Medsider: Learn from Medtech and Healthtech Founders and CEOs - Aligning Mutual Interests to Build Long-Term Partnerships: Interview with Alio CEO Dave Kuraguntla

Episode Date: June 4, 2023

In this episode of Medsider Radio, we sat down with Dave Kuraguntla, co-founder and CEO of Alio, developers of transformative solutions for kidney health, including a remote patient monitoring platform that provides non-invasive, highly accurate, and multi-metric patient data. Dave holds a degree from the West Virginia School of Osteopathic Medicine. While pursuing a surgical residency, he co-founded Alio. And in this interview, Dave shares his journey from aspiring surgeon to revolutionizing kidney health. He discusses common entrepreneurial challenges, such as killing risks early on, being diligent around clinical accuracy, and collaborating with FDA.Before we jump into the conversation, I wanted to mention a few things:If you’re into learning from proven medtech and health tech leaders and want to know when new content and interviews go live, head over to Medsider.com and sign up for our free newsletter. You’ll get access to gated articles, and lots of other interesting healthcare content.Second, if you want even more inside info from proven experts, think about a Medsider premium membership. We talk to experienced life science leaders about the nuts and bolts of running a business and bringing products to market.This is your place for valuable knowledge on specific topics like seed funding, prototyping, insurance reimbursement, and positioning a medtech startup for an exit.In addition to the entire back catalog of Medsider interviews over the past decade, premium members get a copy of every volume of Medsider Mentors at no additional cost. If you’re interested, go to medsider.com/subscribe to learn more.

You have to look at it as fun, right? If you're not embraced, you've got to embrace the, embrace the fact that it is a roller coaster and laugh at yourself and be willing to learn from what you did wrong to get the next one right. Otherwise, you're in for a rude awakening. Welcome to MedSider Radio, where you can learn from proven med tech and healthcare thought leaders through uncut and unedited interviews.

Now, here's your host, Scott Nelson. Hey, everyone, it's Scott. In this episode of MedSider, I sat down with Dave Kragutland, the CEO of Allio Medical. Dave holds a degree from the West Virginia School of Osteopathic Medicine, and while pursuing a surgical residency, he co-founded the company, which is developing transformative solutions for kidney health, including a remote patient monitoring platform that provides non-invasive, highly accurate, and multimetric patient data.

Here for the key learnings that we discussed in this conversation. First, it's important to kill risk as much as possible, especially in early stages, by aligning the interests of key stakeholders, being responsive to customer needs, and remaining open to pivots if necessary. Second, to effectively manage the fundraising process, you first need to demonstrate your company's commitment to long-term sustainable growth. Third, it's critical to foster the right partnerships with individuals and organizations whose vision aligns with yours.

This will benefit all parties involved, especially the patients your company aims to serve. Before we jump into this episode, I wanted to let you know that we just released the latest edition of MedSiter Mentors Volume 3, which summarizes the key learnings for the first. the most popular medsider interviews over the last several months with folks like Jim Persley, CEO of Hinge Health, Carol Burns, CEO of Cajent Vascular, and other leaders of some of the hottest startups of 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. If you're not a premium member yet, you should definitely consider signing up. In addition to every volume of Medsider and Mentors, you'll get full access to the entire library of interviews dating back to 2010. This includes conversations with experts like Nadine Yared, CEO of CVRX, Renee Ryan, CEO of Calah Health, and so many others. Learn more by visiting MedsiderRadio.com forward slash mentors.

All right, Dave, welcome to Medsider. Appreciate you coming on. Thanks so much for the opportunity to be here. Scott. I really appreciate it. Yeah, I'm looking forward to this conversation. Really cool technology that you and your team have built and are developing. And yeah, it should be fun discussion.

So I recorded your bio, at least a high level bio for yourself at the outset of this interview. But let's start there. Can you give us a sort of a macro perspective on your professional career leading up to starting a Leo and running it as running the company as CEO. Absolutely. So from my world, it was very much focused on heading off to medical school, which I did after a few years of research to the National Institutes of Health and I was heading off to a surgical residency and had a chance to see the patient problem firsthand.

