Medsider: Learn from Medtech and Healthtech Founders and CEOs - Build for the User, Not the Spec Sheet: Interview with Phagenesis CEO Reinhard Krickl

Episode Date: August 7, 2024

In this episode of Medsider Radio, we had an engaging chat with Reinhard Krickl, CEO of Phagenesis, a startup commercializing a neurostimulation system designed to treat dysphagia, a condition that impairs a patient's ability to swallow.An Austrian engineer with over 25 years of experience in medtech, Reinhard specializes in neurology-based medical devices. After beginning his career in academia, he got his industry start with Medtronic in 2000, where he would eventually lead the company’s efforts with deep brain stimulation (DBS) therapy across Europe. He is also an INSEAD-certified director and serves on several boards, chairing two of them. In this interview, Reinhard shares insights on the importance of simplicity in design, what thorough market understanding truly means, and how he engages with stakeholders effectively. He also reveals the “market access checklist” he uses before entering the commercialization stage.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 latest Medsider Mentors Volume VI. 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 Reinhard Krickl.

What's important is not what your device can do, what it can do for the end user. So it's not about the features and all the cool technology developing. It's really what's going to be the impact in the hands of the user, what is going to solve for them. 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 star 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 Reinhart Crickle, CEO of Fadgenesis. Ryanhauer is an Austrian engineer with over 25 years of experience in med tech, specializing in neurology-based medical devices. After beginning

his career in academia, Ryanhart got his industry start with Medtronic in 2000, where he would eventually lead the company's efforts with deep brain stimulation therapy across Europe. Here for you the key things that we discussed in this conversation. First, it's easy to get caught up in adding features that don't necessarily translate to better usability or functionality. In bed tech, the compelling need is often the simplest device with an intuitive design. To achieve that, you need to thoroughly understand the market you're entering by interrogating your stakeholders with an open mind. Second, develop a deep understanding of your market, not just in terms of what your technology

can do, but how it fits into the existing healthcare ecosystem. Understand the specific medical and economic environment, a structural dynamics such as regulatory requirements, reimbursement policies, and standard of care procedures, can either hinder or facilitate the adoption of your product. Third, consistent investor communication is crucial for securing funding. When it comes to pitching, you have to be able to tell an engaging story. Use every opportunity regardless of the outcome as a learning experience. Analyze what worked, what didn't, and why.

Continuously refine your pitch to ensure it not only tells the right story, but also resonates with potential investors. Before we jump into this episode, I wanted to let you know that the latest edition of MedSider Mentors is now live. We just published volume six, which summarizes the key learnings from the most popular interviews over the last several months with incredible entrepreneurs like Dan Rose, former CEO of Limflow, Dr. Stephen Michelson, founder of Ferapulse, and current CEO of field medical 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 pick up 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. To check out the latest volume, 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 thematically handpicked collections of the most insightful interviews covering topics like capital fundraising, early stage development, regulatory challenges, reimbursement, M&A, and much more. And last, considering that fundraising could be one of the most daunting tasks for any startup, we curated a database of over 700 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. All right, without further ado, let's jump right into the interview. All right, Ryan, welcome to Medsider. Appreciate you coming on. Coming on the latter part of your day over in Europe.

Looking forward to, it should be a fun and educational discussion. Appreciate being in Westwood. All right. So you've been with Fagagenesis for, gosh, the better part of a decade now, right? It currently serve as the CEO, and I'm sure we'll get into more detail about what's ahead for the company over the next a year or two. But if you could give us a short, maybe elevator pitch on your journey leading. up to now. Let's start there and then before we go too far back in time and learn about what you've been building at the company this far. It's actually quite 10 years now. And where I come from

is an engineering background and then really enjoyed figuring out as an engineer that working with technology on patients in the medical space is the most exciting thing to do. And actually onboarded with some metronic at a time that was in 2024 years ago. And care of the back, that was a big change from academic world and research in the space of medical technology, but then into being hypermetronic, into building a certain geographic area of Austria in this case in the Alpine area, some of the neurotherapes from metronic from scratch, and a complete change into the commercial world right away, which was exciting, but then, of course, also scary because I made a few mistakes, but I learned quickly about how to really optimize

revenue and really approaching sales and the market development in space. So that a few years later actually made a journey from Austria to being promoted into European headquarters of Medtronic in Switzerland. And really being able, and that was the journey for me in Medtronic overall over 14 years, what I would call a corporate entrepreneur. So I was allowed to privilege be in positions to work on therapies, which either were still in development phase or market will build up. Or therapies matroninic had acquired recently.

