Medsider: Learn from Medtech and Healthtech Founders and CEOs - The Steady and Successful Climb of BAROnova

Episode Date: February 5, 2016

Henry Ford is famous for stating, “If I had asked people what they wanted, I would have built a faster horse.” Although it’s arguable whether he ever uttered those words, the statement is still very powerful. And it’s one that Hugh Narciso has taken to heart. In fact, in the early days of BAROnova, when...[read more]Related StoriesWhy Intersect ENT is an Example of Hope for the Medtech IndustryAre Medical Device Models the Key to Building a Lean Medtech Startup?Substantial and Sustainable – 2 Words That Medtech Companies Should Get Used To 

Welcome to Medsider, where you can learn from experienced medical device and med tech experts through uncut and unedited interviews. Now, here's your host, Scott Nelson. All right, hello, everyone. It's Scott Nelson, and welcome to another episode of MedSider, the show where I interview MedTech and Medical Device Thought Leaders. And on today's program, we've got Hugh Narciso, who is the founder and president of MedSider, the show. of Baro Nova. Let me tell you a little bit more about Hugh before we dig into the interview. Prior to founding Baranova back in 2006,

Hugh had held several senior executive positions or served on the board of directors at a variety of companies, some of those including leptose, biomedical, lambda pharmaceuticals. I hope I'm pronouncing that right. Core vascular surgical systems, Mirabont medical technologies. Hugh also is a named inventor

on more than 30 U.S. patent. So a pretty impressive resume. Thanks for coming on the program, Hugh. I appreciate it. Well, thanks for having me, Scott. All right, so we'll dig in here in a second, but I do want to let everyone know that this interview is sponsored by touch surgery.

Now, I'm full disclosure. I'm an employee of touch surgery, and I'll tell you a little bit more about that as we progress here in the interview with Hugh. But in short, touch surgery is a company that makes an app that is free to download on the App Store or the Google Play Store. Completely free.

And it's designed for physicians, surgeons, healthcare providers to learn and practice procedures, surgical procedures anytime, anywhere. So if you're interested, just go to touchsurgery.com and you'll find the link to download the free app. All right. So, Hugh, let's get started. You founded, as I mentioned just now, you founded Baronova back in 2006.

It's now early 2016, a full 10 years later. That's a long time, I think, from anyone's perspective. So let's start with kind of how you're feeling about how your position now, especially against sort of entrenched incumbents like Allergan with the lap band procedures, as well as just other startups that are kind of in that same space, like GI Dynamics and Interometics. Let's start there.

Okay, well, you know, We're pretty happy about where we are as a company. Like you said, we've founded the company in 2006, and we've accomplished quite a bit. We've been through a couple of human clinical trials, including our most recent one, which we conducted in Sydney, Australia. Now, in that trial, we demonstrated a fairly significant level of weight loss in those patients. And just to give you an example, at a six-month time point,

The average weight loss for our patients who had BMI's between 30 and 40 was about 14.9% total body weight loss. So if you take the weight of the patient and you subtract about 15% of their weight, that's what they achieved in six months. And if you look at comparable obesity trial, that's a pretty large number. So we're very happy where we are in our clinical results. We're continuing to develop the product, the Transpilarg shuttle is the name of our device.

And, you know, compared to companies like reshape, Apollo, GI Dynamics, and Terramatics, you know, those guys are all trailblazers. And, you know, they've set the standard with their regulatory approvals. And, you know, we appreciate all that they've done for the space of obesity. And, you know, we're just going to follow in their wake can hopefully have a successful pivotal trial, and then we look forward to competing with them in the market once we get those approvals. Well, yeah, it certainly helps to – I'm not sure if you consider yourself a fast follower,

but certainly helps to follow along the path that other folks that help to play, so I certainly can appreciate that. So I know you mentioned a couple of different things that I want to discuss the trial in Australia as well as your pivotal trial that you're starting. I'm not sure entirely how much you could discuss with your U.S. pivotal trial. But let's start with the actual device. You mentioned that I think it's often referred to as the TPS device. Give us a high, sort of a high-level overview of the device as well as sort of the disease

that you're trying to, you're aiming to treat. I know you mentioned it's an obesity-de-related device. And then how it maybe compares to other devices that physicians would use in today's market. Sure. So our TPS is an endoscopic device, and so that means that there's no surgery required to deliver or retrieve the device. So it's a completely endoscopic procedure, both on delivery and retrieval.

