know with with the lean startup versus eric riz because i think a lot a lot of younger folks would, you know, name Eric Reese in a lean startup, but Steve Blank is, correct me if I'm wrong. Well, they're both. I mean to exclude Eric, but Steve is doing some other work in a similar capacity as the lean startup guys have done.

So I think they're talking the same issue. Got it. Cool. Well, you answered already my second question about business leader. You call it Steve Blank, so we'll leave that one off. Third and last question, Darrell. When thinking about, you know, your career in health care. What's the one piece of advice that you tell your 30-year-old self if we had to rewind the clock that far?

Yeah, that's a good question. I would say that I think that the, you know, I pointed out, don't drink your own Kool-A, don't think you understand. Don't be enamored with technology for the purpose of technology because technology is hard. And if you focus on a problem and you understand it, you're more valuable. So becoming an expert or an expert in multiple areas because you know it, then becoming that KOL in that particular category is very valuable. Being a generalist has marginal value. I would also say that the greatest percentage gain in value happens from creation

to, I would say, first prototype or first in human use. after that it becomes a grind. So manufacturing stuff, hardware, especially, is a really tough business. You have to be not faint of heart to be in the hardware side of the business. Got it. That's good stuff. Thanks again, Daryl, for taking the time to converse with me over the past 30 minutes or so. And I'll link to these in the show notes on MedSider.com.

but and if you're reading this you know this this this interview in text-based format of course you'll you'll see the link that darrell calls out but with the best place to direct the audience to learn more about what you're doing is it is it biol ribbon health is that the best uh the best URL yeah they want to know about yeah biorevenhealth.com is there okay uh very good so check it out when you get a chance biolrivenhealth dot com of course you can google that or google uh you know darrell dryan as well i'm sure there there's some stories about darrell and and Corventus and whatnot that you'll find as well if you want to take a little bit deeper. So Darrell, I'll have you hold on the line here.

But thanks, everyone, for listening to another interview, another MedSiter interview. And until the next one, everyone, take care.