ClavystBio Conversations: Building Medtech Ventures

They delved into the challenges, pivots and strategic decisions faced by Allay, from its origins as Orchid Medical to its pivot to non-opioid pain management and successful Phase 2B clinical trial results.

Key takeaways from the discussion

• Patient-centricity is Paramount: Make patients the NorthStar of your endeavors.
• Focus on Unmet Needs: Start with the commercial opportunity, and then find the right technology to address it.
• Consider Regulatory and Reimbursement Early on: Think about downstream implications during the development process.
• Tenacity is Key: Listen, learn, and iterate. Embrace feedback from investors and adapt as needed.

TRANSCRIPT

Mike:

I'm Mike Carusi, General partner, Team leader with Lightstone Ventures. Been in the venture business for over 25 years. We currently have 875 million under management. We invest almost entirely in device and therapeutics or drugs.

Koon Kiat:

I'm KK. I'm the VP of Singapore Ops for Allay. My background is mechanical engineering. I started my career in biosensors R&D, where I was working on catheters and drug eluting scans. With a group of my friends, we started Orchid. We were developing our own antimicrobial pouch, which was eventually acquired by Allay.

Yingmin:

My name is Yingmin, I'm Director of MedTech Investments at ClavystBio. So, today's conversation focuses on building and scaling medtech ventures. Allay is really a great example. Clinical stage company that has walked this journey and whose story really showcases the power of strategic partnerships and collaboration across Singapore, the US, and is making significant strides in transforming post-operative pain management.

Let me just go into a bit of storytelling mode to get you the teaser, the trailer, the backstory of Allay. So, in 2017, Lightstone Singapore met with Orchid Medical and assessed that the drug loading technology was really promising. Lightstone found KK knowledgeable and very passionate, and continued to build a strong relationship with him and his team. And that eventually led to a partnership between KK, Lightstone, and The Foundry. Allay Therapeutics pivoted the technology platform into a bioresorbable implant for ultra-sustained delivery of post-operative pain medication, reducing the use of opioids.

So, skip over to today. It's a company of 50 people across Singapore and the US, and Lightstone is joined by global investors like NEA, Arboretum, Vertex, Pavilion, as well as ClavystBio.

Koon Kiat:

When I first met Lightstone Singapore, it's not a fairy tale story yet. It was a “no” initially.

Yingmin:

So, in short, it wasn't love at first sight.

Koon Kiat:

So, after some time, I met Lightstone again at a networking session and then I shared that, okay, I have new data. Do you want to take a look? And at that point, that was our first animal data. That data was really what gets the traction and that got them interested and they brought in Foundry as well and got to pitch to Lightstone and Foundry. That's how it started.

Yingmin:

Mike, your turn. Tell us a little about what really attracted you to the technology and the team.

Mike:

So, when we said “not commercially viable”, there was just some question as to was it really addressing an unmet need. And so, although KK and his team may have had some better technology, we didn't really feel that was a segment or a market that we wanted to go after. With that said, Wen Qi and Ken came back and said, you know, we don't like this application, but we do think the technology is interesting.

We were very impressed with KK and the team. We are very focused on team and people, and KK was somebody that we had confidence in. And in addition, it was not just the interaction and getting to know him, but KK came to us referenced by an individual that we know, and that's important. So, if I can leave a lesson with a lot of entrepreneurs, try and work your networks and try and find a way in.

If we just get cold called, it's really hard. We see over 1,000 deals a year. And if it just comes in over the transom, it doesn't get the time and attention that you might hope for.

So, that was the other piece that caused us to not only take the pitch, but to keep working. Because we felt that KK and his team were credible and a group we should get to know.

Yingmin:

So, really at the get-go, we have to think about what the unmet need is, how large the size of the market is, and how do you think about really bringing it to market, clinical trials being one of them?

Mike:

Well, I think it's a great point. I think you may have an interesting technology, but we always work backwards. So, we start with the commercial opportunity. I'm not going to spend a lot of time on the technology, I'm going to assume it works. So, let's start at the end of commercialization, a medical need, is it going to get utilized? And a lot of times, we will pass on opportunities because we conclude that's not interesting.

