Medsider: Learn from Medtech and Healthtech Founders and CEOs - Move Fast Early, Slow Down When It Counts: Interview with Neuspera CEO Steffen Hovard

Episode Date: November 13, 2024

In this episode of Medsider Radio, we sat down with Steffen Hovard, CEO of Neuspera Medical, where his team is developing a novel, less invasive device that uses neuromodulation to treat conditions like overactive bladder.Previously, Steffen spent two decades at Coloplast, where he held various senior leadership roles that contributed to the company’s growth, including the acquisition of a Minneapolis-based urology business in 2005. With deep expertise in the space, he has consistently driven growth and innovation across multiple functions, positioning himself as a leader of leaders in medtech, with board roles at Medical Alley and AdvaMed.In this interview, Steffen talks about confirming market fit before investing, building an early network for key hires and investors, aligning development speed with each phase, engaging with regulators early, and taking a steady, relationship-driven approach to fundraising.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 latest Medsider Mentors Volume VI. 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 Steffen Hovard.

accept the time that it takes. And we can talk about where do you try to move fast and where do you slow down to accelerate? If I think about the, if we go back to stages of the company, you can move fast on the technology development. You can fail fast, you can even go through rapid iterations of your technology. So move fast on the early, probably slow down over the clinical and the regulatory process and then being prepared to accelerate really strong on the back end of that. Welcome to Medsider, where you can learn from the brightest founders and CEOs in medical devices and health 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 started on with Stefan Hoover, who spent two decades at Coloplasts where he held various senior leadership roles that contributed to the company's growth, including the acquisition of a Minneapolis-based urology business in 2005. With deep expertise in the space. He has consistently driven growth and innovation across multiple functions, positioning himself as a leader of leaders in the MedTech arena. Today he's driving for Nuspera, a clinical stage company developing advanced neuromodulation technology for urology

applications. Here are few of the key things that we discussed in this conversation. First, in MedTech, development timelines could stretch over a decade. Before pouring resources into an idea, it's crucial to confirm its relevance and market potential and then get the right people on board. Building your network early helps with finding the right talent as well as the right investors. Second, align your pace with the development stage you're at. Move fast and early development, but slow down and be thorough in the clinical stages. Then be ready to pick up speed and go full throttle when commercialization approaches. Start thinking about market access from the start as early decisions can impact later commercialization.

Bringing in the right specialists up front for coding, coverage, and payment planning can smooth the path to market. Third, take a steady strategic approach to fundraising. Perfect your pitch and refine your story to make a strong impression. View each investor interaction as a long-term relationship rather than a one-time opportunity. Stay in touch and show consistent progress. Above all, bring energy and resilience to each pitch. Persistence can turn a no today into a yes tomorrow. Before we jump into this episode, I wanted to let you know that the latest edition of MedSider mentors is now live.

We just published Volume 6, which summarizes the key learns from the most popular interviews over the last several months with incredible entrepreneurs like Dan Rose, former CEO of Limflow, Dr. Stephen Michelson, founder of Ferapulse and current CEO of field medical and other leaders of some of the hottest startups in the 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 pick up 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. To check out the latest volume, 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 thematically handpicked collections of the most insightful interviews covering topics like capital fundraising, early stage development, regulatory challenges, reimbursement, M&A, and much more.

And last, considering that fundraising could be one of the most daunting tasks for any startup, We curated a database of over 700 BC 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. All right, without further ado, let's jump right into the interview. All right, Stefan, welcome to Medsider Radio. Appreciate you coming on. Thank you very much.

Excitius to be here. And although we were recording this in early Q4, as you mentioned before, I hit the record button. It's like a bright, sunny day there in Minneapolis. You're making me jealous. Unusually warm and sunny and beautiful. Yeah, before we moved down to the West Coast, we moved like the last May that we were in Minneapolis, it snowed that May. So I know firsthand how atypical or unusual weather is, but you'll take it, right? I'm sure.

So I recorded that. You're a very kind of short bio of your background at the beginning of this episode. But let's start there. You spent the better part of three plus decades now in the medical device space. Can you give us a short elevator-style overview of what you've done previously now leading up to your CEO role at New Spara? Yeah, I can do that. And then I'll end it with New Spara. 20 years in the device industry issues.

