The Future of Neurotech: A Fireside Chat

neuro panelOn October 28, 2015, a gathering of the Stanford Biodesign Alumni association, the current Biodesign fellows, and Women in Medtech members, was treated to a delightful fireside chat on the Neuromodulation frontier. The panelists shared a wide array of perspectives first-hand: from entrepreneurs building exciting neurostimulation products, to leaders of publicly traded companies marketing neuromodulation devices and even included the venture capital perspective on the future of this promising field of bioelectronic medicines. Hosted graciously at the T3 Advisors’ office in Palo Alto, this event was a treat for the audience who were entirely engaged in a lively discussion over cocktails.

The panel was hosted by Juan-Pablo Mas, a partner at Action Potential Venture Capital, and included Todd Whitehurst (Google Life Sciences), Rami Elghandour (Nevro), Michael Ackermann (Oculeve/Allergan) and Kate Rosenbluth (Cala Health) to share their unique perspectives on the challenges and opportunities in this space. 

Juan-Pablo Mas is a graduate of the Stanford Graduate School of Business and serves as a Partner at GlaxoSmithKline’s dedicated bioelectronic medicine fund called Action Potential Venture Capital (APVC). APVC is an evergreen fund wholly supported by GSK and targets investments in three categories: companies pursuing novel therapeutic applications for existing neurostimulation devices, new ventures that introduce drastically miniaturaized bioelectronic medicines, and companies that introduce enabling ‘platform’ technologies valuable to this space. Prior to APVC, Juan-Pablo was with Lightstone Ventures and Morgenthaler Ventures, also investing in early stage medical device opportunities.

Todd Whitehurst brings a unique background in medicine and electrical engineering and is a veteran in the neurostimulation industry, with experiences ranging from hearing aids at Advanced Bionics to targeting an array of applications at Boston Scientific that included neurostimulation to perform deep brain stimulation (DBS) and treat pain, vision disorders, obesity and even sexual dysfunction. More recently, he was part of Apple where he worked on HealthKit and currently leads a team at Google’s life sciences venture, Verily.

Rami Elghandour is currently the President of Nevro, Inc., a Redwood City, CA based company that is the pioneer of the HF10TM therapy to treat chronic pain. The product is commercially available in the United States, Australia and Europe. Rami is an electrical engineer by training (Rutgers alum), spent time at Advanced Neuromodulation Systems (acquired by St Jude Medical) before moving on to the investor’s side of the table at Johnson & Johnson Development Corp (JJDC) where he led the Nevro investment in 2011 for JJDC. He later joined the Nevro team in 2012 when they were a small private company, and has since led the corporation through an IPO in 2014.

Michael Ackermann was the founding CEO of Oculeve, a company that came straight out of the Stanford Biodesign fellowship, where Michael was a fellow in 2010-11. Oculeve uses neurostimulation as a pathway to treat dry eye disease, and was recently acquired by Allergan in 2015. Michael continues to advance Oculeve’s programs now as Vice President of Allergan’s newly formed Neuromodulation division.

Kate Rosenbluth is also an alumnus of Stanford’s Biodesign fellowship (2012-13). She is the founding CEO of Cala Health, a neuromodulation company she co-founded with Scott Delp (Stanford Bioengineering) that has been backed by JJDC, Lux Capital and others. Kate’s experience bridges the medical device software (Brainlab), biotherapeutics (Genentech), and surgical sectors (UCSF neurosurgery).


“Why neurotech?”

Being true geeks at heart, everyone in the panel was quick to point out that they were intrigued by the unknowns and biologic challenges addressable by neuromodulation. Rami and Todd both commented on their passion for technology, which started with their training in electrical engineering and subsequently led them to pursue careers at the intersection of technology and health care.  Kate mentioned how the intersection of emerging electronics with discoveries in neurobiology and the nervous system have the potential to create winning combinations defining a new class of neuromodulation devices.

