Medsider: Learn from Medtech and Healthtech Founders and CEOs - When You Should Give a Struggling Medtech Company a Second Chance: Interview With IONIQ CEO Jared Bauer

Episode Date: October 19, 2021

In this episode of Medsider Radio, we caught up with IONIQ Sciences CEO Jared Bauer, who has spent his career turning around struggling medtech companies. He acquired BurnFree Products in 2012, selling it four years later. In 2014, he became CEO of the mobile diagnostics system ApolloDx. Shortly after, he became CEO of the spin-off company Cibus Biotechnologies, which makes a handheld diagnostic system to test for infectious diseases. In this conversation, Jared explains the two key factors he looks at when determining whether a medical device company is worth trying to turn around, why finding investors who really care about your mission is a strategic benefit, and why he hopes that IONIQ’s devices will one day have a place in your medicine cabinet.  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 exclusive Ask Me Anything interviews and masterclasses with some of the world’s most successful medtech founders and executives. Since making the premium memberships available, I’ve been pleasantly surprised at how many people have signed up. If you’re interested, go to medsider.com/subscribe to learn more.Lastly, here's the link to the full interview with Jared if you'd rather read it instead.

And what I see in our industry a lot is people making incremental improvements to existing technologies. What I'm looking for in the companies I'm turning around or companies I get involved with is can we make a leap? Is there something where we can leap forward? We can really stand out. So that leap can be that I have a new, faster, better way of doing this that is maybe five to ten years ahead of where everyone else is. terms of development. That could be. Or it could be that that leap is related more to there's a need in the marketplace and there isn't yet a product that fills that need. Welcome to Medsider Radio, where you can learn from proven med tech and healthcare thought leaders through uncut and unedited

interviews. Now here's your host, Scott Nelson. Hey everyone, it's Scott. In this episode of Medsider Radio, we're chatting with Jared Bauer, who's the CEO of IOND. sciences, makers of a device that uses bioimpedance to detect cancer as early as the first or second stage. In this interview, Jared explains the two key factors he looks at when determining whether a medical device company is worth trying to turn around, why finding investors who really care about your mission is a strategic benefit, and why Jared believes direct-to-consumer is the future of healthcare.

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You'll get access to gated articles and lots of other interesting healthcare content. If you want even more inside info from med tech 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 med tech 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. Jared, welcome to MedSider Radio. Thanks. It's great to be here. Yeah, now looking forward to the conversation. So I provided kind of a high level sort of intro, right, regarding your background at the outset of this conversation.

But let's start there. If you can help set the stage for the rest of the discussion, just provide maybe some additional context regarding your time leading up to a leading Ionic. Yeah, I've been in the industry for about 10 years. Got into the industry right after completing my MBA. And I started out on the device side with a company called Xero Medical. We took a product, burn free, called burn free. And we took that product international globally, ultimately ending as the second largest burn treatment company on earth

and selling then to number one. Burn treatment within that category, I should be really clear with. So very much a niche market, but a great product is just the same. I moved into diagnostics a couple of years later and have spent the remainder years of my career in diagnostics, something I happen to be really passionate about. I'm also the CEO of Sebas Biotechnology, which is working on a handheld portable diagnostic system to be used for infectious disease.

But Ionic then, which I got involved with in 2018, is working on early cancer detection, super cool technology. Got it. Yeah. I think we'll get into, we'll learn a little bit more about the tech and kind of where you guys are headed and your general thoughts around the future of, you know, consumer-driven health care specifically as it relates to diagnostics. But before we go too deep on that note, so Jared, it seems like, you know, in looking at kind of your, you know, kind of your turnarounds,

