Episode: 205 - Greg Lambrecht on How a Spinal Implant Prevents Repeat Back Surgery

A discectomy can feel like instant relief until the pain comes back, and the “small” hole in the disc turns into a repeat surgery, degeneration, and lost mobility. Joining the podcast is Greg Lambrecht, founder and executive director of Intrinsic Therapeutics, with host Geoff Pardo to unpack why recurrent lumbar disc herniation is still so common, what surgeons and patients often don’t see downstream, and how his team built Barricaid to address the problem at its source: the annular defect. They also discuss the engineering logic of a bone-anchored barrier and why early “optimal” designs failed inside a body that’s anything but gentle, as well as CMS versus private payer incentives and why trial protocols should be negotiated with reimbursement stakeholders early. 

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Intrinsic Therapeutics Links:
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Transcript

Welcome And Guest Introduction

Geoff Pardo 0:03

Welcome to the MedTech Talk Podcast. This is your host, Geoff Bardo, and it's my distinct pleasure to welcome Greg Lambrecht, the founder and executive director of Intrinsic Therapeutics, a company which is changing the way we do discussing therapy tour. And in addition, the founder and chairman of Coravin, which is one of the most innovative wine accessible inventors over the past 20 years. Greg is one of the brightest minds in our place and someone I've learned a lot from over the years, and I look forward to more people discussing not only on his in his journey, but also what he's learned from his entrepreneurial experiences and some of the lessons which could be particularly impactful for our medtech industry. Greg, welcome to the podcast.

Greg Lambrecht 0:45

Thank you, Geoff. Thank you for the kind words. And sorry about the city noises of London, which you'll hear in the background.

Growing Up Between Manhattan And SoCal

Geoff Pardo 0:51

Yeah, here a global traveler. And I miss the days when we were interacting a lot more, actually. We were used to see each other in the halls of the spinal conventions, and it's been a long journey for you, but one which is, I think, really gaining momentum. But before we get to that, you know, I always love to hear about people's backgrounds, what kind of sparked their interest from an early age, even in entrepreneurship and medicine, science, innovation. So maybe we start there. What what what's your background? How did you grow up? What what triggered some of your interests?

Greg Lambrecht 1:26

Yeah, it's so I have two wonderful parents, one still still with us. My father and mother met in New York City, so I was born in Manhattan. I was raised there until I was 11 years old. So I couldn't tell you all the best bars to go to because it was but it was an extraordinary experience being a young person in Manhattan. You know, my we would instead of playing soccer and and other things outside, you would go to museums. So my my youth was filled with trips to the Met and the Museum of Natural History and really a wonderful educational experience as a kid. My parents divorced and and we moved out to Southern California, my mother and my brother and I. So I went to Newport Beach, California, just about the exact opposite of downtown Manhattan in the early 1980s and had a wonderful high school career out there, learning to surf and drive and and spend time on the beach. So it was a completely different experience.

Greg Lambrecht 3:36

years.

Geoff Pardo 3:36

Yeah, that's a that's amazing. And I and I love these conversations because I actually hadn't I didn't know that about you. The one that you could surf, that's pretty good. Yeah, yeah, not not so much anymore. It's not a big thing in Boston. Yeah, right, exactly. So so then so to take us through sort of your early experiences, maybe after college, and how you really started to channel, you know, some of these interests into you know more, you know, the tangible work experiences and ultimately the inventions.

Greg Lambrecht 4:09

Yeah, I was I was always a creator of things. I loved being in a machine shop, I loved shopping in high school, I loved the machine shops at MIT. So I went went to MIT for undergraduate and graduate school. My undergraduate work was in plasma physics, and I took my grandfather's first set of advice, energy. And so I was fascinated by fusion power and the potential that it held. And we'd just been through the sort of the first Iran struggles and and the oil scare of the 70s, and so I thought, you know, there has to be a better source of power, and and I was intrigued by the beauty of recreating the sun on the planet. And so I went to work in Japan, had a brief career in Japan in plasma physics, working on an experimental fusion reactor design, and realized that it was never going to be financially viable. It might actually technically work, but it'll never be cheaper than pulling black stuff out of the ground or sun from the sky. And so I was like, okay, well, this is not the career I thought it was going to be. And I went back to Hyde in graduate school at MIT again and and went after the second piece of advice he gave, which was medicine. And I was in grad school and was interested in business because fusion power was one of its fundamental flaws, but it wasn't economically viable. They didn't teach much business to physicists when I was an undergrad. So I wound up in the in the business school for an important series of classes, and I worked on a product for Johnson ⁇ Johnson and the protective peripheral IV catheter way back when. And was fascinated by the fact that you could create something out of a couple of pieces of metal and plastic and and it could be such a success.

