Henry Peck 0:03
Thank you everyone for joining us. And welcome to LSI, USA 24. Scott, I'll return the favor of embarrassment when I attended this event, USA 21. Three years ago, I was in the audience presenting a company at the time, I saw the opening fireside, and I thought, how the heck do I get on stage to do one of those. And here we are three years later. It's amazing and what you and the team have built and letting all of us who have joined since Ba Be a part of it. And this community is incredible. I'm thrilled to do this Fireside Chat tonight to set the stage for the event. And we're going to talk about a breadth of different technologies market segments with two incredible executives from Integra LifeSciences. I'll have the speakers introduce themselves as we get going. But first, I'm joined by Dr. Stuart Hart, the Chief Medical Officer of Integra and Mark Jessore, the Chief Digital Officer of Integra Stuart, we'll start with you Why don't you tell us a little bit about yourself and what integrity is.
Stuart Hart 0:54
Sure. Well, first I want to thank you, Henry for the invitation is so this is my first time at LSI. So really exciting. Thank you for the invitation to be here. I was very excited to come here. It's a beautiful location. So brief background about myself. So my background, I'm a Euro gynecologist and reconstructive pelvic surgeon, I practiced medicine for about 15 years. About eight years ago, I left academic medicine and joined industry. Since that time, I worked for Medtronic for Becton Dickinson, and now over the last year as the Chief Medical Officer for Integra, and so it's it's really privileged but but along my career path, I've really had the opportunity to work both on the clinical side as well as on that device side. So it's really exciting to kind of be here be with a whole group of med tech experts in terms of Integra LifeSciences. So Integra, we're a $1.6 billion global company, we're in 120 countries across the globe, we have two main business units. One is more of a surgical business unit, what we call CSS or common surgical solutions. And that's really focused on neurosurgery now, e and t as well as neurosurgery, but a variety of other surgical procedures as well. We have instruments that are used and abdominal surgery and in many other reconstructive surgery, many other surgical procedures, and then we have more of a regenerative medicine or what we call tissue technology business, which is really around collagen type tissue. So it's used in plastic reconstructive surgery and breast surgery a lot in wound care burns when you need synthetic skin, skin substitutes. So we have a variety of different collagen base products. Also, if you were to injure a nerve or a tendon, our products can be used for repair of those tissues.
Henry Peck 2:56
Fantastic. And Mark, I couldn't think of a better person to ask this question too, is the Chief Digital Officer but to accompany a global medical device company like Integra that serves so many markets? What does digital mean to you?
Mark Jesser 3:09
Well, thanks again, I echo your sentiments that I'm really excited to be here. What to answer your question before I do. My background is I've been at Integra for about two years as the Chief Digital Officer. Before that I spent about two decades in doing kind of innovation and digital roles at both startups and large companies, including Abbott diabetes care and Becton Dickinson. So that's kind of been my background. To date, I would say that, if I had to think about the one thing that probably was why I was hired by the current CEO, it's the work I did, I spent 10 years at Abbott diabetes care worked on their libre glucose sensor, which is, if you're in diabetes, it's it's kind of a kind of a revolutionary product in the sense that it was a large digital health platform, one of the first regulated mobile apps in the industry. And then we built a large platform that serves about 2 million patients. So it had big economic results for Abbott, but more than anything, it really changed the way data was used, bring together patients, their providers and payers so on globally, so it was a great example. And I think I was brought in Hey, can you do that again, for me? So there's no pressure. But in any case, that's kind of my background, I would say to answer your question around what is digital? For Integra? We really when you think about a Chief Digital Officer coming into a med tech, there's really two focuses that, I would say that that it has the first is kind of external customer facing innovation or digital, which is how do we bring digital into the portfolio of devices that we have? There's two ways really to do that. One way is to take sensors and essentially add them into our current products. And so we do that of our neuros faces. And then the other side is to create what we call companion naps are companion platforms where you have non digital products. And you're looking to create ways to pull information from them add information, and then essentially use that to kind of enhance the experience for patients and providers. So that's kind of the overall way that we look at it. There's another piece, which is digital, or just innovation in general, usually digitally led, which is for the enterprise itself. So there's a lot that happens, not just for customer facing things, but also within our factories, and so on, there's a real revolution going on in terms of applying digital for projects inside our factories as well, which we have 14 different factories, and there's a wide range of manufacturing processes. And so there's a lot of opportunities to apply digital there as well.
