Medtech and Our Armed Forces & First Responders | w/ Chris Velis, Dr. Margaret Kalmeta & Dave Hood

Joe Mullings  0:08  
I'm excited with this panel today because we've got a subject that I don't think that health tech med tech community speaks to enough about. And that is the investment by our government, whether it's DOD, NIH, DARPA, ARPA-H, which is an interesting conversation to have today as well. And we've got an entrepreneur who is part of that with your organization, we've got a Chris, I don't even know how I'm going to introduce you. I'm gonna let you do that with Miraki because, like, it's like a secret agent a little bit. And Dave, part of your organization and an advisor to M tech. So Margaret, would you bring us in and tell us a little bit about Rapid Nexus and the mission there so our viewers can have context around that as we move through this journey?

Margaret Kalmeta  0:53  
Absolutely. Rapid Nexus is here to prevent amputations in the diabetic community. And that technology can also be applied to the warfighter. And it is our mission to make addressing so that the warfighter can get the benefits of that we aim to save as much tissue and grow regenerate right at the at the time of insertion of our wound product, right on the scene.

Joe Mullings  1:23  
So that is also a that's using their own tissue on the scaffolding and building that out.

Margaret Kalmeta  1:28  
Correct. So what it is it's it's a wound product that we've developed that is a xenograft based product that is placed into the tissue, it absorbs the blood, but also the nanotechnology then is released upon that blood absorption. And then the warfighters own tissue grows right into this product.

Joe Mullings  1:52  
And then Chris with Miraki How would I best explain Miraki and sort of your impact in the community, especially on the DoD side?

Chris Velis  2:00  
I think by starting by saying that we're mission focused, identifying really big healthcare problems that affect patients around the world, and then marrying technology and people together to solve those problems. We happen to have a funding to do that. But we do it with an entrepreneurial spirit. And we're not afraid to start teams and fund them in order to solve those big problems. And as a subtext to that vast majority of the technology solutions that we find actually come from organizations like the Department of Defense, which we'll talk about today. HSS Health and Human Services and NASA and that would include the types of technologies that started the entire surgical robotics industry and are responsible for you know, the creation of a company like Horace health, which

Joe Mullings  2:50  
we created. What's your you were one of the original founders of Horus, right? Yes, yeah. And Dave, you've got your consulting firm, and then you've got M Tech, that is a little known organization that swings a big hammer. So take us through what MTech is as well.

Dave Hood  3:06  
Yes. So, my organization DH3 and Associates, we work with CEOs to try and help them understand how to blend all of these opportunities that we were just talking about these non dilutive opportunities, whether it's with NIH, Department of Health, Human Services, DARPA, or DOD, blend all those together synergistically in a complementary way with your other investments to help that tech development, product development business develop. Now, M tech, M Tech, we've only been around a few years in M Tech is really an intermediary between the military, medical, community and industry. And it's really set up to be very efficient and working with industry, government and the investor community. So now we have actually, we haven't been around a long time, but in the last 36 months now, we have over 500 members now that we've vetted as having technologies that are potentially relevant to the needs of the military medical community, we have now invested in awarded 150 of them, and we've awarded over $660 million now in the last 36 months. So quite a bit of traction, and excited about having the opportunity to talk about it here today.

Joe Mullings  4:17  
Yeah, thank you for that. And I don't know why more and more of us aren't even aware of that. And that's why this platform, I think, is super valuable. Chris, you and I were together up in your office just a few weeks ago. And we were talking about the influence that the DOD has on investment into the sector, and massive, massive influence on technologies, as well as investments. Share a little bit about about that with us.

