Medsider: Learn from Medtech and Healthtech Founders and CEOs - Why Medtech Founders Should Not Over-Focus on Dilution: Interview with Renee Ryan, CEO of Cala Health

Episode Date: February 4, 2021

We recently caught up with Renee Ryan, the CEO of Cala Health, a bioelectronic medicine company that’s focused on wearable neuromodulation therapies that deliver individualized peripheral nerve stimulation. Renee has 25 years of experience in healthcare as an executive and investor, and in this episode, she shares her expertise with the Medsider community. Renee will discuss some common mistakes that medtech startups make, and talk about what she looks for as an investor in early-stage companies. She shares tips on navigating the regulatory waters and obtaining insurance coverage & reimbursement. Renee also gives us some key learnings from her time at Johnson & Johnson, and talks about what’s new at Cala Health, including their recent FDA breakthrough device designation. But first, here’s a bit more on Renee’s background:She has 25 years of experience in the healthcare space. Previously, Renee led the medical technology investments for Johnson & Johnson Innovation on the West Coast and Asia Pacific for 8 years. While at J&J, she made over 15 new investments, including the Series A for Cala Health. Prior to her time at J&J, she was a healthcare investment banker at RW Baird, Jefferies, and Goldman Sachs. Renee has a great eye for innovation, and we’re excited to welcome her to Medsider today. Before we jump into the conversation, I wanted to mention a few things:First, I’m trying something a little different with this next series of Medsider interviews, which will be focused entirely on stories from some of the most compelling medtech and healthtech startups across the globe. Here's the deal: I’ve asked these founders and CEOs to answer a series of questions, which I’ve converted to audio stories with the help of some professional voiceover artists. Think of these conversations almost like recorded fireside chats that you might find on Audible. They’re short and sweet, but packed with tons of great insights.I’ve never tried this before, so let me know what you think!Second, if you’re into learning from proven medtech and healthtech experts, and want to know when the next interview goes live, head over to Medsider.com. You can sign up for our totally free newsletter, which includes access to certain types of gated articles as well as regular content updates. Lastly, here's the link to the full interview if you'd rather read it instead.

No one ever died from dilution. I see so many founders overfocus on dilution and selling a certain percentage of their company. The focus should be on seeking value-ad investors where their input is worth way more than the dilution suffered in any given round of funding. 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. And on this episode of Medsider Radio, we caught up with Renee Ryan, the CEO of Cala Health, a bioelectric medicine company that's focused on wearable neuromodulation therapies that deliver

individualized peripheral nerve stimulation. Renee has 25 years of experience in healthcare as an executive and investor. And in this episode, she shares her expertise with the MedSider community. Renee will discuss some common mistakes that MedTech startups often make and talk about what she looks for as an investor in early stage companies. She shares tips on navigating regulatory waters and obtaining insurance coverage and reimbursement. Renee also gives some key learnings from her time at J&J and talks about what's new at Cala Health, including their recent FDA breakthrough device designation.

But first, here's a bit more on Renee's background. As I mentioned, she's got over 25 years of experience in the healthcare space. Before Cala, Renee led the medical technology investments for J&J innovation on the West Coast and Asia Pacific for eight years. While at Johnson & Johnson, she made over 15 months. new investments, including the Series A for Cala Health. Prior to her time at Jane J, J, she was a healthcare investment banker at R.W. Baird, Jeffries, and Goldman Sachs.

Renee has a great eye for innovation, and we're excited to welcome her to Medsider today. Okay, so before we jump into the discussion, I wanted to mention a few things. First, I'm trying something a little different with this next series of Medsider interviews, which will be focused entirely on stories from some of the most compelling med tech and health tech startups

across the globe. So here's what's different. I've asked these founders and CEOs to answer a series of questions, which I've converted to audio stories with the help of some professional voiceover artists. Think of these conversations almost like recorded fireside chats that you might find on Audible. They're short and sweet, but packed with a ton of great insights. I've never tried this before, so I'm really curious what you think.

Leave a comment as a podcast review, or hit me up via email by visiting Medsider.com. And if you end up leaving that review, just make sure it's five stars. Wink, wink, if you know what I mean. Okay, second, if you're into learning from proven medtech and health tech experts and want to know when the next interview goes live, head over to medsider.com. You can sign up for our totally free newsletter, which includes access to certain types of gated articles, as well as regular content updates. You can also check out our premium MedSider memberships as well, which come with some super cool benefits, everything from clean, easy to read transcripts to exclusive Ask Me Anything interviews and masterclasses with some of the most experienced med tech experts in the world. Since opening up these premium memberships, I've been pleasantly surprised at how many people have signed up. So if you're interested, visit medsider.com to learn more.

Lastly, we've got a lot of medsider goodness in store for the near future. Not only will I continue to interview some of the best med tech and health tech leaders on the planet, I'm super excited to announce a new series here in the future. I don't have all the details ironed out just yet, but my goal is to give you a behind-the-scenes look at what it takes to get a startup off the ground, to go from zero to one, so to speak. It should be a lot fun, so make sure to sign up. for our free newsletter at Medsider.com. All right, without further ado, let's get to the interview. Please tell us a little about your personal background as well as Cal Health.

In many ways, I feel like I am on my third career life, first investment banking, then venture investor, and now CEO. But the underpinning of everything I have done revolves around a keen focus on healthcare innovation and a passion for improving patients' lives. As an investor at Johnson and Johnson, the world's largest healthcare company, I had a great, great catbird seat on impactful innovation. So when I met the founder of CalA Health, Kate, I jumped on the opportunity to help start the company. I have been on the board since the beginning and came into the CEO role in August 2019. You recently received a breakthrough device designation from FDA for the Calatrio device. Can you tell us how the idea for it came about?

