Medsider: Learn from Medtech and Healthtech Founders and CEOs - First Impressions are Crucial in Medtech: Interview with Retia Medical CEO Marc Zemel

Episode Date: January 18, 2023

In this episode of Medsider Radio, we sat down with Marc Zemel, CEO of Retia Medial.Marc has extensive experience in fundraising for successful startups and is an experienced leader of Fortune 500 companies. Prior to founding Retia Medical, Marc earned an MS in Mechanical Engineering from MIT and an MBA in Sales and Marketing from Yale. He’s also held key leadership roles at Becton Dickinson as well as a capital equipment start-up.In this interview, Marc talks about managing a medtech start-up that’s developing groundbreaking technology while pursuing fundraising that drives sustainable growth.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 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.Lastly, here's the link to the full interview with Marc if you'd rather read it instead.

The way I think about this is don't completely outsource the product development. You're much better hiring a talented system engineer or one or two other engineers in your core competency than just giving it over to somebody. We talk in like software and other industries like minimum viable product. There's no minimum viable product in MedTech. You've got to come out with, you know, the first impression that's the best. you know the thing that I wish we had done more of in retrospect was to say to our advisors okay look if we prove our product does X right what evidence do you need to see to drive

market adoption right assume it works right what else do you want welcome to MedSider Radio where you can learn from proven med tech and healthcare thought leaders through uncut and unedited interviews now here Here's your host, Scott Nelson. Here, everyone, it's Scott. In this episode of Medsider, I sat down with Mark Zemmel, the CEO of Ritea Medical. He's got extensive experience in fundraising for successful startups and is an experienced leader of Fortune 500 companies.

Prior to founding Ritia, Mark earned an MS in mechanical engineering from MIT and an MBA from Yale. He's also held key leadership roles at Beckton Dickinson as well as a capital equipment startup. Here for you the key things that we discussed in this conversation. First, in the MetTech industry, there are a very few second chances. Unlike the software space, you can't really build a minimum viable product or MVP in healthcare. It's critical to hit the market with a product that does what it's supposed to do.

Yes, there is always room for innovation and improvements, but the baseline product needs to be as advanced as possible before it's commercially used on patients. Second, in any business transaction, it's useful to have an out clause. Long-running diligence processes such as acquisitions require heavy resource allocation costing both time and money. A backout clause offers protection so that should things fall apart, the efforts are not all in vain. Third, domain experts are vital for product development. Whether you're making hardware or software, it's crucial to coalesce a group of stakeholders that are genuinely interested in your technology. Ideally, this group consists of people that have

connections to help generate commercial revenue or to get your devices in front of the right audience. Before we jump into this episode, I wanted to let you know that we recently released the second volume of Medsider Mentors, which summarizes the key learnings from the most popular Medsider interviews over the last six months or so. Look, it's tough to listen or read every single 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 mentors, you'll get full access to the entire library of interviews dating back to 2010. This includes conversations with experts like Erica Rogers, CEO of Silk Road Medical, Dr. David Albert, founder of Alivecore, and so many others. In addition, as a premium member, you'll get to join live interviews with these incredible med tech and health tech entrepreneurs. Learn more by visiting MedsiderRadio.com forward slash mentors. Again, that's medsiderradio.com foreign slash mentors. All right, Mark, welcome to Medsider Radio. Yeah, great time to be here.

Yeah, yeah, looking forward to the conversation. It should be fun. And not only learning about your, you know, your background, but also Ray Tia as well. So with that said, I provided a kind of a short bio on yourself kind of at the outset of this episode. But I'd like to hear it from the horse's mouth, so to speak. So if you can give us a kind of an elevator pitch for your professional background before starting Ritea, that'd be helpful. Yeah, sure. So I got a master's in mechanical engineering from MIT. And I would say something in the water there makes you want to start a company. And actually, my first job was at a startup. We built capital equipment for microelectronics manufacturing. I rose through that organization to lead engineering before

switching over to sales and marketing. I didn't know anything about sales and marketing. So I went back to school, to Yale to get an MBA. And at that time, I decided to switch to MedTech. I wanted to make more of a direct impact on society and human health and what better place than MedTech, right? So after Yale, I worked at Beck and Dickinson for a couple of years. Among other things, I worked with their anesthesia platform, which was a great education. BD is an amazing company, but I really wanted to start my own. I'd always wanted to do that, so I left and started RATIA. Got it.

