Medsider: Learn from Medtech and Healthtech Founders and CEOs - How to Build a Strong Network of Investors and Partners for Your Medtech Startup: Interview with DermaSensor CEO Cody Simmons

Episode Date: August 22, 2022

In this episode of Medsider Radio, we sat down with Cody Simmons, CEO of DermaSensor.Cody spent four years learning about business strategy and analytics at biotechnology giant Genentech before becoming CEO of DermaSensor in 2016, where he leads development and commercialization efforts for the company’s novel skin cancer detection tool. In 2018, he was included on the Forbes 30 Under 30 list in healthcare.In this discussion, Cody shares why he thinks companies need to focus on regulatory and reimbursement alignment from the very beginning, the importance of finding ally investors, and how to build trust with potential partners in your network.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 a copy of every volume of Medsider Mentors sent to their door 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 Cody if you'd rather read it instead.

There's nothing like actually trying to sell something to learn what the market really thinks your product. Right, right. All the hypothetical discussions you want in the world, but until you're asking a health system or a doctor or a patient to actually pay for it, that's when you really find out. I think a lot of the successful entrepreneurs that I've seen that, you know, built a billion dollar plus companies in kind of a med tech or health tech space. Of course, they're, you know, competent entrepreneurs and smart and whatnot. but they've just done a really good job that kind of building and nurturing relationships. And frankly, I think, are better salespeople than me.

So, you know, I think that's something that I would have spent more time on in the past and planned to moving forward as well. Welcome to MedSider Radio, where you can learn from proven med tech and healthcare thought leaders through uncut and unedited interviews. Now, here's your host, Scott Nelson. Hey, everyone, it's Scott. In this episode of MedSider, I sat down with Cody Simmons. who spent four years learning about business strategy and analytics at biotech giant Genitech

before becoming CEO of Dermacensor in 2016, where he leads development and commercialization efforts for the company's novel skin cancer detection tool. Here for you the key learnings that we discussed in this conversation. First, Dermacensor learned early on in the development process that it needed to conduct multiple studies for regulatory approval and to qualify for coverage and reimbursement. Medtech companies should pinpoint the criteria necessary to satisfy both regulators and payers and whether there's any alignment between the two. Second, show investors that you have the capability and competency to establish a manufacturing process and that you're prepared to ramp up supply when getting to market. Having commercial product ready to go shows

the ability to execute your plans. Third, spend some time each month proactively reaching out to potential investors. Focus on building strong relationships with people in your network who can become trusted allies and provide help during the challenging times. Okay, so, So before we jump into the discussion, I want to mention a few things. First, when you think of the word branding, what comes to mind? A nice logo, some pretty colors, something along those lines, right? Well, that's what I used to think as well. In fact, most medical device and health technology startups deprioritize branding

because they believe it truly doesn't matter. But here's why they're wrong. Regardless of who you're pitching, a VC, a manufacturing partner, potential employees, maybe even customers, you need to step inside their shoes and ask one simple question. How does my company or project make them feel? You see, most people in the world of healthcare and life sciences have a completely wrong perception of brand and branding. But a buddy of mine, Howie Chan, has spent close to a decade using the power of brand strategy to launch some of the most innovative products, services, and companies that range from startups to Fortune 500 enterprises. Howie recently started as brand design microagency, healthy brand consultant.

Howie and his network of partners grew up in the world of healthcare and can help with research, creative, strategy, and experience, all without the bulkiness of training. traditional agencies. Check out Howie's philosophy and his services at Medsiderradio.com forward slash healthy brands. And for Medsider listeners, I was able to twist Howie's arm into giving away a couple free 60-minute consults. His schedule is pretty full, so Howie was only able to make this offer for the first three people that direct message him on LinkedIn. So head on over to Medsider Radio.com forward slash healthy brands. Send Howie note and mention this offer. Don't make the same branding mistake that most healthcare startups make. Give yourself an edge by partnering with Howie's team at MedsiderRadio.com forward slash healthy brands.

