Scott Wolf, MD is the Founder & Chief Medical Officer of Aerin Medical, where they are providing products to bring relief from nasal airway obstruction and chronic rhinitis. Scott is a prolific medical device entrepreneur across a broad range of therapeutic areas, and has also been a venture capitalist. In this episode we discuss how he identifies ideas, what criteria he uses to select ideas to work on, how VC’s evaluate opportunities, what entrepreneurs should know before they meet with investors, the problems Aerin is addressing, and how they are serving the ENT community.
Links from this episode:
- Scott Wolf, MD LinkedIn https://www.linkedin.com/in/sjwolf/
- Aerin Medical https://aerinmedical.com/
Connect with Mastering Medical Device:
- Website: https://www.masteringmedicaldevice.com
- LinkedIn: https://www.linkedin.com/company/mastering-medical-device
- Patrick Kothe LinkedIn: https://www.linkedin.com/in/patrick-kothe
- Patrick Kothe Twitter: https://twitter.com/patrickkothe
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Pat Kothe (00:31):
Welcome! Serial entrepreneurs are a rare breed.
What drives someone to chaseafter a dream when the numbers
show there are many morefailures than there are wins.
Stepping out on a ledge with nonet below is not for everyone.
And for those of us that havedone it.
(00:52):
You better learn fast.
Our guest today is Scott Wolf,founder, and Chief Medical
Officer of Aerin medical wherethey're providing products to
bring relief from nasal airwayobstruction and chronic
rhinitis.
Scott is an MD and he's also aprolific medical device
entrepreneur across a broadrange of therapeutic areas.
(01:15):
Prior to founding Aerin Medical,Scott founded Zeltiq, Aesthetics
to maker of CoolSculpting, theleading non-invasive method,
method of fat reduction for bodysculpting.
Scott's other startups includeEndoGastric Solutions and
Cardiac Dimensions.
Scott was previously a partnerat Prospect Venture Partners.
(01:35):
And a vice-president at FrazierHealthcare Ventures, both
leading life science venturecapital firms.
In this episode, we discuss howhe identify ideas, what criteria
he uses to select ideas to workon, how VCs evaluate
opportunities what entrepreneursshould know before they meet
(01:56):
with investors, the problemsAerin is addressing and how
they're serving the ENTcommunity.
Here's our conversation.
Scott, you've had an interestingcareer journey.
You're a physician, anentrepreneur, and you've also
been a venture capitalist.
(02:16):
So after starting your career,you quickly pivoted to startup
world.
Can you tell us a little bitabout that transition and moving
from practicing medicine intothis unique space that we're in?
Scott Wolf (02:31):
Sure.
Yeah, there's a handful ofpeople out there like me, you
know, um, uh, doctors who,who've gotten into either the,
uh, investment world in medicaldevices or the, or the, uh, the
startup world of medicaldevices.
But, um, When I was in, uh,medical school, I started to
think, you know, to practicemedicine effectively, you really
(02:53):
can't use your imagination.
You can't, innovate as you'regoing along.
There's a way to treat diseasesthat's accepted and, that, it
didn't really fit mypersonality.
I like to think of new ideasand, was always interested in
science and science fiction.
So I started to look around, youknow, and.
See, maybe if there were otherpeople, like me who had this
(03:15):
thought and there was actually adoctor in New York, who was,
forming, um, biotech companies.
And so I, I reached out to himand after my internship, he gave
me a job.
So that was my start.
This was, uh, before, before theinternet.
So he gave me a, a phone bookand a desk and told me to find
(03:35):
some cool technologies that wecould start companies on.
So I was there for a couple ofyears, got to see, what that
world was like, and then, heardabout some, folks who were, it
was a, venture firm at the timecalled Vanguard Venture Partners
who were doing, who werecreating a, a medical device
incubator with Medtronic.
And so I, begged them to let merun it.
(03:56):
And, they did.
So I moved out to Minneapolisfor a few years and, did that
with Medtronic and got to, seethe, home base of medical
devices and, how big companiesdid things and, and got my first
taste of the startup world and,really just, kept going from
there.
And I really enjoyed the startupprocess and, the thinking about
(04:20):
new ideas and, thinking aboutunmet needs in medicine.
So really, it really put a lotof my interests, together and
along the way I had the idea Iwanted to be a venture
capitalist cause that is, quitea glamorous job.
So after forming some morecompanies.
I, I hooked up with a venturecapital firm in Seattle.
(04:42):
I actually approached them abouta startup.
I had the idea that, you couldnon invasively reduce fat in the
body, right?
And if you could do that, thatwould be a great thing, that you
don't have to do a lot of marketresearch to know that people
want to have fat removed fromtheir bodies.
And The bar is a pretty lowhanging bar in terms of,
getting, if you could do even alittle bit, it would be a very
(05:04):
successful product.
Then they said, okay, come onboard and, we'll fund you to
build that company.
And, and that's what I did.
That's where I found someinventors.
At Mass General, really smartguys who had invented
CoolSculpting.
And so I licensed CoolSculptingand, and then formed Zeltiq with
this venture capital firm,Fraser Healthcare Ventures.
(05:26):
And, they were, very supportiveof, of that company.
And then, and then moved on toanother venture capital firm,
but really realized that Ididn't really want to invest in
other people's companies.
I like the actual process ofcreating something from nothing,
creating, building, somethingfrom an idea on paper to, To a
product, this act of creationwas meaningful to me.
(05:49):
So that's when I went back andformed Aerin Medical.
Pat Kothe (05:53):
Many of us, um, learn and pivot based on new things
that happen to us.
Looking back on, on yourtransition, you go into medical
school, you spend all that time,you prepare for it, you get in,
and then you say, geez, this isnot for me.
Was your personality always...
(06:15):
like it is today or was theresomething that happened in
medical school that says, I needto move out of what I'm doing I
mean Did you fool yourself intosaying medicine was gonna be
good for me if you were youalways an entrepreneur?
Or did something
Scott Wolf (06:28):
This is a, I was always an entrepreneur, but this
was a cultural thing.
My father, didn't go to college.
My parents, neither parent wentto college and they said their
kids were going to get educatedand become professionals.
And so I was tapped.
My older brother was supposed tobe the doctor, but he didn't, he
hated the sight of blood.
(06:49):
He'd faint at blood.
And so then they said, okay,well, you know, Scott will be
the doctor.
So I was tapped.
as a kid that I would go tomedical school and in, certain
cultures, you don't really, youknow, like, I'm sure, I'm sure
this resonates with a lot ofpeople, who are hearing this
because, I didn't question it.
I just said, Oh yeah, I'm goingto medical school.
(07:10):
That was it.
I can do it it, and it wouldprovide me the kind of life that
my parents weren't able to have,so it seemed a great thing to do
as an honor, to get into medicalschool and be the first one to
do it.
But yeah, then I got there andit wasn't, it didn't fit my
personality.
It was eyeopening though, When Ihad this realization, oh wow, I
(07:30):
actually don't have to practicemedicine.
I can use this medical degree.
I felt like a weight had beenlifted off my shoulders.
You know, I, it worked out forthe best.
but yeah, it took a lot ofrealization.
Pat Kothe (07:42):
Yeah, we have to make our own paths.
Uh, my, my older brother, uh,my, my parents had, had, uh,
dubbed him.
He was going to be the priest.
Um,
Scott Wolf (07:52):
Right.
Pat Kothe (07:52):
that, that never happened.
they wanted me to go to the AirForce Academy and, I did a
little bit of, applying thereand then finally said, you know
what, that doesn't fit mypersonality, so we made those
decisions a little bit earlier,uh, but as you said, I mean,
sometimes you've, you, you'vegot a great opportunity ahead of
you and at, at some point intime you figure out this isn't
Scott Wolf (08:15):
Yeah.
Pat Kothe (08:16):
But obviously entrepreneurship and building
things is what turns you on.
Scott Wolf (08:22):
Yeah.
Yeah.
It's what, you know, I'm, I'mone of those people who, want to
be, um, think I'm doingsomething meaningful and
important and if I can feel thatI can, you know, I can really
give my all to it and, um, andthat's how I feel when I'm
building a medical devicecompany.
Creating a new, a new treatmentfor people who are suffering
(08:43):
from a disease condition, Yeah,I find it to be quite fulfilling
in a lot of ways and, fun toboot, it's really fun I think
when something that you,conceive of, it comes to
fruition, and that you be ableto really help people through
that.
To me, that's just a, it's a funfeeling yeah.
(09:04):
I think of artists who create,works of art and, musicians who,
you know, just this activecreation to me is, is really
something that, that, thatdrives me.
Pat Kothe (09:16):
So speaking of creation, you've created or
founded a few differentstartups.
how many startups is it now?
Scott Wolf (09:24):
I have been either, founder or co founder of, um.
six, and so, uh, and some havebeen, you know, I've had the
full range of medical device,experiences and founding
companies.
So some have not worked, forvarious reasons, either funding,
we couldn't get funding.
one failed in late clinicaltrials, which is just, like a
(09:48):
really tough lesson to learn.
You don't want that to happen.
to happen.
You want to ring out, all therisk, as early as possible, ring
out risk.
it's going to work, if you canget to that point.
And then, companies like I'm,I'm at now Aerin Medical, which,
uh, you know, is, uh, we have,two FDA approved products, on
the market and everything isdoing very, well we're growing
(10:10):
fast.
So it's, it's, it's, you know,so there's, I've, I've seen the
full gamut, the, uh, you know,pain of, of things not working
out and, and the fun of, ofhaving them.
Pat Kothe (10:21):
For those that say they've never failed in a
startup, it's really a question.
Uh, the comment is, is
Scott Wolf (10:28):
yet.
yeah,
Pat Kothe (10:29):
because you will, you will for a variety of reasons.
I've had it happen.
It's as you said, it is not fun.
It is pain associated with it.
So let's talk a little bitabout, you know, six, six
startups that you've founded.
I want to talk about findingideas and how you find ideas,
where ideas come from.
(10:49):
Because I'm sure you foundedsix, six companies, but there's
a lot more than six ideas thatyou've run down.
So what are you looking for whenyou are looking for ideas?
How do you find them?
Scott Wolf (11:04):
So that's a, it's a big question.
My main guiding principle is theidea has to, um, be worth the
effort.
At the end of the day, this hasto be a big idea.
This has to be something thatcan change the way medicine is
practiced, that can make things,easier and more effective for
(11:26):
the patient.
And it has to be something in avery large market, because the
effort and money...
required to bring something froman idea to fruition in medical
devices is measured in hundredsof millions of dollars.
This is a very, expensive, thingto do, and it's very difficult
(11:46):
to raise money along the way, soit has to be, it has to be an
idea that, at the end of the daycan generate hundreds of
millions of dollars in revenue,for a company, so that's,
unfortunately, my, number one,rule, the other, the other,
Pat Kothe (12:02):
Let's pause there for a second because, um, that is.
definitely, an opinion that'sout there that, you know, pick,
pick a huge unmet need to goafter, uh, because it does, does
take, but, but medicine is also,and devices are also
incrementally improved.
So If you don't incrementallyimprove on those devices,
(12:26):
there's missed opportunity aswell.