And we never have to spend the time on really digging into the science, the engineering, the technology, because it falls out for other reasons. Which also means, when you're coming up with your ideas, and then pitching your ideas, you need to have thought through all of those downstream issues. Because that's actually, at least for Lightstone, where we're going to spend most of our time to begin with. Because ultimately, that's what you have go to believe, that there's a product. And if you don't get convinced by that, then we're not going to fund it.

Koon Kiat:

So, the option to purchase was scheduled for six months. So, the whole idea is after six months, if we find an application that's really viable, then the deal will be done. So, right from the start, Lightstone and Foundry, they gave us six types of drugs to try because when I was pitching, they were asking me, can your technology work with other drugs?

While I was pitching, of course I said yes. But indeed, we knew to some extent we can, but we have not tried them. Fortunately, we were able to show that we can kind of handle and release the drug, all six, within some extent. I mean, the first part is not perfect, but at least we know that we can, we show that we can handle all six of them and to some degree of different kind of control.

So, we are happy with that. And for one of the particular drug is pain drug, the buprenorphine. And we were tasked also to show that we can load in more drugs because I think they were also assessing the application that can be done and pain management for post-operative pain management is one of them.

And for knee replacement, we are probably looking at two weeks of pain or more. So, we really need to load in a huge amount of pain drug for that. So, within that six months, one of our tasks is also to show that we can load in pretty high amount. We were forced to load in more and more. At first, they came and said, oh, no, we like your technology. Can you load in five times more drug? And then, very quickly, they came back and said, can you load in even more, 15, 20 times? Well, we took up the challenge and eventually we showed that we can load in that much drug and yeah, so that got us.

Mike:

Yeah, and we weren't doing that just to mess with KK and the team. In parallel, Foundry was actually assessing the market and the various opportunities and what it would take. And so, as they were working through it, they were like, that's not going to be enough drug.

It's going to take more, right? And so, these requests weren't coming in a vacuum. It was coming because they were assessing the market and the market needs and market requirements and then feeding it back to whether or not KK and his team could do it.

Ying min:

Yeah, so it sounds like it's an iterative process. And the process is very much so, in addition to de-risking technology, it's also de-risking the relationship. It's building trust.

Yeah, so KK, we started off telling this story like it's a courtship. And it sounds like you were courting, but you were also assessing these guys, right? On whether they're going to be great partners for you in the long run. And eventually, you make that pivot with the group and it's a bold move. Can you tell us about how you found that confidence to do so and found that confidence to work with this group to do so?

Koon Kiat:

I mean, I have two options. One option is, of course, to stick to what I'm doing and continue and don't pivot. But then at that point, it's still a long journey. And the fact is, I'll probably be relying on my limited resources and experience to get this through. So at that time, most constantly on top of my mind was how far can I bring this company or how far can I bring this technology?

Also, I was thinking, can I make a success story out of this so that I can showcase to my team that Singapore R&D is actually viable and we can bring the product to the global market. Then I have the second option to surround myself with experienced VCs and serial entrepreneurs that have been there, done there. So Foundry and Lightstone bring to the table a lot of things that I lack, all the experience and network and resources. And their knowledge on the US market, global market is, I think, critical for the success of the company. So at that time, I was excited. I was thinking, oh, if I can work with them, that's like another level of playing field.

Yingmin:

Yeah, a lot of what I'm hearing is about team building, finding that team with the complementary skillset to tackle the challenges ahead.

Mike:

One of the things that resonated with us in KK and his team and what we look for in founders is that they know what they're good at and they know what they don't know. And I think in KK's case, he exemplified that. And as a result, that's a de-risker.

One of the big pieces of this interaction, and even if it's not to this extreme, one of the big components of due diligence, I know it's a pain in the ass, I know we're asking questions, I know we're drilling down on things. Sometimes we know the answer. What we're trying to get a sense for is how do you, as entrepreneurs, answer the question? Do you know the answer? And if you don't know the answer, are you willing to say you don't know the answer? Or are you going to kind of try and BS your way through it? And all of those things are red flags. So again, a lot about this process is trying to get a sense for who we're working with in whatever role, and whether or not they're going to be good partners.

Yingmin:

So a good technology is really just a starting point, and quite often, there's the result of knowing what unmet need is, but beyond that, you have to build out a team with complementary skillset, and it's not just putting the people together, but also making sure that there's a process of building trust and respect.