Henry Peck 5:42
Let's jump into the patient facing side for a minute and talk about one of the most exciting technologies that I'm sure will be talked about in a lot of different presentations, a lot of different panels this weekend, AI. So when you think about AI right now, Stuart, where is AI poised to have the greatest impact in patient care in the way that Integra sees the market and the market that you serve? Yeah,
Stuart Hart 6:03
it's a great question. It's a question we think about every day. And I can first say, as a physician, as a surgeon, as my background training, it's so much fun to work with the Chief Digital Officer, because we really come up with, you know, really kind of creative solutions to real challenges that that clinicians have. In terms of ai ai, obviously, it's a powerful tool, but it's pretty early on in its infancy. And there's a lot of nuances to AI. But really where we see AI fitting in is if you look at the patient journey, I think is the best way to start thinking about the power of AI. And it's going to take years to get to really kind of live up to the hype, but it's pretty impressive early on. So if you think about the challenges of the patient, it's the efficiency of the healthcare system. First, it's getting the patient into the health care system, it's then getting that patient through the appropriate diagnosis and the appropriate treatment. And so by collecting the appropriate data, and that's part of the challenges is getting the data. But once you have the data, and you're able to leverage that data, using AI, especially on the clinical evidence side, you can really start to tailor therapy specifically to the patient that you're treating. And that's there's been a lot of talk and more in the pharmaceutical industry around that. But if you think about med device, we're using medical devices across a spectrum of different patients. And we really don't have a great understanding of how our medical devices interact with certain patients with certain morbidities and certain conditions. And so it's a challenge. And that's where AI is able to kind of take that data, assimilate that data and find areas that we may be able to improve. And right now we're just not that good at doing that. I mean, if you think about what we do, as clinicians, we look at clinical studies, randomized clinical trials, but but they're very specific to specific conditions or specific uses. And there's no, it's very hard to put all that data together. And the human brain can't really pull that data together. So that's where AI is very powerful. And then from there is figuring out the appropriate treatment, it gets into pre surgical planning as as a surgeon, I wish I had these tools years ago that we can really figure out what is eventually the best surgery for for the patient. And then we can use it for pre planning and for surgical treatments. So there's a lot of places within the system that AI can be used from increasing the health care system efficiency and helping with burnout and getting that patient all the way through to the appropriate diagnosis and the best treatment for that particular patient.
Mark Jesser 8:47
Yeah, I think that the the care, the care pathway, or basically the patient journey is something that we focus on a lot. So med device companies in many ways, there's a push to move us out of just being kind of a point solution or something that's, you know, that we use in a surgical suite. The question is, how can we leverage digital and AI outside either in pre surgical planning, as you mentioned, but also post surgical. So in wound care, which is a big part of our business, it's the idea of, can we have a patient photograph their wounds at home and then use AI to analyze that and decide whether that patient needs to come back into the clinic for treatment or not? Can you basically reduce costs, reduce infection rates, and improve healing and so on. So it's a good example that with access to these new large datasets, we're able to be much more predictive and can kind of drive better care.
Henry Peck 9:39
We're gonna have some more conversations about this throughout the week. But with that capacity of AI that you're talking about the predictive models the ability to potentially reduce costs and create value. How are you thinking about the business side of AI? We see a lot of investment, a lot of development and r&d, but how do you think about actually monetizing the things that you created and doing it in a cost efficient way.
Mark Jesser 10:01
Yeah, the there's a couple of things in terms of the on the datasets side of things, we try to find ways to create value propositions to capture that data without just paying for the datasets. Because in essence, the trick is to really figure out ways in which you can get clinicians to for instance, let's take the wound care example. If you can get surgeons to find value in actually taking photos of their wound of the wounds that they're treating over time. Whether it's for tracking or getting into the EMR and things like that, then you kind of generate these datasets as a byproduct of that. So a lot of times, what we try to do is figure out a value proposition that starts with something that will benefits the patient or the surgeon. And then in the back of our minds, we're thinking about this additional value that comes out of creating a dataset that we can use to drive predictive algorithms afterward.
Henry Peck 10:53
And let's take, let's take a step back from Ai specifically and focus on the digital health category at large, obviously, in the wake of COVID. And post COVID saw a lot of companies a lot of innovation in that space, mixed results so far to date, let's say in the in the later stage financing and public market side, how we're using Tegra, making sense of and thinking about the digital health landscape today, how does it fit into the future of your business and market go back to you to start? Sure.
Mark Jesser 11:19
So digital in general, and AI has just become fundamental for med device companies. So in some ways, like in past roles, they've, you know, I've led innovation, I've led digital, in many ways, there, they become the same thing digital has become so prevalent to innovation across med devices, that is just part of our business. The real thing is that when you look at Med devices, in general, they're old industries, in many cases. And a lot of times, you're always kind of trying to innovate to the next device that you can have, but you're always competing and kind of this you know, red ocean of, of competition that we're digital is creating the breakout opportunity is to maximize the value of the next product that you have. So if you get an innovative product, and then you add a digital set of apps or a platform that supports it, you can really help drive three things. One would be the adoption of those products or the trial utilization of it, and then definitely retention. So there's a lot of examples where digital, it isn't so much a standalone thing, it's just become very fused with the value of non digital med devices.
