Experienced medtech CEO Kerry Pope explains how the Fogarty Institute is building coalitions of corporations and entrepreneurs to create medtech start-ups.
10 Top Topics in this Medtech Talk Podcast:
- Is Tom Fogarty really a shrinking violet?
- How did you meet Tom Fogarty?
- Tell us about Novare.
- Why did you take the role at the institute?
- What does the institute do?
- Is there still optimism in medtech?
- What do young professionals think?
- Why the concentration on women’s or neonatal health?
- What is your relationship with VCs and corporates?
- What is Johnson & Johnson’s role?
Tom Salemi: Hi, everyone, welcome back to the Medtech Talk Podcast. This is Tom Salemi. Medtech Talk of course is the only podcast affiliated with the Medtech Conference. We’ll be holding our fifteenth Medtech Conference. It’ll be on June 1 in Minneapolis. So please check out the agenda. It’s on our website, which is so simple to remember: medtechconference.com. We’ve had a lot of help from our great advisory board and our two terrific co-chairs, Justin Klein and Kevin Hykes. Please do check out this year’s program and we’ll see you there. Last year we were very honored to have Dr. Tom Fogarty attend. He received our Lifetime Achievement Award for all he’s done in medtech. And he and Hank Plain from Lightstone, who of course have known each other and worked together for a very long time, had a very frank conversation about the state of innovation in healthcare. You can actually check that out. That’s also at medtechconference.com. you can find videos from our past events. In that talk, Dr. Fogarty talked a bit about his creation of the Fogarty Institute for Innovation. And that’s what we’re following up on today. I had the chance to speak with Kerry Pope, who is the executive director of mentoring at the Fogarty Institute. And Kerry and I go back a little bit. We talked a decade or so ago when he was CEO of a company called Novare that would ultimately go on to be acquired. Kerry is bringing those insights and those experiences from leading medtech companies into the Institute and really nurturing young companies and young entrepreneurs, which is so vital for the future of medtech. So the Fogarty Institute really is bringing together, again, entrepreneurs, but with corporations like Johnson & Johnson to create an infrastructure and an ecosystem for medtech to thrive. So I hope you enjoy this conversation with Kerry Pope of the Fogarty Institute for Innovation.
TS: Kerry Pope, welcome to the Podcast.
Kerry Pope: Thank you very much, Tom, it’s nice to be here.
TS: Great to have you. Now you’re the Executive Director of Mentoring at the Fogarty Institute for Innovation. And we were pleased to have Dr. Fogarty at our Medtech Investing Conference in May as an award winner. And he was his typical loveable self. He told some great stories, he came off as rough around the edges here and there. I’m imagining behind closed doors, he’s rather a meek, mild individual who sips tea and kind of keeps to himself, is that right?
KP: Not exactly. Not exactly. Dr. Fogarty doesn’t worry too much about appearances. Virtually everything that he says has a meaning. Most times, it’s right out in the open. Sometimes it’s hidden and you have to think about it. But he’s very direct and good, bad or indifferent, that’s what you get when you have a conversation with Tom, whether he’s a presenter or whether he’s sitting in a cubicle working with one of the young teams or talking to investors.
TS: That must be – I would love –
KP: He calls it like he sees it.
TS: I would love to spend a day just trailing him and seeing what the day is like. How did you come to Tom Fogarty and end up at the Fogarty Institute for Innovation?
KP: Well, it’s probably a longer story than we have time for, but basically, I was asked to be the Executive Vice President of Sales and Marketing for a public company that Dr. Fogarty had founded. That was at Tremet Laboratories. And within a very short period of time, the company was acquired by Baxter in its cardiovascular group down in Irvine. And the small company that I was with was folded into the vascular systems division. And I became responsible at that time for sales and marketing of virtually all of Dr. Fogarty’s royalty-bearing products that were distributed by Baxter. And so he and I got to know each other quite well at that time. And then subsequent to that, we had the opportunity to found a company together, Novare Surgical Systems, which was an extension of that cardiovascular marketplace and a third generation of Fogarty Instruments. And subsequent to that – I was a CEO there at Novare, and after about ten years the company was actually sold to Intuitive, and I had moved on to a woman’s health company, and about three years into that gig I was asked to come over and be a reviewer at the Fogarty Institute for a wave of companies who were applying for residence. And one thing led to another, and I ended up moving over to the Institute on a full time basis, taking the role of Director of Mentoring and working with virtually any of the companies that needed assistance, especially those companies that were focused in the area of mothers and babies, as we call it.
TS: No you and I had met when you were at Novare. I had written a lengthy profile about the company. I like to think – it was about a year or so before the acquisition, so I clearly had a hand in having you have the company acquired. Do you think so?