Chris Velis  4:43  
Sure. This is, you know, often confusing to the general public, right. So there's a couple of things to know about it. And the first is that that military health isn't just about the MASH unit that you saw on television, right. It's about first of all preparedness and making sure that our our servicemen and women are ready for whatever comes at them. The second is about sort of combat field care and trauma, right. And when you take those two things, and you spread them across all of the issues that have to do with with humanity, you really are going from performance and optimal performance, all the way to somebody being tragically injured. And what's surprising is when you hear what's come out of the DoD funded research, well, it's everything from the advent of the ambulance, surgical robotics, penicillin, anesthesia, tourniquets, and the list goes on, and on and on. It's it's a tremendously impactful sort of distribution of, of money into academic innovation. And I'd say it's complemented by Health and Human Services, and by NASA, and I'm categorizing those three together really deliberately, because they're tactical organizations, where you might have NIH focusing on more basic and primary research, each one of these organizations are looking at solving a problem with tactically implementable innovations. And remember, when I described our organization, I said, Well, that's really what we're doing is trying to solve big problems. And that's where we see a an alignment.

Joe Mullings  6:15  
And DARPA just using an example, is known. Well, what was it 1958, we started DARPA, and the United States is the answer to Sputnik, I believe, and we wanted to make sure that we did not fall behind in the arms race, if you will, or tech race. And I believe DARPA got started because on purpose, it went after big, crazy ideas, massive ideas with massive impact. And so has that changed at all? As far as the focus? And is that the only deliverable that our government has in regards to pushing something that hard?

Chris Velis  6:55  
Okay, if I tackle that one? Yeah. I'll let you start it. No, I say DARPA is still Mission Impossible. Yeah. Right. The hard problems are what they're attempting to tackle. And it's actually a relatively small organization within Department of Defense, but it distributes a massive amount of money into into research, you could say that it really is the brains of the DoD from a technological standpoint, and one of the categories where they do that type of innovation is in medicine. And a good example of that is operation warp speed, which brought us the COVID vaccines directly run by Matt Hepburn, Colonel Matt Hepburn of DARPA, who now also is part of BARDA Health and Human Services in his station in the White House, I believe, four days a week. But that program, and that the fact that the world has a vaccine is really a an example of byproducts of the work DARPA does

Dave Hood  7:50  
that. So I think DARPA is absolutely still along that mission of Mission Impossible and trying to address that. And I think it's really important, because those tend to be very risky endeavors. So you know, you're looking five to 10 years plus, probably out into the future. And it's really important for the government to sponsor and endorse some of that activity to figure out whether or not it can, it can be realized. I know when I was running product company, when I see a product company, like a lot of your portfolio, we actually started with DARPA. And we wanted to prove out whether or not it was real and work with them before we went to the more operational sides of the military medical community. So one more thing to add there. So yes, DARPA started early on. And yes, it was in the 1990s, when they adopted a mission related to medical, and it had to do with the original Persian Gulf conflicts there, they realized the medical footprint wasn't what they needed it to be. And it originally was in their defense Sciences Office and then moved to what's now there by BTO their Biological Technologies Office, and they sponsor a lot of very forward looking work in medical

Joe Mullings  8:59  
And Margaret, so you now are the recipient of some of that correct as far as the technology? Are you getting funding from a non dilutive funding for your startup?

Margaret Kalmeta  9:09  
So I transferred my own technology from the Oral Surgery space where I was growing bone, and I took it upon myself and self funded the initial portion of my venture. And therefore, the next product that I develop, I'll be going through the SBIR route right now. I'm too far along.

Joe Mullings  9:31  
Too far along. Yes. So you're not a moonshot so much anymore. You're a lot closer to practicality.

Margaret Kalmeta  9:36  
That's exactly right. Right. We are going to market. Yes.

Joe Mullings  9:40  
So there's some numbers out here. I did a little research global military wearable market 46.7 billion by 2028 with a compounded annual growth of 30% per year over the next seven years. And that is specifically for our warriors and wearable markets on anything from human performance to fighting, sort of less than desirable germs out in the marketplace, Chris, what other areas in that have you seen?

