Medsider: Learn from Medtech and Healthtech Founders and CEOs - The Importance of Going All In On Your Medtech Business: Interview with SynerFuse Co-Founders Justin Zenanko and Greg Molnar

Episode Date: July 6, 2022

In this episode of Medsider Radio, we sat down with Justin Zenanko and Greg Molnar, co-founders of SynerFuse. Justin is a Certified Public Accountant who previously led fundraising efforts at Recombinetics and Greg is the former Director of Neuromodulation Research at Medtronic. In 2018, they joined forces to build SynerFuse, a clinical-stage startup developing an innovative therapy to relieve chronic back pain.In this discussion, the two SynerFuse co-founders share their experience launching an innovative therapy to address chronic back pain, how they are navigating challenging regulatory waters, and why they chose to invest heavily in their own venture. Before we jump into the discussion, I wanted to mention a few things:If you’re into learning from proven medtech and healthtech leaders, and want to know when new content and interviews go live, head over to Medsider.com and sign up for our free newsletter. You’ll get access to gated articles, and lots of other interesting healthcare content.Second, if you want even more inside info from proven experts, think about a Medsider premium membership. We talk to experienced healthcare leaders about the nuts and bolts of running a business and bringing products to market.This is your place for valuable knowledge on specific topics like seed funding, prototyping, insurance reimbursement, and positioning a medtech startup for an exit.In addition to the entire back catalog of Medsider interviews over the past decade, premium members get a copy of every volume of Medsider Mentors sent to their door at no additional cost. If you’re interested, go to medsider.com/subscribe to learn more.Lastly, here's the link to the full interview with Justin and Greg if you'd rather read it instead.

This thing is to not be afraid of failing, taking chances, and making sure that you continue to push for the best outcome. But once you get your team and where you're going and the device that you have that you believe is going to be successful with the surgeon input, the customer input, then you go. You don't keep innovating. You can continue to innovate with your IP looking towards the future, but that's not the development. That's late. Welcome to MedSider Radio, where you can learn from proven med tech and healthcare thought leaders through uncut and unedited interviews. Now, here's your host, Scott Nelson. Hey, everyone, it's Scott.

In this episode of MedSider, I sat down with Justin Zananko and Greg Mulnar, the co-founders of a centerfuse. Justin is a certified public accountant who led fundraising efforts at Recombinetics, and Greg is the former director of neuromodulation research at Medtronic. In 2018, they joined forces to found Centervues, a clinical stage startup developing in innovative therapy to relieve chronic back pain. Here are a few of the key lessons that we discussed in this conversation. First, be careful not to get stuck in the ideation phase. Imagining better solutions is laudable, but you won't learn what you don't know until your product becomes tangible.

Second, trust your gut and be willing to push back against conventional thinking. It's never too early to be thinking creatively about how you'll jump through regulatory hurdles or approach the reimbursement landscape, especially if your idea is truly novel. Third, investing in your own business is a way to show that you believe deeply in its success and can help attract investors willing to make a bet on you and your management team. Okay, so before we jump into the discussion, I wanted to let you know that we just released the first volume of Medsider mentors, a print-based book that summarizes the key learnings from my favorite Medsider interviews over the past six months.

Look, I fully realize 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 a way for you to learn from the best thought leaders in our space in one central place. Here's a teaser of what you'll see in this first volume. Gar Hong Kong, founder of Health Quest Capital, teaches you how to successfully pitch your startup. Patricia Ziliak, CEO of Ivinsens, discusses what you really need to know about clinical trials. Jared Bauer, CEO of Ionic Sciences, best practices for avoiding obstacles in your startup journey. That only scratches the surface,

so if you're interested in learning more, head over to medsiderradio.com forward slash mentors. If you're a premium medsider member, you'll get free digital access and a print version sent straight to your door. 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. This includes conversations with experts like Erica Rogers, CEO of Silk Road Medical, Dr. David Albert, founder of LiveCore, and so many others. Learn more by visiting MedsiderRadio.com forward slash mentors. Again, that's MedsiderRadio.com forward slash mentors. All right, without further ado, let's get to the interview.