That's super helpful. And I'm looking at your LinkedIn profile now, Mark. I noticed that it appears that in addition to, you know, sort of serving as the CEO of Ritea, you're also involved with MedSec Innovator, is that well? And then do you do investing too? Well, so we, RATI accepted the MedTech Innovator last year, and so they tell you to put that on your profile so that you show up. It's kind of their way of doing it. But yeah, I'm an alum of the MedTech Innovator program now, which is just incredible.

That is Paul Grant and his team there are fantastic. Really grateful to have been a part of it. And then, so originally when I started RATIA, I was working kind of as an entrepreneur in residence with the Pritzker-Vlock family office. And the idea was for me to start a couple of companies, run them, and they would fund them. And we did do a couple of those. And Raiti is the one that I would say is stuck, right? So my full-time effort now is on Ratiya. Got it.

That's super helpful. Yeah, and I'm super curious. to dig in a little bit about your experiences with MedSec Innovator, especially considering kind of the positive feedback that you have about the program. But with that said, give us an idea of what the Argos platform does, or the Argos device does, which I believe is your core product under the Ritea umbrella. Give us an idea of what it does and then really how the idea came about. So the Argos monitors blood flow, or you would say cardiac output.

and other advanced hemodynamic parameters. And these parameters are used to guide diagnosis and care for high-risk patients. I can give you kind of a basic example. About a month ago, we brought our monitor out to a trauma, ICU, and they were rounding with it to check on some patients. And they hooked it up. The patient's blood pressure, heart rate would fine, all the clinical exam, everything looked fine.

And they're like, oh, let's just hook it up to sort of practice hooking it up. They hooked it up and they saw that our parameters were, you know, very abnormal. And it turned out that we detected an awkward bleed. This patient was bleeding internally and nobody knew it. And so that's just one example of how, you know, using our parameters can help, you know, see, you know, beyond the basic vital signs. This has broad implications for septic shock, acute kidney injury, heart attacks, you know, post-surgical infections, all sorts of things.

I licensed this algorithm from MIT and Michigan State for two reasons. One, I had heard from numerous anesthesiologists that the older monitors didn't work very well, that they weren't accurate. And secondly, I saw the performance of the algorithm in how. we can make a difference. Got it. I'm on the website now. Ritea Medical, R-E-T-I-A-Medical.com.

Again, that's R-E-T-I-A-Medical.com. If you're listening to the show and want to learn a little bit more, go deeper, I guess, on the technology, it's a great, great site. In fact, on one, I believe it's your team or your company page. You've got like a nice video kind of highlights some of the background story, which is pretty cool. So give us, before we kind of go back, in time and learn a little bit more about sort of the journey over the past decades since you

started, Raitia, where is the company at in terms of, you know, development, regulatory, commercialization, et cetera? So we just completed a $15 million series B funding round led by Fresenius Medical Care Ventures with participation for another large global strategic. The Pritzker family came back in and the Michigan State Foundation, which, of course, where we got some of the technology. And that's mainly we're using that funding to drive commercialization and develop our next generation algorithms. The FTA is FDA, sorry, the Argos is FDA clear.

We're also CE marks, so we're rocking and rolling right now. We grew revenue by 350% last year and we're selling in 14 countries. Oh, wow, wow. of that global sales footprint, is most of it focused on the U.S? Or is it OUS? Yeah, 90% of our effort is in the U.S. But that's been historical. You know, that's a big question.