Chris Velis  10:11  
So if you talk about wearables, you can talk about augmented human. So you could talk about robotic exoskeletons, and these have applications for stroke patients for injury patients car accident, patients who lose mobility one way or another, right in order for them to both recover, right by repeated motion, or to allow mobility when say they've lost a limb or something like that. Another example, would be monitoring, right? So integrated wearable monitoring are integrated of things that are already available to us on a commercial basis. But making them work together in order to monitor things like vital signs, metabolic rates, core temperature, respiration rates, stress rates, attention, location of teams, and people in individuals. So all these sort of human performance factors will make their way into the, you know, into the consumer products. And last day would say an example of a technology we're working with is DARPA put a very significant amount of money in order into discovering proteins and materials that actually bind to pathogens. And so one of the foremost things that came out of that research was at the VESA Institute at Harvard University. And it's a protein that basically binds over 120 pathogens, and they're broken down components. And we've now been able to take it, apply it to a filter and remove pathogens and their sort of inflammatory precursors directly from the bloodstream. This type of investment on our part in entrepreneurial venture wouldn't be possible. If DARPA, Department of Defense, Health and Human Services hadn't sort of done the derisking in the early discovery, to bring it to a level where we could say, well, that's, that's a palatable risk to this, we can advance it to humanity.

Dave Hood  12:10  
So I'm gonna give that a couple other slices. So the wearables is, it's a big area, right? Yeah. And we're really, even though we've been working on it for the last couple of decades, it's really starting to take off. COVID made it something that we wanted to do remotely, which has always been of interest to the military medical community is have that remote capability. So on the military, medical community side, you have two sides, really, it's the active duty personnel that we want to take care of, and the veterans, which can both benefit by wearables. And on the active duty side, they want wearables ahead of time to train, prepare, optimize, and they want wearables during an operation so that they can understand what's what's going on, you know, and are you performing at peak performance, and then they want wearables afterwards to be able to rehab really, you know, repair and get ready for your your next event. And we see a lot of parallels on the civilian side for all of that as well. But the military medical community has been pioneering integrated time synchronized physiological monitoring for the last two decades. But now we're starting to see it more reliable, more realizable to a broader population.

Joe Mullings  13:20  
And you've got companies like Fitbit, Garmin, Aura, Apple, Samsung, all in sort of some cortical collaboration with DARPA, and the NIH. So why why is that program? Why would that program be so because we're here at LSI conference, and it's all entrepreneurs looking for funding? Early Stage seed up through C and D round? What should they know as an entrepreneur about these programs that they may be able to leverage and potentially become partners, so to speak, with the US government?

Margaret Kalmeta  13:58  
Thank you, I have a lot of insight to share with with people. If you're an early technology, and you come from theory, your theory based and you say that this will work, and I've done my research and you go to the government for that funding, then this is part of your derisking pathway. If you are a company that's a little bit further along, then please consider getting a DUNS number and selling directly to the military. So that was that was my pathway, I learned that I was too far along. So now we have to ruggedized our equipment in order to sell it to the military.

Joe Mullings  14:40  
So you came in a little post that were most people would come in much more early in the seed idea round, right? That's right. Yep. So again, on the entrepreneur side, why? Why would I want to think about taking my tech and do I need a tech that immediately connects to the battlefield?

Dave Hood  14:55  
So I think we were talking about DARPA news to get back a little bit on that. But for most everybody here, bring us back to M Tech for a moment, M Tech is really working for where you go after DARPA. DARPA is kind of visionary. And as you start moving along and proven concept, you want it to get into the operational elements that can further de risk that and actually bring that ultimately to dual use into the civilian communities as well. And that's where M Tech really works. In the middle of the product development lifecycle, when there's a proof of concept, there's some preclinical or what we call technology readiness, level three, four TRLs, that's where M Tech was really designed to come in and help and work more efficiently with industry, and alongside the investor community. So for a lot of the companies here, you know, they're at that stage where they kind of have the prototype or they want to talk about it, but they need to work that into a real product in a solution. And, and yet, maybe it's a little too early for the investor, there's still a little bit of risk left in there. Or maybe the investor might be more willing to go in it. If the government continues to put some in it, we have a lot of our investments that we've made that actually have strategic and or institutional investors alongside they've vetted it from a financial point of view, we've vetted it more from a clinical outcomes point of view. And so I think that's really in the sweet spot for a lot of the companies that are here.

Joe Mullings  16:18  
Chris, you're experienced in that area.

