Clinical and Regulatory Strategies' Chicken-and-Egg Problem, and its Impact on Investment Decisions | LSI USA '24

This discussion lays out the basics in clinical and regulatory strategies for new healthcare innovations and provides some common pitfalls and recommendations for along the way.
Ivanny Franklin
Ivanny Franklin
Auriel August
Auriel August
, Sante Ventures
Edwin Lindsay
Edwin Lindsay
, Compliance Solutions Life Sciences
Nir Goldenberg
Nir Goldenberg
, Mayo Clinic Ventures
Adam Saltman
Adam Saltman

Ivanny Franklin  0:05  
Well, welcome everybody. Nice to have you all here to join us. My name is Ivanny    Franklin. I am the global marketing consulting Sales Director at NAMSA. I'm also a partner at MedScout Capital where we focus on series a syndicated investments in the med tech space. I've brought together this distinguished group of panelists today to discuss the impact that regulatory and clinical strategies have on investments. So from all of our personal experience, and maybe many of you in the audience today, we have found that often, there is an under representation of regulatory and clinical diligence in the kind of early stages of fundraising and device development. So we obviously see a lot of focus on market potential unmet clinical need IP, etc. But today, we want to talk a little bit about the risks and benefits associated with fleshing out those strategies. And at what stage of your, your funding cycle. I have brought together a mixture of panelists here, both from the investor side as well as regulatory X FDA, we have a couple of physicians up here as well. So certainly the goal is to provide a really healthy discussion on on their experience and what you can use, whether you're an innovator or an investor yourself, we have found too, that these types of strategies have a really big impact on time and costs to markets, as well as ultimately, everyone's ROI. So what we want to unflushed is how you can plan when you should be providing this type of data and information to your investors. And yeah, ultimately how you can make educated decisions throughout development. So with that being said, we want to go ahead and introduce your backgrounds of expertise experience in the field and then ask a few questions for us. Sure. Hi,

Auriel August  2:02  
everyone. I'm Auriel    August. Thank you again, Ivanny for asked me to be on this panel. I'm a principal at Sante Ventures. We are an early stage Life Science venture firm, actually based out of Austin, Texas, we invest across med tech, which is traditional devices, biotech therapeutics, as well as health tech, which is both healthcare services it as well as what I like to call the sexier Health Tech digital therapeutics and that kind of thing. We're often the first institutional investors in so we work very closely with first time entrepreneurs, splicing technology out of universities, and very, very closely with our teams and throughout the diligence process and when we're deciding to make investments. My background is prior to joining venture about three years ago, I trained to General Surgery at Stanford, then went on to do the biodesign Innovation Fellowship. And also did some time at IDEO doing design consulting their design for health studio working both with big strategics doing product design, as well as hospital systems doing service and patient design. And that's me

Edwin Lindsay  3:00  
Edwin    Lindsay I've got a complete consultancy company based in sunrise in Miami, but also in Scotland. We've been in the medical device industry for the last 25 years. I also have my own medical device company. So I've got an idea from both sides of the wall with regards to compliance and with running a business and dealing with the regulatory clinical aspects but also raising money raising in investment to take the product to market and understanding the rules, the regulations and just the pitfalls it's going to be required to take the product to market

Nir Goldenberg  3:34  
Nir Goldenberg, Senior Technical Development Manager with Mayo Clinic ventures. I lead the technology development team. Marketing Ventures is responsible for technology funding and development and also for IP assessment and protection together with licensing execution and management for Mayo Clinic, and my background is in engineering. And prior to joining me I was based in Israel, I was with a group named trend lines trade lines group. It's a publicly traded investment group out of the country. And prior to that I was based in Europe and I was with a group named Incitec. Company is a global leader in Mr. Guided focused ultrasound therapy and systems

Adam Saltman  4:16  
Adam    Saltman I'm also from NAMSA. I am a principal strategy consultant I cover regulatory and clinical. I kind of help our our clients design and then execute their regulatory and clinical roadmaps and actually, as the session goes on, I'm probably going to veer off into some other areas like reimbursement and clinical adoption and other things that are important for companies getting underway. My background I practiced cardiothoracic surgery for about 25 years. During that period of time, I was very involved with medical device companies both little and big. Doing preclinical work with them clinical work with them, studies etc. Then I decided to go to the FDA and work there for 12 years in the Senate for devices as a medical officer. That was very interesting because I covered not just pre market, but also post market compliance and quality. So when the previous panel was talking about injunctions and stuff, I totally get that. So those are things to look out for when you're doing your diligence as well. And then I was chief medical officer for a couple of small startup companies that were developing AI products, software as a medical device, and help them get their products through FDA. So that's me.

