The Anatomy of a Medtech Deal | LSI USA ‘23

This discussion will analyze a one case study of a successful medtech deal where each panelist is from a different side of this one deal.
Scott Pantel
Scott Pantel
Andrew ElBardissi
Andrew ElBardissi
Partner, Deerfield Management
Chris Eso
Chris Eso
VP, Business Development & Strategy, Medtronic
Sabing Lee
Sabing Lee
Partner, Knobbe Martens
Ramin Mousavi
Ramin Mousavi
President & CEO, CathWorks


Scott Pantel  0:07  

It's great to be here. I hope everyone's having a terrific day and a good lunch. And so yeah, we're here to talk about the anatomy of a deal to put a little framework to this. Last year, Ramin ran a session, which we called accelerating into growth. And basically, what do you do after the capital raise? One of the observations that I've made here, which is actually very positive to me is that I've obviously there's a lot of companies here that are raising capital. I've met more companies this year that they're not raising capital, but they're very much thinking about deals and the anatomy of a successful deal is what we're here to talk about today. We're going to we're going to pick one apart, we're going to talk about the things we learned that the things that we may think about in the future, but before we get started, I thought we'd do some quick intros. We'll start at Chris's side and work our way back, quick intro and then we'll jump into it.


Chris Eso  1:02  

Good afternoon, everybody. Chris Eso. So I lead business development and strategy for Medtronic for our cardiovascular portfolio, been with Medtronic for about 12 years on the cardiovascular side, m&a and business development activities. Born and raised in Orange County.


Andrew ElBardissi  1:19  

Hi, everyone, Andrew ElBardissi, a partner at Deerfield, focus on healthcare technology and also biotech and really anything that's technology related in the healthcare space your fields. Healthcare only investment firm we manage around $16 billion, thirds of our assets are on the private side. We also have a public fund and so have the ability to fund companies from inception throughout their lifecycle. Nice to be here.


Sabing Lee  1:44  

Hi, everybody on saving Lee, I'm a partner at Knobbe Martens. So we're an IP firm up the road in Irvine. I'm a med tech attorney. I've been working with Catholics for a few years. So we're the main patent counsel IP counsel for Catholics work with Andrew before at Deerfield. So happy to be here and talk about our involvement with this deal.


Ramin Mousavi  2:02  

Hi, everyone. I'm Rami Mousavi. I lead the team at CathWorks. We are actually housed out of Irvine. So very local. And I am told that we are the first LSI alumn. So we were the very first company that signed up for the very first cell sites. It's great to come full circle.


Scott Pantel  2:18  

That's right. You know, I'll share a brief story. Some of you heard this, but that is true. That's a true story. Four and a half years ago, I called Ramin said hey, Ramin, we're thinking of doing something different. This is what this is where we're going with it. I know you're at CathWorks, I need to he can can he interrupted me. He said, I'm in Scott, I'm going to do it. And so we're actually super proud that four and a half years ago, it starts with the conversation. We go through our ups and downs, which I'm sure we're going to talk about in this panel. But here we are today to talk about the success of a deal that actually happened that makes us very proud. And congratulations. Let's start with kind of setting the framework here. And define what a successful deal is, obviously, it's one that happens. But Chris, and Andrew, maybe you can talk about key ingredients for a successful deal from the outset. That are there or maybe aren't there?


Chris Eso  3:08  

Yeah, and I think there's there's obviously a lot of aspects to a successful deal, right. But I think it starts with trust. It has to have strategic alignment, for the strategic and what they're looking for. It needs to meet obviously, financial expectations that we have, but also, what is the right situation and exit for both the shareholders and the investors. And ultimately, at the end of the day, both parties have to give a little right and there's never going to be a one sided transaction. And so you have to be able to give and take a little bit and feel a little pain and give a little pain in order to get to a successful deal. Ultimately, obviously, it's about patient care and making sure that we can bring this technology to a larger patient population.