Chris Velis  16:20  
And Joe, I think this sort of two or three points, you really want the listeners to take away one is, number one is follow the money. Right? So where's the money coming from? And and how does it translate to an innovation? And, you know, Department of Defense, NASA health, human services, Veterans Administration, NIH, those are primary funding sources for academic research. A lot of technology we translate comes out of academia, but we doesn't we don't know why and where it's funded, right? Well, it's, it's concerning that there's so much technology sitting on the shelves in academia, that's not translated into reality that's funded by our citizens through these agencies and organizations, right. So sometimes there's hundreds of millions of dollars that has gone into this technology development sitting in the academic institutions. So from an investor standpoint, or an entrepreneur standpoint, understanding what's sitting there, what work has been done, is really critical to taking things that are not just a garage startup from point zero, right, but actually have a lot of work done. So that's point 1. Point 2 is that the work is very carefully measured. You know, in the venture community, we talk about round a, round B, round C round D, as if it's indeed indicative of how far along a company is, and it's not. In these other agencies, we talk about TRL levels, and that's technology readiness level. And it was one through 10. Right? And it defines very specifically in each category and type of technology, exactly how ready is for its commercial launch. And the assessment by these agencies, and especially the DoD is rigorous. So when they say it's TRL 5, or it's TRL, 7, or it's TRL 3. You can pretty much be assured that it has been tested, vetted, and it is reliably at that stage of development. And that's really helpful to us, as investors and as entrepreneurs. Right. So, I think those are the key takeaways to, you know, think for generally for the community to understand, because a lot of the technologies that we have, and it doesn't matter if it's in med tech, biotech, Life Sciences, or other forms of technology, really went through that process from these agencies,

Joe Mullings  18:33  
And vetted and vetted by scientists, vetted by end users and then it might again, sit up on a shelf like I remember the early days of Verb surgical. And we were recruited out of SRI Stanford Research Institute. Yes. And out of SRI came, the Internet, came the mouse, came Intuitive Surgical robotics. That's really its entirety. That's right.

Dave Hood  18:56  
And all of those were actually sponsored by DARPA, in terms of financially. Yeah.

Joe Mullings  19:00  
And when you walk downstairs in the basement there, you had robots walking around the hallway. You had these exoskeletons, you had all kinds of off the wall stuff from room to room as you walk through there. And so those might be sitting on a shelf somewhere, and have hundreds of millions of dollars put into them. Is there a database that somebody if they were interested, and let's say they were pursuing a technology on some sort of wound care, regrowth and you had a core business? Can you was it is there anywhere to go for an entrepreneur to double down on that on work already been done?

Dave Hood  19:37  
So first off, I'm really excited to hear that TRL I helped write tohe TRLs. And that was exactly what we were trying to do is to give it a stage gating process to help the technologies move forward indicate a certain level of de risk. So that's, that's great. That and I am happy to hear that people are embracing it that way. And I think that was a good explanation on it. In should companies investing, I think it depends on what you're doing. Like if you're doing wound care if you're doing some of these areas that are of specific interests, we have three core areas of specific interests. Infectious disease, which you guys are working heavily one of your companies working heavily on that. Combat casualty care, which is basically all emergency trauma, it's everything from point of care, all the way back to stabilization. And then we have what's called ops medicine, which is everything before and everything after. So after is all the clinical rehab might be TBI, PTSD might be orthopedic rehab, before as maximizing the ability to be able to do that. Your point about what might be on the shelf. That's so important because these agencies, the transition points to ultimately get to the customer community are really hard to navigate. If you don't want something promising left on the shelf, ideally. So I think the best database that I've seen is there is one a National Institute of Health, it's a pretty good database called NIH reporter. And it's really, really well done. You can look back 10 years and look forward on everything that's currently funded within NIH. So it's a great repository of what's being funded and what's what's its current level of status. Lastly, what I wanted to mention was the NIH great partners, DHHS, great partners. What we're seeing with BARDA over on the NHSS and then on the DOD, is they can be great early adopters as well. So when you're working on the DoD side, now, you've got the whole continuum, maybe from discovery, but all the way through into an early adopter stage. And I think that's pretty enabling for a lot of companies to have the good key opinion leader, early adopters and, and potential for early sales.