Henry Peck 12:25
That's obviously you are very bullish on the impact that digital is going to have on Integra and on the market at large. Maybe store tell us about some of the challenges you experienced when thinking about the integration of digital health and those technologies into your core businesses. When you you know when you're looking at the future, it's
Stuart Hart 12:42
something we we talk about all the time. So when you let's step back to what Mark was talking about, Mark was talking about the data, the power of AI is the data is to pull big data sets together to interpret data in a way that we couldn't interpret with individual data sets. That in and of itself is a big challenge, because the question is who owns the data? Is it a healthcare system that owns the data? Is it the patient that owns the data? How do you pull the data together until we're able to get that data together, and get it working together and leverage the power of AI that can discover clusters of where we can treat patients better than when we when we really understood it as individual you know, it's a clinical studies, it's a challenge. So number one is is really getting the data together, pulling the data together and being able to really leverage the power in the algorithms. And really, if you think about AI, it's about training the AI model. And if there's not good data that you use to train the AI model, it's very difficult for it to actually be used within a clinical setting. The I I've been to a couple of meetings recently and there was there was a recent neurosurgical meeting was really interesting is they were looking at using chat GPT to for diagnosis of neurosurgical conditions. And what they found was when you train the chat GBT on the internet, the output is very poor. It doesn't it's not really doesn't give you predictive information on what's happening to the patient. And what they found is that so much of the information in medicine is behind firewalls. If you think about PubMed, you have, you have access to abstracts, but you don't have access to the articles and then I'll go even one step further for for AI to to truly be able to have an impact in healthcare, you really need access to the data, not just the clinical studies, because for anyone who's who's published clinical studies, you all know that you're very you're limited in clinical studies and how much you can say how much data you can put in how many words are in the clinical study. So clinical studies aren't even good enough. You really need access to that raw data and then pull all that raw data from multiple different clinical studies together and then you finally will really live up to the expectation of AI so that the first challenge is the data. The second challenge for us in med tech is the regulatory environment. There's no great guidance right now. And really, we're, we're leaps and bounds ahead of the FDA and the regulatory bodies really across the world. So it's, it's going to take time for the regulatory bodies to catch up. And in fact, if you look at most of the AI based technologies that have been approved over the last 10 years, it's really been through the 510 K pathway, some through the de novo pathway, but there's no great pathway for AI to move forward. So the regulatory environment has to keep up and also has to empower us. It can't be It can't be so onerous that it's very difficult to engage in AI in the way that that clinicians, the healthcare providers, and the patients want us to engage and, and empower our devices with AI. So data and I think regulatory are kind of the two biggest challenges that we're facing right now.
Mark Jesser 16:02
Yeah, I think that it kind of how do you deal with that is a is a good question. I mean, to me, we talked a little bit about starting with the data, there's, there's a couple of ways to look at it. First, I mentioned, we try to create our own datasets. So we try to create apps and opportunities, things that are of value to clinicians to patients so that they'll use them and we can generate our own data. So we kind of start with what is the access to this data. The other thing is that when you start looking at opportunities, and what else is out there, you want to pick use cases that are going to be able to leverage publicly available information. So even though there's great opportunities and potential to leverage AI, on kind of preparing for clinical studies and things like that, we can we get access to that data. So there's a lot more success that we're seeing in the industry around things where if you're trying to create a treatment plan for a person with type two diabetes, and so on, that's actually the area where we're starting to see a lot of traction in med tech is more around, where there's a tremendous amount of publicly available information on type two diabetes, for instance, and chat GPT. And other kinds of AI engines are fantastic at mining that and creating a customized set of instructions or recommendations for a particular patient. So we're going to see this really unequal sets where if you have the data, you've got the right set of training set of data to train on AI is really powerful when you're getting something where two parts, either you can't get access to the data, or the outcomes of what you need are really critical, you know, there to have patient risk involved. That's where things are going to be a lot slower. When I look at, it reminds me a bit of where we were when we were looking at what's called closed loop within diabetes where you had, they were taking, essentially glucose sensors or sensors that could tell how much blood sugar you had. And they were tying it into insulin pumps. And there was this thing that's been around for 20 years, which is can we go and you know, combine these things, why can't I have the insulin pump, basically just see what your glucose glucose level is, and then give you more or less insulin as a result of it. And it was out there for like a decade it were before it ever got approved in the market. And we had the clinical studies and so on that were in clinical research that was being done that showed that it really worked. But it was extremely difficult to get large companies. But Medtronic was a leader in this space at the time to really like, embrace that and then take on the liability for it. So in some ways, as you start thinking about where the opportunities are going to be, it's that sense of risk, that's going to be really key and where it's a low risk thing like giving a type two person with diabetes treatment recommendations in an automated way, that's going to accelerate a lot faster than when you have an AI that's trying to do something predictive to determine whether you have cancer not.
Henry Peck 18:54
I want to put you both on the spot a little bit. And you both obviously have a lot of you know, clear scope of the challenges that you face, but a lot of optimism and excitement for how this technology can impact your business and healthcare at large. Dr. Hart? Do you think other clinicians share your sentiment? And if they don't, what would you say to them to start kind of driving that adoption or excitement in the clinical community and mark after stocks? Dr. Hart answers, I'd love to know to other executives both inside Integra and the large strategic enterprise and maybe even outside of Integra, the ones that you collaborate with or colleagues with, share your excitement for how this technology can make an impact on their business and healthcare at large.