Ivanny Franklin  5:31  
Adam spends a lot of time sitting around watching TV eating chips. Yes, that's right. Okay, so I think a great place to start, perhaps for Adam and Edwin, but feel free to jump in Ken, can you guys describe some of the FDA review timeline differences between a 510 K and a PMA perhaps as well? Differences in costs and data requirements, clinical rigor, so I'm really trying to hone in on if you are, if you don't thoroughly understand whether or not you're a 510 k or a PMA what impact does that have? And then we'll switch to investment piece of it.

Adam Saltman  6:11  
You want me to take that one? Yeah, so actually, when we were doing some preparatory talk, I went and did a little research on like, the last 300 marketing authorizations that FDA did. So I actually have some data for you, if I can remember it. So basically, I mean, the 510 K pathway being sort of what we would consider the simplest pathway where you can find a device that's similar to yours already marketed. And you can prove what's called substantial equivalence to that product. The guidance from FDA says that will take 90 days. But that is rarely the case. And this is something that I think has important impact when you're looking at a company, or when you as a company are designing your roadmap, because if you put 90 days down as what you expect to get your authorization, people are going to call you on that because the real life is they will be holds put on your file, there will be additional information requested, etc. And so the average time was actually 120 days, which is not terribly longer, but it's not 90 days. So if you want to go a little more complex than that, you can get into what's called the de novo pathway where essentially, you're not a high risk product, but there's no predicate for you to look at. There's nothing for you to prove substantial equivalence again. So you have to go on your own. And you have to develop enough evidence to convince FDA that there's what they call a reasonable assurance of safety and effectiveness. So that's a bigger lift. And it may require you to do clinical studies, etc. The guidance from FDA says 120 days, and I again will call call out any company who says it takes 120 days, when I looked at the numbers, it was a year. So to get a de novo through FDA with all of the rounds of questions, etc. It'll take a year. And then finally, the last one is the PMA, which is the pre market approval process for the highest risk devices. You're going it alone, there's no such thing as a predicate in that in that space, you're developing all your own evidence. Not only that, but you get pre market inspection before you get on the market, etc. FDA says that'll take 180 days and that, I'll just tell you that the average time was two years. So you're talking pretty significant differences here. And in terms of the cost. I had to look that up because it changes every October when the new federal fiscal year starts. A 510 K is about $5,000. For a small company. I don't think anybody here is a big company, right? You're all small, small businesses. Nobody here makes more than $100 million a year is that correct? Raise your hand if you do, oh, there we go. Okay. If you're a small business, and you qualify for small businesses, $5,000 for 510 K, it's about 30. I think $30,000 For a de novo and a PMA will set you back about 125,000. However, if it's your first application to FDA as a small business, zero, so you get one pass. So if you're a big company, like the gentleman here raised his head, it's half a million dollars for a PMA, that's the fee that you pay FDA. So be a small business get certified as a small business, it's definitely worth it. So that was a long answer to your short question about it. Also,

Ivanny Franklin  9:24  
though, you are covering fees associated with the submission itself. If you have data or understanding on the multi-millions that differ between a 510 K and a PMA, from the resulting clinical data, you have to demonstrate, yes, the