Andrew ElBardissi  3:55  

Yeah, my answer is pretty simple. I mean, when you're if you're a board member, your fiduciary obligation is to maximize value to all shareholders. That sounds very simple. It's actually very complicated, because a successful deal in the moment is balanced against what could be future potential upside offset by the incremental dilution that one would take. And that's a very complicated thing when you're looking at a very promising technology and you see huge potential. But one of the things that I think is critical to a successful deal, particularly when you're you're transacting with a party is as Chris said, Trust in the counterparty because many of these deals will have a obviously an upfront consideration, but there will also be value creating events that hopefully the existing shareholders can share in down the line. And to the extent that you have the confidence in that partner to maximize the value of those, those earnouts or the the value to that's received by shareholders. That's a critically Porton piece, and we'll talk about how, how that evolved. In this particular case, I'm sure,


Ramin Mousavi  5:05  

Maybe Scott, if I add just I'm assuming most people know, but just to frame the deal that we've done, you know, so we announced last year in July that we entered into a strategic agreement with Medtronic would be publicly shared is this has multiple elements, starting with an acquisition option agreement for up to $585 million, or publicly disclosed amount, and Medtronic investing $75 million into CathWorks, we are working together to actually in that time, co promote this in US, Europe and Japan. And then there are a bunch of other elements that we didn't share globally. So as far as the complex deals goes, this one is pretty complex, you know, so the elements of what's being touched, all had to come together for that to happen.


Scott Pantel  5:55  

Right. And I guess one of the questions I have for Andrew is, you were promised great weather on the way out here, and a bunch of free time. And I'm looking at your sheet there. I don't know if what we know, the weather was no good. But I don't know, if you had much free time. What do you do another deal with with Ramin after he put you through this?


Andrew ElBardissi  6:12  

Well, I do another deal with Ramin? Why wouldn't I not do another deal with Ramin? Most Steve, don't know me. But I often don't have glowing things to say about many people, but remain is by far one of the best CEOs I've ever had. I mean, just absolutely phenomenal in terms of executing whatever remained does next. He's got my support.


Scott Pantel  6:38  

I'm sure that was gonna be the answer. Okay, so this was a complex deal. Okay. What are some learnings that came out of this deal, that may translate into other deals that are happening? And or will we see similar deals like this, and maybe we can start with Ramin, and then we can work down down the line here.


Ramin Mousavi  6:58  

I think, you know, for me, as we look back, I mean, I'm obviously the beneficiary of a great team, that we have a CathWorks. So but one of the things that we learned out of this one is to take the input that you get, we've been lucky to have multiple strategics as investors, but taking the feedback that you get from your strategic investors very seriously. You know, and I'll let Chris give a little more insight into that. But we, you know, everybody that launches a product in the beginning is excited, but I don't know that many products that add the launch day already. And the question is, are you ready to get the feedback and react to it, or you want to be stubborn? And, you know, assume that you know, better than anybody else? So for me, the biggest takeaway is that if you get a feedback on the product, react to it properly, and then see if it works out or not. And I think that and the trust thing, which I'm sure we're gonna come back to, is what it takes to do deals more like that, but usually don't get both of them at the same time.


Chris Eso  7:58  

Yeah, I can add to that. I mean, if you think about this transaction, right, it started, I don't know, five, six years ago. And we did diligence. We gave feedback, like Ramin was saying on specific things that we weren't happy with that we wanted to see them improve upon. And to their credit, CathWorks credit, they actually went and did work on those four, there were four things specifically that we, we highlighted, and they work through those. And then they came back to us and said, Okay, we've done this, this and this, is this acceptable? And we said, well, we want to, we changed our mind, we want this over here. Now. We we did. We said though, there were certain things that we wanted to additionally see and evolve. And we wanted to get some additional commercial experience with the technology. And so we started that process, and then obviously, ultimately ended ended into the structure that we we landed on last year. And so what I what I always say is, is that it might not be the right answer or the answer that you want to hear. But the answer sometimes is not right now. And here's what you need to work on or focus on. But that doesn't mean it's no forever, right? We'll come back and we'll look at it, we'll evaluate it again. And having that trust, knowing that they're going to work on that helped us build credibility within Medtronic to say, look, we said, this is the things that we wanted them to do, they went and did that. And now let's go and look at this at a much more granular level, and provide additional feedback. And so it's a cycle and it's a continuous evolution to get to where we were today.