Greg Lambrecht 5:47

M y luckiest day was when I wandered into the MIT career office and there was a job advertisement from Pfizer and one Josh MacAuer looking to hire somebody to invent new medical devices for Pfizer back in the day when it had a hospital technology group. And I was lucky enough to interview with Josh and get hired into Pfizer. And we were, you know, he won, he believed that that invention could be scheduled and that we could create a program where we would target a market and in three months we would have developed six to ten new important medical devices for whatever that market was. And I was lucky both to be hired by him and that he was right. And and so he started me on my invention career in medicine and has been part of my career in life ever since. He's a close friend and and on the board at Coravan and was part of intrinsic for quite a while, my spine company. So yeah, it's that I'd always made things, but he taught me how to identify important unmet needs that represented not only significant clinical problems that affected a lot of people's lives with real severity, where if you could solve it, it would be not only important medically, but also important financially. And so that that process has sort of governed my life ever since.

Geoff Pardo 7:10

And yeah, and I bet a lot of listeners forget that Pfizer was in the device industry in back then. And what what were some of the early products you you worked on?

The Pfizer Invention Playbook

Greg Lambrecht 7:20

Yeah, well, Josh and I went after big swings when we were at Pfizer. So they had Valilab, the electrosurgical surgical company at Schneider, which is cardiology, and they had AMS Urology Company that we worked with, and then Hamedica, importantly, orthopedics, hips, knees, trauma. Josh and I developed a lot of different technologies, including a you know, vascular access device for high flow applications like hemodialysis. That's another place where I got very good at needles, which was important for the Corbin story. But it was really after Josh left to start his own companies when I was given control of the of the whole fresh tech process, this invention process, that I was able to sort of dumb it down for the large company. I mean, they we kept going after, you know, new indications with new devices, so PMA products. And I realized that Pfizer, despite its resources, was interested in quick hits. And so it's when I had the opportunity to run an invention program for Pfizer for Hal Medica that we really started to create products that that had a meaningful impact. So we developed new artificial hips for the Japanese market, artificial knees, new fracture fixation devices, some of which I'm very, very proud of that still affect, you know, well over 100,000 people every year. So we've we launched, I think, six orthopedic and trauma-related devices in the last two years of my of my work at Pfizer.

Geoff Pardo 8:52

Wow. And so so then take us through, did did you go from there to really conceiving of of the, and we'll get into the exact technology and intrinsic, but is is that how you started thinking about spine and discectomy?

Greg Lambrecht 9:07

Yeah, you know, I was my last my last year at Pfizer, I was, you know, involved in selling off the medical device division. So I knew I didn't want to stay in pharmaceuticals. I like, I love devices. And and so I think we we sold off the the Homedica business to Stryker, and they were great and and sort of gave me a lot of control of the of the Asia Pacific markets and Japan in particular. But I always had this desire to start my own businesses, and so I took the fresh tech process, this invention process, and applied it to fields I hadn't worked in. And my mother had just been through her third spine surgery, and she'd had a discectomy in her lower back and for discarniation. She then had another dyscectomy at another level, both wound up failing by recurrence, and so she had two more operations, then degenerative collapse and curvature, severe low back pain, opiate dependency, disability. Uh, it really changed the trajectory of her life. And so that that screamed unmet need. And so in 1999 and 2000, I left looking to see if I could solve that problem. I think that's when we met. Way back when.

A Family Story Sparks Intrinsic

Geoff Pardo 10:17

Way back when, yeah. The founding investor was Spray, right? Which joined. So got to be a part of at least some of those ear early ish board meetings. But yeah, so maybe this is a good chance to talk more about intrinsic because it has been, you know, a labor of love for you a long, a long journey, lots of challenges. But you're coming out the other side of it. So may maybe give some more background to the intrinsic technology, a bit of the journey and kind of where things stand today. And of course, I have lots of questions after that.

