Medsider: Learn from Medtech and Healthtech Founders and CEOs - Think Big, Start Small, and Prioritize Ruthlessly: Interview with InterShunt CEO Harlee Sorkin

Episode Date: February 7, 2024

In this episode of Medsider Radio, we sat down with Harlee Sorkin, CEO of InterShunt Technologies, a startup developing a minimally invasive catheter designed to treat heart failure. By improving blood flow and lessening the heart's workload via a shunt, the company's technology holds promise for easing heart failure symptoms.Harlee is a co-founder of Common Place Holdings, a venture studio that has spun out eight medtech startups, including InterShunt. Before Common Place, Harlee led Traco Labs, a health and nutrition ingredient manufacturer, to a successful exit. He also served as the Clinical Assistant Professor at the University of Illinois at Urbana-Champaign, where he focused on translating research ideas into commercially viable applications. In this interview, Harlee delves into the nuances of leading an early-stage medtech company and covers essential topics such as development prioritization and capital fundraising. He also shares what it’s like to navigate clinical and regulatory challenges as a first-time medtech entrepreneur and how to effectively engage with stakeholders across the healthcare ecosystem.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 IV. If you’re interested, go to medsider.com/subscribe to learn more.Lastly, if you'd rather read than listen, here's a link to the full interview with Harlee Sorkin.

The answer is you have to do everything early. And we all know that's not possible. So we have to prioritize. And sometimes we have to prioritize pretty ruthlessly and say, okay, what are the things that are milestones that we can get funding on? And what are the things that are not fundable milestones, but that we know we're going to have to fill that gap at a later date. 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 sat down with Harley Sork and co-founder of Commonplace Holdings, a venture studio that has spun out eight MedTech startups, including inter-sunt technologies the company Harley is leading today. Before Commonplace, Harley led Treyco Labs, a health and nutrition ingredient manufacturer, to a C. successful exit. He also served as the clinical assistant professor at the University of Illinois,

where he focused on translating research ideas into commercially viable applications. Here for you the key things that we discussed in this conversation. First, you have to prioritize ruthlessly during the capital scarce initial phases of your startup. It's a constant cycle of setting and achieving milestones that not only prove potential, but help you secure further capital so you can move on with your next goals. Second, reframing fundraising as friend raising is important. Begin cultivating the relationships before you need the capital as this process can be very time-consuming. Align your funding requests with clear, achievable milestones and choose the right investors for each stage of your company. Third, engage openly and frequently with a diverse range of stakeholders.

Don't be afraid of people stealing your idea. It doesn't happen as often as you might think. Treat every conversation as an opportunity to learn and refine your ideas and you'll end up with a wealth of perspectives and insights. Okay, so before we jump into this episode, if you're listening to this show, I'm going to make the assumption that you're a dedicated pro looking to learn from the best in the business. If that's the case, which I think it probably is, I've got some exciting news related to our premium memberships. First, let's talk a little bit about MedSider Playbooks, your ticket to going from zero to 100 with your company or your career. You see our team as handpicked collections of the most insightful interviews with the brightest founders and CEOs.

People like Nadine Yard, CEO of CVRX, and Mike Carrucy, serial med tech entrepreneur and general partner at Lightstone Ventures. These proven leaders share their strategies and tactics for running a successful startup. Whether you're looking to master capital fundraising, navigate early stage development, tackle regulatory challenges, understand reimbursement, or maybe even position your venture for a meaningful exit, Medsider Playbooks have got you covered. And the best part, all of them are available to our premium members. Get instant access to these valuable resources at medsiderradyo.com forward slash premium. Again, that's medsiderradi.com forward slash premium. Okay, here's the second thing. I completely understand that fundraising can be one of the most

daunting tasks for any startup, especially in today's environment. That's why we've created a meticulously curated database of investors right at your fingertips. Explore a wealth of VC funds, private equity firms, angel groups, and more, all eager to invest in medical device and health technology startups. Access to this database is a premium member exclusive, so don't miss out. But that's definitely not all. When you become a Medsider premium member, you'll get access to every volume of MedCyter mentors where the brightest founders and CEOs share their invaluable learnings, plus you'll unlock the

entire archive of every Medsider interview dating back to 2010. So if you're serious about advancing your career or your startup and want to tap into this treasure trove of knowledge, it's time to consider becoming a Medsider Premium member. Visit MedsiderRadio.com forward to premium to learn more. All right, without further ado, let's jump back into the interview. All right, Harley, welcome to Medsider Radio. Appreciate you coming on. Yeah, thanks for having me today. I appreciate the chance to share our story with you.