Scott Pantel  9:33  

Something that's come up several times hear from companies is like how does it start? How do we start that initial conversation? I know you just referenced you know six this has been going on for six years but like who made the first move? How do you make that first move? Obviously, we're all here to develop relationships. But any advice for companies on that first move? 


Ramin Mousavi  9:52  

So, I until last night I thought I know when did this little started and last night I got corrected. It actually started earlier than what I thought but for me It's interesting to get everyone's perspective because I think we all have our own lens. For me it started when we got that feedback the first time around, you know, from Medtronic, you know, and just add to what Chris said, you can take that feedback and you will hate it, you absolutely will hate it. And you know, and you know, we probably in the first reaction, were not very nice. But Chris, he was in a room, you know, we shared how we felt, but then you have a choice to make, you know, do you believe the feedback you're getting is genuine, and you do something about it? Or you can say, No, I don't believe that I want to go the route you want to go. And we, you know, for us, it started for me, it started at that moment. That's, that was the, you know, I think there's something in there. But we gotta go back. And we have a lot more work to do, until we can get back to that very same moment.


Chris Eso  10:46  

And that was to the beginning of 2020. Right? 


Ramin Mousavi  10:49  

That was the beginning of 2020.


Scott Pantel  10:52  

So what come to say, being in a second here, Andrew, when did you when did you guys get involved with this deal? And why? And I will point out that it's, it's, it's great to have Deerfield here at this event, and I'm glad that we're gonna grow on this, when did you get involved with CathWorks


Andrew ElBardissi  11:10  

2018. So Chris brought CathWorks to my attention. And there were a number of people in my circle, who were were invest existing investors and CathWorks, but I think we were, we were having breakfast. And he mentioned that, this was an intriguing opportunity, and I had not really done work on it. And so that piqued my interest. And, you know, as I did more and more work, got very excited about the potential of the technology. And, you know, Chris and I, during that time, stayed in close touch, we decided to co lead the deal together, the Series C investment together. And so, you know, that was really the moment where we were locked arms in terms of really advancing the company, from from an equity standpoint, from an investor's standpoint. So we lead that deal. And, you know, we can talk about the ups and downs, there were certainly ups and downs as there are with most companies. But, you know, we worked through it, and we were committed to the company. And, you know, as, as Ramin came in, he really helped spearhead many of the improvements that were created a tremendous amount of value both in the eyes of physicians and shareholders. And that's really what catalyzed what was a a very interesting and competitive process when it came to making a deal with with Medtronic.


Scott Pantel  12:42  

Sabing when did you get in the in the story here, and, you know, going through diligence with a company like Medtronic is not a small task. So


Sabing Lee  12:49  

you'll like the answer to this question, because I first got involved at LSI 2020. And so I came to your event, February of 2020, I think it was at the Ritz Carlton. And so I had a random meeting, and Ramin might tell you that it wasn't so random. But I had a random meeting with Catholics saying, Hey, we might have a need for you to do some second pair of eyes second opinion on some of what we were doing, I thought, great meeting, let's see what happens got a contact a few weeks later, saying, Hey, we could really use your help to kind of dig into the technology here. And I think you guys can tell the full story as to what you were already doing at that time in 2020. But we were not the first IP counsel for CathWorks. CathWorks has had patent filings since what 2013 2012. And so the company I think, had done fine. But a lot of the technology has remained can tell you comes out of Israel. And so when you have as an Israeli based company, you don't necessarily have the US Council as involved in knowing as well as they should, what's going on with the technology. And so for us, we were brought in, I think, to help with some particular issues, and then also to interact with Medtronic. And whereas what that's interesting, or the interesting part there is that one of the key guys that Chris knows at Medtronic was an associate that I used to work with at Kenobi. And so I know you're gonna talk about trust, but I feel like this guy, Doug, and I already had built some trust together, and so that we knew how he operates. He knows how we operate. And therefore he had some confidence in what we were doing so that when we were explained that technology, answering the IP questions, dealing with legal issues, we knew what to expect from each other. And I think that really helped with the process that they could trust what we were telling them and not feel like we were just blowing smoke up them.


