Medsider: Learn from Medtech and Healthtech Founders and CEOs - Your Network is Your Net Worth: Interview with NeuroOne CEO Dave Rosa

Episode Date: December 27, 2023

In this episode of Medsider Radio, we had an insightful conversation with Dave Rosa, President and CEO of NeuroOne, a company developing high-definition, minimally invasive neurology devices utilizing unique thin-film electrode technology. Dave brings over three decades of experience in the medical device industry. His career spans several key roles at major firms like C.R. Bard, Boston Scientific, and St. Jude Medical, focusing on marketing, product development, strategy, and commercialization. Dave has several medical device patents to his name, has served on numerous corporate boards, and raised over $200 million in the capital markets. He holds an MBA from Duquesne University and a BS in Commerce and Engineering from Drexel University.In this interview, Dave discusses critical strategies to secure initial capital even before early development and regulatory milestones are achieved, how to leverage networks to connect with potential investors; and the importance of assembling a supportive and experienced team, including board members. 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 Dave Rosa.

Well, if you consider a success, one being successful in one out of 200 conversations, then, okay, I'm successful, but you can't give up in this game. Most people are going to tell you your baby's not as pretty as you think it is or as beautiful as you think it is. And you just have to believe in yourself and believe in the story and not give up. Welcome to Medsider, where you can learn from the brightest founders and CEOs in MediDiDiD devices and health technology. Join tens of thousands of ambitious doers as we unpack the insights, tactics, and secrets behind the most successful life science startups in the world. Now here's your

host, Scott Nelson. Hey everyone, it's Scott in this episode of Medsider, I sat down with Dave Rosa, president and CEO of Neuro 1, who brings over three decades of experience in the medical device industry. His career spans several key roles at major firms like CR Bard, Boston Scientific, and St. June Medical, focusing on marketing, product development, strategy, and commercialization. Dave has several medical device patents under his name, has served on numerous corporate boards, and raised over $200 million in the capital markets. He holds an MBA from Duquesne University and a BS in Commerce and Engineering from Drexel University. Here are for you the key things that we discussed in this conversation.

First, securing initial capital requires more than just a great idea. You'll need tangible progress like prototypes and preclinical milestones. You can leverage local organizations and social media to target potential investors like angels, large companies interested in emerging technologies, and investors who already have a footprint in your domain. Second, embrace open communication for various purposes, including investment, consultation, and support. Surround yourself with a supportive and experienced team, including board members. Third, opt for shorter regulatory paths like the 510K to swiftly navigate through approvals. Focus on technologies with clear predicates to avoid regulatory compliance.

complexities, planning your timelines realistically, anticipating possible delays and iterations along the way. 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 Ablated 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 Medsider Radio.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 and Mentors, 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

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forward slash mentors. Again, that's Medsider Radio.com forward slash mentors. All right, without further ado, let's jump right into the interview. All right, Dave, welcome to Medsider Radio. Appreciate you coming on. Well, thanks so much for having me. Yeah. And for those listening, they can't see our Zoom call, but you're on brand with the

Neuro1 logo front and center. I love it. So this should be a great discussion on kind of not only your journey, right, through MedTech. That's, you've got a lot of swings kind of at the plate. But I'm curious to learn more about Neuro 1 too. And your experiences building this company as well. So with that said, I recorded your brief bio at the outset of this episode. But we'd love to start there first.

If you can kind of give us an elevator pitch, obviously not going through each and every sort of move you've made throughout your career in MedTech, but just give us kind of a high level sense of what you've been doing up to your time leading Neuro1 as CEO. Sure. So I'm kind of an older guy. I'm 59 now. And so I've spent about 32 years going on 33 years in the in the med tech world. And I started like many people do at the bottom. was actually involved in sales, in orthopedics. I've spent time in senior management roles in large companies, small companies, but primarily sales marketing, and then have also been involved in companies that have been early startups that weren't even

at the stage where we had prototypes. So I've spent a fair amount of time as well in companies that were really in the development or preclinical phase. And for the last, I'm losing track of time, the last 10, 15 years, I've been in roles where, you know, I've honestly been excited to have an opportunity to run an organization and in some cases really build it from the ground up. So that's a bit of my background. Yeah. And for those that want to look a little bit more about the breadth of experiences that Dave, you know, has under his belt at this point, we'll definitely link to his LinkedIn profile on the full. full write-up for this particular interview. Let's talk a little bit about Neuro-1 before we kind of

