Medsider: Learn from Medtech and Healthtech Founders and CEOs - Turning Your End Users Into Key Investors: Interview with Lazurite CEO and Co-founder Eugene Malinskiy

Episode Date: September 7, 2022

In this episode of Medsider Radio, we sat down with Eugene Malinskiy, CEO and Co-founder of Lazurite.Eugene is a serial entrepreneur with expertise in the IT and medical fields. He also has hands-on experience as a medic and has worked in operating rooms throughout the country. He founded Lazurite, an innovative healthcare company focused on cutting-edge surgical and lighting technologies, in 2015. That same year, Eugene was selected as one of Forbes 30 Under 30 recipients in the manufacturing sector.In this discussion, Eugene shares how planning out every step of ArthroFree’s regulatory strategy helped streamline the FDA clearance process, the importance of preparing for failure and being ready to solve problems, and why entrepreneurs should seek out input from investors at every step of the process. Before we jump into the conversation, I wanted to mention a few things:If you’re into learning from proven medtech and healthtech leaders, and want to know when new content and interviews go live, head over to Medsider.com and sign up for our free newsletter. You’ll get access to gated articles, and lots of other interesting healthcare content.Second, if you want even more inside info from proven experts, think about a Medsider premium membership. We talk to experienced healthcare leaders about the nuts and bolts of running a business and bringing products to market.This is your place for valuable knowledge on specific topics like seed funding, prototyping, insurance reimbursement, and positioning a medtech startup for an exit.In addition to the entire back catalog of Medsider interviews over the past decade, premium members get a copy of every volume of Medsider Mentors sent to their door at no additional cost. If you’re interested, go to medsider.com/subscribe to learn more.Lastly, here's the link to the full interview with Eugene if you'd rather read it instead.

The sooner you can get your IP filings in, the sooner you can get your grants, the more strong your portfolio is. Good money management, always important. There's all sorts of trips and all sorts of stuff that you can do. But my takeaway is keep up the good communication. Have somebody on the team, probably the CEO or the founder, be the kind of it to the investors in a way that is very personal. and that they feel like they're providing help and input because they are. Welcome to MedSider Radio, where you can learn from proven med tech and healthcare thought leaders through uncut and unedited interviews. Now, here's your host, Scott Nelson.

Hey, everyone, it's Scott. In this episode, I sat down with Eugene Malinsky, who is the CEO and co-founder of Lazarite. He's a serial entrepreneur with expertise in the internet and medical technology fields and also has hands-on experience as a medic and has worked in operating rooms throughout the country. He founded Laz right, a healthcare innovations company focused on cutting-edge surgical and lighting technologies in 2015. That same year, Eugene was selected as one of Forbes 30 under 30 recipients in the manufacturing sector. Here are few of the key learnings that we discussed in this conversation with Eugene. First, put together a regulatory and development roadmap from the start and hire a consultant to help you refine the

Mapping out your path beforehand will pay off when it's time to submit your application to FDA. Second, Eugene sought input from surgeons throughout every step of the arthro-free development process. Those surgeons then turned into investors who drew in more investors. Maintain a strong line of communication with your financial partners and garner feedback from them through every stage of development. Let them be a part of the process. Third, be prepared for things to go south, whether it's a technology failure or a different issue within your company. Be aware of the problems and be ready to solve them. Don't brush them under a rug and kick the proverbial can down the road.

Okay, so before we jump into the discussion, I want to mention a few things. First, when you think of the word branding, what comes to mind? A nice logo, some pretty colors, something along those lines, right? Well, that's what I used to think as well. In fact, most medical device and health technology startups deprioritize branding because they believe it truly doesn't matter. But here's why they're wrong. Regardless of who you're pitching, a VC, a manufacturing partner, potential employees, maybe even customers,

you need to step inside their shoes and ask one simple question. How does my company or project make them feel? You see, most people in the world of healthcare and life sciences have a completely wrong perception of brand and branding. But a buddy of mine, Howie Chan, has spent close to a decade using the power of brand strategy to launch some of the most innovative products, services, and companies that range from startups to Fortune 500 enterprises. Howie recently started as brand design microagency, Healthy Brand Consulting.

