Medsider: Learn from Medtech and Healthtech Founders and CEOs - Doubling Down on Your Mission by Diversifying Your Medtech Portfolio: Interview With ReShape Lifesciences CEO Bart Bandy

Episode Date: November 3, 2021

In this episode of Medsider Radio, we’re talking with ReShape Lifesciences CEO Bart Bandy, who started out selling medical equipment door-to-door, then landed a spot in the first sales class for Ethicon Endo-Surgery. He ran the company’s global sales and managed the San Francisco division, before becoming the Group Marketing Manager of Karl Storz Endoscopy.In 1999, Bart was recruited to become COO of laparoscopic weight loss startup Inamed. He helped manage the company’s $3.5 billion acquisition by Allergan in 2006. Then in 2019, he became CEO and President of ReShape, which had just acquired the Lap-Band, previously owned by Inamed.In this discussion, Bart explains how he writes and tests his presentations for maximum impact, the challenges and solutions of moving manufacturing from Costa Rica to the U.S., and why he wanted to add telemedicine to ReShape Lifesciences without moving away from the brand’s core mission.Before we jump into the conversation, I wanted to mention a few things:If you’re into learning from proven medtech and healthtech 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 healthcare 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 exclusive Ask Me Anything interviews and masterclasses with some of the world’s most successful medtech founders and executives. Since making the premium memberships available, I’ve been pleasantly surprised at how many people have signed up. If you’re interested, go to medsider.com/subscribe to learn more.Lastly, here's the link to the full interview with Bart if you'd rather read it instead.

We talked to doctors about bringing the lap band back. It's like, what are some of the things that, you know, aren't as shiny to you or aren't as pretty to you in this situation? And one of them was like, you know, the more lap bands I do, the more aftercare my practice has to manage. So providing something like this that can help take some of that burden off of the practice, but allow them to do more procedures just made sense, you know, from a corporate perspective. Welcome to MedSider Radio, where you can learn from proven med tech and healthcare thought leaders through Uncut and Uncut and, and unedited interviews. Now, here's your host, Scott Nelson. Hey, everyone, it's Scott,

and in this episode of Medsider Radio, we're chatting with Bart Bandy, who started out his medical device career selling equipment door-to-door, then landed a spot in one of the first sales classes for Ethicon Endosurgery. He ran the company's global sales before eventually moving on

to become group marketing manager of Carl Stores endoscopy. In 1999, Bart was recruited to become C-O of laparoscopic weight-last startup in a med. He helped eventually manage the company's $3.5 billion acquisition by Allergan in 2006. Fast forward in 2019, Bart became CEO and president of another laparoscopic weight loss startup reshape life sciences, which ironically just acquired the lap band, which was previously owned by Inamed. In this discussion, Bart explains how he writes and tests his presentations for maximum impact,

the challenges and solutions of moving manufacturing from Costa Rica to the U.S. and why he wanted to add telemedicine to reshape life sciences without moving away from the brand's core mission. Okay, so before we jump into the discussion, I want to mention a few things. First, since you're listening to Medsider, you're probably aware of how expensive it is to run clinical trials. Anyone who spent time in the MedTech space knows that you typically need to commit hundreds of thousands of dollars, oftentimes millions, towards clinical research.

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We talked to experienced healthcare 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 exclusive Ask Me Anything interviews and masterclasses with some of the world's most. successful MedTech founders and executives. Since making the premium memberships available, I've been pleasantly surprised at how many people have signed up. So if you're interested, go to medsider.com to learn more. All right, without further ado, let's get to the interview. Hey, Bart, welcome to Medsider Radio. Appreciate you coming on. Great. Thanks for having me, Scott. All right. Well, I provided an intro to your background kind of at the outset of this podcast episode.

But why don't we start with you adding a little bit of context or a little bit of color to what I previously mentioned. So maybe take us back to your days before, earlier on in your medical device career, you know, through the intimate eventual exit to Allergan and really kind of, you know, where you've been over the last decade or so leading up to, leading it, taking over the helmet reshape. Oh, great. Thanks. Yeah. So like a lot of people in my generation started out learning sales the hard way, you know, door to door, equipment sales to offices and did pretty good. I rose to a fairly high

management position there within that organization. And I was recruited and very fortunate to be in the very first sales class for Ethicon Indus Surgery focused on introducing mainstream laparoscopy to the market. You know, with that position, lived in the OR, developed a capacity for learning and running simultaneously. And it's been a good chunk of my career with Ethicon actually running global sales for them out of Cincinnati office and eventually managing the division based in San Francisco. But looking at that, I had a good progression through sales, sales management, professional education. But I knew for my career to progress that I needed to get some additional education and experience. So I was recruited by a company called Carl Stort's endoscopy to come in and run their

gynecologic laparoscopy division. And within a short period of time, I was the group marketing manager for the laparoscopic franchise. And spent a few years there, I learned a lot about international sales, group marketing, different markets that we were entering as well as capital equipment. So tremendous experience. And a few years after that, I was recruited to a startup. And finally, I started to see how all of my experience and education and time in laparoscopy might be able to put me in a position to help lead a startup.

