Lunch & Learn: Open Q&A With Manny Villafaña, a “Living Legend of Medicine” | LSI Europe '23

Speakers

Manny Villafaña, PhD, Sc

Manny Villafaña, PhD, Sc

Founder of St. Jude Medical, ATS, Cardiac Pacemakers, Currently CEO of Medical 21
Read Biography
Scott Pantel

Scott Pantel

CEO, LSI
Read Biography
This special panel features Manny Villafaña, a highly successful Medtech executive with seven IPO's, who discusses his current venture, his start in the med device world, and the stories that improved the lives of patients globally.

 

Transcription

Scott Pantel  0:04  
Thank you very much, Henry. And thanks, everybody for joining us for lunch. I know we got a packed schedule. So you're in for a treat here. And I'm going to start this thing. By just saying the following. We're going to make this interactive. So if you have questions now or you think of questions as we go, we're gonna have a small window at the end, we're going to fire questions away at Manny, we never leave enough time for that. So think of your questions now. And we'll get to that. We normally start these sessions. And it's an honor to be here on stage with Manny, "The living legend of medicine", I've had the opportunity to get to know Manny, over the many, many years and learn about his businesses. And I'm really excited about the venture that he's working on now. And we normally start with talking about the history on how you got here. So I'd like to do this a little bit different today. Manny, I'd like you to share with the audience, if you could, whatever opening remarks you have. But tell us a little bit about Medical 21, and what you're working on. And then I want to get back into the history if that flow works for you. So over to you.

Manny Villafana  1:04  
Okay, and before anything else, I hope all of you do appreciate the work that Scott and his team is doing to try to bring together the entrepreneurial entrepreneurs, their spirit and everything to a session here to meet with the people that are trying to sponsor that work, trying to finance that work. And believe me, as an entrepreneur, there is no money on the floor, there's no money in the streets, you have to go and work for it. And he is helping facilitate that ability. And he's doing a super job. I don't know if you have attended the LSI as before, but and every one of them that gets they seem to get better and better and even greater attendance, etc. And thankful to him as representing the entrepreneurs out this meeting. Thank you, Scott, for putting this together.

Scott Pantel  2:03  
I want you to share with audience what you're working on right now. Because one of the main questions that we all have myself included is Manny, why are you still going at it? Why are you doing this? And maybe you can address that. But tell us what you're doing with Medical 21? And then tell us why you keep doing it? I think you'll answer that question when you share medical 20. 