How do you balance that betweenlooking at opportunities that
are incremental and largemarkets versus that huge
opportunity?
Scott Wolf (12:40):
I think it's the, the role of the large companies
and the established companies toincrementally improve things.
And it's just, there's not, um.
Um, you know, again, you canhave, you can have devices in
large markets, let's say AFib,for instance, that's, an
incredibly large market with,unending need and, so if you
(13:04):
have a device that isincrementally better and have
patent protection for it, and,um, you know, have a path to
market, that is something thatcould probably support, a
startup company.
But for most startup companies,you really, you just need,
there's so many things, so manycheck boxes that you have to
(13:25):
have patent protection, right?
So an incremental improvement,is less likely to have a good
patent portfolio.
And if you don't have a goodpatent portfolio, you're not
going to be able to get thefinancing.
The general rule, I think, stillstands, that it has to, it has
to, it doesn't have to be alonein its field of attacking this,
this very large market, but ithas to be a new idea
Pat Kothe (13:47):
So a couple of things here, one is, you, obviously
nothing happens without money.
There's a couple of differentsources, main sources of money
in our space.
One's angel money, one's VCmoney, and sometimes this
incremental stuff can be donewith angel money and not VC
money, and VC money may havedifferent criteria of investing
than angel money does.
(14:08):
So I think that, that may bekind of one of those other
things.
But the other thing I wanted toask you about is when you say
big market, large opportunity,what's big for you?
Is it a hundred million, 500million, a billion, 5 billion?
What's a big market?
Scott Wolf (14:27):
I think, 500 million on up and the ability to
generate, to have your product,generate over a hundred million
dollars in revenue, every yearand is, is, the, yeah, that,
that's how I would define it.
If you have ideas that, that,are going to generate less
(14:49):
revenue, let's say one day, thatdoesn't mean you don't, you
can't start a company on it, orthat can't be developed, it's
just different from what I do,cause I really only know one way
of, of doing things, you know,so I go the route of, um, of, of
trying to find one of these verylarge markets, getting angel
(15:11):
financing, the angel financing,then we'll lead in later rounds,
after you've run out some riskto, to venture capital financing
and, so that's how you continueto keep funding these companies.
Pat Kothe (15:25):
So your first, screening criteria is market
opportunity.
What other things are you, Whatother things are you looking to
evaluate, whether it's worthyour time to, to, devote
Scott Wolf (15:35):
Um, so, that there is a path to FDA approval that's
reasonable.
I think, the FDA does a good jobof protecting us, from dangerous
medicines, medical devices, butas medical device developers, we
have to have a path, throughthat.
So, if the FDA is going torequire a thousand patient
(15:56):
clinical trial, that's usuallynot workable for a startup
company.
So you look at FDA path, youlook at path to reimbursement.
Getting reimbursement is, justthe fact that we need in medical
devices, we need, CPT codes, forphysicians to get paid for what
they do.
So, uh, we need either anexisting, the best is having an
(16:18):
existing code and next is theability to get, a good new code.
Pat Kothe (16:22):
As you're going through your criteria then on,
on the FDA side, our PMA devicesin or out, uh, for you, um, and
as, uh, our new reimbursementcodes, does that mean it's,
acceptance or non acceptance,uh, criteria?
Scott Wolf (16:39):
Um, I'll do both.
For instance, Aerin Medical, we,recently, got, new CPT codes for
both of our products.
So it's an overarching, questionof can I fund this, can I keep
this company funded, so what areventure capitalists, looking for
(17:00):
also, so I'm not averse to PMAproducts, but I, yeah, I haven't
done one in quite a while.
I have been sticking with,510ks.
but we're, but in a lot of ways,the PMA process, isn't that
much, different than a 510k withclinicals.
But yeah, I've been, I've beensticking with 510ks just because
it's, just a little bit safer,easier route.
Pat Kothe (17:24):
Other things like, patent protection, like
competitive landscape, like, uh,opportunities, buying, companies
buying, the
Scott Wolf (17:32):
Yeah, no, all those things.
You've probably named the nextthree.
So patent protection, you haveto be able to, have a, not only
freedom to operate, but theability to prevent other people
from, from fast following you.
It's nice to have naturalacquirers in the field, Fields
like AFib, I mentioned, youknow, there's lots of acquirers
(17:54):
very interested in the nextthing.
That's always nice because itgives you this dual path.
You don't have to rely on, anIPO eventually.
You can have a dual path eitheracquired or go IPO eventually.
Yeah, and then you lookobviously at competition.
What's out there right now andhow well does it, how big a
medical need is this?
is it, something that, that youridea is going to be that much
(18:17):
better than the competition.
Pat Kothe (18:19):
And one of the overarching things that you talk
about is it fundable?
Um, it's, it's, it's interestingto me.
It passes my criteria forsomething that I want to get
involved with.
And I think I can get it funded.
Scott Wolf (18:33):
That's that.
Yeah.
Because, and I think it's alsobecause I've been through, you
know, like the funding processis painful, there's nothing fun
about it and if you like, unlessyou like to be told no a hundred
times in a row, and told, it'sjust,
Pat Kothe (18:50):
And your baby's
Scott Wolf (18:51):
Your baby's ugly.
So that's really what thisfunding process is.
Now, you only have to, you haveto keep reminding yourself, you
only have to be told yes once ortwice, and then things, then you
keep, going on.
but when you've been throughcompanies that can't get funded,
then that is, it's reallypainful and you don't want to,
go through that again.
(19:12):
That's always in the back of mymind.
Friend of mine Dan Hawkins talksabout, you know, founding
Shockwave and, and, um, with,uh, with John Adams, uh, uh,
and, uh, he couldn't get funded.
And so he said.
Okay, we'll stop trying for alittle while and then, either
(19:33):
the world changed or his storychanged or something changed and
then he got financed, so there'sa lot about the cycles of, of,
of financing.
Sometimes it's just not, there'sno funding available, through no
fault of anybody's really.
Pat Kothe (19:50):
We didn't talk about team and that's one of the
things I'm sure, when you're onthe other side of the table,
that's one of the main things,but when you're evaluating an
idea, how do you put team inthere too?
Is that some, is that a riskthat you're, you're weighing as
an entrepreneur or are youassuming that you can, develop
that team?
Scott Wolf (20:08):
That's why I live in the Bay Area is because I'm
assuming, I can develop thatteam here.
The team for, for Aerin startupwas me and then, um.
Andrew Fraser, who's our, our VPof engineering now, and he
joined, he's just a, uh, a trueengineer who can, uh, you know,
if I have, I have an idea, hecan build a prototype in a
(20:30):
couple of days, hand it back tome and we can go to the animal
lab.
To me, that's the perfect team.
I never have any idea or Ihaven't come across any ideas
that require You know quantumphysics yet.
So I think I we can build a teamaround here.
Pat Kothe (20:47):
So what, what we've kind of discussed is, uh, two
people have been through thestartup thing and learned a lot
of tough lessons along the way.
Uh, and have, have come to, youknow, talk a little bit in, in
short, you know, short,shortcuts of things that we've
learned.
Uh, six startups.
Didn't all go well.
You learned all of these lessonsalong the way, and in between
(21:10):
those six startups, you weremoving in and out of the venture
community.
So let's put your venture hat onfor a second.
What does the process look likefrom a VC standpoint?
Scott Wolf (21:24):
So first of all, they are looking for a very
large return on theirinvestment, and because they
have a portfolio of companies.
They know some are gonna workand some aren't, that they the
ones that do work they want tobe able to get a lot, you know a
big return and they're nottalking about like 20 percent a
(21:46):
year they're talking about thatwe want ten times our money
back.
That, that kind of, um, shapesthe entire, viewpoint of a
venture capitalist for, the waytheir business works, they, need
to get these very large returns.
So
Pat Kothe (22:03):
they need to, and they need to get it in a certain
time frame for the life of the
Scott Wolf (22:07):
exactly.
It has to be in a certaintimeframe and depending on where
they are in the life cycle ofthe fund, they're looking for
different things.
So they might be towards thetail.
Let's say the last investment ofthe fund, they don't want to
invest in something that's goingto take 10 years.
They want something that'snearer term.
so there, there's a lot.
You know, that goes into theirthinking that relates to how,
(22:28):
uh, just how a venture capitalfund.
it works, but that the firstthing is yeah, timeframes and,
and return, colors a lot of it.
So it's difficult.
And also the size of the funds.
So if you have, let's say a$50million fund, that fund can make
million dollar investments, and,and get, let's say they, they
(22:52):
can get, a few million dollarsinto a company over the life
time of that investment.
That's okay for a 50 millionfund, but a 5 billion fund, it,
has to be able to invest, a verylarge amount of money into, into
any company, cause they, theycan't just have a thousand
companies in their portfolio.
(23:13):
They're on the boards of thesecompanies.
So it's harder for, for reallylarge funds to invest in early
stage medical devices, becausethe investments are smaller, the
timeframes are longer, That Iguess is, is most of the
thinking is around most of thoseinvestment portfolio management
(23:34):
you know, thoughts.
Pat Kothe (23:36):
And then weighing the criteria.
We went through from an, from anentrepreneur's standpoint, what
you're looking for.
From a VC standpoint, are theylooking for the same things, but
in a different order?
Scott Wolf (23:47):
yeah, I would say so.
I'd say they're looking atexactly the same things.
and, for instance, patent, they,there's some risks that they,
are, they're not willing totake, so they just have, they're
not willing to take anyintellectual property risk.
No market risk.
They want these large marketswhere, you know that if you can
(24:09):
develop this product, you Itwill have a large market and it
will, generate a lot of sales.
They're willing to take sometechnical risk.
Okay.
Will this technology work?
Can this team develop thistechnology?
Those are the kinds of risksthat they are very good at,
evaluating.
Yeah, they'll put a lot ofeffort into, looking at market
(24:32):
and talking to physicians andreally trying to, see, see if
there's a market there and if,if, if there is then looking at
the technology and evaluatingwhether it's actually gonna, you
know, that's, that's the betthey're taking that this
technology and this team candevelop this.
Pat Kothe (24:49):
Yeah.
A common saying within theindustry, and it's common, you
know, is, you know, you bet on,bet on the jockey, not on the
horse.
Is that true?
Scott Wolf (24:58):
there's not a lot of uh, I've found not a lot of
cronyism, you know in venturecapital that it's You know
pretty hard dollars and centsand technology kind of decision
making at least that's been myexperience.
Pat Kothe (25:14):
It's a lot easier to take the meeting to when you've
got an experienced entrepreneur.
It's a lot easier to get intothe conversation, but when it
all boils down to it, all ofthose other criteria that we
looked at still have to be met.
Scott Wolf (25:25):
Yeah, that's right.
Especially medical device mightbe different in other, you know,
in health tech or, in healthcare services.
I don't know.
But in, yeah, in devices, Idon't think, people are, yeah,
making more risky decisions ontechnology or on patents,
because it's their favorite CEO.