And what we demonstrated in that Australian study was that the level of weight loss that I previously referred to was actually superior to the weight loss that you see in a similar study conducted by Allergan when they did their low BMI trial. Now, your audience may or may not know, but the lap band is a surgical procedure. So there's surgery involved in that procedure. So since there's no surgery involved in our procedure,

if you can get surgical levels of weight loss without the need for surgery, we think we've got a pretty good competitive advantage once we get to market with our device. Now, maybe we can talk a little bit of mechanism. how we're working. So this device that we deliver endoscopically, we, in effect, we build it in your stomach. So we send it down in a deconstructed fashion, and then by engaging a few levers and pulleys in the delivery system, we're able to construct it in the stomach. And what

you end up with is it's a ball, probably a little bit smaller than a tennis ball with a tail on the end of it. And the way that it functions is because of its shape and its size, that tail wants to go across the outflow of the stomach, which is the pylorus. So it crosses that valve, and the tail sits in the intestine, the duodenum. And the ball will sit in the stomach. And so our device was designed to work in concert with your own physiology. So a lot of technologies try to fight the physiology. Ours was designed to work with your physiology. So there's a thing called parastolsus, which it's a series of contractions and relaxation of muscle

that forces food from the stomach into the intestine and then down the intestinal track. And so when that wave, which starts at the top of the stomach, starts to squeeze down on the stomach, it'll actually push our device down into the outflow of the stomach, the pylores, and it'll intermittently block that valve. So the wave pushes our device into place, and when the wave passes over our device, it'll pop it out. It pops up a little bit out of the pylorus, kind of like a watermelon seed, will pop, you know,

when you squeeze it between your fingers. And so once that device pops up, it allows food to pass around it. And then the next wave comes along and pushes our device back in place. So with your own physiology, this parasthalysis, which creates the shuttling motion of our device, and that's why we call it a transpyloric shuttle. And by shuttling back and forth, we intermittently block the outflow of your stomach,

so the patient will fill up quicker and stay full longer. And it's really that simple. That's the mechanism that we think we're operating under. Got it, and that's delivered entirely through an endoscopic approach. Correct. Got it. And you said it's sort of constructed in place. So am I right in saying the parts are delivered through an indiscopic approach?

through an endoscope, and then the physician would actually build it sort of in place within the stomach? So they're not delivered through the endoscope. The endoscope is there to visualize the process at various points in the delivery procedure. But we've got our own catheter that is delivered through the mouth, down the esophagus, and into the stomach. And like I alluded to earlier, you know, by turning a couple of cranks, what you end up doing is you engage some strings, which then engage some locks,

and ultimately you lock the device in place. And by locking it, that's what I call constructing the device in your stomach. Got it. Okay. And this question actually came from our audience, you know, someone from the Mediter audience, Ted Jordan with stellar technologies. Not overly familiar with stellar technologies.

But he asked, he wanted to ask you in preparation for this interview, How does the physician then remove the implant after the, you know, the patient loses the desired amount of weight? Can you answer that question? Sure. So, again, it's an endoscopic procedure, so there's no surgery involved in either aspect, delivery or retrieval of our product. So the physician would go down with a normal endoscope, and, you know, typically endoscopes

have working channels. So we use devices that go through those channels that are well. known to gastroenterologists and surgical endoscubists, things like, you know, snares or graspers. And what we do is we put a grasper down the central channel of the scope, and the scope allows you to visualize where the device is. And right on the top of that ball that I earlier described, there's a release mechanism. So what you do is you grab onto that release mechanism.

You pull that back up against the, well, we retrieve it through a, and we, you know, and an overtube, you pull that device up to the over tube and apply a little pressure. And what that does is it releases the, there are four locks in the device. So it releases all four of those locks. And once the locks are released, the device can be deconstructed, basically the opposite of what we do when we construct it, and that silicone is then pulled out through the over tube. Okay, cool, cool. As you described that, I'm thinking, it sounds very significant.

familiar to like an IVC filter removal. And, you know, maybe that's because I said most of my career in the, in the vascular space, but that concept is sort of, you know, grasping on to a hook and sort of retrieving the implant out of a, you know, out of a vessel, or in this case, the, you know, the stomach sounds fairly familiar. Right. Yeah, got it.

Cool. All right. Sounds good. And, Ed, if you're listening, thanks for, thanks for sending that question. And if other folks want to ask questions in advance of the interviews, just go to MedSite or subscribe to the email newsletter. I typically send out information in advance of who I'll be interviewing next. That way you have a chance to ask any questions that you have for the guests here on the program.

So, Q, thanks for that overview of advice. Hopefully they give everyone a good, you know, at least somewhat of a feeling for what you're, what you're building there at Baranova. So let's go back to kind of pre-2006 before you founded the company. You set time with some of those other startups that I mentioned in the intro, Mirabont medical, core vascular, lactose biomedical, when you think about your early time there, you know, this is well over 10 years ago now,

but I got to think that there's probably some mentors that you had, some folks in place that you learn quite a bit from, Can you speak to some of those experiences that you learned along the way that would be helpful for those folks listening that are early in their met tech careers? Sure. So, well, more than 10 years ago, I had a lot less gray hairs, so I missed those days. I've had the good fortune to work with some very knowledgeable and, you know, great mentors. and they know the medical device industry, they know the pharma industry. I've spent some time doing both med tech and biotech.

