Q&A with Casey McGlynn, Partner at Wilson Sonsini Goodrich & Rosati; Fogarty Institute Board Member

by | Jul 29, 2018 | Fogarty Innovation, Mentoring | 0 comments

Casey McGlynn’s roots in the medical device industry go back over 40 years. During much of that period he has had the good fortune to observe and work with Tom Fogarty as a surgeon, inventor, company founder, investor and board member. Today Casey is a board member at the Fogarty Institute and a partner of Wilson Sonsini Goodrich & Rosati (WSGR), a leading legal services provider to technology, life sciences and growth enterprises.

A 40-year veteran of WSGR and partner at the firm, Casey represents companies throughout their lifecycle. This involves helping entrepreneurs with company formations, angel and venture financing, licensing, M&A and IPO transactions. He was responsible for forming WSGR’s Life Science Group and today leads one of the largest practices in the country focused on medtech and healthtech companies.

Casey has formed, represented, sold and taken public many of the most important medical device companies started during the last 40 years.

During his career, he has participated in forming and managing several small funds, all of which have been top performers. In 2005, Casey founded Life Science Angels (LSA), an angel organization focused on investing in medtech, healthtech and biotech companies. Since its formation, LSA has invested over $50 million in more than 40 companies which have received an additional $600+ million in follow-on funding from VCs. This background has given him a unique perspective on the needs of the entrepreneur and the issues they face in building successful medtech and healthtech companies.

We had the opportunity to catch up with Casey following the recent WSGR Medical Device Conference, to get his thoughts on the latest trends in the industry, critical issues facing startups today and what early-stage companies must do to succeed in today’s environment.

Q. What topics were generating the most buzz at the recent WSGR Medical Device Conference?

This is the 26th year that WSGR has hosted the conference; it started in 1993 with 35 people and has grown to approximately 800 this year, which really underscores the continuing importance of medical devices. The event starts with a dinner on Sand Hill Road where participants can meet with other medtech and healthtech executives and the investors that fund their companies. It is followed the next day with a conference. The format of the conference has evolved, and today I see it as a three-ring circus, where separate events are taking place simultaneously throughout the day.

The first ring represents the panels we organize for entrepreneurs so they can learn more about important business issues facing venture-backed companies and make connections with industry experts.

The second ring involves our partnership with MedTech Innovator, a nonprofit that identifies important new medtech and healthtech companies and helps them build their businesses. During the conference, they organize investor presentations for VCs and corporate partners interested in funding important new ideas. Throughout the year, early-stage startups are selected by the organization to participate in select conferences and present to venture and corporate investors. Ours is the first event of the year, and we also invite some of the local startups that are not part of the MedTech Innovator program to participate in the investor presentations organized throughout the day.

The third ring represents an opportunity for private meetings between attendees, investors, acquirers and others in the industry – using a cellphone app, participants can find out who is attending the conference, and schedule meetings, search for technologies and manage their schedule before and during the conference. This has been a great way to build relationships.

Drilling down to the panels, we kicked off the event with a session called “How Hospital Buying Practices Impact New Product Adoption.” We wanted to hone in on this topic because hospitals are the ones that buy the majority of the equipment from the medtech industry and yet their role has radically changed over the years. It used to be that you would build a relationship with a doctor who would introduce your product to the hospital. But the role of the physicians and hospitals have changed over the past 25 years; now many of the physicians are employees, and the hospitals have committees that evaluate devices before allowing a device to be used in the hospital. This creates an additional barrier, so it’s critical for early-stage startups to understand how to work with the hospital system.

Another panel covered artificial intelligence (AI), a hot topic and an increasingly important area for medtech startups. Tom Krummel, chairman of the Fogarty Institute, led and curated that panel, which included Fogarty Institute company MedicalCue. This was a really eye-opening conversation on the important role information can play in better treating patients and ultimately saving lives.

We also had a panel that focused on the evolving role of incubators, which included Andrew Cleeland, CEO of the Institute, as a speaker. The conversation was aimed at helping early-stage companies understand how incubators can help them as they benefit from the talent and experience of the organization’s seasoned medtech professionals. Andrew has a great mind for helping entrepreneurs build the right company from the ground up and was a tremendous addition with his experience launching successful companies.