I think I had a unique view into it. My co-founder, who I interestingly enough met on a Little League baseball team 30-some-odd years ago now. He had done an undergrad in computer engineering and a PhD in bio-med engineering. And while he was his PhD program along with his co-founder of that company, they came across the technology that was very interesting and got a chance to effectively have a court side seats to seeing how that got through the initial process and was eventually acquired by major med tech. And that sounded pretty neat. And I think certainly for me, I found myself gravitating more towards tools in the in the OR and thought, okay, this could be really interesting and had a really interesting opportunity to see

the patient problem firsthand. Notice that kidney health in particular had been lagging, I'd say behind other areas, why is cardio, why is ortho getting all these really neat tools when this is a neglected often underserved patient population that could certainly benefit from some new innovation and technology. And that's a little bit of what led to the initial idea of solving what's effectively a sampling error problem in medicine. And how do you solve a sampling error problem is with sensors and software? That's how we got off to getting Leah off the ground. I told my parents it was going to take a year off residency.

And well, here we are quite a few years later. Still done this. That's great. I love it. It's like a classic, classic startup story. And just to set that kind of the stage or the time frame anyway, we're recording this in Q2 of 23. But you were in, you were at West Virginia, right?

back in like 2010, I'm almost 10 years ago. Yeah, about 10. Yeah, it's been just almost, almost 11 years in the summer, if you will. And then kind of the fall of 2012 is when it really started to come together and being able to focus on this, decided to focus my time on the effort. It's been a journey to say the least. Oh, yeah, no doubt, no doubt. I always like to like set that timeframe because I think there's a lot of entrepreneurial-minded

folks that listen to this podcast and they don't really have a real sense. of how long these journeys really, really, really take and kind of med tech and health tech. So, well, that's cool. On that note, you said you saw the patient need up front and center. And I love the fact that you touched on the idea that or the concept that, you know, dialysis, kidney care, et cetera, typically doesn't get the same sort of attention as, you know, cardiovascular orthopedics, ophthalmology, what name you or what have you. So talk to us a little bit about the alleleo, like the allelea platform and maybe kind of

circle back around to like how like how the idea even came came to be sure so to touch on why you know in some ways where this journey has taken in that time frame the initial idea um from my background one you know heading off to surgical residency wanting to to be a vascular surgeon was seeing the implantation of bypass grafts um in particular for this patient population and seeing how often these folks would come back days, weeks, months later with a clotted graft. Now they're suddenly not being able to get dialysis. They're needing a central line. They have a high rate of becoming septic. It's leading to their demise. This is a really bad work loop, right? I mean, there's not a lot of places where we'd accept that as okay, if you will. And once again, if you think about that from a,

how do you solve what is effectively a treatable problem if you know when to solve it? Once again, with sensors and software. So the original iteration of the company was actually by placing sensors embedded into the wall of a bypass graft. Also had an opportunity to be able to look at how we basically almost spray paint that onto a stent. So the original iteration of the company was actually smart implants. And then along the way we made the pivot of effectively owning the entire stack, the end-to-end stack of the technology, not just being the intel inside for the wonderful stents, graphs, other cardiovascular implantables that are out there, but wanting to own the entire end-to-end user experience. And that's where Aliyah is now a end-to-end remote patient monitoring

platform. It starts off with a wearable that's worn on the skin of the patient. There's no needles, nothing pricking the skin or anything. It's collecting data passively throughout the day. The patient, then, that data is automatically via a cellular connection transmitted up to the cloud. we then run our series of proprietary algorithms on it and then push that out into either our own portal or into an EHR for the patient. Where we're different and very much differentiated is not only the metrics that we can get, but in the clinical accuracy of what we do. We certainly think that that's a very unique white space. So it's multi-metrics. So not just your basic vitals like anyone would expect like heart rate, temperature, auscultation, pulse-sox, not just those capabilities, but then also really excited

for a recent clearance on adding on hemoglobin hematicrit and then also potassium, which is a world's first that's never been done before non-invasively, because those matter so much for this patient population. Those two plus knowing whether or not the access is open, which you can do via being able to listen to it, drive 85% of these hospitalizations for these patients. So being an FDA cleared, multimetric, differentiated, clinical grade platform is where we came about in our journey

from an initial iteration of just being a smart implantable for letting you know when your patient was in need of another angioplasty or some sort of declaw intervention. Got it, got it. That's super helpful. And I'm looking at your site right now, which is aleo.a.i.