And, you know, I've had the good fortune of being under the tutelage of people who are willing to allow me to, you know, expand my capabilities, but while also doing that to instill the passion that's obviously required to succeed in any business. So, you know, I think a lot of it is luck. So, you know, like I said, I had the good fortune to work with people who, you know, took an interest in my career and allowed me to, you know, expand and learn from my mistakes and my successes. So hopefully that answers the question.

Yeah. And is there anything that you remember that you specifically did to sort of foster that type of relationship or you were some of these industry veterans that sort of helped you along, they were, you know, where they became a little bit more open and willing to, you know, to invest in time in you? Well, I mean, I always made it any care to my managers and my mentors that, you know, what I was doing and I enjoyed learning what I was doing, but, you know, once I had gotten proficient in that area that I always wanted to take on more. And so they were always willing to, you know, feed me as fast as I could take. take out new things and, you know, do it responsibly, but, you know, do it successfully.

So, you know, it's really just kind of pushing the envelope throughout your career. And, you know, when I mentioned in the last question, you've got to have passion for what you're doing. And so, you know, if you have that passion, then, you know, you're willing to work the extra hours to, you know, kind of accomplish what you need to accomplish and learn what you need to learn. Got it. And I think, you know, and I'm making a hunch here, but I'm, you know, but I'm, I'm making a hunch here, but I'm guessing your passion, you know, 10-plus years ago was probably fairly contagious, which probably opened the doors to relationships with those around you.

So just take a guess, but I have a feeling my hunch is probably right. So I'm glad you mentioned that because, you know, like we discussed here earlier in the conversation, you've been at, you know, much more than 10 years, but barely over specifically 10 years. I mean, you've got to have a lot of passion for what you're doing in order to make that work. Very cool. So on that same sort of note, speaking of kind of the early days of Baranova, what sort of drew you to this gastroenterology or sort of the obesity market? Was there something in particular? Well, before we founded Baranova, I had spent some time with leptose, biomedical. And leptose was a company developing neurostim technology to treat obesity. So that was my introduction to obesity.

You know, obviously, everyone knows it's a very large market. It's probably, if not the biggest, one of the biggest medical opportunities that's out there. And there are a lot of ways to attack it. So, Neurostim was one way to attack it. But, you know, when my time was coming to a close at Leptose, as they decided to relocate the company, I was approached by my co-founder in Baranova, Dr. Dan Burnett. and Dan Burnett is one of these serial entrepreneurs.

And actually probably a better description is he's a parallel entrepreneur because he's probably got, you know, five or six or seven venture-back companies that have started up are, you know, in operation right now. And, you know, Dan had this concept that he had developed while he was still at Duke Med School of the Transpilarch Shuttle. And, you know, his early prototyping is quite different from what we have in the clinic right now, but the basic concept is still there. And, you know, I just thought it was a fantastic concept in that the simplicity of the approach is what makes it elegant, right? So it's easy

to tell people, whether it's an investor or a doctor or a patient, you know, how this thing works. It basically works as a ball valve, an intermittent valve that we put in the outflow of your stomach that causes you to fill up quicker and stay full longer. So it's an easy story to tell, but it's an elegant story to tell. And when we took it into the clinic, you know, what we discovered was that these patients lost a lot of weight. And so, you know, we knew we had something there when these, you know, early patients would lose a significant amount of weight.

And, again, we can do it all without the need for surgery. So, you know, it was a very exciting time. Yeah, got it. And, you know, speaking of, you kind of hint at it earlier with respect to the fact that the first prototype probably looked a lot different than, you know, the device that was studied in your study in Australia and then probably the, you know, maybe different than even than one in your pivotal trial here in the U.S. But can you talk a little bit about how you went from sort of initial idea or initial prototype iterating on that idea? based on the feedback that you got in the trenches or in the market? Yeah, sure. So, you know, obesity is, you know, it's a challenging field.

It's also a relatively new field. So it's not like cardiovascular disease where, you know, people have been not only developing products for cardiovascular disease, but they've been, you know, inventing animal models that will mimic what you see in the clinic. And I think one of the major Achilles' heel for obesity right now is there's no large animal model that is predictive of what you will see once you take your device from animal testing into the clinic. And so, you know, we can do all the testing,

and, you know, we did do a series of bench top and animal testing on our device, but you never really know how it's going to work until the rubber hits the road. You know, you take it into the human clinic. And, you know, what we learned in those early trials was, hey, it's functioning as we designed it to function. So, you know, that's kind of the exciting point that, you know, there's the anticipation and then the nervousness about taking it into the clinic. You know, you've done all you can to make sure it's a safe device, but now you've got to find out if it's going to be an efficacious device. And so when we did that in our early trial and got the results that we got, you know, we were excited. And what that allowed to do, it allowed us to attract an investor in our Series B, which was Allergan, who at the time was the world leader in devices for weight loss and obesity.