I guess, for lack of a better description, which I think we're going to get to it. We're going to discuss it a little bit later here in this conversation. But there was some overlap between what you were doing at Xero and then your time at Apollo and then that kind of that spin out with Sebus. Like were you, were these projects that you were working on simultaneously or just maybe can you add some color around that? So absolutely projects that I was working on simultaneously. Xero went from 2012 to the exit in 2016. We founded Apollo in 2014 and then Cibus Biotechnologies in 2017. So there's been some overlap again, then ionic sciences being added in 2018. I took over there. So there's always been overlap between them. Generally, I'm with two

companies at a time working on advancing the science and the technology and taking the company or the product or the technology to a certain stage at which point historically I've then turned that over or sold it. Got it. Very good. And just one other follow-up question before we kind of get to the 2018 timeframe where you were considering moving on to Ionic. What does that look like? when you're, I mean, you're obviously raising capital and turning around some of these companies, do you just get, do you get buy-in from your investors to sort of work on projects simultaneously? Or is that just sort of like what you're kind of M.O. It's like you, like, sort of your team knows that you might be working on multiple projects

simultaneously. It's not going to be distracting to, you know, kind of your primary focus. So that's the agreement. And it's, it's actually in my contracts that I will be working on other project simultaneously. And believe it or not, I actually find that I'm able to operate more effectively and I'm able to lead the teams more effectively by doing that. I'm a heavy thinker. And the more I can transition between projects, actually, the clear I'm able to think. And I'm honestly believe the more value I'm adding to those companies. For example, without being specific, right now I'm with Cibis Biotechnology as an ionic sciences. And even just, just last week, I was in a meeting at Sivas Biotechnologies, and the next day I came over to

Ionic sciences and saw something a little bit differently based on my experience just on the other side of the building, we're in the same building, or in the same complex, rather. And we were immediately able to just apply some small changes that I think fundamentally are going to make ionic sciences a stronger and better company. I think that sometimes you get too much down into the whole. You're in it too far. And when you're in it too far and you're not able to break out and think about something, force yourself to think about something else, I don't think you always, at least for me, I don't think clearly in that. When I add another element where I'm being forced to go and address something else in a different application, I can come back and think more

clearly rather than just fill the intensity of a stress around the situation. I'm able to really strategically evaluate the situation. Got it. No, that's super helpful. I'm glad I'm glad you even mentioned that because, gosh, his name is escaping me. His last name is Bichera. I think his first name is John, but he's kind of a startup guy in Silicon Valley. And he wrote this piece, gosh, I think it's probably been a year ago now, where he kind of detailed out like the future of, the future of CEOs, where it's like there's this one project that they're working on, but it almost, it's synergistic because just like an architect may be working on different plans at the same time,

but one of them is taking up maybe, you know, three-fourths of his or her time. The same thing applies to, you know, startup leaders and that they may be focused on one thing, but they're also moving along other projects in parallel that may be synergistic or maybe kind of kind of completely separate things down the road. And anyway, it's a great piece. So and as I kind of studied your background a little bit, you know, leading up to this conversation, it kind of reminding me of that of that interview. And I wish, I wish more, maybe this is not the best way to describe it, but it seems like there's sometimes some unnecessary friction, right, from investors when there's startup leaders that are doing or kind of, you know, I guess working on multiple

things at the same time, they get unnecessarily concerned about that. Where in reality, it's probably, it probably behooves everyone involved, you know, as long as the CEO's the person that can make that work, you know? So I think that's right. If you ever find that send it to me. I'd love to see it. But ultimately, investors do from time to time, and I've had investors take a pass because they did not like this idea. And I've had investors come to me with concern or with frustration. Ultimately, though, I believe that investors, for the most part, have been in my camp once they have seen really the advantages of it or the outcome of it, rather. But I'll tell you that I see this even in just my own staff. So it's not just the CEO. And

I don't think we should look at it that way. I mean, I've found that my staff members are more effective when they transition between projects. If they have, if they leave something, go deep into something else. When they come back, they're seeing it with fresh eyes. And ultimately, the outcome is just, it's better. Yeah, no doubt. No, no, no, I 100% agree.