Manny Villafana  2:19  
Well, what we're doing in medical 21, of course, is trying to create an artificial artery. Between 800,000 and a million times per year in the world. Someone is doing bypass surgery on patients. And it requires the tearing open stripping, opening your legs, your arms of your breast who gets a vessel to be put on the heart to go around the blockages that you have in the heart, that's a typical bypass surgery. Typical patient receives about three or four vessels that triple or quadruple bypass, as we say, and but yet, every time they do it, they have to harvest a vessel out of your leg or your arms, etc. If you've had an opportunity this morning to see my presentation, I show an actual picture of tearing open legs and arms to do this. And for years, people have tried to develop a an artificial artery in the past 50 60 years, at least maybe 100 150 different individual hospitals and companies have tried to do that. But no one has ever been able to do it. I decided about six years ago, seven years ago, I should say because this month, we celebrated our seventh anniversary, to pursue an idea of trying to make a graph that will regenerate itself within the body after we put it in the body after we supported after we strengthen it, put it in so that within your own body, you grow a new graph that is on your heart. And that's what we're doing. And we're at the stage now, where we hope to begin our clinical trials in Switzerland as I mentioned this morning. During that travel, we've, of course have had to find the funds to do this. We have raised approximately $12 million over the last seven years. And we're trying right now presently to raise about another 10 million to do the clinical trial. We go all different fashions to raise their money. We have private individuals, accredited investors that will put in 100,000 200,000 clip we welcome interest from venture capital we and we are also pursuing discussions with maybe strategics that have some interest in this field and very difficult Step there, because typically there is nothing really coming out of cardiac surgery market. There's not a product. I mean, obviously we're doing, as I said, a million procedures per year, but there's no product. So for the first time, a strategic, you know, a Boston, a Medtronic a St. Jude, et cetera. Okay, all come down, take a look at cardiac surgery and say, there is a product down there. It's an artificial graph, that Medical 21 Is is building. Now, how do we get there? Where do we start with the journey, if you want to start with the journey, I suppose it starts with the first open heart surgery, what we call cross circulation. That was done in 1954 1954, there was no way to open the heart. There was no pumps, there was no way of doing it. And, and yet, little children were born with a lot of heart deformities that required the surgeon to open up the heart of a child, heart of a baby. And one of those gentlemen that was working on that was a gentleman named Dr. C. Walton Lillahigh, often known as really the father of open heart surgery, I had the great, great fortune of knowing him personally. And he was my mentor, believe me, he was my mentor. But anyway, it started in 1954, he had done some experimentation in animal went to his boss. And the boss said, by all means, go ahead Walt. And that little piece of paper is in a little museum in Minneapolis, if you want to see the actual written construction, by all means, go ahead wall. And when he was describing what he was going to do to a group of surgeon, one of those surgeons got up and went to a local judge to get a warrant to arrest C. Walton Lillihigh, because he thought he was crazy. And he went to the judge, and he said, Judge, we should arrest this man, because what he is trying to do has not 100% mortality, a chance of 100% mortality, it has a chance of a 200% mortality. And maybe some of you don't know how that can happen. I'll kind of describe it quickly. What Walt did was take the baby, put it on the operating room table. And the other close by nearby, probably 10 15 feet away, he put the father of the child on a table to patients. He put a milk pump, a pump that he acquired at a dairy farm in Wisconsin, and he put it in the middle. And he connected the father to the pump from the pump to the child and then going down to the to the inferior vena cava of the of the baby connected the baby to the pump, and the pump back to the Father. Now if anything went wrong, guess what? 200% mortality. So you can see that was kind of crazy. Well, before thewarrent was served was that I already done it. Okay. And the statistics show that I may I may be a little bit inaccurate, but somewhere around 50 to 95. I've heard numbers as high as 95 cases were done. No one died. There was one child that died, I think after 10 to 12 days after surgery, because of pneumonia. But it was a very successful procedure, better