All right, Justin and Greg, welcome to Medsider Radio. Appreciate you guys coming on. Thank you. Thank you. All right. Looking forward to the discussion. And this will be a little bit unique just because I don't want, you know, I want to avoid a scenario where we're, where you guys are talking over over each other. But it's, it's going to, it should be a fun, a fun conversation kind of getting, uh, having both of you, both of you on the, on the program to kind of help tell the, the center few, the center of you story. So, um, let's start there. I, I mentioned at the outset of this interview, I, or at least I provided kind of a very short bio, uh, for both of, uh, both of you guys. Um, but, you know,

in, in maybe a couple minutes or less, can you help us better understand your, your, your professional backgrounds leading up to C.terfuse? Sure. So this is Justin C.O. C.R.F.U.S. So my background is I was trained as a CPA formally. And I started off my career early on, taking a leap of faith and going to a gene editing company, which was all in the regenerative medicine space, which was about growing human organs and pigs from stem cells and was the first CFO in 2011 and all the way up until 2021 served as a board of director where we raised about $70 million, $40 million from angels and another 30 million from a strategic investor.

And I learned really there how to build companies, how to build teams, how to properly motivate, but also how to really focus on innovative technology and how to focus on commercialization. Yeah, this is Greg. I, you know, as a young lad, wanted to study science, invent something to help people and retire. And I had an opportunity to do that, studying neuroscience.

And then my doctoral graduate work was a mechanism of action of neuromodulation and deep brain states. stimulation and then had the great opportunity to be recruited to Medtronic and lead research in those spaces and all the neuromodulation spaces and invent a lot of things that helped a lot of people and was ready to retire and then realized, hey, there's a lot more fun things to do. And after briefed in academia, met Justin. And we clicked amazingly and said, hey, we got this great opportunity to make a difference in patients with chronic back pain. And here we are. That's great. Yeah, thanks for the additional details. It should be a fun conversation as this unfolds,

for sure. Before we get into kind of like some of the key lessons learned that you've picked up on over the, not only your careers, but really more specifically, you know, building up interviews. Talk to me a little bit about how this idea was born. And if you can frame it around, like, how how patients are currently, you know, what's the standard of care for current patients with chronic pain? Because I, I, I, I spent most of my careers, I mentioned kind of before we hit the record button in the cardiovascular space. So very loosely familiar with, with neuromodulation. But so if you can help us kind of understand the, you know, how this idea came to be, and then how it fits into kind of the broader neuromod market, that'd be helpful.

So, um, early on, the idea came about from, a back pain physician who was seen back pain and patients that were that had successful fusions, but were still getting pain. And the idea on where we are with centerfews really came about, can we actually do something at the same time as a fusion, as a conventional spine surgery that is really, really looking to correct a mechanical problem, but neglected the neuropathic element. And when Greg and I met and started talking and really focused on why that was,

we realized that patients were not getting treated up front when they needed to be treated up front, which was the best chance for actually having neurostimulation work for patients with chronic back pain. and Gray can tell you about the standard of care today. Yeah. So as, you know, as the nerdy neuroscientists to study this, you know, I always will say pain is not pain is not pain. And there's lots of different types of pain. You have your normal, natural, you know, pain, you know, your body telling you something's wrong. That's, you know, neurososceptive pain, normal pain.

And then you, you know, a person has a surgery or an injury, you know, and then needs a surgery to fix their back, well, now you're cutting through nerves and muscle and tissue and tendons and ligaments and even the bone itself when you see Ace Ventura and, you know, too, and he had the spear in his knee and he goes, oh my God, it's in the bone, it's painful. So even just during normal surgery to do a fusion to fix a back that needs to be stabilized, there's a lot of pain that was there before and after. That's not your normal pain. it's neuropathic because what happened is you damaged the nerve.

You damaged the trunk and the big branches of the nerves, so it's not the normal nervous system telling you that, hey, there's something here, fix it and it'll go away. This pain is literally in your brain. So when the doctors say, oh, it's all in your head, I fixed your back, it looks great. Well, it literally and figuratively is in your head because that pain was so traumatic to the nerves and the nervous system that it literally went to the head as almost like this. bad memory of pain being there. So you have a patient that had a bone problem and a nerve problem.

