Medsider: Learn from Medtech and Healthtech Founders and CEOs - Think Commercially from Day One: Interview with Conformal Medical CEO James Reinstein

Episode Date: January 15, 2025

In this episode of Medsider Radio, we sat down with James Reinstein, President and CEO of Conformal Medical, a company developing a foam device that seals the left atrial appendage (LAA) to reduce the risk of stroke without anticoagulants. James has over 30 years of experience in the medical device industry. He’s held executive roles across multiple companies, including Saranas, Cutera, Drawbridge Health, and Aptus Endosystems (acquired by Medtronic). Earlier in his career, he served as Senior VP and Chief Commercial Officer at Cyberonics (now LivaNova) and as Vice President of Boston Scientific’s Asia region.In this interview, James discusses choosing the right market, simplifying workflows to drive adoption, and balancing clinical focus with early commercialization planning. He also offers fundraising insights, including planning for long-term events like IPOs.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 3 packages that will help you make use of our database of 750+ life science investors more efficiently for your fundraise and 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 VII. 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 James Reinstein. 

I had to take the question to myself, not to mention the conformal board asking me. We're a good three or four years away from being commercial. Would we hire commercials to you? And my thought was getting a product to market is getting the clinical data and basically getting an enrollment. What you're doing is convincing a physician to use your product. And probably even more of a trick is you're convincing that physician or helping that physician educate a patient. That's really the other layer of a commercial CEO coming in and was driving enrollment. 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 James Reinstine president and CEO of conformal medical, who has over 30 years of experience in the medical device industry. He's held executive roles across multiple companies, including Serranus, Cutera, Drawbridge, and Aptus Indosystems, which was acquired by Medtronic. Early in James' career, he served as senior VP and chief commercial officer at Cyberonics, which is now Levenova, and is vice president of Boston Scientific's Asia region.

Here, a few of the key things that we discussed in this conversation. First, the right market is one that's big enough to scale, growing fast, and underserved with limited competition. Once you've chosen your market, your next priority should be simplifying the user experience, whether that's physicians, patients, or hospital staff. Create efficiency to make adoption easier. This is the formula to attract investor interest and long-term growth opportunities. Second, startups often focus too much on clinical work and fail to prepare for the transition to commercialization. By laying the proper groundwork early, you avoid scrambling later when it's time to launch.

Think about who you need to convince to move the needle and match your hiring to your market goals. For example, building a market versus taking share requires an entirely different skill set. Third, choose a market that excites investors. Build a functional, aligned board by understanding the motivations and goals of each fund representative. Consider how your current raise fits into the bigger picture, whether that's preparing for an IPO or trying to exit early. Finally, hit operational milestones, de-risk the company, and maintain open communication with strategics to strengthen your position for future M&A opportunities. All right, before we dive into this episode, I'm pumped to share that volume 7 of of Medsider Mentors is now live. This latest edition highlights key takeaways from recent

Medsider interviews with incredible entrepreneurs like Bill Hunter, CEO of Canary Medical, Brian Lord, CEO of Pristine Surgical, Don Crawford, co-founder of Safion, and current CEO of Corvista Health, and other proven MedTech founders and CEOs. Look, we get it. Keeping up with every MedSider interview isn't easy. That's why we created Medsider mentors. These e-book volumes distilled the best practices and insider secrets from top founders and CEOs, all in a downloadable, easy-to-digest format. To check the latest volume out, head over to MedsiderRadio.com forward slash mentors. Premium members get free access to all past and future volumes, plus a treasure trove of other resources. If you're not a premium member yet, you should definitely consider signing up.

We recently revamped Medsider with swanky new features, especially for our premium members. In addition to every volume of Medsider mentors, you'll get full access to our entire interview library dating back to 2010. You'll also get Medsider playbooks, curated guides, path with actionable insights and topics like fundraising, regulatory challenges, reimbursement strategies, and more. And if you're fundraising, don't miss our exclusive investor database, featuring over 750 life science VCs, family offices, and angels. We've even created three custom packages to help you with your next fundraise. Learn more about Medsider Mentors and our premium memberships by visiting MedsiderRadio.com forward slash mentors. All right, without further ado, let's dive in the

interview. All right, James, welcome to Medsider Radio. Appreciate you coming on. I'm happy to be here. Thanks for having me. Yeah, looking forward to the discussion, especially with your pretty extensive med tech background across several different therapeutic areas. But on that note, I recorded a very short bio at the outset of this interview, at the outset of this episode, I should say. But let's start there. If you can give us a two-minute pitch, kind of elevator-style pitch on your background leading up to taking on the CEO role at Kuformal. That'd be great. Okay. It started in MedTech for me with Boston Scientific. I spent 17 years there in multiple roles and functions primarily on the commercial side of the business. but I finished in a general management role in Asia with multiple countries reporting in as a regional vice president.

