Etienne Nichols Interviews Jeremy Starkweather, Managing Director of Phase Therapeutics

Etienne Nichols  0:00  
Hey everyone, welcome back to the Global Medical Device podcast. My name is Etsy Nichols. I'm the host of today's episode. Today with me is Jeremy Starkweather from phase therapeutics,

Jeremy Starkweather  0:09  
yes, phase therapeutics, glad

Etienne Nichols  0:11  
to have you with us. We're at LSI at Dana Point in California. Really fantastic event where, I don't know what the number is, something like 350 medical device companies come to do their pitches in front of investments, investors, and make connections with with funding. And it's exciting. There's a lot of energy in the event. How's the event been for you? So far? Jeremy,

Jeremy Starkweather  0:34  
it's been outstanding. I had some follow up meetings, but making a lot of new connections, and in the never ending process of fundraising, you need as many of as many of those connections as possible. So it's been really great sitting on a nice patio. Dana Point under the sunshine doing pitches is better than over. Zoom, that's for sure. Absolutely,

Etienne Nichols  0:56  
I don't get to stay at the Waldorf as often as maybe I should

Jeremy Starkweather  1:00  
so, yeah, exactly, exactly.

Etienne Nichols  1:03  
So I wanted to talk to you yesterday. We met. What was it breakfast? I'm not sure I was yeah, we met at breakfast. And so the thing that struck me about you is you were talking about going to meet with your investors and to talk about some funding. I wanted to talk about just some of the challenges that a lot of a lot of the founders here are facing, or maybe have faced and have overcome, but the journey of a CEO? Yeah, I don't know if we can start with your, your early beginnings of medical device or we were joking before the interview. Gee, did you ever see yourself as a CEO of a medical device company? But, but what was your What did your beginning look like? Yeah,

Jeremy Starkweather  1:39  
the beginning. I mean, I'm a sales, commercial is my strongest suit. So at an early stage, early part of my career, I started off in the orthopedic world, but then I got an incredible opportunity at a pretty young age with Boston Scientific and I spent 11 years there and got to do a lot of things there, from sales to Global Product Management, where I started to understand a little bit more about R and D, the regulatory challenges a device might face, and started to integrate into quality. So I became more well rounded by moving away from that field based sales role into a marketing role where you kind of are a general manager of your own small little business with inside the big corporate environment, and also got involved in diligence. So I got to be a part of a diligence team that would do, you know, analysis of young startups, and you you'd follow them along the way, and you would be there as a subject matter expert. That compelled me to go work for one of them. That company was exalumina, incredible product in the interventional GI endoscopy space. I was a VP of sales and business development there. We commercialized it, and then Boston Scientific ended up acquiring it. So then went into my second startup, which was a venture backed startup in the GI space, again, and we didn't have success commercializing that product.

Etienne Nichols  3:10  
So we're about, I mean, not everybody's comfortable talking about, I don't know if you want to call it failure, but tell us a little burp,

Jeremy Starkweather  3:16  
yeah. So it was interventional treatment for GERD, okay, it was one of the most well engineered devices that I've ever seen, especially in gi nosfe. It was a indoluminal stapler and great technology. But some of the commercial challenges is the product, the procedure had some complexities to it, and you're, you're dealing with a market that is, you know, primarily managed by drugs. And so if you're going to have great commercial effort that became a, really a patient recruitment effort, and there's some folks still in GI that are, that are making headway in that space, but we really just ran out of time and money and didn't have the ability to pivot as quickly with device changes and the clock ran out. So I think that in hindsight, you know, we probably should have identified some of the shortcomings of recruitment, shortcomings of the device itself, halted the commercial effort, and then reset and preserve time and money. So that was the biggest challenge that I've seen. So you know, when you start to look at risk assessment and opportunities, it needs to be fully it needs to be baked in from from early, early on.

Etienne Nichols  4:42  
So when you talk about those risk issues that occurred, I mean, looking back, you never know hindsight. It's always 2020, but looking back, who do you think was closest to those issues and maybe could have identified the best? Yeah, or does that make sense? What I'm asking

Jeremy Starkweather  4:57  
it does you. So this was a pretty it was a reasonably funded venture, and, you know, the technical risk were difficult, but overcome got regulatory. I mean, we were commercial. I just don't think that we had the full, full picture of healthcare economics figured out yet, because those healthcare economics are what would have driven patient recruitment, okay, so, and then ultimately, you know, a couple couple challenging cases, you start to lose a little bit of confidence from your clinician performing the procedure. So now then you're going to go ask them to recruit a patient for a procedure that probably wasn't completely baked. So it's tough to it's tough to point the finger of any one individual, because it was an incredible team that we had at that at that venture.