Joe Mullings  21:51  
I know some of our clients have had contract, non dilutive investment from the government. And they had access on the clinical trial side into the VA, which is a massive assist based upon in fact, we were sitting with a big job and today in Potrero for, you know, acute kidney injury. And I believe if I'm not mistaken, that's another organization that leveraged a relationship with the VA for massive drive on clinical trials.

Chris Velis  22:20  
And that's, that's true in both cases, right Veterans Administration, as well as in the military health care system, you know, led by Walter Reed in our clinical studies on bone and infectious disease are right out of, you know, Walter Reed, and we've coordinated 12 hospitals around that, and those clinical studies, and they're just a tremendous partner, very reliable, very proficient, very knowledgeable. And it just simply works. Moreover, the technologies that are funded through these TRL levels are exactly the technologies that these organizations want to acquire, they don't fund things that they don't want to acquire. So, if the technology has been funded by one of the organizations, it really is critical to look back and say, What were you trying to accomplish? What was your goal? Department of Defense? Navy, Army, Air Force, Space Force, right? What was your goal, Health and Human Services? And what form? Do you need this technology? And do you need a green? Do you need a camo? Do you need it? Like, do you need a durable do you need it small that it has to fit in this space or that space? Understanding that can ensure that you have a customer off the bat, in the technologies you're developing, and that's part of the de risking, and they will, they will call you and say you're at this TRL level, we're going to start what they call a licensing program. And it will be confusing because licensing in our world means something different. Really, what they're saying is we're starting our acquisition process and lining this up. So when you're ready and approved, we can place orders.

Joe Mullings  23:52  
So Margaret has had a conversation that you had when you talked about they looked at your technology with too far along, and you needed a field based durability solution. Is that an example?

Margaret Kalmeta  24:01  
That's an example? That's absolutely right. And so what we are doing right now is we're working with MTech to convert our solution from the chronic wound space to the space where the war for warrior can use this technology. Pardon me. And so, in along the process, some of the medical equipment can be used when we ruggedized it and the wound care product that we've developed, it just needs to be transferred. So we need to work with the military in order to transfer that.

Joe Mullings  24:36  
Does the military look for proprietary ownership of a technology when it invests in it? Is there usually a licensing or a lockout period before you could potentially bring it to a commercial market?

Dave Hood  24:52  
So the good news is as an entrepreneur, you you retain essentially all the intellectual property rights. What the military wants you to do is protected because they want it to become a product and a solution. And they know that if you don't have IP around that novel idea that it's less likely to get the investors and so forth down the line, and the military wants it to become a solution. So I think, you know, yes, they're interested from that perspective, do they license it, and they're gonna buy it from, they're gonna buy it from you. So they're not looking to license licenses specifically.

Chris Velis  25:29  
And I'll elaborate on that, in the vast majority of the cases, the process is from grant DoD funding collaborative agreement funding to academic institutions, the place where the research is done, or the work is done, whether it's an academic institutions or within a company ends up owning that intellectual property. So normally, what you'll see is an entrepreneur licensing technology from an academic institution that was funded by one of these organizations. And sometimes the link from that startup back to the original funding organization is not even clear to the entrepreneur. And this is a big, big flaw and a big miss, right? Because they really should go back and say, Well, what were you trying to do here?

Dave Hood  26:10  
You know, I want to get back on the VA comment, that was a really strong one that you made. And I want to, I want to emphasize that because I think when people are looking at key clinical sites, it is a good idea to see about the viability of potentially having a VA site or one or more of the VA sites, because that's a big population of people that have vast needs. But in addition to that, what Chris was saying, there's another hospital system within the military medical community that serves active duty. And that's where Walter Reed and out here on the West Coast, Balboa and Madigan up in the northwest, there's equally a large number of medical treatment facilities that served active duty personnel. So if you have something that's applicable to active duty, like wound care, and so forth, you do want to try and include them in if you have something that's more applicable from veteran standpoint, maybe it's breast cancer or something like that. You want to look at maybe including those VA sites, clinical sites.

Joe Mullings  27:08  
What didn't we chat about today that we should have touched on Margaret, Chris, Dave, that we that on this subject?