I spent 20 years with Korda Medical Device Company and then did a bunch of different things there. And most meaningful from leading up to where I'm right now, was part of the team that acquired a company that was based in Minneapolis. police back in 2005, 2006. It was a urology and uricanacology business. So I've been in urology and uric oncology for about 20 years at this point in time. And that acquisition was also what eventually brought me to Minnesota. I've been here for about 13 years at this point. So touched a number of different things, but really in urology and uricanac oncology for a long period of time. Yeah. Very helpful. And of course we'll link to your LinkedIn profile in the full write-up on MedSider for this particular conversation. So you can, for those listening,

can learn a little bit more about Stefan's backgrounds. Nusferra, tell us a little bit about kind of the, not only the problem that you're solving with your device, but how your maybe device specifically helps solve the issues that a lot of patients are suffering from. Yeah, lots of do that. And I'll actually try back to your question before, of how did I end up there?

Noospera is a neuromodulation company originally established as a platform company, and I'll talk about the differentiation and just a little bit. The OAB market, which is our first application, is a market that has been developed over the past 25 years or so, but still has only accomplished a 5% market penetration with the current systems. 5% over 25 years is, in our view, a very tear signal that patients are looking for something fundamentally different. And that's where the Nuspero technology and the differentiation comes in. Instead of having an implanted IPG and an implanted battery, we have a very small implant

that we flower and provide stimulation patterns with an external wireless transmitter. So we minimize the amount of hardware implanted in the body, which also leads obviously to a significantly less invasive procedure. We call it microinvasive procedure, but otherwise actually building on the same principles as existing saconoreum modulation. So the differentiation for Nuspera is no battery,

significantly less hardware in the body and wireless transmission of power which was also what brought me to New Sparrow I knew the OAB market from the outside of having been in the space for a long period of time and I knew the field and I knew the players saw the Nus Barrow technology and I thought this is a true opportunity

to make a real disruption and I think with the barrier stages of that obviously but then like where it is pointing Yeah. And you got a beautiful website. It's N-E-S-P-E-U-S-P-E-S-E-S-P-E-S-A-R-A-E-S-P-R-A-E-Sparat.com. We'll link to it in the write-up that I mentioned beforehand. But I guess a follow-up question with respect to clinical utilization, right?

You mentioned that the minimization of the hardware, right, with New Sparrow system. Do you think that's one of the key reasons why there has been relatively low adoption is just the sort of the invasive of existing technology before he's fair? That's what we see in the patient. research we've done, that's what we see being played back to us. It's interesting because when you live with the clinical outcome, look across any of the existing solutions out there. There is a performance on primary endpoint, which is a larger than 50% reduction in UUI,

urinary urgent condiments episode of 80%. So a responder rate of 80% is really high across any application of neuromodulation. So we know that it works, and then we know that it's been around for a long period of time, And it's interesting to see what happened. Competition has picked up in the field, and we could see that market growth has more than doubled as we saw one new entrant coming. So there is something about awareness, but also the ability to convert that patient pipeline into actually implants and people doing better.

So to answer your question, yes, that's what we see in the patient research being fed back to us, and a lot of it resting on great clinical performance already with the existing system. Yeah, that's a good point because even if there was more awareness, this idea, if you put yourself some of the shoes with a patient, when they're, when the option, this option is posed, the idea of having a kind of a bigger implant in the body, there's probably a fair enough of, or there's lack of conversion, if you will, because people don't want to opt for something like that, whereas they're much more, they'd be much more inclined to use a micro implant, I think is the way you described it. So that makes a lot of sense. So give us a sense, give us an idea of where this new spares at. Are you accidentally commercializing the device currently? We are in the regular. process. So we expect to be commercial in about a year. So Crowley did in second half of 2025. So we've been on this journey and maybe let me back up a little bit and give some background on Nispera as well. Company was founded in 2013 or we incorporate in 2014. So about a 10-year journey, which is typical in our space now. And then about a year from commercialization, as I said, we have completed implants and our Pipsol trial. So we've been on this journey for a bit.

we come out of his ability to study. There was a foundation for the Pierozo that showed really good results, which was obviously promising and what led us into to pushing it forward. The performance we saw on back to the point on primary endpoint, the performance we saw on feasibility was actually very par with what is seen from the current solution. So we feel really good about the clinical application. We feel good about the technology being well-stable and operational,

and that's why we're pushing forward with their regulatory approval. It's in Class 3 device, I'm assuming? It's a Class 3. It's a PMA process. Got it, got it. And how, when did you commence your Pivotal trial for the PMA? The Pivotal was really started early 20 or mid, the mid of 22 was when we did. So we completed enrollment in just about 12 months. Got it, got it.