Edwin Lindsay  9:41  
510 K clinical, maybe one to 2 million if you're lucky, maybe slightly over but the Pm is going to be at least five six times more than that. And just the regular of trying to get you the data, the scrutiny that it will be under the FDA. PMA is a lot higher than what the 510 K will be. They're also looking at your sites will be inspected by the FDA, your clinical trial will be inspected by the FDA before you even get in the submission process. So you're trying to balance up the 510 K, what's clinical versus the course. But one of the things I've seen recently is the FDA like to change the rules. And you're there, we've worked with a couple of CSCs devices where they've, they've told us during the 510 K, that they will not accept equivalence with one clinical data on their own device. So that's kind of where that's put us back nearly 18 months. So you, you think of that you're going towards a 510 K doing all your development work. And then the FDA gives you a cotton balls in with Chuza regulations, you know, they find between one and $2 million to run the clinical trial, it's going to put you back a few years. So it's the early stage some things planning gets thrown out the window early. But it's that planning of making sure, as Adam says early on working out well, your clinical trials and the costs because there's a 510 K, one to 2 million, PMA, anything up to 10 million even more depending on the risk of the classification of the product.

Ivanny Franklin  11:08  
So now let's switch to an investment perspective with data and numbers like that, how does that impact your strategy?

Auriel August  11:17  
I just want to like I feel I felt like very strongly coming out of that, because it makes it sound as though PMA is not a dirty word. And yes, it is more expensive. But if you think about any project that you're doing, if you're developing a device, it's all about value creation, right. And so it's gonna cost money to create value. And it just depends on where you're spending that money and when you're going to create the value. So if you are a higher risk device and need to put all this money more upfront of running a really rigorous clinical trial and getting premarket authorization, that is where you're creating the value and you're spending the money there. But I think ultimately, we'll see with a lot of entrepreneurs, they're thinking like a speed to market maybe like the best way, but there is no shortcut. Ultimately, if you're gonna spend the money one way or another, so is the value creation of really good clinical data and submitting for a PMA, we're now that's enough value where you've created, you've opened an exit window at FDA approval, because you've done all this work on the front end, as opposed to maybe you get closer to a 510 K with clinicals, you prove significance equivalence with another product already on the market. But now your works on the back end, now you're taking, you have to show value that you can take market share, because now you have to show that in the market, which can cause actually a lot more building a sales force than than running a PMA trial. And so ultimately, when we're evaluating new technologies, and I said, we're a very early stage investors, we're thinking about that every step of the way of where is the value creation in this project? Is this a new clinical area with a novel technology where you're going to build a market and have a really new device and create a whole new opportunity area? And similar for large companies and strategics that are coming in? They're thinking that way? Is this disrupting something new? Or are you coming in with a better technology and established market where you're really going to show your value that we can take market share from an entrenched player. And so when you're planning out your timeline, and the money you need to raise to, to get to these different value inflection points, whether it's from first inhuman to put to ide approval for clinical trial, or that's your 510 K approval, commercial launch, like there are gonna be different time points there where your company now is worth something more, you've created more value. And so it's very, very important when you're thinking about the clinical area that you're targeting. Is is the juice worth the squeeze. And it's ultimately what it comes down to. Right. So if you're building something that is, and I also do think me too, product is not a dirty word either, right? There are a lot of great innovations that come through of listening to feedback from physicians from other health care providers saying we have this tool and it doesn't work and creating something better, but knowing that your lift is heavier on the back end, but also knowing say, hey, if I'm going to have to raise, yeah, we get through a 510 K approval in, say, five to $10 million of development. But then we're launching the product and we got to raise 80 to 100 million to build out of Salesforce and take market share. But ultimately, the market we're entering is only worth 500 million like that math doesn't quite work up as opposed to, we're going to you know, we're building a novel heart valve, right? And it's going to be heavy work that this is a 50 to $100 million project but it's over a billion dollar market. So that's what we're thinking about as investors have the money it's going to cost to create value within the company to ultimately what are the market you're into entering into?