Stuart Hart 19:35
Yeah, at the end of the day, clinicians want optimal outcomes for their patients. We want the best for our patients. We want to be able to use the best data that's available. We want to be able to use the best devices that are available and treat our patients and patients and get the best outcome. So if you start to go to many of the medical meetings, especially in the in the surgical space, there's enormous optimism for AI And it's not just about treatment algorithms or diagnostic algorithms, but it's about how do you enable surgeons who are performing complex surgical operations to be able to perform those better? And then how do you get feedback from the devices that you're using in surgery to better inform that surgeon, so they don't injure a vessel or organ? And they get the best outcome. They don't have complications. And so, you know, how do we start to leverage and it's not just about AI, but it's about how do we take that AI and the data and like imaging data is a great example and create augmented reality for surgeons. And I know there's some companies in here probably working on that it's a, it's a big area of interest is how can you layer on the radiology data during surgery, so you can avoid those critical structures in the brain. I mean, when you're operating in the brain, you don't really have a lot of room to deviate from what you're removing. If you're removing a tumor, you gotta be very close to that tumor. And so some of the biggest advances are in neurosurgery is, is how do you identify a tumor, which may be very hard to identify, stay very close to that tumor, just remove what you need to remove, and then get out without causing additional injury for the patient? And another way is how can we minimize surgical incisions and brain in the brain minimally invasive surgery is a very exciting area. And certainly AI and digital health is gonna be very important to help guide the surgeon so a lot of optimism in medicine.
Mark Jesser 21:36
Yeah, I would say, what I see when I look out there is digital is an AI is that kind of latest thing that there's there's a whole movement toward it within med tech. And that's it's becoming, you know, used to be digital now. It's actually AI and so everything's now, you know, relabeled as AI, is it? So is it
Henry Peck 21:55
the same same beast by a different name? Or do you see a true step?
Mark Jesser 21:59
No, the, the predictive models and the ability to have to move from kind of a one time search into this models that basically can learning models and so on is different. And it is pretty transformative. The it does continue this whole trend toward digital, but there's absolutely these kinds of models are definitely going to transform certain areas of care. But it does, it is one piece, and in some areas, it won't, it's not going to be there for a while. And in other areas, it'll be pretty transformative in a much faster way. So I think that it's a progression, it's kind of the most cutting edge area of digital that we have for these companies. What I would say is that in terms of the excitement level around it, you can certainly get people to talk about it all the time, and you get asked to talk about it. But in many ways, what I think I'm always looking for is when is it going to turn into like a real product that gets funded or real investment for our company? That's, that's the most interesting thing for me. Because, you know, in large companies, they always have some group that's making PowerPoints on, you know, AI somewhere, right? And so the question is, okay, that's great. But our what is, where are you going to choose to invest in these things? And that's really what's most interesting for me. And when you start thinking about, well, what would I invest in? It? A lot of it goes back to the fundamentals of what is the business model? And how is this going to reduce? You know, yes, the the idea of kind of something that's kind of sexy in the AI space is interesting, but a lot of it goes back to fundamentals is going to save money is, you know, we're going to get more procedures out of this, are we going to sell more products, I mean, we really get pretty block and tackle when it comes to making large scale investments. Where I think it's interesting is that, for a large med tech company, the interesting intersection for us is where we're never going to be the most nimble companies out there when it comes to software and AI. But we have a real advantage that we have the medical devices themselves and non digital products that are being used in those spaces. A lot of big companies also have giant, you know, access to both in acute and non acute care we've got, we were the leading players in those spaces. So we have the relationships and the channels. So for us digital is often a way where we can, where can we leverage our products in those spaces in a way and digital is the way to do it. So a good example of this is adding RFID tags or 2d barcodes, so on to a whole bunch of products within the acute care space. They're not new products are the same kind of old products that we've had. But because we're the ones manufacturing the products, we're able to kind of leverage that and use digital to kind of track those things and so on. And so these kind of old time med device companies end up becoming, having an unfair advantage in a way, whether it's fair or not, you can decide on that. But we have an advantage in that space where we're able to kind of bring the combination of the hardware or devices as well as the digital together.
Henry Peck 24:55
Talk to me a little bit more about that advantage. Because when you play that out what it sounds like is the the incumbents will really be the drivers of adoption of this technology in the space based on those historical channels that built in distribution, the relationships globally and here domestically, what would you say kind of to the challenge that you just could not move as fast as some of the Nimble startups and therefore, with even with those channels, they'll still either create their own channel or kind of move in on your territory?
Mark Jesser 25:25
Yeah, I mean, there are interesting digital technologies out there. Especially when you move into large healthcare systems and things like that, it's really hard to do it as a standalone startup, what we get more, what we think more about is really the idea of are we going to miss out on the opportunity to partner with another company to actually bring something to market that leverages our products, versus another major competitor, we definitely don't look to do most of this work internally. Most of my team is relatively small, we tend to outsource most of this because we really can't keep up. What I think is more important, though, for us is the fact that we're kind of setting the strategic agenda of what we want in that space. And we don't really worry as much about the independent small company kind of taking away our markets, we think more about, hey, which ones should we be kind of putting, placing a bet with and working with.