You have that 10-year journey so far. That's something that comes up quite a bit on this program, interviewing other founders and CEOs. If you're not, if you're not naturally inclined to the area that you're working in, it's hard to go this long. I think that's really important for everyone listening that if you've got an idea in your head or a concept of your hand, but if you're not really got passionate about trying to solve for it, these are long journeys, right? So oftentimes not two or three-year bits. It's a decade or close to it anyway. You're exactly right. As soon as you're looking at an inkling and particularly an active and cannibal device, it just takes that much time. There's so much technology work that goes into it stabilizing and making sure that the chemical work is solid as well.

It just takes time. It really does. Yeah, yeah, no doubt. Even thinking about Fastway, which is the company I spend most of my time at it's, we started working on this, the back half of 2020. So it's like next year will be half a decade, and it still feels there's a lot of hand. And so it's that kind of rustly 10-year window is about spot on for most, most startups in the space. With that said, I'd love to use the next to maybe 20 or 30 minutes to get your insight and pick on up, pick up on some key learnings across various functions that most med-tech startups have to tackle at some point in their journey. And I think these are going to be especially interesting. considering your broad and deep background in the space. So first question on the doc is really around taking a napkin concept, right, and turning into reality, right? And in those first few years, we are trying to iterate on various designs with, in most cases, pre-limited capital. A lot of people either strike out, they burn through too many resources. They may give up a myriad of different reasons.

But what do you think in working with other and being surrounded by other metta contractors, What do you think most of us really should try to get right during those early days? I think about it. One of the obvious ones is make sure that what you're trying to solve for is really relevant, and the market opportunity is big enough. Because as soon as you're looking in implantable devices, we talk about the 10 years. 10 years also means a lot of money that needs to be invested. And it's hard to find a way around that.

And so if the opportunity you're going after is not big enough, If the problem you're trying to solve or is not really big enough to be attractive, it will be really hard to raise capital, particularly in this market. So that's one. And I know it's very obvious, but I hear of so many great ideas, hey, I can do this and I can do that. Yes. But does anybody really care? What happens if you don't solve for it?

Will, will the world really be in a worse place? So that's one. And I would say the other is get the physicians on board very early on. We may live in a, the world is big, but it's very small at the same time. And in any sector, there is a limited number of physicians and VCs and strategic, you might argue that are truly being the circle and get those guys on board early on. Because at the end of the day, whatever you do and whoever checks sort of your idea, they will go to those people.

So get them involved early on, not necessarily getting them on contract, but get to know them. and build out the stakeholder groups early on. And then the last piece is getting the venture guys informed and bringing them along on the journey. So let them get to know you, let them get to know your opportunity. And if you follow up with them at a reasonable rate, even if they're not prepared to invest the third time,

then if they see you coming back and doing what you actually said you would do when you come back the second time, you do it the third time, then eventually you'll get their attention, which opens up the opportunity. So I mentioned those extra moment things, which is primarily my world, what happens outside the building in a sense. And then, of course, there is all the technical side, which is more for, let me say, the founder of the company. The work that he did at the fundamentals of the Nuspera really showing that this technique he can work. And then all of the technical development and all of the technical preparation was just an amazing job.

Yeah. There's so many different things like asked you about in that response that a couple of things that like really come to mind is, You mentioned the market opportunity. I remember Brian, say he on the program probably a couple months ago, is the co-founder or CEO of, he mentioned that very same thing. He mentioned that very same thing. You've got, like, early on you've got technical, you may have technical risk is like the biggest risk that you're trying to stuff or maybe it's clinical risk, etc. He goes, but oftentimes, even if you're not working on a planable device, these companies take so much capital. They're so capital in 10. You need to be thinking, like, what that really looks like and whether or not your idea is big enough to attract the type of capital that you're going to to need inevitably. And so I think that's such a key thing to keep in mind is because it's so easy to get just stuck on this idea that you really, this thing that you really think should be, that should really come to reality. But

if it's not fundable, it's just, you may have to just leave it. It's so hard to do, especially if it's a really, it could be a really good idea that would be a great product. But if the market is not there, you're almost always going to need capital and you're not going to be able to track the right investors.

And it's, you're exactly right. And the very fine balance of having the grid and the patience and the beliefs and the investing and the resources and the passion and all of that stuff and believing in your own idea. And then at the same time, and that's why I mentioned bringing stakeholder, extra stakeholders in early, because use that as an opportunity to calibrate and say, is am I looking at this, or am I missing something really fundamental here? And back to the notion of funding. If you go back in our industry, having been around the blood a few times,

if I go back 10, 15, or maybe even 20 years, if you look at the development time, we looked at that point, and the investment profile, we looked at that point, it is so fundamentally different today. The numbers we're looking at and the timelines we're looking at back in that time, we were saying, well, that's pharmaceuticals, that's not medicalized, and we're getting awfully close. And then particularly, if you look at it as a BC,