You know, how much you push on the OU.S. activity, especially the sort of state of Europe right now, inflation and the challenges of executing, you know, across that regulatory landscape. But there are certain dedicated, you know, key opinion leaders. in countries that really value this technology. So I would see no reason why we shouldn't pursue that. Got it. Yep, makes a ton of sense.

And yeah, I think your description of rocking and rolling is probably a good one, right? I mean, raised a series B, you know, commercializing in, you know, multiple countries. That's pretty cool to hear. So congrats on the success thus far. That said, let's use that kind of as a transition point to go back in time, step inside the old MedSider time machine. And I'd love to get your take, especially considering you have. a lot of experience with early stage companies. You mentioned you licensed it, you licensed the

algorithm from, was it from MIT and Michigan? The IP is both MIT and Michigan State. The bulk was from Michigan State, actually. Got it. So when you think about like those formative years for Retia, right, when you were kind of moving through your alpha concepts, maybe into your beta, your beta products, you know, if you can take us back in time, what, what are some of the key things that you learn through that process? Maybe frame that. that up around, you know, what you see, you know, where the areas that you see med tech or life science entrepreneurs make the biggest mistakes, you know, in those early, those early years. Yeah, you know, we started, uh, RATIA before the term digital health existed, like, or was

that common. So we kind of like landed in that space. I was excited about algorithms because I thought these are pretty hard to do. And so, you know, they're, they're pretty well protectable, I would say. There's some, you know, tricks around. that, but, you know, having a really good solution, you can, you know, make a big impact and defend it. Algorithm development takes a long time. And, you know, people think you build something, you write some code, right? And a few months later, everything's ready, right? Nothing could be further from the truth. Whatever data you think you need, you got to multiply by three. Also, if it's a serious unmet need like what we were facing, your customers have probably tried

several different alternatives already and been burned. So they're going to be very skeptical. And so that expectation for performance is going to be really high. So that we took a, what I would say, a slower development path on the algorithm to make sure that it really worked before we brought it in front of customers. And that's paid a lot of dividends, you know, since we've started commercializing. Those are really good insights. I have more if you want. I thought a lot about this question. Yeah, no, no, no, no. Feel free to chime in.

I mean, I think you've probably got a ton of value to ads, considering how much, you know, how much time you've spent, you know, in the early stages of Ventech companies. Yeah, so, yeah, please share more. Yeah, so we actually developed our algorithm and then we built the monitor, the hardware. You know, there's no point in spending money on that unless you were sure that the data worked.

So that was good in terms of, you know, low burn. But it, you know, it also meant that, you know, we needed more time to do the hardware. I think in retrospect, I might have done that in parallel, which would have shortened some development, but you're taking more financial risks. So, you know, that's a tradeoff. But for most hardware, the conventional sort of like, you know, MBA wisdom

is to outsource your product development. You know, don't bring on all these engineers. And we tried that. But the company that we worked with, started treating us like an unlimited ATM. And we ended up bringing the work in house and we supplemented our team with solo consultants. And that worked so much more efficiently. And even so, we only had five people by the time we filed for our 510K.

So, you know, the way I think about this is don't completely outsource the product development. you're much better hiring a talented system engineer or one or two other, you know, engineers and your core competency than just, you know, giving it over to somebody. Got it. So if you had to start from scratch today, right, brand new company, would you follow that same approach? Would you take that same path where you try to keep the team lean but not too lean where you're completely relying upon, you know, a third party, you know, a contract manufacturer?