So they brought me as the chief commercial officer. And they were looking for somebody of corporate background with a commercial background and laparoscopy in their history. And when I saw the technology during the first interview, you know, I knew it was going to be a winner. And that was the lap band. And, you know, looking at that, obesity growing and being evident everywhere and looking at a laparoscopic, minimum invasive alternative, just seemed to be the right thing for me. So I took that position and ultimately became the senior executive for that company, growing the company from zero revenue to $300 million in revenue and from 13 employees to just under 300 employees. So a lot of growth, a lot of development, personally, and professionally.

and actually it was a part of a big purchase when Allergan ended up acquiring Inamette for $3.4 billion. And I was the only senior executive actually to transfer to the new organization and helped manage that transition. So, you know, another great experience and another solid learning experience because now I had the ability to go through a whole M&A experience at a public market level. And that was just a tremendous challenge. But we were able to put everything together. and after about nine months, worked through the diligence and did the transition. And then after a few years of working for Aller again, we had continued success with the band. We continued to grow, continue to expand our markets.

But really, going back to corporate, wasn't the best fit for me personally. And I wanted to get back into developing and building a company. So that's what I've done. For a little while, my wife and I built a few restaurants and, you know, try to see if that might be a viable alternative. but it wasn't because medical device is in my blood and I knew I wanted to get back and do something there. So I worked in a few startups at executive level president, chief executive officer. The position right before my current one was as the CEO and president of an ophthalmic company up

in Berkeley, California. So I was able to try out a few of the markets during that little break from laparoscopy. You know, I was in aesthetics. I was in wellness and in ophthalmology. So I think that even helped develop my career better because I was able to look at how they did things differently in the different markets and try and accumulate all that information and pull out the best practices. Yeah, thanks for that background. Your last comment around being able to pull out, you know, best practices reminds me of conversation. I literally just recorded earlier today with Jared Bauer, who's running ionic sciences. And we talked about that very same concept of he's running multiple companies at the same time. And he said actually it's a it's actually, he's found it to be.

almost, you know, almost more beneficial, right, having to manage both companies, you know, simultaneously because he can, you know, sort of quote unquote using, you know, Austin Cleon's, phrase, steal like an artist, right? And pull insights from his other, you know, other company and use those to kind of level up, you know, some of the things he's doing at Ionic. So it gets a really interesting point. And let's go back to Inamid and Allerganic. Because I remember when I first got into the device space, the lap band was like one of the sexier things. you know, at the time. And then, you know, it almost, I mean, I sort of went and gotten into the vascular space

that maybe could have been a little bit about it. But it almost seemed to kind of just disappear. So maybe before we kind of transitioned to, you know, what led you to reshape and kind of some of the key initiatives that you've been able to lead over the past few years at reshape, kind of highlight what happened a lot bad because it didn't really seem like it almost fell off a cliff. No, that's a great question. You know, without saying anything negative about the,

previous two companies that had responsibility for the lap band. I can just say that the medical device market and bariatric market being even a smaller component of that are very unique. If you don't continue to build and support your technology and the customers that are using your technology across a gamut of investments and execution, the product won't continue to thrive. The medical device market is always moving forward. It's very competitive. If you're not out in front of everything, the doctors have so many people speaking to them with so many technologies that are emerging, that you get lost. You fall back in the pack pretty fast. And I think that's part of what happened here. And again, you know, they had different strategies. They had different product

mixes. One was more of a pharmaceutical oriented organization and the other one was more of an endoscopic oriented organizations and not necessarily perfect fits for a laparoscopic, mental invasive technology. And, you know, some people feel that when you have a technology as it gets older, it should have less of a product importance to your portfolio. But that's not necessarily true because when you have a horse as strong as the lap ban and there's really no competition for it, the market's still yours. You know, what's interesting is we built, when we launched the lap ban, we helped build the bariatric surgery market from 25,000 annual procedures in the U.S. to over 250,000.