KP: I think that’s absolutely right. You should come over and talk to some of these others, too.
TS: If only I had that touch. So what – Dr. Fogarty gave a great plug for the Institute at the Conference, but a lot of our listeners unfortunately weren’t there, but they’ll be there next year. What does the Fogarty Institute for Innovation do? What is your role? I mean it’s more than – it’s not an incubator. It’s much more than that.
KP: No. We’re sometimes called an incubator, sometimes called an accelerator. It’s a very unique institution. Dr. Fogarty founded it I guess in 2007. He was quite frustrated with the pace of development and the obstacles to innovation for small companies. He’s quite vocal in his criticism of governmental interference and the performance of the FDA. So at the time that he started it, there was a location on the campus of El Camino Hospital, and one company, which is now Heart Flow, and a very successful graduate. Then over time he added a couple of other companies, but there was not a lot of structure. And then about five years ago, there was a move to expand the Institute and its role. You probably know, but I’ll mention it, that we’re a nonprofit. We’re a 501-3c educational nonprofit. And added a number of programs that enhanced the Institute’s stature. But clearly, clearly the attraction was for small companies that likely were going to have some challenges in existing in the traditional venture backed world to take their technologies, however worthwhile, take them through to commercialization. And that’s Dr. Fogarty’s passion is to help small companies. So a very small but accomplished team was assembled to administer the various education programs, but then also to provide some structure to support the companies in residence. And then in joined in early ’13 first as a consultant, but then it evolved into a full-time position here, but the responsibilities were always the same from day one. And what’s unique about the companies that are here and those that have exited is that they all were – are – addressing significant problems that have been ignored for whatever reason by larger companies and their development efforts, but because of the environment were finding it significant challenges in obtaining capital to advance the companies’ business plans.
TS: It’s interesting that you’re working with younger people in medtech. I wonder what is their perspective on the sector? I know I’m a newspaper guy, a former journalism. I see my old industry sort of in tatters. And what I hear from younger people in that sector, there unfortunately is not a lot of hope, there’s not a lot of understanding of what’s coming next. Is that sort of sense of dread prevalent in the medtech industry, or is there still a lot of optimism?
KP: Oh, there’s a tremendous amount of optimism. And we continue to receive inquiries about the possibility of residence from all corners of the country and from, quite frankly, outside the United States, young innovators that are absolutely committed to bringing their idea forward and into clinical practice. So despite the obstacles that are presented, whether it’s regulator or financial, and in most cases it’s financial, assuming that the clinical story holds up, it’s primarily a financial challenge. They’re not daunted. They’re convinced that others have done it, and they can do it, too. So it’s good to see. I know there’s a lot of commentary about what’s going on in Silicon Valley, and I think Silicon Valley is probably maybe the – what’s the analogy? – canary in the coal mine. But it always moves to where the promise and returns are. And right now, there’s just so much capitalization focused on the high tech industry, and of course it’s changing the way that we do everything today. But medtech is still an area of interest, but because there are so many people that are reaching for those dollars, you really have to have a very compelling story, and you have to have patience, and you have to have perseverance.
TS: We’ll take a quick break from this conversation to ask you to go to medtechconference.com, check out our agenda and our speakers. We’ve got some great panels that we’re building and getting up on the website, and you should be there. It’s really a fantastic event, one I’m privileged to be part of, and one you should be attending. So go to medtechconference.com and register for our conference on June 1 in Minneapolis. Now back to this conversation.
TS: And you have to have a kind of unique niche, too, a unique focus. And that’s something that sort of has been developing at the Fogarty Institute. You’re dealing with a lot of startups in the women’s health field. And how did that come about? Was that an intentional we see an opportunity over there, let’s find it? Or is this really sort of the market leading you and helping you discover or making clear where there’s need or where there’s opportunity for new medtech venture?
KP: It’s kind of my fault.
TS: Keep going, Kerry.
