Dom Messerli.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.
John Shufeldt:
Hello everybody, and welcome to another edition of Entrepreneur RX, where we help health care professionals own their future. Hey, everybody, welcome back to another episode of Entrepreneurs RX. I'm your host, John Shufeldt. Happy New Year today I'm excited to have a gentleman whose company we invested in through accelerant, and it is a really exciting company, so I'm excited to have him tell you about it and how he got to where he is. His name is Dom Messerli, and he's this visionary founder as president and CEO of Lenoss Medical, which is this pioneering kind of biologic technology company for the treatment of osteoporotic compression fractures in people's back. So without further ado, Dom, welcome to the show. It's good to have you on it.
Dom Messerli:
Great to be here. Happy new year, John.
John Shufeldt:
Happy new year. Where are you speaking from right now?
Dom Messerli:
I'm actually out of, uh, Providence, Rhode Island, and we're about ready to get a snowstorm.
John Shufeldt:
Really interesting. I mean, I'm in Phoenix and it's 46 here, and we're all freezing better here than there, I suspect. All right, Don, so I know all about your background, obviously, because just to be full disclosure, accelerant is an investor, and we're super excited about it. But let's go back. Give us a little about your background.
Dom Messerli:
Yeah, absolutely. So it goes back to Switzerland where I got my mechanical engineering degree quite many, many years ago and was lucky enough to be introduced to Mr. Hans Quiz, which was the owner of Synthes at the time. And they offered me a job at Synthes had the opportunity to lead one of the spine divisions within Synthes and grow within that division, and certainly learned a lot on the job. Always is looking into spine technologies. And as I was growing within the spine field and my roles, I eventually figured I need an MBA. So I got a business degree from Penn State and Executive MBA, which was fantastic. And literally while I was graduating, Synthes was a position for an acquisition. It was acquired by J&J for $21 billion. So that MBA came in very handy as I was going through the transition with change. And then I stayed with change for a little bit and then started this business.
John Shufeldt:
Well, did you say 21 with a B billion? All right. Wow wow. Yep. That's not a small number. Yep. Very cool. All right. Well let's talk about what problem are you trying to solve with your solution. Is that how you started this. Like how did you end up with this idea. Because I know a little bit about what obviously what you're doing.
Dom Messerli:
Yeah. So in one part I would say I stumbled on it a little bit in a way. But on the other way, it was obvious that I would come up with this idea because at the business with Synthes, we were the market leaders, and specifically my division was the market leader in using. We call these the allograft tissues or bone tissues to treat spinal disorders. We were at state of the art technologies to come up design, develop and allograft, uh, implants for spinal surgery. So we we're the best in the market. And we knew that these are spinal compression fractures from osteoporosis that they're treated currently not with optimal solutions. These were solutions still today that don't allow for bone healing or fracture healing. It's literally the injection of a plastic or an epoxy. But we knew all the benefits of these allograft tissue, meaning you have bone and was like, well, I think we can come up with a design where you can then use that allograft tissue and place it where bone is needed most for new bone formation. And that's how we came up with the it was actually me personally come up with the design for we call it the OsteoPearl implant that can be used to treat those spinal fractures. And very simply now replacing bone where new bone is needed most. It made a lot of sense.
John Shufeldt:
So I think I told you a long time ago, you used to have this TV show called Top Doc. In the very first top doc we did was we went into the interventional radiology department at Saint Joe's and watched one of the very first Kyphoplasty is and it was amazing because here you stick this large bore needle through someone's back under fluoroscopy and you inject, as you said, this epoxy. And they literally seem like they were not quite be pain free, but almost be pain free immediately because you'd see their bone magically go back up and conform to its original shape. That's what you're talking about doing, right? You're talking about doing kyphoplasty. However you're doing it with these pearls, and these pearls are genetically bone tissue. Is that.
Dom Messerli:
Correct? That's 100% right. So now instead of injecting a liquid that then eventually hardens, these OsteoPearl implants are engineered in a way so they can go through a small, minimally invasive approach. And now you can envision in simple terms you would have like a bag that's filled with granules. And they're felt very densely. In our case, the granules are the cortical bone pieces that we insert and create this sturdy bone mass within the vertebral body. Not only, you know, really fills the vertebral body, but because of their structural cortical pieces, they have the ability to further lift and restore the fracture. Because, again, it's not a liquid. A liquid goes places around where it's not supposed to go. But the cortical bone, because it's a structural piece, has the ability to even help restore the fracture. And and again, it's a piece of bone that's conducive for new bone formation.