go back in time and discuss some of the key functional areas of any Med-Tech startup has to kind of execute against. Give us a sense for kind of what the platform that and technologies that you're building at Neuro-1. And if you can kind of explain it to me as if I'm a freshman in high school, maybe that's the best way to frame that up. Yeah, it's about the only way I understand it. So this should work out well. Basically, the company really evolved from a relationship with the Mayo Clinic and the University of Wisconsin. And both of those organizations for 20, 20 plus years, we're trying to develop this thin film electrode technology that really originated in the 1950s to a point where it would be much thinner, much lighter, have improved resolution.

given that part of the function was for diagnostic use. And that's kind of when I got introduced to the company. The surgeries that were being done in epilepsy, Parkinson's disease, you know, they're very invasive surgeries. You're either removing a patient's top part of a skull, you're drilling holes into the brain. And this technology offered the promise of being able to be placed minimally invasively because of its thinness and flexibility, and then also because of its design,

have improved resolution. What I found along the way was that that really excited me and was probably the primary reason why I joined the company was that it had what I consider to be multiple capabilities. And what I mean by that was, you know, I thought this platform, this electrode platform could not only perform diagnostic functions, which was really the initial intended purpose. It was supposed to be a better mousetrap of technology that had been available, you know, as I said, since the 50s. What it turned into was a technology that had the capabilities of not only diagnosing problems in the brain or finding the problem areas, but then without having to send a patient home

or have them come back for a separate surgery to then be used. to perform the therapeutic function. So if you take the example of epilepsy, what would normally happen is these patients would go home after the diagnostic surgery, come back, have a laser ablation where the laser would remove the problematic tissue. So a patient would have to undergo multiple surgeries. And no one, at least that I've met over the last six years,

has been excited about going in and having holes drilled into their brain or having brain tissue destroyed. So what I felt we could offer to the table was a platform that not only performed the diagnostic function, but that could be left in to perform the therapeutic function. And so the breadth of what we feel very confident we can do is have a device, again, that performs the diagnostics that can do an ablation in the brain or other parts of the body, as well as provide stimulation.

So that was really the goal that I set out, given what I had learned about the technology. So it's really a platform that can do that for a variety of different neurological procedures. And another application that kind of fell into our laps was using the same device, not only to do all the things I just mentioned, but also to deliver drugs into the brain or gene therapy.

Got it. So a really true platform type of technology. And we're recording this in early Q3 of 2023. I think based on your LinkedIn profile, it looks like you've been at it. Gosh, what is it seven? Is it seven years now? Let me scroll back up here. I think I officially joined October 2016.

So yeah, this would be year seven. Yeah, yeah, seven year anniversary this month here. So give us a sense kind of with that in mind, just to kind of set the stage for those listening. Give us a sense kind of for where the company's at. I think you have a couple 5K clearances under your belt for the diagnostic tools, I believe, but are you expecting, were you out in terms of, you know, Clint Reg and eventual, you know, commercialization of devices? Sure.

So you're correct that we have two product lines that have purely diagnostic clearances from FDA. These are 510K clearances. And those devices are actually, they've been commercialized. the high volume device that is placed less invasively, that was just launched in May of this year. We received approval late last year. We were waiting for Zimmer Biomet, who's our distribution partner,

to actually complete some of the accessories that they needed to use our device with their robotic system, which literally precisely places the device where the neurosurgeon wants. So those two devices or those two product families are already commercial. We've submitted a 510K application to the FDA. It was in June of this year. We did receive feedback from them.

And again, this was for our first combination diagnostic electrode that could also, when connected to our proprietary hardware, could perform an ablation. So again, the one device that's performing both diagnostic and therapeutic function. So we've heard back from FDA and we are planning a response late this month, early next month. We're just waiting for some additional documentation. Our drug delivery system is in development. We are exploring the opportunities in terms of how to present this to FDA from a regulatory pathway. And then we have another project in development that is in tenet.