than the statistics that we have today. And cardiac surgery. That's where it started. Now for me, I got involved when I answered an ad for a little company in New York. I was born and raised in New York. I answered an ad for a company that was looking for someone in sales. We had a little knowledge of Spanish. So if I'm walking around the building, you see me speaking Spanish is because I have to practice it. I'm in Spain. Okay. And that's where I'm going to practice and that's what I do. Okay, but anyway, the job calls for helping small medical companies export their product overseas. The name of the company was picker International, a subsidiary of picker X ray, which at that time was the largest X ray company of the world. And they were replacing all the buildings and hospitals in Europe, because after the war, there was a lot of need for hospitals in New Bern. All these are new and new places and, and of course, in every hospital as soon as you build a hospital, you're going to put in 510 Different X ray machines in there. But they found that the team of people to support those x ray machines could also sell different medical products. So they formed a division called Picker International, to find companies that may want to sell their products. So they went to various companies and one of those company with a little company, really little little company, teeny, weeny little company called Medtronic, whose annual sales was less than a million dollars, who had already gone through two bankruptcies. Okay, with going nowhere. By coincidence, they hired me, they brought me on board. And for some reason, they handed me Medtronic. And they said, you're going to be handling the pacemaker, what the heck is a pacemaker and at the time, we all had to learn, it was a battery pack, about the size of a hockey puck heavier than a hockey puck. But what probably lasts anywhere between 12 and 18 months, if you were lucky. And that was the birth of Medtronic business going overseas, which it turned out to be even bigger than what they were doing domestically. Okay. So that's how I got involved with pacemakers. Medtronic, then brought me on board a couple of years directly and moved me out to Minneapolis, Minneapolis, where is that, you know, from South, okay, and now my very, very first day in Minneapolis. What was March 8, March, not january, february, march 8. And when I woke up in the morning, after saying that in a local motel there, the temperature was 15 below zero, where the wind chill of 43 below zero. For some of you are from Europe here and you use the Celsius system, same number 43 below Fahrenheit is equal to about 43 below, Celsius. Now, do you understand how cool that is? Okay. That was my first day in Minneapolis. After working with Medtronic for about five years, I told them, You got to make a pacemaker better because patients are dying, it's hard to live getting a new pacemaker every 12 18 months. So working with an engineer that was developing a new power source, I worked with a new engineer. And we developed a pacemaker called the first lithium powered pacemaker which was CPI. And we ended up with a pacemaker about half the size, about half the weight. Okay, but instead of 1218 months, my goal was to make it 10 years. No one had ever done that. No one had ever gone to the moon on that one. Are you crazy? No when you do that, and it was seven manufacturers that pacemakers at that time, and no one got up to two years, nevermind 10 years, but we made it and I was wrong. We did not hit the 10 years. We hit instead 50 years five. Oh, there are still pacemakers that we made back in 1972 73, that are still running five oh 50 years later. Okay. That company became history. And of course, eventually, Boston Scientific bought that company for $27 billion. One surgeon came along and said, Manny, you've done a nice job and pacemaker and in fact, two surgeons and other ones named Dr. Parson and the other one was Dr. Nickel off. And he said why don't you try your luck in heart valves. I knew nothing about heart valves, looked at him and they said this is what happens and stuff like that. And we started working on a heart valve and we ended up developing the St. Jude heart valve, which was the first valve again, that would last a lifetime interface MANNY No one No valve, less laksana patient 510 years if you're lucky. Okay, and we did that. And we went beyond that. And they all cause strokes and they all break and they all wear out and ended up with the St. Jude valve which by the way, was made out of glass. Of course when you think of glass you think of breakage and you think of wearing out and stuff like that. But we made the St. Jude bow which went on to be the most commonly used prosthesis in the world. It would not wear because very very little strokes, very little problems and stuff like that, and became the standard of care in the heartbeat.