Howie and his network of partners grew up in the world of healthcare and can help with research, creative, strategy, and experience, all without the bulkiness of traditional agencies. Check out Howie's philosophy and his services

at MedsiderRadio.com forward slash healthy brands. And for MedSider listeners, I was able to twist Howie's arm into giving away a couple three 60-minute consoles. His schedule was pretty full, so Howie was only able to make this offer

for the first three people that direct message him on LinkedIn. So head on over to MedsiderRadio.com forward slash healthy brands, send Howie note and mention this offer. Don't make the same branding mistake that most healthcare startups make. Give yourself an edge by partnering with Howie's team at Medsiderradio.com forward slash healthy brands. Okay, second, if you're into learning from proven med tech leaders and want to know when the new content and interviews go live, head over to Medsider.com and sign up for our free newsletter. You'll get access to gated articles and lots of other interesting healthcare content.

If you want even more inside info from MedTech experts, think about a MedSider premium membership. We talked to experienced healthcare leaders about the nuts and bolts of running a business and bringing products to market. This is your place for valuable knowledge on specific topics like seed funding, prototyping, insurance reimbursement, and positioning a MedTech startup for an exit. In addition to the entire back catalog of MedSider interviews over the past decade, premium members get exclusive Ask Me Anything interviews and masterclasses with some of the world's most successful. successful MedTech founders and executives. Since making the premium memberships available, I've been pleasantly surprised at how many people have signed up. So if you're interested, go to medsider.com to learn more. All right, without further ado, let's get to the interview. Eugene, welcome to Medsider. Appreciate you coming on. Scott, thank you for having me.

I'm very glad and happy to be here. Yeah, definitely looking forward to the conversation. So let's start out with the basics. And hopefully we'll spend maybe maybe five or ten minutes, learning a little bit more about your background. So let's start there. What were you kind of doing leading up to founding Lazarite? Yeah, good place to start. So I'm a quote-unquote serial entrepreneur. This is my, I guess, fifth company, depending on how you count. But I've actually been doing a lot of sort of company formation, leadership. I started in the IT sector. Actually did up pretty well in that sector for a number of years before I started switching over to medical sector. But there's a little story there, which is I've always sort of, I've been good with my hands. I actually have a

chem degree, an engineering degree, but I've also always had this passion for medicine. So I've always had this sort of, what's called dual track life, where I've been able to use a lot of my skills on IT, on engineering, but I've also been a medic. I spent a lot of time in hospitals, and I have this big passion for medicine. But it was really actually, those lives didn't really coexist until I actually went through and actually got a biomedical engineering degree, so I'd be a me, and I was actually able to combine sort of both the things I was good at, and my passion into sort of one one path, and I've been sort of growing since then. So my prior company, right after pretty much right after I got my degree or my master's degree,

in BME, I started another company, Dragon ID. Dragon ID was a medical device consultancy, and we spent a lot of time in cardiac, ortho, neuro, and wearables. And we sort of did some really cool projects. We had both local recognition as well as national recognition. And we got to work with some really amazing people because we would work all the way from your sort of surgeon who had an idea on a napkin and is sort of curious what the processes to bring that idea to life all the way to working with large companies and working with some of their products and maybe helping them on their way. But it was a consultancy, right? So we did a sort of a lot of work for a lot of different people. But then of the day,

none of it was sort of ours. So I was always, I can't say always, by the last couple of years of that I was a little bit on the lookout for where could I go next? How could I sort of combine all my relationships that I had built up, all sort of the skills, the team, and sort of the expertise? And was there sort of a niche where it could be applied to in order to do our own thing? And as these things happened, right, this wasn't planned, but there's a there's a story that I tell around sort of what actually led to the formation of what is now Lazarite and what is now our first product that we're just about to go to the market with literally

weeks away from from introducing to the market and that that's Arthur free. So the story is I was, so this is Dragon ID. I was on a contract. I was in the operating room. Happened to be an orthopedic operating room, minimally invasive surgery, so arthroscopy. There was a patient on the table for getting ready for their surgery.

