Lessons Learned from Acumen Medical
Recently 8 Biodesign Alums had the unique opportunity to share a meal with Chris Eversull and Nick Mourlas, founders of Acumen Medical. Chris and Nick were also fellows the first year of the Biodesign Program at Stanford. Over the course of the evening, they shared their journey in developing a technology to revolutionize the delivery of therapy to the heart. Several interesting and insightful points emerged from the dialogue:
They were able to observe clinical cases after fellowship because of physician relationships developed during fellowship. It is critical to cultivate these relationships.They became convinced there was a need based on a tip from a big company insider and from talking to a “trainer” who saw the same problem over and over again, especially when doctors performed the procedure for the first time. In addition, they experienced the pain themselves by attending about 11 cases, several of which went for multiple hours. These insights were critical for them.
- They liked that there was no physics that needed to be figured out. Plus it was within their wheelhouse of technical development. Another key was that they had a very clearly defined need. In addition, they were able to quickly iterate prototypes and get quality feedback from a few key doctors.
Just because you can sell a product doesn’t mean that a rep can sell it
- They thought it was fundable when someone wanted to write them a check. “You only know you have something when someone is willing to write you a check.”
- It took them 6 months to get a license, which was very bad for them considering the fact that this technology turned out to be time sensitive. Setting up a weekly standing meeting with the licensing group helped.
- A 5% royalty fee to Stanford would probably not have been a big deal. They shouldn’t have been so concerned about negotiating this down.
- Initially they raised a few hundred thousand from friends and family and did not take a salary. Looking back, they should have taken a reasonable salary, but just not paid themselves until the next round closed in order to conserve cash.
- They went heavy on the provisional patents and kept well documented lab notebooks. They budgeted $10k per month for IP and spent about 1/3. In the end they filed about 20 patents—¾ of which were issued—and averaged spending roughly $15-30k per filing.
- When the went to sell, they learned a surprising lesson: “Just because you can sell a product doesn’t mean that a rep can sell it.” Also, they learned that “Selling products is hard, getting sales people to sell your product is even harder.” In addition, they overestimated the adoption rate based on heavy user centers and underestimated difficulty of sales force management and penetrating new accounts.
- Looking back they would have spent more time to design the device for manufacturability because lowering the costs would have given them more flexibility in their sales model.
- They were incentivized not to setup partnership deals up front because this would limit the options for being purchased at a later date.
- Being a C-level employee gives you great exposure. They estimate it is 5 times greater than what you see at the director level. In that sense, it made all the hard work worth it, regardless of the money.
- They designed the ‘ease of use’ of the system for a top physician. Unfortunately, device success rate did not translate to the wider population. They suggested designing for the majority of physicians, not just the experts.
- In terms of an exit strategy with a big company:
- Don’t accept lose-win terms even if it isn’t very crucial, as this reinforces the asymmetry in the relationship.
- Start talking to them early…”I wouldn’t be so worried about big companies stealing my ideas if I did it again.”
- Counter-intuitively, a competitor folding or publishing disappointing clinical data can damage the perception of your start up.
- Start-ups especially vulnerable in a new space or an untried solution space within a well established space.
- Physicians associate your product’s performance with the competitor’s poor outcomes.
- Potential funding decreases as potential investors and acquirers lose interest in the space.
- Value Proposition: it is critical to understand who will be making the ultimate decision about the use of your device. Depending on the decision maker, your overall value to the health care system may be meaningless in terms of the actual purchasing decision.
- In an environment where a physician makes this decision, price is not as much of a concern, and you must focus delivering value to the physician (usablity, efficacy, safety).
- In an environment where the hospital makes the purchasing decision, it is all about price. Your value proposition to the physician of saving physician time simply won’t work if your price is higher…”let doc struggle for 3 hrs, then we will pull your device”.
Thanks again to Nick and Chris for these valuable insights.