Etienne Nichols  5:51  
You said something earlier when you talked about when you were you essentially had a company within a company, your book of business at one point in your career, and I think that's an interesting point, because I think a lot of people probably could get that more well rounded view if they were a little more intentional about it. Some roles put you in that situation, and you just have the you just take advantage of the situation. Others, you maybe you can take take responsibility and build that intrapreneurial mindset at whatever role you're in, is that something that you agree with or feel free to disagree, but, but how can people build, build some of their their mindset and their thinking, so that they can, if that, if that is one of their goals, to become building a medical device company. When,

Jeremy Starkweather  6:35  
when I was a young guy at Boston Scientific I'd been my sales role for a while. I had built deep relationships with key opinion leaders at major academic medical centers. I knew that I wanted to expand my knowledge. I had a strong interest in product development, even though I was not an engineer, I had watched hundreds and 1000s of procedures. So I became, I became a subject matter expert within that field of Gi and pulmonary endoscopy. But I wanted more. I knew that there were things that could be done with devices, or improvements that could be made, and being out in the field, you can't impact that change. So the opportunity was given to me to move into global product management, it was actually a step back in pay, and it was a lot of sacrifices at the time. You're like, okay, is this worth it? I'm having a great sales career, and I think you really as a young, you know, guy in the in the medical device space, you kind of pick your pathway. Am I going to go down, like sales management and leadership, and maybe that moves me into the executive level positions, or am I going to diversify my skill set and move down this product development pathway? That's what opened the door for me. My eyes became wide, and I was like, I can probably impact the patient care better from that angle. And so that was my choice. Some people take it, some people don't, but it's led me to where I am today, and I couldn't be happier. That's awesome.

Etienne Nichols  8:09  
Well, tell us a little bit more about becoming CEO then founding a company. What was that like first time?

Jeremy Starkweather  8:16  
So the first company that we founded, it's in the GI endoscopy space, and me and one of my business partners are in a cab, and we're leaving DDW, and we were thinking about this one particular procedure, and we start, started to think about how we could improve that space. We started with a basic concept for that product, and I drew it on my iPad, and I still have the picture today, and it actually looks like the developed product, which is pretty, pretty rewarding, unusual, too. Yeah. So I'm not an engineer, right? So I don't have the ability to design that device, even though I could understand the concepts that needed to be done. And that's from watching a lot of these procedures and listening to physicians, the key opinion leaders, tell me everything that needs to be improved upon that and it is very difficult for a large organization to react quickly in that environment, but once I had the opportunity and the freedom to explore that myself, I'm like, Okay, I need the best engineers I can find on this product, because it had some level of complexity. And then we started to round out the team, and we formed the company, and we did our initial prototype, and then it's like, okay, we need to raise some funds doing, of course, all of this unpaid is not easy. So we raised some friends and family money. We raised about $400,000 friends and family. Got the prototype a little bit more well refined, and then we landed a Series A and we took the series a money, and we just submitted to the FDA. Uh, in November, got some back and forth. We anticipate FDA, FDA clearance on that product. And then hopefully we'll we've got a good pathway to an exit on that one. And that's what we moved into to Phase. Phase is, is the is our next venture. So learned a lot from that, literally, that's going to go from concept to commercialization and with our own invention. But who do you pick to help you do that? Is the most critical things, and actually the assessment from day one of the concept, because I'm primarily a commercial guy. I was thinking about, okay, who's going to buy it? How's this going to penetrate the market? And then you have to roll back and say, Okay, what are the clinical risk, the technical risk? Can we build it? What are the regulatory risk? But that go to market strategy has to be vetted out on day one, and all those risks need to be assessed, because that tells you exactly how much money it's going to take, and it also gives you an idea of timeline.