Okay, second, if you're into learning from proven medtech leaders and want to know when the 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. If you want even more inside info from med tech experts, think about a MedSider premium membership. 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. Cody, welcome to Medsider. Appreciate you coming on. Thanks for having me. excited to speak with you today. Yeah, definitely looking forward to the discussion, learning a little bit more about what you're doing at Dermasensor, the progress you've made, and really kind of the key lessons that you've learned along the way over the past four to five years. So with that said, let's spend the first

maybe five to 10 minutes talking a little bit more about your background leading up to Dermacensor and helping kind of set the stage for like where you're currently at in terms of sort of the life cycle of the company. And then we're kind of rewind the clock and go back in time and, you know, hopefully learn a little bit more about, you know, some key lessons that you that you learn. So with that said, talk to us a little bit more about what you were doing, you know, previous to taking on the CEO role at Dermasensor. Sure. Sounds good. My background in bioengineering and also business, you know, academically. So I did my, was a Brown undergrad and bioengineering minor, basically, and also as part of the

entrepreneurship program and also major in economics. And then I did my thesis research in a biomaterals lab for a master's at Stanford. And so I kind of always knew health tech was of interest, but I also knew from that master's research and also some kind of undergraduate experiences that my passion really lied more on the, you know, developing and commercializing new health technologies. So, you know, worked at a venture fund part-time, junior year, and, you know, worked with a couple startups. And then at Stanford, actually worked with a couple PhDs to launch kind of the first startup that I've been a part of launching, which was basically a biomimetic cell culture system. So the same way that the body, you know,

stresses and strain cells, you know, for example, you know, heart cells, right? You know, your heart's beating, your lungs are moving, your, you know, our muscles are subjecting cells to strain and stress. We kind of mirrored that in a self-cultural system. You can think of it as like a dynamic petri dish. So that really put me on this, man, this could kind of develop and launching new technologies could really be great, but didn't really have the confidence to sort of jump straight into something full-time, you know, at the ripe old age of 22 at that time.

So went to Genentech for four years. So I did a tier leadership development program there, mainly the commercial strategy and business development projects. So it's four, six-month rotations. And then I spent two years after that in the U.S. pricing contracting strategy group for oncology drugs. And, you know, Roche Genentech is the largest cancer drug company in the world. So it's a really good experience.

Got a lot of great, I kind of think. of it as my like industry MD or PhD, right, kind of a lot of that foundational knowledge and skill set and business analytics strategy and just kind of how to commercial organizations and really you know high functioning high performing organizations operate. So it's a great kind of foundation but you know been on the lookout for opportunity to get sort of back to an early stage startup and was introduced to the CEO of a five-person startup that had just raised a $9 million financing with mobile ophthalmic screening and monitoring tools called Digicide Technologies in San

Francisco where I was, you know, I've been living for the last few years. And so joined them as the head of business development, which was a great experience because besides the CEO, there was no one there that had any business nor health care experience. So it's really great kind of being his right hand man and, you know, everything from kind of medical and clinical work to product to strategy and, you know, working to get contracts with health systems and pharma companies. You know, we were having some challenges. So we kind of brought two medical devices to market both class one. We're having some challenges on the business front actually really due to mainly due to reimbursement considerations. and, you know, with the financing kind of a few months after me had hired kind of full C-suite.

And so there is, you know, kind of the ramp-up team-wise wasn't really keeping pace with the business kind of traction in ramp-up, I would say. And around that time is when I was introduced to Dr. Maurice Farray. And I'm very happy to say that Digi ended up making a very successful pivot to become a pure health data company rebranded as Rory. So they're doing very well now, which is great. But yeah, so I left digitized and came back to my home state of Florida to, and so now kind of getting into the dermis sensor story, we have a bit of a non-traditional founding story. So how we think about it is there's the founding investors, Dr. Maurice Ferre and Chris Dewey, who originally kind of started and set up the company.

and then I'm kind of the operating founder as the first, you know, full-time employee and really got things off the ground. So to take a step back, Maurice is the orthopedic surgeon by training. His first company, you know, the surgeon turned entrepreneur, his first company was an orthopedic imaging company that sold the GE. And while he was a VP of business development there, came across a couple very interesting technologies. one was a surgical robotics company called Z-CAT, and another was he joined the board of trustees at Boston University around that time as well where he went to med school,

and another was this non-invasive spectroscopy technology that was really invented by this researcher at BU of Professor Irving Bejillo. And so he's kind of looking to kind of build his next company and decided, you know, Z-Cat already kind of had a working prototype or a little further along. So him and Chris Dewey kind of, you know, made an investment sort of ramped up this company, rebranded it as MACO Surgical.