Margaret Kalmeta  27:14  
Well, I think that the military is also looking for an aspect of human performance increase. And so wound care can be that. And so our sports medicine application is able to heal knees, ankles non surgically. And so a large part of the people that trained for the military, they drop out, because of injuries during training. And so this is one of the solutions that we can bring to the table. And then also, when, you know, during combat itself, we're able to help on site. So,

Joe Mullings  27:54  
yeah, so performance performance enhancement is what I hear there as well. Right. So Chris, anything we didn't touch on that we should have? Yeah,

Chris Velis  28:01  
This system is a national competitive advantage, and a national treasure. And it's not understood. I'm afraid that the investment community sort of hears the word war, and shys away. And the reality is, it's about human health, national defense, sustainability. But more than that, it's about economic development. And I want to make a historic point of where this all originated from General George Daurio. And I believe this was all the way back to the 50s to the 70s said, there's a lot of technology that is a matter of national security, like radar, that needs to be translated. He and I believe it was a senator from Vermont, got the idea that we should have legal structures in order to create venture funds, and moreover, went to Congress to get Congress to approve that pensions, could invest in the asset class of venture capital. So this all happened in Boston, venture capital spread throughout the United States, and our concepts of risk sharing, technology development, all stem from that. And it's one of the reasons that our economy in America is so strong. And understanding this is really critical because what you're having is citizens money, going towards really critical tactical and basic research, being translated into the companies that we all work in, that are our livelihoods, creating economic value, improving our health our life our well being the safety of the world, and humanity and then feeding back into the tax dollar, which feeds the entire cycle. It is a really incredible competitive advantage that we should embrace and that we should protect, rather than be afraid of, because it these are the technologies and things that have changed the world and made our lives so much better and and give us our freedom and our our economy.

Joe Mullings  30:04  
Amen to that for sure. I mean, I made a small list Maderna, the vaccine for warp speed came out hp, HPVV vaccine at bay, Hep B vaccines come out of this. Siri, Google came out of it's called was called the Digital Library initiatives with Sergey and Larry got funded on that Tesla, Elon Musk gets 5 billion in subsidies, GPS, I mean, so to your point, these are all things that keep us safe, that make our lives easier, right and create jobs, salaries, for us to spend money back into the system

Chris Velis  30:43  
telecommunications, radar, planes would not fly and be able to navigate around the world the way they do without these technologies, sonar, ultrasound, these are all things that came out of this type of program and research. And you know, their impacts. Well, you can't calculate that.

Dave Hood  31:03  
Yeah, I think a lot of people don't realize how much it that that's true on the medical side, in terms of all of those technologies, a lot of them get the fuel, get the de risking and start there. So you on my final note, I want to mention a new program that we have within MTech. And that is last year, we opened up to members of key service providers, because we really wanted to these tech companies to start realizing that they needed to work with people that could help them productize and really transform that technology into a solution. And I want to congratulate and welcome you.

Joe Mullings  31:39  
So you helped us

Dave Hood  31:41  
And TMG team here. And those are two really important services. I mean, understanding how to communicate your message is really important to being able to have that technology become real. And obviously being able to get the staff and the team around that that can enable that. So welcome to M Tech family. And thank you very much.

Joe Mullings  32:03  
Well, I think you know, first of all, as I sit here, everybody who's in the medical device industry is here for a reason. Right? We most of us had options to go keep somebody in a browser for 42 more seconds, right? Or go into banking and stay in investment banking, for more money, but all of us made a conscious decision now to be able to do medical device and keep the country safer, and support our warriors. I think the compounding of that is something we need to be reminded of every day, how fortunate we all are to play in this area. So with that, thank you all for taking part in this conversation and sharing your subject matter expertise on it and show

Chris Velis  32:42  
Joe, thanks for doing this. I think it's really critical information. And I just want to add MTech group members to is an amazing organization, the TRL contributions that you that you made that I didn't know, you were part of absolutely helpful, incredible. This is something the entire venture community should adopt, so that we're communicating about exactly what stage things are. So thank you for that contributions. Thank you. Thank you. Thank you,

Joe Mullings  33:04  
Margaret. Chris. Thank you, Joe. I'm Joe Mullings from LSI 2020 to be well