Medsider: Learn from Medtech and Healthtech Founders and CEOs - How to Secure Widespread Adoption of Novel Technology: Interview with Magnolia Medical CEO Greg Bullington

Episode Date: December 11, 2023

In this episode of Medsider Radio, we had a riveting conversation with Greg Bullington, co-founder and CEO of Magnolia Medical, who is leading a team in the development of Steripath, a revolutionary device that dramatically improves the accuracy of sepsis tests.Greg’s previous expertise includes leadership positions across biotech, healthcare access, and enterprise software. Over the last decade, Greg has shaped every facet of Magnolia's success, from creating their own category and navigating the regulatory landscape with FDA to collaborating with the U.S. Senate for the widespread adoption of Steripath.In this interview, Greg talks about the pivotal role of robust clinical data, why Magnolia is still running studies even after proving their device’s efficacy, and how to use the results to successfully convince different entities of its benefits, such as FDA and other government bodies in public health. Before we dive into the discussion, I wanted to mention a few things:First, if you’re into learning from medical device and health technology founders and CEOs, and want to know when new interviews are live, head over to Medsider.com and sign up for our free newsletter.Second, if you want to peek behind the curtain of the world's most successful startups, you should consider a Medsider premium membership. You’ll learn the strategies and tactics that founders and CEOs use to build and grow companies like Silk Road Medical, AliveCor, Shockwave Medical, and hundreds more!We recently introduced some fantastic additions exclusively for Medsider premium members, including playbooks, which are curated collections of our top Medsider interviews on key topics like capital fundraising and risk mitigation, and a curated investor database to help you discover your next medical device or health technology investor!In addition to the entire back catalog of Medsider interviews over the past decade, premium members also get a copy of every volume of Medsider Mentors at no additional cost, including the recently launched Medsider Mentors Volume IV. If you’re interested, go to medsider.com/subscribe to learn more.Lastly, if you'd rather read than listen, here's a link to the full interview with Greg Bullington.

Focusing on the data, focusing on the repeatability, focusing on the sustainability early on, gives you the calling card that you need to be able to really garner support and start building that traction because when there is no awareness to your earlier point, there is no recognition of a solution. Welcome to MedSider, where you can learn from the brightest founders and CEOs in medical devices and health tech Technology. Join tens of thousands of ambitious doers as we unpack the insights, tactics, and secrets behind the most successful life science startups in the world. Now here's your host, Scott Nelson.

Hey everyone, it's Scott. In this episode of Medsider, I sat down with Greg Bullington, co-founder and CEO of Magnolia Medical. Greg is a leading figure in the development of stereopath, a revolutionary device that dramatically improves the accuracy of sepsis tests. Greg's previous expertise includes leadership positions across biotech, health healthcare access and enterprise software. Over the last decade, Greg has shaped every faucet of Magnolia's successes from creating their own category and navigating the regulatory landscape with FDA to collaborating with the US Senate for the widespread adoption of Sterepath.

Here for you the key things that we discussed in this conversation. First, you need solid data, repeatable results, and a technology that remains relevant over time when trying to shift the paradigm in healthcare. Simply demonstrating a device's functionality isn't sufficient. validation and persuasion of diverse stakeholders are keys to widespread acceptance. Two, effective communication strategies are crucial when introducing a novel technology. Magnolia found itself educating not only FDA, but also enlightening the broader market about SterePath's significance, ultimately owning the entire space.

Third, positioning a device as the standard of care requires backing from government entities, which are often inundated with proposals from various parties, knowing how to tell a compelling story with the data you have can push your device higher up on the priority list. Before we jump into this episode, I wanted to let you know that the latest edition of Medsider mentors is now live. Volume 4 summarizes the key learnings from the most popular medsider interviews over the last several months with folks like Rob Ball, CEO of Shoulder Innovations, Kate Rumroll, CEO of Abolative Solutions, Dr. Christian Ramdo, CEO of Tempe Health, and other leaders of some of the hottest startups in a space. Look, it's tough to listen

or read every Medsider interview that comes out, even the best ones. But there are so many valuable lessons you can 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.