Nir Goldenberg  14:36  
I think for me, a key word here is confidence and credibility for investors. Right. So we are all familiar with a traditional due diligence process in which we are investors are evaluating different aspects could you starting from IP to commercialization and regulatory and clinical strategies are part of that? So you heard hear from Adam and add that for me regardless if it's a 510 K or PMA F word, we're talking about a significant investment from a time perspective from $1. perspective. So I think investors expectation is to see that there is an appropriate planning and understanding of the upcoming effort. And that the team is thinking in a lean, creative, smart men are on how to execute the plan. And so that's, that's, for me, actually, the baseline for creating confidence and credibility, confidence to the investor and credibility to the team. So

Adam Saltman  15:33  
I just also wanted to point out that there's kind of an undercurrent here, that you're only picking one path. And I want to also point out that that doesn't have to be the case in the sense that you, you know, depending on the engagement you have with your funding sources, and what they want, and how they want to work with you in the future, etc, you may end up doing staged approaches in the sense that if you get on the market, with a tool indication for your device through a 510 K, which is a fairly straightforward pathway, that is probably the lowest cost and the quickest of any of the things we've discussed, you then start generating revenue, you may find out from your clinician advisors, that actually your product will be used for the way you eventually envisioned it to be. And therefore you are adding value, while you are then going to pursue that future dream. And so there are ways to build that relationship. So you get through FDA, you get on the market, you know, all these milestones, if you will. So it doesn't have to be like the moon or nothing, right? So you know, and I think when you're looking at a company from an investor point of view, and I'll go totally out of my ballpark here, because you guys are the investors. But I think looking at a company and seeing that they've thought this through is a really important thing, right? That builds your confidence in the team, that they understand that they're, hey, if it doesn't go this way, we have this other way. We have contingencies, we have other things. So the other thinking about this intelligently, one

Edwin Lindsay  16:59  
of the things you mentioned about the 510 key in the clinical data, but the hard work, if you don't have clinical data is at the early stages of startups is actually get a strategy with thinking of let's just do clinical, as it says it builds a confidence with investors, it may actually help you get the clinical trial, investment upfront early, quicker, and also makes your life easier in the long run. Because you see, a lot of startups just want to get to market quickly. Just want the 510 K, let's get selling. And probably the key part is understanding the investor. And what's the thinking, because you could choose an investor who just wants an early exit strategy. And that's not going to happen, even with a normal five turnkey product is putting that strategy around and picking the right investor that will understand and be with the injured. Seeing right, we will do our clinical trial, although it's not needed for the 510 K is going to actually maybe meet the 510 K easier as we get through the review process. But it's going to allow us to have clinical data to start selling and selling quicker, which most startups when they don't have clinical data, we look on our corners, it's probably one to two years before you actually really get good traction, you're potentially given away free product for clinicians to use just to get buy in from them, if you don't have a key opinion leaders. So the key is that early stage talking to investors is can we raise the money to do the clinical trial, even though we don't need it to get the market?

Ivanny Franklin  18:30  
So maybe question for you, it will use diagnostics as an example. Say you have a really cool novel molecular diagnostic that can test for a variety of pathogens would from an investor perspective, we saw in the COVID space, a lot of sponsors pursuing, you know, COVID first with later indications to pursue STIs would you find more value in like a me to COVID assay, because the platform, you know, it's easier to commercialize or get through FDA approval there versus, you know, for an example at home ccmg test what how do you decide, which is good, but

Auriel August  19:06  
that's actually a really great example, right? Because there were so many EUA tests that came out and how many are still around? Yeah, exact. So it was great to be able to rush to market for specific indication, but do they do have the longevity and staying power? So yes, think about that short term pathway of quickly authorization to do a COVID test, but ensure that you're still doing the development on the back end, for the harder test that actually is what's going to give the company life long term. So it's not as much valuing one over the other it's ultimately what is the longevity of the company? What is the actual business plan and how is this sustainable moving forward? And you need to have thought through that past the, you know, global pandemic that lasted roughly 24 months, right.

Nir Goldenberg  19:51  
Yeah, totally agree with that. And it's an excellent example. During you know, during the COVID era, we you there was a lot of deal flow and Opportunity flow. But then, you know, some of those opportunities, you know, in areas touched on the value creation, right? So, you know, teams would come to you and say, Hey, this is a time quick time to market, you know, low hanging fruit 510 K, but is it a true commercial opportunity? That's a different question. And so I really would like to second whatever you had mentioned, you need to think about the way you're managing and planning in around your regulatory strategy. But also, you need to think about the bottom lines and the value that you can create around your core technology and, and back to your investors and, and to the company.