Got it. And that's Series B. That was back in 2008. Is that right? Correct. Okay, got it. And at that point in time, I am not overly familiar with the space, but was the lap band, the lap band was on the market at that point in time? Yeah, the lap band had probably been on the market for about five years by that point.

Five years, okay. Okay, so Latvan, maybe if I've got my timing right, it was maybe early 2000s, and then fast forward in 2008 and Allergan because of a strategic investor. Very good. So before we move on to sort of how you begin to build out your team at Baranova, is there a certain methodology that you typically utilize or a framework that you utilize, that you personally utilize or your team utilizes when it comes to making device iterations based on the feedback that you see in animal labs or in actual human trials?

Well, it's important to have a stable of, you know, key opinion leaders. So, you know, we've surrounded ourselves with some of the best and some world-famous gastroenterologists and surgical endoscopists to help us with that process. Now, part of the problem is you can go to these KOLs and say, you know, what should we develop? And if you're too broad when you approach these people, you're not going to get the answer that you're looking for because basically what they want to do is they want to make, you know,

a technology that they're familiar with, they want to make it a little bit better. And when we're talking about the TPS, we're talking about a technology that is very different than everything else that's out there. So they don't even know what's possible until you show them what's possible. And when we went to them with the original concept of the TPS, then the light bulb goes off in their head. And because they're very experienced clinicians, they say,

okay, well, you need it to do A, B, C, and D. And then, you know, we put our engineers in the room with the KOLs and, hopefully some magic happens. Got it. That's interesting that you said, I mean, when you initially, maybe that's a piece of advice

for other, other met tech entrepreneurs or just other folks that, you know, serve in some sort of R&D capacity that, you know, when you're getting feedback from thought leaders or KOLs,

you know, within a certain therapeutic arena, that the goal is to get, to go to them with a very specific sort of problem or specific need. Would that be accurate? Yeah.

Yeah. So it kind of goes back to, I don't know if you've ever heard the quote by Henry Ford, but, you know, Henry Ford said that if I had listened to what the people wanted, I would have built a faster horse, right? So we didn't build a faster horse. We built, you know, the first car. So it was a very different concept, and it wasn't an improvement on something else that existed. It was a whole new concept. Got it. Yeah, I'm reminded also of the Steve Jobs quote as well. And I'm going to paraphrase here. It's got on the quote in front of me,

But it's something to that same sort of effect where I think the theme of the topic, the theme of the quote was around, you know, focus groups. And he said, you know, you can't, you know, focus groups aren't necessarily, you know, worth it, you know, because people don't always know what they want, you know. So I'm totally paraphrasing. I probably murdered that quote. But I think, I think we're on the same, you know, kind of at the same sort of content there, right? I think so.

Got it. Cool. So let's pass forward to the team now. So it's you and Dan in the early days of Baranova. How quickly did you begin to build out a team and what did that look like? And I'm asking this because I remember an interview several years ago I did with Rudy Mazzaki, who probably could be described as maybe one of those parallel entrepreneurs, as you mentioned.

But he mentioned how his team early on, I think it was sort of in the context of what would he done differently. And I think he said that now with his teams, he almost entirely, almost entirely a contract-based team in the early stages of a met tech startup. And so I'm curious, you know, when you look at kind of those early days and beginning to form out a team of Baranova, is that what you followed? Or what did that look like? Yeah, so my philosophy throughout my career has always been to, you know, to be capital efficient. So, you know, we were capital efficient before it was invoked to be so. And, What that means is, you know, you want to bring on core competency.

I mean, you have to have some internal expertise because, like I said, the TPS was a new concept, and, you know, we needed people inside the company that could develop that concept. You're never going to get the attention and the dedication that you need to develop a new product by outsourcing that. But that being said, I think a lot of the other, you know, peripheral activities within a company, especially early on, can be outsourced. There's enough excess capacity out there to do that, and that allows you to use a certain function when you need it, and then avoid paying for it when you don't need it.

