Medsider: Learn from Medtech and Healthtech Founders and CEOs - How to Position Your Medtech Start-Up for an Exit: Interview with Bruce Shook, CEO of Vesper Medical

Episode Date: January 14, 2021

In this episode of Medsider Radio, we’re catching up with Bruce Shook, the President & CEO of Vesper Medical. Bruce is a medical device executive with more than 30 years of experience, and today, he’s sharing his insights with the Medsider community!In this conversation, we’ll discuss key aspects of running a medtech company, from the early design and fundraising stages through an eventual sale and exit. Bruce shares his expertise on raising start-up capital, designing and prototyping products, navigating the regulatory landscape, and managing reimbursement and coverage strategies. But first, here’s a bit about Bruce Shook’s background:Most recently, Bruce served as CEO of Intact Vascular, which sold to Philips. Prior to Intact Vascular and Vesper Medical, Bruce was co-founder, Director, President and CEO of Neuronetics, a publicly traded device company that markets a non-invasive brain stimulation technology for the treatment of depression.Previously, he was co-founder, Director, President and CEO at Neuron Therapeutics, a venture-backed company developing a drug/device product for the treatment of CNS disorders. Bruce also served as President of Abiomed, where he obtained a PMA for the first ventricular assist device. Bruce also developed cardiac pacing and anti-arrhythmia products at Cordis Corporation.Bruce holds advanced degrees in Biomedical Engineering and Business Administration from Columbia University and the MIT Sloan School of Management. He also earned a B.S. degree in Chemical Engineering from Penn State University. Before we jump into the conversation, I wanted to mention a few things:First, I’m trying something a little different with this next series of Medsider interviews, which will be focused entirely on stories from some of the most compelling medtech and healthtech startups across the globe. Here's the deal: I’ve asked these founders and CEOs to answer a series of questions, which I’ve converted to audio stories with the help of some professional voiceover artists. Think of these conversations almost like recorded fireside chats that you might find on Audible. They’re short and sweet, but packed with tons of great insights.I’ve never tried this before, so let me know what you think!Second, if you’re into learning from proven medtech and healthtech experts, and want to know when the next interview goes live, head over to Medsider.com. You can sign up for our totally free newsletter, which includes access to certain types of gated articles as well as regular content updates. Lastly, here's the link to the full interview if you'd rather read it instead.

The well-worn cliche that says companies are bought, not sold, is certainly true. But there are things you can and should do to make it more likely you are acquired. First, early on, you should identify those companies in your space that would be likely acquirers down the road. Second, figure out which key opinion leading physicians are trusted advisors to those companies and align yourself with those people. Get them on your own scientific advisory board. Get them involved with the development of your products and the management of your

clinical trials. In short, you need to develop them as at vacates for your company with the targeted acquirers. Third, over time, get to know the commercial and business development leaders at the targeted acquirers. Introduce them to your company and update them on your progress at conferences you both attend. The goal is to gradually get them comfortable with you in your senior team, as well as your technology. In the case of Phillips, we developed a relationship with the commercial leadership team that consisted of Chris Landon, Heather Page, and Bud Faye. They were the people who really recognized the great fit between our companies and drove the process internally at Phillips. Finally, don't run your company based upon the idea that it is going to get bought at a specific point in time.

Nobody can predict when, or if, acquires will act. So, don't paint yourself into a corner. 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, and in this episode of Medsider Radio, we caught up with Bruce Shook, the president and CEO of Vesper Medical. Most recently, Bruce served as CEO of Intact Vascular, which sold to Phillips. He is a medical device executive with more than 30 years of industry experience, including

multiple early stage ventures. Prior to Intact Vascular and Vesper Medical, Bruce was co-founder, director, president, and CEO of Neuronetics, a publicly traded device company that markets a non-invasive brain stimulation technology for the treatment of depression. Previously, he was co-founder, director, president, and CEO at Neuron Therapeutics, a venture-back company developing a drug device product for the treatment of CNS disorders. Bruce also served as president of AbioMed, where he obtained PMA approval for the first ventricular assist device.

Bruce also developed cardiac pacing and anti-arhythmia products at Cordes Corporation. He holds advanced degrees in biomedical engineering and business administration from Columbia University and the MIT Sloan School of Management. He also earned a BS degree in chemical engineering. from Penn State University. Okay, so before we jump into the discussion, I wanted to mention a few things. First, I'm trying something a little different

with this next series of MedSider interviews, which will be focused entirely on stories from some of the most compelling med tech and health tech startups across the globe. So here's what's different. I've asked these founders and CEOs to answer a series of questions which I've converted to audio stories with the help of some professional voiceover artists.