Yeah, looking forward to learning a little bit more about your journey coming out of the University of Illinois, as well. well as kind of what you're building at Intershunt. So with that said, let's start from the top. I recorded a very brief bio on your background at the outset of this episode, but I always like to kind of hear it from the horse's mouth, so to speak, right? If you can give us sort of an elevator pitch of kind of what you've been doing leading up to your current role as as CEO of Intershed, that'd be helpful. Sure. So I think of my background is, or my professional career, is living at the intersection of research and commercialization. So I've spent one foot in more the academic arena,

our academic circles head, with the other foot in the early stage startup arena. And so background, if I go all the way back, was introduced to entrepreneurship really as an undergrad with my wife, or at the time she was my girlfriend that became fiancé and wife, but we had a business that we had taken over from her father and grew that and ended up building an ingredients business that was selling things like pharmaceutical precursors and dietary supplement ingredients, raw ingredients, and exited that and

formed a new business unit for a large specialty chemical company. But then I got back into this area of what I'll call translational research. So at the University of Illinois, I hold positions in the College of Engineering and the College of Medicine. But I'm not an engineer and I'm not a physician. So my objective is to take things that are developed in those research environments and bring them into a commercial environment, a real-world application. So that was kind of the academic piece. Now on the commercial piece, about a little more than a decade ago, I started a small venture group. It was kind of a venture studio model called Commonplace Holdings. I started it with three partners. they were all the brains behind it.

They were the MD PhDs. They had the technical expertise. They had all left academia to commercialize their research. So we all had the same skill set. I happened to be more of the business lead and had some ideas around the financial models. And so we worked together. In that process, we formed eight companies. One of those is Intershund, which is the company that I run today.

So a couple of years ago, Intershunt hit an inflection point and kind of took off. It needed a little more attention. I reached an agreement with my partners to jump in full time, and I took leave from the university at that point in time. So this is all I've been focused on for the past couple of years. Got it, super helpful. And if you can give us an idea of what, like the technology that you're developing at Intershund, and maybe explain it as if I'm a patient and you're the physician in this case,

helping me understand kind of what this technology does is going to do for me. Well, great, because I saw every episode of ER when I was in college, so I think I know how to speak like a physician. even though I'm not. So the way that I'd put it is in, we're working on the issue of heart failure. So heart failure is a condition. It's a slow degenerative condition. It's not somebody who's going to suddenly keel over from a heart attack. This is a condition where the heart gradually loses its ability to pump enough blood to the body. So the body's calling for blood, whether it's your organ organs or your tissues. And so the heart's job is to take that oxygenated blood

from the lungs and move it to the body. Well, in a failing heart, it can't pump fast enough to meet the body's needs, but it's still filling just as fast. So we all remember that old I Love Lucy episode where they're trying to get the candies out of the machine and they can't keep up with it. Well, that's happening to the heart. What happens is the left atria pressurizes because it's filling too fast. And eventually that backs up to the lungs.

