Medsider: Learn from Medtech and Healthtech Founders and CEOs - Winning Together in Medtech: Interview with Orchestra BioMed CEO David Hochman

Episode Date: December 4, 2023

In this episode of Medsider Radio, we had a riveting chat with David Hochman, founder and CEO of Orchestra BioMed, a company accelerating high-impact technologies through risk-reward-sharing partnerships with leading medical device companies.David has over two decades of experience in healthcare entrepreneurship, venture capital, and investment banking. He has a history of leading successful medical startups, including Orchestra Medical Ventures and Accelerated Technologies. As Chairman of Motus GI and former board member of Corbus Pharmaceuticals and PROLOR Biotech, David has been instrumental in advancing medical technologies, contributing to significant mergers & acquisitions, and many fundraising successes.In this interview he talks about driving successful partnerships, operational excellence in R&D, and the importance of a long-term strategy for sustainable industry innovation through aligned incentives. Before we dive into the discussion, I wanted to mention a few things:First, if you’re into learning from medical device and health technology founders and CEOs, and want to know when new interviews are live, head over to Medsider.com and sign up for our free newsletter.Second, if you want to peek behind the curtain of the world's most successful startups, you should consider a Medsider premium membership. You’ll learn the strategies and tactics that founders and CEOs use to build and grow companies like Silk Road Medical, AliveCor, Shockwave Medical, and hundreds more!We recently introduced some fantastic additions exclusively for Medsider premium members, including playbooks, which are curated collections of our top Medsider interviews on key topics like capital fundraising and risk mitigation, and a curated investor database to help you discover your next medical device or health technology investor!In addition to the entire back catalog of Medsider interviews over the past decade, premium members also get a copy of every volume of Medsider Mentors at no additional cost, including the recently launched Medsider Mentors Volume IV. If you’re interested, go to medsider.com/subscribe to learn more.Lastly, if you'd rather read than listen, here's a link to the full interview with David Hochman.

And I think was really driven and attracted by the, we refer to it as the double benefit. If we're going to make money and generate returns for investors, we're only going to do that because we've impacted patients. And we've given tools or our solutions to care providers. And that was really appealing. 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 tactics, and 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 David Hawkeman, founder, and CEO of Orchestra Biomed. He has over two decades of experience in healthcare entrepreneurship, venture capital, and investment banking. David has a history of leading successful medical startups, including Orchestra Medical Ventures and accelerated technologies. As chairman of Modus GI and former board member of Corbus Pharmaceuticals and ProLore Biotech,

David has been instrumental in advancing medical technologies, contributing to significant mergers and acquisitions, and many fundraising successes. Here for you the key things that we discussed in this conversation. First, embrace creativity and structuring partnerships and business models. The nature of collaboration depends on you and your partner organization's vision, capabilities, and long-term goals. When done right, sharing risks and rewards can be highly productive. Second, having robust operational capabilities enables you to generate more clinically meaningful data. The more impactful the data, the more value you can build over time. Third, prioritize a long-term outlook over short-term gains. Do not cut corners in favor of reaching certain milestones, especially in clinical

trials that latter up to your regulatory strategy. Before we jump into this episode, I wanted to let you know that the latest edition of MedSider Mentors is now live. Volume 4 summarizes the key learnings from the most popular Medsider interviews over the last several months with folks like Rob Ball, CEO of Shoulder Innovations, Kate Rumroll, CEO of Abolative Solutions, Dr. Christian Ramdo, CEO of Tempe Health, and other leaders of some of the hottest startups in the space. Look, it's tough to listen or read every Medsider interview that comes out, even the best ones. But there are so many valuable lessons you can glean from the founders and CEOs that join our program. So that's why we decided to create Medsider Mentors.

It's the easiest way for you to learn from the world's best medical device and health technology entrepreneurs in one central place. If you're interested in learning more, head over to MedsiderRadio.com forward slash mentors. Premium members get free access to all past and future volumes. And if you're not a premium member yet, you should definitely consider signing up. In addition to every volume of Medsider mentors, you'll get full access to the entire library of interviews dating back to 2010. You'll also be able to see all of our playbooks, which are handpicked collections of the most insightful interviews with the brightest founders and CEOs.