It was about integrating into the business. So most of my time was in neuro and that was in neurology in metronic and it was really taking therapies from an early stage into really mature stage of market development. First in Austria and then on the European level. For many years I was the head of Deepren Simulation for Europe. And that was at a time where Deepen Simulation was really focused. in Europe because many approvals didn't happen or haven't happened at the time in the United States. So it was really a focus area of Europe. And there's a lot of learning because if you look at

deeper in stimulation, it's not only about the implantable device you need to take care about, is about how you get functional statactic neurosurgeons trained to be able to scale the business so that enough of them doing therapy implanting the neuro, the DVS system. How do you have enabling technology ready so that they actually can put the electrode in the brain in the right possible way. How do you actually get referrals because Parkinson's patients who can benefit from deep brain stimulation that will be with pill doctors, with neurologists. The doctors not necessarily like functional steroidineal surgeons because it's a very different business and they might lose the patients towards them. So how you drive referral. And it's

exploring this whole spectrum of how complex it could be to develop. the market and scale the market. And that was a fantastic experience to have been able to be in charged with all these different aspects. And that was for the metronic journey then into also the cardiovascular world, into different countries like Germany before and actually left matroning after 14 years, feeling now I'm actually, we want to go into the startup world itself. Got it. That's a super helpful overview. And I'm looking at the site now. It's digitisis. It's P-H-A-G-E-N-E-S-I-S-com. And we'll link to it in the full write-off on MedSider. But that's the website if you're if you only get to the audio portion of this interview it's a phaginesis.com

p-h-a-g-g-en-es-is dot com you can explain what the key problem area that you're trying to solve with the device and maybe frame that up as if I'm a freshman in high school and I know nothing about this therapy oh with pleasure this is about new stimulation and we treat a dysphagia which means patients can swallow and think of it like that a little bit mechanism of action is when a healthy subject swallows, what happens is the food balls touches the pharynx, and then aphrine signals into the cortex, timing of the swallowing to be triggered in the medulla by the central pattern generator, and then that triggering actually means swallowing execution. That means that the muscles are being activated in order to close off the airway and process the food

into their suffocis. That's the swallowing loop, as I would call it. And the patients can't swallow anymore if that loop is disrupted. And by the way, what happens, everybody's happened to everybody already, is that you get actually things in the wrong type that you swallow into your airway and then you cuff it out. So actually, even the synchronization, I tried to explain it didn't happen properly. So guess what? Now, unfortunately, about 50% of stroke patients can't swallow anymore because the stroke has affected that swollen loop. I try to explain to you either centrally or peripherally. But also patients can't swallow anymore if they have undergone more than 48 hours of ventilation, mechanical ventilation. So basically a breathing tube has been put in place,

preventing them to have that sensory input into the brain anymore. And so there's a disruption peripherally, preventing them actually also to trigger that swallowing. So can a long story short, so if patients can't swallow, it's not only they can't eat, they can't even actually manage their own secretions, you on saliva. And so they're at high risk to not only be, not be well nutritionized, malnutritioned, but also that actually they can have aspirations, aspirations, aspirational pneumonia, and then just infections and death. So it's a high risk of mortality.

One of the typical complications after stroke for stroke survivors, but also for those who are being ventilated, they can't be extubated. And long so short, we can retrigue that by actually putting an electrode at the level of the pharynx where we have this sensory loop being kicked off. And through this, we can apply a strong, let's say, super bolus, and it's often in rehabilitation with a super bolus, there's a new plastic reorganization in the brain because the brain needs to deal with these super bolus

and starts reorganizing and picking up a function of swollen again. And this swollen coordination of the swallowing loop, I try to explain you before I'm in a minute. And that's the magic. And to cut it short, so with neurostimulation of a catheter, which is just temporarily placed with electrodes touching the pharynx, that's the area where all these sensory loops starts. We can actually treat patients over three consecutive days, just 10 minutes a day of stimulation, and that's the super bolus which re-triggers swallowing and patients get back to normal swallel.