So I mentioned that because MACO Surgical went on to be very successful, went public and sold the striker for $1.6 billion. So it's kind of great success story, especially here in South Florida. And so from MACO, there's been a handful of companies that are effectively MACO spin-off. Neosys, I think they've raised $100 million plus. here in South Florida, derma center, bus,

orthosensor, the same group of guys also started. So, you know, it's kind of like the PayPal Mafia. We kind of have like

the Maco Mafia down here. It's funny that you said that I was just going to bring that up. It sounds like the PayPal, like the PayPal Mafia, but, but, Mako instead.

Yeah, the MAKA, maybe MedTech mafia. I don't know. So, yeah, no, it's been kind of great working with those guys.

And so actually, so I was introduced, to Maurice, January 2016, and spoke with them. And he said, yeah, you know, basically we have these couple 30-pound spectrometer systems we built with these couple groups in Boston. We've been doing early data collection. Seems really promising. But, you know, it's effectively the line I'll never forget.

We have an interesting research project, and we're looking for someone to turn into a company. So, you know, I've been excited, you know, having done similar kind of. stage with the spinoff from Stanford where you know we did a licensing deal and went through the start X accelerator you know raise some angel money right kind of like okay I kind of know what that piece if it looks like but very was very excited to have the caliber of entrepreneurs and executives in the med tech space that had built and sold you know a billion dollar plus companies before and so it's really yeah I think it's really been great sort of having them guiding me and the other operating team and sort of going about that, having those, you know, season heads around the table

and board meetings, you know, and kind of available whenever needed that have been through exactly what you've gone through before. And, you know, we've even at a couple points basically been incubated in Maurice's office because he ended up having a lot of extra office space and we didn't need that much. So yeah, I think that's kind of high-level company background. Cody, that's super helpful background. Can you tell us a little bit more about what the technology is and does and then kind of where you're at in terms of the life cycle of the company. Sounds good. Yeah, of course.

So derma sensor, we're really focused on putting a high performance, easy-to-use tool in the hands of hundreds of thousands of primary care providers so that they can more effectively detect skin cancer. You know, skin cancer is more common than all the cancers combined. There's about 5.5 million diagnosed every year in the U.S. primary care physicians can miss up to half of them, but they're also referring dozens, depending on which study, like 30 to 50 suspicious moles for everyone melanoma, right? So they can miss a lot of them, but also there's tons of unnecessary referrals.

The good news is that 99% of melanoma, the deadliest form, is curable if detected early. So really, we're trying to enable kind of a new model of skin cancer assessment, or detection and kind of bring the, you know, certainly, you know, it's hard to turn to make, you know, primary care providers or generalists, you know, on par with specialists on a lot of fronts, but we hope we can help primary care providers get closer to kind of the performance levels of dermatologists who are obviously the experts and the specialists in assessing skin cancer. So that's really our focus. And certainly there's a place for the tool in the dermatology setting as well.

for dermatologists, but also for their, you know, their care team, for example, APPs like nurse practitioners and physician assistants and dermatologists that aren't as focused on skin and cancer necessarily, right? There's some that are more cosmetic oriented, things like that. So, yeah, that's really what we're focused on. And our current stage, so we just announced, actually, in June, the successful completion of the first ever. FDA pivotal study for any kind of primary care skin cancer detection tool.

We also received FDA breakthrough device designation last year. So we're not currently FDA cleared and therefore, you know, consider an investigational device in the U.S. and not available for sale. However, the regulatory path is different abroad. So we've then seen marked and have Australia listing. So basically it's like the Australia FDA, it's called. the TGA. So we've actually been doing active sales and marketing in Australia for about a year and a half. But it's been, you know, it was relatively slow moving in the early days. Well,

due to limited products supply, but mainly due to the COVID-related lockdowns. Australia's had zero-COVID policy and kind of full lockdowns pretty much until March. So just a few months ago were the, you know, two full-time equivalent, you know, the team they are able to start going to conferences and such. So, you know, that's kind of where we're at development-wise. And, you know, Australia work has been great. Obviously, the traction in Australia in and of itself is, you know, helpful as a business. But I think the learnings that they've gotten there, which was a big part of why we kind of did that in this work in Australia, you know, how best to position the product, pricing models and amounts, you know, even certain features of the product.

we made a major kind of algorithm and software change based on feedback we got early on in Australia. So, yeah, I think that's kind of a high level on the company and where we're at. Yeah, that's super helpful. And I know I've got kind of a series of questions where I want to go a little bit deeper on kind of your approach to regulatory and kind of building out, you know, the kind of the clinical roadmap for dermis sensor. But before we go there, you mentioned, you know, when you were kind of describing your background leading up to taking on the CEO role, that your, your experience. at some of those larger strategics and how helpful that was. I would echo that same sentiment for me personally. I didn't, you know, I spent the first, gosh, 10-ish years or so of my career in large

companies. And looking back, although maybe I would have, like, you know, jumped a little bit earlier into the end of the startup scene. It was really, really good experience. So, you know, just in short, you know, was how, I guess how important, maybe what advice would you give to someone who is maybe more entrepreneurial and nature, but maybe doesn't have, doesn't have that, you know, that experience at a large, global, you know, multinational strategic.

