Cynthia Yee, a principal at Windham Venture Partners, opened her firm’s office in San Francisco. Yee shares her opinions on many medtech questions including 510(k) versus PMA, the power of payers, and how younger professionals view careers in medtech.
Tom Salemi: Hi, everybody, this is Tom Salemi. Welcome back to the Medtech Talk Podcast, the one and the only Podcast affiliated with the Medtech Conference. For information about the Medtech Conference, go to medtechconference.com and you’ll find all the information about the June 1 event in Minneapolis. One of the panels we’ll be having is called A Fresh Perspective on Medtech, and our guest today, Cynthia Yee, she’s a principal at Windham Venture Partners and a member of our advisory board, will help lead this conversation between younger CEOs of medtech startups. We’ll talk not only about the challenges of leading medtech efforts today, but also what medtech looks like for younger entrepreneurs, younger executives moving into the space. We very often hear about accomplished executives, but it’s great to have a perspective from a younger set of eyes to give us a sense of medtech’s future. So without any further ado, let’s begin this interview with Cynthia Yee, principal at Windham Venture Partners.
TS: Cynthia Yee, welcome to the Podcast.
Cynthia Yee: Thanks, Tom. Appreciate you having me here.
TS: It’s great having you here. I have a question. I have a theory about medtech, why it’s not exactly on fire. I don’t think we as an industry tweet enough. Do you tweet at all? Are you on social media?
CY: I don’t even have a Twitter account.
TS: You don’t?
TS: I think we need to start tweeting so things start trending. We need to be trending if we’re going to turn things around. What do you think, is that stupid?
CY: No. I think marketing is an important part of any sort of business and industry. I just might start my own Twitter account after this.
TS: There you go. Are you just not a social media person in general? Or not a Twitter person?
CY: I’m in LinkedIn, on Linked In if that counts. But no, I’m not big on social media. I think my philosophy is better to kind of keep your head down and show results based on your exit and how you can help your company.
TS: Yeah. That’s how this conversation with Josh Mackower a couple of Podcasts ago, and he said exactly that, that this isn’t an industry where you’d market yourselves like you do in others. And I completely respect that. But I just think we need some sizzle. So yeah, after this phone call, get your Twitter handle going and I’ll start following you. How does that sound?
CY: Great. You and my mother will be my only followers.
TS: That’s an esteemed list. Very happy to have you involved with the Medtech Conference. Windham is a great firm. We had Adam was at our conference last year, and did a great job on the panel. Can you bring us up to speed on Windham? It’s a firm I think not a lot of people follow, but you folks are really one of the more active investors in medtech. What are you looking for?
CY: Yeah. So Windham is a New York based healthcare venture fund. We’re focused on medical devices and do a little with healthcare IT. It was founded about ten years ago by two operators out of J&J. I joined in 2014 and opened up the SF office. We’re actually a pretty diverse fund. We invest across all stages and are opportunistic. I think we do a lot of medtech, just given our respective backgrounds. One of the things that we look at is really at a higher level thinking about the clinical benefits that any product can bring to a patient and the economic value.
TS: Sure. Well, how do you measure that these days, the economic value part? That is an area we’re going to get into on the conference as well, not to keep referring back to that. But do you know if when you’re doing due diligence for a company, how much – what percentage of your research is sort of on the technology itself, and what percentage is it on the economic value? I’d have to think it’s almost a 50-50 split, if shifting the other way toward value.
CY: Well, I think how we think about the economic value of any new technology is really kind of refers back to its own clinical data, and how it can treat patients more effectively, either the durability of a particular procedure, or even if we’re looking at an in-hospital procedure, what’s the recovery time for a patient, how long are they going to be in the hospital, how long is the procedure itself going to take? Are there some workflow benefits that hospitals can treat more patients? So I think there’s multiple facets of a way of looking economic value. But I think there’s an acute measure of does this improve the efficiency of the hospital, and then there’s the kind of longer term measure of is the patient being treated very effectively, or is this kind of an intermediate stop gap to some other therapy, longer term. That’s kind of how we look at economic value of a particular device.
TS: That’s interesting. To deliver on that value, do you almost need to go a PMA route? Like really need to be swinging for the fences and for the big, big ideas? Or do you see value opportunities in more maybe iterative 510K devices?
CY: So I don’t think that you necessarily have to be a PMA product to deliver value. One 510K or de novo 510K company that we were investors in was a company called neotract. And that developed a novel, minimally invasive solution to treating BPH. But I do think just given the way the regulatory climate has shifted a lot of things that were traditionally 510K to PMA, that that’s a route that we’ve actually kind of pursued more so that most people. I think the willingness and the need to invest in robust clinical studies to generate the data that show that you are providing higher value to patients, and payer ultimately, who are going to be paying for these devices, is really critical in garnering and driving market adoption.
TS: When building – you mentioned the payers, you got me thinking. I think you might have been at our payer/provider/venture summit last year, too, and that’s certainly an interesting area we’re seeing. And if you weren’t, you can say you were; you don’t have to tell me you didn’t go. But it was really a fabulous time.
CY: I was.
TS: Oh, good. What do you think about the payer sponsored investor class? Is that a group that you’re really – and providers, too, I suppose. Is it really important to get those entities involved in a medtech syndicate? Do you find a lot of value from those players?
CY: I think we’ve invested with a couple payer-provider groups in some of the deals I’ve worked on, particularly at NEA at Windham. I think they provide some perspective in how they might view a product, particularly on the healthcare IT side, and what the sort of hurdles are to adoption and deployment within their healthcare system. But each hospital system I think is so unique in how they look at any particular new technology or device that having one perspective is helpful in framing your value proposition and marketing message. But its adoption in one system or an investment by Kaiser, for example, in your product is not necessarily going to mean that every other healthcare system is going to adopt your product as willingly.