Scott Pantel  14:30  

Let's Andrew talked about the ups and downs. Let's let's take a minute to go through some of the ups and downs specific to this deal. So maybe we'll start with Chris, was there any moment where you thought this deal might not happen? And Why and how did you overcome it and then maybe others can share their view on that?


Chris Eso  14:47  

Yeah, there was there was a couple obviously the transition on the IP side. That was a big turning point, I thought. I think the interactions that we were having we weren't getting confidence in the In the IP landscape and in the algorithm and what was being explained in terms of the technology and what was actually happening until Kenobi came in and actually helped us understand exactly what was working, and so our guys could understand it. So I think that was a turning point in 2020. I think obviously, this transaction that Trent that took place last last July, I think there was lots of turning points in that. It was a competitive environment. There was a an acquisition offer on the table for for Kath works. And you know, we were trying to figure out what is the our Avenue and our pathway to actually get the, the transaction. But we were trying to avoid not taking dilution. And so how do we go about doing that? And so we got really creative, and kind of, you know, worked together and said, here's our problem. Here's our issue, we want to do this, can we solve this together, and it goes back to that trust, and that transparency, to be able to share and talk through different constructs that could work, including partnering with Deerfield, for Deerfield, to acquire it, and then us invest into it that way. And so we looked at a lot of different structures in a very short amount of time. I think both Andrew and I were on, on vacation with our family, and he was in a much nicer place than I was. And but I was sitting in my car while my family was doing things he he was, you know, sitting in his room while his family was out. And we were trying to figure out solutions that could work to be able to make it work for the shareholders, for the investors for the board members. And for for Medtronic. So there was a lot of ups and downs.


Andrew ElBardissi  16:53  

Yeah, so So maybe the framework, what Chris said, from my perspective, so without going into too much detail, we had an outright acquisition offer on the table. So you're getting money today, if you sell to this party. And you had Medtronic on the other side, saying We just cannot take this on today, given the dilutive impact of the transaction. Now, obviously, the offers were materially different, but certainty versus risk is a very difficult thing for a board member to take on especially and for the, you know, for all shareholders to take on especially when they were both very attractive offers, right? And so I'll be honest, I was not sure we were gonna get there because we were trying everything we could to bridge that gap. So there are a couple of ways you can bridge that gap? Well, one is maybe it's not near term certainty you can solve for but maybe you can solve for certainty. You know, venture funds are usually not graded based on IRR, they're graded on the multiple of invested capital. And so for me, I didn't necessarily care if the multiple was lower today, but the IRR was greater I cared about the magnitude of the multiple. So if we could push the transaction down the road, increase what the return would be relative to the other party and then get certainty. That's a that's an equation I would take. That's a you know, that's a potential deal. And for Medtronic, I think that we're probably not to put words in your mouth, but you're probably happy to pay that. If you know that you don't have to inherit the dilution today, right. So everyone's a little bit uncomfortable. And honestly, I didn't really know if our board was going to get there because, you know, they were both really attractive offers. I think the other element that's really important is everyone recognized that this technology belonged in Medtronic spag. And you know, as I mentioned at the outset, a part of this deal is the earnout structure, which, if done incredibly well can be incredibly valuable. The other party also had elements of earnouts. But I'm not sure that we had the same degree of confidence, just given the nature of their business. And so that also kind of weighed in favor of Medtronic. I mean, Chris alluded to the fact that we were doing everything we could with them to try to get this in their hands for many of those reasons. We put on the table, a proposal where Deerfield would acquire the company and then Medtronic would pay it down over time. We're pretty creative at Deerfield. We'll come up with these structures at time that our accountants didn't love it. And then we've ultimately got to what was really that solution for certainty. So it was that put call structure where, you know, at a certain point in time, Medtronic would inherit the company through one of two mechanisms, either they called it or the company could put it to them. And so we would have effectively solved for that certainty. Yes, a number of years down the road. But again, when you think about how venture investors think about investments, it really is the magnitude of the dollars returned. And so that's ultimately how we got there.