It's kind of, it reminds me of my time, like my time in an agency, although it was relatively brief, but your time spent in an agency is oftentimes, you can learn so much and that much faster, like the timelines expedited, just because, or amplified, I should say, because you're working on so many different projects at one time. And I think it makes a lot of sense within the confines of this discussion. But I'll pull up that article after the conversation, after this, podcast interview, you'll shoot your way. You'll probably, you'll probably enjoy it. But on that note, let's talk a little bit, let's kind of transition into Ionic and what you guys are doing and learn a little bit more thoughts about what the future holds there. But take us back to kind of

that 2018 time frame. What did you see in Ionic that compelled you to kind of dig a little bit deeper and consider taking this project on? So I do turnarounds, right? And Ionic happened to fall into that category. And I think we see this a lot in our industry and life sciences in general. And what happens is it takes different teams at different phases of the company. And so we use the term turnaround all the time because I think it's generally understood. I prefer to use different terms. You know, companies have phases and we're moving into the next phase. And the next phase takes a slightly different leadership team.

It takes a different skill set. And if you were in a massive company, right, they actually have different teams that pick projects up at different phases. and move it through the process. And that applies to small companies as well. And so that's ultimately where the company was in 2018. And without getting into some of the gory details, of course, there were some governance issues, as happens a lot again in our industry.

There were some issues around some things that had happened with some employees. And all of those, and I don't want to downgrade the seriousness of those issues because they're absolutely serious. and they were addressed first and foremost. But in our industry, everything comes down to technology. And is the technology, how valid is the technology, how novel is the technology, how strong is your IP around the technology? And then you have to ask the question of where is the technology today versus what is

the promise of the technology in the future, right? So that's ultimately the analysis that I do. And so I look at this. to put things into buckets. And what was interesting about ionic sciences, even in 2018, was you had this company that had been around for a number of years, had completed multiple clinical trials, had clinical data that supported some of the claims that they were making, but also had this opportunity for this great unknown in the future as how broadly applicable is the technology. And that was the question of the day, right?

And so in 18, we came, I came in and we made a number of immediate changes to the team, changed out governance, changed out the entirety of the board, brought in a brand new board, people with a lot of deep industry expertise, kept some of the core team, but then also began to add a stronger scientific element. And the reason for doing all of that, one, the board needed to be modified specifically to solve some of the governance issues of the day. We also, I believe really strongly in having a strong board. And so we have one.

We have a board that takes us to task on certain things, make sure that we have quality systems, regulatory, manufacturing, trials, all of those pieces in place. And specifically we were recruited for the Ionic board, key board members that brought those areas of expertise with them. And so as you go around the board room on any given day, I have board members speaking to different areas of issues. And that's been a great addition to our team.

Back to the company. And that ultimately, with that, we were able to solve the governance issues. We were able to raise the capital that we needed for the next phase. And we were able to move forward in advancing the science and technology. And so we begin to move forward. And I'll just, you know, the team that the company had, and this is not unique to Ionic. but it's hard always to find. And I'll give you an example here in just a second.

But there are on every team people who fundamentally care about the purpose of the company. And then there are people on the team that it's just a job. And deciphering that during a period of change is really difficult to do. So I'll give you an example. We had a guy who was, as I looked at the org chart for the company, Ionic sciences did not yet have a product ready to go to market, right? Pre-FDA, pre-submission, and we'll dive into more of the story of where we are today in a second. But that's where the company was in 18, was pre-all of those things.

And so I'm filtering through the team and I'm saying, who do I keep? Who do we remove? Because we've got to trim up some fat. We've got to cut costs. And ultimately, the goal was to begin to spend in a quarter what the company previous to me coming in a CEO spent in a month, right? So basically we've got to cut this thing by two thirds. And so you're trimming a lot of stuff. You're trimming a lot of that.