Pat Kothe (25:46):
You've been on both sides, uh, of the table when
you're making presentations andI'm sure you learned some things
early on what to say, what notto say, and then when you're on
the VC side, what doentrepreneurs not know that
they're doing incorrectly whenthey're, in a meeting with, with
a
Scott Wolf (26:04):
That's a good question.
Um, I actually, I talk to youngentrepreneurs about this.
I tell them you are the expert,you are going in to share your
expertise about this, withthese, potential investors.
So be confident, be, sure ofyour answers.
(26:24):
if you don't know something,you'll say why you don't know if
it's something that you shouldknow and how you're going to
find out and how, you're goingto, answer that question, but
the confidence, is, I thinklacking a lot of, first time
entrepreneurs.
cause yeah, it's can be veryintimidating.
(26:45):
There's a lot riding on theoutcome.
The other is, uh, yeah, knowwhat questions are going to be
asked in advance.
So you should vet this.
do your presentation multipletimes, with other people see
what questions come up, do it asmany times as you can, because
the questions are usually thesame, between potential
(27:06):
investors.
So you shouldn't be surprised byany questions that are being
asked and, you should have aplan, a real plan for getting
this.
Product developed, but alsogetting, through the FDA,
getting reimbursement, and salesmarketing, and this should be a
real plan.
It, it doesn't have to be afully baked business plan with
(27:28):
numbers attached, five yearsout, but you have to know the
life cycle of, of this product.
Pat Kothe (27:35):
think one of the other things that I've learned
through the process too is doingyour homework on the person
that's across the table fromyou.
you need to know, as we said,you need to know where they are
in their fund.
Uh, where you are, uh, whatother investments they've made,
in the space, are they,typically investing in the type
of round that you're, thatyou're in?
Are they a seed investor?
(27:56):
Are they a B investor?
You know, kind of where, where,you know, what's their sweet
spot for it?
That's basically sales 101 isyou need to understand the other
side's motivations before youstart
Scott Wolf (28:08):
That's right.
Yeah.
Yeah, exactly.
Um, yeah.
And then, um, uh, you know, andhave, your experts ready to
answer their questions.
Your scientific advisors ormedical advisory board, ready
to, um, because you've obviouslyvetted your idea with these, So
(28:28):
You know, experts and theyshould be willing to talk to,
the investors for you to tellthem, why they think it's a good
idea.
Pat Kothe (28:38):
Just some great information in the last 30
minutes we put together.
A lot of, a lot of hard, hardlearned facts
Scott Wolf (28:48):
Hard, hard learned.
Yeah.
You know, again, it, they are,yeah, all hard learned, you
know, because I had, you know,when I first started I made, you
know, yeah, I, I've made, uh,I've made most of the mistakes
that the, uh, that newentrepreneurs are going to make.
Pat Kothe (29:06):
I think that kind of going back to if you're going to
spend the next 5, 8, 10 yearswith an idea, you better know
what makes it successful.
what makes a successful idea?
And you just laid out all of thedifferent criteria.
And basically what you're tryingto do is mitigate the risks
(29:27):
associated with it, with thisidea.
Make sure that there's a greatopportunity at the tail end of
this thing.
And as you said, it's alsokeeping an eye on, is it
fundable?
can I, can I put the fuel inthere to make this happen?
Is, because funding is asignificant risk, one of the
most significant risks that astartup has
Scott Wolf (29:49):
Yeah, no, it's very, I, and I, at one point I, I got
funding from, the government ofSingapore, cause they were
looking to.
experience entrepreneurs, maybe,employ people there and teach
people how to build companies.
And so they gave me asignificant amount of funding
and I went out to Singaporequite a bit too.
So you have to explore otheravenues.
(30:09):
Just do whatever you can to tokeep the company going, certain
times because, you, yeah, you,so again, you have to really
believe in, that the companywill have an outcome like Aerin
Medical is having, right nowthat you're able to actually,
really positively change thepractice of medicine.
Pat Kothe (30:28):
Well, let's talk about Aerin.
Really a fascinating,technology, being applied into,
a problem area.
So tell us about what theproblem is that Aerin is
solving.
Scott Wolf (30:40):
Yeah.
So we're developing non invasivesolutions, office.
friendly treatments, for a hostof chronic, nasal airway
conditions.
And so our first two productsare solving, nasal airway
obstruction.
So just having this feeling ornot being able to get enough air
(31:02):
through your nose.
So that's our first product,VivAer.
Our second product is, RhinAer,which treats chronic rhinitis.
So, uh, a chronically runnynose, post nasal drip, just
overactive mucus production inyour nose that affects, millions
of people in, in.
it's a very common condition,especially as people age.
Pat Kothe (31:23):
What is the, you know, kind of go a little bit
further into the problem.
What happens when somebody hasan obstructed nasal passage?
what's the, what's that person'slife like?
How is it,
Scott Wolf (31:35):
yeah, the patient journey, you know, we call it.
And, and, but that, that isactually the question I asked
when I first got into, intothis, so I was attracted to ENT
because, there are physiciansthat do procedures, in the O.
R., they see patients in theoffice, they can do, you know,
and they can do officeprocedures.
I thought it was ripe for maybemoving some of the things that
(31:59):
they did in the O.
R.
to the office or providing themnew things to do, to in the O.
R.
So I actually looked in thebeginning, I went to ENTs and I
said, what do your patientscomplain about, you know, what,
and, uh, so nasal obstructionwas number one, and I started to
look into what the actualproblem was, so if you think of
(32:20):
it, In physics terms, theproblem is, you know, not
getting enough air into intoyour nose.
So where is the resistancecoming from?
And I discovered this thing Inever heard of called the nasal
valve.
So it's the area of greatestresistance in your entire nasal
airway, and it's, it's reallywhat breathe right strips work
(32:42):
on.
So those nasal strips that pullthe sides of your nose open,
that's pulling open this nasalvalve area.
It's where like 60 percent ofnasal resistance, and just about
everybody breathes better if youput on a nasal strip or you pull
the sides, of your nose open.
So that got me thinking, okay,would everybody then benefit if
(33:02):
we could just enlarge that areaa little bit?
using radiofrequency energy.
That's where this idea camefrom.
We spent a lot of time looking,can you safely treat, you know,
use radiofrequency in this area?
And you can't, becausetraditional radiofrequency is
really ablative.
So we had to develop a way thatyou could apply um,
(33:26):
radiofrequency to shape and openthe nasal airway without,
really, damaging the, mucosawhere you would have a mucosal
ulcers or even perforation.
So we had to develop a very safeway of, of applying
radiofrequency to the, to themucosa in the nose and that we
(33:46):
developed a temperaturecontrolled radiofrequency, um,
to, to do it.
Pat Kothe (33:51):
Scott, one of the...
Other issues, I don't know ifthis is, um, what, how you're
applying the technology to is,with, people with apnea, sleep
apnea, people who snore, is thissomething that can, that helps
solve those issues as well?
Scott Wolf (34:08):
I'll take snoring first because we can definitely
help a certain population whosnores.
If you have a nasal airwayobstruction, you can snore just
from that because you produce,when you breathe in, you produce
too much negative, pressure andit causes your palate to to
vibrate.
And if you open up the nose in alot of those patients, that
(34:32):
snoring will stop.
Our studies have shown thatpeople report less snoring after
our procedure who snored before.
And we have a lot of, reallygood, uh, data on, improving
sleep.
People feel more refreshed whenthey wake up.
It's definitely something thatcan help, with, sleep disordered
breathing.
When you talk about sleep apnea,that is, a lot of patients with
(34:54):
sleep apnea also have problemswith, their tongue.
falling back and, it's amultifactorial problem.
So we would never really saythat we can treat, sleep apnea,
but we can definitely help, somepatients with, with snoring and
other sleep disorder problems.
Pat Kothe (35:10):
So from a, a, a, a patient, you know, kind of going
back to patient standpoint,they're having difficulty
breathing out of one or bothnostrils and you open this up.
Is there a medical issue thatyou're solving other than
uncomfortable feeling in thepatient?
Scott Wolf (35:28):
Sleep is, is probably the biggest one.
Sleep and well being, so it justpeople are much happier and,
feel better when they breathethrough their nose.
So those patients, you know, ifthey go to see their ENT, the
ENT will do what's called acaudal maneuver, which is
basically opening up this nasalvalve area that we talked about.
(35:50):
If they can breathe better afterhaving the Caudal maneuver, the
VivAer procedure in the officeis likely to help they, that
those patients don't necessarilyhave to go to surgery anymore.
That's what we were trying to,um.
You know, is, is providepatients who, either aren't
surgical candidates or don'twant to have surgery, another
option, for, for getting betternose breathing.
Pat Kothe (36:12):
As a father of a, of a woman who had a deviated
septum and had surgery and itdid not work properly, she's
still having problems to,breathing, as an adult.
Uh, I think this is aninteresting
Scott Wolf (36:29):
Well, one reason that, that, you know, deviated
septum surgeries might not workis because there could be a
nasal valve problem.
on top of that.
And so that is something shemight want to check with her ENT
about.
Pat Kothe (36:42):
Yeah.
So, uh, you mentioned.
Reimbursement.
Is this the product that you're,just recently got some positive
news on reimbursement?
Scott Wolf (36:52):
Both of them.
So, so, um, so VivAer for nasalobstruction, that code went into
effect at the beginning of thisyear.
So that's being, covered by,Medicare and Medicaid and then
private insurers are makingtheir own decisions about it.
And then our, our RhinAer codegoes into effect at the
beginning of 2024.
Pat Kothe (37:12):
Let's talk about RhinAer for a little bit and
what problem that's solving.
Scott Wolf (37:15):
yeah, so RhinAer solves the problem of, too much
mucus, produced in the nose, sochronic rhinitis and these
patients are, can have justeither just clear fluid dripping
from their nose, so you'll,people walk around holding a
tissue all the time andsniffling, and it can also be
allergic rhinitis, which isassociated with, congestion and
(37:36):
itching and, and sneezing andboth can be associated with post
nasal drip.
Millions of people have this,but there's really been nothing
to treat it, other than themedication and medication, a lot
of people don't either don'trespond or, don't tolerate it
well, or just don't want to beon medication for the rest of
their lives.
(37:56):
What our device does, whatRhinAer does, is it goes in and,
um, ablates the nerves thatcontrol mucus production, and
they happen to be in an area ofthe nose that we can reach with
the RhinAer device, and weapply, radio frequency energy
over the area of the nerves inmultiple areas.
(38:18):
We have a very high success ratein our randomized control trial.
So it's been very exciting.
And while doing RhinAer, we canalso use that same technology to
reduce the size of enlargedturbinates and reduce the size
of, uh, nasal swell bodies,which are another thing that can
cause congestion.
So we can also reduce congestionalong with reducing the,
(38:41):
overproduction of mucus.
Pat Kothe (38:44):
So you've got two problems.
Both patients come to the ENT toget diagnosed and they can get
it done at the time, or in thephysician's office.
And it's, how long is theprocedure?
Less,
Scott Wolf (39:00):
It's,
Pat Kothe (39:00):
than half hour?
Scott Wolf (39:01):
yeah, it's less than half, less than a half hour, I
would say, average of, 20minutes of actual procedure
time.