Currently, this is not possible because any kind of swallel. following recovery or rehabilitation takes seven weeks and months. It's a very cumbersome process of a lot of back and force led by speech and language pathologists typically and needs involvement of the patient, collaborative patients, and a lot of repetitions. We can actually do this just in three days. In an ICU or stroke in its setup, we don't have patients, we don't need patients collaborating. We can put it even while the breathing tube is still in place.

So it's a complete game changer because all of a sudden you can treat and fix swallowing in the hyper-acute setup without patients needing to collaborate. And then you can actually get them discharged out of the ICU, out of the stroke unit with a safe swallow. So it's a complete paradigm change. Got it, got it. And for those listening again, agenesis.com, p-h-a-g-g-en-es-is.com is the website. Really slick animation. If you were interested in learning a little bit more about the technology or how it fits within the workflow, the major process. problems it solves, et cetera. I highly encourage you to check that out. With that said,

I know Ryan, we'll get into this in a little bit more detail, but you recently closed a series D round of financing to fund your commercial effort. So maybe give us, before we rewind the clock, so to speak, maybe give us a high-level overview of where the company's at and it's in its current lifecycle. The company is, I think we've mentioned it before, is a European company. So the company was founded in Manchester, UK, and that's really based on university research and that already happened in 2007. I joined a company in 2014 when it was at the stage of really having a product developed and the first study is completed.

And the last 10 years was really about driving further commercialization in Europe and then gaining FDA approval in the United States. And now we are, after closing the funding route and full commercialization model, we're kind of morphing now from a clever stage company into fully-complicated. commercial stage company with our business operations in Europe and the United States. Got it. Super helpful. I think that's a good segue way into kind of jumping inside the old Medsider time machine, as I like to call it. So maybe we'll spend the next 20, 25 minutes or so talking about just various sort of functions or topics that every founder or CEO at a, you know,

a startup or a mid-cap is going to have to go through in order to push, push their own bolder, their own venture up the hill. But the first question on the docket for your right hour is really thinking about your transition from engineering and and in the world of academics into industry. And one of the things that's always really challenging is those early phases of development, right? And you typically are operating with a pretty lean amount of capital, not a lot of resources, but you're trying to quickly make iterations on your system.

And I'm sure the early look and feel of the Pigenesis device looked very different than the product now. And when you think about your journey, whether it's at Genesis or other startups that you're involved with, are there a couple pieces of advice that you'd like to offer up to other entrepreneurs that are really just trying to get to the next milestone with their early stage development with limited capital and limited resources. Absolutely. First and foremost, understand the space you want to be active in.

And I think that's something I'm sure you heard very often is just because you have a technical solution of something. It doesn't mean it's actually having an impact on anybody because your solution has to fit with market needs. So you have to really understand the space you're acting in. You have to understand what or how a potential solution could look like. The way my, Colonel Rooney, actually, one of the company founders and really had behind R&D and then the current CEO, the way he puts it is it's what's actually reading his quality.

What's important is not what your device can do, what it can do for the end user. So it's not about the features and all the cool technology developing. It's really what's going to be the impact in the hands of the user, what is going to solve for them? And to your point, as well, Scott, of course, in the early stage, he was about using off-the-shelf lap equipment to figure out, can we actually reduce, can we with stimulation of the farings, produce an effect on patients improving dysfadure? And that was a lot of work of the other company co-founder, Professor Shaheen Hamdi from Manchester University, who really explore that whole area about the brain and then use cheap lap equipment, if you want, to really figure out can we actually induce with electrical stimulation. that kind of effect of improved and accelerated swallowing improvements. That's how it started. And then it was about how can we now design a product after we understood the mechanism