Chris Eso  20:29  

And I think that that certainty in the future, right was a hard thing for Medtronic to get comfortable with, right? Because if you look, I think we've got three or four call put structures in all of the transactions that we've done since I've been there. So for 12 years, three or four, right? That's not that many. And so it's, it's a certain profile of a company of a technology of a market that we could get comfortable with. Because CathWorks was already approved in the US, Europe, Japan, had reimbursement, right had 850 patients of data. So we were able to get comfortable with that, if we pushed it out a few years, right. And so, but that took a lot of convincing internal Medtronic to get people like, comfortable with to that level.


Ramin Mousavi  21:18  

And I think I mean, two different important things. One, as you live this, you know, breathe Andrew, you know, we actually walked into a board meeting. And you know, to make it very easy on me, these deals when you want to get them done, you know, if you think about the players that you need to have involved, you have your investors, you have the management team, you have the BD, you know, team on the strategic side, and then you have the operating unit, and they all have to go all well together. And they play different roles that are moments of low that somebody else lifts you up. And right before we walked in the person who was the president of the coronary division that sent me a text, I said, let me know if I need to delete your number. You know, today, I'm like, fantastic, you know, this is good to walk into the meeting without any pressure. And but it's important as you think about the kind of company you want to run, to think about the people you want to have at the table. You know, one of the benefits of having a Deerfield as an investor is what just Andrew said, because I think, probably nine out of 10 investors, you know, this will be a black and white, you know, transaction, you know, oh, you know, money on the table. And they were pretty meaningful, you know, very different, but very meaningful. I actually flew to Miami to meet Andrew while we were in the middle of this, because we brainstorm and we struggled, you know, we like because we were sitting, I think we both had a what we thought was a best thing to do. But how do you get there and not convince other people because you want to let him make a decision. So that's one front. The other thing is, it's not done until it's done. But you also don't want to give up, you got to have to stay with it. And there were many, many moments where the easiest thing to do, you know, there was some very late night conversations that I would have been Chris. And then I would call Andrew and say, Well, I don't know if I completely put it off. Now somebody has to call him and say, we really want to do the deal. So you gotta have to trust that the other person on the other side is giving you what do you think? Chris said something and I don't think this is actually a common thing. Because you asked a question of why deals like this don't happen. It takes a a level of trust. And I don't know, I think it also takes the the group that you're dealing with be committed to the cause to be open, because you know, you go in and if I say one thing to like my peers who all want to do this, and if you put yourself in the shoes of the BD person of a large company, every day, all day, all day, do they talk to CEOs and investors of a company and 99% of time people come across saying their perfect product is going to change the world. It's actually refreshing if you come and you're vulnerable, you know, it's like, oh, that's the authentic person. Data risk, we were like that when we made the changes. Medtronic returned that when we were doing this deal, saying we want to do it, but here's the thing that we need, and I think allow that to go back and have a conversation. And I think it will play a big role. But a lot of Don moments, you know, we had to actually, at some point, we had a countdown in my office that every day I'm like, it's gonna happen eventually, you know, got to zero we went over only by a few days.


Scott Pantel  24:19  

That's great to hear. And I think from from my perspective, and from the outside perspective, sometimes the stories about being on vacation and calling each other from your car in your room, or taking the flight out and getting the text what are the things that we don't hear about that are interesting and you spend 5 6 7 years working on a deal, you're gonna go through a lot of this Are there any other kind of backstories or moments that anybody wants to share, say being I don't know if you had any, any moments that you want to?


Sabing Lee  24:44  

I'm just gonna comment on Ramin because I do think having a great chief executive is important, but Ramin is amazing. And so just the amount of time you spent on all aspects, so a lot of times like I'm an IP attorney, the CEO doesn't know the IP as well as they often should. Ramin knew everything like Medtronic has a very, very detailed diligence request. I think one thing that was good in my mind about this deal is because there were starts and stops, you were very well prepared in a way, in 2022, when it finally happened, because you had done all of the investigations before, there were some things that Medtronic wanted you to correct, which you addressed. But the data room was already essentially complete. So when we came in, we've got to supplement and see a lot of the work that was already done. And so a lot of work was put in at the right amount of time, so that when you were going a mile a minute, in what early 2022, when you were on all these calls, and we were on calls with you, day and night, all kinds of things going on, you had all of that background work already done, so that you were probably more better prepared for dealing with all those issues.