So if everyone listening, that wants to check out the technology in more detail, it's A-L-O. a lio.a i i'm looking at um you know above the fold on the home page there's uh you know a a female with the aleo uh smart patch and it looks like it is it does it have to be worn over over the fistula then of the dialysis patient it is worn over the other vassar access uh for for an eskd patient or one that has an access and that's the current um this is the second clearance allowed for that um that particular patient population um we did our first clearance all

also allows it to be worn on the arm or the chest in general for some of our metrics. And we're continuing to take the same metrics that we've developed into other locations of the body as well and excited to hopefully bring that back to the patient population in the next later this year, early next year as well. Got it. Cool. And I certainly don't expect you to disclose too much. But is the magic sort of sauce in the actual sensor itself, you being able to kind of detect, you know, various metrics that you mentioned, kind of differentiated metrics? Is that kind of where the, the magic is? So I think what we do a little bit differently than most folks is effectively really

focus in on the underlying vessel. So that's a little bit of where the magic lies. I mean, it's all off the shelf components, if you will, for the actual sensor itself. I mean, obviously people have been working on this for a while. But the interesting thing, and where there's certainly a very broad patent portfolio around this, but that being said, being able to effectively, it's like trying to extract oil from oil sands versus being able to tap an oil well directly. It's kind of the same idea of there's a very rich data set in the vessel. And if you can really focus in that vessel, you're going to be able to get a lot more than you otherwise would at a much higher fidelity.

And we've spent a lot of time also on the clinical accuracy piece. For example, not just because it's a question around equity, but just the right thing to do in terms of accuracy for patients is we correct for skin color every single time we take a So we correct for skin color and ambient light because we understand that that has an impact. We also look at things like motion are very careful around motion artifact. It's always going to be motion artifact that you may have to tackle. But being able to reduce that noise and get a much higher grade signal boost your overall clinical accuracy and also the breadth of metrics that you can potentially get.

Okay, cool. That's super helpful. So, Dave, can you give us a sense before we kind of, you know, rewind the clock and go back in time to the the early days of the early days of Leo. Can you give us a sense for kind of where you're at in terms of, you mentioned a couple regulatory clearances, but are you currently commercializing? What's sort of on,

what are you doing now and what's sort of on the immediate horizon? We're very excited to close our first commercial contract, just a short while after the second clearance. So that was certainly exciting. It is a stage commercial launch, as you might expect, into some of our partners. We are working through several of our clinical partners to date,

are converting from those clinical partners into contracts, got a great amount of inbound as well that we're certainly excited about. I think that's a unique place to be as a company. I think this, once again, is a space that's been a start of innovation, but has also been stimulated by a recognition that the way it's been done for 40 years wasn't going to work anymore. There's been a really massive shift towards value-based care where it was less than 10% in 2020. A new bill was passed at that time. And now we're almost the two-thirds of the patient population being in some sort of value-based umbrella, which is certainly a benefit for a diagnostic company like ourselves. Got it, got it. And if I had to sum up, I mean, just like from a layman's perspective,

I know a little bit about, I guess, this patient population, not nearly the same degree that you do. But if I had to sum this up, is like this, you know, the allele platform allows positions to sort of get a proactively sort of monitor their dialysis. patients to help prevent like all of those those issues that you know that that that surface that are acute in nature and tend to be pretty expensive indeed i think one of our partners was the national health service out in the UK and several of trusts are tackling this in different ways but one of them in particular was literally sending nurses to patient homes on their off dialysis days sometimes driving up to 50 miles each way just to do a point of care of blood draw and get this data and

they saw that it could reduce their internal hospitalizations, but that's obviously not a very scalable way to tackle the problem. Other countries, in fact, actually mandate doing a blood draw every dialysis session. Sometimes they're four and after. It's obviously expensive to do that six times a week. And plus, you're not getting the data typically until the next day. So by the time you see the data, the patient's not there. So being able to be proactive means you can now get them into your clinical workflow. There's well-defined guidelines of where to maintain these patients. There's In fact, CMS has a quality incentive program, just targeted around maintaining your patients in those, well, within those guardrails.

