A primer on building Neurotech — part 2

Harikesh Pushpapathan
Stoic VC
Published in
6 min readDec 12, 2023

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In part 1 we examined product development and defensibility.

In part 2, we look at product delivery and best practice strategies for regulation and reimbursement.

Successful product delivery = Longitudinal (relationship with regulators + evidence generation).

Note: Naturally — much of this discussion can be generalised to Medical Devices.

How can I increase likelihood of regulatory approval?

Short form answer = Close the feedback loop quickly + early.

There’s only one relationship more important than the one you have with your colleagues, family, friends or pets.

It’s the relationship you have with the FDA.

FDA guidance is a lagging indicator for neurotech development. This is due to the slower rate at which new technical knowledge is transmitted from R&D → Industry. For nascent high growth corners such as BCI/precision neuroscience, regulators are having to play catchup to meet evolving applications and biocompatibility risks. This has confined most neurotechnologies to the lab or at best — single patient trials.

e.g Synchron published pre clinical trials in 2016. Guidance for implantable brain computer interfaces was issued five years later in 2021.

It’s thus important to understand the maturity of your invention and its position in what I coin the conviction continuum (illustrated above). The goal for inventors with new technical knowledge or applications of it, is to help propagate this continuum as fast as possible. This means bringing conviction to not only customers and insurers, but importantly to the regulators. As gatekeepers to the market, it is critical to establish early, effective and ongoing engagement with these reg. bodies. i.e CDRH.

  1. Early Engagement

Avoiding meeting with regulators early on is kicking the can down the road — especially for higher risk Neurotech. The pre-submission (Q-sub) program provides an upstream touchpoint with the FDA at little to no cost.

This can provide insight into study risk, necessary evidence generation, endpoints for product development and trial design i.e opportunities for non-clinical testing without the need for a finalised device.

2. Effective Engagement

Pre sub meetings are exercises in truth seeking. Thoughtfully engineered questions will move you closer to truth and lead to actionable insights. My rule of thumb is, lean into closed-ended questions. The FDA aren’t creative( nor meant to be).

e.g

Open ended: Can Neurosync be used for the De Novo pathway as per FDA guidelines?

Closed ended: Upon executing a 510k search, our team found no predicates for Neurosync. Our product is made of low-risk , industry-standard materials such as carbon nanotubes and uses alginate hydrogel. We have met necessary guidance on biocompatibility. Given the aforementioned, does the FDA agree that a De Novo submission is the best regulatory route?

3. Ongoing engagement

There is no official limit to pre sub meetings, but with a sizeable sunk cost at hand, a follow up meeting (even informational) just might be worth the hassle. Use this opportunity to build a working relationship with the FDA.

Building your regulatory muscle, means eventually building in-house expertise. In the beginning, it’s acceptable to have so called “advisors” or consultants laying the guardrails. But contracting is definitely not a long term strategy to tackle regulatory affairs. Consultants can intentionally drag out the process and wring you dry. Therefore use these consultants in the beginning to not just outsource work but make you smarter over time.

How to optimise G2M motion for reimbursement?

For most Neurotech startups, crossing the chasm and reaching critical mass means securing reimbursement. Whilst this is evaluated post-approval, getting the FDA nod has little to no correlation with successful insurance coverage.

Providers are constantly being pitched solutions that hold the promise of saving them fortunes. As a result, more healthcare buyers are expecting greater longitudinal evidence before engaging with payers.

For founders, this means building a dense data registry from the outset of your business. Your G2M motion should therefore be designed to address the two key criterion Health Technology Assessment (HTA) bodies are looking for when advising these payers: Comparative therapeutic benefit and economic benefit.

Building evidence of comparative therapeutic benefit.

Demonstration of superior benefit against the SOC (Standard of Care) doesn’t come from outreach conversations with buyers, it comes from actual use. But this isn’t to say you shouldn’t leverage existing literature of comparable inventions and successful clinical data.

For lower risk neurotech, an increasingly popular strategy is to combine the benefits of typical D2C and clinical go to market motions. Software plays like training programs or non-invasive devices should look to engage with the end user as early as possible. This can allow for faster product iteration and customer acquisition. Test prototype with a select number of users and understand the design elements that might optimise for compliance and UI/UX. This might even help you map out key endpoints for your feasibility studies.

For higher risk neurotech e.g Class III devices or technologies that are invasive, the barriers to user-testing are much greater. You’ll not only require Institutional Review Board (IRB) approval, but Investigational Device Exemption (IDE) to run any kind of in human trial. Clinical trial design is therefore even more critical here to ensure the most appropriate endpoints and comparators are selected.

Building evidence of economic benefit.

Demonstration of economic benefit falls under three buckets:

Cost effectiveness (CE), cost benefit (CB) and cost utility (CU).

CE = Cost per unit of derived physiological or behavioural benefit

CB = Cost per unit of derived productivity + financial gains.

CU = Cost per unit of derived quality-adjust life years.

Whilst randomised studies and post-market data will be the most reliable determinant of economic benefit, start with the lower hanging fruit. Leverage existing meta analyses of relevant or comparable indications which demonstrate economic burden. In addition, observational studies can be a useful approach to understanding the economic and real world outcomes for your Neurotech — as opposed to ‘ideal’ in RCT’s. These studies are designed to investigate the SOC — risk factors, health outcomes and importantly the direct, indirect costs implicated by the target indication. Observational studies are generally much cheaper than RCTs as they don’t require randomization of patients and intervention.

If your invention is eligible for reimbursement, that is your north star. The best Neurotech founders invest in their reimbursement strategy from Day 1 — thats what I’ve observed in the market. Remember, the prescence of a billing code doesn’t negate the need for evidence generation. Your invention may be one of 50 providers/payers are tossing up…

Building livewired therapies.

David Eagelman’s concept of livewiring is the reason Neurotechnologies exist in the first place. They seek to answer the question:

Why do we still build hardwired therapies to treat livewired conditions?

Hardwired approaches such as pharmacotherapy are trusted because they have been proven. But on their own, they are rate limiting — especially when targeting more complex physiologies such as the CNS. Tolerance, narrow therapeutic windows and inter-patient variability are all downstream proof points. Personalised dosing regiments and combination therapy may yield short term wins, but not in the long term.

Whilst trust is yet to be gained, the livewired approach should become the steady state for treatment of psychiatric and neurological conditions. That is, infotropic systems that can self configure overtime for optimal therapeutic response.

To move closer to this ideal, we must first gain trust from the market. As illustrated in this two-part series, this process requires a great deal of persistence and pragmatism.

As a Neurotech founder, it therefore may seem trivial to even attempt to build out a slow-moving industry, riddled with regulators trying to ‘game the system’ in their favoor.

But if you can figure out that game, the potential externalities are enormous.

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