And, you know, one example would be, you know, our manufacturing. So when we took our Series A dollars, we raised enough money to, you know, develop the product, tested in animals, and then do a handful of patients in our first in-man trial. Well, to do all that, I mean, after we got through the prototyping and we froze the design, you probably need less than 100 devices to support your clinical trial, to support your V&V testing, and any other thing, any other needs for devices. Well, to build up a huge manufacturing facility and operation,

to build 100 devices that you're going to need over the next two years, it makes absolutely no sense. And there's plenty of capacity out there to access people who have those skills to do that work for you. And I could probably come up with another five or six examples of functions within an early company that you can outsource. So, yeah, I mean, I would agree with your initial statement that you want to be, I won't call it virtual

because, like I said, you do want that core competency, but being, you know, semi-virtual. Sure, sure. No, that's a good example. and I think definitely a lesson learned, especially in an era where you would know this much more than I would for sure, but we're in an era where MedTech venture capital is not easy to raise, and capital efficiency is certainly incredibly important.

And I want to ask you a little bit about that here in a second. But first, let's talk a little bit more about the FDA, the regulatory environment as well as insurance coverage, and reimbursements. And I think you would probably, correct me if I'm on, but you probably agree that the FDA does tend to take a lot of criticism when it comes to slow regulatory time, although it seems like those are improving as of late.

You know, it looks like based on 2015, that may have improved a little bit. But, you know, you're dealing with a PMA type of device, right, that's even going to require even more regulatory scrutiny. Not to mention the fact that, you know, insurance coverage and then insurance reimbursement represents a whole other set of challenges. So, you know, when you think about positioning

the TPS device for eventual commercialization in the U.S., are the things that you're doing now to help you sort of fast-track those types of or help you overcome some of those challenges when it comes to U.S. commercialization? Well, yeah. Let me start by agreeing with, you over the ten years that Baranova's been around there's definitely been headwinds

and tail wins from the FDA so you know probably within the last I don't know three or four years I would say that our group at the FDA has modified their way of thinking and they're very supportive to companies like Baranova I think a lot of that has to do with the leadership in the group that reviews our technology it's a Dr. Herb Lerner, who's done a phenomenal job with that group at the FDA, and I think the FDA is using that as a model to extend to other areas of specialty. So, you know, but getting back to your question, you know, I have established a relationship with Herb over the years,

and, you know, I have the ability to pick up the phone and give them a call and say, look, this is what's going on within either our development area or within the clinic, and how can we work through this process. So it's become a very iterative process and a very cooperative process with the FDA where if you had asked me this question six or seven years ago, I would have said that the FDA is putting up barriers that are so high that even the approved devices

that were out at the time couldn't be approved that day. So, you know, your point is well taken. the regulatory environment, the pendulum swings, and right now it's swung to a cooperative direction. But, you know, getting an approval and not having reimbursement or not addressing how people are going to pay for this technology is just as important. So it's almost like you can't take one without the other.

They're inextricably intertwined. So, you know, what I would say about reimbursement is because Baranova is an endoscopic procedure performed on an outpatient basis, and the cost of the device is relatively low compared to other technologies, for example, neurostimulation for obesity, that we have the ability to, you know, once we get our approval from the FDA to support a self-pay market. So, you know, it's probably similar to LASIC therapy, which your audience may be familiar with when LASIC first came out.

It was something that people would go in. Insurance wouldn't cover it, but they would pay for it. And the companies would arrange for financing to support that approach. Now, that being said, I think that's a short-term approach for us, because while initially after we get approval and we launch our product, it'll probably be into a self-pay market, I think there is incentive for the third-party payers to pick up the cost of our device and procedure because if we can produce surgical levels of weight loss without the need for surgery,

you know, that's kind of code for we can get surgical levels of weight loss with all the cost associated with surgery. I think the third-party payers are going to be open to this approach. And so I think we take a dual track that while we're gaining that, you know, reimbursement approvals that we will pursue a self-pay approach. Got it. Cool. So that's an interesting path for sure, and it seems like more and more med tech companies are sort of keeping that sort of idea,

that sort of path on the table, that sort of self-pay approach where you can initially launch a device into a market and expect patients to pay for it, especially as co-pays and co-insurance you know, and deductibles. And the more of those increase over time, the more and more patients are paying, you know, out of the pocket for certain procedures for sure. So, but on that note, I want to ask you kind of a follow-up question,

even though that you maybe expect to launch into a self-pay market where patients are paying for this procedure with, you know, with cash, are you, are there activities that you're doing now or conversations you're having to help with an eventual, you know, eventual code or maybe, you know, more specifically to help with coverage or reimbursement with third-party pairs? Or do you see that happening down the road? Well, it's not that black and white. So, you know, we've tried to have the discussion with the third-party payers, and it's really not a fruitful discussion until, you know, you're looking at data, right? And so I think we're going

to talk about it a little bit later, but, you know, we've just initiated our U.S. Pivotal TRI. which is a randomized controlled double-blinded trial. And so those data are going to be very pivotal in the assessment of the third-party payers on whether there's a there-there-there, right? But I think what we can do right now is we're establishing the relationships with our, you know, obesity, society heads, which you really need to find people to carry your banner, to the AMA to ultimately get the reimbursement codes that you're looking for.

