Medsider: Learn from Medtech and Healthtech Founders and CEOs - How to Use Checks and Balances in Your Medtech Start-Up: Interview with Michael Tozzi, President and CEO of TAS Medical

Episode Date: May 2, 2020

On this episode of Medsider Radio, I had the chance to sit down with Michael Tozzi, President and CEO of TAS Medical. Mike and his team are aiming to eliminate surgical mesh by converting hernia procedures to minimally invasive repairs.Mike has over 20 years of commercial medical device experience and specializes in investor relations, sales & marketing readiness, and improving the execution of early-stage medical device companies. Previous to TAS Medical, Mike served as Chief Commercial Officer at Carevoyance, where he and his team created groundbreaking analytics tools designed to help medical device companies better understand their markets and execute their commercial goals.Prior to this, Mike helped to build Cardiovascular Systems, Inc. (or CSI) from the ground floor, taking the company from an early stage to over $1.3 billion in market capitalization in just seven years. At CSI, Mike held various executive roles in sales and marketing. Joining me on this episode is special guest host, Norbert Juist, who runs Sales Performance Resources, which specializes in recruiting for medtech marketing and sales positions. Prior to this, he was a sales rep at Cordis Endovascular, a spine consultant at Synthes, and a sales rep at Ethicon. Interview Highlights with Mike TozziThe origin story of TAS Medical and how Mike got involved.The strategies that TAS Medical followed to go from initial product concept to eventual commercialization.The regulatory and clinical paths that Mike and his team considered.How much did the insurance coverage and reimbursement landscape factor into Mike’s early decision-making process?Mike’s approach to raising capital for CSI and TAS Medical. Common mistakes that early-stage medtech companies make and how to avoid them.Mike’s favorite book, the business leader he most admires, and the advice he’d give to his 30-year-old self.See more...

The only thing more scary about losing your own money is to lose your friends or your business associates money. So I can tell you that TAS Medical, I am humbled to have some of my closest friends and closest business associates. People that I respect so much have invested in TAS Medical. And I'm motivated to see it through for a lot of reasons. But I promise you that a lot of it has to do with the fact that there's no way I'm going to fail. You know, my friends and the people who invested. in TASMEDAW and the people who invested in me. 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. On today's program, we've got Michael Tazzi, the president and CEO of TAS Medical. Mike specializes in investor relations, commercial readiness and improving the commercial execution of early stage medical device companies. Previous to TAS Medical, Mike served as chief commercial officer at Carevoyancer, where he and his team created groundbreaking analytical tools designed to help medical device companies better understand their markets and execute their commercial goals. Prior to this, Mike helped to build cardiovascular systems or CSI from the ground floor, taking the company from early stage to over $1.3 billion in market cap in just seven years.

At CSI, Mike held various executive roles in sales and marketing. In this conversation here, some of the things we're going to cover, the origin story of TAS Medical, including the early product concept and how Mike got involved with the company, Mike's strategic approach towards taking the product from initial idea to eventual commercialization, including the regulatory and clinical paths that were considered. How much did coverage and reimbursement, or lack thereof, factor into Mike's early decision-making process? His approach to raising capital for TAS medical, as well as other Meds Tech startups he's worked with, and Mike's favorite business book, the leader he admires most and the advice he'd give to his 30-year-old self. There's a lot more we cover in this wide-ranging discussion, but I wanted to call out a few things before we get started.

First, joining me on this episode as a special guest host is Norbert Juiced. Norbert and I go way back, In fact, we used to sell vascular devices into the same cath labs. Now he runs sales performance resources and specializes in recruiting for medical device sales and marketing positions. And he's quite good at it. Norbert not only brings a ton of industry experience to the table, but he's one of the most honest, genuine, and personable people I know. So if you're looking for a new gig or need help recruiting for some open positions,

Norbert is definitely your guy. In the show notes for this episode, you'll find a link to learn more about Norbert and his background. And no, he did not pay me to run this message. All right. Second, if you're new to these Medsider interviews and I want to be updated when the next interview goes live, head on over to Medsider.com and enter your email address. That's M-E-D-S-I-D-R. Medsider.com. Rest assured, we will not spam you. In fact, the only time we'll ping you via email is when a new

conversation goes live. Again, it's super simple. Just visit Medsider.com. And right there on the homepage, you'll see the opportunity to enter your email address. All right. And lastly, as a reminder, if you continue to enjoy these conversations, please give us a rating in your podcast app. just open the reviews tab and click on the old five stars. Thanks again, it really helps us a ton. All right, without further ado, let's get to the interview. All right, Mike, welcome to Medsider. Appreciate you coming on.