And then was on my way back to Boston to report into senior leadership over the time. And got a call from Dan Moore to go down to Houston, Texas, with cyberonics, which is a neurostim company in desperate need of some turnaround. Someone called a reclamation and was part of that management team that took the company from about 200 million in market cap to 3 billion by the time I departed. And at the time, I was tapped to become the inside heir parent to Dan Moore, who was CEO at the time. And they had identified him. They identified me as the internal Canada, but then signed Dan on for four more years. So I felt like the VP that wasn't going to get the presidency. And so I felt the board that knows me best thinks I'm ready to run a medical device company.

I'd like to run one at the time. In Houston, there really wasn't much of an industry for MedTech. So I looked elsewhere and looked outside of the state. and ended up in California running a company called Aptus. So that was my first foray into startups and fundraising and VCs and the like. And had a good run there about the thing was there almost three years before Medtronic came in and acquired it for $120 million in an all-cash deal. Done without a banker. And then I did a couple of other startups during that period.

I also started a boutique or got involved with Palo Alto MedTech Advisors, which is a boutique advisory firm, helping startups. Primarily, what we ended up doing is help them raise money. And then I also ran a public company, Coutera, which is in the aesthetic space, which taught me I didn't really care for that business. Concepcially, the mission was great because if people feel better, they look better, they feel better, at least a healthier lifestyle. I still believe that.

I just feel as though if you're selling a product to a doctor so he or she can make money off their patients, it just creates an environment that, That wasn't for me. He left that and went to another startup. And then while I was there, I got a call from regulatory advisor who had we had worked with in the past at Boston Scientific. She said, what are you up to? And I said, we just raised money in Serranas. We're going to commercialize. We're going to do another Raptis. And she said, you really have to take a look at this company because the CEO wants to retire. They need a replacement. You'd be ideal. Long story short, it was so serendipitous that I talked to a doctor about what was interesting,

what was going on and he said, oh, I just got involved with the conform trial. I'm so excited about and he knew nothing about my recent conversations. And I said, I'll tell me more because it was a confidential search at the time. And he just went on about how this is going to be the next watchman. It's going to be really going to change the market for LAA closure. And then the next week, I'm in another center or another hostel that I was working with Serranas. And he said, hey, I've got some cases going on. You want to come in and watch? I said, yeah, what are you doing? He goes, I got three watchmen. And I say, yeah, I'd like to go check that as to us.

I ended up meeting all the Boston scientific people that were there. And then a guy, told him I used to work there, got a good overview of that market and that product, which is a phenomenal product and one that we really got our work cut out for us in order to compete with it. But we feel that we really have some advantages over that product, which I know we'll get into. But long story longer, here I am a conformal, been here a little over two years and really feel like this is just one of the greatest opportunities of having the career. Yeah, that's cool. I love the fact that you referenced the serendipity because that's so often like the case and a lot of these different transitions or even starting a company for that matter. These little signals that that kind of surface that are maybe a little bit unexpected. So it definitely sounds like that was the case for you to make the move to conformal. So that said, I'm on the website, which is conformal medical just as it sounds. C-O-N-F-R-M-A-L conformal medical. For those listening that I don't get a chance to click on the link on the full medside of write-up. But give us a sense for what

What the, is it pronounced as it spelled? Is it class or CLA? Plus. So the point of the system. Give us sense for what the device is and like the major, you mentioned watchman a couple times. I know there's a lot of people listening that are familiar with the watchman device. Yeah, but give us a sense for product, major problem you're solving and like how it

maybe differs from something like the watchman. Yeah. People with atrial fibrillation with ASIB that either can't or don't want to stay on their antichagulence for life. So if you have AFib, you run the risk of stroke. If you can't stay on the anti-cragulants. And so the device, our device, the Watchman device, actually Amulet also has a product out there called, or Abbott has a product out there called Amulet. The two approved devices are from, and Boston Scientific, but Boston's probably got around a 90% market share.