Ramin Mousavi  25:48  

And I think you know, the important element that you touched on, you got to remember that you try to deal, you know, you know, the larger the company, the more comprehensive due diligence, and you know, Medtronic is very comprehensive in diligence. But you got to know that each function has a responsibility, they are trying to do what they are tasked to do. So knowing who it is that you need to go back to when you need to, because you know, if you're dealing with the IP lawyer, on the other side, they have a task to do you know, you're not the one who's going to have to, you know, make the final call. But do you need to get very comfortable, I think one of the things that sometimes don't come across is the everybody has to get comfortable. We did package the whole thing. And one thing that I learned and appreciate it a lot is the role. The physician feedback plays in what we do, you know, when you bring a product to the market, you we tend to go to the people who are most enthusiastic, but then when you get a feedback you don't like usually to try to brush over it because you want to find a way to convince yourself, I think one of the things that helped us a lot is we had a pretty good, honest set of feedback, even after the improvements. And when we work with Medtronic, we were actually very transparent on the improvements we've made and where we still had gaps. Because the anticipation that you know, our team, our management team had is as soon as they pick up the phone and somebody calls somebody, that's exactly what they're going to hear. So why not be honest and tell them what it is? And that actually, I think it helped because to Chris's de risking, you know, you're trying to come up with high search. Certainly, that helped them say no, we already have anticipated for that risk factoring, but we need to do.


Scott Pantel  27:24  

Chris, you were gonna jump at the other backstory question. Any other? Yeah, I mean, any moment.


Chris Eso  27:29  

So I think the the investment that would that we made was until the end of 2018. Right. So I think basically, the whole 2019 we negotiated a co promotion arrangement, which we couldn't get agreement to. Because we couldn't align with how our team in Europe was looking at it from a technology and perspective. And so that whole time, even though we made an investment, right, we were like, well, we're not going to get the the the commercial experience this whole time that we were hoping for as part of our due diligence effort. And we couldn't get an agreement with, with with CathWorks on it, right. And it was back and forth fighting in a lot of discussions back and forth with with remains, you know, predecessor. And we finally said, Look, we're going to, we're not going to push forward for that. And then, three months later, four months later, they engaged the bank started a process to sell, which we in we participated in, and we didn't, you know, put an offer in because of of the, you know, the switch and the kind of the understanding the IP, right after that, we had another deal that was materially less than what we ultimately agreed to materially less, but we had to acquire it at that point, right, and take it on ourselves. And we always say, right, we would love to have the product, de risked, and, and wait longer and pay more than to take it on because we're a big company, right? There's a lot of things that play into what we fund, how we fund what we prioritize. And we were worried that if we brought it into Medtronic, we wouldn't prioritize it and give it the effort that it needed so that it could get to a larger patient population. So there was a lot of a lot of back and forth going on there.


Scott Pantel  29:26  

Andrew any backstories?


Andrew ElBardissi  29:27  

I mean, you know, we so I think it's clear but but maybe to put a point on it. So there were two moments in time separated by two and a half years where we were deeply engaged with Medtronic and at one moment in time we were using a bank at that second moment in time we did not and yep, I think bankers are fantastic I think they would right banker right situation can create A tremendous amount of value. In this particular case, the Compare and contrast is pretty stark, in terms of not just the outcome was materially different offer, but there was a ton of progress made on the technology. But the rapidity and the depth of engagement. I mean, I would I'd be on the phone with Chris at 10pm at night, and then I'd be calling Ramin, and then remain would be calling Jason. And then we would do that every single night. To the point that I think at one point, like if you do this, if you call someone enough, and you have an iPhone, it'll just make that person your emergency contact. And that's what happened. In this case, thankfully, it's fallen off, you're no longer my emergency contact. But you, you lose, I think it's not only that trust, you lose that trust when you engage with an intermediary. And if you have those relationships, and alignment around the board, it was very easy for for Chris to say, Hey, would this work and I'd be like, Look, I just don't think that's gonna get it done. Like, I'm not I'm asking with you, I'm not negotiating, I'm telling you, even if I wanted to do it board's not gonna get that board is not going to rubber stamp that. And to be able to iterate in that way. So quickly, to be able to get some of my structuring partners on the phone at like 11pm, and talk through different options to deal with accounting issues. Like that just doesn't happen unless you have that degree of connection. So to me, it was more of a story of it's probably a unique situation where you have that depth of, of engagement, both on the strategic side and the investor side, and the CEO side, where we can all work collaboratively to the same goal. And we all felt a little bit uneasy at times. But I think no one felt like, we got cheated, right? No one felt like, Oh, I did I just overpay or did I just take the inferior offer. And for me, it's kind of a perfect outcome in that regard.