So right now, the obesity societies are very aware of what we're doing. They're keeping an eye on what we're doing. We make sure we share our data with the societies. So when it's time for them to pick up the banner and sing our song to the people that are responsible for coding, I think we'll be prepared. Got it.

Very good. So I want to talk about your recent your EAD and as well as kind of the, you know, the pivotal trial, or at least a touch on the pivotal trial, you know, share what you can, because I know it's going to be somewhat limited as to what you can share. But before I go there, I did mention that this interview is sponsored by touch surgery. Again, in full disclosure, I'm an employee of touch surgery. But really, for anyone listening, you should really, really check us out.

Go to touchurgery.com, and really, I would encourage you to take the next step and download the free app. completely free, just register with your email address. And really, it's very cool. I mean, what we're doing is we're building out surgical procedures, or really any type of procedure, interventional, surgical, open surgical, etc., building those out on a mobile platform or truly mobile platform. So the concept is that a physician, any health care provider, for that matter,

instead of having to, you know, the fly to a course, to, you know, read through some sort of PowerPoint deck, etc. Instead, they can learn and then practice through interactive procedures on their mobile device. So whether it's an iPhone, an iPad, you know, an Android-based tablet, et cetera, you can pull it out anytime, anywhere, 24-7 and learn and practice procedures. And then what's even more you need is you can test yourself against what you know or what you practiced as well.

So very cool app. I encourage everyone to check it out. So, again, touchsurgery.com. just click on the links to download the Android version or the version that's that it's on top of iOS. So anywhere, back to our discussion, Hugh, you recently, again I mentioned this earlier in the intro, you recently raised your series B, so congrats on that, I think it was a 30, well, it was reported at least to be, you know, over $30 million.

So very cool to see, very cool to see you guys do that. So before we get into what you're doing with the clinical trial here in the U.S., let's talk about sort of your experiences with fundraising. I know your Series B was back in 2008, Series D, late 2015, et cetera. So are there some major lessons that you learn, you know, maybe with respect to your early fundraising versus kind of your late-stage fundraising. And then also I want to get your take on that. And also, you know, you've got, you were able to raise money with both corporate entities

as well as private and venture capital firms. So I want to get your take on that. So maybe let's start with the differences between your early and late stage rounds and then also get into the kind of the corporate versus private VC topic as well. Yeah, so, you know, I would say that, you know, series A and series B is more about the promise of the technology. I think Series C and Series B is more about execution. So, you know, by the time you get to Series C and Series C, you have to prove that you've used, the previous dollars raised in a responsible way, hopefully efficient and effective way.

You know, Baranova has, we've had the good fortune to be able to attract many of the blue-chip healthcare venture groups to invest in us. And we've also received investments both from Allergan, who I think I mentioned earlier, was at the time of the investment, they were the world leader in devices, medical devices, for weight loss. Since then, they sold their obesity franchise to hollow. And we've also received an investment from Boston Scientific, and, you know, Boston, while they're not actively involved in obesity,

you know, they've got, you know, a pretty mature endoscopic group where, you know, this white space technology could fit into that group at some point. So, you know, I think our clinical data has been validated by, by these professional medical device manufacturers. So, you know, kind of getting back to your point, there's a little difference between early fundraising and late fundraising, but, you know, by the time you get to see,

you've got to have a track record that people can invest in. Yeah, I like, what was the analogy you use, the differences between A and B, and then, like, you know, maybe D and E is, you know, A and B's, A and B rounds are based on the promise, and C&B rounds are based on the data. That's a pretty helpful description. For sure. So can you discuss the differences, your experience is dealing with both private venture

capital firms as well as corporate venture? Because certainly there's been, you know, I'm sure you'll get a different opinion depending on who you talk to with respect to working with both parties, especially with corporate venture arm. So maybe talk a little bit about that. Yeah, so I mean, if you probably interviewed 10 CEOs, you'd get five that fully support corporate partnerships and five that absolutely hate them. So, you know, I come from the experience of I've had very good relationships with corporate partners. And that's both from the med tech world and from pharma.

So I think that, you know, if you get the right person that is your champion with this, in the company, and the company values the indication and the approach that you're taking to deal with that unmet medical need. I think the motivations are all in the right place, and I've had the good fortune to work with some great BD people, some great corporate development people. And I can give you an example. When Allergan made their investment, they put a gentleman, David Lawrence, on our board. and David was great.