We do, we provide topicalanesthetic, topical and some
injected anesthetic.
So that, that needs to take intoaccount.
So you're, in and out of, theoffice, much less than an hour,
but the actual procedure isabout 20 minutes.
Pat Kothe (39:22):
Tell me about the training, that a physician would
need to have for this product or
Scott Wolf (39:27):
Yeah, no, it's actually pretty great.
For VivAer, you really don't,you don't even need to use an
endoscope.
Everything you're treating is,in the, front of the nose.
So, uh, they're, They're reallyup and running, after seeing a
video and, we're, we'll be therewith them in the first cases,
but it's a very, it's a veryshort learning curve.
(39:49):
It's working on areas that theENT physician is very familiar
with accessing and, working onin other procedures.
Pat Kothe (39:58):
As far as the product itself, I'm assuming that
there's a power source and thenthere's wands of some sort as
Scott Wolf (40:04):
That's right, we have a generator, and then we
plug in, uh, two differenthandpieces and the generator
will read the handpiece and,know which procedure, to, to
provide.
Pat Kothe (40:15):
As far as business model, are you selling these
devices leasing the power?
how do, how?
How's this bus, the businessmodel
Scott Wolf (40:22):
We're selling the, the disposable hand pieces and,
and then, giving away agenerator with a purchase of a
box of handpieces.
And then the generator can stayin their office.
Pat Kothe (40:34):
Is this something that is a new, service?
A new, revenue generator, so tospeak, for the physician?
Scott Wolf (40:42):
It definitely is.
Yeah, it definitely is.
And, it is something they can,incorporate easily in their
practice.
The generator, needs a verysmall place to sit, you know, a
countertop and, and it's verysmall footprint.
The prevalence of, nasal airwayobstruction is about 30 percent
in the U.
S.
(41:03):
And of the patients that.
actually, walk into the ENT'soffice, it's a lot higher, even
if they're coming in forsomething else.
So this allows them to offer, apretty, low, no doubt time way
in the office of treating thosepatients that they wouldn't
normally be able to offeranything to.
Pat Kothe (41:23):
Up until just recently when you received your
reimbursement, was this an outof pocket cost for patients?
Scott Wolf (41:31):
It was, yes.
It was out of pocket for,treating the lateral wall of the
nose, but there were some codesavailable for other, uses of the
device.
Pat Kothe (41:41):
So the regulatory pathway for these devices were
510ks?
Scott Wolf (41:45):
That's right.
510(k)s,.
Yes
Pat Kothe (41:47):
With or without clinical data?
Scott Wolf (41:49):
with our clinical data
Pat Kothe (41:50):
With clinicals.
Scott Wolf (41:51):
into the FDA, we did a, a meeting with them and told
them what we plan to do Soworked it out in advance.
what clinical data we'd beproviding with them.
Pat Kothe (42:00):
So sometimes when we do our clinical studies for
regulatory, it's a more of afinite group of patients, but
when we take it out into themarketplace, we need additional
data.
was your data for theregulatory, submission
sufficient for the market or doyou, did you need to do
additional clinical studies onceyou hit the
Scott Wolf (42:20):
Yeah, no, that's a, it's a great question because it
is a different, um, you know,there's a different goal for
different clinical data.
We had the goal of getting FDAclearance of our 510k, but then
also getting new codes.
So we, we did many more studiesafter because to get a new code
needs, a randomized controlstudy plus, and, really about
(42:46):
five peer reviewed journals withdifferent studies.
So we did, many more studiesafter the FDA study, including a
randomized, sham controlledstudy for each product.
Pat Kothe (43:00):
How are you distributing the product?
Do you have a direct sales forceor is it a distributor
Scott Wolf (43:04):
have a direct
Pat Kothe (43:04):
or a combo?
and available in the U.
S.
are you available outside the U.
Scott Wolf (43:08):
U.
S.
only right now.
Pat Kothe (43:11):
What is the next couple of years look like?
really hitting the market hardand getting market adoption, new
products.
what does it look
Scott Wolf (43:18):
we want to, really, just, there's tremendous
opportunity in both of ourcurrent products.
We're really focusing on givingour physician users the best
possible experience.
So there'll be, updates to thoseexisting.
products.
So that, that's really our mainfocus for the couple, for the
next couple of years, but thereare also additional
(43:41):
opportunities in ENT that wewant to develop products for.
We're working hard on our,pipeline and, have some things
in the hopper and you know,things that we're looking at.
So we want to really continueto, to offer as much innovation
as we can in the field of ENTmedicine.
It's a field that, thateverybody needs good nasal
(44:03):
breathing and, good function intheir nose and there's a lot of
conditions that, I think that wecan help with.
we're gonna devote a lot ofenergy to doing that.
Pat Kothe (44:11):
Well, Scott, it's a very interesting problem, uh,
two problems that, that you'resolving.
And I think most of us knowsomeone who has one or both of
these issues.
And, knowing about this, I thinkwould be, very interesting for
our listeners.
And then finding the clinicianswho can perform these procedures
(44:32):
or be able to talk them throughto see if they're eligible for
these procedures is gonna besomething I think, will be very,
interesting, again, for ourlisteners to, to evaluate
whether it, it can help them orsomeone, that they're related
to.
Scott Wolf (44:45):
Our website has, has a physician finder and
information on both of ourproducts.
Aerin Medical, A E R I N.
Aaronmedical.
com,
Pat Kothe (44:55):
How'd you come up with the name, Aerin?
Scott Wolf (44:57):
Cause air goes in your nose and I want more air
in, and then I spelled it in a,I thought it was a fancy way of
spelling it.
I got both spellings as a URL,but, um, so Aerin, and then, uh,
I, I was able to buy the, theURL, um, just, uh, the website
Aerin.
com.
(45:17):
So just A E R I N.
They wanted, um, 850 for it.
I said, Oh, you're, what areyou're dreaming.
And I offered them like 500bucks for it.
They said no.
And they sold it to like EsteeLauder company.
so I probably could have, uh,funded Aerin by just selling
the, buying that URL and sellingit.
So
Pat Kothe (45:38):
Scott, thanks so much for a great conversation.
I do have another question andgoing back to where we, you
know, where we kind of startedin that it's a entrepreneur VC
side of things.
Companies can't function withoutmoney, and money can't do
anything without great ideas andgreat people to, to be able to
(46:00):
implement something and buildsomething.
But sometimes, some of theseinvestment decisions are kind of
outside of the control of anentrepreneur.
You could get hit with COVID.
You could get hit with a downcycle.
In addition to what you have asa product.
There are a lot of great ideasthat for whatever reason, don't
(46:23):
hit the funding cycle and aren'table to, to be realized, even
though they're, they're a goodidea.
Is our current system forinvesting in medical device
working properly?
and are there some ways that wecan make it better than what it
(46:45):
is?
Scott Wolf (46:45):
I think you're.
You know, you've correctlypointed out, the issues.
I think that the system ofbringing ideas to market and, is
flawed.
And it's, there, it's a lotbased, it's really cyclical.
There are times when, you know,early stage money just dries up.
(47:05):
There's the very early stagemoney that, is, friends and
family and angels.
If you don't know people, it'svery difficult to tap into,
there's this mid stage where,traditionally smaller VCs might
have, might play and, that's anever changing universe where,
(47:28):
uh, smaller funds make thoseearlier stage investments in
medical devices, but those firmsmight get bigger and not want to
make those investments, or theymight be at the wrong fund
cycle.
And then there's later stageinvestment, which they're, the
universe is perfectly set for,there's large VCs and private
equity investors.
(47:48):
So once you get past this early,earlier stages, you can start,
if you survive, you know, thatlong, you can act there, there,
that, that world works.
But this earlier stage world is,is chaotic and is is a little
hit or miss, and that's why ithas required passionate
(48:09):
entrepreneurs who are, You know,who are willing to, turn over
every stone to, to get, to getthis financing, done, cause
that's really the only way thatit, it happens.
So there's, groups like FogartyInnovation, that are trying to
bridge that and helpentrepreneurs.
(48:30):
There's, incubators like YCombinator that has funded a lot
of, early stage, healthcarecompanies, and I think that's
what's, really needed is a, asustaining universe of that kind
of funding.
But in my long career, I justhaven't.
really seen a huge change, init.
(48:52):
I don't have any good answers,except to say that it still is
possible for, one person with anidea.
if they're willing to, knock ona lot of doors and kiss a lot of
frogs, to get it done.
and it's still fun and, andrewarding.
And if I have any, any goodideas for changing the, uh, the
infrastructure, I'll let youknow.
Pat Kothe (49:14):
Entrepreneurs are important in bringing
innovations to healthcare.
But they're not the only onesthat do it.
We need investment to make ourvisions come to life.
I appreciated that Scott couldlook at things more holistically
based on his experience as a VC,as well as an operator.
A few of my takeaways.
(49:36):
First of all being a serialentrepreneur.
It's a lot like riding a wildroller coaster, uh, with it's
share crazy ups and downs.
You're constantly facingchallenges like the pressure to
keep innovating the fear offailing.
Uh, which is always lurkingaround.
And the whole whirlwind ofmanaging multiple projects at
(50:01):
once.
But Hey, uh, In the midst of allthat chaos.
Uh, there's this incrediblechance to learn and grow like
never before.
Each new venture teaches youthings you'd never learn
otherwise.
And that makes you moreadaptable, tougher.
And given you a, a real killerinstrument instinct for sniffing
(50:23):
out opportunities.
And then let's not forget thethrill of chasing different
passions and the potential formassive success.
Yeah, it's a wild ride, but fora serial entrepreneur, it's the
thrill that keeps us going.
The second is know youroperating thesis.
And he talked, you know, really,um, in depth on what the profile
(50:48):
is of the type of opportunitythat he wants to work on.
It's gotta be something with abig idea, big market.
It's a new idea.
Reasonable regulatory pathway, apath to reimbursement fundable.
He's open to, to, you know,different types of regulatory,
um, pathways, uh, but he wantsto, he wants to de-risk the deal
(51:10):
as much as possible.
And make sure that there's a bigopportunity there because it's a
lot of time and effort that'sgoing to go into building this
company.
So what he's done and what Isuggest that all of us do is
look for patterns and continueto hone the criteria of the
things that you look to do getinvolved with.
If you're a serial entrepreneur,stakes are big, make sure that
(51:33):
you know, what is inside andwhat's outside of the
opportunities that, that, uh,that, that, uh, take on.
The last thing was advice toentrepreneurs when pitching to
investors.
And this kind of goes across allpitches, whether we're, or we're
pitching to investors or apitching idea within a company.
(51:53):
Be confident you're the expertin this area.
Make sure that, that you'reconfident when you're, when
you're talking to people.
Predict the questions that arecoming.
Most of the questions that arecoming are things that you can
predict and having conversationswith with others.
So make sure that you prepare.
And then if you don't know, sayso.
And what I liked, what Scottsaid is, say why you don't know.
(52:16):
Uh, if you've got a goodexplanation of why you don't
know.
Uh, it will go a long way and,and, uh, making sure that they
know that you're confident thatyou're going to be able to get
it.
And the final thing was have areal plan.