Whether you're looking to master capital fundraising, navigate early stage development, tackle regulatory challenges, understand reimbursement, or position your venture for a meaningful exit, MedSider Playbooks have you covered. And last, considering that fundraising, and be one of the most daunting tasks for any startup. We created a meticulous database of investors right at your fingertips. Explore a wealth of VC funds, private equity firms, angel groups, and more, all eager to invest in medical device and health technology startups. Access to this database is a premium member exclusive, so don't miss out.

Learn more about MedSider Mentors and our premium memberships by visiting Medsiderradio.com forward slash mentors. Again, that's Medsiderradio.com forward slash mentors. All right, without further ado, let's jump right into the interview. All right, David, welcome to Medsider Radio. Appreciate you coming on. Hey, thanks, Scott. It's great to be here. Thanks.

I recorded your short bio at the outset of this particular episode. But let's start there. I'd love to hear it kind of from the horse's mouth, so to speak. Give us a sense for kind of your professional background leading up to kind of what you're doing and focused on at orchestra. And obviously, if you can kind of give us elevator style kind of background, that'd be most helpful. I'd be happy to.

So I have been now 25 years plus as an entrepreneur and a venture capitalist is really my background in the field of healthcare innovation. I will say there was a period early in my career. I also worked in telecom innovation and media innovation. I kind of got an opportunity to choose early on which path I wanted to take. And I'll admit that I did not have much background in science and medicine. coming out of my economic background, but on-the-job learning really fueled a passion for the field. Suddenly I discovered, wait a minute, I love this stuff.

It comes to me reasonably naturally. I like the opportunity to work with doctors and innovators. And I think was really driven and attracted by the, I mean, we refer to as a double benefit. If we're going to make money and generate returns for investors, we're only going to do that because we've impacted patients. and we've given tools or solutions to care providers, and that was really appealing. I got to work early in my career in venture capital in both biotech, actually more biotech before I got into the device space. Also, I had some early work in kind of collaborative care models, health care information,

sort of what now is an explosive field of kind of digital health. I got to see a lot. What drew me to medical device innovation was, at least in the early days, was this perceived shorter cycle of, you know, kind of both turning an idea into, you know, a product as well as maybe turning, you know, that work into a return on investment. And so I think I came to really focus on device innovation, device investments, got to help co-found a company in an eventual cardiology in the early 2000s. And it really started, I got to work with some key opinion leaders that we all know in interventional cardiology. That really turned me on. And I wanted to be involved in pursuing concepts purpose built for unmet needs and building companies and products from that stage through the cycle. And I thought this was a great field to do it.

I joined an accelerator called Accelerated Technologies Inc that Marty Leon was one of the founders. And that accelerator itself was kind of born out of the birth of structural intervention. PVT was one of the first projects that sort of was born in parallel to the accelerator. And I joined the accelerator in 2006. It's interesting, very shortly thereafter, the world changed, I think, in terms of, broadly, certainly. but I think the device innovation field has become much more challenging ever since probably 2008 for a variety of reasons. But we did continue to pursue that model. It was physician-driven.

We would really talk about unmet needs with a group of innovators spent a lot of time and purpose-built solutions. I had joined to help raise for that accelerator our own dedicated venture fund. We did that in a tough environment, founded some new projects. But as I said, the rules of engagement had changed. And where kind of regularly you could have in the past taken ideas, early data points, maybe even first in human data, and see larger companies, middle market companies, acquire those, and then take it from there. That's, I think, not the norm anymore.

And we ended up founding orchestra biomed in 2018. A lot of the best ideas are born out of adversity. We got a problem. We got to solve that problem. We've got to figure out a different and maybe for some ambitious product, better way of approaching. How do you get through development? How do you get through now much more complex and demanding environment

for clinical data, clinical trials? higher expectation, higher bar for regulatory approvals and frankly for market adoption. How do you do that when the capital needs and the time are longer? How do you do that when the exits, the acquires are looking not just for good ideas, but they're looking for products that are actually generating top line revenue? And we had some exciting products that are now really flagship parts of our portfolio that we felt needed a different way. And that's what we found in the company.