So very much a dominant player in the field, particularly in the U.S. And it is one of the fastest growing medical device markets in the world today, growing easily a 20% growth rate. Kagger at this time. And right now it's currently about a $1.5 billion market. It should double in the next two, three years and then even double again. So today or last year, about 100,000 patients were treated with Watchman or Amulet. And in 2030, there should be about 400,000 patients treated. So a significant amount of growth in the space. The clear market leader is Watchman from Boston Scientific. Safety profile is extremely good on that product. And what we expect, but there's opportunities for improvement. Right now, the option for watchmen is that you've got six different

sizes to choose from. And there's a lot of consternation of which size to choose. So a great deal of imaging, they tend to use, or over 90% of the cases they use, what's called transosophageo echo, which is the gold standard for imaging for this procedure. But in doing so, because it's going down the esophagus large to image the patients under general anesthesia. So what we've proposed because we're practically a one size fits all. We have only two sizes and if it's going to be a big one, you know, you don't need a lot of imaging to decide that. So because that simplicity of just choosing the right size, greatly reduces that imaging burden, you can actually move to what's called intracardiac echo. So it's still ultrasound, but you're going through the groin, through the

and into the left echrome with an echo device versus through the esophagus. That allows not only the no need for the transesophageo echo, but therefore the no need for the anesthesia. And because the implanter is now doing the imaging, the local anesthesia, you don't need an anesthesiologist. You've gone from three physicians to one. Now, you can do a watchman or amulet today under what they call ice, the intracurdiac echo and conscious sedation. However, it's a lot more difficult because the imaging burden and the choosing of size. As well as, at the end of the procedure, to confirm seal. Our device, because of the way it's constructed, you can use angiography to confirm seal. You don't have to really rely again on that echo image to do so you don't need the gold

standard with T.E. or transosophageal echo. And so that again reduces the burden for imaging and therefore allows for the physician. One physician, general anesthesia is out, and the need for echocardiographer is not necessary either. So we believe that this growth that's going from 100,000 implants to 400,000 implants really cannot happen unless the labs become more efficient. And we think that our device, the design of the device and reduction and scalability of it for the lab enables that to happen. Yeah. That's a great review. And again, conformal medical, which is a great site, by the way. You can go to learn a little bit more about the class system and some of the differentiators that the James just referenced. On this program, James, we talk a lot about like these solving for

workflow, right, at the end-use level, because I'm sure this, you get this, all the time, probably from investors especially who's like, can you really take a certain amount of share from Watchman, their market leader, first to market, etc. And the reality is like most of us that are closer to the customer know that like some of these maybe seemingly simple or straightforward changes can mean all the difference in the world in terms of utilization at the hospital level. And it sounds like you guys are beyond some of the other benefits that you reference. Like some of those workflow enhancements are really going to not only compel, compel users to use this type of technology, but it's going to ladder up to what sounds like some pretty significant

growth ahead. With Asset, give us a sense for where the company's at in terms of stage. We're recording this in Q4, 24, just for everyone's reference that are listening to this, maybe after the fact. Yeah, so we, about two years ago, we initiated our IDE trial. We did an early feasibility first man, and then submitted for IDE, got that approval. We started it right before I joined. So I joined September of 22, so a little over two years ago. And the trial had just initiated, maybe I had three or four sites up and running by then. And we've enrolled 400 patients so far. So we're about 25% through a 1,600 patient trial.

So it's a massive trial. Similar size was required for watchmen. Similar size was required for Amulet. And we hopefully and expect that anybody following us will have to do a similar size trial. Since the barrier we're having to overcome needs to be a level playing field for anyone else coming. we had initiated the trial, and we actually early on saw a safety signal with paracardiofusion, a fusion in the plurospice of flood,

which is a known adverse event for these procedures. And while we were still in the margin of error, if you will, we were just at the higher end of that margin. Over the course of the two years, we saw the number come down pretty precipitously, and so we equated it to learning curve. But then in April of this past year, we had two events. And the tyranny of all small numbers, two events raised the rate back up to a level,

the high end of the level, and we also lost a patient. This is an elective procedure. It's preventative medicine, so we really shouldn't be losing patients. We identified early on because we saw the signal, and we went through the litany of options as to what could be causing the higher rate of infusions, and we identified that the length of our entering barb was too long. And so, In the instances where we did lose the patient, the pulmonary artery was fairly adjacent to the appendage. And one of our anchors was exactly at the right spot where it could nick the artery. And unfortunately, the patient expired that evening of the procedure. So when we heard this, spoke to our founder, Aaron Kaplan, our CMO as well,

and basically made the decision that we would pause the trial, fix the issue with the bar. We also made some other iterations to the product. And so we're coming back out in short order here. Hopefully, by the time people are hearing this recording, we're back into the clinic and restarted the trial in early January. And we just, what I will say is that there was zero pushback on pausing the trial because not only did we have the safety signal, but we also had the severity signal of losing a patient.