And if you're not a premium member yet, you should definitely consider signing up. In addition to every volume of Medsider mentors, you'll get full access to the entire library of interviews dating back to 2010. You'll also be able to see all of our playbooks, which are handpicked collections of the most insightful interviews with the brightest founders and CEOs. Whether you're looking to master capital fundraising, navigate early stage development, tackle regulatory challenges, understand reimbursement, or position your venture for a meaningful exit, Medsider playbooks have you covered.

And last, considering that fundraising can be one of the most daunting tasks for any startup, We created a meticulous database of investors right at your fingertips. Explore a wealth of VC funds, private equity firms, angel groups, and more, all eager to invest in medical device and health technology startups. Access to this database is a premium member exclusive, so don't miss out. Learn more about MedSider Mentors and our premium memberships by visiting Medsiderradio.com forward slash mentors. Again, that's MedsiderRadio.com forward slash mentors.

All right, without further ado, let's jump right into the interview. All right, Greg, welcome to Medsider. Appreciate you coming on. Thanks for having me, Scott. Yeah, looking forward to the conversation, especially with the shared Midwest roots, you know. The only thing better would be, you know, doing this over, you know, Cornuccove or something like that, right?

Exactly. The Iowa cornfields, right? That's right. That's right. I recorded a short bio on your background at the outset of this particular episode. But let's start there. Give us a sense for kind of your professional background, at least at a high level without getting too far to the weeds,

leading up to your role now with Magnolia. So I started my career in the strategy consulting industry, and early on had some really neat opportunities to work on totally new novel technologies. In particular, when active immunotherapy was a totally new treatment modality in the world of oncology, I had a lot of exposure to that early on. Subsequently, the firm that I was working with did a lot of work with the big Blue Cross Blue Shield folks. So I had a payer perspective, and then we also did work on some managed care organizations that were managing Medicaid programs throughout the country.

So had kind of an interesting mix of experience from an overall exposure to health care and commercializing new novel technologies and creating completely new markets. Subsequently, I had co-founded a software company with a group of software engineers and built up an intellectual property portfolio around that software platform that was really designed to optimize the performance of hard drives in data center environments in particular. And so I ended up selling that company to Sandisk and really kind of had my aha moment in terms of the importance of intellectual property, which became a true foundation when I was introduced to my co-founder, Dr. Richard Patton, who was the chief of pathology at one of the University

of Washington hospitals here in Seattle. And really, the first time I met with him, he pulled a little bag of goodies out of his drawer in his little office in the back of this huge clinical lab and dumped a bunch of needles and tubes and blood test equipment out on his desk and started to explain this really significant problem around the misdiagnosis of sepsis, which is the number one leading cause of death, costs and readmissions in hospitals nationwide. yet the standard of care tests that's used to diagnose sepsis is wrong in an average hospital about 40% of the time. So we've got 40 out of 100 patients that are being stewarded down a diagnostic and treatment pathway that's not appropriate. And it drives really significant, avoidable, preventable morbidity and mortality. And that is the mission and journey that we've been on for the past decade plus.

I was just going to say that that story that you just shared about, you know, when your co-founder or sort of dropped this bag of goodies, right, on the table, on his maybe office desk or lab. That was, you know, over 10 years ago, right? Because I'm looking at your LinkedIn profile now, and it says, it looks like you started the company or co-founded the company. Gosh, is it 12? 12 and a half years ago now, something like that? So, I mean, did that story, like, happened way, you know, that long ago?