Scott Pantel  15:01  
I wanted to ask a couple of questions. And then we're going to open it up to the audience. But the St. Jude story always fascinates me, because you've shared with me the number of iterations that you had to go through and the the point really of exhaustion that we all get as entrepreneurs when we're have so much conviction for something. But it's hard. Yeah, it's not easy. And being an entrepreneur is not for everybody. And if anybody knows me, they know that my heart is with the entrepreneurs. Yeah. So could you talk a little bit about with the St. Jude story, just that night, and then we'll get into some questions. But that night, when you got that call, when you were on that, I don't know, 14 version, or whatever it was, of the St. Jude heart valve, how close you guys were to not getting there. And if that Valve didn't get created, think about the world that we live in today. And what happened that night, and why perseverance is so important for not only the innovators here, but the investors that need to have the patience for the companies that we're building. Can you tell us a little bit about that I

Manny Villafana  15:58  
that story came up relatively recent, when we were doing the the medical 21 graph. And you know, when you're developing things you try, it doesn't work, throw it in the garbage, can they just try it again, you throw it in the garbage cannon, and every time you throw it in the garbage can that's I call that iteration one, iteration two, window, ship three. And making an artificial graph is very, very difficult. And we were about iteration number 11. And my, my team was looking at me kind of cross eyed and saying, Well, Manny, I don't know if we can do this. We tried his 11 times is not working. So I pulled up the story, about one day, I was doing St. Jude. And for some reason I had to go back into the machine shop, because bows were typically made under into machine shops. And there was a guy named Charlie Hoesley. Our machinist, our chief machinist, and he was adjusting machines. And he was crying, you know, wiping the tears from his eyes. And I said, Charlie, what's the problem? What's what's wrong? Is that many. This is the 26th iteration that we're doing on the St. Jude bow. And we still don't have it, right. We still it's not working. Well, we continue to obviously, and we did continue to make the St. Jude bow. So when I was telling this story, to my team at 11 iteration, when I finished the story, I said, Okay, guys, can we got a long way to go yet? Okay. And we actually went up to iteration 13. I thought we had it. And some surgeons said to me, Manny, no, it's still not there. Finally, iteration 14, we got it. We're making it. The animal studies are phenomenal. And doctors are ready and waiting for us for our graph, which as I said, hopefully at next quarter, we can start doing a clinical trial. But it is I don't care what entrepreneur is doing right now. There comes a time when you say, Oh, my God, I gotta try it again. And again. And that also goes for funding, by the way.

Scott Pantel  18:17  
That's right. I think Charlie called I think that same Charlie that was crying called you up in the middle of the night one night to tell you he had it and you had to come down to the office.

Manny Villafana  18:24  
Oh, it was another guy. Another one of my engineers said Manny, Manny Manny calls me at three o'clock in the morning. And I'm sleeping. And the phone rings, the three Hello. And many, many I got it at that time. We were making the St. Jude Val. But they were all breaking because remember, it's made out of glass. A paralytic carbon is a form of glass. And in that particular month, month of February of 1978. We broke 97 out of 100 Bounce. The 3% Yield is not going to make a business. And we had a lot of problems. We couldn't make it. We couldn't put the leaflets in them without breaking the ring. But this one engineer, a guy named Peter called me up at three in the morning, many many I got it and I said Peter, it's three o'clock in the morning. It's a big snowstorm outside what are you calling me up? Manny? I got it. I had a dream. Yeah, Peter, right. Right. And he's one of these engineers been telling me Yeah, well, don't worry about it. We'll figure it figure. I'll see you at five o'clock in the morning. I said, No, you know, you're lucky if you see me at nine o'clock because it's just snow storm outside. Anyway, I got there at nine o'clock in the morning. And he's there at the door waiting to take my coat off and it's snowing and everything you get inside. He takes me into the lab and he says, I sit out and you're going to make it and he had 13 rings on the table. And he wanted me to convert them to 13 vows. And I said why am I doing why don't we Every one of our manufacturing ladies who have small hands and can do it properly and everything Oh, no, no, no you can do I said, Why is it Manny? If you can do it? Anybody can do it. Okay. I kicked him in a few places in the shins and other places. But we finally got to go, and there was a solution and how to do it. We never patent that solution. We kept it as a trade secret. And that's how we make the St. Jude bow. We know how to put the leaflets in without breaking the vowel. And hopefully

Scott Pantel  20:30  
You guys call Charlie to let him know he could stop crying. Yeah, okay. So before we get into questions, Manny, seven IPOs, hundreds of billions of dollars in value created millions of patients touched lives saved? How do you and I'm gonna, I'm gonna force you to make this a short answer here, because we're gonna get into the questions. How do you rank Medical 21  opportunity, right, to those those previous Ventures is going to be is that have the potential for a single a double a Grand Slam? How does this one rank in terms of overall potential opportunity?

Manny Villafana  21:07  
Well, you know, if you take a look at some of the companies, we we may they, you know, it was a little bit of a homerun, maybe didn't go into the bleachers, it may mean went a little bit out of the park. And then it actually bounced in this, you know, in the parking lot, but then bounced all the way to the moon, and on the way to Mars, couple of these companies like sold into multi multi billion dollars. If you take, for example, the St. Jude project or the CPI project at the time, the market was about 65,000 to 75,000 pacemakers or heart Bells was the market. This project that we're working on now the market is in excess of two to 3 million grafts. I think this has the greatest potential of the mall, we will help more patients than we have ever helped with pacemakers or hard balance. And it's a very dramatic improvement because the the harvesting of vessels out of your legs and arms is horrendous, painful, filled with fraught with infection, costly, a lot of different things. And we're able to do this without touching your legs, arms, breasts, etc. So I think if you're going to rank it, I have to say that this has the greatest potential to help a lot a lot of people to reduce pain, alleviate pain and improve health in a lot of different ways. And financially, I think it could be the biggest one we've ever done.