Etienne Nichols  11:12  
I can see those being independent risks, but also working together. I mean, you know what, you mess with one lever it's potentially going to impact another. Is that accurate? Or how do you, how do you kind

Jeremy Starkweather  11:22  
of it's accurate. I mean, like, if you think about product design and how that's going to impact the regulatory risk, for example, yeah, if it's too novel, you're going to be a de novo or a PMA, right? So if it's, if it's got a clear predicate, and you stay within a reasonable design. You don't want to make it too complex, right? You need to manufacture it. It needs to be able to be manufactured at good with good cogs. Got to have great margins, especially if you want an exit someday. So yeah, we assessed the number one, what's the clinical need that builds your all your user requirements, right? And they're like, Okay, this is, this is the design of the product. What is that going to look like regulatory wise? But then clinically, what clinical endpoints does this product eventually have to show to to get somebody interested in buying it our models, we don't, we're not interested in building a company the last for 10 or 15 years, and, you know, with a massive sales force, or, you know, going IPO, we have very, very clear and specific goal, how quickly and effectively can you get from concept to commercialization, if, if, with with my background and the team that I work with, if we have to commercialize, we'll go commercialize. We'll get early proof of commercial success, and actually take that moment also build out the clinical story with key opinion leaders at the major academic medical centers that are the early influencers to the rest of the market. So we focus on them. Collaborate with them. Collaborate with them early, so they can actually help influence your pathway. How

Etienne Nichols  13:16  
do you get a hold of those people? Because I can see a lot of people saying, I'd love to collaborate early with, you know, strategic. But what does that look like in reality,

Jeremy Starkweather  13:26  
collaborating strategic or collaborating with the clinicians, maybe

Etienne Nichols  13:30  
clinicians, maybe I jumped the gun on where it's going to the yeah, let's, let's

Jeremy Starkweather  13:33  
explore that. Because, yeah, I have domain expertise in the field of Gi and pulmonary endoscopy. So you have connections. It's been built. It's been built over 20 years, right? So I consider a lot of them close friends. They're all at major academic medical centers, because the positions that I had in my in the past, both the Boston Scientific and with these VC backed startups. So I can tap into the them as resources, but it's not always a one it's not a one way street, right? There's got to be mutual benefit for them to work work with you, but they are the ones that can really vet out whether you are on the right track or wrong track. And most pivots that that I've done have been from expert opinion leaders and delivering what they think is going to be good for the patient. That's that's number one. So if, if you are an inventor or an entrepreneur, let's say you're a technical entrepreneur, you're a clinician inventor, or if you're an engineer inventor, if you don't have that, that delaying expertise and that tight connection to the market, you need to find somebody that has it Gotcha. So that's my advice to all technical inventors. You need to find somebody like me who is in that space that is is connected. It deeply within that market, and that takes time. I mean, it took, it's taken me 20 years. I've only been in this space for 20 years. So you don't have to have that, but if you don't find somebody that does,

Etienne Nichols  15:13  
so that seems like that would be one of the very first things you would want to build into your team, yep. What are some of the next steps when you're building out that team? Yeah.

Jeremy Starkweather  15:21  
So you have to have great engineering partners.

Etienne Nichols  15:26  
If you're not an engineer, how do you tell a good and win from a bad one?

Jeremy Starkweather  15:30  
A lot of times it's word of mouth, and then it's just proof. But I mean, I have to connect with somebody like personally. I mean, we have to be in lockstep. I also hate changing course. Like you know, you can go get an engineer who can do the engineering, but I want an engineer that can take me from the all the way from the concept to finished goods manufacturing. So either they have the connectivity or they have it within their own organization. We actually found that with render medical, and that's spelled rndr, and I work really closely with one of the one of the principals there. His name's Anthony, and he is somebody that can take me from concept to commercialization. And he's very honest about it. He's like, we're gonna have missteps along the way and but we'll figure him out. So he'll give a brief, a brief look at it, and then determine whether he wants to spend his time and effort on it, because it's, it's more than just a fee for service relationship. And if you have that relationship, and you don't have to change course. That's the kind of relationship that I prefer. As we're rounding out the team. This is me. Personally, I typically work with consultants on all other aspects. We keep our core team. Let's call it the original founders, or the folks are doing the initial startup, we keep that super lean, and then we work with outside partners on almost everything else that allows us to preserve cash. We don't have a bunch of high paid executives, and our investors like it.