Pleasure to be here, Scott. And Norbert, you ready to rock there in your captain's chair? Ready to rock and roll. It should be a fun conversation because I know you guys go back a bit. So I'm anxious to have kind of a hopefully an entertaining but yet informative conversation about Mike what you're doing with with Tas Medical as well as just your extensive background in the med tech space so without further ado to set the right context i mentioned in the intro that you're you know you're the president's CEO of task medical so to give everyone the listeners a better idea of kind of what

you're doing now can you maybe walk us through your technology and maybe even just use a hypothetical patient as an example just so everyone gets an understanding of kind of what you're doing today has medical by the way stands for trans abdominal strap we've got a great It's a medical grade zip tie, zip strap technology. And we seek to eliminate the need for surgical mesh in abdominal surgery. So it's probably good to also mention the unfortunate reality that there's currently 54,000 pending lawsuits in hernia surgery with regard to mesh. So those listeners, it's tuned into medical device for a little while.

You'll remember that there was quite a few lawsuits in the pelvic floor reconnoisse. instruction space and stress urinary incontinence space. This is just hernia. So really hernia is the next frontier, unfortunately, for litigation. So we'll also be talking a little bit about a ventral hernia. And so most people know what a hernia is, but a ventral hernia starts with the reality that there's five million laparotomies every year in the U.S. And so a laparotomy is just when a general surgeon has to open you up for either exploratory

or trauma or hernia surgery. And then of those five million laparotomies, the number, one complication is a ventral hernia. It's about 11% of them turn into a hernia. So it's a big patient population. There's over a million ventral hernias around the globe every year. That's a big number. Yeah, it is. About 350,000 just here in the United States. I'm sure a lot of the listeners are semi-familiar with some of that hernia-related litigation. I mean, I'm not, I wouldn't consider myself an expert in the space by no means, but it's hard to keep up with the med tech space and not have some sort of like idea.

of kind of what's been going on there. So can you maybe speak to that, Mike, in a little bit more detail and maybe how, and maybe contrast that to like how your technology is resonating with people who are very familiar with kind of the associated, you know, kind of litigation risks within that specific to the hernia space? Yeah, I will. And by the way, now that I've mentioned it to you guys, I guarantee you'll see it, especially if you turn around the TV after 11 o'clock at night, you'll see these commercials. these attorneys that are really hurting for these hernia patients. And so when you talk to general surgeons, they'll tell you that they spend a ton of time with their patients in clinic. Patients will come in, have a hernia, and patients don't want mesh anymore.

They're scared of it, in large part, probably because of these commercials after 11 o'clock at night. And so there's not an alternative for it. And so general surgeons will spend a significant amount of time in their clinic, just trying to educate their patients on the complications of mesh and what to expect. But, yeah, most often it results from pain and infection in the body, just fighting this foreign material. And unfortunately, a lot of times the mesh has to be removed. And so our transabdominal strap will allow for an alternative to mesh and a number of other

things, too. We're also going to convert a ton of procedures from open procedures to minimally invasive procedures. And so, yeah, we're excited about our value proposition and excited to bring this product to market. Can you speak to, like, the development of it, how it came about, how you got involved with it and so forth? It was fun. I was helping other companies to raise money or early stage medical device companies to raise money. And I came across Dr. Chin. Dr. Chin is a prolific medical device inventor. So he's got over 200 patents to his name. And him and our chief operating officer, Tom Kramer, collectively, you know, they've had 20 other concepts or

ideas that have made it from a patent for an idea all the way through to commercialization. And so got talking to Dr. Chin and Tom about helping them to raise money. And one thing led to another, just really became more and more interested in their innovation and their journey. So that's how I became part of the company. I decided to take it on as an entrepreneur and help them to raise money. And so here we are two years later and we're just, you know, less than a year away from FDA clearance and commercialization. That's super interesting. And what, Mike, I'm a curiosity, I'm sure, I mean, we'll get into this a little bit more with respect to your experience helping early stage medical device companies raise money.