Stuart Hart 26:27
And just a follow up, if you look at medicine, and all the problems we need to solve, there's way too many problems that need to be solved. I mean, look at health care, look at our outcomes in health care, we put so much investment into health care the United States yet we don't really have any better outcomes, and countries that spend half the amount of health care. So there's too many problems to solve. And so we need to partner with small startups, we need to partner with universities, we need to partner with with the key opinion leaders to identify what those problems are, and come up with innovative unique solutions, and then work as a partnership to leverage digital leverage AI, we need the data, we can't do this alone. I mean, this is really when you look at the future of medicine, it truly is a team sport, it is not something that one company can do alone. And there's not one solution to fix a problem for a patient. There's multiple ways to do it. And there's no right and there's no wrong. So really is a partnership. And that's why it's so important, like a conference like this for everyone to be together everyone collectively to brainstorm, come up with solutions to all the challenges that are impacting healthcare. I mean, we're going to be in this for a long time trying to try to fix these problems. So you know, we need to work together, many more
Henry Peck 27:45
LSAS to come to continue, continue. But it keeps us keeps us happy. Yes. Good. I'd love to use some of our remaining time to throw a couple of quickfire questions that you get some quick answers across the board, we'll dive in where there's relevant tangents that sound good. Sounds good, perfect. Let's kind of make a nice natural transition from where we were obviously, AI, very exciting. strategic side seems like it's all the rage on the investment side. Obviously, it's also been very, very hot both inside healthcare and outside. Do you think that a lot of the investment from the venture capital perspective into AI has been driven more by hype and FOMO, or that on the flip side, the people that are more bearish on it are under estimating or under appreciating the real value that's going to be created in this vintage.
Mark Jesser 28:30
I mean, it's going to be very uneven in in the sense that, depending on the use case, things are going to crawl and then in other places, it's really going to speed ahead. So it goes back to a lot of the themes that we were talking about earlier, if you have access to the data, and there's relatively low risk, liability risk, that's going to be transformative. So you're seeing it, the first place that it went was kind of completely transforming the way surgeons gather information and start communicating and tracking what they're doing with patients. There's, there's a tremendous amount of time, it's something you know, depending on which study you're looking at, you've got surgeons that are spending half their time documenting things in the EMR, and so on. So the ability to really reduce that that's going to be that is becoming transformative, and that's going to just completely transform that that side of the industry at the same time, when you have something like an algorithm that's supposed to titrate, certain kind of cancer medication or something like that for you high risk, that's gonna go slow. And so and the FDA, frankly, is really struggling to figure out how do I deal with something where I really don't understand how this models, you know what prediction it's going to have and then keep it as it gets more data, these predictions might change. How do I actually deal with that as the FDA, so that's going to go a lot more
Stuart Hart 29:55
in a second what you were saying so it is clearly going to be transformative in some areas, not so much in other areas. But when you look at transformation, it doesn't occur in a year, it doesn't occur in two years, it occurs over many, many years, probably our lifetime, it's going to continue to evolve in health care. But if you take a step back, we've been talking about transformation in medicine, at least since I've been in medicine, since I've been in medical school, and probably well before there. And if you think back to the last big transformation that occurred, we're probably all gonna laugh about it. But as electronic health records, you know, that was the transformation that was going to change everything access to data, make it easier, more efficient for the healthcare system. And what did it do? It created burnout, it created too many alarm fatigue, and just created actually overwhelming amounts of data and overwhelming amounts of work that really impacted the healthcare system in a negative way. I mean, if you look at in an ICU setting, nurses used to work within an ICU for many years. Now there's about a third of the nurses within the ICU, especially during the COVID period are now turning over. And physicians are leaving practice, they're getting burned out, they don't want to deal with the hassles of billing, electronic health records. So we've talked about transformation many times. And some of the transformations that we spoken about never became transformations, they became problems that suddenly we have to now fix. And so I'm hoping with AI, it solves a lot of those challenges. I hope it solves the inefficiencies and using AI for dictation and for billing and take away those the kind of the day to day right of the physician so they can or the healthcare provider to they can spend the time listening to the patient and diagnosing and treating the patient. Instead of dictating spending, I was in practice, I used to go home every night and spend hours putting information into the electronic health system, I worked at 1011 o'clock at night, even after I got home putting that information in. So first, the first part of AI is it's got to truly transform us, it's got to make medicine easier. And it's got to really improve the clinician or healthcare provider patient relationship, and allow that healthcare provider to get back to why they went into medicine to treat patients. But then it's got to take medicine to another level, it's got to enable us as clinicians so we can make better diagnosis better treatment, we can do better surgical procedures. So we got there's a lot of inefficiencies that have to be cleaned up. And I hope AI really lives up to that expectation and takes away some of the previous challenges of of another transformational technology that was supposed to be transformational. But but hasn't lived up to it. But then I hope it takes us to a whole nother level. But this is not something that's going to occur in a few years. This is something that's going to take probably decades to live up to its full potential we're getting there. And the results are impressive early on. But we're in for the long haul.