So once that happens, these patients develop pulmonary congestion. or they feel it as shortness of breath. So even though it's a heart issue, the way that it manifests is these patients can't breathe, and that's why they end up in this revolving door in the ER. So there's this new area of research and development that's happening around decompressing the left atria. And it's really based on something that occurs naturally. So if you've ever heard of a baby being born with a hole in their heart, actually we all have that hole in our heart in the uterus.

because we're not breathing oxygen, but it closes after we take our first breath. But what we realize, one of these happy accidents that occurs in nature, is that it doesn't always close in every baby. And in fact, about one in five babies are born with a PFO or a hole in their heart. And some of those babies later in life went on to develop heart failure. And so it was actually over 100 years ago that there was a French physician who realized that these people who had this hole in their heart, it might have worked against them during their lifetime, once they developed heart failure, they were less symptomatic. And the belief is that it's providing a checkoff male for that elevated pressure in the left atria,

which means the blood can keep moving from the lungs so you don't get that pulmonary congestion. So having said all that, there's this area of therapy that's emerging that's considered, it's really exciting. It's drawing a lot of attention from all the strategics, the venture community to the clinical community. And it's called interatrial shutting, where we go and put that, hole back in the heart. And the history on it was there were companies that were developing stents or fixating the tissue, creating a ring of scar tissue in order to maintain a durable opening. And the belief was when we, you know, physicians cross the septum on a regular basis in patients

during procedures on the left side of the heart. That's how they get there is they poke a hole in the septum. And those can heal shut. So the belief was you have to put a statured. dent in there in order to hold it open. And that being the case, it makes all the sense in the world to deploy a stent or fix the tissue. But our belief, and what we love about these therapies is they do decompress the left side of the heart, but they also now put hardware in the heart that blocks access to the left side of the heart. And they're fixed. So they can't ever change. Our belief was that the septal tissue, while it's subject to a healing response, it's not subject to a regrowth response. So we did a lot of work early on to say, can we do this same thing?

Instead of by putting a stent or burning a ring of scar tissue in the heart, can we do it instead by, for lack of a better term, making a hole punch? It's really that simple. We have that we've developed a catheter that makes a whole punch in the septum and removes a small disc of tissue. And what we've learned is that that's not subject to a regrowth response. So the, end result is we end up creating a pathway for that blood to, you know, for that high elevated left atrial pressure to bleed off to the right side. And by creating that pathway, we leave the septum in a completely compliant state. So it's now can respond to the hemodynamic needs of the heart. And so we don't think we're smarter than mother nature, but we just create the pathway and allow

the heart to tell the septum and to tell the shunt what it needs to do. Got it. Super, super helpful background. And so that whole punch analogy, I think, is a great one. If you're listening to this and, you know, that's caught your attention. And I highly encourage you to check out the website, intershunt.com. That's I-N-T-E-R-S-H-U-N-T-R-S-H-U-N-T-R-R-Sh-U-N-T-R-R-T-R-R-E-R-R-R-E. There's a cool little video on a site that kind of helps helps visualize kind of the way Harley just described the technology. But Harley, you mentioned that you've, you kind of stepped into the CEO role full time for a few years now because of this milestone kind of that the company hit and required, you know, some more, some more dedicated focus. Give us a sense kind of for where you're at now. I know you're based in St. Louis, but

it sounds like most of your engineers are in Minneapolis. So yeah, give us a kind of sense of where the company's at in its current life cycle. Yes, the company was started in St. Louis. So I mentioned commonplace holdings, which was the venture studio that I operated with a few partners. And it was one of my partners who's an MD PhD who really took this on to say that, you know, this is high value. And I think there's something exciting here and got it going. We started this with a physician who's in private practice in St. Louis. His name is Gilvarty. He's an interventional cardiologist. He's the one that had the idea that said, I don't think it's necessary to put hardware in the heart in order to deliver this therapy.

And so the company, you know, for a couple of years, we actually operated it more as a program within commonplace holdings. And it was about 2018, 2019, when some of the initial companies started moving to Pivotal Pril. We started seeing some really exciting pilot data that suggested this is, there's something here. And this is worth our time and attention. So when we started to build a team and realized that the company needed more resources, the biggest one being attention. You know, we're in St. Louis. St. Louis is a fantastic place to develop a therapeutics or a biologics company,

but an interventional cardiac catheter device company, we simply don't have the resources, the material suppliers, the vendors, things like that, the engineers. So when we look at a map and say, okay, where can you do that, you know, there's a few geographies in the U.S. that make a ton of sense. and for a physician and an entrepreneur in St. Louis, well, Minneapolis is the obvious choice. It's Minneapolis culturally and in every other way is basically the same as St. Louis.