David understands obesity. Obesity can be a nuanced specialty, and he really understood the nuances of obesity. He also understood the challenges of operational issues, even with the development stage company, and having that voice kind of balance out the approach of the venture capitalists was very valuable to Baranova, and I think we had a very functional value-added board

to have both the corporate perspective and the venture perspective sitting in the same room. Got it. That's helpful. That's helpful. Certainly very cool that it worked out so well with you. And I got to think that as you just mentioned, this gentleman by the name of David Lawrence at Allergan. I'm not sure if he's still there, but that's the fact that he knew so much,

he understood the space that you were offering with, and I got to think that helps a lot for sure. Yeah, absolutely. So, cool. So before we get into the last three questions, probably one of my most favorite parts of the interview, which is a little bit more personal in nature, let's talk about, you know, what's next for Baranova.

You mentioned the pivotal study that you're working on for the U.S. Maybe talk about that and then finish it up with, you know, for physicians that are wanting to, you know, learn a little bit more about the device or are considering, you know, ways to treat this patient subset, you know, in the future, why, you know, why should they consider TPS, the TPS device? So the first part you want me to cover is what? Yeah, sure. So maybe just talk about the U.S. trial first, you know, for anything that you can share. And then just kind of finish it up with maybe the unique things that make the TPS device different. Okay, so we just initiated our U.S. Pivotal trial, and I think your audience probably knows that the Pivotal trial is the final trial that you conduct to gain FDA approval.

I can't say much about it. I can't say much about it mostly because it's a double-blinded trial, and I don't know much information about it. So I'm blinded to the trial also. But I can tell you how it was structured. So as I mentioned, is the randomized controlled trials. So we've got some patients receiving our device, some patients that receive a sham procedure, so they think they have the device.

And it was randomized two-to-one treatment to control group. The goal is to put the device into about 270 patients. So that means 180 will get the device, 90 will be in the control group, and to leave the device in for one year. So we wanted to differentiate ourselves from some balloon technology where, due to materials they need to remove the device after about six months. We're going to leave our device in for one year. Now, it should be noted that there's nothing in the materials or the mechanics of our device that would prevent. it from living in the stomach for two, three, five years. We just need to prove that. And for a startup company to bite off a three-year or a five-year clinical trial right out of the

shoot just doesn't make sense. So the plan would be to get the approval at one year of residence time in the patient and then get subsequent approvals to expand that indication out to two years and multiple years after that. But it should also be noted that in that trial we're treating patients that are 30 to 40 BMI, which is considered a low BMI clinical trial. But that doesn't mean that we couldn't ultimately treat patients that are above 40. What we saw in our Sydney trial was that patients above 40 lost the same percentage of weight as the patients between 30 and 40. So, you know, if you're an above 40 BMI patient and you lose 15% of your total weight,

you're going to lose a lot more weight than someone who's a 32 BMI. But on a percentage basis, it seems to work the same independent of BMI. Now, once we expand north on the BMI scale, there's nothing preventing us from expanding south on the BMI scale for overweight patients. There's a cosmetic indication that we could pursue where, you know, people who are overweight and want to lose weight for some specific reason, such as they've got a wedding coming up or they want to look good on the beach in the summertime, there's the opportunity to treat those subjects with a shorter-term device, you know, maybe put it in in January and take it

out in April. You know, there's that opportunity for patients, for overweight patients, the cosmetic indication who want that benefit. There's also the diabetes indication. So, you know, people are familiar with the weight loss associated with improving your type two diabetes. So just by losing weight, you get the secondary effect of improving your diabetic condition, either eliminating the meds you're on or at least reducing the dosage. Well, we think that in addition to the secondary effect of diabetes, we're going to have a

primary effect on diabetes. So if you remember early in our conversation, we said that the mechanism that we think we're operating under is slowed gastric emptying. So the food moves from the stomach into the intestine in a slower manner. So if you think about that, if the calories are moving from the stomach into the intestine slower, you aren't necessarily changing the amount of glucose that gets released into the bloodstream, but you're doing it over a longer period of time. and when you stretch that time out, the effect is you reduce the glucose peaks. And if you reduce the glucose peaks,

that's exactly what you want to do in a diabetic patient. So we think of the primary effect, there's the potential, at least, of the primary effect of our device for the diabetic patients. So we're very excited about pursuing a trial in that area once we get our initial approvals. And lastly, another area we're very excited about is adolescent obesity. There really is nothing for the adolescent obesity.