Barricade Explained With A Tire Patch

Greg Lambrecht 10:52

Yeah, sure. I summarizing 20 some odd years in in a couple of minutes. You know, I one thing about entrepreneurship is that it's something my father said, you never win if you give up. And and so I, you know, I really it's a testament to the team that nobody ever gave up. The clinical need was still there. There are people suffering, hundreds of thousands of people in the United States suffering every year. So the solution needs to exist. And so that really drove us. The barricade technology, that's the name of our system, barricade is a technology that essentially closes the hole definitively at the end of a lumbar discectomy. The fundamental flaw with lumbar disquectomy is that you know the problem ultimately originates from a hole in the outer structure of the disc, the annulus fibrosis. So when the disc ruptures, this outer structure tears, and the nucleus on the inside comes out and compresses the dura, the nerve roots behind the disc, causing severe radiating pain, loss of motor function, sciatica. It's like I've had it. It's like lightning going down your leg. It certainly grabs your attention, can even stop you from breathing. It can hurt so badly. And so the most people get better without surgery, but about 450,000 people every year get surgery every year. And they, so they they go down, they make a small incision in your back, a little bit under an inch, and they they remove the offending fragment of nucleus that came out. The problem has been that that the hole is still there and that the disc is under such enormous pressure, , up to 10 times your tire pressure, that it has no innate real healing capacity. It doesn't have a blood supply directly to it. It's an avascular structure.

Hard Design Lessons Before It Worked

Greg Lambrecht 12:26

And so healing is disorganized and it certainly can't hold back the 23 atmospheres the disc can make. And so barricade is a is a tire patch, essentially. It's a bone-anchored barrier, flexible barrier that's tacked into either one of the neighboring vertebral bodies with a titanium bone anchor that holds this barrier in place to resist the pressures of the disc and block the hole to stop the nucleus from coming out that same hole again. And so that that's the simple concept of it. It was this is it was not an easy problem to solve. And there are many reasons why that's true. And you know, our company went through all the phases. We we tried three different device designs over the course of eight years trying to block this hole in all of its various forms, and and the the extent of the pathology mattered, and the size of the hole mattered, and you know, the disk height and the flexibility mattered, all these factors destroyed our first two devices that we tried that were not anchored to bone. And then in 2008, so it was three years until our first inhuman, two years of struggle with that first inhuman device to in clinical trials to try to get it to work, giving up, going to another device design, another two years in clinical trials, struggling to get that to work, and then finally coming up with the current design, which really hasn't changed much since its first implantation. So that was the first phase. The second phase is clinical proof. And so first in human studies, 2008, two of them, 75 patients, and we took a a one in four rate of reherniation and reoperation and and dropped it down to about three percent. So it was a big improvement and big enough to make a gamble on a randomized clinical trial. And so we needed a randomized prospective study, not only for regulatory but for insurance. And so we initiated our RCT in December of 2010. Four years to enroll 554 patients, randomized equally intraoperatively after the discectomy was done to either receive the device or not. Three years of follow-up for the FDA, two years of negotiation with the FDA. So final approval in 2019, real launch in 2020. We got approval of the commercial device three days before the pandemic hit. So another, then there's the commercial phase. So there's the there's the regulatory approval phase, then the commercial phase, and so we are at the end of our our sort of reimbursement struggles. The light is finally shining upon us, which is great. So CMS issued a new payment code for our device very early on due to some smart advice that I received before we started the RCT. So we we had we had CMS payment, but the vast majority of our patients are under the age of 65, so private insurance. And and so CMS payment in 2020, and you know, we had to get a new CPT code, , which we achieved last year, got rucked over the course of last year, and became live in January of 2026 this year. And Cygna has moved to positive coverage, Anthem is neutral and paying everything, and Blue Cross Blue Shield seems to be next in line. So yes, the the winds have changed in our favor, which has been great, but it's a haul.

Geoff Pardo 16:00

It makes such intuitive sense. I mean, if you you know, for anyone who's about to go through a discectomy, I mean, it's there's very little downside and all the upside you mentioned in terms of pre preventing that whole degenerative cascade that can follow and and all the things that means. As you look back though, on on the history of it, I'm sure there's a ton of lessons, a ton of things that you would, you know, you know, you might consider differently or do differently, and not to mention, you know, just thoughts on our regulatory process and how we pay for things in this country. But I'm curious as you think about it from, you know, if you talk to other entrepreneurs and you you talk about this whole journey you've been on, what what are there a handful of things that you would advise, like other entrepreneurs on how to do things and how to, you know, make it happen, maybe in a you know quicker way?