They expect you, they expect youto have thought through the
product.
But they also expect you tothink through regulatory
(52:36):
reimbursement, sales, marketing,everything else about, about
your business.
Thank you for listening.
Make sure you get up episodesdownloaded to your device
automatically by liking orsubscribing to the Mastering
Medical Device podcast whereveryou get your podcasts.
Also, please spread the word andtell a friend or two to listen
to the mastering medical devicepodcast as interviews like
(52:57):
today's can help you become amore effective medical device
leader.
Work hard.
Be kind.
Welcome! Serial entrepreneurs are a rare breed.
What drives someone to chaseafter a dream when the numbers
show there are many morefailures than there are wins.
Stepping out on a ledge with nonet below is not for everyone.
And for those of us that havedone it.
(00:52):
You better learn fast.
Our guest today is Scott Wolf,founder, and Chief Medical
Officer of Aerin medical wherethey're providing products to
bring relief from nasal airwayobstruction and chronic
rhinitis.
Scott is an MD and he's also aprolific medical device
entrepreneur across a broadrange of therapeutic areas.
(01:15):
Prior to founding Aerin Medical,Scott founded Zeltiq, Aesthetics
to maker of CoolSculpting, theleading non-invasive method,
method of fat reduction for bodysculpting.
Scott's other startups includeEndoGastric Solutions and
Cardiac Dimensions.
Scott was previously a partnerat Prospect Venture Partners.
(01:35):
And a vice-president at FrazierHealthcare Ventures, both
leading life science venturecapital firms.
In this episode, we discuss howhe identify ideas, what criteria
he uses to select ideas to workon, how VCs evaluate
opportunities what entrepreneursshould know before they meet
(01:56):
with investors, the problemsAerin is addressing and how
they're serving the ENTcommunity.
Here's our conversation.
Scott, you've had an interestingcareer journey.
You're a physician, anentrepreneur, and you've also
been a venture capitalist.
(02:16):
So after starting your career,you quickly pivoted to startup
world.
Can you tell us a little bitabout that transition and moving
from practicing medicine intothis unique space that we're in?
Scott Wolf (02:31):
Sure.
Yeah, there's a handful ofpeople out there like me, you
know, um, uh, doctors who,who've gotten into either the,
uh, investment world in medicaldevices or the, or the, uh, the
startup world of medicaldevices.
But, um, When I was in, uh,medical school, I started to
think, you know, to practicemedicine effectively, you really
(02:53):
can't use your imagination.
You can't, innovate as you'regoing along.
There's a way to treat diseasesthat's accepted and, that, it
didn't really fit mypersonality.
I like to think of new ideasand, was always interested in
science and science fiction.
So I started to look around, youknow, and.
See, maybe if there were otherpeople, like me who had this
(03:15):
thought and there was actually adoctor in New York, who was,
forming, um, biotech companies.
And so I, I reached out to himand after my internship, he gave
me a job.
So that was my start.
This was, uh, before, before theinternet.
So he gave me a, a phone bookand a desk and told me to find
(03:35):
some cool technologies that wecould start companies on.
So I was there for a couple ofyears, got to see, what that
world was like, and then, heardabout some, folks who were, it
was a, venture firm at the timecalled Vanguard Venture Partners
who were doing, who werecreating a, a medical device
incubator with Medtronic.
And so I, begged them to let merun it.
(03:56):
And, they did.
So I moved out to Minneapolisfor a few years and, did that
with Medtronic and got to, seethe, home base of medical
devices and, how big companiesdid things and, and got my first
taste of the startup world and,really just, kept going from
there.
And I really enjoyed the startupprocess and, the thinking about
(04:20):
new ideas and, thinking aboutunmet needs in medicine.
So really, it really put a lotof my interests, together and
along the way I had the idea Iwanted to be a venture
capitalist cause that is, quitea glamorous job.
So after forming some morecompanies.
I, I hooked up with a venturecapital firm in Seattle.
(04:42):
I actually approached them abouta startup.
I had the idea that, you couldnon invasively reduce fat in the
body, right?
And if you could do that, thatwould be a great thing, that you
don't have to do a lot of marketresearch to know that people
want to have fat removed fromtheir bodies.
And The bar is a pretty lowhanging bar in terms of,
getting, if you could do even alittle bit, it would be a very
(05:04):
successful product.
Then they said, okay, come onboard and, we'll fund you to
build that company.
And, and that's what I did.
That's where I found someinventors.
At Mass General, really smartguys who had invented
CoolSculpting.
And so I licensed CoolSculptingand, and then formed Zeltiq with
this venture capital firm,Fraser Healthcare Ventures.
(05:26):
And, they were, very supportiveof, of that company.
And then, and then moved on toanother venture capital firm,
but really realized that Ididn't really want to invest in
other people's companies.
I like the actual process ofcreating something from nothing,
creating, building, somethingfrom an idea on paper to, To a
product, this act of creationwas meaningful to me.
(05:49):
So that's when I went back andformed Aerin Medical.
Pat Kothe (05:53):
Many of us, um, learn and pivot based on new things
that happen to us.
Looking back on, on yourtransition, you go into medical
school, you spend all that time,you prepare for it, you get in,
and then you say, geez, this isnot for me.
Was your personality always...
(06:15):
like it is today or was theresomething that happened in
medical school that says, I needto move out of what I'm doing I
mean Did you fool yourself intosaying medicine was gonna be
good for me if you were youalways an entrepreneur?
Or did something
Scott Wolf (06:28):
This is a, I was always an entrepreneur, but this
was a cultural thing.
My father, didn't go to college.
My parents, neither parent wentto college and they said their
kids were going to get educatedand become professionals.
And so I was tapped.
My older brother was supposed tobe the doctor, but he didn't, he
hated the sight of blood.
(06:49):
He'd faint at blood.
And so then they said, okay,well, you know, Scott will be
the doctor.
So I was tapped.
as a kid that I would go tomedical school and in, certain
cultures, you don't really, youknow, like, I'm sure, I'm sure
this resonates with a lot ofpeople, who are hearing this
because, I didn't question it.
I just said, Oh yeah, I'm goingto medical school.
(07:10):
That was it.
I can do it it, and it wouldprovide me the kind of life that
my parents weren't able to have,so it seemed a great thing to do
as an honor, to get into medicalschool and be the first one to
do it.
But yeah, then I got there andit wasn't, it didn't fit my
personality.
It was eyeopening though, When Ihad this realization, oh wow, I
(07:30):
actually don't have to practicemedicine.
I can use this medical degree.
I felt like a weight had beenlifted off my shoulders.
You know, I, it worked out forthe best.
but yeah, it took a lot ofrealization.
Pat Kothe (07:42):
Yeah, we have to make our own paths.
Uh, my, my older brother, uh,my, my parents had, had, uh,
dubbed him.
He was going to be the priest.
Um,
Scott Wolf (07:52):
Right.
Pat Kothe (07:52):
that, that never happened.
they wanted me to go to the AirForce Academy and, I did a
little bit of, applying thereand then finally said, you know
what, that doesn't fit mypersonality, so we made those
decisions a little bit earlier,uh, but as you said, I mean,
sometimes you've, you, you'vegot a great opportunity ahead of
you and at, at some point intime you figure out this isn't
Scott Wolf (08:15):
Yeah.
Pat Kothe (08:16):
But obviously entrepreneurship and building
things is what turns you on.
Scott Wolf (08:22):
Yeah.
Yeah.
It's what, you know, I'm, I'mone of those people who, want to
be, um, think I'm doingsomething meaningful and
important and if I can feel thatI can, you know, I can really
give my all to it and, um, andthat's how I feel when I'm
building a medical devicecompany.
Creating a new, a new treatmentfor people who are suffering
(08:43):
from a disease condition, Yeah,I find it to be quite fulfilling
in a lot of ways and, fun toboot, it's really fun I think
when something that you,conceive of, it comes to
fruition, and that you be ableto really help people through
that.
To me, that's just a, it's a funfeeling yeah.
(09:04):
I think of artists who create,works of art and, musicians who,
you know, just this activecreation to me is, is really
something that, that, thatdrives me.
Pat Kothe (09:16):
So speaking of creation, you've created or
founded a few differentstartups.
how many startups is it now?
Scott Wolf (09:24):
I have been either, founder or co founder of, um.
six, and so, uh, and some havebeen, you know, I've had the
full range of medical device,experiences and founding
companies.
So some have not worked, forvarious reasons, either funding,
we couldn't get funding.
one failed in late clinicaltrials, which is just, like a
(09:48):
really tough lesson to learn.
You don't want that to happen.
to happen.
You want to ring out, all therisk, as early as possible, ring
out risk.
it's going to work, if you canget to that point.
And then, companies like I'm,I'm at now Aerin Medical, which,
uh, you know, is, uh, we have,two FDA approved products, on
the market and everything isdoing very, well we're growing
(10:10):
fast.
So it's, it's, it's, you know,so there's, I've, I've seen the
full gamut, the, uh, you know,pain of, of things not working
out and, and the fun of, ofhaving them.
Pat Kothe (10:21):
For those that say they've never failed in a
startup, it's really a question.
Uh, the comment is, is
Scott Wolf (10:28):
yet.
yeah,
Pat Kothe (10:29):
because you will, you will for a variety of reasons.
I've had it happen.
It's as you said, it is not fun.
It is pain associated with it.
So let's talk a little bitabout, you know, six, six
startups that you've founded.
I want to talk about findingideas and how you find ideas,
where ideas come from.
(10:49):
Because I'm sure you foundedsix, six companies, but there's
a lot more than six ideas thatyou've run down.
So what are you looking for whenyou are looking for ideas?
How do you find them?
Scott Wolf (11:04):
So that's a, it's a big question.
My main guiding principle is theidea has to, um, be worth the
effort.
At the end of the day, this hasto be a big idea.
This has to be something thatcan change the way medicine is
practiced, that can make things,easier and more effective for
(11:26):
the patient.
And it has to be something in avery large market, because the
effort and money...
required to bring something froman idea to fruition in medical
devices is measured in hundredsof millions of dollars.
This is a very, expensive, thingto do, and it's very difficult
(11:46):
to raise money along the way, soit has to be, it has to be an
idea that, at the end of the daycan generate hundreds of
millions of dollars in revenue,for a company, so that's,
unfortunately, my, number one,rule, the other, the other,
Pat Kothe (12:02):
Let's pause there for a second because, um, that is.
definitely, an opinion that'sout there that, you know, pick,
pick a huge unmet need to goafter, uh, because it does, does
take, but, but medicine is also,and devices are also
incrementally improved.
So If you don't incrementallyimprove on those devices,
(12:26):
there's missed opportunity aswell.
How do you balance that betweenlooking at opportunities that
are incremental and largemarkets versus that huge
opportunity?
Scott Wolf (12:40):
I think it's the, the role of the large companies
and the established companies toincrementally improve things.
And it's just, there's not, um.
Um, you know, again, you canhave, you can have devices in
large markets, let's say AFib,for instance, that's, an
incredibly large market with,unending need and, so if you
(13:04):
have a device that isincrementally better and have
patent protection for it, and,um, you know, have a path to
market, that is something thatcould probably support, a
startup company.