And the way you do that is almost by job title in the beginning. And then you kind of work your way back. So I go and I'm looking at this one afternoon and I've made the decision as to who I'm going to fire the next day. And I get a phone call from one of the individuals who's on my list. And he says, hey, can I meet with you? And I said, no, I don't really have time to meet. And he said, well, you know, can I, I'll come to you.

you. And I said, well, I have to eat dinner. So if you want to bring me dinner, you can come and we'll sit down and we can talk over dinner. And so he did. And he sat down and he was really bold. And he said, look, I think that I'm probably on the chopping block. And he was the chief marketing officer for a company with no product. Right. This is, there's, there's not a direct fit there. And I had to admit, yeah, no, you're here on the chopping block. And he said, well, if you'd give me a seat at the table, I promise you all perform. And we had this long conversation and I, and, um, short on details here, but he convinced me over this 45 minute period that he should be with this company, maybe forever. And so we kept him on and, you know, great, it has been super valuable to the team.

And I can, I can point specifically to certain times as with all startups, but especially startups going through transition. There are certain points in a timeline where you say the company is on the verge of failing. Do we make it through or not? Right. And as I look back and I look at some of those, he was critical to the success in some of those areas. So that's where it was in 2018. Those are the first steps that we took. We eliminated a lot. We trimmed up the company pretty substantially, brought in more of a scientific team, really to ask that question, what is the promise of this technology? First of all, can we get through the FDA with what we have? And second, what is the promise of the technology? Got it. And thanks for sharing that story, by the way.

That's phenomenal. And it's a great lead-in to kind of my next question around, you know, other key kind of recommendations, suggestions, et cetera, considering your experience kind of in successfully turning around, you know, companies. But before we get there, I am super interested to dive a little bit deeper, which we'll get to here in the back out of the conversation around what that technology of Ionic, the promise of that technology and what it holds, you know, what you see, because it sounds like that was pretty paramount kind of leading up to, you know, you taking over the helm back in 2018 is that, you know, what does this really look like, you know, three, four, five, maybe 10 years down the road.

So I'm excited to get into that. But on the topic of turnarounds, other than, you know, the story that you just shared, Is there anything else that comes to mind in terms of things that you've either learned or done that have been instrumental in kind of those successes that you've had? Yeah, I mean, there's a couple of elements that I think are just more general business thoughts applied to turnarounds that are critical. And I think they're critical in any business, but specifically as we look at turnarounds, you have to determine whether or not a company can't move. into that next phase or be saved or be turned around or however you want to phrase that, right? And it depends on the situation of the company. And generally in our space, you're going to have problems either in either you have issues with IP or you have issues with governance

or you have issues in regulatory or you have issues in your core science, right? That's kind of where you're going to find that. And then within that manufacturing distribution, there's a whole slew of kind of secondary issues that fall into the. that quality systems and the like. But those to me are the core. And so as we look at that, you say, I always ask these questions. Is the technology novel? Yes or no? And the reason I ask if it's novel is it's really difficult with a Me Too product that's already having issues or is having to go through a really difficult transition period to take that next step. That's issue number one. Issue number two is by asking, is it novel?

You're asking inadvertently, how well can we protect this, right? Something truly novel is also patentable, generally speaking. You're able to have some trade secrets, generally speaking. And those things are really protectionary to the entity itself. And so I always say, is it novel, right? The second thing I ask is, is there actually a market? Is anybody ever going to buy this? Is there a need? And what I see in our industry a lot is people making incremental improvements to existing technologies. What I'm looking for in the companies I'm turning

around or companies I get involved with is can we make a leap? Is there something where we can leap forward? We can really stand out. So that leap can be that I have a new, faster, better way of doing this that is maybe five to 10 years ahead of where everyone else is in terms of development. That could be. Or it could be that that leap is related more to there's a need in the marketplace and there isn't yet a product that fills that need. But all of those, you know, those things become really critical. And then, of course, you ask all of the general business questions, the governance, the financial, the manufacturing, the quality systems, in addition to, then, is there a regulatory pathway? And so those are all critical. So in the case of ionic sciences,

for example, the issues were governance related and then a lot of science questions, but not science questions in terms of, you know, is there validity to this, scientific questions in terms of how far can this thing go, which is a much better question to be asked, right? And that's ultimately where the where ionic was but i would just say to anybody who's looking at that make sure that the core elements are there right you can get through governance problems you probably get through some regulatory issues you can probably get through manufacturing quality issues right those things can be corrected for they can be moved but if it's not novel if you can't get IP around it if there's no market for this thing on the other side if you're just a me too product you know if you're only making

small incremental improvements rather than taking a leap forward, your likelihood of success pretty low. Got it. That's good stuff. So let's presume, you know, a scenario like Ionic, right? Novel, we'll get into this in more detail, but novel technology, large market, defensible, et cetera. What are the kind of the key things that enable success in raising capital, right?