Think of these conversations almost like recorded fireside chats that you might find on Audible. They're short and sweet, but packed with a ton of great insights. I've never tried this before, so I'm really curious what you think. Leave a comment as a podcast review, or hit me up via email by visiting medsider.com. And if you end up leaving that review, just make sure it's five stars. Wink-wink, if you know what I mean. Okay, second, if you're into learning from proven med tech and health tech experts

and want to know when the next interview goes live, head over to medsider.com. You can sign up for our totally free newsletter, which includes access to certain types of gated articles, as well as regular content updates. You can also check out our premium Medsider memberships as well, which come with some super cool benefits, everything from clean, easy-to-read transcripts, to exclusive Ask Me Anything interviews and masterclasses with some of the most experienced med tech experts in the world.

Since opening up these premium memberships, I've been pleasantly surprised at how many people have signed up, so if you're interested, visit Medsider.com to learn more. Lastly, we've got a lot of Medsider goodness in store for the near future. Not only will I continue to interview some of the best medtech and health tech leaders on the planet, I'm super excited to announce a new series here in the future. I don't have all the details ironed out just yet, but my goal is to give you a behind-the-scenes look at what it takes to get a startup off the ground, to go from zero to one, so to speak.

It should be a lot of fun, so make sure to sign up for our free newsletter at medsider.com. All right, without further ado, let's get to the interview. Bruce, tell us a little about your personal background, as well as intact vascular and Vesper medical. I started out life working as a chemical engineer for a Fortune 500 industrial gas company. After a couple of years of that, I realized the chemical industry was boring, and life at a large company was not really for me. So, I quit a high-paying job and went to grad school, where I got into biomedical engineering. I landed my first job in the MedTech industry at court as in the 1980s when it was the number two pacemaker company in the world and long before it was part of J&J.

It was a great intro to MedTech, but after three years, the pacemaker division imploded and I needed to find a new opportunity. I was recruited into a tiny company in Boston called AbioMed. I was initially hired to create a clinical research and regulatory department, and I managed a clinical trial and PMA process that led to the first ever FDA-approved ventricular assist device. The product was crude in retrospect, but it was the first one, and laid the groundwork for much better technology to come. I spent 10 years at Abbey Omet in its early days and later became president of the business unit. I then departed to start companies of my own, which began with Neuron Therapeutics in 1998. We developed a new stroke therapy, but it failed in clinical trials, and we literally had to auction off the furniture. Undeterred, I co-founded a second company called Neuronetics with several members of the Neuron Therapyics Management Team and one of the investors, Danny Sacks,

from neuron. I spent 11 years at Neuronetics where we brought a novel brain stimulation technology called transcranial magnetic stimulation to the market for the treatment of drug-resistant depression. Neuronetics subsequently went public and is traded on NASDAQ today. After Neuronetics, I joined intact vascular, an early-stage startup in need of new management, and a capital infusion. We developed a novel approach to vascular scaffolding it intact, called the TAC-endovascular system. We conducted several large clinical trials and received three PMA approvals for our products in 12 months. After a successful product launch in 2019, we sold the company in September of 2020 to Phillips. Along the way, we also spun out a new company called Vesper Medical,

which is developing a family of venous stents designed to treat deep venous disease, a large and seriously underserved population of patients. I have managed both companies for the last two-plus years, but following the sale of intact, I am focusing all of my efforts on Vesper. Thanks for sharing more about your background, Bruce. Can you tell us how the idea for the TAC endovascular system came about? The TAC system was the brainchild of Dr. Peter Schneider, a very talented and prominent vascular surgeon who is a pioneer in endovascular interventions.

One day, he was hanging Christmas lights on his house using a staple gun, and he thought, why can't I do spot stapling like this inside an artery when I see a dissection following angioplasty? The gold standard, up until that point, involved lining the entire lesion with metal using a standard stent, and it disregarded the fact that dissections can and do occur in discrete areas. So Peter came up with a way to only use metal where you needed it when repairing arterial dissections. This dramatically reduced the amount of metal left in the artery and therefore the inflammation associated with the implant. Bruce, you've been involved at the ground floor with several innovative med tech companies. When it comes to designing and prototyping the alpha or beta versions of your first product,

what do you think is the biggest mistake most startups make? The biggest mistake you can make during the design process is assuming you know what is and is not important or valuable to the customer. Engineers sometimes believe they know what is best. Until you dive in with the customers, both clinicians and patients, you don't really know. So do your voice of customer research at the beginning of your design process and check back in with your customers whenever you are contemplating

any significant changes in direction. As you mentioned earlier, the TAC endovascular system required a PMA. When it comes to navigating the regulatory landscape, what one to two pieces of advice would you give to other startup leaders that are working on devices that require a PMA? First, you have to interact with the FDA