adolescent obese population right now. And, you know, you just have to open up the New York Times probably daily to see an article on the, you know, the effects of adolescent obesity. So because our device is completely reversible, you can put it in and take it out. You don't have to worry about the effects of the device on a growing individual, whereas if you were suturing something in place or changing the plumbing like you do with some of the more radical bariatric surgeries, you'd have to worry about that. So in our case, we can get the effect of our device, remove it,

and then the adolescent can move into adulthood and either maintain their weight loss or if they need some intervention, whether it's another one of our devices or surgery, you know, when they become adults, they've got all the options in front of them that they had before. And so I think all those reasons together make physicians, very interested in what we're doing because we can treat a broad band of their population

because they get, you know, all types of obese patients into their practices. And I think they're very excited when we talk about these potentials. Yeah. Okay, I really didn't have any idea. I'm glad to mention those three other sort of avenues that you could pursue as well. You know, the Cosmesis Avenue is certainly interesting, you know, where because your device is removable, someone could realistically have it, you know,

to get ready for the beach weather. I say that sort of tongue-and-cheek, but it could be a market, but the diabetes, the ability to treat diabetic patients as well, that's very cool, and I guess if anyone's familiar with, if I understood how you were describing sort of the way your device functions, it be the equivalent of why it's more healthy to eat, you know, a long-chain carbohydrate because your body digestes, though, are thereby preventing,

you know, those glucose peaks, those insulin peaks, which can be dangerous for diabetic patients. So very cool. It's one of the reasons I love met tech so much, you know, if you kind of put yourself in the shoes of a patient, I'm sure you do this, you know, quite a bit. But, you know, instead of that patient being on some sort of lifelong or prolonged, you know, taking a, you know, a drug, you know, for a prolonged period of time or maybe in some cases, you know, for the course of their life, you know, they can take, they can utilize a, you know,

a device like, like yours, you know, for a temporary period of time. So it's one of the reasons I like med tech. It's, it's very cool for that perspective. So, um, very good. And you can just make more comments. For obesity, I think that this is really a disease that is best treated with a device as opposed to drugs, because what we've seen with the drug studies is not only do you have the, effects of a systemic drug on all the systems within the body.

So you've got all these, you know, cardiac effects, and, you know, you can go down the list of the drugs. But what you see with drug studies is even the ones that are fairly effective, the body habituates to them within the first, you know, nine to 12 months. And once the body habituates, the body's an amazing thing. It finds another pathway around it, and you'll see that the patients regain their weight. So I think with a device like ours where you can leave the device in place

for a relatively long period of time get some success, pull the device out if you fall off the wagon like I said earlier you've got all the options in front of you that you can get surgery, you can get another one of our devices you can get one of the competitive devices put in because you haven't changed anything about your anatomy you're not all in like you would be with Rune Y surgery

got it Yeah, it's very, very cool the way that you leave your options open, certainly. So very exciting, very exciting for Baranova. Congrats on all the work you guys have done. You and your team have done there. Very exciting times. It's always good to hear some success stories, you know, in MedTech like Baranova. So before we is here, last three questions, very short questions, but a little bit more personal in nature.

So first you, what's your favorite nonfiction business book? Well, I'm a bit of a dinosaur. So my favorite nonfiction business book is an oldie but a goodie. It's built to last. I don't know if you're familiar with that book. It was written by some guys out of Stanford. And what they did is they did this comparative analysis of a series of competitive company pairs. So they would take two companies within an industry.

and go through their history and find out why one was successful and why one was more successful than the other one. And it's pretty informative on what works and what doesn't work and how you do build something to last. Cool. So built to last. So next question, is there a business leader or maybe another founder or CEO that you're following right now or maybe one that really inspires you? Well, maybe not necessarily a business leader, but I would say closely related. A political leader who inspired me and still inspires me to this day is Ronald Reagan.

This was a man with clear, critically formed ideas, plainly communicated, who had the ability to persuade his opponents to support his policies. You know, it's easy to convince your own troops or people that are on your side to go your way. But, you know, a true leader can get people from the other side to pull with you in the same direction. direction. So Reagan's my hero. Very cool. Good answer. And then lastly, when thinking about your med tech career and then even even the successes that you've experienced here at Baranova, especially as a late, what's the one piece of advice that you tell your 30-year-old self?

Well, if I could talk to my 30-year-old self, I would tell myself, go into software development. Good answer. Good answer. We'll leave it at that. Let's let the audience sort of, you know, take that for what it's worth. But this has been a really enjoyable conversation, Hugh. Is the best place to direct people if they want to learn more about Baranova is your website? Yeah, that's the best place.

Yeah, that would be great. www. www. Baranova. Baranova, B-A-R-O-N-O-V-A. And, of course, we'll link to that in the show notes for the... for this interview on Medsiter.com. So again, Hugh, thanks a ton for doing this.

I'll ask you to hold on here before I, before I, we hang up. But again, thanks for taking some time and sharing your, your experiences over the course of your career, as well as those with founding Baranova. Well, I appreciate the time, and I appreciate you, you know, reaching out to Baranova. Cool. All right.

That's it. For now, folks, until the next episode of Medsider. Everyone, take care.