Yeah. I mean, I guess how I've thought about it, both from my own career and also now looking back, you know, a lot of kind of observations of friends' career paths and whatnot is, you know, have some kind of core competency or skill set that you bring to the table, right? You know, coming straight out of college, especially, I think some colleges, you know, example, Brown and Stanford where I went and did research, it's almost a disservice to students that is like, oh, you're going to change your world, you know, blah, blah, blah. It's like, yeah, maybe eventually, but now when you're 21. And so, I mean, yes, there are the Zuckerbergs of the

world that have done that, right? There's the exceptions and the jobs, sure. But, you know, I think getting a foundation and something, whether it's an MD or a PhD, right, so a medical or clinical foundation or technical foundation or in my case is more like the business you know working like basically all my managers were ex-management consulting consultants and so real understanding kind of life sciences and pharma and you know analytics and you know how to synthesize and analyze really complex business issues and data sets and whatnot you know that was kind of my kind of core competency in the earlier's but true question about okay someone that doesn't want to walk for a huge company and kind of wants to get, you know, get into startup more out of the gate.

Are you a developer, you're a designer? You know, do you really kind of become, you know, digital marketing, a guru? And is that kind of what you know really well? I think kind of having something kind of clear, now that you're the best in the world at it, right? But something that really have that kind of core proficiency in, I think is important. So then, you know, even as a journalist, if you're a founder, you kind of, you kind of to know you have that skill set you can bring in the table and can kind of bring, have others, you know, as you kind of build out the team that hopes are successful,

that can bring complementary skillsets to the table. Yeah, I like it. That's my thoughts on that. Okay. That's good stuff. That's good stuff. Let's transition to kind of some of these core functional areas. And, you know, some of the key lessons you learned along the way, how you generally

approaching things at Dermasensor. And let's start out with that breakthrough device designation that you, I think you mentioned it earlier in our, earlier in the conversation. here. I don't remember exactly, but I believe about a year we're recording this conversation in mid-2020. So about a year ago in 21, you received breakthrough device designation by FDA. So first, I guess, congratulations on that. And so just really curious, you know, what impact or what has that enabled maybe you to do at derma-sensor? And then what have you, you know, are there a couple things that you've learned kind of about, you know, through this, through this kind

a global regulatory approach that you think would be, that's significant, right? And would be helpful for other, you know, entrepreneurs or startup leaders in the, in the med tech and health tech arena. Sure. Yeah, I mean, the breakthrough designation certainly is helpful. I think, you know, it was helpful for the recent $10 million we raised, you know, kind of that formal stamp or designation from the FDA is, you know, basically there's two main criteria.

There's a lot of nuances, but, you know, that you address a disease. that is deadly and that there's no other products currently on the market with the same indication for use, right? Or that does the same thing sort of another way. So, yeah, I think it's easy enough to read about the criteria and, you know, kind of think about whether you can meet that. I think, and obviously regulatory folks can help. So on that part of the question, on the regulatory front, you know, I think it's really

key to realize that you've got to invest the time and, or, money, often money, working with an expert that really understands this well out of the gate, not to flush out all the nuances in advance, but to put you on the right path. So you have an understanding of, you know, is this FDA exempt? Is it class one, class two, maybe class three? Like get an idea of where you're going. And I think also as part of that, if you're able to, you know, through discussions with experts or kind of engaging a, you know, a consultant or a firm, have a sense of like,

how does reimbursement and the requirements for regulators mesh or not mesh with reimbursement requirements? So that's something that we did early on, and I think was kind of a helpful North Star in a sense that there wasn't really a study for us that would satisfy the FDA and also payers. like we kind of had to do a two-step approach, whereas effectively a big clinical validation study to get to the FDA, followed by clinical utility studies