Yeah. I mean, it depends on the type of process. product, right? Our product is an algorithm, a software kind of product. The hardware is not going to change that dramatically. So you don't need necessarily that in-house, but you're going to be iterating on the algorithm a lot. We did that in-house. You're going to be iterating the software because you're going to add features that your customers are going to ask. It's already come out with several versions of, you know, different user interfaces and things like that. So there's certain things that you know you're going to continue to maintain, as we called it,

like in sustaining engineering. So that you're going to want anyone. But, you know, do I have a mechanical engineer to design the housing? No. Right. So you have to think through those issues. Got it. I think this is a really super, a really interesting topic. And it kind of resonates with me just because of where we're at with fast wave medical, which is the company that I'm running now. But I think you bring up a really good point. It makes, on paper, it makes a ton of sense to, you know, to outsource as much as possible, right, to a design house, right? Especially if they have, if the project you're working on is right in their wheelhouse. But there is risk with that, right?

Especially if you don't have, you know, like an in-depth relationship or if the incentives aren't aligned. I mean, things may start off, you know, really well, but six months, nine months, you know, a year down the road, you're either to your point, either being used as an ATM machine or you're just deprioritized, you know what I mean? And then kind of, you know, sort of not out of, not completely out of luck. that point, but, you know, stuck between a rock and a hard place. So I think that's a great point. Yeah. And also, you know, these big sort of like, you know, massive firms, like they have

everything, right? And there's been a lot of consolidation in that space. But when it ends up happening is, well, you know, now they got a lot of overhead because they have ahead of business development and they have ahead of this and ahead of that. And then, you know, now the blended rate for those firms is like, you know, 2.30, 240, 250 an hour. You can hire. You can hire. a couple of good engineers for a lot less than that, right? Not to mention the fact that most of these firms, they're good at a couple things, but it's really hard to find somebody that's good at all the things, right, that you particularly, your product needs, right? So you're better off finding the best and piecing it together.

Yeah. It's more management time, but, you know, you're going to need it anyway. Yeah, yeah, totally. I'm right there with you. And you mentioned kind of this concept of of instead of going with sort of an agency, right, or a full house, a supposedly kind of full-service, yeah, full-service, full-stack kind of development shop, you know, sort of piece-mealing your team together. They don't have to all be full-time employees per se.

They could be, you know, part-time, 20 hours a week, maybe less than that, maybe a little bit more than that, but kind of piece-mealing that team together where you can identify sort of the expertise, you know, and in that scenario, they're more, there's a lot, it's a lot easier to get alignment, but also that, you know, the tradeoff being, you know, you just mentioned it, a little bit more management.

Exactly, right. And I used a lot of consultants, right? And they were awesome, right? Because a lot of them had worked at other companies, big med tech companies. They knew what they were doing even better than I did, right? So that was just, you know, great for everybody. Yeah. And I think a lot of this stuff, I mean, it really does, you know, come down to the project that

you're working on. But, you know, when you look at a, you know, a proven, like a large proven, contract house, you mentioned kind of the blended hourly rate, which can really get up there by the time you layer in different management layers. But in addition, you know, you just can expect things to move a little bit slower, right? Traditionally, you know, versus, you know, kind of piecemealing your freelance team together, if you will. So I think those are really, really good points. Anything else to add before we kind of jump to regulatory? On the product side, you know, we talk in like software and other industries like, you know, minimum viable product, there's no minimum

viable product in MedTech. You've got to come out with, you know, the first impression that's the best. So don't compromise, right? You really have to make that good impression. You know, these, a lot of your customers, whether it's a surgeon or an anesthesiologist or, you know, any number of fields, dermatologists, these people make, you know, several hundred thousand dollars a year easily, right? They're used to certain style of performance, premium, you know, type of life, right? Don't come out with this rinky dink thing that doesn't have, you know, doesn't look good, right? Doesn't, isn't easy to use, like people, you know, throw that around, but yeah, everybody has an iPhone in their pocket. that should be your standard.

Yeah, it's a good point. And I love the fact that you brought up MVP or minimum viable product, right? You can't really effectively do that in MedTech, right? You can't ship a product that's going to, that's not going to have a whole bunch of, you know, risks associated with it. Right. And your investors may not have patience for that, right? They want to, oh, why don't you get this thing out there?