Ivanny Franklin  20:40  
So if you have maybe I don't know, from a regulatory perspective, or an investment perspective, but if you have a product or a platform that has the ability to pursue multiple sets of indications, and do you find more value in having an understanding of the regulatory and clinical requirements for one primary indication, or multiple, you know, if the platform or product is scalable, do you find value from an investor's standpoint that they have fully fleshed out and are focused on the primary indication or an understanding of the pipeline?

Adam Saltman  21:19  
Yeah, I mean, just the regulatory thing is pretty cut and dried in the sense that you have to support the claims you make. And so if you're going to make a whole bunch of claims, you have a much harder road in front of you, then if you decide to focus on one, essentially, like proof of concept, and then get that through the agency and get on the market with that, expand it later with, you know, additional data that you collect. So from a regulatory point of view, I think it's pretty, pretty straightforward in terms of time and effort and cost. So

Edwin Lindsay  21:51  
one of the things I would see with is yes, no the roadmap and understand that, as you're taking the first one to market. We have seen in the past where we've we've actually had done 345, please subs, as the 510 key is going to end the Pm is going to end as in getting the information from the FDA early on what the roadmap is understanding what they're thinking, can you overlap with some of the testing some of the clinical work that may reduce time further down the line, but actually speaking to the FDA, through the police program, doing multiple ones, have them going on one after the other, knowing what your questions are, is going to help that platform as well, because it's a, it can save time and effort further down the line. Because you've asked the question early. If you've not asked it early enough, you could be repeating a lot of what that you've never done before. Yeah,

Adam Saltman  22:38  
I'll just can I just throw in there for one second, because that comes down to clinical strategy and clinical strategies, not just to get the regulatory, there's a whole bunch of other reasons to do clinical work, obviously, but the concept that you would have these discussions with FDA, and you would say, Okay, I'm going to generate the evidence to support this claim. And that's what I'm going to go to market with. But I want to continue this study to enroll additional patients and then support an additional claim that those are excellent conversations to have, and then plan that roadmap out

Edwin Lindsay  23:07  
it because one of the things we've seen is, especially in these devices, where you've got maybe diagnosis and monitoring, but the split that one's a 510 K one's a PMA, technically, it's the same device. It's the same test or the same process. So speaking to the metal, and asked them, can we run the 510 K PMA together? And ask them, Can you cross over? Can the data be used for both? You'll never know what to ask the questions. You can ask 100 different consultants different clinical, but you'll you'll never get the answer until the FDA tell you. And that's one of the key things we've seen is the split between a 510 key and a PME. As early on questions to make sure can we use data on both?

Nir Goldenberg  23:46  
When there is a clear platform playing? Right? So you see it in many occasions, like a company has a very clear roadmap strategy around fundraising, around r&d development roadmap, everything is spot on. But there isn't a correlated or associated regulatory and clinical strategy that goes with that. So I would highly recommend to think about that aspect. And to put it together with, you know, the more, you know, kind of traditional aspects that are being managed properly by companies, again, the fundraising and the development would recommend not to neglect that aspect when you're presenting to investors. Yeah, I'd

Auriel August  24:25  
say it's, I'm biased a little bit. I think it's really specific on the clinical indication your targeting. And if you have a true platform play I often too often you'll see a company coming saying trying to pull different indications for their product to create a larger market. And that's very different from having a solid beachhead market that you focus on where you see potential for additional indications down the line. I think there may be some small exceptions around some of the digital health plays some of the monitoring things where there is a platform case that that market by itself is large enough and can actually capture all that initially but more More often than not, you're going to have one clear market that you need to go after that ultimately will have applications down the line and others. But we like to see a pretty good focus and well thought out plan on your primary indication, before thinking about expansion because it can be defocusing. And ultimately, your your primary indication, if that's the only thing you get needs to be what's able to carry the company. And so if you're going through that, and you find yourself trying to find other markets to make it worth it, that's a probably a key indication in your mind right now that either you don't have the right product or the right market, that you're going after that if you can't create a sustainable company on the primary indication, ultimately down the line, when you think about bringing things do down the pipeline for additional indications that's for expansion and growth. That shouldn't be your initial market business plan. And it probably that goes very heavily in device. But I'd say it's pretty applicable as well in a lot of the digital therapeutics as well.