John Shufeldt:
So it's funny, I have this lovesac in my office filled with these little pellets. And either I have a really large ass and I've shrunk the lovesac or compressed the pellets. I ordered some new pellets, and now all of a sudden I have new pellets and the lovesac is like this huge thing again. And I was laughing, thinking of like, oh my God, I just did a Lenoss' version of the Lovesac because now. Goes back to its perfect shape and without my ass indentation in it.
Dom Messerli:
Uh.
John Shufeldt:
That's funny. What was the problem with the epoxy? Because when you explain this to me, this was new. I did not know this existed. And I should have.
Dom Messerli:
Yes. So I say that the positive part about the epoxy was it had good pain reduction early on, which is great. It does also allow for a minimally invasive kind of injection. But the challenge is that it's liquid and you have to time it right. Meaning when it's mixed in the operating room on the back table, it's literally where it's mixed with the two component epoxy is mixed. Yeah. So exactly you do that. There's different methods of doing that and tools and instruments for it. So there's the timing for that the preparation time. And then once it's ready to go meaning has the right viscosity, then you have the working time. How long has it the right viscosity. Meaning if you injected too early then it's almost like water. And when it's almost like water, the vertebral bodies have so many arteries and veins going through it, it escapes through the veins. Unfortunately, if you wait too long, then it's like a little bit gooey and then you can't inject anymore when you still needed to inject some more. But the true challenge is, is that when it's too liquid with all these arteries and veins, it does escape into the veins, unfortunately.
Dom Messerli:
And we have now collected over 40 published case studies where the epoxy cured in the patient's heart. And I've seen an actual video, a physician showed it to me on his iPhone live video of his x ray arm, where literally the cement you could see getting out of the vertebral body and pulsate it like with the bloodstream going right up. I could see it goes up, up. And it was terrifying. Terrifying. And the physicians know, and they try to do whatever they can to avoid it from dimming the lights in the operating room for doing a timeout and say, look, now we're injecting the cement, everybody's eyes on the CRM machine. As soon as you see there is an extravasation of the epoxy, call out, stop! So they make it work. But if you don't have to worry about that, you know, why not use that as an alternative solution so you don't have to worry about it. And on top of it, in our case, you have the bone formation and go back to natural. But unfortunately there are risks associated with the use of the epoxy. Is there any.
John Shufeldt:
Chance of rejection if you're putting this bone into the vertebral body itself? I mean, what are the side effects, I guess, or what are the contraindications or risks for Lenoss' system?
Dom Messerli:
Yeah. So that's something I had to learn as well, that there's a big difference between like organ donation, where you have organs, where once you have an organ donation, you have to take a medication that your organs are not rejected. Right. But with bone that's not the case. So there's no donor matching or there's no like, pills you have to take to avoid rejection because it's pure natural bone. And I guess one of the scientific reasons is there's no living cells as they are in organ tissues. So it's super easy. And the other thing is that the allograft tissue has been used in orthopedic and spine surgery, as you probably know, for decades. Very there's a lot of very good solid data. It's like a common material that's being used for orthopedic and spine surgery.
John Shufeldt:
So basically your magic is you came up with the delivery system and a new application for old, for lack of a better way to say it, technology.
Dom Messerli:
For a very known established bone material. We engineered it so you can use it in a minimally invasive fashion. And we call it the OsteoPearl. It's almost like a pearl necklace made out of bone that you can very simply easily insert into the fractures. Yeah, you can.
John Shufeldt:
See the picture off your left shoulder in the background. You can see these things that look like little pearls sitting in. Looks like right in the vertebral body. Is that an actual CT scan.
Dom Messerli:
So the one here in the middle is is an illustration. And then this is an axial CT scan of the actual implants. And you're going to see some fuzziness with the new bone formation.
John Shufeldt:
That's really cool. How long does the bone formation take between injection time to stability time. Yeah.
Dom Messerli:
So stability is instant because like you said, the loft sac that you're sitting on, you have instant stability because you fill the vertebral body with the OsteoPearl. And then the bone formation that happens over a period of time. And usually you get about 80, 90% of like fusion, we call it specifically in interbody fusions within 9 to 12 months. And if you're in an inter-party fusion environment where you have to fuse two vertebral bodies again, takes up to two years. But here we're within the vertebral body. It's very vascular, so we get much faster in regards of bone formation and fusion, as you can see on this image that you. And out here.
John Shufeldt:
Is there much downtime post procedure?
Dom Messerli:
No, it's no difference. Like the post procedure, protocols for the patients is the same as it is when they use epoxy. So there's no difference.
John Shufeldt:
And then as I recall, there were some magic window of time between the compression fracture and the time you actually had to do the kyphoplasty. Is it the same with us?
Dom Messerli:
It is the same. And it's just generally with all the new literature now, it really highlights is the soonest these fractures are treated the better for the patient. If patients are not prescribed to go for surgical treatment or conservative care, these published studies actually do show that morbidity and mortality is worse. Patients actually have a longer life expectancy if they're surgically treated, which is a very powerful, you know, clinical literature that states that it's very important. Yeah.