But I'm sure you came and maybe still do come across a lot of different ideas or maybe different, you know, early stage, you know, business ideas or concepts. what's particularly attracted you to the technology at TAS versus, you know, other concepts or ideas that came across your desk? Yeah, you know, I think it was the fact, the more I learned about it, I realized that this unmet need was not just large, but obvious and present. And I'm talking about this opportunity to provide for a full thickness, abdominal wall closure, if you will, a hernia closure. And do it in a minimally invasive manner. That's not happening today. Almost all of these ventral hernias are being done as an open surgery. And so this presents an opportunity to not just present clinical efficacy for the patient, but huge, huge healthcare savings, literally hundreds of millions of dollars per year to save healthcare. And then also to kind of do away with this issue of mesh, right?

It excited me that there's not other companies or innovations that are trying to eliminate mesh. There's a ton of ideas to make mesh safer or to make a better mesh, but it's going to be a great journey to actually eliminate it. And I should also say that it really was Dr. Chin and Tom Kramer that interest me to work with them. These guys just have a great track record. They're really pros of what they do. They're just great, great guys to work with. It almost sounds like you, to some degree, like Dr. Chen had the concept, but that you almost pitch them on picking the idea to market.

Is that accurate? Yeah, you know, they have the concept down and the IP down and the track record to develop these technologies. Tom Kramer, for example, he owns and operates a medical device manufacturing facility. And he and his engineers, they specialize in early. design and development. But it was exciting for me because I saw this value proposition kind of come together and this concept of being able to give surgeons something to offer their patients other than mesh and also to convert this large procedure volume over to minimally invasive surgery.

And for those of us that have been a medical device for a long time, know how much fun that is. To convert a procedure from open to minimally invasive surgery is just a win, win, win for everybody. So yeah, it all came together and it's just a ton of fun working with Dr. Chen and Tom Kramer. That's super interesting. And I'd love to get, and I think we will have enough time to really kind of dig into, you know, some of the lessons learned during your time kind of at, at kinetics and kind of what you saw, whether it was, you know, issues that a lot of med tech startups faced or just other lessons learned in general. I think that will allow us to kind of dig into your background a little bit more, Mike. But specific to TAS, while we're on this topic of,

And you mentioned you're very close to 510K clearance with FDA. You know, walk us through kind of your general approach from, you know, when you first sort of begin to collaborate with Dr. Chen on this idea, walk us through your general, like maybe your high level thoughts and then how you begin to put together a strategic approach to commercialization. If you were to ask Dr. Chan and Tom, they would tell you that, you know, their concept is to take class two, 510K products, right? So class 2, 510K, meaning that you find a good, solid, predicate device, and you can gain FDA clearance

much faster than having to do some of the longer pathways for FDA approval. And so this is, TAS is a class 2, 510K. With regard to, you know, go-to market or thoughts around commercialization, we plan to, and I should mention, we plan to gain FDA clearance in Q3 of next year, Q3 of, Q3 of 20 and then start a soft commercial launch a year from right now, Q4 of 2020. And so that will essentially be a post-market registry. And we want to figure out what is the niche for this trans abdominal strap and ventral hernia? And exactly how many patients did we eliminate the need for mesh?

We'll want to prove that. We'll want to prove how many patients did we convert from an open ventral hernia to a minimally invasive sent ventral hernia. And once we know that, we'll also be able to figure out what was the cost savings for each hospital at the hospital level. And then beyond that, we're just super excited to take this product to market. And we'll use business drivers, just as we've had in the past, and I've worked with Norbert. Norbert's seen some of this. But business drivers is basically when a sales rep or a marketing representative does something that there's, you know, right behind it, there's sticky adoption and nice clean revenue to follow. And so it's things like medical education

and market development as well as just discipline, sales management and execution. I think your point about, you know, devices that, you know, Dr. Chin looks for as an example. Is there, can you provide a little bit more context around that? Because I think that's really interesting. And the reason it really stands out to me is, is Noverner and I are going to have another chat with Duke Rowling here in another couple weeks. And I know with what he's doing with Ajax Health, it's just his new, his new venture firm, his new MedTech venture firm, I should say, is really, like one of his niches is really specializing in funding or leading, I should say, early rounds in companies that have a clear business model. You know, I think it's amazing how many,