And our core thesis at OrkishabioMed was to focus on partnerships. How could we align with the strategic partner, the established global med tech leader that have the commercial infrastructure to make one of these products successful, assuming you have the data to generate a regulatory approval? How could we align early in a risk-reward sharing structure so that we can help each other? We can help them secure potentially a very important future growth asset. We can help them to execute on development work where, frankly, you'd be surprised big companies only have so much resource, so many people that can run clinical trials.

And frankly, a big theme of orchestra biomed is focusing on how do we supplement or expand the R&D P&L capacity of our strategic partners. and we can talk more about it, but be surprised how limited the MedTech Strategics are and what they really can spend on research and development. So how can we enable them at the same time? One of the things that's so exciting about medical device field is when you, you know, create a new product and bring that to market and build a new capability in healthcare intervention, healthcare and with technology,

that can become a standard and sort of a commercial franchise for decades. And so venture capitalists tend to focus on, let's build it, let's invest, let's get to an exit. Well, oftentimes the exit undervalues the long arc of value we like to call it. You miss some of that huge value creation that happens after the fact. And so our idea was can we participate through revenue shares or royalties in that long arc of value? And by doing so, you know, can we generate greater returns, more value for our shareholders? So we really had to found a new company. We integrated a couple of our lead programs.

We felt were really ideal for this model and set out to convince the world that, you know, this could work. And I think five years into it, we've had some success we're proud of. We still have more work to do. There were a lot of skeptics early when we started down this path. Yeah, as I said, we have more to prove, but I think we are doing a good job of bringing different creative thinking to bear. We have some great partnerships, one with Metronic, one with Tarummo, and we're executing on our lead programs and actively looking for more opportunities to put the model to work.

Yeah, I definitely want to make sure we have enough time to kind of dive a little bit deeper into that model because it's very, I think, creative, right? Like we discussed before we hit the record button of this conversation, but I think would be valuable, right, for others that want to sort of maybe approach things a little bit, a little bit differently, right? Which is, which is needed, I think, in this kind of global macro economic and environment. We like to say, you know, if we do our job well, you know, we won't be the only people doing it this way. Sure. And so we're looking to be flattered with other people, you know, saying, hey, what those guys are doing is smart and we can't do everything. I think

we're just trying to inspire sparks, you know, for the industry. Hey, there are other ways to go about this. You know, I mentioned that I got to work on a lot of biofarmine. opportunities earlier in my venture career, that many, in many ways was the inspiration. If you look at the drug development field and it dwarfs in terms of companies, projects, you know, dollars invested, you know, revenue, what we do in the med tech space doesn't mean our work is any less important. But partnerships are fundamental to how drugs have been developed for the last, you know, many decades. And big pharma, big biotech, you know, small biotech, have used and continued to use a lot of creativity and structuring to help take what can be long,

unpredictable, expensive development cycles and share risk and reward. And the capital markets have rewarded them by, you know, kind of putting a lot of, we're in a disrupted capital market, but in a normal capital market, a lot of future, a lot of net present value, future potential cash flows. As a MedTech venture capital, we, that's just just intense. intensely jealous of how that, you know, created opportunities for realizations and also opportunities to capitalize good ideas. And so that's been a big part also of how, you know, we sort of thought through and

we're continuing to learn and also how we surround ourselves with some people that know that better than we do and try and apply some of the ideas. Not all of it will work, but there are some good ideas in biotech we can learn from and apply in the medtech field. Yeah, I'm a one of my favorite books of all time is Austin Cleons, steal like an artist. And I love that concept of like looking at other verticals, other industries and saying, oh, I think that could work over here, right?