Greg Lambrecht 16:56

Absolutely. So I'll go on the on the clinical technical side because we went through eight years of doing the wrong thing before we got to the right thing. If you have a brand new idea for brand new field of medicine or opening up a new opportunity, start with the simplest, most rugged possible solution, not this sort of idealized optimal solution. The thing that that is the simplest, most rugged expression of your solution. The body is a violent place that is extraordinarily varied in anatomy and in pathology. And so I've seen certainly intrinsic, our company, and others that had brilliant ideas go after the optimal, this sort of theoretical optimal. That is call that your second generation device. If Gen 1 works, if the rugged simple works, then start experimenting with with the this theoretical optimal. Because there are so many surprises along the way. If you've got a great core idea, close the hole in the annulus fibrosis, do it in the most secure way possible. That the the safest, simplest way that has the has a decent chance of working. Because you might be surprised by how effective it actually is. Here we had this up this idea of optimal, like we were gonna have a self-expanding stent that covered the entire posterior part of the annulus, and it was gonna be, you know, nitinol and covered in Gore-Tex. And you know, it it it was optimal, sure. It absolutely eliminated the risk of recurrent disc, but it was also nearly impossible to implant and really dependent upon the anatomy and the pathology.

Greg Lambrecht 18:36

So just going for simple early is the best way to go when you're working on something brand new. That's the clinical advice I have. The the thing that I would do differently from a trial perspective, you know, we in the United States and actually around the world, because we've been commercial in Europe as well as in Korea and Australia, the regulatory approval body and the reimbursement bodies not only don't talk to each other, they don't respect each other. And so many people design their clinical trials with the regulatory agencies without considering designing them with the payment agencies. And I've I've learned the hard lesson that an FDA approval or a CE mark or an Australian approval is the approval to sell your device for nothing. Yeah. Right. And so it is, I was very lucky early on. There was a really smart guy who said who said to me, you know, in the end you're gonna need CMS to issue a payment code for this thing. Why don't you take this protocol you're negotiating with the FDA and negotiate it with CMS first? And then whenever they tell you, if it's different from what the FDA wants, fight like hell for what they what CMS wants. That was spectacular advice. And in our in our case, the one change that it led to was you know, the CMS was saying, why does the FDA always cut off enrollment at the age of 65 and then for spine studies? And then the companies come to us asking for reimbursement, and you haven't studied our patient population. Why would we pay you? So, you know, we made a very simple change. We we had 18 to 65 for our age group, and and we went 18 to 75 and and let CMS know we were doing it for them, and then fought with FDA tooth and nail over that change. But we enrolled, you know, 10% of our population, 15% of our population over the age of 65 as a result. And that led to CMS's approval. They also really appreciated the fact that we gave them our protocol to edit, and and when our device was found superior, they were like, okay, here you go. That was great.

Greg Lambrecht 20:46

The mistake I made was I should have done the same thing with private insurance. There is an opportunity to interface with the medical directors of private insurance companies, because we do it now to talk to them about our data. And I don't know that they would have changed our clinical trial protocol in any meaningful way, but involving them in the process early, , even though the people are likely to change over the course of the, you know, six, seven years you do a PMA or eight, at least their input was there and their stamp is on the on the protocol. It's it's easy as a as an entrepreneur in medicine to get lost in the arguments and negotiations with the FDA. It's important to remember that at the end the goal is to make sure the device is paid for. So I think if you're doing something new, that's the advice I'd give. My my strong advice would be find a 510K with an existing paying code.

Geoff Pardo 21:40

Yeah. Right. Yeah, for sure. That is, I think, where a lot of investors certainly gravitate to. Yeah. Because it's hard. It is hard. You took on one of the biggest challenges spying and and getting something both approved for, given the length of the follow up, and then paid for that's truly novel and spying. I mean, there's not been a lot of really rigorous studies in spine. You probably have among the most evidence and rigor of any spinal implant, I would wager.

Greg Lambrecht 22:10

Yeah, I think we do. I credit Pfizer for that. There's one thing that you did come out of Pfizer with, which is a a healthy respect for good science from a from a randomized trials perspective perspective. And, you know, they also had Schneider Cardiology Company that I just work with. You know, you in cardiology, you do you do clinical trials at the drop of a hat. Right. That's just the way that that business rolls. And it was one of the things that I recognized when I worked in orthopedics how little data there was to support anything. And how most decisions are made on, you know, gestalt. Right.

Geoff Pardo 22:46

Yeah.

Greg Lambrecht 22:46

And most indications are off label one way or the other. And so I made a concerted effort, and maybe that's sort of pigheaded on my part, but made a concerted effort to be counterculture from a data perspective. I wanted to make sure that that, you know, I it was my mother that I saw I found the company for. You know, I wanted, I wanted to make sure that when Barricaid was launched and was used broadly, that it was going to be safer than discectomy alone. You know, that we were gonna not just reduce reherniation, but all cause reop and make people's lives better, get them back to work faster.