It's just an airplane right away. The Mississippi River is a little narrower and a little cleaner up there than it is down here. Otherwise, the cities have an awful lot in common. So as we built a team, all the resources we needed happen to be in Minneapolis. So that's where we built the team out. And, you know, with the pandemic hitting, you know, realizing that we needed some of our own resources, that's when we actually moved there. Because we realized we had to have our own space for our engineers where we had control and we could control environments, things like that. So that was the point in time when we moved the company to Minneapolis.

Now, that was also in the preclinical phase. So it was what I'll call the late engineering phase of it, you know, around kind of the proof of concept engineering phase. So in that phase, we were doing a lot of preclinical work, a lot of animal studies, some cadaver work. And it's really when things were ramping up. Well, since then, we got through preclinical phase. Things looked really good. And we moved to our first in human. So in early 22, we enrolled our first in human study where we did 10 patients with our

procedure. And that was done in the Republic of Georgia. So we did go outside of the U.S. We considered a few geographies and based on level of care, cost, the process, the oversight process, and probably most important, and all this is that the, you know, I mentioned quality of care for the patients, but it's the follow up quality of care. It made a lot of sense for us. And so that's where we ended up going. We had a great experience there with a great clinic and great operators to, you know, manage the. these patients. So that's, you know, where we sit today is we've just, we just finished our,

late this summer finished our one year follow-up on those patients and presented our results at the TCT conference last month. Got it. That's super helpful. And those results were based on that. You said 10 patient first in human study? That's correct. We did 10 patients and happy to share some of the details. I think at a very high level, the way that I'd put it is first in human study is all about safety. Can you perform your procedure effectively and is it safe on the patient? So that's the primary objective of a first in human study. And so both acutely through the procedure and then longitudinally through the one year follow-up procedure, we didn't have any negative events, no adverse events that were reported and succeeded in performing the procedure in all 10

patients. But then, you know, we look at our program and the real fundamental question is if if you make this hole in the heart without fixing that tissue, is it going to heal shut? So that was, of course, a very critical objective for us. And what we saw was in all 10 patients throughout one year, all of them maintained a durable opening. And so they have an open shunt with left or right flow at the end of a year. And then, of course, you look at clinical outcomes, just to look for some signals. And I think what was really encouraging is that not only did all of our patients,

respond, they continue to improve throughout a year. So we had remarkably consistent results among all 10 patients across every measure that we looked at. So that was really exciting to us to say, okay, you know, we've really learned a lot from those who came before us in terms of which are the right patients to select. And by selecting them and performing our procedure without hardware, these patients not only improved, but it seems to suggest that the dynamic nature of the opening that we create allows these patients to continue to improve overtime. And in a nutshell, the way that we look at our outcomes and why we're so excited by them. Yeah, very cool.

And so looking ahead, I guess before we kind of go back in time and learn a little bit more about not only your journey, but really kind of the earliest sort of development efforts at Interchut, where does the company go next? Are you currently kind of preparing for, I presume this is a class three device, right? So are you currently preparing for, you know, an eventual PMA here in the U.S.? Yeah, so ultimately we will have to conduct a pivotal trial in order to get a heart failure claim for our device. So I think of the ClinReg process, the clinical and regulatory process is really three steps. So the first in humans all about safety.