of action through in the best possible way, make it easy to apply that same therapy logic. And that was a lot of the R&D project behind it. And that meant not only to send the mechanism of action, how we can replicate it, but in the users' hands now, who are the users, what's the best way for them that they can, actually apply to therapy. So for example, our catheter now is designed in a way that it can be placed by anybody who's placing a nasogastrofitting tube. Because if they're actually looking like a nasogastrofitting tube, it's mimicking the design of it because we figured out that those special anged pathologists were actually also nurses who were involved with this very old

process. What they have to do is use a nasogastrofitting tube placing it in order to feed the patient. So we actually use our product for stimulation and mimic it to the nasogastrofitting tube. These guys are using, they have no barriers to actually start to learn how to use it. They can use it the exact same way in the initial placement, but then of course use it with the additional feature of stimulation. They can also use it actually as an agostochastrofitting tube. So it was really made compatible to the current environment. So how can you enter that space in a most seamless way so that no big processes have to be changed? but still be disruptive in the game changer, which we bring as a new therapy.

So how do you make it as easy for the end users to apply and create the biggest impact in terms of therapy benefit? Yeah, I can always tell that even someone with maybe more of an academic or engineering background, they've spent a lot of time in some sort of either sales or market development or market access role where they're really close to the end user. I always can tell the difference, right? Because it's easier for you to think around this device could be cool and you can add A, B, and C features and etc.

But if it doesn't translate into the hands of the end user, a lot of times will fall on deaf ears, right? All of those potential features or benefits. And the simplest device is often the best device. And I mentioned before, Scott, that I come from Deepenumulation, which is probably one of the most complex areas, technology-wise, in terms of the device itself and then also the enabling technology you need around it.

And so if I look at the phygenics device, it's probably disappointing because it's actually not at all sophisticated technology, but that's the beauty of it because it actually works. It's super safe. It's super easy to apply. And another important are actually already, how to say, market access criteria is the same person who's actually seeing the patient is actually applying the therapy and then is following up the patients and will have a positive feedback link.

What I mean with that, I told you before. briefly about the DBS world again is it's creating an extra barrier if the person actually applying a therapy, you actually putting the DBS lead in place, is a different one than the person holding the patients, the Parkinson's disease, pill doctor, because now you need to make a link between us. And then if the patient is successful, will the Parkinson's pill doctor ever figured it out? Is there a positive feedback to do that the patient benefited of that or not? In my world, the technology is pretty simple and that's a beauty of it because it's so solid it's working always basically it's super easy to apply it's so safe for the patient and the same person who's

applying the therapy sees the outcome because that's encouraging the same user to then treat more and more patients because the positive feedback loop is very convincing so actually what everybody needs to strive is not the coolest technology it's the simple solution for the problem which will be successful. The sophistication is in the simplification, right, of your technology. Oh, it is. Yeah. Yeah, it might be super complex inside.

To the outside, it's super easy to use. And as an engineer myself, sometimes you got lost into great features, but that's not a way to get it. As you nicely side, it's the beauty of it is making or something potentially complex super easy. Yeah, no doubt. I just, I mentioned this earlier about, I remember even when I went from field-based kind of sales and sales management internally and begin to enter.

interact with engineers a lot more in my date at Kiviti. And I could always tell the engineers that it just spent more time, right, in the field with customers. They just got it, right? It clicked, right? This idea of, oh, yeah, I can add this and this and all this, like all of these features that just made things more complicated. And oftentimes that just the reaction, whether it was a physician or a nurse or a tech, is just, that's too much. It's too much. I want something, I want something that's going to make my life easier and more simple and more straightforward. And it really means, as you say, spending time with the end user. And as we have also heard it from a lot of other things we have read and learned and seen is really

observing, standing there, asking questions, not jumping to early assumptions, not asking loaded questions, why are you ready to know the answer? No, just really just be in the corner of the room, watch what they're doing, take a lot of notes, because that's in the end going to guide you what's going to be the best science solution to figure it out. Yeah. Yeah, it's good stuff. Let's use that as a transition transition point, but yet still talking about this theme of being close to the customers, really market development. And you mentioned this previously, Figenesis, you're working on a pretty disruptive therapy. It's very different than standard of care. And you've had the opportunity to work on other technologies that are fairly novel.