TS: Hi, everybody, this is Tom. I just want to take a quick break to remind you to go to medtechconference.com to check out our great agenda. Recent ads include what it takes to win in medtech. We’ll have Michael Ackerman of Oculeve, Andrew Cleeland of Twelve, Mike DeMane of Nevro, and Keith Grossman of Thoratec. This will be a very informational panel. You want to be there to hear their very unique points of view. Now back to this conversation.
TS: You opened the Windham San Francisco office. Obviously there’s a great deal of medtech activity out there. Do you still find a difference in I guess philosophies between East Coast and West Coast when it comes to medtech? Or maybe a difference in the number of investment opportunities? Do you think there’s more opportunities on one coast or the other? Or is it pretty robust on both sides of the country?
CY: Yeah, I think clearly the Bay Area has always been a hub for innovation in all kind of fields, so in healthcare and technology, particularly in medical devices. But I like to think of it as hubs of innovation. And I don’t necessarily think there’s major differences because it’s such a small, tight-knit community that people from Minneapolis will still work with people from San Francisco and people from Boston. Perhaps on the East Coast it is more focused toward technology more so than your traditional sort of implanted devices. But I don’t see a huge difference between East Coast versus West Coast. And I’m actually glad. I think I like that it’s a very collaborative community.
TS: It is that. And I think the size is both – is a positive in that regard. It’s small enough where you really do know everybody and all the players, and you probably, I imagine, get to see most of the deals you want to see.
CY: Yeah. I think that’s actually a benefit. People ask why I’m still in medtech, and I think there’s just a lot of great assets out there. And given the fewer investors out there, we have attractive valuations. You’re not investing $100 million pre-money on a preclinical asset like you do have in pharma or something like that.
TS: And Windham does healthcare IT as well. Is that an area you look at? Or is medtech really your focus?
CY: I helped out a little bit in our healthcare IT practice. I think particularly looking at connected devices, so devices that are traditional devices, but have a connected kind of monitoring component to them. So I think one of the more interesting aspects about digital health or healthcare IT is the ability to monitor and collect data to better understand chronic diseases and manage them more effectively. One such investment in our portfolio is a company called WellDoc. That is an app, actually the first FDA cleared app. It got 510K approval, and did a clinical study that showed a 1.5, a big percent reduction in HbA1c over the course of 6 months. So I think looking at things like that and applications that really help consumers better manage their diseases is something I’m interested in.
TS: Now how did you find your way into venture? I know you’d spent some time, as some VCs do, on Wall Street. Were you always planning to get into VC? Did you have other healthcare aspirations? Or did this sort of just come together for you?
CY: You know; I can’t say that I always thought I would be in venture. But I knew what I liked and I always thought that novel, emerging technologies was something I was interested in. Understanding the competitive landscape was an important part of my job, identifying new growth opportunities for the companies I covered. And I thought this was actually the most interesting part about my job and what I wanted to be able to more actively contribute to that process, I felt like being an equity research analyst I could tell people to buy or sell a stock, but that might help us directing the flow of capital, but it was a very passive way of being engaged, and I wanted to be in a position to really influence outcomes and the development of these technologies. And so venture seemed like a natural fit.
TS: How is medtech seen as an opportunity for younger people getting into finance or in finance, who are looking to maybe do what you’re doing, to get more involved in the investment side of things? Is medtech still enticing to people? Or is it an area that many have some concerns about and perhaps won’t get involved because of those concerns?
CY: No, I actually think medtech is still a very exciting field. When you look at – this was a question I asked myself even 5 years ago: is this the field I want to stay with? Is it shrinking? And I think with all the FDA challenges and funding and capital flows away from the sector, it’s still a valid question. But I think there’s a lot of exciting new technologies out there. You’re seeing actually a lot of pharmaceutical players who 15 years ago now, they began divesting their medtech franchises. And now you’re seeing them actually establish little venture groups within their firms, actually explore investing in medical devices because they’re realizing that it’s not so sustainable to have someone on a drug chronically or multiple drugs chronically. It might be more efficient to actually treat the disease with a device one time, and then be done with it, hopefully. So I think medical devices is almost seeing a renaissance with the FDA climate changing. You’re seeing more people get back into it, either through connected devices or actually through traditional implanted devices.
TS: That’s great to hear. And just final question: what are some of the highlights of your portfolio? I don’t want to ask you to name your favorites because I know you can’t have one. But I know your portfolio is pretty diverse. You’ve got some cool ophthalmology companies, ClarVista which we’ve talked about on our OIS Podcast. But what are some of the portfolio highlights that we should know about?
CY: Well, you mentioned ClarVista, which I will give a little shout out to because I’m on the board of it. That’s actually really one of the more interesting companies in our portfolio. It has a modular IOL that will allow physicians to optimize refractive outcomes and facilitate postoperative lens exchange, should that be necessary. Another really cool technology is a company called VytronUS, which is developing a next gen integrated mapping and ablation catheter. And what’s unique about it is that it’s non-contact, uses ultrasound energy, and can make a contiguous lesion. And it’s just a really cool device to treat AF, and I think it’s actually going to revolutionize the way physicians approach that disease.
TS: That’s great. Those are two very good examples of how exciting medtech can be. Well, I’m glad you’re helping us out with the Medtech Conference, and thanks for sharing a bit of Windham’s story and we’ll see you in Minneapolis on June 1.
CY: Yep, look forward to it.
TS: Cynthia Yee, thanks for joining us on the Medtech Talk Podcast. And thanks of course to our listeners for visiting with us today. Go to medtechconference.com, check out our great agenda, register to attend the Medtech Conference. It’s on June 1. Sign up and we will see you in Minneapolis