Etienne Nichols  17:16  
What is the goal in the when it comes to an exit. And how do you come up with the criteria for that? Because I would assume that is affecting your decision not to have high powered, you know, high paid executives or different types of hires and using consultants instead. Is that true? Yeah,

Jeremy Starkweather  17:33  
so, you know, my two primary business partners on some of things we're working on are Jason elizardi. He's got as much background in GI endoscopy commercialization as I do. He's been with like, four startups in the GI endoscopy space, and then John Wynn, who was actually with me at Boston Scientific, he was on the biz dev side of Boston Scientific for the endoscopy division. I got to know him by doing some diligence in back in those days. So Jason and I are always thinking about that go to market commercial strategy and user needs. So we tap into our network to figure all of that out, and we can get a long way there, just with the two of us collaborating. We also have Kristen springs, who is, is, is with us. He has a startup guy, deep experience in taking products. He's as he's had exits, taking products from from early ideas, from him and one of his clinician partners to an exit. So he's an expert in the space. So you've got these, get these four people that are all kind of honing in on what needs to be done related to this business. But John brings something very unique to the table. He market models the way he market modeled at Boston Scientific, yeah. So that's where you start to figure out, Okay, what's our valuation going to be? What do we think the total market is going to be? But what is the exit going to be someday? And let's not make any missteps along the way, because if the goal is to exit, that's, that's, that's what we want to do. So John brings that market modeling piece to the end of it, and that's really kind of what drives our strategic engagement. So we've had a lot of relationships with strategics in this space. And when we work on something, we we socialize it early. Say, Hey, here's what we're going to do, and we're going to go raise money, and we're going to finish the product development, and then we're going to go commercialize it.

Etienne Nichols  19:38  
I can see a lot of people being close to the vest. You know, inventors have this syndrome where they don't want to share their ideas, but you say you share this early with with the relationships with strategic So two questions, number one, is there NDA or how's that work? And maybe the upstream question of that is, how do you build those relationships with those strategics?

Jeremy Starkweather  19:58  
Yeah. So. Interesting, because a lot of people have come from Boston Scientific and gone to the other strategics and leadership positions. So we've got a relationship there. But I never relationship with all the business development people, you know, take advantage of conferences like LSI, absolutely industry conferences like DDW, if you're in the GI space, and then the, you know, the other pulmonary conferences, and you can meet, you can find them and meet them. They, they you have to do, you have to make the effort to do that. And so it is, yeah, it's no different than trying to get an investor related to what we share with them. You know, no investor wants to sign an NDA. They just don't do it right. You can occasionally get a strategic to sign an NDA. If I have something, I typically would never pitch a strategic competitor product. I just think that that doesn't make sense, unless it's a real leap forward. So as long as you have some level of IP protection, that's good, but you don't have to show them everything. Like I can show you a device and I can put a prototype on the table. That doesn't mean that you're going to see, you know, the engineering files, yeah. So we'll hold the secret sauce private and show enough that they will have confidence that we're going to be able to do it. So I don't have a problem with sharing enough secrets to gain interest, but the engagement with the strategic is not just about, Oh, do you want to invest or do you want to buy my product? It's about building relationships. That's number one. But it's also giving them enough information in the beginning that they can start socializing it within their own organization. So you know, if you go to JP Morgan and you meet with meet with a strategic, or you come to LSI and you meet a strategic, you're not even going to be on the map for another nine to 12 months with anybody. Yeah, so it gives you time to say, hey, here's what we're doing. And then you also gain a ton of credibility as you start to execute on what you said that you were going to do. So that is the real goal from early engagement. The last thing you want to do is say, hey, you know what? Got this FDA approved product. We're going to start a process. Do you want to be in it? And that's a bad look, in my opinion.

Etienne Nichols  22:39  
So why is that? Why is that a bad look? Well,

Jeremy Starkweather  22:41  
I think it's a bad look because they don't necessarily have enough time to react. Or, you know, what are you gonna do? Take a term sheet and to somebody else and say, Hey, I've got a term sheet now. Do you want to be a part of it? I

Unknown Speaker  22:55  
started saying, Yeah,

Jeremy Starkweather  22:56  
you're you need to educate people at the right time about what you're doing, because the last thing you want to biz dev person at one of these companies to they don't want them to get caught off guard within the own organization, and that just doesn't make sense. So we communicate early. Tell them what we're going to do. We don't ask for anything. The majority of strategics will say, Oh, yeah, you guys are too early. Go do whatever, go get FDA clearance, or go get commercial traction or whatever. But it's also good to understand what their expectations are related to your technology. So you know if they tell you that you need to go get commercial traction, well you know what to do. Yeah. So we communicate early and we communicate often while we're doing it.