So let me actually like take a piece of that or maybe the whole concept or idea and apply it. And it's funny that you bring up biotech because when I was, I've heard of orchestra and kind of been loosely kind of following what you've been doing. But I've never really, you know, gone a little bit deeper and kind of like tried to understand kind of what you guys, what your team is is doing until until leading up to this interview and I was like, this looks a little bit like, there's some biotech in here, right? Some biotech modeling, right? And so it's funny that you brought that up. So let's circle back

around to that here in a bit, but give us a sense for kind of your, you mentioned your two flagship products, which are Virtue SAB and then Backbeat, C&T. Give us a sense for like kind of those two flagships and almost as if like, say, I'm a high school freshman and I'm wanting to know kind of what, what are these two products do? What are these two devices do? Yeah. Well, and we've had an exciting last couple months and then just the last couple weeks because we announced ID approvals for both programs. And just really last week had announced our full ID approval for our Backbeat CNT program, which we partner with Metronic. So let me start there. Now that we're a year into our partnership with Metronic, we are calling the therapy atrial ventricular interval modulation therapy.

I'm glad I said that without stuttering. Or AVIM therapy, you know, it does really describe what we're doing. It is a backbeat or AVIM therapy is a, we think, potentially potent treatment for hypertension, high blood pressure, which is really the largest medical problem in the world, affects over a billion people. We are targeting very specific patient populations. What's exciting about it is it's essentially a way of reprogramming a pacemaker. We don't change a dual chamber pacemaker.

We don't have to change the hardware, the implant, the procedure, and hypertension is the number one comorbidity in that, you know, established patient population. Over a million pacemakers get implanted every year. And upwards of 70% of those patients have hypertension. A pacemaker patient is going to be on average in the early 70s. They clearly have, you know, one cardiovascular, you know, rhythm problem. But typically they have more than one and other comorbidities. They're going to be on medication for their blood pressure, likely multiple drugs, and have a harder time controlling their blood pressure.

The disease tends to be a little different than, you know, someone in their 50s that develops high blood pressure. They're probably going to be on a bunch of other medications, so complying and adhering to medication becomes tougher for those patients. Our therapy is a way of leveraging the capabilities of pacemaker to control blood pressure both hemidynamically and then use that control to. reprogram or I guess alter the autonomic nervous system responses that play a big role in both driving and maintaining dangerous elevated blood pressure, doing that really, you know, through a

pacemaker device. And so while I don't, we think of it as entirely therapy, effectively it's a feature or capability we can add to a pacemaker that now also allows that device in the background to be lowering blood pressure. And so that ID is exciting. We partnered with Medtronic, who we all know is the global dominant leader in cardiac pacing therapies last year, focused on the first indication of treating hypertension in the existing pacemaker population. We worked with them very carefully designed this trial that we got ID approval of. They integrated our therapy, which we developed. Actually, it was part, one of the concepts that we developed as part of the accelerator venture portfolio

that became a wholly owned asset of orchestra when we found of the company. But they integrated our therapy into their pacemaker devices. They did all that testing and we then engaged the FDA and have a trial that will get going on soon here in 2023 that we think is a registrational study to then allow to the hand Medtronic, hopefully a submission ready, It would be a PMA supplement, but a submission ready package that then they can commercialize

globally this powerful therapy, hopefully for the benefit of a lot of patients that every year in our becoming pacemaker patients. There's more we can do with it after that we can talk about. So that's really the flagship program. And then Virtue product we also developed. And those were the two kind of core assets we started. We said, hey, went to our lead investors and said, we think we have great lead programs. great idea, partnerships and risk-reward sharing, but a model is only as good as what are your

pipeline programs, how do you prove it? So virtue is a serolomis alluding balloon, but a novel alluding balloon. We call it an angio-infusion balloon. So instead of a coated balloon, we've developed a long-acting formulation of serolomis. We deliver it and enable angioplasty. We deliver the drug through the balloon. So there's no surface coding. And serolomis is the gold-stallum. standard drug used on stents to help prevent restinosis. Sorolamus is kind of, I'll use a pun, it's eluded the industry in terms of how do we get a drug-coated balloon with serolumus because it works differently in many ways better, but it needs to be present in the artery for more than 30 days.