And I think that all leads, once again, towards how can we optimize for what we all like to call the four P's of the patient, physician, provider, and payer? Their incentives are all aligned, which is certainly strong here. I think it makes for an ability to roll the product out and really capture that imagination in a new and unique way. when you're solving the services problem on top of that, that people have been trying to solve in otherwise clunky ways, I think it's a little bit of icing on the cake.

Yeah, yeah. I love that framework, by the way, the 4P framework. I'm not sure if that's new or if that's unique to A Leo. But I think for everyone listening, you need to understand kind of your value prop to each of those stakeholders for sure. Out of the gate, ideally, right, before you go too far down the development path.

You know, you could have the most amazing clinical solution. That's great for patients and providers. But, you know, look, if you don't have a payer on board, that's willing to reimburse or pay for the technology, it's going to be a tough, going to be a tough go. But that's a great overview. Let's transition and spend the next maybe 20, 25 minutes or so talking about really, really the journey over the past decade or so and kind of the key lessons that you've learned along the way of building out the platform because it's certainly shifted, right, from a sensor on maybe a synthetic AV graft, right, to now an easy-to-use,

you know, wearable. So let's go back in time, right? And maybe this is like, you know, eight, nine, 10 years ago, when you think about sort of the very first versions, and maybe actually frame that up a little bit differently, let's focus maybe on the first versions of your current device. You know, what are, what are some of the key lessons that you, that you've learned or picked up on building out those first alpha and beta prototypes? And maybe, maybe, maybe you use that as an opportunity to maybe coach up some other entrepreneurs that are listening and trying to be efficient with their capital in those early, early stages. I think it's important to kill risk as a CEO, especially early stage.

you know, be ruthless about killing risk. I think is certainly important. I'm sure we're not original in aligning the four P's, if you will. But with that being said, I think we learned that lesson very much. I think we have the patient, the physician, in many ways, product was probably a third P in the original iteration of the implantable. But for the payer and the provider, we learned that that was part of that transition as well of owning the whole stack was the realization of how we, we could actually help all of those key stakeholders along the way. I think that was part of our own journey. We knew that, you know, obviously not having patients get sepsis is valuable, but

if the pot of money is split, unfortunately it is split in many ways across different either strategics or providers or payers, trying to find a place where it's a little bit more together. It's actually what led us to the NHS in the first place, was realizing that it was all kind of falling to one, into one bucket, right? It was a little bit different than it was done here in the U.S. until that recent shift towards value-based care. So with that preamble, I think what's really interesting is where we started off was just on the Vasker access component of monitoring.

And then we were really, when we went back to the customers, they said that's awesome. But you're tackling part of the reason that these patients go to the hospital. if you look at once again that 85% hemoglobinomaticrate and potassium are very useful in tackling those. We knew that others had been able to do hemoglobinimaticrate with PPG.

Could we do it in our own unique way with that same level of accuracy? It was certainly important. But I think that's how you get through the alpha to the beta phase. I think being able to move quickly was important. We made that transition from an implantable to a wearable

in about two months because we had some of the underlying technology. we had some of the, we'd already had some of the cloud infrastructure built out. So we could very quickly, with limited funds of that time, with not a lot of cash in the bank, because we had kind of been heading one direction, we were very quickly able to showcase the same amount of value to the customers and to the potential partners and to the investors in about two months, refill the coffers and make that, you know, really successfully execute that pivot towards a wearable.

And being ruthless about killing the early risk of that was really important. and then adding the feature set of what else the customer wanted, being able to raise the necessary capital to tackle that, and then really showcase that long-term vision of this is why we're really solving an underlying problem with the large unmet need that folks haven't been able to tackle with the current solutions today. Got it. I don't know what it is, but it seems like the past maybe five or six MedCenter interviews I've done.