Like, that's the worst thing you can do. Mm-hmm. Yeah. But the way I like to think about this, like the concept of, of MVP that's often used to like in the world of software, as an example, get your MVP out or get some version of your product in front of customers as early as possible, right? Not actually the finished thing, but whatever you're trying to optimize for, right? Wherever your key questions are, try to get that, that some semblance of what you're trying

to get answers to in, you know, in front of, you know, your ideal customers sooner or rather later, just so you can, you know, pick up on signals or insights that you may have otherwise missed. Oh, yeah, absolutely. had a lot of focus groups. We did a lot of surveys, you know, did a lot of stuff sort of on the down low at conferences, right? But the clinicians love to help you there because they want to see what's coming, right? And, you know, there's some really awesome people that really give up themselves in their time because they want to see improvements, right? So you can do that fairly cost effectively and they value that. Yeah, yeah, no doubt. And conferences

are certainly a great way to kind of get feedback in one setting from, you know, a lot of different physicians. But, you know, if you're listening to this conversation, you know, you don't necessarily have to wait for the conference, right? You can do a lot of this, you know, virtually. Or if you're in a, in a city and, you know, have access to the right, the right specialists that you're looking for, the right physicians, physician specialties, you know, you can certainly do it locally as well. So with that said, Mark, let's jump to regulatory, right? Argos device you mentioned is, has C.E. Mark, has regulatory clearance. I think your 15K was back in. back in 2018.

So when you think about kind of the topic of regulatory in general, and again, kind of leaning on, you know, all of the other early stage projects that you've been evolved with, what are some of the key lessons that you think other med tech entrepreneurs really need to understand about trying to navigate the regulatory waters? Yeah, I mean, look, we're a class two diagnostic computer with, and we needed performance, so we needed clinical studies, right? It depends on your type of path.

First thing is you got to look up predicates, right? You got to figure that out. If you don't know, you got to hire a consult to help you figure that out. And then you need to get the FDA to concur with your choice of predicate. I'm a big fan of engaging with the FDA early and often using the pre-submission process. Our reviewers were tough, but they were fair. You know, I still see today some companies treat the FDA like some kind of enemy. That's the worst thing you can do.

They really want new companies to come in, right? They want to encourage innovation. I went down to D.C. twice. This is pre-COVID, obviously, right? I met with them face to face, right? We started dialogue. We educated them about our technology. And, you know, I remember being really nervous, right, to go in front of all these people.

and I brought all my papers and like printouts and whatever and I forgot something. And our lead reviewer was on his laptop and he pulled it up for me because he'd had it from the prior submission. They're not, you know, they're not trying to be jerks, right? They're actually trying to be helpful to get you through the process. Really class act down there. I can't complain at all. We used Hogan and Lovels. You know, they're expensive, but they were excellent.

They guided us through the final steps. And the other thing that we did was we brought our, you know, virtually, we brought our consulting chief medical officer who is an anesthesiologist to the meeting to apply. And, you know, look, MDs listen to MDs, right? And so you need to be aware of that when you talk to the FDA. Yeah. I've noticed that too in various presubs. That makes a tremendous amount of difference, right?

is if they're asking questions around a key, like a key sort of aspect of your technology, well, bringing in, you know, the lead engineer that's most familiar with that aspect really, really helps because they appreciate, you know, going deeper on a certain topic. And same thing on the, on the clinical side, right? Like if you can bring in an MD, you know, to discuss a certain clinical topic with, you know, the MD that on the review side for FDA, I mean, that helps tremendously. With that said, Mark, that you mentioned, though, that, you mentioned, though, that the Argos system is a class two,

class two diagnostic, but did require clinical data. So when you, when you think about, you know, kind of just kind of clinical, clinical research, building out sort of your clinical roadmap at Ritea, like, how do you, like, how did you begin to think about it? Was it just to meet kind of the regulatory, you know, burden? Or were you thinking, are there other things that you think med tech entrepreneurs need to need to be aware of, you know, as they approach kind of that clinical, you know, out that clinical strategy.