The patient was already intubated under anesthesia, fully draped, ready to go. And then a PA walked by the bed, and tripped and fell on the cables that were actually going from the bed that were there for the surgery. And that's sort of like, right, like everything sort of happened in slow motion, as everybody always says, right? Like the PA fell, hurt herself actually pretty badly from what I understand. The surgery had to be scrubbed. It was considered never event.

You're never supposed to see these things happen. Unfortunately, they happen a lot or a lot more than we would want. But I'm sort of standing there, obviously after making sure that we sort of took care of the PA, that we took the patient back and all that. I'm sort of standing there and I'm looking around and I'm just going on my head. This is crazy, right? like the years whatever 2014, 2015, why are there all of these cables and wires to the surgical tower that shouldn't be there, right? Like wireless surgery should be possible, right?

We have cell phones. You have all of these things. And now, right, in 2022, that's even more true. But even back then, I was like, this is crazy. And so that became the impetus of what? became Lazarite, what became Arthur Free. Got it. That's super interesting story. So saw a problem like in real life, which led to like spark, spark the idea for for Arthrofree. With that said, why don't you tell us a little bit more about the product and we'll kind of get into kind of a lot of the lessons you've learned, you know, throughout your, your MetTech career. But tell us a little bit more about Arthro Free,

kind of what it is and then where the company's at. You hinted at the fact that you're close to commercialization, but give us a, give us an overview of you if you can. Yeah, yeah, it happens to yourself. So this actually follows, taken directly from the story. So let's take this 10,000 foot view, right? Who in the audience, right? When you listen to this conversation, the question that I have to you, the audience is, raise your hand if you've ever had any minimum invasive surgery or you know anybody in your

family or your friend group who has, virtually I'm expecting everybody is going to raise their hand or say yes, of course. When I say minimally invasive, I mean orthopedic, like arthroscopy, lap, like a lap coli, endoscopy, E&T, GYN. These are all minimally invasive surgeries. And there's sort of a common through line to all of these surgeries, which is that if you want to do a minimum medical surgery, right, then more and more surgeries are becoming minimally invasive. What do you fundamentally need, right? The surgeon makes a tiny incision. That's what makes it to be invasive surgery.

But then you need a light into the body and you need video out of the body, right? Without those things, I don't care what the surgery is or what the tools are being used or what the organ or joint is. You can't do that surgery. So right now, Currently, besides Arthur, and I'll get to it in a second, besides Arthur free, there are no FDA cleared wireless surgical devices that can be used for surgery, for minimal invasive surgery. There's literally multiple cables running out of the surgeon's hand holding this camera, right,

that takes the video from inside the body. there's a light to that camera that provides that light into the body, multiple cables that are heavy, that are bulky, that are dirty, and go into this surgical tower that's across on the opposite side of the patient. And that's been the same way. It's been for the last 50 years. Right. So you think about everybody, like everybody thinks like the operating room is this sort of cutting-edge experience and all that. Unfortunately, the reality is, while there has been a lot of innovation, so think like robotics, there's also a tremendous amount of stuff that's 20, 30, 40, 50 years

old, nobody's innovated on it. And doctors and nurses and PAs and the staff, they just make do. So this is one of those things. So what is Arthur Free? Arthur Free is the world's first FDA now. FDA cleared, wireless surgical camera. We got our FDA clearance in March of this year. For anybody here who's listening, who's a little bit of a regulatory wonk, we got our clearance in three months. For those who are not, that is very fast. And we are very sort of thankful for the

process that we went through. We had a really nice package that we put together. So we've been very happy with the FDA process. So the Arthur free system is a system that drops in into a current operating room. And I mean that virtually, literally, I can walk in and have the system up and running in about 10 to 15 minutes. And it eliminates the cables that the surgeon currently has to deal with and it provides a much better overall experience for everybody. So I can connect our camera to existing pieces of equipment that are ready in the operative room and the surgeon and the staff don't have to spend hours relearning how to use a system because it is meant and designed and we have a lot of human factors data to show that this is the case,