Geoff Pardo 23:21

You know, I wanted it to work. You you bring up a an important point here, which is kind of the patient experience and then the surgeon experience. Because from a patient experience, they're the ones that experience the reherniation and everything that follows from that. The surgeons, at least in my experience, they do the procedure. It looks great, you know, procedurally. They maybe do a follow-up with the patient, but they often don't see that patient again. If they reherniate, maybe that patient may go to another surgeon. So they don't really appreciate kind of the downstream effects of the procedure that they did. I mean, I'm sure they do, and to some degree, so I'm over probably overemphasizing that. But but in in many cases, I don't think they feel like, oh, I did a, you know, a poor discectomy, or I could have done it better with this device. How hard it has it been to change the surgical mindset given that backdrop?

Greg Lambrecht 24:18

It it yeah, there's the only person in this whole process that doesn't have a conflict of interest is the patient. Right? There's, you know, it's actually fine, not that this is a a big driver, but it's actually financially more lucrative to reoperate a patient.

Geoff Pardo 24:33

Right?

Convincing Surgeons Without Blame

Greg Lambrecht 24:33

The surgeons paid for the primary operation and then they're paid for the reoperation. And you know, as long as global payments don't extend a window out too far. So, you know, there's that. There is the fact that that patients go elsewhere. You know, if they if you do the dyscectomy and then they felt better and then all of a sudden they felt worse, even worse than they did before their dyscectomy, they the patient tends to blame you as a surgeon and and go find somebody else. And it, you know, I've had some funny conversations with surgeons. I was like, you know, do you do you do you appreciate a recurrence rate or a recurrence risk in your in your hands? And it really comes down to how you have this discussion. I'll get to the right way of having it. This is this is the wrong way of having it. You know, I would say, do you appreciate the the recurrence risk that that your patients undergo and or at risk of? And and they'll always say, no, no, no, in my hands, I mean, wow, I can't think of the last reherniation I had. Maybe, maybe one a year. I just had this conversation with a surgeon, maybe one a year, you know. I probably do 150 discectomies, so I would say, oh, it's a fraction of a percent. And then I always say, Do you operate on your neighbor surgeons' recurrent disc herniations? Oh, yeah, all the time. Right? Uh I don't have reherniations, but my oh, the guy down the street, he has them all the time. And like, you know, you you you hope that they come to recognize some surgeons are great, right? Some surgeons are like, yeah, of course, we have r ecurrence.

Greg Lambrecht 25:53

And I've learned to have the question ask the question a different way. When I when my team goes into the operating or goes into a the office with a surgeon, they'll say, you know, who is it that walks in your door that you know is gonna be a high recurrence risk? And there are those people, there must be those people. Who is it that when they when they come in your door, you're like, oh no, I'm gonna do this discussion. This is, but this is a this is a high recurrence risk. And they all have some sort of preconceived notion of who that patient is. And you start from there. There's some great research that shows that not everybody is at the same risk. And people that are at the highest risk are the people with the biggest hole, right? The larger the hole in the tire, the higher the risk that air is going to come out in the disk sense. And it sort of logically makes sense. And if they have a preserved disk height, if they still have nucleus left, you know, they and they have a big hole, they're at a really high risk. And so, you know, what I'll normally do in with surgeons to walk them there is to say, whatever group they've said, normally it's young women, obese women, obese somebody, football player, sports, heavy labor, whatever it is, I'll say yes. And there's great research that shows that patients with a large hole in their disc, no matter their age, no matter their profession, are just at a higher risk. And nine times out of ten, you get somebody nodding.

Geoff Pardo 27:08

Yeah.

Greg Lambrecht 27:09

You also want to just put it in their head so that when they have their next recurrence, they're like, hmm, there was that barricade thing.

Geoff Pardo 27:15

Yeah. Yeah. And I mean, this is where data and data in spine is so important. The fact that you ran a randomized trial. You certainly didn't go after, you know, sort of fly-by-night spine surgeons. You went after, you know, really high quality spine surgeons, and and the data, you know, is pretty incontrovertible.