Whether it's for a turnaround like Ionic or whether it's just for a new project altogether that needs a Series A or whatever round of financing. Because that's always like, I mean, it's, it's one of the biggest hurdles, right? And kind of this start a ecosystem is getting investors, you know, bought in and successfully raising around. So what's been, you know, any keys to your success over the past decade doing this? That's a big question. And 30 seconds or less, Jared, you need to answer. Yeah. That's a big question. And look, investors are all different. And, So bucketing investors into a investor category, what's the key to investors is an impossible question to answer because investors are all looking for something different.

I would just say that when you find that group of investors who fundamentally are aligned with the entity that you're representing, you've got a great chance of having an investor to work with. And so what I mean by that is at Ionic Sciences, we have a number of investors who have been personally impacted by cancer, generally lung cancer, but sometimes others who recognize that we need to look at this differently. We need to be really aggressive about detection. Early detection is everything. And so fundamentally, they're aligned with us. And so there's still to be all of the right business elements, the right valuation. We still have to go through the meetings,

the presentation, due diligence, and all of that work. And I'm not sure that that makes that work any easier by any means. But it does make it so that on the other side, you have an investor that you can pick up the phone to, you can call and you can say, here's where we're at, who is in this for more than just the payday on the other side and becomes much more of a partner than just an investor. And so we do our best to find investors that align with us. We do our best to communicate with them. we have a really solid communication strategy.

And subsequently, we've seen a lot of our investors over the last few years come to the table with additional investment as it was needed by the entity to support us rather than just to invest. And that's a really powerful place to be. And we've been really grateful for that. I've got a lot of investors, all different, you know, something different drives each of them. But when we're aligned, it's really powerful. Yeah, I had two different conversations recently, one with one with a founder of a pretty, pretty well-known consumer brand that's been pretty

successful in their recent raises. And then another kind of more, we'll just classify this as like, you know, a company that's operating in the med tech space literally echoed the same, the same exact sentiment that you did is like their biggest mistakes in raising. Because I asked, I asked them a similar type of question, right? It was kind of low. loaded like this, a bit difficult to, you know, definitively answer. But they did. They echoed the same thing. The biggest, instead they kind of framed it around like, what would they, what would they do differently? And they said the same thing. Like I would try, if it all possible, try to avoid investors that are just looking to make an investment and are not aligned with what we're

trying to do. So hearing you say the same thing, especially considering your, you know, your recent successes with these various, these various companies. I think is, she probably probably hits home for a lot of other, you know, med tech, biotech, health tech entrepreneurs that are kind of in the same boat. Well, I think it's hard, right, and I appreciate that. And I think a lot of people share that sentiment. I've also, though, been in the situation of a CEO of a young startup, not yet having found those who are aligned and desperate for capital to take those next steps, right? And so, I've been on both sides of this. And I guess the sentiment I share is, you know, to anyone who'd be who's listening, who is,

you know, looking is in the middle of a startup or is, wants to start something up or, you know, anything along those lines is spend your time not just talking to every person you meet. Spend your time filtering through and finding the investors and then meeting strategically with those that are aligned. And this is actually a lesson that I forgot a year ago and we went out to the marketplace. And we reached out to everybody under the sun. And it wasn't very strategic.

And it also wasn't very successful. We actually had to go back and reframe the raise and do it differently. We're going back out to the market with this particular, with a particular investment opportunity right now. And we're doing it very differently, very systematic, very strategically, finding those investors who are aligned with us, filtering them as best we can before we meet. And I'm confident the outcome is going to be substantially better for us.

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