And that was, you know, in 2008. And coming back into the market in the last couple of years, it hasn't budged. You know, it still stayed at that number because there have been no introductions that have achieved reimbursement or significant FDA indications. Other procedures, there's no growth because, you know, you can't really promote those other than the doctors doing it themselves. So I think it's just, it's kind of like, I don't like to say that it declined. I like to say that it was just put into hibernation. And we have the chance to wake it up and to bring it back to the market, you know, putting some additional components behind it, some different program parameters that we can expand

and some services like reshaped care that we just launched, which is reimbursed, virtual care to support the aftercare of the technology. It's going to really help us bring this back. And unfortunately, obesity and weight gain are continuing to be prevalent, not just in the U.S., but globally. So it's not like the market has gone away. And, you know, nobody's really taken ownership of it. And we're ready to do that because we know the product works. There's over a million lap bands out there in the world that have been placed in people. And again, specific indications for weight loss, specific indications for the lowest BMI in the weight loss market, and reimbursement by the major carriers. So this is a great little gym to dust off.

Yeah, I just hearing you kind of describe that, and we could probably record a whole conversation around some of the lessons learned, right, in kind of bringing this back to life or bringing out of hibernation, as you put it. But just hearing you describe that, kind of reminds me of of Cordes, right, the company in the vascular space that launched the first drug-alluding stent, you know, such an enormous kind of technology, you know, truly game-changing type of technology, but then sort of sat on their laurels, really, you know, and, you know, quickly, you know, other companies kind of quickly took the lead, you know, in that space, you know, Boston Scientific being one of them, Medtronic, et cetera. And so if anything, it seems like the lesson learned there is,

like, even though that technology is elegant, super compelling, you know, if there's not, you know, concerted effort and pushing it forward and, you know, I'm not being proactive. I mean, I guess anything could, anything is at risk of going into hibernation, you know. You know, it's funny, Scott, because we've done some focus groups and people 30 years old and younger don't even know what the lap bend is, which is crazy because 10 years ago, every billboard in Southern California was lap band. Yeah. And when you think about it, you go, wow, so nobody promoted it or put it out there for 10 years

and now these 30-year-olds were 20 and younger. Yeah, you can imagine. It really is a whole new market to introduce it to again. Yeah, I bet. I'm excited to learn a little bit more about what you guys are doing at reshape, right, to kind of bring this, you know, breed some fresh air into what was a very, a very cool product. Before we get into some of these kind of key accomplishments, you know, that you've been able to kind of lead over the past few years, take us back to a few years ago, right, when you were considering the reshape opportunity,

what compelled you to take over the helm there? It's kind of a funny story. So as I mentioned, I was CEO for an ophthalmic company up at near Berkeley. And for two and a half years, I commuted from San Diego to the Bay Area every week. And simultaneously, I was looking at personal relocation and everything else. And a friend told me about a company in Orange County that had just announced their acquisition of the lap band and the simultaneous. departure of their CEO. So I loved the lap band. I loved Southern California. And I said, I need to find out what this opportunity can look like. So it's just kind of a lot of stars aligned.

And I got a chance to bring back something that I know I'm fully committed to and I'm fully passionate for. And the whole weight loss market is just something that if you have the opportunity to participate it, you can see the impact you have on people's lives. It's the biggest thrill in the world. And I wanted to pursue that. So everything lined up. And we're here in Southern Cal. That's pretty rare where, you know, a company will make a significant sort of acquisition, especially with the technology that's as well known as the Latban, or at least it was once as well known as the Latband. Yet the CEO kind of moves on, you know, presenting an opportunity like that.

So that's certainly probably a good way to describe it, right? The stars sort of aligned, especially considering your experience with that device. before we get into some of these key initiatives that I mentioned that you've been able to hurdles, you know, hills that you've been able to climb, you know, over the last, over the last few years. I want to go back to kind of your background leading up to maybe the past, you know, seven, eight years, you know, prior to reshape, you have a ton of experience from a commercial perspective, especially around developing new markets. So with that said, like, you know, when you think about all of the years doing this, you know, are there, are there one to two, you know,

things that really come to mind that have enabled your success in taking on this, this, you know, various market development activities? Well, thank you for the nice lead-in. But, you know, I think one thing I learned was, you know, you have to really understand the health economics up front and make sure that they're incorporating your complete strategy and execution plan. Because, I mean, everything from R&D to how you're going to package it to where it's going to be used to what the CPT codes look like, to what kind of surgeon returns there are. Because surgeons are also running businesses, a lot of them in the private sector. So you have to understand all those health economics so that you can really design appropriately

and create a winning platform. Know where you want to go and know how you're going to get there before you start the journey. And that's what I've always told everybody. So get involved early into what that really looks like from a health economics perspective. and then hire the best people and create a culture of collaboration and accountability, provide them with a clear and consistent direction, and then be comfortable in getting out of their way, but supporting their efforts to achieve those identified objectives. You know, that's the thing.