Longer ago, shockingly enough. So we started really as a commercial entity in that timeframe you see there on LinkedIn, But we had several years of clinical data collection that we were conducting at three major hospitals in the Seattle area, really to prove out our core hypothesis to begin with to really ensure that we have broad data. We actually had collected blood cultures with a manual off-the-shelf park process from tens of thousands of patients here in Seattle. And we had really encouraging exciting results, but we still got stuck at this kind of 25% of the positives were still false positive. So one patients. And the big question we asked is, well, if we invent a completely new device category and we have a closed system, sterile end-to-end blood collection platform that gives us the ability

really to create a sterile connection to a patient. So the only thing we're actually testing is their blood, not their blood mixed with skin cells and bacteria from the surface of the skin or the hospital environment, how much better would the results be? That was the big question. And so we went through an exhaustive design process that really fueled our intellectual property portfolio, which, as you know, is critical for an early stage med tech company. And ultimately, we had three major independent clinical trials conducted and the answer to our original question about how much better is our device than our manual process. It turns out the device performed 10 times better.

So 90% reductions in one major clinical trial that was published. just recently from Stanford University down in Palo Alto, over 11,000 patient sepsis tests were collected with our device platform with zero false positive results. Wow. We have demonstrated this is, in fact, a preventable error, and that's led to a lot of our government affairs activities and otherwise that we can get into further as helpful. Yeah, yeah, that's very helpful.

So you've been at this a while, but it sounds like you've developed quite the system and create an entire category around this technology. you touched on it already a little bit, but give me a sense for like how this actually works, maybe frame it up from a patient's perspective. And, you know, if you can explain it to me, like I'm, you know, maybe a freshman in high school, I don't have a ton of domain expertise in this particular category. So help us give it, help me and maybe, you know, everyone else that's going to be listening in this conversation and understand kind of what, what the technology is and does.

Sure. So if you think about a typical hospital and you think about the flow of patients into an emergency C department, somewhere in the range of about 10% of those patients. So 1 in 10 is going to have symptoms that they may have an infection. They'll have a fever, a rapid respiratory rate, low blood pressure. These are all signs that you may be having a reaction to an infection. And the real question becomes, is that infection being driven by bacteria, yeast, or fungus, or is it a viral reaction? And as I'm sure you remember from being a kid, if you have a virus, you're supposed to drink orange juice and sleep, not take a bunch of antibiotics because they won't help and in fact,

they do harm. So we will take blood cultures from every one of those patients that has those symptoms. On average, we think of 100 patients in the emergency department. 92 of those results will be negative. So even though 100 patients had the symptoms, 92 of them negative result, only eight will be positive on average. And in a typical hospital, three or four percent false positive rates represent 40 to 50 plus percent of the positives. Got it. And really, the challenge comes in, it's not a binary thing. So you can't immediately deduce that a contamination or bugs from the patient's skin

or from the nurse's fingertip palpating a vein or just from the ambient environment. Emergency departments are chaotic and often not the most sterile of environments. So that becomes the conundrum for the physician. Is that bug that we isolated in the patient's blood, or was it from a different source? Should I treat the patient? Should I not? And as I mentioned earlier, this is the number one leading cause of death, costs, and 30-day readmissions. And so it's a really serious decision.

And most often, understandably, the physicians will take a more proactive and defensive approach in treating the vast majority of those patients. Got it. I'm on your website right now. It's magnolia-medical.com. for those listening that don't get to the full write-up on medside, or definitely encourage you to check that out. Magnolia-Dash or hyphen, medical.com. We'll link to it in the full summary piece.

But I'm looking at Stereopath, right, which is I think that, you know, that's the core foundation, or the core technology that we're talking about. So you guys, this end-to-end system that you referenced earlier, that's in-to-end in terms of collecting the blood and then, and then sampling and diagnosing then, correct?