And so when you think about a store that cuts both ways, right? It's oftentimes really fun to work on this sort of stuff, but also very challenging because you're trying to attempt to change the status quo. And when you think about just all of your experiences, building markets, developing markets for novel disruptive therapies, like the one you're developing at the genesis and commercializing. Are there a couple of things that really stand out that you've either learned a lot from, missteps, if you will, or things that you've done right and you're now utilizing your current role at the company?

So on the market access, absolutely. No, number one is, again, going back, understand the audience, really understand what they need, but that's what we discussed a few minutes ago. Also, that you need to understand the different barriers. in the market. There's one thing I've learned in matronic, which I would call the market access checklist. That has guided me since, specifically on metronic times. And just to quote at least the three major barriers or considerations, it's what are structural barriers to market adoption? And that's the first one. And this is, is it very clear what indication do I solve with this issue? Basically,

is it clear which patient will benefit from our therapy? And that's probably something like in obvious one, but very often you position something and it's not 100% clear with actually legible for your therapy. Another one is really that you need to have clear evidence for the benefit you claim. So that's because of the whole clinical strategy, which probably is another discussion. That clinical strategy is not only about regulatory needs, it's really about a lot about market adoption that you need to be able to support these claims you're making with excellent evidence. It's understanding the hospital or physician economics. So an obvious one, and we notice everything in the hospital is more guided not only by clinical decisions, but really can the

hospital make money with that? Can the physician actually have a financial benefit out of that or any clinician who is involved? And what's about capacity? Is this actually, is this something which can be integrated into this care pathway? Is somebody able to do that? So that's what I would call the structural barriers and how ready am I to address those? How profound is my business case in this regard? The second one is what I've learned is the therapy readiness. So that goes a little bit back to the discussion which you said is about the ease of therapy delivery or procedure standardization. So how easy is it that your therapy has been applied? How easy it's to drain somebody on applying a therapy or on the other hand, how complex is. And on the other hand of the

therapy readiness, what about safety risk? What about complication rates? We have deeper in simulation again. I keep comparing between the two is, of course, that's a pretty invasive therapy. It is less and less because the technology went better and better, was going better and better over years. But it was pretty interventional still. What is great about all therapy of phagensis, it's we have a fantastic safety record.

We have never had a single series of best event in our entire career of the company. So this is just safe. So it's much easier for adoption if physician clinicians can actually make a decision without being concerned of any safety risk. So how can you really make this safe or how can you address safety risks? And in the third component, so the first one, sexual barriers, therapy readiness, and the third one was physician adoption. So what's the awareness of the implant that the prescriber to refer?

So as I said before, again, there's the complex DBS world where this is probably all different people. Are they aware of it? Are they really familiar with that? space, are you ready to make a referral or in my phogenesis world? It's much easier because all of them actually the same, the one positioning the catheter, the one applying the therapy, the one actually having a patient and then following up on the patient is the same person. So how aware of the therapy makes it much easier on any kind of referral linkages and positive

feedback loop. As I said, that's easy in my world, but can be very complex in certain other words. When I was, for example, leading the audience in Germany, that was again very complex. All those people were different ones. How can we then link them together? So that's the framework of market access checklist. I've learned over the year is so helpful because you really need to go through and understand how I solved all these issues. If not, I will not be able to drive with adoption. Got it. That's really great framework. Yeah, those three, three stools of the chair, so to speak. And it was just a repeat. It was structural errors, therapy readiness. And then the third one, how did you frame that up? It was the physician adoption. Got it. Physician adoption. Yeah, got it. Yeah, it's

That's good stuff. 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 Mared, CEO of CVRX, and so many others.

As a premium member, you'll get to join live interviews with these incredible medical device and health technology entrepreneurs. In addition, you'll get a copy of every volume of Medsider mentors at no additional cost. To learn more, head over to MedsiderRadio.com forward slash premium. Again, that's Medsiderradio.com forward slash premium.