that pairs really want to see, you know, real world, longitudinal, how does use of this device benefit, you know, patient cares can cancer detection, et cetera. So then getting a sense of, you know, what is your regulatory path? And is there some way to align that with reimbursement so you can maybe do one or two studies in parallel

versus sequentially, for us, unfortunately, that wasn't the case. But knowing that in advance was really important. So that would kind of be my high-level recognition. That's great stuff. I've heard so many, especially it seems like maybe over the past couple years, not to say this has always been underappreciated per se, but I've heard so many kind of startup leaders mentioned something similar as you, that was maybe either a key lesson learned or something that they really honed in on early on

is is not just identifying, you know, the clinical work that's needed for the reg pathway, but trying to figure out if there's, there's any synergy or overlap as it as it relates to what payers are going to want to see, what clinical data payers, pairs are going to want to see to whether it's, you know, for the need for to generate, you know, a new CBT code or, you know, just to, you know, win over or compel payers to cover your device or therapy. So that's, that's really good stuff. One other quick follow-up. question in regards to your your first comment around identifying, you know, a consultant or a firm to kind of help lay the foundation. How important is it that they have domain expertise in,

in your specific therapeutic arena? So like in your case, whether it's, you know, whether it's, you know, skin cancer, dermatology, like how crucial is that versus just finding someone that's like really good at reg? Yeah. I guess from, I didn't, wasn't necessarily a sophisticated enough to really think about that in detail at the outset. Now in reflecting back, I think I would say definitely someone who's in your general subdivision or sub-industry, I guess, within the life sciences. So someone only does pharma, your med tech or diagnostic startups. Diagnostic startup, like keep looking, right? Because there's enough, there's plenty of folks that you can speak to and find, but someone that specifically knows, you know, kind of primary care or dermatology

pointed care tasks. Like, I don't think that's so necessary. If you can find someone like that, great, but, you know, if they're much more expensive or, like, they don't come with their strong recommendations or something like that, I wouldn't necessarily optimize that for that, but it's definitely one of the considerations. I think you just have to realize that, okay, but someone that kind of knows med tech and diagnostics generally, but it hasn't necessarily done much work with our specific type of tool. That's fine. You may just have to pay a little more for them to come up to speed. Or maybe you make

that agreement with them Scott up front and say, hey, listen, I like you a lot. Like, your pricing's fair. I want to work with you. You don't really know our space much, though. Would you guys mind you know, kind of doing five, 10 hours of review of like, you know, all these materials we can send through and kind of waiving that as part of the project? you know, something like that. Yep. Yep, that's, that's super helpful.

Let's transition into kind of the next, the next topic, which is, which is clinical. And you kind of touched on this a little bit already, but you completed, you know, the, the pivotal trial, I believe, just a few months ago, right? So was that like May, June, 2022 here? Yeah, we announced it. Yeah, we announced in June 2020. And I think that was the first, that was the, that was the first pivotal for, skin cancer detection, right, for primary care?

For primary care, that's the key piece. Yeah, there's been two tools that have been FDA approved over last decade. Not one of them has really gotten much use. Mellifying Actors discontinued after a few years. The other product, Nevisense, was approved. And I believe 2017, maybe 2018, if I had to guess, don't hold me to. I was going to say, don't quote me, but I'm on a podcast. So IDS maybe is in use by a couple dozen or a few dozen dermatologists here in the U.S.

And I think, you know, part of the challenge is like dermatologists are pretty good at assessing skin. I mean, that's what they do, right? That's their specialty. So, you know, an innovative tool to improve that, yeah, possible, but challenging because that is their expertise. And there's some, you know, kind of clinical and financial considerations as well that don't necessarily align well with them using tools like that,

especially kind of expensive and complex tools like the couple that have been approved to date. And so, you know, really what we think more than that need is primary care, actually more suspicious skin lesions are assessed by primary care providers and dermatologists, right? There's often that, oh, and what do you think, doc, of this mole, you know, I noticed it, or my wife noticed that should I go see a dermatologist or not? And they can't just not say anything, right? Like they have to make that assessment and that referral decision. And that's what I mentioned earlier on in our conversation, right, that they commit, you know, literature shows, they now show our studies show they miss up to half of the skin cancers that their patients are pointing out, but that they're also making dozens of referrals or biopsy, sometimes primary care providers do biopsies pretty regularly for everyone melanoma, right?

So, you know, we're trying to improve that part of the funnel. And so back to your comment, yes, this is the first. pivotal study that's been successfully completed for any kind of primary care of skin cancer device. 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.