So this is something I wish I had done a little better. I'll tell you, we focused on validation, right, because our advisors told us focus on making it accurate and we'll take care of the rest. And this is because we had scientific and clinical advisors and they take a scientific step-by-step approach to these things, right? That's fine, but so slow, right? you know, the thing that I wish we had done more of in retrospect was to say to our advisors, okay, look, if we prove our product does X, right, what evidence do you need to see to drive

market adoption, right? Assume it works, right? What else do you want, right? And the answer could be nothing, right? But, you know, the answer could be, well, we want to see some surveys, we want to see costs. We want to see, you know, any number of things. Outcomes, which is tricky in the monitoring world because no monitor does anything except give information, right? But no matter what it is, you can often gather that information in parallel with your, what I'll call your efficacy, you know, your validation study.

And I think that can cut, you know, one to two years off your timeline. That's a really interesting way to frame it. I love that. So asking your key, you know, clinical team, right, which is your in, you know, your in users in most in most scenario, that question of, hey, let's assume this works, right? It does, it does X, Y, and Z, like what you, what you would expect it to do. What evidence would you need to support, to support that? That's a, that's a great way to frame that up.

Yeah, I mean, look, you know, when I was in the MedTech program, the MedTech innovator, like, Paul Grant gets on staging, he's like, look, at all the different innovations. and your traditional sort of like, you know, thing that, you know, cures cancer, right? Those types of innovations, you know, I know there's like neuromodulation or valves or things like that. That's like this much of the whole spectrum, you know, tiny amount of innovation. There's a lot of innovation in software and care delivery models, all these things. And so it's not so straightforward that if it works, people will buy it. right that was that was 20 years ago we're we're beyond that now yeah no doubt one of the uh i i

interviewed nick anderson gosh this was probably over a year ago um he's a kind of a reimbursement expert um and we talked a lot about this very topic i mean that this comes up in in most of these medsider uh medsider conversations but um you know he he had a really great point he's like you know all of the um the early stage med tech companies that i'm a part of across the board almost almost always i never see anyone either represented on the board or an advisory capacity that's from a payer. And he goes, look, I mean, what most med tech companies are missing is like they just don't think enough early on about how is their device going to be paid for, right? And you're saying something similar, like, yes, do the study, you know, do the validation work

that will get you to regulatory clearance, but you've got to be thinking about what things can I incorporate in this clinical work that are actually going to lead to adoption, right? whether it's efficacy, whether it's, you know, something else, maybe it's, you know, maybe there's economic considerations, et cetera. But thinking about those early and trying to work that into the process as much as possible is, you know, is the ideal scenario. Yeah, and then you publish it, right? Because then that purchasing person is going to want to point to a publication and said,

look, you know, this is proven now. It's peer reviewed that it is, you know, saves money, you know, or whatever it does. that gives them a lot of cover to bring in a new technology. Yeah, yeah, definitely. So yeah, maybe the take-home message here, you know, as if you're, as you're building out, you know, that clinical research roadmap, that clinical data roadmap, whether it's, you know, specifically needed for regulatory clearance or approval, but think about ways to, you know, incorporate certain outcomes, certain measures that are going to be important when it comes to,

buying decisions, right? And, you know, who's going to be paying for your technology, who is going to be, you know, trying to convince, you know, hospital or any other, you know, side of care to bring an end, you know, be thinking about those as early as possible. Hey there, it's Scott. And thanks for listening in so far. The rest of this conversation is only available via our private podcast for MedSider premium members. If you're not a premium member yet, you should definitely consider signing up. You'll get full access to the entire library of interviews dating back to 2010. This includes conversations with experts like Renee Ryan, CEO of Cala Health,

Nadine Miarid, 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.