Next, you go into a feasibility study or a pilot study. Really, you're looking for feasibility. Make sure that multiple operators across a broader spectrum of patients tolerate the procedure and that it's, continues to be safe in and the ease of use is there, that the procedure can be performed effectively. And then you move into pivotal. So in order to generate a heart failure claim, we do expect to have to perform a pivotal study of our own in a heart failure population. So the first of human is kind of step one. Step two is coming up next year. So we do plan to conduct an early feasibility study. it'll be U.S. based and we hope to kick that off in the spring next year. And so we're in the process

of preparing for that. We learned a lot in that first in human study in terms of what do we need to do with the device to, in terms of ease of use and compatibility. The therapeutic aspects of it worked exactly as we had intended. So the ability to make that opening in the septum and safely and securely do that. That was great. So we're leaving all that alone. But it's all the things that you want to do to make the device look more like a commercial device. So some of the iterations there have been conducted. And we're now preparing work in that process of validating those devices so that we can then go back to the FDA and ask for an IDE or investigational device exemption in order to conduct

an early feasibility study in the U.S. Got it. Super helpful. I think that serves as kind of a nice baseline to sort of go back in time. and maybe we'll spend the next 20, 25 minutes or so talking about, you know, various, various sort of functions of, of a business that any startup kind of needs to tackle, right? You know, starting from from early, early development all the way through Greg Klin and, you know, fundraising, of course, along the way.

So with that said, you've got a ton of experience, right, taking sort of, you mentioned kind of this idea of translational kind of medicine, taking these ideas out of, you know, an academic institution like the University of Illinois and figuring out ways like, you know, is this a viable product, right? Does it solve a true need? Does it, you know, can we effectively manufacture and commercialize this at scale, et cetera? So when you think about kind of those very early days of any startup, right? And maybe interest is a good example or maybe take one of your other other companies that you've spun out of out of commonplace holdings. What do you think are the key things that any entrepreneur, CEO, founder needs to get right in

those early stages as, as, you know, because most of us are dealing, you know, have to work with a very limited amount of capital, but need to reach sort of, you know, certain development milestones, you know, going from, you know, concept to alpha to beta, et cetera. So if you have, you know, a couple things that really stand out, you know, that have worked either well or that you've learned from over the years, I'd love to get your take on, on this topic first. Yeah, well, I could tell you the things that work really well, but those aren't to be good stories, right? Good stories where I fell on my face. You know, that's where we really learn. I think I can maybe approach this two ways. So first is to say, okay, what do we do? Like if I'm giving the positive direction, what do we want

to nail? I really think, and really within commonplace holdings, one of the things that we really focused on was defining fundable milestones and working towards those. So you pointed out this idea that capital is precious very early on. And any entrepreneurs can hear all this great advice of it. Here's what you need to do. Here's what you need to do early. And the answer is you have to do everything early. And we all know that's not possible.

So we have to prioritize. And sometimes we have to prioritize pretty ruthlessly and say, okay, what are the things that are milestones that we can get funding on? And what are the things that are not fundable milestones? but that we know we're going to have to fill that gap at a later date. We're basically going to accrue a debt that we're going to have to go pay back in some way. And I don't mean that as a debt in terms of financial debt, but if we haven't built something appropriately, say IP, for example, well, at some point we're going to have to go back and fill that void. But in the meantime, the question is, what are the milestones that you will be able to take,

to somebody in order to say, here's what we've accomplished. Can I please have some more money in order to accomplish our next goals and demonstrate that you can very rigorously achieve those milestones? So it's really this process of defining what you're going to do, telling people what you're going to do, and then go do it, and then go back and show them what you did so that you can then begin that process all over again. So, you know, I think of the early stage is this permission-based capital, you know, where it's, you know, we need to go do our job in order to have permission to go ask for more capital. So that's kind of from the capital standpoint.

That's one way that I think of it. So, you know, it's so cliche to say this, but, you know, I think of capital as it's a friendraising process, not a fundraising process, because if by the time you start working to raise that capital is when you need it, then you're just going to be meeting people. And it takes months, if not years, to get checks. In fact, most of my best checks to date are relationships that I started several years ago by introducing people to our program and talking about it. So, you know, that is one thing that I think is very unique to medical technology is our value inflection points, or our value-creating milestones are unique in that we've got this very long period of development before we're ever going to have our technology see the light

of day. And as opposed to, like if I had a, you know, in the traditional tech world, right, a computer-based tech world, if I build it and somebody's willing to pay me for it, you know, because I don't have a regulatory process, well, then that's success. So a lot of those companies get funded based upon demonstrating users and user retention and run rate. We're not going to have a chance for run rate for years, sometimes even longer, a decade. So now we have to say what are the milestones that we can point to and say, if I accomplish this, this adds value to the company and I can get funded based on that. So that's, you know, that's how I think of it.