We are also noticing a hive of international activity in China and Japan, so we planned programs that focused on those markets since entrepreneurs aren’t as familiar with them. China and Japan offer a major opportunity, as these countries have money to invest and large markets interested in advanced medical technologies.

Finally, a key area of focus was on the critical challenges medtech companies are facing; for example, some of the discussions dove into funding, which continues to present challenges. And, we find that executives are largely unaware of the danger inherent in the increasing number of sexual harassment allegations. It’s vital to be prepared by training employees and managers, in order to keep the organization safe and in compliance.

Q. What is your view of the state of the medtech industry?

Funding is still very tight for early-stage companies. We used to have a great venture capital industry with early-, mid- and late-stage investors, but everything has moved upstream, and there are now far fewer early-stage investors. This makes it extremely difficult for new startups to find capital, especially if they don’t know the medtech infrastructure.

Today, you need to find the early-stage investors, figure out what they are looking for and position yourself to be funded early. There is also more government and angel funding, which can be difficult to break into. It’s a different world than 10 years ago, and while it’s not getting easier, there is money out there, from sources that include China, Japan, angels, corporate and later-stage venture capital. Success will come from being a “super networker,” that is, by surrounding yourself with a solid circle of experienced people and being very tenacious in terms of figuring out how to find the funding and then using it very wisely.

Q. How did you first become interested in law and life sciences, and what are the most rewarding parts of your job?

After graduating from law school at Santa Clara University, I got a job at WSGR. One of the first companies that I incorporated in 1978 was Advanced Cardiovascular Systems (ACS), which was founded by John Simpson and Ray Williams.

For the next four to five years I worked with them as they built their company and eventually sold it to Eli Lilly, which later spun it out as Guidant Corporation. It took me several years to realize how important that company was for my career. Although I didn’t realize it at the time, ACS was my “sunflower,” with hundreds of seeds: As ACS was sold, the seeds began to find their way into the fertile soil of Silicon Valley, and each one became a new startup that I eventually worked with. Tom Fogarty, John Simpson and Ray Williams were my earliest clients. This helped me realize the value of focusing on a single industry to become a real expert in the medtech business. I subsequently “followed” the founders of these early companies – Tom Fogarty, John Simpson, Ray Wiliams and other entrepreneurs and doctors – as they founded important new medtech startups.

It has been a whirlwind experience that all started with ACS, a company that I had the good fortune of being able to incorporate.

Regarding the most rewarding parts of my job, I really love to hear someone come in with an important new idea. I have seen so many things work and not work, and I am always astounded when a founder comes in with another product idea in an area that has already been explored by others, and that founder is able to take the next important step with a new concept that radically improves patient care.

While medtech may have a lack of money, we definitely don’t have a lack of good ideas. There are so many smart individuals who are thinking of ways to help patients and/or help hospital systems provide less-expensive medicine. It’s incredibly rewarding to watch these entrepreneurs build their businesses, get to market and really make a difference.

Q. When is the right time for startups to think about a legal strategy and engage a firm?

The earlier, the better. If you are a founder, you need to think about protecting your inventions and setting up your company correctly. You really have to think about these steps as important building blocks for your business. If you start with a poor foundation, the founder is usually the one who suffers.

All the firms in Silicon Valley have special arrangements to help companies that can’t afford to pay much, so it makes sense to find an attorney who has a lot of experience in your field and who can help you not only incorporate, but also provide introductions and identify problems, so you are in the best position to go out, raise money and make a success of your new business.

Q. What are some of the critical issues that medical technology startups should pay attention to?

Probably the two most important components are IP and capital. You really need to build a strategy for each and you need to start thinking about these strategies from the very beginning. On the IP side, you want to understand how your invention fits into the existing IP landscape and you want to hire a professional experienced in building patent portfolios in your industry. On the money side, you want your capital to come in logical chunks of money that are tied to achieving important milestones that build your company. You also want to make sure the financing is structured properly to protect both the founder and the investor.

You also need to determine your FDA pathway early on, so you need to find an excellent regulatory and clinical team that can help you get your product to market.

And, today you also need to deal with reimbursement issues. You need to understand from the very beginning if you are developing a product that already has reimbursement in place or if you need a new code, and what that means in terms of raising money and the time it will take to get to a commercial state.

These are all big issues, and the way to tackle them is to network and meet the right experts. And that’s one of the great benefits of the Fogarty Institute — they bring the experts to the companies, which is vital to move the needle for these startups.

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