Joseph Rafferty, VESTECK - Spotlight Interview | LSI USA ‘23

Transcription

Nick Talamantes  0:15  

Joe, thank you so much for stopping by the LSI Studio. It's a pleasure to have you.

Joseph Rafferty  0:18  

Thank you for having us.

Nick Talamantes  0:19  

Why don't you tell me a little bit about Vesteck?

Joseph Rafferty  0:21  

Vesteck is a has now become a clinical stage startup company, we've done our first three inhuman procedures. And we've actually got three more scheduled within the next couple of weeks. So we're a device company that sutures endovascular aortic grafts to the aorta, either at the time of the initial implant, or there's about a there are about a million patients around the world that have these endovascular grafts implanted, and they're failing at a fairly alarming rate. And when they fail, we can suture those grafts back in place, so that they don't have to have open surgical procedures that can be very complex and, and dangerous.

Nick Talamantes  1:06  

When you're talking about the graft failing, are you referring to endovascular graft migration?

Joseph Rafferty  1:11  

Well, interesting question. Depending on the brand. Migration is an issue. Many of the graphs put these little barbs, these hooks up at the top to stop them from migrating. However, the tissue, the aorta itself continues to dilate. The graphs have these nitinol or nitinol stents in them. And that radial force tends to push on an already diseased aorta. And so over time that that Outward Bound, the radial force creates additional siltation the neck and now blood seeps in between the graft and the aorta. And now your aneurysm is re pressurized. And now you're back to square one. And, and so, essentially, what clinicians have told us really around the world is that they don't have tools to repair this. They're kind of at a loss, they end up having to go back and do some some pretty basic things. And a lot of that leads to open surgical repair. And, and, you know, 2 3 4, or five years after that index procedure, the first procedure, you're never healthier, you know, 65 70 year old person coming back five years later, is not usually a healthier person. And so it's a it's a dangerous redo. So many folks have said, if you listen to your customers, they'll tell you what they want. And we listened to these endovascular physicians, surgeon, vascular surgeons, interventional cardiologist, radiologist, and really all across the world. They're saying we don't have tools, we need tools. So is it safe

Nick Talamantes  2:49  

to say then that this tool of yours that you're developing is going to be best implemented at the procedure at the initial procedure to prevent these failures from occurring to prevent re interventions?

Joseph Rafferty  3:02  

That is a very insightful question. And most physicians will say, if we just like in an open surgical procedure, if we secure the graft, basically, if we secure the aorta to the graft at that initial implant, it's not going anywhere. And when it doesn't go anywhere, when it doesn't leak, and that patient's not coming back. That's, that's a cure, if you will versus palliative. And that is exactly what we're promoting. And then you've got this other group of about a million patients around the world that need help when they come back, because they don't want to be, you know, in that open procedure.

Nick Talamantes  3:39  

I'm curious, you mentioned a million patients coming back. How many are you looking at annually right now?

Joseph Rafferty  3:44  

Well, it's that is another great question. The the, our Chief Medical Consultant is a brilliant he's a brilliant person, and he doesn't suffer fools well at all. Shawn Lydon is the chairman of the department of vascular surgery at the Cleveland Clinic. And he has come on board as our chief medical officer. Dan, Claire was the chief at the chairman at Cleveland Clinic. He's now at Vanderbilt now. And and when they, because of their identity, they've created a center, they see 4 5 6 patients a week, coming back now their tertiary care center, they're there because they've got they've got the the capabilities, but they're seeing four or five, six a week coming back that need repair. Because there aren't the skill sets out in the, you know, the community hospitals. And so when you talk to them, they're seeing it at an alarming rate. And again, and that converts back to open surgery versus can we give them tools to do it percutaneously when they when they come back to the hospital.

Nick Talamantes  4:51  

This sounds like almost a fundamental design flaw with the graft itself. Why has it been acceptable that graphs have this sort of functional limitation to them, that requires an additional intervention such as the one that you guys are developing?

Joseph Rafferty  5:07  

Well, it's a great question. And without getting all the graph companies and the FDA upset at us, we'll we'll just say that that physicians had, I had a teacher at one point that used to say, physics is a cruel mistress. And you can argue with physics, and this is the manifestation of that our our bodies remodel the physics of our bodies, you're not going to argue with and our bodies are telling us that this is a partial fix, and it needs some some additional help to be a really permanent fix.

Nick Talamantes  5:43  

In my mind, I'm curious, is there even a way that we could develop like an algorithm or some sort of process to identify who is at risk, high risk of graft failure based off of characteristics or things of that nature? And then we go in and we say, we absolutely need to use Vesteck in this patient? 100%? Is that something that could be done? Or is that outside the realm of physics right now?