Scott Pantel  32:07  

So that's this trust idea has come up this talk about that that trust element of a deal, you know, I think for


Ramin Mousavi  32:13  

us is pretty bottom up, because I'm pretty lucky because half of the executive team that we have at CathWorks, I have worked with him, you know, for two decades in different places. So we wanted to make this thing successful. So this was our goal, from the beginning. And we chose to do this thing, we'd understanding of the risks, you know, before there was any deal. So you try to emulate that. And you want to know, a group is holding hands. So if you envy chose a more difficult route, but we believe it's the right thing to do, I think if you have investors that sit on your board, it's important to understand what their investment thesis is. So then you can have that conversation, I think a lot of times the mistakes that is made is, you know, the CEO is trying to make a deal, and then go back and sell it to the board. That's not how it works. You know, it's like, people have to be part of it. And the experience comes in there were many times when we were doing the deal were and it was like, let me just check with somebody because they did something similar. And then it will come back and say he's not gonna pass Medtronic accounting, you know, for us was that we believe this was the right thing to do. We actually I think, genuinely everybody believed he was right, he knew we were not sure that we could do I can tell you that God on the street, walking into that board meeting, I knew what I wanted to see, I wasn't 100% Sure we gonna get there. But we got there. So it was knowing that you can get there if everybody pulls through. And then you got to kind of take a leap of faith knowing that the other people are going to do the same thing.


Sabing Lee  33:44  

So there are probably two aspects of trust that I'd want to address. One was the trust between CathWorks and their advisors. And so I feel like in some situations that I see your patent attorney, your counsel doesn't necessarily get told all the information that they need to get told. And sometimes it's because the IP counsel is not asking the right questions. And so it's important for the IP counsel to know exactly what's going on, to be able to represent the client in the best way possible. And so when Chris, you're talking about some of the technology issues, I did want to address that so that people understand that I think one of the issues involved in this deal was that the counsel didn't understand the technology as well as they needed to. And so while we don't need to get into all the details of that technology, one of my roles is to convince the people at Medtronic as to what the technology is about why there's risk or there's no risk. But if we can't explain the technology in the right way and answer your questions, you're not going to have trust in the answers that you're being given. And part of that came down to the council needs to understand from the company exactly what's being done. And so we're dealing with technology companies, the technology is very complicated here. And so you can scratch the surface and not really understand the details of it. And in this situation, we really had to get into a lot of the details, technically, to explain to Medtronic, what was important, what's relevant and that ultimately convinced I think, you guys that what we were telling you was actually not only the truth, but also of manageable risk, let's say,


Chris Eso  35:13  

yeah. And on that front, right, I was on my side, I was actually in Europe, right before the shutdown on the phone, talking with our attorneys saying, You got to understand the technology to a level that we can explain it. And they could explain it to us, right, because they weren't, they weren't not talking to each other, they were going over each other prior to Knobbe. And I vividly remember I'm sitting in in in the lobby of a hotel in Europe, in Germany, doing a diligence trip on another one talking on our attorneys trying to get them to figure out how to they could actually connect to each other and have the right conversation and, and it just was like, well, we're just talking over each other. So that's why we we ended up not moving forward at that stage of it. And then obviously, they brought in Knobbe based on that discussion and that interaction, and then that helped us get to the comfort level that we needed.


Scott Pantel  36:06  

Andrew, you've seen a lot of deals anything unique about this on the trust side?