“The human nervous system is extraordinarily powerful, with an amazing ability to get the body to even heal itself, or make it feel better without damaging tissue,” said Michael Ackermann, about why he was drawn to this field. The panel also agreed on the evolution of recognizing the multi-disciplinary nature of training required to be successful here. Todd recalled not being allowed to sit in on an anatomy class from his time at Stanford as a student of electrical engineering, but eventually ended up going to med school in order to take the same class! Rami shared a similar experience at Rutgers. Neuromodulation is a rare field in medical devices that allows for stand-alone companies, another draw for people like Rami who combine their curiosity and interest with passion for building teams and culture.

Rami also pointed out that having an open-mind is key to being successful in this arena, recalling from his experience at Nevro where the company’s product was found to be 2x more effective in treating leg pain and back pain without paresthesia, something they did not know would be achievable in the earlier stages.


“Is there an intrinsic aversion to doing neuromodulation, in general?”

The panel was quick to point out the consumer’s inherent difference in perception between a pill and an implantable cardiac device, something that played heavily in the choice of where neuromodulation existed in the treatment chain. Kate chimed in that increasingly, she sees that an overwhelming majority of people are more accepting of “quantified self,” managing disease states better and being more open to devices in general.  Rami added that from his experiences, there were a number of start up failures that led to a loss of faith in neuromodulation until the likes of Nevro and Oculeve brought excitement (both investor and public) back to the space.  He also discussed that neuromodulation is a later stage treatment often following surgery, which is something that could change with better patient and physician education along with continuous improvements in therapy. The panel agreed that part of the fear might be due to the lack of complete understanding of both technology and mechanisms of action for some of the devices.

Todd added that time to market for neurostimulation devices (tending to mostly be implantables) was a cause for concern for investors and entrepreneurs alike, prompting a diversion of investment interest. Michael was quick to agree that from his own experiences with Oculeve (originally intended as an implantable device), he found that pivoting to a non-invasive device with comparable efficacy afforded the business plan a lot less reimbursement risk.


“With wearables/non-invasive devices, is it better to market to the consumer or go the prescription route?”

At Oculeve, Michael’s team found that people tend to at least try to use a device prescribed by a physician a majority of the time; something that is very challenging when it’s an over-the-counter product. Engaging the patient to use it regularly is a huge challenge that these devices face, despite having an edge when it comes to commercialization time.


“How do the large players in this market look at new opportunities?”

Rami opened by inserting that there’s a noticeable lack of competition in several neuromodulation spaces that are currently dominated by one or two larger players. “There’s a quasi-monopoly in markets like sacral nerve stimulation,” he said. He was also quick to add that the emergence of a new smaller player in any of these markets always seems to energize the larger companies, where neuromodulation is usually a smaller division that is added on to a predominantly cardiac device company.

Kate spoke about how there was possibly a closer fit with the pharmaceutical companies for neuromodulation, given its mechanism of action. Rami agreed and commented how Nevro approaches clinical trials similar to pharmaceutical companies’ model of progressively larger studies (Phases 1-3) drawing another parallel between the two industries. The acquisition of some neuromodulation companies by pharma players adds validation to this line of thinking.


“Talk to us about the reimbursement landscape”

Todd opened by pointing out that the way things are paid for in medicine in the United States is quite “weird.” There’s almost never competition on price, instead, there’s competition on getting physicians to choose their device. Insurers not being overly excited about changes to healthcare policy make things harder.  A strong focus on value (Obamacare) will hopefully drive this down, said Todd.       Michael added that he also learned from his interactions with CMS that there were separate funds for drugs and devices, so savings cost in one category isn’t always an incentive for CMS to cover new therapies. Private insurers, said Michael, might be more interested.

In many ways, reimbursement pathways have emerged to dominate the risk profile of most medical device startups today, specifically neurotech, where devices have historically been more invasive and expensive. It is now essential for any startup assessing a neurotech opportunity to clearly understand their stakeholder, existing reimbursement codes, and talk to physicians and coders alike on what pushbacks they see in using those codes currently.


“To date, Neurostimulation has remained a last-line option surgical option for patients first failing multiple drugs.”

The panel agreed that a lot of this might be because of the inherently invasive nature of most neuromodulation therapies in the market today. Todd added that there was an increasing trend in moving away from the traditional paradigm of needing to be very invasive to effect therapeutic changes. Furthermore, this may change as bioelectronic medicines make good on their promise of miniaturized, targeted neurostimulation with an improved safety/efficacy profile.