that it is virtually a drop-in incredibly low burden of, sort of mental burden for the staff. So we can come into an operating room, set up our system in about 15 minutes, teaching a surgeon and the team takes about five to 10 minutes. It really is very, very easy. And then they can go ahead and start doing, surgery like they do right now, but now without those cables with a lot more freedom of motion,

with a lot more accessibility where they didn't have it before, a system that provides them all the functions that they expect without the drawbacks of the dirty cables, without the drawbacks of the weight from those cables, and a number of sort of other value propositions that we for different audiences, but in the center of it all, right, is the surgeon and their team and their ability to perform surgery. And I am literally making their life easier. Got it. That's super helpful. Thanks for the overview. And for anyone listening that wants to learn a little bit more about what Eugene is talking about, the art for free system. Their website's really, you've got a really nice website. I'm not sure who designed it, but it's nice to be done.

And that's, that's, that's lazaret.com. It's L-A-Z-U-R-I-T-E dot co, I should say. Laz right.com. Need to get that.com. Lazorite.com. So, yeah, check out the websites. It's super cool. But Eugene, you mentioned something around your regulatory experience with FDA.

I mean, that is incredibly fast. I think most of the, the audience probably does understand, you know, 90-day turnaround is pretty, is pretty quick. When you think about that process, what are, what were some of the keys to success with your team. Yeah. No, thank you for that question. Let me sort of explain it like this. Having seen at my private company, Dragon ID, processes from all the way from small companies

to large companies, I had a sense of what worked and what doesn't work. And so one of the first things that I did, right, so I formed the conference. company in 2015, I think on day four or day two after I formed the company, I called a regulatory consulting firm, micro, in case anybody is curious, but I called micro and I said, look, here's what I want to do. I have this idea for a wireless camera system. We are going to have a new, brand new light source on it, and I'll get to that, what that means. in a minute. But we have a brand new light source on it. We have some really advanced wireless components that we're expecting. And here is the path that I think it will need to take

to get to the FDA. So I mapped first myself, I mapped our 510K path, chose our predicates, chose all the testing that I thought we'd need to have done, gave it to Micra. Micra looked at it, sort of channeled their own expertise, probably talked to a few of the folks that they know at the FDA, came back with some minor modifications to my plan. And we followed that plan throughout our entire development life cycle. So when it was time to, in essence, submit, we had a whole package already put together, and obviously micro-helped us and all that stuff, but we had a whole package put together because we were following the plan that was originally created ahead of time. So that's one. And then number two thing that I did at the very beginning is one of my first

hires, an expensive hire sort of, because, right, venture back and all that, like it's an expensive hire, but it was a critical hire is one of my first hires, was our director of regulatory and compliance. And he's been with us almost since the start. And why is that important? Because without that person, his name is Patrick, without Patrick being in the mixed entire time, there's no guarantee that we would have stayed on course,

on track to go through all the paperwork and all the processes that we would need to in order to be successful. So it was so, How did we get through so quickly in three months? We had a plan. We followed the plan. We had a person who was in charge of leading the plan.

And then when we did put a package together for the FDA, it was very comprehensive. I got it. That's super helpful. So laying that foundation from the outset of the project, right, was crucial to what I imagine, not just, you know, a fast turn. around with FDA, but probably just to your point earlier, being able to follow that plan led to a lot of efficiencies along the way. Yes, absolutely. Got it. And then you asked earlier, and I just want to make sure I get this, you asked earlier where we were as a company.

So we right now, as of the recording, are weeks away from shipping products. So we got our FDA clearance in March. That was actually a little faster than we expected. So we have hardly ever hear that, which hardly ever hear that. Right. Yeah. Yeah, yeah. That was that. So little, I mean, we were very grateful and thankful for it.

So we've been aggressively hiring. We have been working through the manufacturing supply chain. And potentially by the time folks hear this, we will either have already just had our first man or will just have. have it in very shortly. I cannot mention who that is yet, but it is coming soon. But we are doing a full product launch. So no limited launch of React.