But for most startup companies,you really, you just need,
there's so many things, so manycheck boxes that you have to
(13:25):
have patent protection, right?
So an incremental improvement,is less likely to have a good
patent portfolio.
And if you don't have a goodpatent portfolio, you're not
going to be able to get thefinancing.
The general rule, I think, stillstands, that it has to, it has
to, it doesn't have to be alonein its field of attacking this,
this very large market, but ithas to be a new idea
Pat Kothe (13:47):
So a couple of things here, one is, you, obviously
nothing happens without money.
There's a couple of differentsources, main sources of money
in our space.
One's angel money, one's VCmoney, and sometimes this
incremental stuff can be donewith angel money and not VC
money, and VC money may havedifferent criteria of investing
than angel money does.
(14:08):
So I think that, that may bekind of one of those other
things.
But the other thing I wanted toask you about is when you say
big market, large opportunity,what's big for you?
Is it a hundred million, 500million, a billion, 5 billion?
What's a big market?
Scott Wolf (14:27):
I think, 500 million on up and the ability to
generate, to have your product,generate over a hundred million
dollars in revenue, every yearand is, is, the, yeah, that,
that's how I would define it.
If you have ideas that, that,are going to generate less
(14:49):
revenue, let's say one day, thatdoesn't mean you don't, you
can't start a company on it, orthat can't be developed, it's
just different from what I do,cause I really only know one way
of, of doing things, you know,so I go the route of, um, of, of
trying to find one of these verylarge markets, getting angel
(15:11):
financing, the angel financing,then we'll lead in later rounds,
after you've run out some riskto, to venture capital financing
and, so that's how you continueto keep funding these companies.
Pat Kothe (15:25):
So your first, screening criteria is market
opportunity.
What other things are you, Whatother things are you looking to
evaluate, whether it's worthyour time to, to, devote
Scott Wolf (15:35):
Um, so, that there is a path to FDA approval that's
reasonable.
I think, the FDA does a good jobof protecting us, from dangerous
medicines, medical devices, butas medical device developers, we
have to have a path, throughthat.
So, if the FDA is going torequire a thousand patient
(15:56):
clinical trial, that's usuallynot workable for a startup
company.
So you look at FDA path, youlook at path to reimbursement.
Getting reimbursement is, justthe fact that we need in medical
devices, we need, CPT codes, forphysicians to get paid for what
they do.
So, uh, we need either anexisting, the best is having an
(16:18):
existing code and next is theability to get, a good new code.
Pat Kothe (16:22):
As you're going through your criteria then on,
on the FDA side, our PMA devicesin or out, uh, for you, um, and
as, uh, our new reimbursementcodes, does that mean it's,
acceptance or non acceptance,uh, criteria?
Scott Wolf (16:39):
Um, I'll do both.
For instance, Aerin Medical, we,recently, got, new CPT codes for
both of our products.
So it's an overarching, questionof can I fund this, can I keep
this company funded, so what areventure capitalists, looking for
(17:00):
also, so I'm not averse to PMAproducts, but I, yeah, I haven't
done one in quite a while.
I have been sticking with,510ks.
but we're, but in a lot of ways,the PMA process, isn't that
much, different than a 510k withclinicals.
But yeah, I've been, I've beensticking with 510ks just because
it's, just a little bit safer,easier route.
Pat Kothe (17:24):
Other things like, patent protection, like
competitive landscape, like, uh,opportunities, buying, companies
buying, the
Scott Wolf (17:32):
Yeah, no, all those things.
You've probably named the nextthree.
So patent protection, you haveto be able to, have a, not only
freedom to operate, but theability to prevent other people
from, from fast following you.
It's nice to have naturalacquirers in the field, Fields
like AFib, I mentioned, youknow, there's lots of acquirers
(17:54):
very interested in the nextthing.
That's always nice because itgives you this dual path.
You don't have to rely on, anIPO eventually.
You can have a dual path eitheracquired or go IPO eventually.
Yeah, and then you lookobviously at competition.
What's out there right now andhow well does it, how big a
medical need is this?
is it, something that, that youridea is going to be that much
(18:17):
better than the competition.
Pat Kothe (18:19):
And one of the overarching things that you talk
about is it fundable?
Um, it's, it's, it's interestingto me.
It passes my criteria forsomething that I want to get
involved with.
And I think I can get it funded.
Scott Wolf (18:33):
That's that.
Yeah.
Because, and I think it's alsobecause I've been through, you
know, like the funding processis painful, there's nothing fun
about it and if you like, unlessyou like to be told no a hundred
times in a row, and told, it'sjust,
Pat Kothe (18:50):
And your baby's
Scott Wolf (18:51):
Your baby's ugly.
So that's really what thisfunding process is.
Now, you only have to, you haveto keep reminding yourself, you
only have to be told yes once ortwice, and then things, then you
keep, going on.
but when you've been throughcompanies that can't get funded,
then that is, it's reallypainful and you don't want to,
go through that again.
(19:12):
That's always in the back of mymind.
Friend of mine Dan Hawkins talksabout, you know, founding
Shockwave and, and, um, with,uh, with John Adams, uh, uh,
and, uh, he couldn't get funded.
And so he said.
Okay, we'll stop trying for alittle while and then, either
(19:33):
the world changed or his storychanged or something changed and
then he got financed, so there'sa lot about the cycles of, of,
of financing.
Sometimes it's just not, there'sno funding available, through no
fault of anybody's really.
Pat Kothe (19:50):
We didn't talk about team and that's one of the
things I'm sure, when you're onthe other side of the table,
that's one of the main things,but when you're evaluating an
idea, how do you put team inthere too?
Is that some, is that a riskthat you're, you're weighing as
an entrepreneur or are youassuming that you can, develop
that team?
Scott Wolf (20:08):
That's why I live in the Bay Area is because I'm
assuming, I can develop thatteam here.
The team for, for Aerin startupwas me and then, um.
Andrew Fraser, who's our, our VPof engineering now, and he
joined, he's just a, uh, a trueengineer who can, uh, you know,
if I have, I have an idea, hecan build a prototype in a
(20:30):
couple of days, hand it back tome and we can go to the animal
lab.
To me, that's the perfect team.
I never have any idea or Ihaven't come across any ideas
that require You know quantumphysics yet.
So I think I we can build a teamaround here.
Pat Kothe (20:47):
So what, what we've kind of discussed is, uh, two
people have been through thestartup thing and learned a lot
of tough lessons along the way.
Uh, and have, have come to, youknow, talk a little bit in, in
short, you know, short,shortcuts of things that we've
learned.
Uh, six startups.
Didn't all go well.
You learned all of these lessonsalong the way, and in between
(21:10):
those six startups, you weremoving in and out of the venture
community.
So let's put your venture hat onfor a second.
What does the process look likefrom a VC standpoint?
Scott Wolf (21:24):
So first of all, they are looking for a very
large return on theirinvestment, and because they
have a portfolio of companies.
They know some are gonna workand some aren't, that they the
ones that do work they want tobe able to get a lot, you know a
big return and they're nottalking about like 20 percent a
(21:46):
year they're talking about thatwe want ten times our money
back.
That, that kind of, um, shapesthe entire, viewpoint of a
venture capitalist for, the waytheir business works, they, need
to get these very large returns.
So
Pat Kothe (22:03):
they need to, and they need to get it in a certain
time frame for the life of the
Scott Wolf (22:07):
exactly.
It has to be in a certaintimeframe and depending on where
they are in the life cycle ofthe fund, they're looking for
different things.
So they might be towards thetail.
Let's say the last investment ofthe fund, they don't want to
invest in something that's goingto take 10 years.
They want something that'snearer term.
so there, there's a lot.
You know, that goes into theirthinking that relates to how,
(22:28):
uh, just how a venture capitalfund.
it works, but that the firstthing is yeah, timeframes and,
and return, colors a lot of it.
So it's difficult.
And also the size of the funds.
So if you have, let's say a$50million fund, that fund can make
million dollar investments, and,and get, let's say they, they
(22:52):
can get, a few million dollarsinto a company over the life
time of that investment.
That's okay for a 50 millionfund, but a 5 billion fund, it,
has to be able to invest, a verylarge amount of money into, into
any company, cause they, theycan't just have a thousand
companies in their portfolio.
(23:13):
They're on the boards of thesecompanies.
So it's harder for, for reallylarge funds to invest in early
stage medical devices, becausethe investments are smaller, the
timeframes are longer, That Iguess is, is most of the
thinking is around most of thoseinvestment portfolio management
(23:34):
you know, thoughts.
Pat Kothe (23:36):
And then weighing the criteria.
We went through from an, from anentrepreneur's standpoint, what
you're looking for.
From a VC standpoint, are theylooking for the same things, but
in a different order?
Scott Wolf (23:47):
yeah, I would say so.
I'd say they're looking atexactly the same things.
and, for instance, patent, they,there's some risks that they,
are, they're not willing totake, so they just have, they're
not willing to take anyintellectual property risk.
No market risk.
They want these large marketswhere, you know that if you can
(24:09):
develop this product, you Itwill have a large market and it
will, generate a lot of sales.
They're willing to take sometechnical risk.
Okay.
Will this technology work?
Can this team develop thistechnology?
Those are the kinds of risksthat they are very good at,
evaluating.
Yeah, they'll put a lot ofeffort into, looking at market
(24:32):
and talking to physicians andreally trying to, see, see if
there's a market there and if,if, if there is then looking at
the technology and evaluatingwhether it's actually gonna, you
know, that's, that's the betthey're taking that this
technology and this team candevelop this.
Pat Kothe (24:49):
Yeah.
A common saying within theindustry, and it's common, you
know, is, you know, you bet on,bet on the jockey, not on the
horse.
Is that true?
Scott Wolf (24:58):
there's not a lot of uh, I've found not a lot of
cronyism, you know in venturecapital that it's You know
pretty hard dollars and centsand technology kind of decision
making at least that's been myexperience.
Pat Kothe (25:14):
It's a lot easier to take the meeting to when you've
got an experienced entrepreneur.
It's a lot easier to get intothe conversation, but when it
all boils down to it, all ofthose other criteria that we
looked at still have to be met.
Scott Wolf (25:25):
Yeah, that's right.
Especially medical device mightbe different in other, you know,
in health tech or, in healthcare services.
I don't know.
But in, yeah, in devices, Idon't think, people are, yeah,
making more risky decisions ontechnology or on patents,
because it's their favorite CEO.
Pat Kothe (25:46):
You've been on both sides, uh, of the table when
you're making presentations andI'm sure you learned some things
early on what to say, what notto say, and then when you're on
the VC side, what doentrepreneurs not know that
they're doing incorrectly whenthey're, in a meeting with, with
a
Scott Wolf (26:04):
That's a good question.
Um, I actually, I talk to youngentrepreneurs about this.
I tell them you are the expert,you are going in to share your
expertise about this, withthese, potential investors.
So be confident, be, sure ofyour answers.
(26:24):
if you don't know something,you'll say why you don't know if
it's something that you shouldknow and how you're going to
find out and how, you're goingto, answer that question, but
the confidence, is, I thinklacking a lot of, first time
entrepreneurs.
cause yeah, it's can be veryintimidating.