Etienne Nichols  23:45  
So when it comes time to go get that money, whether you're trying to get it from the VC investors, what are some questions you should be asking yourself before you go? We talked about this a little bit before, how there's some questions that are going to have to have some answers, so you might as well just ask them yourself before you get there. What are those?

Jeremy Starkweather  24:02  
Well, we, we try to do a reasonable analysis on the on the the venture firm themselves. Okay, are they pre seed? Are they seed? Do they get involved in series ABC? That's critical, because if you don't match their investment criteria, you're just wasting everybody's time. So as much as you can find out from their website or talking to somebody else that's been in it, VCs are hard to get so when you get that moment, make it worth it, and you don't want to get into a pitch and then then be like, oh, yeah, we only write checks of $20 million right? And you need, like, a million, yeah, you're not going to be a good match. And you spent that, you could spend that time with, with more with more focus. So when we're engaging VCs, it's, it's pretty simple. It's like, here's what's. Been done. Try to keep the decks small. You know, let's call it a max 10, if not five, maybe a one pager. You've really given thought to all the different areas. I don't care if you're raising seed money or or later, you a lot of times have to answer the same questions, yeah, what is the regulatory pathway for this product? What are you going to have to do clinically to get it accepted? What's your technical ability to just execute what you what you are planning? So the questions are all the same. It's they don't very much, depending on the funding stage. You just have to get more precise the further you go, because you're not going to have all the answers in the beginning.

Etienne Nichols  25:47  
So it sounds like there's different paths that you could take. I mean, if a guy wants to start a company who's a engineer inventor, he's got a different team he needs to build out shore up his weaknesses, but then there's going to be a different fork in the road down the road. Maybe I want to just, I'd like to sell those strategic or I'd like to just license this technology, or I'd like to own, own a company and become, you know, just the next big medical device company. I guess I don't know what, what are some of those forks in the road that maybe some people aren't aware of, or some things you learned along the way. Yeah.

Jeremy Starkweather  26:23  
So I give phase as a good example. Phase is a transluminal delivery of cryoablation for inoperable lung tumors. The exact same platform can be leveraged for access to the pancreas via endoscopic ultrasound in the lung. It's robotic assisted bronchoscopy or endo bronchial ultrasound. That product was invented by a world renowned expert in cryomedicine. He had four patents. He funded his research with non dilutive funding. NIH, to the tunes of millions, wow. This is in the product's real breakthrough in the in the field of ablation. That's why we started phase. So I get introduced to him through Kristen springs, one of our, one of our business partners, and it's like, let's, let's hone in on this, this lung, this, this transluminal, trans brochure approach to lung because if we can do that, we can do any cryoablation, quite frankly. So we formed a new entity with the inventor. We licensed all the IP into the new entity. We're a new co but we've got years of development that's already been done. So that is a pathway where you've got this mix of non dilutive that is now tied in to what we're doing now, which is raising money from VCs. So that pathway is a little bit different, because that is, hey, we've got an incredible concept here that's got like, 10 preclinical labs and hundreds of bench test labs, and that's a that's a different scenario than saying, hey, I want to raise $400,000 or $500,000 in seed, like a phase doesn't need $500,000 that needs 5 million, yeah, because we got to get first in Human Right, right? We're not, we're not, we're not building that. We're not in this early, early phase. So no pun intended. So yeah, it's you really have to look at at each business individually, where you are. What can you accomplish in a reasonable period? When I look at timelines, it's kind of like, for me, it's okay. What can we accomplish in like, the next 24 months now, much funding is that going to take? Hard to develop a device inside of 12 months. You really are going to need at least 18 to 24 to get everything, uh, hammered out. And then you can take the next step, which would be like, you know, getting into humans. As I've