John Shufeldt:
Because I mean, just the mobility factor. What was your biggest surprise when you came up with this idea and have taken it to where it's now? What does kind of shocked you?
Dom Messerli:
Hmm. That's an interesting, uh, interesting question. Uh.
John Shufeldt:
Anything catch you off guard? I can say us almost daily, like, oh, geez, I never saw that one coming.
Dom Messerli:
One of the surprises was, since this innovation I had while I was working for a larger organization, I didn't think you would take me quite as long as it did to actually take it out of the organization. You know, there's my IP of the associated with the larger organization, Synthes and Johnson and Johnson to take it out of that. I thought I could pull this off quicker, but it took over a year to actually pull it out, but happy that we were able to pull it out.
John Shufeldt:
I'm actually surprised, cannily, that you got it out. I'm sure it was a long negotiation, but I can see many things were like, no, you were doing that under our auspices. We own it. You're our employee. Have a nice day. So. Yeah. Yeah. Good for you to get it out. What was the hardest thing you had to overcome to get it to this spot? Because from, you know, the accelerant ventures perspective as you're about to go like this. Because I think once this is in the mainstream, no one's going to use epoxy anymore. What would they. Right.
Dom Messerli:
Yeah, exactly. The hardest parts certainly the first piece, as I mentioned, getting a license out of a large organization to make sure I have good legal counsel for that to get that done. That was a big element for sure. Next piece. The partnership with the tissue bank is extremely important, and I was lucky enough I already worked with the world's largest and highest quality tissue bank my whole career, so I was able to get that partnership was extremely important. And then the next piece is I always look at it, it's like there's always a fork in the road where either you succeed or you don't succeed. And one of the last milestones is really the clinical use. We had high confidence that with the experience of the base material of allograft tissue, it's going to work. But still you have to do it and have to get it into patients and see how the patients do what's kind of the last milestone and just getting into the clinics and get this done. And we're lucky we had 49 cases now. So we are about the 50 cases and expanding, which is great, which is really the last piece of kind of de-risking. And now I'm excited to really report that with these cases, that what we thought would happen is we have zero intravenous embolism, zero is is not possible, but it's not proven in these cases as well. So we're really excited about that.
John Shufeldt:
Amazing. You know, when when you first told us about this I was just putting my lawyer hat on, said, there'll be a point soon where anybody who doesn't use this and has an embolus, that they will have basically violated the standard of care, because you can see the plaintiff's attorney say, wait a minute, there's a product on the market that has zero cases causing endless. You use an older product that has what did you say the percentage was of embolism? It was not low.
Dom Messerli:
Yeah. We know I hate to say this out loud, but the literature reports 20 to 70%. The most recent study has reported 70% of cement extravasation. Not all of them cause issues in the heart, but 70% those most recent study that was published of cement getting out of the vertebral body.
John Shufeldt:
Wow. And if they've got a right to left shunt, that could go right into their brain as well and bypass or otherwise probably what gets stuck in their atrial appendage or their lung tissue. But has there been any strokes that have been caused by it?
Dom Messerli:
You know, we haven't researched a stroke. The three areas that we've seen is the epoxy in the heart, curing in the heart. Yeah. And if it doesn't cure in the heart one of the next places it goes, it's actually is actually the lungs. So we have multiple cases where you see the epoxy, you know, just resting for the rest of the life in the lungs. And then the third part is that if the leakage or extravasation is into the spinal canal posterior, and actually there was a case in your neck of the woods in Phoenix where the patient was paralyzed because the epoxy leaked out into the spinal canal.
John Shufeldt:
You know what? I know of that case. Okay. Yeah. When you said that, my ears perked up. I'm like, God, that sounds like a Phoenix case I know of, man. That's rough. So anyway, when you told us about this idea, I immediately said, at some point, probably very quickly, it will become the standard of care for, for this very reason. So people will be like, of course I'm going to use it. What advice do you have for Non-physicians who want to go into this medical entrepreneurial space as far as problem identification, because you crushed it? Clearly we were excited to be an investor. What advice would you have for others who want to follow in your footsteps?