especially maybe it's more common in the med tech space, how many early stage founders don't really consider the business model. You know, they're really stuck on the, on the innovative idea and it maybe it doesn't have legs at all when it comes to commercialization. And so is there a lot more like filtering criteria than just, you know, 510K devices when it comes to kind of what you look for or maybe, maybe what, you know, Dr. Chin looks for as an example? Yeah, I would say that there is. So Dr. Chen started out by working with a guy by the name of Fogarty. So I think a lot of people are familiar with Dr. Fogarty. And so early in his career, they worked together on a number of different innovations, including the Fogarty Chin catheter. And so over the years since then,

he's had, I want to say, a dozen products that have made it through to commercialization. In large part, we do. We look for 510K technologies that provide disruptive solutions to large unmet needs, and ideally carry with them cost savings to health care. And if we could, we'd also prefer there to be a reimbursement play as well. That's sometimes in today's age a little bit more difficult and time-consuming to generate. It used to be the opposite where regulatory and FDA clearance and approval was the big obstacle, but now it's CMS. And so we take all of those things into consideration, and we feel really lucky and fortunate with TAS in that we feel like we have all of those pieces in play.

So we're excited to tell the story and bring this product to market. Yeah, that's really interesting. Go ahead. Over. With the reimbursement side of it, and I mean, with Dr. Chen, you said, you know, has at any one time 20 patents or something with this particular product, was this one kind of a darling? Or was this one that was, you know, attractive to you for all those reasons? Because Scott and I have done other calls where we talked about how going through the FDA clearance process. and the, you know, CMF clearance process and all that is just so costly and time consuming.

Indeed. No, for sure. Yeah. And so reimbursement, I think that's what you're asking about, Norbert, is a huge component. And so with TAS, we're in a good spot in that because most of these procedures are still being done open, there's an opportunity to convert them to minimally invasive surgery and there's reimbursement there. So there's already substantial increase in reimbursement for hospital centers and surgical centers for doing a laparoscopic ventral hernia compared to that of an open ventral hernia. And so we're lucky in that respect that, you know, for those listeners who've launched a lot of disruptive medical device technologies, it's a ton of fun when you've got something that's disruptive and going to meet a big unmet need. But that's, you know,

doesn't mean it's already a grand slam. You've got other obstacles, especially now, getting through different product committees to get your product on the shelf. And they want to see health care savings, right? They want to see that their global population of patients are going to have a positive outcome, not just acutely, but chronically after this procedure. And occasionally, if you can launch a technology and on day one have a reimbursement story, that's always a treat. It's rare, but it's in this case, we're excited about that. And just to follow up on that, we had a Norbert and I had a chat with Dan Rose recently, and by the time this podcast is out, that one should be up as well. And he kind of referred to that

period of time when it comes to commercialization as the valley of death, when you've got, you know, regulatory clearance, whether it's 510K, de novo, PMA, and then that time between approval clearance or whatever and when you actually can obtain coverage and reimbursement as that value of death for a lot of companies, because they just don't consider you know, the resources, the time that's needed to actually make that a reality. So I just think it's super interesting that you're trying to leverage or that you're thinking very far ahead in terms of, or well beyond just the regulatory constraints that you may encounter, but also, you know, coverage reimbursement.

So just to clarify with your technology, your existing technology with TAS, are you leveraging an existing CPT code? Yes, yeah, existing CPD codes for laparoscopic surgical repair of eventual hernia, yep. And then when you think about the commercial model, you're making sure that that's priced in a way where it's economically positive for the hospital, the physician, et cetera. Yeah, well, Scott, it's great. And it's easy for us right now to do that because the cost savings of a patient who's going to have an open ventral hernia compared to that of a laparoscopic. It's a $5,000 savings per procedure, right? So not only will we save healthcare $5,000 for every conversion, but we'll also be able to help hospitals to receive a higher reimbursement to the tune of about $4,000, by the way, of a higher reimbursement for a laparoscopic repair compared to that of an open ventral hernia. And that doesn't even factor in the 11% infection rate and how much that costs the hospital as well. No doubt, no doubt.