You can't do it all. But if you bring in the right people and you give them the resources and the support they need, you know, help them get there and you'll get there. So those are two of the biggest lessons that I've learned. You know, you've got to have trust. You've got to have the right culture. And you have to know exactly where you're going before you start. And I'm glad you mentioned, not to underappreciate kind of the, you know, the second answer that you provided, but I'm really glad you mentioned the healthcare economics component of this.

I recently interviewed Nick Anderson, who by the time this is published, I'm sure that interview will be, will be live. But he's an out, he's like one of my go-to, you know, health economics guys. And it's amazing. We had this very, the same conversation. It's amazing, even to him, right, because he does a fair amount of consulting. It's amazing how many startups just don't, whether startup, are just like companies that are introducing, you know, new technologies to the market, just underappreciate the health economics component. It's like sometimes it's an afterthought when it, you know, very well could be, you know, the most important factor, right, in whether or not, you know, something's going to succeed.

So I'm glad you mentioned that. It's still surprising, right, that a lot of folks, you know, kind of missed that component. Yeah, I think you have to try to avoid getting founder vision where, you know, you have the prettiest baby all the time in your eyes, but you haven't really checked it out with the rest of the world. Right, right. Yeah, that's a good way. That's a good way to put it. Well, yeah, let's transition to the past few years, and maybe, maybe really the past, the past year, especially with some of the things that you've been able to accomplish at reshape. And maybe it's best just to start out with, you know, the capital race that was recently announced.

I think there's some details around the affiliated merger with Obelon therapeutics. And so maybe, maybe kind of tell us a little bit more about what that looked like. And then as a follow-up, I'd love to get your take just on raising capital in general within the life science of space because everyone that's, you know, most people that are listening to this interview understand how hard it can be. So we'd love to get kind of your take on that as well. Well, the, so the merger was something that made sense. You know, we looked at it from a lot of different angles. And one, you know, we talked earlier about the previous CEO had left. Well, the company had a lot of challenges. prior to my joining and trying to raise cash, trying to stay viable, trying to keep the company alive, they had to make some decisions that ultimately led to them being delisted from NASDAQ. So that was part of the reason for that. So one of the things that we had as a goal as a company was to get back on NASDAQ, you know,

to bring back the company to clean up any issues that might have been out there and to have better access to the capital we really needed to build out the program, you know, to have the money to commercialize lap band to acquire products and support services that were synergistic with, you know, our focus on the weight loss market. And so that was crucial for us. So when we looked at the Obelon merger, number one, we were able to bring ourselves back onto NASDAQ and become relisted. So that was great. And then that gave us immediate access to account. We brought in $46.2 million right after the merger and also brought in some money that we had in the acquisition. So we were able to finally have that financial position to make sure we had a clean balance sheet, make sure our supply chain was

completely up to date, make some of the investments that we'd had on hold during the pandemic, and to, you know, really pivot from a survive sort of a mentality to a thrive. And, you know, just to see that excitement level and passion now within the employees and the doctors that we work with in the market, it's just exactly where we wanted to be. So, you know, you wanted what you wanted, we got there, and now we're under the spotlight and we have to execute. So we're ready for that. All right. The journey's just begun, so to speak, right? So when you're, you know, speaking of that that raise, right? I mean, I'm sure there's a fair amount of people that you had to to sort of win over, right, that you needed people on your team to kind of get behind this,

merger and the effective raise. You know, what are, you know, in your experience doing, you know, participating those types of, you know, capital raising initiatives? Are there, you know, one to two pieces of advice that you'd offer up to other med tech or other healthcare entrepreneurs that are there in the same boat, whether they're, you know, maybe trying to raise their series A or maybe it's a follow-up round. Sure, yeah, I know. Great question. A couple of things I can think is one, build a great company presentation that can be emailed to somebody and they can still get through it.