Etienne Nichols  28:54  
listened to you talk, it sounds like, no matter what type of CEO you are, what type of founder you are? One of the things that you really have to focus on and shore up is that that your gaps. Yeah, like you said, You're not an engineer, so you're going to need that engineer experience, engineer innovator. He's going to need that clinician experiences, right? So whatever you are, you've got to, you've got to mirror that and figure out how to shore up those gaps. What are anything else that you really think this? You know, this is one thing that a lot of people maybe they miss when they're when they're going through this one way to shorten the timeline, reduce spend, something that that a lot of people are at pitfalls are getting into. The first

Jeremy Starkweather  29:35  
thing that I would advice, that I would get is, like, if you come up with an idea and you think that you want to start a company, you better think long and hard about it, okay? Because it is going to be a lot harder than you think, and it's going to be tremendous sacrifice, nights, weekends, you name it. Everybody's got their entrepreneurial story, right? I'm not telling anybody, but you'd really have to do because it's going to take you to spend the next, you know, three, eight years of your life. Five dedicated to doing this, if you're going to do it right, unless you want to, you know, license the product to whoever and let them do let them do it for you. So number one, take a real hard look in the mirror, because it's going to be there's going to be many moments of pain. The biggest advice I have related to funding is, have a clear strategy. What is your goal? I don't think people think about that enough like, what do you really want to get out of it? Because that will take you down different different roles, right? If I want to license technology, maybe I just get, like, early commercial or, I'm sorry, maybe I get early prototype development done, and I'm able to show this off to a strategic that maybe wants to goddle it up. But if you're going to go all the way through the FDA with the potential of commercializing it even in an easy regulatory path and a reasonable technical path, I mean, you're probably going to be in the 10, $15 million range. If it's got a really big challenge related to regulatory you're going to be, well, in the 3040, or 50, if it's a super long path, and you've got to build like a commercial team for you know, that's going to have 50 reps. I mean, we see companies all the time that are in the 100, 200 $300 million fundraising range. So all that's good. It depends, but it depends on what the exit strategy is, because if you have too much paid in capital and too small a market, nobody wants it. So I just think that you can't have enough resources to help you. I cannot. I don't do market modeling. I do that with John, and we sit and look at a spreadsheet and say, Okay, what is reasonable here, knowing that a strategic is just going to discount what we say anyway. But the more detail we have, if we have to show our market model, we'll show our market model, and if they have a different market model, then, then let's do it. But I don't have the ability to do that, and it's a critical component to what we do often overlooked. You see, do you see Dex all the times like, Hey, I have a multi billion dollar market. Well, what are you? Are you? Or how are you going to eventually, like, launch this product and commercialize it, and what kind of revenue can be generated? That is believable, and that's when you really start to understand what the value of the company is. So lot of gaps. If you don't have that skill set, you're going to have to build it in. I give up equity probably way too generously. But you know, even to outside, even outside parties sometime, because I either take money from the investor and pay somebody, or I exchange some work for some equity. There's a lot of creative ways that you can do it in the early stages when you don't have money. So I don't know if that answered your question. I know as bouncing around. No,

Etienne Nichols  32:53  
I think it does. I think some people are just afraid to give away equity. But a lot of the successful entrepreneurs that I've spoken to use that even saying, I give my employees equity, they work better, you know, they care about the company. Lots of these things, yep, opportunities to really have a better company,

Jeremy Starkweather  33:09  
absolutely. And with, you know, there's much more skin in the game, right? So, yeah, I mean, of course you have fee for service partners that you work with, but I think anybody that's critical to the core teams got to be incentivized with some level of equity. It can drive them. Gives you something to

Etienne Nichols  33:28  
shoot for. Awesome. Well, Jeremy, thank you so much for coming on the show. Where can people find you? Just to maybe, if they have any questions or want to reach out,

Jeremy Starkweather  33:35  
connect with me on LinkedIn. Is easiest way. Yeah. Same thing. If you send me a message, send me your email, we can communicate back and forth. You know, give me a little give me a little idea of what you want to talk about. But I love networking. I love exchange of ideas. I don't think that you can meet enough good people to collaborate with. So I appreciate you giving me the opportunity to chat today. Awesome.

Etienne Nichols  34:03  
Thanks, Jeremy. I'll let you get back to those who've been listening. You've been listening to the Global Medical Device podcast. Thanks so much for listening, and we'll see you next time. Thank you. Bye.