So, Mike, it seems like this is a bit of a no-brainer, right? I mean, if you think about the pitch to the, you know, the value analysis team or any sort of influencer or stakeholder, kind of just going to make a decision around bringing in this type of technology. So using that as kind of a reference point, how are you thinking about building out, you know, a U.S. Salesforce? I mean, we all know that that's incredibly expensive. So do you have maybe some, are you thinking about ways to do it differently in order to stay lean, but also? still experience strong commercial traction as well? Yeah, yeah, great question. By the way, and I appreciate you sharing your optimism.

I'll have to send you a term sheet. You sound really interested. Well, I'm really just interviewing here, Mike. I mean, I'm interviewing for sales gig, you know, but... You're interviewing and I'm closing, so I'll send you a term sheet. There you go. There you go. Now, it's a good question with regard to thinking about commercialization,

and with it being as early as a year away, it's definitely something that we talk and think a lot about. So I'm fortunate in that I've worked with some of the most sought-after medical device executives and sales reps in the industry today. And so relationships really matter. And a lot of these folks I've worked with with Norbert, he's helped to introduce me to a lot of them. And so what we plan to do is once we gain FDA clearance, we'll spend the first nine months into

what we call a soft commercial launch. and it'll be a post-market registry where we'll prove out all of the things that we're trying to accomplish before we do a large launch. And so this post-market registry is going to be super important to us and it'll give us the opportunity to show hospitals and to show physicians what the metrics look like. And so that'll be a big part of our early commercial launch. And that should start as early as a year from now. And Mike, that soft launch, was that largely driven by the data that you need to collect post-market as part of that 510K clearance? Or is this like more of a strategic lever that you're pulling? You know, man, it's like all of the above. I think we owe it to the space to be responsible.

And having launched a lot of exciting, innovative, disruptive technologies, that's great. It's fun to do that. But with a paradigm changing approach to something, you also have to make sure that you're niching it to the right patient, right? So I always believe that a niche is a great thing. Even if it's a small niche, it's a great thing. You want to use your technology in its sweet spot and let people experiment with it when you know you're going to have a good patient outcome. And so it's driven largely for that. We want to make sure we get it right to the patient. And also, you know, given that we have a class 2, 510K technology, we have the benefit of gaining FDA clearance and the absence of human trial.

And so we will limit the use of our technology to just our medical advisory board during that first nine months, complete a good, hopefully responsible post-market registry. And then once we take the learnings from that, we'll take it large scale and look to change the space. I love the approach because immediately my head goes towards, like, hearing you kind of describe kind of the paths of the soft launch, my head is like, well, why not go big? Why not start building out a sales force and really, you know, start to put. the foot on the on the gas pedal so to speak but i love the approach because there's a lot of synergy

in doing kind of all of the above right you know you're sort of how you put it mike like it's good for the space right because it's it's good for the patient it's good uh in terms of proving out efficacy and cost savings to the hospital stakeholders it's good from a regulatory standpoint it's kind of all of the above so it's interesting to kind of hear you uh kind of describe that because it definitely resonates yeah well thanks yeah we're looking forward to execute on it and uh hey we've got a a complex healthcare system right now, but it still does have all of its checks and balances to make sure that, you know, patients are getting the right treatment.

Healthcare is not being drained, and we want to make sure that we launch this thing the right way and the right patients are treated with our technology. Right. I guess what I'm trying to say is, you know, this sounds like maybe a soft launch formula. You can call it the Tazi soft launch formula for medical devices, you know, and trademark that. But I don't know about that. I'm following the lead of other great medical device technologies that have paved the way for us. Yeah.

No, no. Yeah, I'm joking aside. I love the approach. And I just think it's interesting, especially when you compare it to other spaces, right? Other spaces outside of health care. And that's just kind of the reality of operating within a regulated environment with a lot of different dynamics to consider as part of a traditional product launch that you wouldn't otherwise have to, you know, in the world of SaaS or something like that. So very interesting. But Norbert, anything else that you want to chat about with respect to TAS Medical before we kind of get into Mike's background in a little bit more detail?

Yeah. So with respect, let's say you have a crystal ball and you were to predict, you know, being acquired, which seems to be the growing trend among, you know, startup companies. I mean, obviously it has always happened, but it seems like it happens more frequently and quicker in today's society. how much does that play a role in your thought process or do you not really even think about that and you focus on, you know, the path at hand. And if that happens, it happens, you know, how do you strategize for that? 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

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