Mark Jesser 33:03
We can't say that. As you mentioned, when we go out and talk to our customers, they they do not ask us, what is the new AI thing that we can bring to them? Right? I mean, they they basically are like I don't have enough time. And then if you talk to their managers, they're like, and we don't have enough money, right? So how can you save us money, and then doctors want to know how you can make things simpler for us. So I think that what is great about AI is that in a certain set of areas, especially around documentation, and so on, I would agree with you, I think it has the potential to kind of clean up a lot of the issues that EMR and electronic medical records brought to the, into this space. So I do think that it has some real opportunities to kind of bring more not just in terms of for the the the providers, but also for patients. So you've got kind of this combination, where it's going to be something a technology that's leverage that should basically provide benefits of both areas.
Henry Peck 33:59
Moving off of AI into another technology segment that you referenced quickly earlier, augmented reality virtual reality. Obviously Apple vision Pro comes out renewed consumer excitement around immersive technology and mixed reality. How are you as Integra? Thinking about that type of technology and where it may fit into your business?
Stuart Hart 34:19
Well, it's something we certainly need to embrace. I love the idea of augmented reality virtual reality. So in my previous career as a as an academic Doc, I was very interested in simulation and training and spent a lot of my time training surgeons how to perform the best procedures they can with the best outcomes. And when you're dealing with surgery, especially procedures within medicine, it's all about practice and the correct type of practice and teaching physicians the right techniques to be able to perform those procedures. And it's and if you kind of think about in medicine for me had a year is the mantra we have kind of the suit the see one do one teach one, it doesn't really make a lot of sense, I mean to go, and that's the way I was trained, I would go in the operating room, and I would see a few procedures and then kind of get thrown is a first second year resident. Now it's your turn to go ahead and you're practicing on the patient. And that's not very efficient. And that kind of sparked this whole age of simulation. And we started with more simulation, computerized simulation and virtual reality simulation. But I think augmented reality is really an amazing tool, because I think it bridges that gap between where we were in terms of simulation, to now being able to take the simulated environment and bring it into the real life environment. And now you can, you're you're practicing on these on the simulation tools. But in augmented reality, we can practice but then we go into the operating room, it's almost essentially the same, because you're layering on the what you're seeing in a simulated environment onto the patient. So you can make better decisions when you're performing surgery. So I think these are really exciting technologies. Again, it's going to take the data to get us there, it's going to take a collective experience of healthcare providers and academics to all come together and start to study how we best use this technology. And if you think about med device, there's just not a lot of compared to at least the pharma industry, we especially when it when a device is launched, there's just not a lot of evidence around that device. So it's really this partnership with academic institutions and healthcare providers all throughout the world, I think we're at 52 Different countries are here. So it's it's partnering with institutions all over the world, to take the new technology that's developed by all of us in this room and med tech, and then really understand how we can best apply it within medicine, understand the nuances, but then partner with the data so that we can really optimize outcomes for our patients. Yeah,
Mark Jesser 37:00
I would say that, we look at this, we look at AR and VR. And those technologies, it's a space, if you're someone's in that space, or think about investing in that space, where, in many ways, those kinds of kind of overlays, and so on that you can use during surgery, for pre surgical planning, and so on, those are going to be things that start driving the Choice for which med device people use that will be less about the actual med device, and it'll be more about the digital side or the AR VR that's available. So we definitely think about it a lot. Because in some ways, you know, we have fantastic energy products that are used in surgery to kind of ablate tissue and things like that. And that's great. But what do you do if someone comes out with something that's almost as good from a med device standpoint, but then has a great AR VR solution that's built on top of it. So we think a lot about how digital and those kinds of products could but actually displace us out, it'd be disrupt us out of the market, where it's no longer just who has the very, very best piece of hardware, but it's actually the digital piece that goes on top of it to get a little more specific. The AR, this is very tied into robotics, frankly, when you get into surgery. And we think a lot about how that's dominated by, you know, a single company. And so a lot of this is around, are we the right players to be in that space. So you have to really, if I was in that space, and looking at an AR VR, I would totally want to understand how my solution fits with the robotic companies that are robotic surgery has kind of taken over everything. And in essence, they're not going to choose a different robot because of your AR, they're going to choose the robot first. And so you've got to kind of figure out how you fit in that ecosystem. They aren't really standalone products for the most part.
Henry Peck 38:59
Let's let's pivot a little bit more towards the overall med tech market 2023 down year for m&a, thinking about 2024 Do you see m&a activity picking up declining even further remaining stagnant as compared to the previous year?