Andrew ElBardissi  36:13  

Yeah, yes. I guess it's unique, but it's sort of how you would draw it up, right? You have to, you know, more often than not, there's misalignment with boards and CEOs, there's a different vision for how you want to build the company, how you want to maximize value creating events. And, you know, sometimes that's you get to an okay place, and sometimes you don't, I think in this particular case, we were aligned on exactly what we needed to do to maximize the potential of this technology. And that, I think, unfortunately, is unique. And so, in this particular situation, that what that does, is that gives you just tremendous confidence that there's alignment. And that, you know, we're not going to get over our skis, when you enter into a process like this, that can be very, that can be very tense and very stressful, and where one slip of the word can potentially result in, you know, an inferior outcomes. That's one side of it. And the other side of it. And this is difficult to manufacturers, you know, Chris and I have known each other for, you know, a decade plus and so I have no problem calling him up and being candid, and you know, when you sort of have alignment with the CEO, the person who's running the process, and you can have that open dialogue with, you know, the potential acquirer. I think that is actually very unique, right. And to me, it's more, you can't you can't manufacture those situations. But when they happen, I think they can be incredibly powerful.


Chris Eso  37:53  

Yeah, and the only other kind of trust that I would talk about right is one of the aspects that we were contemplating right was, like Andrew said, and I think I mentioned that Deerfield was going to be an acquire. That's a interesting dynamic, right? Because now he's competing bid against our bid. Right? And so I got a lot of questions in Medtronic. Like, can we trust what Deerfield is telling us? That that's going to be the case, and they're not trying to just drive up the price against us? Right? And I'm like, Look, I know, Andrew, I've been, you know, a decade with him, talking with him exploring different companies, we came into this together into this investment, five or six years ago, you got to trust me that I believe that this is the right thing to do. And if we're trying to solve something, this is a pathway to solve it. It's not complicating it. I mean, it obviously adds a level of complexity, but it's not driving the value in any direction. So there was a trust that we had to have, because now he was bidding in theory against us in this in this process.


Scott Pantel  39:00  

So you guys kept each other in check. That was a unilateral trust. There is there is caution trust. Okay, we're running out of time here. Ramin I know a lot of folks have come to you and said, Hey, how'd you pull the deal off and you've opened up your some of your secret sauce? Are there any final advice? You want to give people out there about a deal like this things you would maybe do differently? Or just things to be thinking about?


Ramin Mousavi  39:21  

Well, first let me thank these guys because you know, it's not that easy to get the people who play you know, key role to come and you know, as hopefully you saw openly share, you know, the behind the scenes, but I know that's the thing that we all live through, you know, the CEO job is a very lonely job and I have to tell anybody who was here you know, there are moments where you're there and you know, I am incredibly lucky that I am surrounded by you know, a CFO I've known for a long time and he keeps me in check. You know, IT management team did day old. That isn't it important one and I believe at the end of the day, when the strategics buy a company, they buy three things, they buy a good technology, they buy a market that technology can fit in and then it by a management team, you know, what you're, you're basically you're paying for that. So that I think is what's gonna take to be able to do what you need to do, to be surrounded by people that you're comfortable challenging you every day we, and that is, you know, vulnerability is actually a good leadership skills, but surrounded by a group of people that they are comfortable to come to you and they don't feel like they have to agree with you, God, I can't even get them to agree to me on anything. So, you know, the, you know, data helped a lot. I, you know, I've had these conversations many, many times, actually, just the past few days, people ask, you know, when you get investors add it to your company, you're not just asking for money, you're trying to bring somebody to the table that can view strategic insight. And that means that they're not gonna agree with you also, but it's good, they're gonna keep you in check. And then the last thing is, and I have had the luxury of sitting on the other side, being, you know, responsible for a business doing BD deals, you got to see it from the perspective of the other party, it takes a BD team, it takes an operating in it to be able to do a deal with a strategic, you know, when we entered into this one, I think a lot of people said it's impossible because call and put doesn't happen, you know, it might be a different kind of valuation. But if you get those things, then you know, timing is the other part. So even if you go through it sometimes may not work out, you know, stick with it. I think it'll work out.


Scott Pantel  41:21  

Thank you. Well, we learned complex deals take time they take trust, and I want to thank all sides of the table for joining us today. We didn't get to any questions, but if you have any, please come up afterwards. And I want to thank all the panelists, Ramin, congratulations LSI alumni number one, right 2020 Here we are with this deal and very proud and it's great to be here. Thank you, everyone.


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