Am I understanding that, right? We're just the front end component of that. The only thing that goes into that blood culture bottle or that test vial is your venous blood, not your blood coupled with a skin plug and hair follicles and sweat glands and ednexel structures from the process of actually attaining vascular access. Okay. For our platform today, we're really focused on that front end collection, making sure that we really create a sterile connection to a patient so that we have that pathway to transfer just the

blood. That results in accurate tests from a contamination standpoint. And then we have a whole future product development roadmap and platform that addresses other problems around accuracy. And then importantly, timeliness. And that's really where the kind of diagnostics and some of the things we're doing on the software front come into play to enable the full end-to-end opportunity to really address and solve this problem. Got it. So this is like an extremely precise way to collect blood. Okay. Got it. Got it. Yeah, that's the maybe the layman's, the layman's way of describing, describing your, your device. Very cool. So we talked about this earlier. You're, you know, 10 plus years into co-founding and operationally running the company as CEO.

So give us an idea of kind of where you're at in terms of Clint Reg. You're actively commercializing this as well. Give us kind of an idea of where the company's at and where you're headed maybe over the next few years. Yep. So as you mentioned earlier, this really is a totally novel device category that we invented. And so once we had the clinical data under our belt to prove that we could deliver 10 times better results, more recently in that Stanford study, as I mentioned, 100% reduction or the elimination of contamination across. 11,000 plus patient sepsis tests.

You know, we've really been on the journey to drive what we call our mission to zero program. And so our target is to eliminate the misdiagnosis of sepsis. That comes in the form of accuracy of the test. It comes in the form of timeliness of the actionable information. That comes in the form of measuring our performance to make sure that we're appropriately recognizing and treating patients in the timeliest fashion that we can. Time is the ultimate enemy when it comes to a patient that really does have a bacterial or a fungus or yeast-driven infection.

And so where we are today is really in that fun, rapid, commercial scaling phase. So we have almost 500 hospital and hospital system customers across the country that have adopted our platform as the standard of care for their sephs testing accuracy initiatives. And so we're continuing to really drive significant ramp commercially. we've worked long and hard over the years to really affect and enact a new standard of care. So we've worked closely with CDC, with CMS, with the major societies that govern laboratory standards and quality. And there's really been major movement over the last 12 months.

And so we're working with the support of Congress. We have bipartisan support in both the House and the Senate to accelerate the adoption of these new standards of care because this is such a significant problem. It's so costly economically. It's so costly clinically. And there is a direct morbidity correlation where we know that we can directly reduce morbidity and mortality day to day by addressing and solving this problem. Got it.

Yeah. Sounds like you had a very fun and exciting stage of the company, especially if you're working with even the U.S. government in that sort of fashion, right, really kind of pushing the envelope and pulling all the levers. So with that said, let's spend the next 20 or 30 minutes kind of going back. in time and kind of covering some of the key functions and phases, you know, that, you know, any life science startup typically goes through if they get to the point that you have, you know, especially for those in MedTac. So I want to kind of focus in on Sterepath Micro and maybe

compare that to Sterepath. And, you know, we'll talk a little bit and really kind of more focusing more specifically on development and really what you've learned kind of getting through alpha and beta on Sterepath and then, you know, maybe how you're approaching it a little bit different with Sterepath Micro. And maybe if you can frame up kind of your thoughts around this, this topic, you know, if you were to coach up, you know, other entrepreneurs that are kind of going through alpha and beta development for the first time, you know, what are some of the key things that you would recommend, you know, based on your your experience as developing your novel technology? Well, to your point, if we rewind to the very beginning, you know, we had really compelling

clinical data with a kind of clunky off-the-shelf parts cobbled together process. And we believed intuitively that we could get better results if we designed a mechanical, closed system, sterile, end-to-end system. But we didn't know. And at that point in time, there was no such thing as an initial specimen diversion device. There was no clinical data supporting how much better or more consistent the performance could be. And so we really started off with a simple mandate that I would submit. is something that any MedTech entrepreneur who's looking to develop a device that might think

long and hard about. And that is, I kind of had three criteria that were the charge for the product development team. And I said, what we want is at least nine out of ten times when we come into a hospital, we provide this new device, this new product. You know, we have to explain the rationale of why are we bringing a new product in? Why are we making any modification to the way we've done something for decades past? there has to be a compelling reason. And obviously the patient safety and the hospital economic impacts are compelling on their own.