Ivanny Franklin  25:54  
So how about from a timeline perspective? Maybe for the investors up here at what stage of funding? Do you have the expectation that a reg strategy, for example, or simple device classification is determined is precede too early is a too late? You know, how? One of

Auriel August  26:15  
the first things you should think about when you're when you're building a company, because ultimately, that determines how long it's going to take how much money you need? What is your market? Who are you going to ask you for money, it is very, very different. And not everyone likes it. Not every program or project needs venture money, right? Like there are tons of good devices out there that aren't venture plays, things that you should work in partner early to grants, non dilutive funding, built device versus, you know, things that really need institutional capital, because there are pros and cons to both approaches. But ultimately, if you don't have a good clinical and regulatory strategy, any any investor is going to want to see that you at least thought about it that maybe doesn't need to be perfect. But you should know the device classification, you should know generally, you know, what are your competitive landscape, right? Because ultimately, you're going to know if there's another device on the market that's doing what you're doing? Or is it's a completely new category. So I think it's really hard to even get to the point where you're asking anyone for money without knowing kind of how well you're what you're gonna do with that money, because that's usually after r&d, it's clear.

Nir Goldenberg  27:19  
Yeah, 100% agree, I think, as soon as possible. That will be my my reply to that. As already mentioned, this is one of the first things that should be defined by the company. So for me, there is no nothing like, you know, there is no too early for that. And again, you need to the company needs to have high level of clarity around that sort of things.

Adam Saltman  27:43  
Yeah, and there's no charge from FDA for going to have a pre submission discussion with them. So, I mean, I think if you're early on, you go to fda with a pre sub, and you say, This is what I think my classification is, this is what my device evaluation strategy would be and bounce it off them. And you know, when you reach kind of common ground with FDA, that can only help with investor conversations, right? Like I've already been there, I've already had these conversations. It's been like, vetted. So yeah, I agree,

Edwin Lindsay  28:10  
because some of the investors have what we will not even speak to them until we've spoke to the FDA, until we have at least of when the pre sub regulatory report from confirming classification. And at least there's no core blame is or there's no curveballs that the FDA is going to think about, once you've got that the Let's talk.

Auriel August  28:31  
I would agree. I mean, it can't hurt to think about it any earlier. And I'd say that even the next level that really shows me that the team has thought about this as actually, if you think a little bit around what that clinical trial looks like, like what are the endpoints you're going after? How roughly how many patients not gonna be perfect, of course, but saying like, Hey, these are in generally in the field, what other folks have done, and this is what they got approval off of. And even so if it's a 510 K, that you're following, that your predicate device had to do a clinical trial to to get approved. So what did they do to actually show value within the market? And so thinking through that saying, you know, this is going to be 100 patient trial FTM, four, let it be open label or single arm, you don't have to randomize This is roughly an estimate of how much is gonna cause that shows me that you're really thinking like, for what this project looks like. And that gives me a lot of confidence that you know what you're doing, because too often, they'll be like, oh, yeah, then we're gonna get a fraction K approval, and they're gonna be like, and then we'll get the intapp and it's gonna be great. And they're gonna pay it before you know it, and then tap payment, everybody. That is a red flag to say, because actually, the conversion to actually get an internship is very low. It's a new technology, new technology, new technology, add on payment. So yeah,

Adam Saltman  29:37  
well, it's an interesting time right now, because with the advent of software as a medical device, and particularly with all the hype about AI, I mean, we at NAMSA are seeing people come to us for consulting advice their two kids in a garage. I mean, because they realize I don't have any manufacturing costs. I don't have any other stuff. So I'm just going to crank out a product and they haven't thought about any of this and they just assume, you know, people gonna throw money at me. And maybe before 2020 That was the case, maybe? I don't know, but not I guess not now anymore.