It becomes almost intuitive for them to understand what your value proposition is and have your clear objectives that highlight your key benefits and your differentiation and what you represent. present as an organization and a management team. You know, showing the clear and experience management background for your team is very important. One of the most crucial things I've seen investors discuss, you know, is if I give you money, who's going to use and what are they going to do with it? And then fine-tune that presentation. No matter how many times you've done it, fine-tune it, have a different audience look at it.

So, you know, we had investors look at it, regulatory people look at it, attorneys look at it, outside mentors that could look at it and have good experience with it. And no matter how many times you look at it, there's something you can improve. And if you don't think so, have somebody else to look at it because there's always something you can improve. But then you have to practice it. Practice it, practice it, practice it. You have to make it almost like it's part of your being to the point that you can

confidently shape it and present the information to an audience in a highly efficacious matter, but on the run, because they're going to take you a lot of different directions. You're going to have to be able to skip slides. You're going to have to be able to pivot your story. story to answer their questions. And you know, you can be presenting that this deck anywhere from an investor to a banker to a potential board of an acquisition target. So you've got to really have a good deck. And it has to be, it has to be strong, have a great base, be intuitive and be very clear. But also it has to be something that you can pivot. And it's almost like a book where you can skip

chapters and go to pages and, you know, help help people understand exactly what they're trying to find out from you. Because remember, they're giving you 15 minutes. You better make best use of it. And the second thing I say is hire the right bankers and attorneys and anybody else who can help open the right doors and expand your network. And then also help you make sure that you're negotiating the best deal. So there's money out there. But what type of money and how much money is up to you, your offer, and how you perform in your presentation to these people. Yeah, that's such good advice, you know, hearing you describe kind of your, the efforts needed and the focus and efforts needed around, around just the deck and the presentation alone, especially considering you've

probably done this a fair amount, right? And you, you still can't, it's not like you can, you know, skate, skate through it, right? It still deserves a ton of attention and a ton of a focus, a lot of practice, a lot of shots on goal, right, in order to find the right, to find the right partners. On that note, with respect to kind of reshape and the merger with Obelon, Why their merger? Was their technology? Did Obelon, like, did that company have technology that was synergistic to what you're trying to do at reshape? Yeah, absolutely. So they have an endoscopic balloon that you're able to swallow a capsule. So no upfront procedure to swallow capsule, swallow additional capsules during a six-month period, kind of keep your stomach full so that you

eat less food. And then after six months going and endoscopically retrieve those balloons. So it makes sense because it's weight loss. It's maybe a different, market segment than what we currently focus on with the lap band. And because we also have reshaped care, which is reimbursed aftercare, we can put a reimbursed virtual health program behind that balloon. So right now, you know, they shut down everything in March of 2020. So right now we have the keys to the building. So we're going through that manufacturing and analyzing it, making sure that, you know, we can bring everything back up. The FDA certifications are still in place. But we have to make sure that it's a viable business and that we can we can treat it right. So that's what we're doing

right now is focusing on almost like looking at a new business. Can we do it? Is it right for us? And what are the opportunities down the road with five-year performance and everything else? But we're digging in hard. And I just love the optionality bringing in an additional product to our portfolio that really positioned us to have multiple pathways for physicians or surgeons and their patients to achieve success. Got it. And is Opelon, is that a company that was based here in Southern California as well, or were they based elsewhere? Yeah, actually, they're just down the other side of the Marine Base. They're in Carlsbad, California. So as you might imagine, the secret project name for this was Project Pendleton. There you go. Yeah. And for those listening, you know, I'm recording this here in Mission Viejo, South Orange County and Barts there at the three-shaped offices in San Clemente. And then, of course, Camp Pendleton is just south of where we're at. So, yeah, it makes,

It makes sense. Good, good choice for the project name. Right. On that, let's jump to another kind of key win that you were able to knock off, which is incredibly impressive, which was a manufacturing transfer, you know, during the COVID pandemic, mind you. And so you decided to make the, to move lines, I think for the lap man, correct and from from Costa Rica, back to the U.S. So two questions really around that is, is that seems a little bit atypical, right, when most medical device companies are moving manufacturing lines outside the U.S. You decided to do the opposite, go against the tide, so to speak. So curious to learn a little bit more about that.

And then also, like any other, you know, key tips, whether it was specific to this particular transfer or other transfers that you've been, you participated in, are there, you know, you were able to do this during the pandemic, which, you know, I'm sure presented a lot of unique, unique challenges. So interested in any other key insights you have around, around making manufacturing transfers more efficient. 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

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