Dom Messerli:
Yeah, absolutely. I think one thing that is very important, and you probably know this as well as I do, and this is something I would do different this time. You don't know what you don't know, so don't do it alone. Even if you're an entrepreneur and you start this up, do it with somebody. Have a partner that believes in your solution and your mission. Because I feel you need somebody to bounce things off. Sometimes you're down, sometimes you're up. You need that partnership. So it's important not to do it alone because there's a lot of aspects of building, specifically a medical device business or a health care business. You can't do it alone. And then line yourself up with good advisors. Expand your network to people that you can trust and ask. I think that's one of the most important parts. If you're an introvert and you can't talk to people, I don't think you can do it because you have to network. You got to talk to people and have people support you. And then specifically within the startup business, at some point you have to raise some funds. And honestly, for me, that was a little hard because I was born and raised in Switzerland. And when you're born and raised in Switzerland, you learn that you never borrow a dollar and then all of a sudden you have to go and, you know, fundraise for millions of dollars and you have to be able to do it. And without a network, it's not possible.
John Shufeldt:
Looking back at it, was that the most difficult challenge for you was asking for money?
Dom Messerli:
It's just mentally, that was a hard part to get to that point, that it is okay to go and look for partners for investments. I was lucky and very positively surprised that we did our first fundraise right before pandemic into the pandemic, and it was a lot easier than I thought it would be. I was surprised by that.
John Shufeldt:
And then how about this last round? Is that more difficult? Yeah, it was more difficult.
Dom Messerli:
People were always saying, oh, this is a hard time to raise some funds. Yeah, it certainly was more difficult. It was a series A private equity round. And again the most important thing was you have to network. You have to talk to people. That's the only way it works.
John Shufeldt:
What did you think about your valuation? And you don't have to. Was it where you expected it to be, or do you think the economic environment dampened down your expectations?
Dom Messerli:
Well, I wish that it was slightly higher, but not by much. So my vision was that it was slightly higher as very happy where we landed, that I was comfortable with it and the investors were comfortable, I think because most investors are very comfortable with it, maybe we could have asked for a little bit higher. But in that environment, I think it was important to be reasonable and it was much more important to get the funds so that we can continue to progress with the business, then negotiate just. Yeah. Another on the on the valuation.
John Shufeldt:
You know, one of the things I always try to coach founders on is if you come in too high on your valuations, you can pound your chest and high five and do all that sort of thing. But you put undue pressure on yourself because if you have a down quarter or a down year and now you go out and do a down round, you have a lot of angry investors who believed your pitch and now you didn't come through. There's a company now that I'm dealing with that's happened to, and it's going to be challenging for them because now they've got to work themselves out of this rut, and they have a lot of investors who are less than thrilled with their progress and their investment. And everybody knows they're not all unicorns. But when you're pitched one thing and then something 30% less happens, people are like, all right, I commend you. I thought where you came in at was very reasoned and very thoughtful. You could tell you're experienced, you have an MBA and you're an experienced investor.
Dom Messerli:
Thank you.
John Shufeldt:
So final question, what's your biggest take home for founders? Because, I mean, you've lived in the corporate world. You've successfully navigated your. Way out of the corporate world, and now you're gutting it out. As a founder, what's your piece of advice? What's it take?
Dom Messerli:
It's not for everyone, that's for sure. And if you're in it, you will know if it's for you or not, for the people that it's not for. They're out of it soon. For the ones that it's entrepreneurship and starting a company, it's the right thing. You never want anything else. And the really silly thing is it is hard. It's not easy. There's a lot of pressure. You go through a lot of stuff. You work for no salary, do whatever, and then people ask you, so what do you do afterwards? Even if you have a successful exit, what do you do next? Oh, I'm going to do it again. Oh yeah. Yeah. Then you know it's the right thing for you. Yeah.
John Shufeldt:
There's a definitely an addictive quality to it. But it's funny because there's a lot of people who I talk to and they're like, oh yeah, I'm going to do X, y, Z. And I know them. And I'm like, it's not for the faint of heart. It's angst provoking, even in the best circumstances. And there's never the best circumstances. Well, then where can people learn more about you? This has been awesome.
Dom Messerli:
Always happy to actually teach and share my experience is that I had, you know, things where I stumbled so people can always reach out to me. I'm on LinkedIn and I'm domestically at Linux.com. I'm always happy to share stories and help people, especially people that are interested in this field. And I would say, look, if you're on a big corporate and you have an itch to try something new, do it. Do it as soon as you can because you will not regret it. Yeah, well.
John Shufeldt:
You may regret it, but you'll learn a lot in the process of regretting it. Thank you very much. We'll put everything in the show notes and including connections to Dom and some more about him. And thanks for tuning in to Entrepreneurs RX.
Dom Messerli:
Thanks so much, John. It was a pleasure.
John Shufeldt:
Thank you. Thanks for listening to another great edition of Entrepreneur RX. To find out how to start a business and help secure your future, go to John Shufelt, md.com. Thanks for listening.
Sonix has many features that you'd love including generate automated summaries powered by AI, upload many different filetypes, secure transcription and file storage, powerful integrations and APIs, and easily transcribe your Zoom meetings. Try Sonix for free today.