The surgeons do miraculous job of fixing the bone problem. So they say your back is straight and perfect, and yet they have pain, and that's the nerve problem that is left the unmet need. And so when we came together and working with the early company with an idea of trying to help out, we quickly, you know, shifted the direction to say, hey, while you're doing that surgery to fix the bone problem, let's put in the neurostimulators over the nerves that were damaged, and let's fix that nerve problem at the same time. So when patients leave the OR, they have both of their problems fixed. And so that was really the genesis of where we came from and then, you know, kind of building up our research plan, working with the FDA and our surgeons, you know, we're now off to the races,

our clinical study. Yeah, the big issue is today when a back surgery is performed for a fusion, you're only dealing with mechanical and not the nerves. It takes on average six to ten years later after going through all of the turmoil of opioid, addiction, pain, you're doing whatever you can to get out of that pain. And the problem is the way that today's health. care is set up. The standard of care is you have to do all these measures before you can get indicated to get a spinal cord stimulator put in. And the DRG, which is our first product is

targeting, it takes a very specialized pain physician to actually fish an epidural up the spine to the target. And when they get there, they have tremendous success today. But it's very hard, very low adoption rate. And the key for us is how can we increase adoption sooner rather than later? And instead of someone, everyone knows someone with a bad back or someone that has pain, gets into opioids and can't get out of opioids. And when the doctor says no more opioids, they go seek drugs on a local drug dealer. And hopefully they don't spike with fentanyl where you die from an overdose.

Or you get denied. And unfortunately, we've been seeing shootings of doctors, which is very unfortunate and could be avoided if we actually treated the pain up front. Got it. That's super helpful. And so it sounds like, I mean, to a layman like me, right, that's, again, doesn't really understand. It's not in the weeds, right, within the neuromodulation space. You're sort of combining, right, this fusing element with kind of the traditional sort of, like, modulation side that that's specific to the to the nerve part of the equation you're combining

that into one procedure and trying to solve for these these that gap earlier on in that kind of that that disease state so to speak yeah 100 100% and and think of it like um building a house when you're when you're putting the framing up for the house before you put the drywall you put the electricity you run the wires we're essentially doing that. So you cover everything where today you're getting your framing right, but you're not putting in the wiring at the right spot. And it's so much easier when it's open than when you're, when, you know, earlier versus later when when you're dealing with all these other complications. Yeah, that's, that's a great analogy. And then can you,

before we kind of, you know, jump to sort of the next set of questions here. Can you spend a few minutes catching us up to speed on kind of where you're at with Synerfuse. I think the company was founded, if my notes are correct, in 2018, you got IDE in 2019. Yeah, tell us a little bit more about kind of where you guys are at right now. So in 2020, we got our IRB approval. And actually, due to COVID, we didn't get our first patient until 2022. And now we have three patients implanted. we've identified a fourth and a fifth, and we're kind of getting into this real exciting period where once we have five patients,

we will get our data safety monitoring board together. And because this is a safety study primarily, but we're also secondary following pain scores, ODI, the biggest thing for us is to show that the two therapies together are safe and more importantly, we are designing our Gen 2 device with surgeon input. Not the old days where a device company designs a device and gets input way after the fact. We're doing it all up front because we need to get the doctors better tools up front.

And if the tools are designed by doctors, four doctors, that align doctor outcomes with patient outcomes, now where we can actually drive towards a paradigm shift of driving adoption, but also more importantly, getting people off of opioids and never getting into that pain element that we see so commonly today. Got it. That's a great overview and super helpful. And actually serves as a nice transition and kind of the next series of questions, which I'd like to kind of focus on some of the key, the key kind of lessons and lessons learned that you both have experienced not only throughout your careers, but, you know, especially over the past four to five years, building up,

centerfews. And let's start actually on that, with that topic, Justin, you know, building out kind of the early alpha versions of a device. Where do you think most, you know, med tech and other health technology entrepreneurs make the most mistakes when they're at that phase? Well, I think we have so much pressure put on by our shareholders and also ourselves, you know, internally, where we always want to, we always want to find the quickest and fastest approach. However, the reality is we always have to be driving for better innovation, better outcomes, better ideation, better development. And it's a fine line. You can develop too much and you don't get your product out where, you know, patients really could use the innovative devices that are coming to the forefront from smaller med device companies. But the biggest thing is to not be afraid of failing, taking chances and making sure that you continue to push for the best outcome. But once you get your team and where you're going and the device that you have that you believe is going to be

successful with the surgeon input, the customer input, then you go. You don't keep innovating. You can continue to innovate with your IP looking towards the future, but that's not the development. That's laying the groundwork for grabbing land masses. Got it. And Greg, anything else to add to that, considering your breadth of experience there at Medtronic? Yeah, definitely. So I think the key there is just this. saying about the innovation is you want to get you know early products out and you can have a cadence over time but if you you know the enemy of of good is better and sometimes I've seen it in industry big industry and in academia especially where people want to put everything in the kitchen

sink into their first device and the thing is with a lot of it you don't know what you don't know so you want to get something that is going to work and going to, you know, get out on the market, and then you're going to learn from how it's used, and then you continue to innovate and bring out subsequent products. But sometimes when you want to put in so much up front, well, then what happens is you could spend all your money, go pour up front, you know, by trying to make a perfect device that would be maybe like a fifth generation device of a big company with no revenue coming in. And so you've tried to make this ultimate catch-all therapy.