It tended, again, to be a combination device where it's doing recording, but also providing chronic stimulation for patients that have back pain and, quite frankly, really any type of pain. So that device is in development. It's a little bit further off because those devices obviously have greater hurdles in terms of longevity of use. you have to at least be able to demonstrate that you can record and stimulate over a five-year period. So that submission is probably a few years away from occurring. But everything else is either in process or already cleared. Got it's super super helpful. And the website for those, for everyone listening, if you don't get a chance to get to the full write-up on MedSiter, we'll link to it there, of course. But it's NMTC and the number one. So nmtc1.com. Great looking website, by the way. Look at it. Now really cool. And you can learn a little

bit more about the various platform itself as well as the various systems that Dave mentioned. So with that said, let's kind of transition maybe for the next 20, 30 minutes, talk about some key functional areas, right? And I think the first one on the docket is IP. Actually, before we get to IP, let's talk about development, early stage development. You sit on the boards of quite a few different startups have been around the block. And you've seen a lot, right? That's the easiest way to say it. Getting, getting through various iterations of a product in the early stages of a startup, especially in the MedTech space, is really, really difficult because you're kind of trying to do that with typically a very, very limited amount of capital. So if you had to kind of sum up maybe

your thoughts on how to best do that, right, or mistakes to avoid, are there a few things that that come to mind? Yeah, for sure. So, I mean, limited capital is probably the phrase of the last few years because I think every company, as you mentioned, every company I'm on the board of or friends of mine that are in senior leadership roles, they're all literally struggling, you know, with the same issues. So, you know, I think there are some things that you can do early on, as you're trying to look to finance the company. So we're based out of Minnesota, and most major cities, you know, West Coast, Midwest, and also on the East Coast,

you know, have a society or local societies that are really there to try to help early stage companies, such as you mentioned. And for example, the one in Minnesota called Medical Alley, there are a number of large, medium size and startup companies that participate with that. But they're an organization that you can go to that has connections to early stage investors, institutional investors. They even have a portal that includes people that might be looking for employment. So, you know, there's a cost associated with hiring, recruiting.

to find good talent. It's always difficult to find interested investors, especially when you're just trying to get things started. So, you know, I guess my first point would be look to see what societies or organizations are in your area that may help, you know, companies, small businesses or companies that are just starting up. So that would be one. Something that I did that I found to be very useful was, in my past,

was I actually used LinkedIn to target investment bankers, analysts. I didn't have any network. I didn't have, there's no training for these types of jobs. And I got on to LinkedIn to introduce myself to, I'll call it the financial community. And there were a number of relationships, you know, three or four that came out of that, have been really helpful for me in my career, finding small pockets of money. So that's something you could do as well. Social media has become more of a necessity now.

You know, I was a guy that was not very active on social media. You know, as I said, I'm 59 years old. There wasn't no social media when, you know, when I was in high school and college. But, you know, one of the guys that I was introduced to who really kind of focuses on the use of social media. you know, said to me, he's like, listen, you know, you need to get your face out there. You need to get your story out there. People need to see you. And you need to keep saying the same thing so that, you know, you're able to capture people's interests. And I will tell you that while I was like very skeptical, you know, I have become much more active on social media. And it's, it's afforded

me the ability to be introduced to physicians, some of which, you know, who are entrepreneurs themselves, who are interested in investing in technology that's in their area, you know, as well as other large corporations. So companies are always looking, large companies are always looking for smaller companies to invest in, you know, in the hope that they might, that might be the next growth platform for them. So that's another thing that I've done in. I've also spent time just doing some basic research on companies that are in my space that may be competitors or closely related. And I've looked to see who those companies' investors are and targeted them, at least in terms of my outreach,

you know, based on the thought process that, well, they already like this space. They're already invested in this space. And sometimes they may want to make a second bet in the space. So it doesn't always mean that if there is a direct competitor that they're invested in, that they won't invest in you. Probably one of my last few pieces of advice that I always have to remind myself is, you know, investors, this happens a lot on the private side, but investors will, you know, they're usually very complimentary of what you're doing. Everybody's got great ideas, but very few get invested in. And what I've seen happen with some CEOs who maybe have not had as much experience on the fundraising side, and this applies actually to public company CEOs as well, you know, they have a tendency if an investor and a firm tells them that, you know, they're interested that, you know, well, okay, they're interested.