Joseph Rafferty  6:09  

No, I'm smiling, because you've obviously done your homework for this interview, there is stratification and algorithm, when you talk to these advisory board members we have, they can go through exactly that, that stratification you're talking about and tell us large neck aneurysms, short neck and large diameter, short neck angulated necks, the conical necks. So there's a whole presupposition. And then you break into the other conversation to say, well, they're already diseased tissues, its aneurysmal. And if they they form what's called a Type Two endo leak, where there's like a collateral circulation back into the aneurysm sack, those will create additional leaks. And 60% of them create these really complex challenges. And the rhetorical question is, Doc, when you did that initial implant, and you had a straight neck, and it was a long enough neck, and it looked like healthy tissue, and 60% of them are going to fail. Do you know which 60% Before you ended the procedure? And it's a rhetorical question, because they don't know if they knew they would do something different. Or if they had tools, they would do something different. But they don't know which ones and they don't have the tools. So it's a double whammy. And, and it's all kind of coming to a head. In the UK, socialized medicine, right, you can top up and buy some some other premium health care, private health care. In the UK, the NICE, which is kind of a hybrid FDA, they shut down this Evar repair procedure for almost two full years, because they knew the cost and the frequency of these patients coming back in a very short period of time, was a cost and a danger that they they wanted to stop caring. We think we can save the global healthcare community about a billion dollars a year in cost avoidance for these patients coming back. And not to mention, they're not healthier and and, you know, the comorbidities and challenges that come back. So those Kaiser Permanente and Geissinger that are payer provider, so they're the insurance company, they're the physician, and and the patient's they're all in it together. They have all the data, they know how rapidly these graphs are failing, and how to stratify which patients go which way. And so we're going to work very closely with them to to validate the benefits that we're bringing to, to these patients. 

Are these more strategic partnerships, then with those institutions that you mentioned? Or are you reaching out to them and seeing if they have interested in running clinical research with you?

Another great question. We're going to when we've got people like Sean Lydon and Dan, Claire and others that are luminaries, when we approach, Kaiser and Geissinger, we're going to do 100, patient clinical trial here in support of our FDA 510K. And and we've already talked with Dr. Claire and Dr. Lydon about going and who at Kaiser and who had Geissinger because their perspective on the business of healthcare is extremely valuable, extremely valuable. So we'll, we'll make sure that they're in our clinical protocol for the FDA and also allow them to kind of coach us because they've got the data. You know, they're following their patients, right?

Nick Talamantes  9:50  

You guys are a clinical stage company of a great product that addresses a huge unmet need. Maybe coming back to that graph failure. This question is now teasing in my mind, and I want to pick your brain on a bit. Why not take your technology and implement it in your own graft?

Joseph Rafferty  10:07  

It's that that's another great question. The predicate device for our device in the 510k was a product called Aptus. And Aptus initially had a suture and a graft combination that was the device. Unfortunately, the graph design itself was suboptimal, and they, they had to withdraw it. But the the Apttus is literally looks very much like a corkscrew. And Medtronic has done a wonderful job validating with a device, it's not easy to use, that when they can get the Apttus device to work, it's very, very helpful for the patients, they do much better that if it's if it's acutely successful, then long term, it's going to be successful. So what we want to do is two things, we want to fit in and work with Gore Cooke Medtronic Thermo. It's a $5 billion market. And if we can be like Switzerland, and work with all of these graphs, because they all have the same challenge, the only one that's really new is the endo logics graft, they've gone at it a different way, in the neck, they're filling it with a polymer. And so we don't want to be putting sutures in a polymer and worry about that. But the other big graph companies globally, we want to be able to work with them, and and make an already successful procedure, more durable, and more successful.

Nick Talamantes  11:38  

You mentioned Cook, Gore, Medtronic to rumo. Are you in early talks, or any talks with any of these strategics currently, with your technology?