And so we did a lot of innovative work to figure out how do we make that ideally capable without the problems of a coding you can lose in transit and create particulate. So we've done a different job there. So virtually we think it's a potential to be a best in class solution in terms of an angioplasty and drug combination. And as TCT is coming up a few weeks, we've been working in the field of drug-alluding balloons for a while. And for a lot of years, the idea that we would use a drug-alluding balloon in the coronary arteries,

was also something people were skeptical of. I think today we're seeing kind of thought leaders say, this is the future. The future of kind of the largest core segment of device innovation and eventual cardiology is, let's use stents in the future as an exception, not as the rule. And we're excited about also embarking on a study,

a pivotal study in coronaries with that product, first an instant re-stinosis. So those are the two flagship programs. Our partner there is Turuma. who is the largest Japanese global medical device company and an innovator in a lot of key areas in interventional cardiology. Yeah, it's super helpful. Just one follow-up question with respect to the Virtue SAB program. So it sounds like that balloon, because one of the problems, right, with drug-coded balloons historically,

is just sort of the sheer amount of drug that falls off, right, as you navigate the balloon to the target vessel. So it sounds like you're almost infusing, like almost like a weeping balloon. Is that kind of, do I, am I understanding it? It's a microporous balloon, but it is an angioplasty balloon. We do, you know, full pressure angioplasty. That's the primary device mechanism of action. So some of our innovation is how do you have a balloon with holes in it? That's also delivering drug, but also performing angioplasty.

But you talk about one of the key problems. You know, stents have stable, durable coatings that are designed to take advantage of the fact that the stent is permanent. You know, you put a statin that's never going away. That's part of the problem. And so designing a coating where you can elute a drug like serolomis or another limus out over 30, potentially 30 plus days is a lot easier. Designing a balloon that's only going to be in the body for, you know, 30, 45, 60 seconds. And all of the drug is supposed to stay on the balloon all the way through to the point where you want it to then all come off. and ideally go to your target lesion is, in our view, just impossible.

So, yeah, there's a lot of data out there where, you know, the vast majority of the drug on the balloon is lost in transit or in inflation. Our device allows for what we call protected delivery. Actually, the drug is at the back of the catheter, and the physician only delivers our drug, which we call serolomis, EFR, extended focal release, when they're ready. They're looking, hey, I'm ready to deploy.

my balloon and inflate my balloon, and they know they've delivered the full dose of drug because they literally see that measured dose go through the catheter once the drug's deployed, you're done. So it's a really different device concept that we think has really procedural advantages, but most importantly, we know balloon angioplasty works. We know that serolomis works if you get enough drug to the tissue, and you have it there over a long enough period of time. And so we do a lot of work and we publish a lot of our data showing uptake and long-term allusion with our formulation and obviously because of the device design, a lot more confidence that the drug is going where it needs to go.

Right, right. Yeah, definitely. It sounds like you're solving for one of the most significant challenges, right, with drug, historically with drug coated balloons. We are trying. Yeah. We put a lot of work into it. Yeah, no doubt.

Well, cool. I think that serves as a nice segue, and you gave us a sense kind of for where you're at with both programs in terms of kind of the Clint-Rag path. ways. And before I guess we go any further, for those listening that don't get to the full write-up on MedSide or OrchestraBiomed.com is the site where you can go learn a little bit more about those two flagship products as well as the rest of the pipeline. So it's orchestra, just as it sounds, orchestra biomedad.com will of course link to it in the full write-up on MedSider too, as well as a David's LinkedIn profile. Okay, so that gives us a chance. I want to be

mindful of the time. We've got about 30 minutes left. Let's go back in time a little bit. And I've got a list of questions. We won't get to all of them, I don't think. But let's start with this risk reward sharing. You touched on it already. I think it's really novel, right, that model. Give us a sense, and I'm not sure how much you can share, but give us a little bit of better sense because my understanding,

can I hear you describe it, is you've taken kind of a concept that's been around in biotech for a while, applied it to MedTech. And it almost sounds like you're creating almost like an accelerator, individual accelerators and partnership with strategics that allows you to kind of capture that long-term value. But yeah, give us a greater understanding of like how this works. 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

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