(26:45):
There's a lot riding on theoutcome.
The other is, uh, yeah, knowwhat questions are going to be
asked in advance.
So you should vet this.
do your presentation multipletimes, with other people see
what questions come up, do it asmany times as you can, because
the questions are usually thesame, between potential
(27:06):
investors.
So you shouldn't be surprised byany questions that are being
asked and, you should have aplan, a real plan for getting
this.
Product developed, but alsogetting, through the FDA,
getting reimbursement, and salesmarketing, and this should be a
real plan.
It, it doesn't have to be afully baked business plan with
(27:28):
numbers attached, five yearsout, but you have to know the
life cycle of, of this product.
Pat Kothe (27:35):
think one of the other things that I've learned
through the process too is doingyour homework on the person
that's across the table fromyou.
you need to know, as we said,you need to know where they are
in their fund.
Uh, where you are, uh, whatother investments they've made,
in the space, are they,typically investing in the type
of round that you're, thatyou're in?
Are they a seed investor?
(27:56):
Are they a B investor?
You know, kind of where, where,you know, what's their sweet
spot for it?
That's basically sales 101 isyou need to understand the other
side's motivations before youstart
Scott Wolf (28:08):
That's right.
Yeah.
Yeah, exactly.
Um, yeah.
And then, um, uh, you know, andhave, your experts ready to
answer their questions.
Your scientific advisors ormedical advisory board, ready
to, um, because you've obviouslyvetted your idea with these, So
(28:28):
You know, experts and theyshould be willing to talk to,
the investors for you to tellthem, why they think it's a good
idea.
Pat Kothe (28:38):
Just some great information in the last 30
minutes we put together.
A lot of, a lot of hard, hardlearned facts
Scott Wolf (28:48):
Hard, hard learned.
Yeah.
You know, again, it, they are,yeah, all hard learned, you
know, because I had, you know,when I first started I made, you
know, yeah, I, I've made, uh,I've made most of the mistakes
that the, uh, that newentrepreneurs are going to make.
Pat Kothe (29:06):
I think that kind of going back to if you're going to
spend the next 5, 8, 10 yearswith an idea, you better know
what makes it successful.
what makes a successful idea?
And you just laid out all of thedifferent criteria.
And basically what you're tryingto do is mitigate the risks
(29:27):
associated with it, with thisidea.
Make sure that there's a greatopportunity at the tail end of
this thing.
And as you said, it's alsokeeping an eye on, is it
fundable?
can I, can I put the fuel inthere to make this happen?
Is, because funding is asignificant risk, one of the
most significant risks that astartup has
Scott Wolf (29:49):
Yeah, no, it's very, I, and I, at one point I, I got
funding from, the government ofSingapore, cause they were
looking to.
experience entrepreneurs, maybe,employ people there and teach
people how to build companies.
And so they gave me asignificant amount of funding
and I went out to Singaporequite a bit too.
So you have to explore otheravenues.
(30:09):
Just do whatever you can to tokeep the company going, certain
times because, you, yeah, you,so again, you have to really
believe in, that the companywill have an outcome like Aerin
Medical is having, right nowthat you're able to actually,
really positively change thepractice of medicine.
Pat Kothe (30:28):
Well, let's talk about Aerin.
Really a fascinating,technology, being applied into,
a problem area.
So tell us about what theproblem is that Aerin is
solving.
Scott Wolf (30:40):
Yeah.
So we're developing non invasivesolutions, office.
friendly treatments, for a hostof chronic, nasal airway
conditions.
And so our first two productsare solving, nasal airway
obstruction.
So just having this feeling ornot being able to get enough air
(31:02):
through your nose.
So that's our first product,VivAer.
Our second product is, RhinAer,which treats chronic rhinitis.
So, uh, a chronically runnynose, post nasal drip, just
overactive mucus production inyour nose that affects, millions
of people in, in.
it's a very common condition,especially as people age.
Pat Kothe (31:23):
What is the, you know, kind of go a little bit
further into the problem.
What happens when somebody hasan obstructed nasal passage?
what's the, what's that person'slife like?
How is it,
Scott Wolf (31:35):
yeah, the patient journey, you know, we call it.
And, and, but that, that isactually the question I asked
when I first got into, intothis, so I was attracted to ENT
because, there are physiciansthat do procedures, in the O.
R., they see patients in theoffice, they can do, you know,
and they can do officeprocedures.
I thought it was ripe for maybemoving some of the things that
(31:59):
they did in the O.
R.
to the office or providing themnew things to do, to in the O.
R.
So I actually looked in thebeginning, I went to ENTs and I
said, what do your patientscomplain about, you know, what,
and, uh, so nasal obstructionwas number one, and I started to
look into what the actualproblem was, so if you think of
(32:20):
it, In physics terms, theproblem is, you know, not
getting enough air into intoyour nose.
So where is the resistancecoming from?
And I discovered this thing Inever heard of called the nasal
valve.
So it's the area of greatestresistance in your entire nasal
airway, and it's, it's reallywhat breathe right strips work
(32:42):
on.
So those nasal strips that pullthe sides of your nose open,
that's pulling open this nasalvalve area.
It's where like 60 percent ofnasal resistance, and just about
everybody breathes better if youput on a nasal strip or you pull
the sides, of your nose open.
So that got me thinking, okay,would everybody then benefit if
(33:02):
we could just enlarge that areaa little bit?
using radiofrequency energy.
That's where this idea camefrom.
We spent a lot of time looking,can you safely treat, you know,
use radiofrequency in this area?
And you can't, becausetraditional radiofrequency is
really ablative.
So we had to develop a way thatyou could apply um,
(33:26):
radiofrequency to shape and openthe nasal airway without,
really, damaging the, mucosawhere you would have a mucosal
ulcers or even perforation.
So we had to develop a very safeway of, of applying
radiofrequency to the, to themucosa in the nose and that we
(33:46):
developed a temperaturecontrolled radiofrequency, um,
to, to do it.
Pat Kothe (33:51):
Scott, one of the...
Other issues, I don't know ifthis is, um, what, how you're
applying the technology to is,with, people with apnea, sleep
apnea, people who snore, is thissomething that can, that helps
solve those issues as well?
Scott Wolf (34:08):
I'll take snoring first because we can definitely
help a certain population whosnores.
If you have a nasal airwayobstruction, you can snore just
from that because you produce,when you breathe in, you produce
too much negative, pressure andit causes your palate to to
vibrate.
And if you open up the nose in alot of those patients, that
(34:32):
snoring will stop.
Our studies have shown thatpeople report less snoring after
our procedure who snored before.
And we have a lot of, reallygood, uh, data on, improving
sleep.
People feel more refreshed whenthey wake up.
It's definitely something thatcan help, with, sleep disordered
breathing.
When you talk about sleep apnea,that is, a lot of patients with
(34:54):
sleep apnea also have problemswith, their tongue.
falling back and, it's amultifactorial problem.
So we would never really saythat we can treat, sleep apnea,
but we can definitely help, somepatients with, with snoring and
other sleep disorder problems.
Pat Kothe (35:10):
So from a, a, a, a patient, you know, kind of going
back to patient standpoint,they're having difficulty
breathing out of one or bothnostrils and you open this up.
Is there a medical issue thatyou're solving other than
uncomfortable feeling in thepatient?
Scott Wolf (35:28):
Sleep is, is probably the biggest one.
Sleep and well being, so it justpeople are much happier and,
feel better when they breathethrough their nose.
So those patients, you know, ifthey go to see their ENT, the
ENT will do what's called acaudal maneuver, which is
basically opening up this nasalvalve area that we talked about.
(35:50):
If they can breathe better afterhaving the Caudal maneuver, the
VivAer procedure in the officeis likely to help they, that
those patients don't necessarilyhave to go to surgery anymore.
That's what we were trying to,um.
You know, is, is providepatients who, either aren't
surgical candidates or don'twant to have surgery, another
option, for, for getting betternose breathing.
Pat Kothe (36:12):
As a father of a, of a woman who had a deviated
septum and had surgery and itdid not work properly, she's
still having problems to,breathing, as an adult.
Uh, I think this is aninteresting
Scott Wolf (36:29):
Well, one reason that, that, you know, deviated
septum surgeries might not workis because there could be a
nasal valve problem.
on top of that.
And so that is something shemight want to check with her ENT
about.
Pat Kothe (36:42):
Yeah.
So, uh, you mentioned.
Reimbursement.
Is this the product that you're,just recently got some positive
news on reimbursement?
Scott Wolf (36:52):
Both of them.
So, so, um, so VivAer for nasalobstruction, that code went into
effect at the beginning of thisyear.
So that's being, covered by,Medicare and Medicaid and then
private insurers are makingtheir own decisions about it.
And then our, our RhinAer codegoes into effect at the
beginning of 2024.
Pat Kothe (37:12):
Let's talk about RhinAer for a little bit and
what problem that's solving.
Scott Wolf (37:15):
yeah, so RhinAer solves the problem of, too much
mucus, produced in the nose, sochronic rhinitis and these
patients are, can have justeither just clear fluid dripping
from their nose, so you'll,people walk around holding a
tissue all the time andsniffling, and it can also be
allergic rhinitis, which isassociated with, congestion and
(37:36):
itching and, and sneezing andboth can be associated with post
nasal drip.
Millions of people have this,but there's really been nothing
to treat it, other than themedication and medication, a lot
of people don't either don'trespond or, don't tolerate it
well, or just don't want to beon medication for the rest of
their lives.
(37:56):
What our device does, whatRhinAer does, is it goes in and,
um, ablates the nerves thatcontrol mucus production, and
they happen to be in an area ofthe nose that we can reach with
the RhinAer device, and weapply, radio frequency energy
over the area of the nerves inmultiple areas.
(38:18):
We have a very high success ratein our randomized control trial.
So it's been very exciting.
And while doing RhinAer, we canalso use that same technology to
reduce the size of enlargedturbinates and reduce the size
of, uh, nasal swell bodies,which are another thing that can
cause congestion.
So we can also reduce congestionalong with reducing the,
(38:41):
overproduction of mucus.
Pat Kothe (38:44):
So you've got two problems.
Both patients come to the ENT toget diagnosed and they can get
it done at the time, or in thephysician's office.
And it's, how long is theprocedure?
Less,
Scott Wolf (39:00):
It's,
Pat Kothe (39:00):
than half hour?
Scott Wolf (39:01):
yeah, it's less than half, less than a half hour, I
would say, average of, 20minutes of actual procedure
time.
We do, we provide topicalanesthetic, topical and some
injected anesthetic.
So that, that needs to take intoaccount.
So you're, in and out of, theoffice, much less than an hour,
but the actual procedure isabout 20 minutes.
Pat Kothe (39:22):
Tell me about the training, that a physician would
need to have for this product or
Scott Wolf (39:27):
Yeah, no, it's actually pretty great.
For VivAer, you really don't,you don't even need to use an
endoscope.
Everything you're treating is,in the, front of the nose.