And we just felt like the right thing to do was we know what the issue is. We know how to fix it. We're going to fix it. And we actually started another trial in Europe once we were confident with the fix called the Gloss trial. And we've already done about a dozen patients in that trial. We're going to do another dozen more over the next course of this next week. And so we're really confident based on all the work we did that we've mitigated the issue going forward. So it's one of those where people say that must have been a tough decision making.

The reality is easy decision. The fallout of the decision is what's hard to manage. but we have in the team really responded extremely well. And to get back into the clinic within basically eight months of pausing a trial, I think it's really impressive for this team to have accomplished. Got it. Yeah. Yeah. I like how you put it, right? Like fairly straightforward decision, right? But just dealing with sort of the ramifications of that decision.

Not so easy or not so straightforward. No, but thanks for that, reviews. By the time this comes out late, late Q4, 24 and into early 25, your beat sounds, you know, flip to the gas pedal, right, in terms of not only your current IDE trial here, the U.S., but also that the gloss trial in Europe as well. Yeah, and I spoke to all 50. We'd had 50 sites opened up when we paused, and I spoke to every one of those PIs, explained to them the rationale, the reasoning. And to a person, they were all real impressed the fact that we did this. I think we

get some credibility. A few or more than a few of them commented, not every company would do this, but nonetheless, I had zero pushback from our board. And what I will say is that not a single site that we were either initiated already or were about to initiate, wanted to pull out of the trial, which is also unheard of. But I think the fact that we had identified this issue, we had gone through it, we did a number of in vitro test and modeling to make sure we were creating an unattended consequence. We did animal, we could ever.

And so now we're back in the clinic. Like I said, we got about a dozen uses so far. We have another dozen or probably 30 by the end of the year in this European trial. Got it. Cool. Let's actually transition to, I want to spend the next maybe 20, 20, 30 minutes or so talking about some of these key functions that every startup is going to have to navigate at some point. They're going to experience some type of success. And one of them is critical. And I can formally take on some pretty, pretty intense club of work. And the fact that you even just mentioned, I'm not sure. Hopefully everyone caught this. But like going through decision like this, you personally talk to every PI, right? Every side investigator. There's over a lot of it. It's not like there was like five to ten sites. There's 50, 50 plus sides. You talked to every one of them. That seems out to me. It's just the level of like involvement and commitment that I think probably my hunch is probably why you had such good response from your sites as they know there's a certain amount of trust right that's earned to that type of approach. And maybe I guess I'd love to get your take on and especially considering you've got so many different experiences about both strategics and startups in different stages really. Like when you think about like building out a clinical roadmap taking on extensive clinical work for other founders or CEOs for that matter that are they're staring at down this level of clinical work, are there a few things that you would advise them

or like they really need to get right before going too far down the path? Yeah, it's an interesting question to be asked, particularly of me, because if you look at my background, every role I've ever had was commercial. I've been in the commercial side of the business, even my general management roles at Boston Scientific's. We're running a commercial organization. We had multiple functions overseas, but it was really, a commercial side of the business. All my CEO roles, we were either on the precipice or already commercial. And this was one where even I had to take the question to myself, not to mention the conformal board asking me, you were good three or four years away from being commercial.

Would we hire a commercial CEO? And my thought was, look, you're really going out. The big long call in the tent, if you will, to getting a product to market is getting the clinical data and basically getting enrollment. What takes the longest after you've contracted with the sites and the centers and gotten the budgets approved and everything else and then you've contracted? That takes a while. But then it's all about enrollment and how quickly can you enroll the trial? And, you know, everyone has the forecast, which I can tell you as soon as that forecast

is written, it's 100% wrong. It's the one definitive thing I can tell you about a fork. But what you're doing is convincing a physician to use your product. And probably even more of a trick is you're convincing that physician or helping that physician educate a patient in order to get their head around the fact that they're going to consent and be randomized to either your product or washman and they're not going to know going in which one they're going to get. What I will say is pretty interesting. The way we've trained our dogs is to take each product. Ours is much like a little marshmallow. It's a cute little device called the fingers into the heart.