But there's three things we want at least nine out of ten nurses to say after they use our product, which is we want them to say, wow, we want them to say, thank you. And we want them to say, you made my job easier. And I think if folks keep those ideas and concepts in the forefront, I think that's a really helpful starting point. You know, we had these signs plastered up all over the product development lab. And I know that my team is tired of hearing me say that. But I haven't found any flaws in the logic yet.

So I've yet to change that charge. But to your question previously, so differences between seripath and stereopath micro, well, stereopath was a first of its kind technology. And so we took all the learnings from our manual process and obviously integrated that into the ultimate initial architecture that we chose, but we developed hundreds of different mechanical solutions around how we could solve these problems. And we integrated that all into our intellectual property portfolio, which was an important first step. And then secondarily, like any technology company, so the name of our company is Magnolia Medical Technologies for a reason, which is that

we have that view of envision of the continuous opportunity to continue to improve, just like the microchips or processors, right? We started out with the 386 and you look at where the new Apple chips are today, right? That there are those exponential opportunities to continue to drive improvement. So our Stereopath Micro product, which was recently cleared by the FDA and has a unique set of capabilities in terms of the design of the actual diversion capability, as well as proprietary needle technology. So we've partnered with Beckton Dickinson from a co-marketing and co-selling standpoint here in the U.S. And that also opened up an opportunity for us to

integrate one of their new and really important technologies that basically is a needle technology that allows for higher flow rates, which helps to ensure you capture the appropriate volume of blood, which can help increase the sensitivity of the blood culture test or help abate the risk of a false positive or false negative rather. So the micro product is smaller. It's easier to use. It has a new technology in terms of how it diverts and sequesters that initial blood flow. And then it's also coupled with this new BD needle technology that helps improve the overall flow dynamics to try to optimize sensitivity. Got it. I want to circle back around to kind of the first part of your answer around those three, kind of those three responses that you're

looking for, right? I think it was wow. Thank you. And you. you made my life easier, right? Or something, I think I have those correctly. That reminds me of, of kind of the methodology that Jeff Bezos incorporated at Amazon, right? Where when they start a new product, and for those that aren't familiar, I think this was, I don't know at what point

he introduced this into Amazon, but when they're thinking about, you know, developing a product, they'll start with the end of mind, right? And that end is a press release, which basically is intended to capture sort of that response, right? That you, those types of responses that you mentioned, And it reminded me because I was just listening to this podcast the other day,

the Founders podcast. I'm not sure if you're a bit, but I think he was covering the recent book of like what it's like working with or what it was like working with with Jeff Bezos. But anyway, I've heard that framework or that concept before, but it was sort of as a good reminder. So it's interesting that you mentioned, you know, kind of starting with the response that you're looking for

and then kind of going back and using that as fueled, got to develop the end product. Yeah, 100%. And I think you pointed out, you know, when you're trying to move quickly and you have limited capital, it's, those are the hard tradeoffs. And, you know, in my view, you can't overinvest in trying to get that direct end user feedback and trying to have as many cycles as you can out in the field to collect that, as opposed to making decisions in a vacuum around a conference room table with a whiteboard.