The FDA breakthrough designation for our Calatrio label expansion into action tremor in Parkinson's patients is really exciting. Our society, our science, scientific insight upon founding the company was the ability to deliver electrical signals through a wrist-worn neuromodulation device to affect the exact location in the brain, where the action tremors initiate. This target in the brain is exactly where electrodes for deep brain stimulation for both essential tremor. Our first indication, an action tremor in a Parkinson's patient are placed. Throughout your career as a healthcare investor, I'm sure you've seen a wide variety of early stage med tech concepts. When designing and prototyping

the alpha or beta versions of a medical device. What do you think is the biggest mistake most startups make? Although I don't frequently see the flaws being made in the prototyping phases, many of my experienced counterparts are trained to get user and customer input in the early phases of design work. Where I see many companies, the stub their toes is around the go-to-market and reimbursement assumptions. Many companies try to take shortcuts in these areas, and I think that limits their ultimate commercial opportunity. When it comes to navigating the regulatory waters, What one to two pieces of advice would you give to other startup leaders that are in the same boat? Jump in, the water is warm. Just kidding. I think my advice includes a much broader lens than just regulatory.

Hire the best team, internal or external, that you can, and invest in the relationship. Earlier this year, we added an external regulatory firm to our roster, and during those first few months, we took a lot of time to bring them up to speed on our technology, our science, and our approach, that upfront investment has paid off tremendously as we now have seamless integration with this external group and our internal teams. Tell us more about your approach to scientific evidence. What's your best counsel for other early stage companies

that are building out their clinical research roadmap? At Cala, I stress our science-first approach, and that dictates how we scope our budget and time in both fundamental mechanism of action science and our early clinical studies. Since our founding, we have had well over 500 patients in clinical studies with our technologies,

which includes real patients providing feedback for our hardware and digital developers. This has been really valuable. I'm sure your team at Cal Health is working hard on obtaining private insurance coverage for the Trio device. What are a few of the most important lessons you've learned over the years when it comes to this topic?

Similar to my answer before. I can't stress enough that you need to hire great talent. Short and sweet, but that's my best advice. Taking an idea from concept to commercialization is notoriously expensive in MedTech. Considering you've sat on both sides of the table as an investor and leader of a startup company, what's the most important piece of advice you'd give to other entrepreneurs that are trying to raise early rounds of capital? No one ever died from dilution. I see so many founders over-focus on dilution and selling a certain percentage of their company.

The focus should be on seeking value-ad investors where their input is worth way more than the dilution suffered in any given round of funding. During your tenure at J&J, you hope start a number of companies built around the hypothesis that data is incredibly valuable for the future of MedTech. Do you still believe this to be true and why? Wow, the value of data. Yes, it's all about the data. I feel this even more strongly today than I did several years ago. I am an advisor to a number of companies, both actual board seats and casual help-advice type

of relationships. And the only type of companies that get me excited today are those with data-driven therapies. That is the common thread. Clearly, Kala is at the core of this theme. We're able to not only monitor and measure our patient's hand tremors, but then treat, measure and track the benefit as well. No other technology can do this today. I love that. What's next for Kala Health? What are you most excited about over the next few years? We are very excited about the platform nature of our technology and see a number of very interesting opportunities to deploy wearable neuromodulation therapies. But we are completely committed to the success of our patients who suffer greatly with movement disorders.

Before the pandemic, we ran an on-site clinic, the Cala Clinic, where we were able to interact directly with patients really struggling with hand tremors. We hear stories of embarrassment when eating out, the frustration of not being able to get dressed, or even the isolation because some days are just too hard. The Cala Clinic sounds like an innovative concept. Can you tell us more about the idea for it as well as some of the value, expected or unexpected, your team was able to gleam. One of the first things we did when starting CalA was established an on-site clinic. Our devices deemed a non-significant risk device by the FDAs, so we had the flexibility to set up a clinic, receive IRB approval, and see patients.

We love having the flexibility to do healthy subject testing, patient preference work, and full clinical studies. When the pandemic hit in March 2020, we worked with our IRB to quickly move to virtual care mode, which meant enrolling patients with telemedicine and shipping our devices to patients' homes. We have had to pivot to different types of outcomes, but we are very active now with three clinical studies through the Cal Clinic. Where can readers or listeners go to learn more about Cal Health?

We have a few fun podcasts and videos that can be found on our website at www.calahealth.com. Let's transition to some fun, rapid-fire questions. For someone that is starting their entrepreneurial journey in the med tech or healthcare arena, What's the most critical thing they should know? Hire the best people, both internal and external, that you can. Be impatient, but know that it likely will take twice as long and cost you two times as much. What influential books, podcasts, or resources have been most helpful in your entrepreneurial adventures? Beyond all of the Dr. Sue's books, which are full of life long lessons, I would suggest the hard thing about hard things by Ben Horowitz, which I have read twice.

And I just finished No Rules Rule by Read Hastings, which is super inspiring, even though regulated industries like healthcare do require some rules. And then finally, Shoo Dog, by Phil Knight. OMG, I laughed, I cried, and I think every entrepreneur must read Phil's book. Are there any MedTech or Healthcare entrepreneurs that you find particularly inspiring? It's not good for me to pick a favorite since I was a service provider and investor for 20 plus years. And believe me, when I say I include amazing, story. leaders in my circles. The one common theme that all of these people taught me, and I carry with me even today, is this, patience are our true north. Doing right by patience is always good business.

So even through the tough days of the financial crisis in 2009, or even when the pandemic first hit, when the early stage financing markets got tough, I told entrepreneurs to focus on delivering real value, real benefit to patients. Make a difference. Last question. Starting over in your mid-20s, knowing everything you know now, What would you do differently? Nothing. I have loved my career and all its twists and turns. I have always been excited to learn and grow.