very early in the process to define the targets you will need to hit. We made liberal use of the Q sub-process, and it was enormously helpful. in working out the in vitro in vivo and clinical requirements we would need to meet in order to get to market. Make sure you do this before you start spending money and time on generating data. Second, be thoroughly transparent regarding your data and the problems you have encountered along the way. No PMA is without warts of some kind. Be open about them and how you solve those

problems. FDA is going to find out anyway, so you may as well be upfront about it. What are a few of the most important lessons you learned when developing the coverage and reimbursement strategy for the TAC end of vascular system. We were fortunate in that CPT codes and reimbursement for vascular scaffolding were already in place before we developed the TAC system. The one thing we did to ensure that we would be covered is develop relationships with the relevant professional societies in order to gain alignment on which codes would cover our product and why. We selected one society to work as our primary contact, and they led the way with the remaining societies. This allowed us to participate in the process, albeit

it at arm's length, which worked out well. Bruce, you've been successful in raising capital for multiple early stage medtech companies. What is the most important piece of advice you'd give to other entrepreneurs that are trying to do the same thing? First, raising money is all about storytelling, and you need a very good story to succeed. Before you stand in front of potential investors, you must assemble a complete story that covers all the concerns investors are going to have. The topics range from targeted markets to product designed to reimbursement to clinical

performance to IP and so forth. Each key area needs to be addressed effectively, but briefly, within your pitch. Don't go out there with a half-baked story. Second, be enthusiastic, but realistic. You have to exude excitement to succeed, but you also have to acknowledge there will be challenges and unknowns. This is a careful balance that is the product of thinking through coherent answers to difficult questions in advance. Third, if your pitch takes longer than about 20 minutes to deliver it is too long. You will get one hour if you are lucky. Investors will have lots of questions, so leave plenty of time for them to talk. If they don't get to talk, you are not walking out of there with cash. As you mentioned previously, Phillips acquired intact vascular in September of 2020.

When you think about positioning a MedTech startup for an exit, what helpful feedback can you provide to other folks in the same boat? The well-worn cliche that says companies are bought, not sold, is certainly true. But there are things. you can and should do, to make it more likely you are acquired. First, early on, you should identify those companies in your space that would be likely acquirers down the road. Second, figure out which key opinion leading physicians or trusted advisors to those companies and align yourself with those people. Get them on your own scientific advisory board. Get them involved with the development of your products and the management of your clinical trials. In short, you need to develop

them as advocates for your company with the targeted acquirers. Third, over time, Get to know the commercial and business development leaders at the targeted acquirers. Introduce them to your company and update them on your progress at conferences you both attend. The goal is to gradually get them comfortable with you in your senior team, as well as your technology. In the case of Phillips, we developed a relationship with the commercial leadership team that consisted of Chris Landon, Heather Page, and Bud Faye. They were the people who really recognized the great fit between our companies and drove the process internally at Phillips. Finally, don't run your company based upon the idea that it is going to get bought at a specific point in time. Nobody can predict when or if, acquires will act.

So, don't paint yourself into a corner. What's next for you, Bruce? What are you most excited about over the next few years? I am focusing my attention on making Vesper Medical a technology leader in the deep Venus space. We have best-in-class Venus-standing technology, and I am confident we will soon have the same in terms of clinical data. I'm also excited about contributing to other companies as a director. I'm very enthusiastic about helping neuronetics expand and accelerate its brain stimulation business and helping DeVero Medical pioneer its truly novel fromectomy technology.

Where can readers or listeners go to learn more about you and what you're working on next? They can learn more about Vesper Medical at www.vespermedical.com and Neuronetics at www.new.org.org.com. DeVero is less public at this. point, so there is little information currently available. Okay, Bruce, let's transition to some fun, rapid-fire questions. For someone that is starting their entrepreneurial journey in the med tech or healthcare space, what's the most critical thing they should know?

That's easy. Make sure you are solving important problems. What influential books, podcasts, or resources have been most helpful in your entrepreneurial adventures? A great foundational book for entrepreneurs is Crossing the Chasm by Jeffrey Moore. It is a classic. Are there any med tech or healthcare entrepreneurs that you find particularly inspiring? Bill Hoffman and his team at Anari have pulled off a miracle. I'm in awe.

If you had to teach a class on one thing, what would the topic be? Why you should make giving back to a world that desperately needs it, a lifelong priority. Last question. Bruce, starting over in your mid-20s, knowing everything you know now, what would you do differently? reject the status quo at every opportunity and spend all your available time looking for problems to solve. That's where the great opportunities exist.