And those are typically creates a lot of additional downstream challenges that you would like to avoid. And I think those can largely be avoided with a high enough sample size of getting really direct candid feedback from the folks that will be using your product. Yeah. I love the simplicity. I am a big fan of using threes, right? The rule of three. And I love like just honing in that kind of that end goal down to three key things that you're looking for. And then, you know, as you make certain design or product decisions, right, keeping those from.

right? Is this going to result in a, wow, is this going to result in a thank you? Is this going to result in a, this made my job or my life easier, you know? And so I love that approach. Let's talk a little bit about kind of the category that you created. I think you refer to it. Is the acronym ISDT? Is it? Do I have that right? Isdd. The ISDT, the technique was our original off-the-shelf parts manual process. Yep. That was the ISDT. So we had that, that's where we got the results down to about one and four. And then the ISDD was the major mechanical device category innovation that delivers

10 times better results than the ISDT, which is that manual process with off the shelf parts. Got it. Got it. So, I mean, that's a huge challenge you take on, right? It's like you're creating, you're creating a category. Not only are you trying to develop and eventually, you know, get regulatory clearance for a product, but also commercialize it, but yet you're having to kind of take that one step further and educate

an entire market around this category that they don't maybe know entirely exist or maybe they don't know how to describe it. And so, I mean, if you had to kind of narrow in on a few key learnings, right, that you've picked on through, picked up on through that process, what are those? You know, if you had to kind of boil it down to a couple things. Well, I think first and foremost, as a physician co-founded company, our commitment to evidence based and scientifically validated approaches to really drive in the development of our platform has been paramount. And so to me, that's the starting point that, you know, you have to have that in place

and have that very strong foundation, really to take advantage of any opportunity to meet a significant unmet clinical need. As I mentioned, we've really focused on this mission to zero program. and our goal really is zero in terms of eliminating misdiagnoses of sepsis. And so it's a journey and a pathway to get there, obviously. As I mentioned, you know, there are many legs to the stool. But I think that having the data foundation that we have gave us a unique opportunity to really collaborate with a lot of the key opinion leaders, a lot of the influential

societies, a lot of the standard setting bodies, as we were briefly touching on previously, the government affairs and the government support that we've been able to garner really has been on the basis of the fact that we have 20 plus large-scale studies published using our technology and we're evaluating the cost-effectiveness profile of preventing these sepsis misdiagnoses. So I think that really focusing on the data, focusing on the repeatability, focusing on the sustainability early on gives you the calling card that you need to be able to really garner support and start building that traction because when there is no awareness to your earlier point, there is no recognition of a solution. There's always major skepticism in the healthcare space

about any new technology, sometimes appropriately so, but I think you get to a certain point where that becomes an irrational hindrance. But again, I think it all starts with the facts and the data and the science to support the validity of what it is that you're off to go solve. Yeah, I think most of us that are in MedTAC or have been in this space for quite some time. I understand that, but it's a good reminder, right? Because, like, as an example, I was just reading a survey response from an analyst that covers a certain therapeutic arena.

Gosh, it was a couple days ago, something like that. And I was looking at the responses from the physicians. And they were like, one of the reasons they're not using this technology is there's not enough data. They're not convinced. And I'm like, really? Like, there's a ton of data on this particular product. But it was like a reminder of like, you can never really stop. Hey, everyone.

Let's take a quick break to catch you up on Fastwave Medical, the company I co-founded and lead as CEO. We're developing multiple intravascular lithotripsy systems or IVL for short for a market size of over $10 billion. So you may remember the exclusive round of capital. told you we were going to carve out for fast wave insiders in the cardiovascular space. Well, due to the overwhelming demand, we blew through our cap in just a few weeks and had to close it down much earlier than expected. The incredibly high interest in this exclusive fundraise exceeded even our own expectations. But in retrospect, it sort of makes sense. Here's why. First, Shockwave Medical, which is the only IVL player in town, has a market cap of close to

$10 billion. Second, we've designed fast wave systems to be faster, better, and more efficient, and to disrupt this monopolized category by giving physicians more IVL options to choose from. Third, we've already secured two non-provisional patents from the USPTO, one of which was granted in six months, which is almost unheard of in the MetTech space. We may open up another private fundraise in the future, so if you're interested in joining our waiting list to invest in one of the hottest cardiovascular therapies, head over to fastwavemedical.com forward slash invest and enter your email. Again, that's fastwavemedical.com forward slash invest. All right, let's get back to the rest of the conversation.