And it just, you don't know what you don't know. So you've got to at some point just say, hey, what's going to be the first-gen product? Let's lock it in, get that train moving. And then you can in the future bring out your next versions because sometimes you want it to be so, you know, theoretically, academically, perfect in every widget and module. And it could be great for some type of a research study. but if you don't know your customer, you don't know how the FDA works and the regulatory works, who your stakeholders are, you could be designing a device to be perfectly for such a subset

that it's really not adopted. So you really just have to think about your generations of product and getting the input along the way, or you could just kind of burn up quickly up front trying to pack too much into your first offering. Yeah, I like that framework that both you guys mentioned. about like viewing this through generations, right, device generations. And it's not like that that's rocket science per se, but if you're familiar with kind of like the sort of the iteration that happens, right, in these early days, it's really important to think about that, right?

You need to get, you need to get Gen 1 out the door. And it's something that we talk a lot about like in some of the portfolio companies in our kind of our incubator slash accelerator at Big Sky is sort of being, you know, if you're feeling like you're, if you're 80% there with a decision. didn't just run with it, right? Kind of under the guys that, you know, action, action and momentum trump perfection, you know? And so we talked a lot about that.

It sounds like you guys have a similar type of philosophy there at Centerfuse. Yeah, definitely. Yeah, you just got you. The scope creep can always get you. And one thing, too, is sometimes when you pick your team, like to match that, to know when to say, okay, this train car is full, send it off. We'll do the next one instead of like this saying, let's just make it perfect. is you've got to bring people in that no reality, know how to go through the FDA if it's medical device, you know, know how to do that because sometimes it's a safe exercise depending on your team to just keep inventing, keep growing.

And then you never have to deal with reality because you're never going to get out of the early concept phase. So you also need people that know how to take it from concept to commercial on your team to make sure you. you don't, your folks don't fall into those scope creep breaths. Yeah, 100%. On that note, let's talk a little bit more about kind of the regulatory topic or subject. And we mentioned, you know, previously that your IDE came in 2019, followed by IRB in 2020. When you think about sort of navigating, you know, the regulatory waters, which can be pretty, pretty choppy, especially with, with innovative technology. like what you're working on at Centervues.

You know, what are, you know, maybe one or two, like, big lessons learned over the years when it comes to this, you know, all things, all things regulatory. So two main things from my perspective. One, trust your instincts your gut. And two, never give up, never stop. When they say when you get resistance, and especially if you're innovating, you are, going against current thinking, there is going to be pressure from the other side to say, well, you know, this is the way it's always been done. And you have to be willing to

push against that conventional thinking and be okay with that. That's so true. I'm, you know, for those listening to this, this interview, you know, we're recording it on video, but I'm nodding my head. Because I, I, I, I, I, I hundred percent agree with that approach. I mean, there's like this balance of obviously needing to consult with people that have done it before, but kind of threading the needle of knowing like when to sort of listen to the advice and when to sort of like you said, Justin, trust your gut and think a little bit and be willing to kind of like think a little bit differently, you know, and run with maybe a counterintuitive approach to something. So yeah, totally. And if you're not, and if you're

not willing to ask the questions or in my case look stupid. You know, I'm more happy to ask questions and continue to push forward on questions and risk of saying, well, I don't know. Maybe it should be different. Maybe we can do it differently. But a lot of times I think that especially a bigger company mentality is, well, you can't be wrong. You have to have it all figured out. And like Greg is saying, you don't know what you don't know until you go through the process. but if you're committed to your team and you're committed to your vision and your passion

and he has faith to persevere, it's amazing how you will find ways to overcome and you actually get to a better outcome than if you would have just done the conventional path. Yep, yep. This reminds me of a kind of a recent scenario that I was helping one of my friends who runs another medical device company, more of a direct-to-consumer type of play. He sells a manufacturer's and sells an over-the-counter device, but was pursuing 510K for a new product. And the regulatory sort of advice that he was given was there was probably room to do it a little bit differently.