And really, I think of maybe three that become really critical, or at least that stand out to me in the earliest stages. One is the team. Again, it's, you're never going to have the complete team. But do you have the one or two critical people who are uniquely qualified and have an unfair advantage that can accomplish that pre-define redefined milestone. So I think that's the most important. You know, you're going to have to do all the things to be creative to get those people on board with you, you know, and make those commitments.

So that's one. Two is IP. So, you know, in the med tech world, like it or not, we exist based upon having intellectual property. And when we get acquired or take things to market, oftentimes it's based upon IP. So when in an IP standpoint, I actually, we always started with freedom to operate. We spent much more time on understanding what the landscape looked like and to make sure that we weren't going to step on somebody else's toes before we worried about building our own IP program and making sure that our solution was defensive. So that's, you know, that's kind of one of the first legs of that. So, you know, teams, one leg of the stool and IP is the next. The third that we always looked for was what is that proof of concept or that milestone that I was harping on so much earlier.

And so it's really to say, you know, can you demonstrate that this works? It may be ugly. It may be crude. It may be on a bench. It may be in an animal. It may be in a model that you built. But demonstrate that you can technically do what you say you want to do it. So that's, you know, in terms of proof of concept, that kind of the third leg of the stool that we look for.

So I realize that it's, and I'll pause there because I've kind of given one view that's that's pretty robust there. And I have other ways of thinking about it that I mentioned that are based upon not where I've succeeded, but where I've failed, you know, where I really screwed up. Yeah. No, but those three, those three kind of key points that you laid out, right? Like team, IP, right, whether it's, whether it's, you know, freedom to operate or, you know, something, some IP around around the novelty of your technology. And then, you know, kind of getting to prove the concept, I think that's a great foundation. But just to circle back around to that, that phrase you used earlier, right? Permission-based funding. And I think it kind of starts to

your point with with friend raising, right? Because you've got to be able to, in order to go raise capital, you've got to be able to demonstrate sort of clear progress, right? And, you know, this slow methodical kind of process around burning down technical risks, especially in those early days. And I love, I love that idea of kind of permission based, you know, fundraising or permission based, you know, capital, because it makes, it makes a lot of sense. And it's so closely tied to those earliest stages of development, right, and being able to, again, look for those fundable, fundable milestones to your point. You know, and I guess that allows us maybe to segue a little bit. So like, let's say you've gotten to alpha, right? Or you're in, you're,

you've got your past sort of proof of concept, right? And you've been able to live up to these, these expectations or these promises that you've been you've been you know signaling to you know potential investors or capital partners um so the next step is to kind of build out right or at least kind of you're building out maybe in parallel this this this this clenraig pathway um you know and you laid out earlier right in talking about introshence kind of process right from going from first in human which is largely focused on safety to uh to now you know in eFS what it sounds like you know starting next year and then into your your pma pivotal when you think of about just, you know, taking a set back and thinking about kind of mapping out the reg Klin

process. This can be daunting for most, you know, med tech entrepreneurs, especially those that haven't, haven't been around a lot of startups. So, you know, how do you typically think about either mapping that out or creating kind of a clear roadmap or, you know, I guess the flip side of that coin is like, you know, what mistakes have you made, right, historically, you know, across the kind of this Klin, reg function that you're now, you know, they're not causing you to kind of do things a little bit differently. 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, Nadine Miarid, CEO of CVRX, and so many others. As a premium member, you'll get to join live interviews with these incredible medical device and health technology entrepreneurs. In addition, you'll get a copy of every volume of Medsider mentors at no additional cost. To learn more, head over to MedsiderRadio.com forward slash premium.

Again, that's Medsiderradio.com forward slash premium.