Scott Pantel  22:48  
It's incredible. Okay, so we have the living legend of medicine up here seven IPOs. Incredible Journey, he's seen multiple cycles, we're going to open it up to q&a, there's got to be some questions, and we truly can't see anything. So if you've got a question,

Manny Villafana  23:03  
You can't

Henry Peck  23:05  
I have a two part question for you. So many, when I asked you earlier, a little bit about medical 21. And some of the experiences that you've had with the companies, you made a joke that you're from the Bronx, and they know not to mess with you, when talking to investors and other people in the ecosystem. I want to hear a little bit about how like how you've approached the rest of the ecosystem, now coming in with another venture with the pedigree and the success you've had going out to investors going out to service providers and other people in the ecosystem? How do you strike the balance of finding the partners that you need? The partners that you've had on the journey before the new partners that can help do things that are, you know, novel to the industry? Like how do you strike that balance with people in the industry, and then any advice that you have for up and coming entrepreneurs, first time founders, younger executives at companies to to take some of what you've learned and put it into practice?

Manny Villafana  23:55  
That must be Henry. Henry, okay. First of all, and one would say Manny, you know, with the success you've had before, et cetera, et cetera, and your track record, etc. This should be a cakewalk for you to take it through to a strategic. No, we have to two major major hurdles. The first one being that you're doing what you're working in cardiac surgery. And if I'm the CEO of a major company, we don't we don't have anything down in cardiac surgery. There is no products down there. Truth of the matter is that is correct. Although we have a million procedures per year in cardiac and bypass surgery, okay. There is no product that can be sold. Okay, not really anything because the price product is a vessel that you take out of the leg or out of the arm or off of your breasts. So I have to come in there and explain to them. That is correct. There is no product. We have a saphenous vein and you can't sell a saphenous vein or radio, I can't sell it. But wait a minute, I got a better idea. Let's not spend the money, incur the pain incur the infection, in pulling out that saphenous vein, why don't we use this graph out of a little package that we feel will be as good as if not better than that saphenous vein. And we could sell that. And once you sell that, in an operation, that is performed at least a million times per year. And by the way, the average patient has between three and four graphs. So that means somewhere in the neighborhood between two and a half and three and a half million times you can make that sale per year. That's an enormous market. That's a bigger market than pacemakers and heart valves and stents combined. Okay, that's that's the first hurdle. The second hurdle is and the one that has been the eyeballs every so often. And that is he's doing well. He's making an artery. For what, for bypass surgery? Oh, no, not another one. Over the last 50 years, there has been at least and I say this modestly, at least 100 attempts in trying to make an artificial artery. And they've been by the big company to buy the Medtronic to St. Jude's, a variety of different companies have tried to do it. Universities, Mayo Clinic's Texas heart, a variety of heart centers, physicians, etc. that have tried to make an artificial graph, small diameter graph. No one's ever done it. So how do you come along and say, why the kid from the Bronx is gonna do this? Yeah, we're gonna do it. We never went to the moon. Because we never been there. No one goes to the moon. No one's ever done it. Well, no one's ever done this, but I'm gonna do it. Okay, and we have done that through seven years of extensive work and, and tissue regeneration technology. Okay. saving money, saving pain, infection, helping millions of patients, we're going to do it. And that's where we stand today. And that's how we overcome those two major obstacles.

Scott Pantel  27:42  
So my takeaway from that two part question is that it's not easy. Even with a guy with a guy with your track record and your Rolodex and your network. It's not easy. And so as we're finding this, the next question out there, this I think the second part to Henry's question Was any advice for the young entrepreneurs that are out here? So maybe you could share? I don't know if it's persistence, or what what what is the advice for entrepreneurs while we tee up another question out there? 