Mark Jesser 39:17
It's definitely going to go up in a sense that interest rates have kind of stabilized med tech is kind of booming right now in terms of and there's a lot of there's been a lot of waiting to kind of buy things. The other thing is I know it's tough for for VC kind of backed companies, you know that things are tough and valuations are down but when you're large strategic you we've got the we're like hey great, there's stuff we can buy. So I you know, it's not good news for you all but for us it's something we think about so we're sure we look more seriously at these because some of the what we would consider really crazy valuations have come down to something that's more reasonable that we can think about buying
Stuart Hart 39:58
and always looking for new and innovative technologies. Again, it's it's, we can't solve the world's problems, the biggest med device companies can't either. It's, you know, we all have to find our swim lanes and go after certain problems. So it's we're always looking at what are the new, the newest technology, what problems are being solved. And it's important to have this whole ecosystem that continues to flourish, there
Mark Jesser 40:27
is continuing push towards stuff that is creative or has a proven business model that comes up much more than it didn't pass. So there's less interest in kind of just exploratory, bending and much more on hey, does this have a path to revenue? Is this something that we can reasonably see benefiting us financially within the next two to three years? So there's been a lot there's kind of some recalibrating there where there's less unbridled? Well, if it's digital, we want it and more into what's what's the path for this? And how is this going to turn into something that drive our portfolio? Yeah,
Stuart Hart 41:04
it's not just the it's the path within have they proven the path? Have they gone out and proven it? They have the clinical evidence? Do they have the economic evidence? Have they tried it? are clinicians using it? Yeah, it's looking more and more proven technologies. Volume
Henry Peck 41:22
is going to pick up but the pendulum of stage of acquisition more still the bias towards those more de risked slightly later stage technologies and targets versus more of a pendulum swinging back towards the development stage acquisition may have seen in years past? Yeah,
Mark Jesser 41:37
I mean, it's tough when I'm kind of asked about acquiring things. Like we don't want to be the frankly, just, we don't want to be the company that buys something that pays off all the investors and we get kind of stuck trying to commercialize something, right? I mean, that's not like where we want to be. So we're kind of looking for that inflection point, we either want to be really early, or we want to be at the point where if we're going to pay a lot, it's actually it's going to have a path to revenue, we don't want to buy something where, hey, we've sunk at $100 million worth of investor money in, and we really going to hockey stick anytime now. And that's not the point at which we want to go buy that company, we're trying to basically got to be a little further along where it has a proven model of revenue, or it's gonna be much earlier where we can, we can have a much earlier investment in kind of partnering with them to grow.
Henry Peck 42:27
Thinking with something that you said a moment ago store talking about the things you look for in a technology, obviously, as strategic executives, you mentioned, a heavy focus on partnering and on looking for innovation outside of kind of the four walls of your company, m&a activity, possibly picking back up, when you look at early stage companies and growth stage companies in the broader innovation ecosystem. What is the one thing above all else are the set of things that make a company stand out to you, when you're looking at the theme? You're looking at the business hack? What are those things that make it stand out to it?
Stuart Hart 43:01
For me, it's about the evidence strategy, the clinical and the economic evidence strategy. And I think it gets back to what Mark was talking about, have the proven out the technology and there's no better way to prove out the technology than with evidence? Is it really going to work? And then is it going to be economically feasible to use the device?
Mark Jesser 43:18
Yeah, I, I think that in many ways. med tech companies, we know we're not like, there often isn't a lot of synergy between a digital company and what we have in our portfolio, typically, and it's and you know, this is true for Integritas group are lots of other companies, too. So what we think about a lot is, are is this going to be able to kind of thrive? Is it really about strong complement to the non digital products we have in our portfolio? If it's not, then does it kind of stand on its own and have you know, it's, it's something that we can manage and actually use to drive in our business, we think a lot about really core business, you know, is it we have to build a channel for this thing, we're gonna be able to retain the software people that are involved in this, because it medtech really struggles with this, where we don't have most of the DNA of these big tech companies. It's not built around digital. So a good you, there's a lot of things I've seen come in at Tech over the years and just kind of fizzle away and die because they don't have the culture there to really build on it. But you've really got to think carefully about what's coming in is nothing is gonna be able to stand on its own, that it's going to have an advantage to this big channel, this big company that can access or not. So we're looking for that synergy with what we have in our current business today. And then the fact that it's something that can kind of stand on its own. So we balanced both of those. When we think about acquisitions.
Henry Peck 44:46
You mentioned something about retaining the talent. And you know, in years prior I was part of a company that was the robotics and digital space that was integrated into a major global strategic went from 100 person company to a Multi 1000 person division of a company. And then headcount ended up drastically contracting for not too long after you talked about going to retaining that talent, how do you think about talent retention, post acquisition, compatibility of the team that you're acquiring and the people that you would need to keep this business moving forward with the way that your business is set up, when you're also evaluating great tech evidence strategy, you know, business model that works? Where does talent retention fit into all of those things?
Mark Jesser 45:27
Yeah, it's a good question. I mean, we, we try, there's kind of like a pendulum, right, we have these smaller companies that we buy, and we go all the way from like, we're gonna really get on top of this and integrated and make sure they're successful. And then there's the other side, which is going to leave him alone, because we don't want everybody to quit, right. And so, so we kind of have gone back. And both both both have their pros and cons in terms of what ends up happening with that business. Usually, we try to make sure that something that's in the digital space that we aren't big in is make sure it's going to have enough mass. So we really hesitate to buy something that needs a continuous pipeline of innovation that doesn't have enough people in it, because we think about where they're going to where they are, and whether those people are going to stick around. So some of our most challenging acquisitions have been ones when we haven't had masks, and there's only a few people there, but we need them. Again, it goes back to the stage of what you're buying, you've got to be really careful that if you're buying something that it's far enough along, that you're in more of like a state standing mode with that, as opposed to if you're buying something that's early stage, we're really counting on innovators, remaining innovative at a large med tech company, a lot of them kind of cash out, I would probably do. Yeah,
Stuart Hart 46:44
I think it's P giving, is keeping people engage. I think it's engaging what they love to do, why they're doing it, usually you're in a startup, because there's a particular area that you absolutely love, whether it's r&d, it could be medical affairs, whatever it is, but keeping people engaged, and when they suddenly move from a small startup where they're doing everything to a bigger company, they may not be doing everything. So find out what their passion is, how to engage them, how to keep them engaged in the company.