KP: So when I was asked to come over as a reviewer for the Institute’s applications in early ’13, and we had about three dozen companies, 36 or 38 companies that had applied for residence, and we only had two spaces available at the time, but of those 36 companies which we winnowed down to about 10 in the final round of review, we ended up with four that were in women’s health. And two of them had been identified and selected, and there was another company that was outside of women’s health that had been selected. But there were two companies that were going to be rejected, and one of them was in post-partum hemorrhage, and one of them was in pelvic floor damage, a labor assist device. And I convinced the board that it was folly to not take advantage of two quality companies – granted, they were young and they were inexperienced, but their ideas were clinically and technically sound, and the markets were underserved. And I convinced them that by taking these two companies in along with the two companies that were already here, and subsequently we added a fifth one that we would create a women’s health platform, if you will, that I believed would both serve patient populations globally, but would also be a very important cornerstone of the Fogarty Institute’s development and presence in the Silicon Valley for sure, but in women’s health broadly. And it’s turned out to be the case. We get a lot of inquiries about our interest in taking in another company or talking about the technologies that we have today and their appeal globally. So it is now an area of interest. We now have 7 out of 11 companies that are in women’s health or neonatal health. As we review new applications, it’s not a requirement, and we don’t bias our perspective; it’s just worked out that way to this point. But that first decision to add maybe a disproportionate number of quality applications from the women’s health space has created a presence for us.
TS: And do you see the interest sort of following down the pipeline? Do you see – in the past, women’s health has been an area of some focus for VCs and entrepreneurs. But the strategic buyers haven’t necessarily been there. Do you see more interest in the acquirer side, and you getting paid for your labors down the road?
KP: There is a lot of interest. Each one of these companies is an independent entity. They’re their own legal entity; they have their own financing requirements; they have their own team; they have their own business plans. So ultimately, they decide their own fate. And our role is just to help them get there in any way that we can. But obviously, we do have connections with potential acquirers, and we – these companies are being looked at and there are at least two of them that are in discussions now with potential strategic partners. But we’ll see. So far, we have not had a women’s health company exit the Institute. And for us, a successful exit is a company that raises its series A and that reflects the need for more space and more people, which the Institute typically can’t accommodate. And so I’m going to suggest to you that over the next six to twelve months we’re going to have a couple of these companies that do reach that milestone and are going to be moving out to pursue their destinies outside of the Fogarty Institute itself. But we continue to retain that relationship. So yeah, I think so. But the level of proof continues to be very high when you’re dealing with obstetrics and gynecology and pediatrics and neonatology. They want to see the science. And they want to know that the risk envelope is something that they can accommodate.
TS: And just a final question: what has your relationship been like with traditional VCs and with corporate VCs? I know at last check I think you had one relationship with Samsung. I don’t know if it’s as a corporate venturing group or just another sort of tiered relationship. But what is the Institute – how are you working with traditional VCs and corporate VCs in helping these companies get out of the nest?
KP: Well, we use our connections and especially Dr. Fogarty’s, we bring VCs into the Institute to meet and learn about the companies, and we take the companies to venture capital firms to tell their stories. And while we don’t always expect that there’s going to be an investment made, we know that we’re going to get very positive feedback, and we’re going to get an extension of our network to find sources of capital, typically non-traditional sources of capital for the companies. Johnson & Johnson as an example is a very strong supporter of the Institute, and has extended an offer and has established a program for providing mentoring from J&J resources into the companies in residence.
TS: That’s great.
KP: Yeah. And you mentioned Samsung. And Samsung was a part of our – this year, a part of our summer internship program, in which they provided insights into how some of their products are developed for the young interns that we had here at the Institute.
TS: That’s great. Well, it’s great to reconnect with you, Kerry. I’m glad I could help out with the sale of Novare. If you ever need help again, you know where to reach me. And it’s nice to hear some optimism, too, that there’s still young people moving into medtech and creating new ideas that’ll become wonderful therapeutics and devices someday.
KP: Thank you, Tom. I enjoyed talking about it.
TS: Well, thanks, Kerry Pope, for joining us on the Medtech Talk Podcast. It was nice to reconnect with you and to hear the great stories you have to tell from the Fogarty Institute. It’s nice to see those areas in women’s health and get the attention it deserves, but also to see some fresh faces in medtech entrepreneurship. So it’s definitely a sector that’s drawing new talents, and that’s critical if medtech is going to proceed forward. So thank you again for that insight. I’m sure this won’t be the last story we’ll hear from the Fogarty Institute. In fact, in our Medtech Talk Newsletter that we sent out this week, we also profiled a couple of the efforts in a couple of the companies that are coming out of the Fogarty Institute. So if you’re not receiving the Medtech Talk Newsletter, you really should. Go to Healthegy.com. Healthegy is the company that puts on the Medtech Conference, and it’s spelled healthEGY.com. Sign up for our Medtech Talk Newsletter, sign up for our Breaking Health Newsletter, and you’ll not only get these podcasts, but you all get our videos that we’ve done not only from our own events, but from other events. We’ve got some great interviews with JP Morgan. And you also get some great insights and perhaps some breaking news from our team of medtech reports. So go to healthegy.com, sign up for our newsletters, and of course go to medtechconference.com to sign up to attend the June 1 Medtech Conference so we will be able to see you in Minneapolis.