Manny Villafana  28:05  
The answer to that is, by the way, when you do get the answer, call me because I want to get on that same line. Because it's hard. When you're dealing with something that's never been done before, there's such a hesitation. And what makes it even worse, is that 100 times it's been tried before, and no one has done it. I had an investor come to our office, and he brought his cardiac surgeon, he brought his own surgeon to the meeting. And we went through the whole thing and everything and, and the investor turned around to his own surgeon. He says, Well, what do you think? And a surgeon said, Well, you know, I've looked at least 100 different graphs. That industrial got up, left the room, he left the company, Jay came to visit us, the surgeon I happen to know personally. And I said, you and I have to sit down let's go over this again. I can tell you that the following week, that surgeon came back to my office with a a sign subscription agreement and a check in hand. And he invested

Scott Pantel  29:12  
All right, persistence. Pays off. Okay. I think we have a question here. Thank you. Hi.

Audience Question  29:22  
Should be on? Hi, my name is Cobb. I have a question with regards to the seven successful IPOs you did congratulations by the way. Which one was your favorite and why?

Manny Villafana  29:37  
Wow, that is a good question. First of all, I hold the Guinness book of record for the fastest IPL. We opened the doors of the company on February 2 1972. And we did our first IPO 114 days later as Gotta be a record. Okay. But I think the most favorite one was the St. Jude, the St. Jude IPL. A lot of people, I asked people, what do you think was the amount of that and most people will give me a number? Anywhere from 5 million to 50 million 100 million and the highest number I've ever heard is, well, you needed about 500 million to do St. Jude. Well, the correct answer was 962,000. We did St. Jude with less than a million dollars. Okay. And we did that one, seven months? Or was it nine months, about nine months after we opened the doors at St. Jude, we went public in nine months, and we did an offering for $962,500. Now that one had a return that was absolutely phenomenal. Okay. In fact, one of my current investors had many I, I just got $85 for my shares of St. Jude, when Abbott bought it out. Abby bought the company for 30 $30 billion. And I said, Yeah, he said, Yeah, but I only paid 25 cents per share. And it gave me $85. So I said, well, the math is that you got you know, 432 times your money. Not bad. Not bad. Okay.

Scott Pantel  31:30  
It's great. More questions? We got about five minutes.

Gavin Kennedy  31:35  
Hey, Manny, I'm a baseball guy. And Scott mentioned to me that you have a story about swinging for the fences. Can you tell us a little bit about that?

Manny Villafana  31:43  
Yes, I born I was born in the South Bronx I ended up seeing from my building, Yankee Stadium. I have a lot of stories about Yankee Stadium and why didn't particularly was Mickey Mantle. Mickey Mantle was of course known as one of the greatest players of all time, I believe he owned five or seven World Series rings. Okay. It was the only guy that ever received the MVP award more than once, I think he'd received either twice or three times one of the greatest players of all time. But very few people know that he held the record for strikeouts. Why would a guy like that strike out so much. And he was really bad. I remember following him, he went over for today went over five and stuff like that. Well, the problem was that during the early part of his career, someone that took care of the playing field, left a cover off of the sprinkler system. And one day, Mickey Mantle went after a ball and out in central field. And, and, and got his leg caught in there. tore up is both legs tore them up to the point that for him to continue to play every single game, he had both legs wrapped up. Now, once that happens, you don't go running too much anymore. So when he got up, he was told you got to hit a home run or go home. Okay. So he was always swinging for the fences, swinging for the fences. And you have to swing extra hard, which causes you to strike out more often. Well, I don't know about all of the entrepreneurs, but I can tell you about the stuff that I do. I have to swing for the fences, because I'm doing things that people say cannot be done.

Scott Pantel  33:43  
That's great. I think that's a perfect way to end it. I want to thank Manny for joining us today. Thank you all for bringing your lunch in here. And let's give Manny around applause please. Thank you. Thank you

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