Mark Jesser 47:12
I mean, just practically speaking for I get asked this question by other large that Texas, like, how do you? How do you How should you do digital at a big company, and one of the things we do speaking of engagement, as we absolutely create kind of a small entrepreneurial function at the corporate level that is tied into the divisions themselves or the business but isn't part of those businesses, because in some ways, when you're trying to get trying to attract and maintain talent, it's too much to think that they're going to go into one of your division and find enough like minded people, because that's not the way these big companies are built. They just don't have those kinds of people. So we try to create small clusters of people that are all working on next gen products or kinds of you know, they're working on excellent products and innovation are there working on digital products, and we try to keep those people together in a cluster so that they can basically feed off each other and not feel kind of alone in
Henry Peck 48:08
a large company, like attracts like within the company. Yeah, yeah,
Mark Jesser 48:12
it tends to be that balance. A lot of times we get told, Oh, you've got to like, push digital throughout the whole organization. And you know, I'll tell them, Yes, if it's a job interview, but otherwise, you know, it doesn't tend to work that way, you tend to have clusters of, you know, small groups of innovators that cluster together. And you kind of put those within the organization as opposed to thinking people who have been in med tech for a decade and have had nothing to do with digital are suddenly just going to start thinking digital. And
Stuart Hart 48:41
it's not the solution, everything. Digital can't fix everything. It's a tool of many tools that are out there. Yeah.
Henry Peck 48:48
So kind of thinking about the businesses that you operate in, obviously Integra as a leader in neuro, and whether it be neurosurgery or diagnosis and brain health and a whole host of other things related to the brain, which we'll have other sessions on and neuromodulation and stroke and so many things, heard from a few people kind of characterize this decade that we're in and entering as the decade of the brain the way that you may think about a decade focused on a decade on cancer, kind of the largest thing that was tackled in that in that period of time. Would you agree in serving that market that we are at the precipice of are in the decade of the brain? Or are we decades away from the decade of the brain?
Stuart Hart 49:29
Oh, call it the century of the brain. It's certainly not in a decade. It's going to be many decades to really understand brain, how it interacts in the brain is so complex, just understanding how we can go from big craniotomy to smaller incisions has taken decades. So and then understand how we can approach disease states without surgery and impact behavior impact thinking, the brain is just so complex that's going to take on Long time. Yeah,
Mark Jesser 50:01
I would say that if you look 10 years from now how we're treating certain conditions, they will be remarkably different. But I don't think it's going to be done in 10 years, I think it's really going to be just moving that direction. But things like minimally invasive surgery, surgical planning, and things that are going to be massively in terms of how we handle things in 10 years, and how we can't handle it today. But definitely it won't be won't be the decade I think I think I'd go with Stuart, it's probably 20 or 30 years of real innovation, and leaps in terms of progress within the aerospace sounds
Henry Peck 50:37
like 20 or 30 more years of LSI events. There we go. Good. Well, in our final couple of minutes here, I'll pass it off to both of you first, just to kind of, say your final thoughts on what we talked about today, the impact of digital the role of AI how Integra is innovating in the market? Why don't we start with you, Mark, just tell us a little bit about kind of final thoughts to wrap things up?
Mark Jesser 50:58
Sure. I mean, digital is just it's a space that's near and dear to my heart, obviously, over the years, I think that it's great that it's getting it's kind of do in terms of being discussed and talked about I would see AI is really just the latest piece of that transformation that's happening both inside and outside the enterprise at midsize companies like Integra as well as really big med tech companies.
Stuart Hart 51:24
Yeah, I think this is a very exciting time, when you look at where digital where AI is going to take us. We have to embrace it. But you also have to be cautious. It's not the solution to everything. And I mean, if you look at probably all your emails on a daily basis, you will get any trade magazine, it's all about AI. But the reality is we've had AI for many years, and it really hasn't made a huge difference. And now we're getting we're we're kind of transitioning into better models and predictive analytics and generative AI. But we have to be cautious. And it's going to take a lot of work, it's going to take a lot of collaboration, for us to get to the point that it's truly going to have a major impact in medicine. And then I really think it is going to take off at some point and significantly impact medicine, I think it is going to be transformational, but it's going to take time to get there. So I just think we have to be cautious about throwing AI the term AI digital health around because it's thrown around everywhere. But let's do it in a very process oriented rigorous just like with any new medical technology, we study it, we kind of follow its progress over time. And then we continually iterate on it. And that's where I see AI heading.
Henry Peck 52:41
Well, thank you both so much for joining us tonight. Thank you everyone in the audience for joining us here and looking forward to a great week at LSI USA 24. Thank you. Thank you
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