Ivanny Franklin  30:10  
So how about red flags? And both from an investor perspective and also from reg and clinical but, you know, in screening pitch decks, and I know we joked about some stories about improper diligence in the strategy. We've had some maybe not purposefully lie, but maybe I don't know. So I have a couple I know we have some stories, we can even shell share, don't don't share names. But you know, improper diligence, what breaks your trust from an investor perspective? What red flags Do you have? If they say, Yeah, I'm a 510 K, or these are reimbursement codes I've identified and they are inaccurate, indeed. So I want to make sure we're all doing it right. We've stressed the value of it. But now, what's the correct way? Dumping?

Edwin Lindsay  30:55  
Just don't tell lies. Because most investors will have regulatory people behind them, looking at that, and then evaluating what you're telling them, because they're not going to make the decision on their own. They're going to have people behind them looking at like Nomsa or something, they're going to have somebody behind them making that say, No, that doesn't sound right. And I've seen invest investment pitches, and I'm going to tell you that talking rubbish, as it seems, Scotland, they're not that they're not going to get to market. So it's having that information, being just upfront, honest, truthful, and also done your homework early. And as I say, that's probably the easiest. So it's easier, but it's not when something's on companies.

Nir Goldenberg  31:36  
I agree with her. Yeah. And I really mentioned before that, you know, the regulatory plan, and strategy should not be perfect. I agree with that. But sometimes you see, like, very significant and kind of painful mistakes. So you know, sometimes you see a company stating, saying, Yeah, this is a 510 K, and you just go a bit into the weeds, and you see that there is a mentioning of a specific predicate device. And then with your team, you're evaluating that, and sometimes it doesn't make sense. So you know why you're saying that this is a factor. And that's a predicate, where even without, you know, initiating a discussion with FDA, you already know that that's not it, that's a red flag, because, you know, you see that there is no organically within the company, or the company was not smart enough to engage with the right partner to help her with doing that first assessment, and then communicating that to you as an investor property. So that's a red flag.

Adam Saltman  32:30  
Yeah, so that kind of opens up the conversation that I said a little bit earlier about clinical strategy is more than just getting through regulatory. And that touches on what you're asking of it, because I look at it as there's a regulatory strategy, then there's is someone going to pay for your product. And I've seen that mistake made more than once, where you think the only thing you need to do is get through FDA? Well, FDA doesn't care if someone is going to buy your product, that's not their job. They want to know what's safe and effective period. Now, then you shift over to CMS or other payers, and they want to know what's reasonable and necessary. That's a different evidentiary requirement. And then, finally, in my view of the world, there's the clinical adoption strategy, because if doctors are not going to use it, or whoever the users are not going to use it, then you're also stuck. So you sort of have these three strategies. And I look at the clinical strategies as laying on top of all of them, in the sense that, yeah, you could do three separate efforts, you know, you could do a regulatory focus study to satisfy FDA, you could do a reimbursement, focus study to satisfy CMS, and then you can publish loads of papers and go to professional societies to get in the guidelines. And guess what, now you've done three very expensive studies, taking you a long time, a lot of money, etc. Is there a way to do it in some way, maybe in Google an effort or in fewer efforts, or whatever, you know, to combine those. And so what I've seen people do is, you know, they put together investor pitches, you know, these little companies put together these pitches, and they leave a piece out, and they didn't talk about how their product is going to get paid for or if doctors will, will be willing to use it or something like that. And that's a glaring hole. And then I've seen people put what was the word you use rubbish, I've seen them putting rubbish in, they're like, Okay, here's our reimbursement codes. And then, you know, I'm, I'm functioning as their consultant and I go and I do some research on I find out, there is no such code, you know, I mean, that's like a problem. So anyway, I'll just leave by anecdote.