And sure enough, you know, we got some other folks involved. and, you know, trusted, you know, trusted sort of our instincts about how to, how to approach this. And obviously, I can't share all the details here in this conversation. But, you know, by just getting, by getting some people with a little bit of a different, you know, a different, you know, seeing things through a fresh set of eyes and willing to kind of, you know, take a few, you know, risks. I don't want to think significant risks. And sure enough, we got clearance way faster than, you know, than the other, other kind of regulatory team was expecting. And so I think that's a, you know, hearing, hearing you kind of explain your approach kind of reminds me of that scenario. Yeah. Yeah, the FDA folks, I mean, they appreciate innovation and they want stuff to come out and help patients.

And their job is just to make sure really to focus on the safety side of it. And to your point of saying, you know, with a friend that you had some folks that knew it, there's a lot of paperwork that needs to be filled out, you know, a lot of forms. But there's also strategy. There's also adjusted, the intuition your gut. And so you do need partners that not only know the, you've got to fill out these forms, but then almost that strategic thinking in this, you know, largely, you know, process flow that can, you know, propose great arguments to the reviewers and write up the documents in a convincing way.

And, you know, when you meet with the FDA to having, engaging conversations, bring your, you know, technical experts, you know, to those meetings. And you can have some really good conversations. So it really is an art and a science. And you do have to have the right people. And like anything else, you know, you know, when you're shopping around, you're getting reviews, you want testimonials, talk to your colleagues. Did you, who do you work with? And sometimes you just, you just have to accept sometimes.

Like you said about the devices, you're not just going to build one perfect device and it's over. You're not just going to find one partner and it's done. You always have to know that you've always got to make sure. Are they really doing the right job? How does your gut feel? Is this, are they really, are they really the ones for us? And then, of course, not be afraid to say, you know what? Thank you.

But I think, you know, we're going to work with this other group. And that, if you accept that, then it's not such a big shot. But if you're kind of going through it like, well, we're doing business and I check this box, and I check that box and that box, and it should all be done. you know, that's not that's the, that's not how it works. Yeah, yeah, no doubt. And kind of understanding and operating within that kind of art versus, not art versus, as you say art, it's both art and science, as you mentioned. It's so true. It's so true. Um, certainly can, can echo that from my, my perspective as well. So with that said, let's jump, let's jump to

the next topic, which is, which is kind of your, your strategic partnership that you announced with with SERTEC. And I think that was maybe a year ago or something. something like that where that was announced. But can you talk to a little bit about, like, how that came about and why you decided to move forward with that, that collaboration? So when we were looking at the space and this is really before, you can't remember now, this is before our proof of concept study and we have patience, it was all about what can we get for a technology that we can go to a pivotal with that is no one and something that we can

leverage. And SERTEC had a platform to leverage. And we went through that process. But as, and again, you know, like going with any device partner, it's really important to make sure you're on the same page. But as we were going through our proof of concept study, we started to learn new things, which now is pushing us into a Gen 2 development, which is kind of unique because usually, and this is for, you know, all the people listening, when you as a CEO make a decision strategically to partner with someone, you know, that's a big commitment. However, we are a culture of innovation and always pushing to the next level. And the thing about innovation and having that culture of innovation is as we learn new things,

going through the process of our proof of concept study, we learned that we needed to have a smaller device. We needed to make sure that the device is what the surgeons wanted, where before we were looking at a quick to market play. But the reality of it is. is that if we're going to do this right and really lead to adoption, which is going to get, which is going after the back pain issue, we need to make sure that our customer was really front and center. And we are, you know, moving towards a Gen 2 device now.

Got it. So if I understand that partnership with SERTEC, it really allowed you to kind of maybe fast track that first in human clinical work? No, so it helped us from a standpoint of getting, like in any, so I don't know if you've heard this before, but do you know when a forecast is wrong? Yeah, correct. Yep. No, but do you know when it's wrong? Do I know when a forecast is wrong? Yeah. I guess it depends on what type of forecast.

The simple answer or plan is the deal. day you make it. Yeah. Something changed. I got it. Always is changing. It's always fluid. But if you don't start with your first set of plans, you don't have the confidence to go

raise capital, put your own money in, get the full commitment. So what the Gen 1 device contract did in partnership with SERTEC did is set the groundwork to put everything else in motion. 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.

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