you can choose to allocate your resources towards pharmaceuticals, biotech or you can go META. Metc has a, we have a certain degree of predictability in how we go about it because a lot of sort of fundamental mechanics so we can project how this may play out. The opportunity there or the challenge there is exactly to this discussion, finding those value pools that are big enough to justify the resource allocation. The other piece being that back in the day, God, I'm dating myself here, but that's what it is. back in the day, we would be looking at the European market,

we would look at the U.S. market, and we would look at emerging markets, and we could go there relatively quick. Now, with the changes in the regulatory environment in Europe, which is different from the U.S., that's very different than things were before, but it means that the value pools are more, we risk looking at value pools that are more fragmented that they were back in a day,

which again means how do you find the opportunities that can fly at a global level in order really to attract the right level of investment. Yeah, there's no doubt. And you touched on this idea of building and nurturing relationships over time. And starting that clock, if you will, if you don't have these existing relationships, starting the clock as soon as possible. And I think that's so spot on.

I had Don Crawford on the program last week. He exited Safian to Cavitya in and is now at Corbista. And he mentioned the same thing within the context of do you go to a CRO or do you try to build out a clinical function internally? And I think it probably depends, right? on the company, et cetera, but one of the reasons he tends to be biased towards building out that function internally is because he gets to build relationships directly with the stakeholders. And that's why he kind of prefers ASEA. He mentioned sometimes it's not always the easiest thing to do if you're outsourcing it

to someone. I think that kind of ties into your point, right, about just like raising money, you're not going to do it in a month or two months, right? This is oftentimes going to be a very long period of time where you've got to build that relationship. So even if someone says no, right, following up with them, not being annoying, but following enough with them with some sort of consistent cadence is typically going to be helpful in some regard. And that's interesting. And maybe coming back to your original question, how to think about that

early stage and what does it really take? I would say two things. One, we see a lot of great ideas that come from engineers and so on that he had this idea of being able to apply something. I would say the other thing is get somebody that understands your sector, get somebody involved their areas that have some of those initial contacts. On the clinician side, it just makes the journey, is so much easier. So having that nice balance between somebody with the external customer perspective, if you like, and somebody who thinks about their technology being able to marry that all very on, I think will minimize the number of stumbling blocks that you will come across. That's this good point. Let's transition to the topic of LNRA, and I think this is especially pertinent, considering

you just mentioned right at Nuspera, your device is a Class 3 PMA pathway that requires a significant, climate and regulatory resources for that matter. So when you think you think, think about what's really needed to get right when you begin to map out that pathway and then execute it against it. What are there a few things that come to mind that either you've had to learn the hard way or maybe that I've even done really well at New Spera that you've been able to learn from previous experiences? That's a huge question. In a not radio story specialist, I should start harder by saying that ever. The key thing for me is probably accept the time that it takes. And we can talk about where do you try to move fast and where.

Where do you slow down to accelerate? If I think about the, if we go back to stages of the company, you can move fast on the technology development. You can fail fast. You can go through rabbit iterations of your technology. You can mature and all of those different things. Be thoughtful, be cautious when you get into the clinical work and when you get into the regulatory work. I'll mention one thing, which is that dealing with the FDA is not just dealing with sort of a gray entity. There are people there, and it is managing, I would say, the FDA as another stakeholder in a sense.

And it's a question of what kind of reputation do you build for your company? I'm not just talking to Sparion and more broadly and other experiences on there. How do you build a reputation for your company and how do you do that by getting the right people involved? And back to the discussion on what do you do externally, what do you do internally? I'm a big believer in building interim teams on the radio as far side. again, because you need somebody who really in-depth understands the technology, the clinical space, what is it that you're a clinically trying to solve for in order to present that in the right way to the FDA and then managing the stakeholder relationships for the long haul.

Now, that's not to say that you don't need detailed and very deep specialty consultants on certain areas that definitely happens. But I would say building an internal team and doing that early on, I think is really important. That idea of knowing when to accelerate or speed up versus when to slow down. That's such a good point. And it's even helpful for me to hear you say that based on your experience because it's, even what I'm living through now is as it as we begin to map out, like, what's ahead from a clinical standpoint. Sometimes it can seem onerous to get so much feedback from a variety of physicians and really folks with really deep clinical experience. But to your point, like, that's an area that you oftentimes want to move with a little bit more caution,

and move a little bit slower because it's not like you can move the old Facebook mantra and move fast and break things. You can't do that with a pivotal truck. 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 Kala Health, Nadid Miarid, CEO of CVRX, and so many others.

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