A big advantage with some of the more invasive neuromodulation devices is the minimal involvement or compliance required by the patient. With the move to wearable and minimally invasive therapeutics, it is important to assess human factors that could impact success of the therapy.


“With the waning venture interest in this space, how would an idea like Nevro’s become a successful commercial company in today’s climate?”

Juan-Pablo opened the discussion alluding to the fact that most existing neuromodulation markets started with invasive surgical procedures and empirical evidence,  though more recently drug companies have placed more emphasis on the mechanism of action. Funds such as the one he runs for GSK have realized the potential of neuromodulation to do what most drugs do today, while being more targeted and specific in its mechanism of action. There needs to be enough committed capital to fund some of these companies with novel scientific and technical foundations, and venture funds such as Action Potential are testimony to industry’s recognition of this need.

Rami added that Nevro’s founder had a fantastic vision, and even in today’s stringent climate, would have probably been just as successful, even if it might’ve taken longer. There continues to be money for good people and good ideas. The difference between the best people and average is night and day, so ensuring you surround great ideas with the best people is paramount to success, Rami advised.

“This is a real problem. There are lots of exciting discoveries happening today in academia, including activating and blocking nerves with light (optogenetics). Problem is that nobody wants to throw that Hail Mary pass and wait ten years for it to hit,” said Michael Ackermann about helping translate ideas from the lab to the clinic. He added that he was optimistic about the future with funds such as GSK’s entering this space. Todd was also optimistic for the future of this space, as evidenced by his own personal experiences working with Apple and now Google Life Sciences.


“What is it about the Apples and Googles in tech, in their approach to healthcare technology, that is invigorating and fresh?”

Todd recalled his experiences working with tech leaders in Silicon Valley and was optimistic of the products they were planning and its impact on healthcare. Google, he admits, is interested in “everything”- with a reputation for backing even high-risk ideas, the sky even is no longer the limit there. Google’s approach has been one of collaborative partnership (e.g. Sanofi, J&J) and leverage those for not just one device or drug, but instead focus on improvement on an entire disease state.

Google’s approach includes using analytics with the access to large patient populations that are engaged online and using mobile platforms that could make a bigger dent in managing a large disease such as diabetes.


“Stanford Biodesign…”

The panel talked about the huge advantage that Stanford’s Biodesign has when they put together very diverse and skilled teams and get them to focus on identifying a problem, rather than jumping to a solution first.  “One of the things I love the most about Biodesign is bringing people together to get everyone to be successful as a whole, remarked Rami.   Todd added that Biodesign does things the “right way”: Starting with a truly unmet need, and then generating solutions from there. In his experiences with Google, he recalls saying a number of ideas that don’t normally have a “needs-first” approach.  The panel talked about how products that are fit into a market or mold often struggle to meet the consumer’s needs.

The key to the success of programs like Stanford’s Biodesign has been in its strong focus on these values upfront, in identifying and assessing opportunities around a truly unmet need. In bringing physicians, engineers and scientists to work together on teams, Stanford recognizes the multi-disciplinary nature of skills needed to be successful in creating a lasting impact in this space.



The panel touched on a number of key topics that pertain to most all medical devices, but specifically neurotech and shed some light on the new wave of excitement in this field. With pharmaceutical and tech companies now taking renewed interest in advancing this further, the future certainly looks more promising than ever. The gathering was lucky to have a panel with diverse experiences while still all converging on a narrow niche in neurotech.

Entrepreneurs working in this area now have access to niche funds, expertise and a vastly untapped market that is impactful to patients. Key challenges to address upfront now include reimbursement pathways and a thorough understanding of stakeholders in patient management to guide commercial strategy. The advent of minimally invasive devices, although promising, brings a new set of challenges that include careful consideration of patient lifestyles, compliance and its impact to therapeutic efficacy and reimbursement.

In all, the Biodesign Alumni association and Women in Medtech had plenty to cheer about the future of bioelectronic medicines to better manage disease states and got a glimpse of the vast array of challenges specific to this field from different vantage points. It is not entirely unlikely that the future may see devices that specifically treat diseases without systemic side effects, and gain acceptance into mainstream healthcare, as opposed to an option for the refractory today.


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