Everyone across the board has really hammered on this. this idea of really reducing risk and killing risk in the early stages. In fact, an interview I just published recently with Sam Mason is one of the co-founders of Reflection Medical. He mentioned the very same thing. He's like, you know, most, it's easy, you know, with your, with your capital in those early stages to maybe tackle the lowest hanging fruit, the stuff that maybe is a little bit easier. He, you know, his advice was similar to yours. He's like, no, actually, actually use that capital to knock out the biggest risk items, right, in your, in your stack or your particular device. So it's interesting that you're mentioning the same thing.

But I want to circle back around, Dave, to something you mentioned earlier, that pivot, right? You said you were able to kind of, you were able to go from like an implantable, which was kind of like, you know, the direction you were heading in. And then you made a pivot and we're able to build out a wearable within a couple months. And I don't want to, I guess I don't want to gloss over that because that was probably a huge decision at the time. And I'm a huge, I'm a big believer that like any successful, you know, startup CEO is like a decision machine. You've got to be able to make decisions fast. And so I don't know if you would agree with that, but like maybe take us back in time. Was it an easier decision than maybe it sounds like or, you know, walk us through that process?

So with the original iteration, as I mentioned, we were very much thinking we were going to be the intel inside for stent 3.0, right? So you've had, you know, normal stents, if you will, you had drug alluding stents being stent 2.0. And then stent 3.0 was going to be the smart stent that told you when something was going wrong with the patient. and we were going to be the chip for that was the idea. That means, though, you have to have, you know, partnership with the strategics and others. And once again, you know, we were a startup. We understood what they were good at and what we were good at. What I don't know that we, to be blunt, had an appreciation for was, I'd say we're very product focused.

I think the distribution channel is the economics for those large strategics were completely different than our incentives. And those incentives were not aligned from the way that they get paid to the way that their sales reps get paid to the way that they handle a customer complaint to, you know, how do they sell product number two? All of those different, the incentives weren't aligned. And so I think that really created some amount of clarity in terms of our focus has always been doing the right thing for the patient. So that wasn't going to change.

So decision number one, we always were going to do the right thing. for the patient. Decision number two came across the line through one of our advisors, a lady by the name of Terry Litchfield, who's an amazing person, was one of the co-founders, a founding lifeline Vascular Vascular Access, which got actually got acquired by DeVita and then got spun out recently. But through that process, she's just been a dynamo in the space for quite some time now. And her comment to me was, Dave, you've been working on this for a while. these patients deserve your best and every last ounce of energy that you can give them because

it's the right thing to do. And I think that really inspired the, we're not going to let this go. So therefore, what's a different way to, is there another way to take the technology we have the day? We went to our investors. We only had a couple months of cash in the bank. We basically said, give it back to you or there's this crazy idea we came together with over the weekend. Effectively, would you let us try? And I think that was a really, it really honed. how many decisions could be done in terms of if it's outside the body, then we can put it on the patient. If we own the whole stack, then we can take care of the economics and we don't have to split them out. So I think it was a really driving set of decisions. But the ultimate patient

need focus allowed that decision matrix to be really, really tight in terms of we're not going to get scattered brain. We're not going to go do 50 things, really focused on how do we control the economics, and then how do we make sure that we don't lose our patient focus? I think those were two really strong guiding principles, if you will, through that time, then allowed us to make some really key decisions really quickly. Wow. That's amazing. And when was that roughly, when was that pivot?

That was 2017, I believe. 2017. Okay. Okay. So, you know, approaching six years ago or so. That's amazing. And I love the fact that you brought up the kind of sort of the economics piece and understanding like, hey, like our incentives and what we're building isn't necessarily

lined with like that distribution channel, right, through, you know, with the kind of the stint's implant, the intel inside. of stents and the fact that you, you know, you could sort of stuck to your guns in a sense, right, but pivoted accordingly. That's, that's amazing. That's great. Let's talk a little bit about that 510. You mentioned the most recent, you know, 510K clearance for the system. I mean, this is this, I mean, most of these wearables are at least like medical grade, clinical grade, you know, wearables. It's pretty, pretty new, right, within the regulatory world. And so when you think about kind of this journey navigating those waters with a pretty novel kind of technology

and platform and what you're trying to do, are there a few things that you've learned along the way or maybe that have been, you know, especially important, you know, getting, you know, clearances like you just mentioned. 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.

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