And a lot of physicians, a lot of patients, or physicians will tell us that when they show the patient both devices, They'll say, oh, yeah, I want this one. This squishy, I heard it called. That's really the other layer to the idea of a commercial CEO coming in and was driving enrollment. But then the other layer is you've got a physician and their research team educated and convinced on how to get a patient to consent to a randomized trial. It's a lot of commitment. And there's certainly some upside for the patient because I forget which theory it is, but knowing that they're being watched means that. that they're doing a better job. I think it's hard for a physician to tell a patient because I'm being watched. I do better medicine, but the reality is that there is a known and proven benefit of being in a clinical trial.

Right. Is that you get that much more attention as a patient. Yeah, it's such an interesting. I didn't expect you to go there with your response, but that's such an interesting point because I had Tim Rosa on the program recently. He's running Somni sleep. He was the former chief medical officer at FitBin and led that company through the acquisition to Google.

And he grew up on the brand side of a lot of businesses building a brand. And he, like, so he's clearly a strong believer of trying to build a brand even at the earliest stages. And I think your point around, like, every sort of thing is every aspect of a business usually involves some sort of sales or some sort of convincing. And one of the key hurdles to get through it, any Med-Pek startup is a clinical stage, right? And the faster you can do it, the better. And how do you accelerate that, right? It's usually convincing and brand-building and getting people excited about your technology and enrolling patients. And I think it seems to be a lot of the best. And it seems

like that's often missed. Like, how did you overcome that with whether it was, when you were interviewing for the role at conformal or just like helping maybe some more conservative med tech thinkers get on board with, look, this is, clinical stuff is a lot of, there's a lot commercial aspects of the court. Yeah, I think I did too good of a job convincing because every time Boston Scientific comes out about, they came out with a new iteration of their product. And therefore, they, and then they put it in in the hands of their organization, which is probably about a 600 person, commercial and clinical support team. They have more people in Atlanta than we have in our company. But the reality is, I can only focus on the 100 sites where we're doing and helping them

get a patient convinced to enter into a trial. Yeah, that's so funny that like the comment from like your board or other investors are like, we want to be seen more. What's like part of being seen is the commercial exercise, right? Like in trying to drive awareness and that that's good. And there are laws against doing that for us. We're not available in the market. Yeah, I guess the main point I think that's work like re-emphasizing is, and I have a conversation with other friends and the business about this too, is oftentimes so many startups are so heavily focused on clinical work that their entire company, like post-approval or clearance, looks like a pure play clinical organization. And they're not prepared to properly commercialize. It's a huge shift. And we should all be doing ourselves a little bit of a favor and start to build out that commercial kind of function earlier.

So it's not such a hard transition upon launch. And I think there's a lot of companies that, and right place clinical. You need to have the right clinical folks in place, but if you're not thinking about how this looks like when you begin to commercialize, I think that might be some tough waters to row. Yeah, and these folks generally come out of technical or clinical backgrounds, and selling and messaging is not in their DNA. It's just a whole different phenotype of an individual. One thing that we've done during this pause is those two have dragged me or Aaron or or PMO or another executive to be face to face with all these PI. So we've gone out. I probably do a visit, two visits a week so that when we do hit the go button again, what I can say again,

every one of these in-person meetings, every physician has said, yeah, I'm there. I'm with you. I can't wait to get restarted. Yeah, yeah, that's cool. One of my friends who runs a startup in a different, it's not MedTAC. It's in more pure play tacky. He likes to use the analogy of a piracy. In our scenario, Every case that gets done, it's like another flag that you're going to fly in your pirate ship is you try to take on the behemus in our space. So I think it's a pretty good analogy. Let's shift and talk about fundraising, right? I think you raised a pretty significantly size Series D.

I think my notes shows upwards of $35 million oversubscribes. Yeah, Series D last year, which was a terrible fundraising environment, right? Do you're able to get that done, which probably is a signal to what you're building at conformal. But when you think about fundraising, whether it's early stage or even later stage fundraising, you've got a fair amount of experience. Are there a couple really things that you've learned over the years that it's like you wish you maybe knew 10 years ago? Hey there, it's Scott, and thanks for listening in so far.

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