Ivanny Franklin  34:45  
I had one where I asked Adam to take a look at the in the pitch deck they had claimed Okay, these are the codes that cover our product. So I just ran it past him and he said this codes don't exist. So you know, that was immediately dismissed. Session is standing right there. I apologize. But okay, no, no, you are right. They were wrong. So

Nir Goldenberg  35:06  
I think just a second Adam here, I think that the key thinking here should be how do you leverage your clinical and regulatory strategy and execution towards your upcoming commercialization? How do you leverage it? How do you enhance that even your commercialization around your execution of your clinical and regulatory strategy? I think that's a very important point. And many companies don't do that thinking, and then they're missing out because they can leverage it and enhance the commercialization nicely if this is being if this is being planned properly.

Ivanny Franklin  35:44  
So do you have we're coming up on time here, I'll just keep this open ended? Do you have any, I guess, general advice that you would provide startup companies on, you know, whether the how to do it correctly, when to do it. And and you have suggestions for them?

Auriel August  36:01  
Yeah, I, I would emphasize thinking about it early, your clinical regulatory strategy, and then also laying on the reimbursement piece, because ultimately, it won't matter if you create the best product in the world, if no one will pay for it. So that and that will tie in to the different clinical evidence you're going to build, ultimately, you're not going to be able to outsmart the investors. I know like, it's always you want to be like very positive and like forward thinking and optimistic. But you have to realize that we're seeing like you're focused on your company, but we see everything and have done a lot and had been there and see how long it actually takes and how much money it's going to cost to do things, even whether even a 510 K can take just as many years to get to market adoption as much money and time as a PMA product. And so, I think the under promise and over deliver actually goes a long way of really thinking about your market sizing, how much money is gonna take how long it's going to take, like said the average drowning for 510 K, you know, you're looking at at least, you know, probably six months, at minimum to get, you know, some advice back. And then if you're doing any kind of clinical studies, so things just take time bringing sites online, think, you know, working with Kol is like there's a there's no shortcuts. And so being really honest with yourself and thinking through it, it means a lot more to me as an investor that you've thought through this and say, Hey, this is a this is a, you know, a five year program and, and walking me through that, that you thought through and we didn't bring it in the timeline, great. But if you're already coming up and saying this is how long this is going to take and have thought about it thoroughly, then that's the means you're thinking about it the right way I my my red flag is that, you know, we only need, you know, 18 months, and we're gonna be in the clinic, and then we're gonna run it. We don't have approval in a year from there. And then we're commercializing and we'll be at 100 million Arr, in five years from that. And so like, that's just not realistic. And that is when you're like, okay, they don't know what they're talking about. So it's much better to be really thoughtful from the beginning,

Edwin Lindsay  37:52  
you obviously do your homework, Ben, being on the side of compliance, regulatory, but also from a staff top side, is do your homework, make sure you've got to connect, be prepared to be told that your baby's ugly, several times, be prepared to change it several times. But just keep doing your homework, but stay on top of it. Especially the regulator old things are changing. So you don't think you've got your regulated roadmap early, it's always going to change, keep reviewing, I see companies that don't review it, and they just get to the end. And it's like, oh, it's not proven that way. Was Okay, two years ago, no, it's that planning and always doing your homework and staying one step ahead. Because things do change.

Nir Goldenberg  38:32  
I would suggest to think about your team, think team, you hear this, again, again, from investors. Some people say it's a cliche, but it's not right. Like, it's the team, your team is a significant asset. So think about who in your team. Again, this could be organically or the partner that you would work with is supporting and helping you to be on top of things. And as the saying, there are so many moving parts and pieces here. So you need to have a strong partner or an organic team member that will help you to manage and regulatory and Clinical Strategy along the cardinal and crucial years of your company. So

Adam Saltman  39:14  
yeah, I don't have anything to add to that except to say don't forget your quality management system.

Edwin Lindsay  39:22  
That takes time and money. One last thing on the team side would be make sure you've got people that are strong enough to make decisions and just don't hide behind the regulations. I see too many companies with good people who just hide behind the regulations and tell them you can't do that. You can't do that. You can't do that. Make sure you've got a strong team that people can make decisions and know what the decisions are and will stand behind the decisions.

Ivanny Franklin  39:46  
Well, thank you all great job. Appreciate the expertise


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