So, uh, they're, They're reallyup and running, after seeing a
video and, we're, we'll be therewith them in the first cases,
but it's a very, it's a veryshort learning curve.
(39:49):
It's working on areas that theENT physician is very familiar
with accessing and, working onin other procedures.
Pat Kothe (39:58):
As far as the product itself, I'm assuming that
there's a power source and thenthere's wands of some sort as
Scott Wolf (40:04):
That's right, we have a generator, and then we
plug in, uh, two differenthandpieces and the generator
will read the handpiece and,know which procedure, to, to
provide.
Pat Kothe (40:15):
As far as business model, are you selling these
devices leasing the power?
how do, how?
How's this bus, the businessmodel
Scott Wolf (40:22):
We're selling the, the disposable hand pieces and,
and then, giving away agenerator with a purchase of a
box of handpieces.
And then the generator can stayin their office.
Pat Kothe (40:34):
Is this something that is a new, service?
A new, revenue generator, so tospeak, for the physician?
Scott Wolf (40:42):
It definitely is.
Yeah, it definitely is.
And, it is something they can,incorporate easily in their
practice.
The generator, needs a verysmall place to sit, you know, a
countertop and, and it's verysmall footprint.
The prevalence of, nasal airwayobstruction is about 30 percent
in the U.
S.
(41:03):
And of the patients that.
actually, walk into the ENT'soffice, it's a lot higher, even
if they're coming in forsomething else.
So this allows them to offer, apretty, low, no doubt time way
in the office of treating thosepatients that they wouldn't
normally be able to offeranything to.
Pat Kothe (41:23):
Up until just recently when you received your
reimbursement, was this an outof pocket cost for patients?
Scott Wolf (41:31):
It was, yes.
It was out of pocket for,treating the lateral wall of the
nose, but there were some codesavailable for other, uses of the
device.
Pat Kothe (41:41):
So the regulatory pathway for these devices were
510ks?
Scott Wolf (41:45):
That's right.
510(k)s,.
Yes
Pat Kothe (41:47):
With or without clinical data?
Scott Wolf (41:49):
with our clinical data
Pat Kothe (41:50):
With clinicals.
Scott Wolf (41:51):
into the FDA, we did a, a meeting with them and told
them what we plan to do Soworked it out in advance.
what clinical data we'd beproviding with them.
Pat Kothe (42:00):
So sometimes when we do our clinical studies for
regulatory, it's a more of afinite group of patients, but
when we take it out into themarketplace, we need additional
data.
was your data for theregulatory, submission
sufficient for the market or doyou, did you need to do
additional clinical studies onceyou hit the
Scott Wolf (42:20):
Yeah, no, that's a, it's a great question because it
is a different, um, you know,there's a different goal for
different clinical data.
We had the goal of getting FDAclearance of our 510k, but then
also getting new codes.
So we, we did many more studiesafter because to get a new code
needs, a randomized controlstudy plus, and, really about
(42:46):
five peer reviewed journals withdifferent studies.
So we did, many more studiesafter the FDA study, including a
randomized, sham controlledstudy for each product.
Pat Kothe (43:00):
How are you distributing the product?
Do you have a direct sales forceor is it a distributor
Scott Wolf (43:04):
have a direct
Pat Kothe (43:04):
or a combo?
and available in the U.
S.
are you available outside the U.
Scott Wolf (43:08):
U.
S.
only right now.
Pat Kothe (43:11):
What is the next couple of years look like?
really hitting the market hardand getting market adoption, new
products.
what does it look
Scott Wolf (43:18):
we want to, really, just, there's tremendous
opportunity in both of ourcurrent products.
We're really focusing on givingour physician users the best
possible experience.
So there'll be, updates to thoseexisting.
products.
So that, that's really our mainfocus for the couple, for the
next couple of years, but thereare also additional
(43:41):
opportunities in ENT that wewant to develop products for.
We're working hard on our,pipeline and, have some things
in the hopper and you know,things that we're looking at.
So we want to really continueto, to offer as much innovation
as we can in the field of ENTmedicine.
It's a field that, thateverybody needs good nasal
(44:03):
breathing and, good function intheir nose and there's a lot of
conditions that, I think that wecan help with.
we're gonna devote a lot ofenergy to doing that.
Pat Kothe (44:11):
Well, Scott, it's a very interesting problem, uh,
two problems that, that you'resolving.
And I think most of us knowsomeone who has one or both of
these issues.
And, knowing about this, I thinkwould be, very interesting for
our listeners.
And then finding the clinicianswho can perform these procedures
(44:32):
or be able to talk them throughto see if they're eligible for
these procedures is gonna besomething I think, will be very,
interesting, again, for ourlisteners to, to evaluate
whether it, it can help them orsomeone, that they're related
to.
Scott Wolf (44:45):
Our website has, has a physician finder and
information on both of ourproducts.
Aerin Medical, A E R I N.
Aaronmedical.
com,
Pat Kothe (44:55):
How'd you come up with the name, Aerin?
Scott Wolf (44:57):
Cause air goes in your nose and I want more air
in, and then I spelled it in a,I thought it was a fancy way of
spelling it.
I got both spellings as a URL,but, um, so Aerin, and then, uh,
I, I was able to buy the, theURL, um, just, uh, the website
Aerin.
com.
(45:17):
So just A E R I N.
They wanted, um, 850 for it.
I said, Oh, you're, what areyou're dreaming.
And I offered them like 500bucks for it.
They said no.
And they sold it to like EsteeLauder company.
so I probably could have, uh,funded Aerin by just selling
the, buying that URL and sellingit.
So
Pat Kothe (45:38):
Scott, thanks so much for a great conversation.
I do have another question andgoing back to where we, you
know, where we kind of startedin that it's a entrepreneur VC
side of things.
Companies can't function withoutmoney, and money can't do
anything without great ideas andgreat people to, to be able to
(46:00):
implement something and buildsomething.
But sometimes, some of theseinvestment decisions are kind of
outside of the control of anentrepreneur.
You could get hit with COVID.
You could get hit with a downcycle.
In addition to what you have asa product.
There are a lot of great ideasthat for whatever reason, don't
(46:23):
hit the funding cycle and aren'table to, to be realized, even
though they're, they're a goodidea.
Is our current system forinvesting in medical device
working properly?
and are there some ways that wecan make it better than what it
(46:45):
is?
Scott Wolf (46:45):
I think you're.
You know, you've correctlypointed out, the issues.
I think that the system ofbringing ideas to market and, is
flawed.
And it's, there, it's a lotbased, it's really cyclical.
There are times when, you know,early stage money just dries up.
(47:05):
There's the very early stagemoney that, is, friends and
family and angels.
If you don't know people, it'svery difficult to tap into,
there's this mid stage where,traditionally smaller VCs might
have, might play and, that's anever changing universe where,
(47:28):
uh, smaller funds make thoseearlier stage investments in
medical devices, but those firmsmight get bigger and not want to
make those investments, or theymight be at the wrong fund
cycle.
And then there's later stageinvestment, which they're, the
universe is perfectly set for,there's large VCs and private
equity investors.
(47:48):
So once you get past this early,earlier stages, you can start,
if you survive, you know, thatlong, you can act there, there,
that, that world works.
But this earlier stage world is,is chaotic and is is a little
hit or miss, and that's why ithas required passionate
(48:09):
entrepreneurs who are, You know,who are willing to, turn over
every stone to, to get, to getthis financing, done, cause
that's really the only way thatit, it happens.
So there's, groups like FogartyInnovation, that are trying to
bridge that and helpentrepreneurs.
(48:30):
There's, incubators like YCombinator that has funded a lot
of, early stage, healthcarecompanies, and I think that's
what's, really needed is a, asustaining universe of that kind
of funding.
But in my long career, I justhaven't.
really seen a huge change, init.
(48:52):
I don't have any good answers,except to say that it still is
possible for, one person with anidea.
if they're willing to, knock ona lot of doors and kiss a lot of
frogs, to get it done.
and it's still fun and, andrewarding.
And if I have any, any goodideas for changing the, uh, the
infrastructure, I'll let youknow.
Pat Kothe (49:14):
Entrepreneurs are important in bringing
innovations to healthcare.
But they're not the only onesthat do it.
We need investment to make ourvisions come to life.
I appreciated that Scott couldlook at things more holistically
based on his experience as a VC,as well as an operator.
A few of my takeaways.
(49:36):
First of all being a serialentrepreneur.
It's a lot like riding a wildroller coaster, uh, with it's
share crazy ups and downs.
You're constantly facingchallenges like the pressure to
keep innovating the fear offailing.
Uh, which is always lurkingaround.
And the whole whirlwind ofmanaging multiple projects at
(50:01):
once.
But Hey, uh, In the midst of allthat chaos.
Uh, there's this incrediblechance to learn and grow like
never before.
Each new venture teaches youthings you'd never learn
otherwise.
And that makes you moreadaptable, tougher.
And given you a, a real killerinstrument instinct for sniffing
(50:23):
out opportunities.
And then let's not forget thethrill of chasing different
passions and the potential formassive success.
Yeah, it's a wild ride, but fora serial entrepreneur, it's the
thrill that keeps us going.
The second is know youroperating thesis.
And he talked, you know, really,um, in depth on what the profile
(50:48):
is of the type of opportunitythat he wants to work on.
It's gotta be something with abig idea, big market.
It's a new idea.
Reasonable regulatory pathway, apath to reimbursement fundable.
He's open to, to, you know,different types of regulatory,
um, pathways, uh, but he wantsto, he wants to de-risk the deal
(51:10):
as much as possible.
And make sure that there's a bigopportunity there because it's a
lot of time and effort that'sgoing to go into building this
company.
So what he's done and what Isuggest that all of us do is
look for patterns and continueto hone the criteria of the
things that you look to do getinvolved with.
If you're a serial entrepreneur,stakes are big, make sure that
(51:33):
you know, what is inside andwhat's outside of the
opportunities that, that, uh,that, that, uh, take on.
The last thing was advice toentrepreneurs when pitching to
investors.
And this kind of goes across allpitches, whether we're, or we're
pitching to investors or apitching idea within a company.
(51:53):
Be confident you're the expertin this area.
Make sure that, that you'reconfident when you're, when
you're talking to people.
Predict the questions that arecoming.
Most of the questions that arecoming are things that you can
predict and having conversationswith with others.
So make sure that you prepare.
And then if you don't know, sayso.
And what I liked, what Scottsaid is, say why you don't know.
(52:16):
Uh, if you've got a goodexplanation of why you don't
know.
Uh, it will go a long way and,and, uh, making sure that they
know that you're confident thatyou're going to be able to get
it.
And the final thing was have areal plan.
They expect you, they expect youto have thought through the
product.
But they also expect you tothink through regulatory
(52:36):
reimbursement, sales, marketing,everything else about, about
your business.
Thank you for listening.
Make sure you get up episodesdownloaded to your device
automatically by liking orsubscribing to the Mastering
Medical Device podcast whereveryou get your podcasts.
Also, please spread the word andtell a friend or two to listen
to the mastering medical devicepodcast as interviews like
(52:57):
today's can help you become amore effective medical device
leader.
Work hard.
Be kind.
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