They normally make $5 million investment so I can count on that. I think you have to be very careful that no matter what any of these investors tell you, I don't care if it's a wealthy individual or a small institutional investor. And until that check is cleared in the bank, you don't have the money. And then, you know, the last thing I would say is honestly, you can't give up. I had this conversation with my children many times when they asked me how I've been able to raise as much money. in their words, how I've been so successful. And I said to them, well, if you consider a success, one being successful in one out of 200

conversations, then, okay, I'm successful. But you can't give up in this game. Most people are going to tell you your baby's not as pretty as you think it is or as beautiful as you think it is. And you just have to believe in yourself and believe in the story and not give up. Your comment around perseverance and grit and kind of pushing through. It reminds me about something that Prague mentioned recently, published an interview with him. He's the CEO of Spinex.

And he's like, you know, when I talk to other founders who are trying to raise funds, you know, I really try to emphasize they need to talk to a lot of people. They're like, oh, yeah, 20, 30 people. Is that enough? And they're like, no, no, no, no, no. Like hundreds, hundreds of people, right? And so, you know, you're the batting percentage, you know, you just mentioned one out of 200, you know, obviously doesn't look good.

but that's sort of what it takes, right? Absolutely. Yeah, and especially against this in this fundraising environment, right, within this macroeconomic kind of climate. So completely agree. When you think, kind of I'm sticking to this fundraising topic, anything else that has been especially helpful to you in raising capital over the years to fund early stage development,

whether it's, you know, things that you think are super important when it comes to the actual deck that you're using or the process in general, anything else that you can think of? Yeah, so that's a really. really interesting question. You know, I say to people, I'll kind of give you an overview of that and then how things have more or less changed. But it used to be way back in the Stone Age when I started this, not this company, but just in this business, that what people, you could raise money from VCs or investors based on a concept. And then, you know, a short while later, it was, well,

you had to have prototypes, and then you had to have animal data, and then you had to have human data, and then you had to have clearance to sell, and then you had to have revenue. And I can tell you over the last 15, I don't know, 20 years, the discussions I see now are you have to be at break-even. So what's happened is the appetite for risk, I don't care what investor you're talking about has been extended to more difficult milestones to hit. And people have said, well, you know, how do I raise money? You know, I need money, you know, to get to all those areas. So what happened as this was progressing was, you know, angel investors started to become,

they in essence picked up the slack from the risk levels that VCs used to be willing to take. So all, you know, all these states, you know, where there's new technology, there's angel investors that are willing to go in and invest at an early stage. Now, some people say, well, yes, but you, you know, you have to give up a lot of a company to do that. So I've seen other companies try to approach strategics early, in some cases that's successful. We were successful at Neuro1 doing that with Zimmer Biomet. We did not have a final design of a product, but we met what one of their strategies were and one of their growth initiatives. So they were willing to take literally a chance on us. But the truth is, I've been most successful in developing

networks. So networks, you know, some of the early ones began using LinkedIn. And then it was just introductions from people I would talk to, sometimes investors. And what happened is there are people out there that have a high net worth individuals whose money they manage who are willing to make, you know, smaller bets, 50,000, 100,000, you know, investments in companies that, you know, are at early stages. There's not a, you know, a formula for that. It's the formula is get out in front of as many people as you can find the people that, uh, that have relationships with family run offices or who manage, uh, high net worth individuals. Uh, and you can find out who those people are, you know, by reaching out, whether it's investment bankers, uh, whether it's, you know, colleagues or friends.

It's, you know, you've, you've got to go out and, and talk to as many people as you can. But those are the people that are providing in my last company. That's how I financed it early on. And you'll think I'm crazy when I say this. But for the first two years, we were financing the company on a month-to-month basis. We had a small team. We would go out to our network of investors. And we were literally saying we need $100,000 this month.

We need – so – but I only got to that point because of the network of people that, you know, that I met, that helped me to do that. I wish it was more simple and more straightforward, and money was, you know, more easy to come by. But, you know, whether you're, some people are trying to get NIH grants, which, you know, you can do. It's difficult. It's time consuming. But the fastest way to get money for me has always been find a network, find a person who has a network that you have a relationship with that can put you in touch with wealthy individuals who are willing to help finance you in the early days. Hey there, it's Scott, and thanks for listening in so far.

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