We've been hiring a very nice, sophisticated sales team and getting distributors on board and all that stuff. So we are doing a full market launch. We're starting in the orthopedic sector. So arthroscopies. But, and this is the key, our FDA clearance. covered, and I alluded to this earlier, RFD clearance covered not just orthopedics, but also in virtually any minimum invasive surgery as long as you can use our camera. So up endo, GYN, E&T, all of those are markets that we would not be off-label use.

Our IFU would allow us to use our camera in those procedures, in those surgeries, for both diagnostic as well as surgical uses, which we are very grateful for. And next year, we're going to start addressing some of those, Mark. That's cool. And I would imagine that was strategic, right? Just a little bit. Just a little bit. Right, right. That's good stuff. Well, congrats on all of your success so far, as well as the kind of the impending launch. And we're just for listening, we're recording this in early Q3 of 2022. So if you're listening to it a little bit later after the fact, you can kind of get a sense for the timeline. Let's, I want to go back in time a little bit and talk about the very early days at Athrofree. And this kind of speaks probably to your

experience at Dragon ID. When you think about that ideation process and that early iteration process around alpha and leading into the beta versions of your device, where do you think most startups make them the biggest mistakes? So I'll say we had like four pre-alphas before we even got to an alpha. So I mean, I can tell you what I can tell you where we made a lot of our mistakes. And based on sort of prehistory, I can say where other companies made it, and we made the same mistakes. The number one mistake that everybody makes ourselves included is,

everything always takes twice as much time and twice as much money. And then it's probably double that again. So if you think it's going to take twice long and twice as much money, double that. Just to be close to what it really will take. So we were very optimistic. It took longer than we expected. It was harder than we expected. even though the technology for like our pre-alphas and what became our alphas and betas,

the technology on paper was possible. And I was sort of pulling from automotive sectors, military sectors, a lot of non-medical locations. I was pulling a lot of things to put Arthur Free together. the reality was that getting all those components to play nicely together and not in isolation was very difficult. And I think that's actually the mistake that a lot, if not most, if not even all startups make is unless you have something very simple and most startups don't, right? Because now we're sort of in this advanced stage that things are getting. really interesting out there in the MetTuck world, everybody sort of builds on modules, right?

I have this module, I have this module, and then you put them together. And that's where the difficulties happen is how hard is it to put things together. And I'll actually give examples using ourselves. So when we started, I sort of had a pretty good idea that wireless, that wireless was going to be a problem. And not just in the sense that, look, I need to move a lot of data, which I do. It needs to never fail, which it does. But also it needs to be able to go to the FDA.

And the FDA has some very strict considerations around wireless, because, right, if everybody thinks about their home route or their home internet, or even your corporate internet, right? If it goes down, you can't work. And how often does that happen? How often does your Wi-Fi at home break? It's not infrequent. Or even your cell phone doesn't always work.

So if we're doing nominally critical patient data video transport, it can never break. So how do you build that? So I sort of based on a prior life, I found a company. that provided a module. That was actually more on the military side of things, and we went with a protocol called UWB, ultra wideband. It's an encrypted, secure protocol, nominally very fast. Great.

I thought, okay, it took me some months of testing. I was like, look, we have this module. This is wonderful. We know how to solve wireless. Okay, so let's table that. then I was like, okay, I now, so now this is like sort of moving a few years ahead, like alpha and beta, I have now this entire system put together. I drop in this wireless module and what happens is that I have an incredible amount of lag or latency.

In essence, if you're a surgeon doing surgery, you really cannot have any lag between what you perceive as your hand movement and what you see on the screen. Right. As a reminder to the audience, right, it's a minimally basis of surgery. The surgeon's not looking down at the patient. There is no sight, right? It's a micro incision. What is a surgeon looking at?

They're looking at a screen and they're working with their hands. They're moving the camera. They're moving the tools with their other hand. And so if there's any separation between their hand movement and their expectation of what they see on the screen, what is called lag or latency, they will just drop what they're doing and say, this is unusable. I cannot be usable. 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 Cala 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

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