Joseph Rafferty  11:46  

They all know who we are, I've been around since I had hair down to here. And they know who we are, we're communicating with them early and often. And many of them are watching very closely. And, and, you know, tucking this into a global sales bag, would bring the most benefit to patients, more patients than us trying to, you know, start it and build it out and sell it. So tucking this into a Medtronic, who's already evangelized. You know, to their credit, they've done a wonderful job, demonstrating the benefits. You know, in the US Gore's the number one market share, I think they're, they might be up to 60% share now. And so, you know, having having physicians implant, a graft, but then having another company's sales rep bring the best tech device in is a little bit challenging, because then you end up maybe putting some of your market share at risk, if you will

Nick Talamantes  12:48  

But that's how these competitive landscape sort of work out, right? Where if a Medtronic wants to get a leg up, increase their market share, they should be looking at what you guys are doing to make their device a more optimal choice over the competitor

Joseph Rafferty  13:04  

Or multiple choices. Exactly. Certainly, my analogy is that GM has gotten multiple, you know, everybody's not driving a Porsche. Everybody's not driving a Maserati. You know, unfortunately, yeah, you can have multiple choices. So you're exactly correct. You're exactly correct.

Nick Talamantes  13:20  

So maybe shifting gears a little bit. And pardon that, I guess that's a car pun now that we mentioned GM and whatnot. What brings you to LSI this year?

Joseph Rafferty  13:29  

I went to Grove last year, for the first time, we were beginning a raise and, and I had a very positive experience, there met a lot of wonderful people. And it was an environment that allowed a lot of learning, but also a lot of connection. And, and yes, the meetings I call it the speed dating is is fantastic. But and in addition to the speed dating, the the networking, you know, the cocktails and dinner, and so on breakfast, lunch, dinner, the multiple opportunities to connect in, in, in meaningful ways with a lot of very impactful people was was quite impressive. And so when we got the invitation to come back, it was it was very much appreciated. And I may have mentioned to you earlier, I've heard from the floor more than once that this meeting is becoming the JP Morgan have call it early stage to mid stage startups. And and they've got the right investors here, and the right companies here that might get lost into JP Morgan because it's just such a big meeting. You know.

Nick Talamantes  14:47  

It's great seeing repeat innovators and companies like yours at these events because you right front and center on the stage telling us all how things have changed since we last saw you. 

Joseph Rafferty  14:58  

Well, I'm telling you right now I'll be in Barcelona.

Nick Talamantes  15:00  

really awesome, we look forward to it, then that's great. You know, you mentioned you were at the Grove, you're here, we're imagining that you're planting a lot of helpful seeds and growing your network. So to say, how is that going has anything from the grove experience back in London, blossomed into anything?

Joseph Rafferty  15:20  

Absolutely. And what I've learned, we all think that we're, that people will, will get to know us and, and appreciate our value and the story about the company and, and my capability and credibility, the team's capability and credibility. And, and what I've learned is that an opportunity to speak with somebody at the Grove and then come back and see him again, and I've probably communicated with them at various times over the last number of months, that I call it waves on the beach, you know, people go to the beach, because the end, you just keep coming, and then allows that introduction at the Grove, and then just some some reinforcement of who you are what you are not going away, we're moving the ball down the field, we're making progress, we're hitting milestones, and then you get to see people face to face again. And, and the reinforcement that may have started at the Grove or got reinforced at the Grove is, is now communicated back where people feel, frankly, comfortable to give you very valid or maybe sensitive information, feedback, and you can do this better, or you're doing great here. And that, you know that feedback loop from investors is critical. What do they want to see? When they tell you what they want to buy? You know, you give them what they want to buy.

Nick Talamantes  16:41  

So you just mentioned you're raising money. Well, how much are you raising? And what is that going towards?

Joseph Rafferty  16:47  

Yeah, we've we've effectively just close to series A at about $10 million, just about 10 million taken. And we're starting Series B, 16 million will support our clinical trial 100 patients, and when we manage the money appropriately, on the backside of that Series B with FDA clearance, we'll still have about 4 million in the bank, that as we're negotiating with Medtronic and Gore & Cook, about an exit, we'll still have money in the bank so that we'll have our own leverage, we'll be able to continue on maybe sell product, we'll probably do, we're planning on doing a call to major market, maybe five cities and do the rollout there. So having that money in the bank, after the clinical trials completed, will be critical for us, then we're not out raising money. When we you know, we've got an FDA clearance in hand. But we can't commercialize yet because we don't have any money. And so, Greg Baker today from bensalah was telling me that he agreed with the strategy. We've been very, we've been very fortunate to be coachable. And so when you ask some very sincere people what they think about different ideas when I maintain my humility and sincerity they're, they're happy to share some thoughts.

Nick Talamantes  18:12  

Yes, certainly the people you meet at events like this aren't can offer you great insights that can if you are humble, can take and use it to plan multiple approaches. Well, Joe, thank you so much for joining me in the studio. It's been a pleasure learning about Vesteck.

Joseph Rafferty  18:28  

Thank you so much. I appreciate the time and the opportunity.