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Fixing Regulation By Defining Safety

Geoff Pardo 27:53

I'm curious, you know, as you reflect more as a from an industry perspective on your regulatory experience and now the reimbursement experience. And let's start with the regulatory. I mean, three-year follow-up sounds really long. I mean, , there's few devices that have to undergo that length of follow-up, but I'm curious if there are things from a regulatory standpoint that you feel like could really we should be thinking about in in terms of expediting the pathway to you without compromising safety or efficacy to market for patients.

Greg Lambrecht 28:26

Yeah, it's I think about this a lot because I, you know, we we got we had regulatory approval in the European Union in Korea and in Australia long before we had it in the United States. And the Koreans and Australians and the Europeans benefited from barricade earlier as a result. In the end, I'd probably need a randomized clinical trial of the size that it was just to battle with the private insurance companies. In the end, that study needed to get done. The the follow-up length was was ridiculous. That, you know, we had to extend an additional year was ridiculous. There's always here's my thought. The FDA is not celebrated for approving something great. They are only derided for approving something they shouldn't have. They're there there's no upside to benefit and there's enormous downside to new risk. There they have this risk-benefit ratio that they pay lip service to, right? They are required by law and statute to evaluate risk versus benefit. And if the benefit outweighs the risk, then they should approve. And if the evidence shows, and while that is written into law, their risk aversion is so enormous that they they struggle mightily with approving rational studies and and and even agreeing with themselves when that study is shown.

Greg Lambrecht 29:55

I mean, Barricaid was shown to be superior to discectomy alone from three months now out through five years, ten-year data is about to be published. And you know, they they should have had a mechanism of approving us earlier and faster. I think there's all sorts of fixes that are possible. But you know, I for the US defining safety in a clear way, right? Because the because paranoia wins otherwise. I remember one of the people on our FDA panel saying, Well, you need 10-year data to prove that this is still safe. Right. Like you know, if if 10-year data were required for anything, we would have nothing on the market. Right. Right. And yet, you know, that's that sounds rational in certain circumstances, but it has nothing to do with actually advancing therapy. So, you know, I think for a for a field of medicine to be able to define data from a safety perspective, you know, if you're gonna be doing surgery in the lumbar spine, you need to demonstrate X, right, from a safety perspective, X number of years at a minimum or a maximum. That would be wonderful. Efficacy is going to be dependent upon the indication, but the safety part needs a line in the sand. So because you know, the the the the it's interesting, the assumption is that the current procedure is perfect, yeah. Yeah, and that anything new just generates new risk.

Greg Lambrecht 31:20

And here we had data that showed that the barricade had an overall dramatically reduced rate of reoperation, all cost relative to the existing procedure. And even that was not considered enough to overwhelm their risk, their fear of theoretical concerns that had not raised their head, you know, that that have never been a reality. That that seems like a flaw. And then there are all sorts of things. The appeals process goes through the FDA. So if you're to appeal, you're appealing to the organization that's rejecting you. That doesn't make any sense. I think defining a safety line is one thing that would help them. Defining what safety is rigidly, so at least it's predictable, would be great. Having an approval issuance with an ability to withdraw approval might give them the sense that they have the power to control safety if there's something untoward that's discovered once you've launched. I'd be comfortable with that. You know, one of the things that I love about the the US system is that there is a forced mechanism of reporting adverse events post-approval through the mod database. I mean, if I think if you've got continued reporting requirements to the FDA, that should be allowed for approval, you know, measuring your safety once you're actually out in the field. It's a little bit like the European used European Union used to used to do. They would audit you every year.

Geoff Pardo 32:37

Yeah. And they had the right to pull. This is really interesting because it's indexing more towards safety. I mean, the the tragedy of what we have to go through right now is you you go through safety efficacy studies, , you get approval, and then you if you're novel and you don't fit under the existing reimbursement, you know, coding coverage and payment, then you have to go through another set of studies or, you know, another many, many years to so you in effect have two different approval processes that you have to go through. And I think what I hear you saying is index more on the safety side, so we're not putting stuff out there that's it's gonna harm patients, and allow companies to build the efficacy data post in a post-market situation, which they're gonna have to do anyhow to convince the payers to pay for it.

Greg Lambrecht 33:24

Is that that is absolutely true? And so thank you for summarizing my meandering. I but it's because it's that is what the EU did ultimately. The regulatory body was responsible to f for defining safety, the payers are responsible for defining efficacy. The EU has now changed, unfortunately. But you know, the the FDA should make sure that whatever is out there is safe. It would still require two years in a in a spinal implant for safety to be well defined. I think that's a a good endpoint. Everything that's almost everything that's gonna happen is gonna happen in two years. But the efficacy side of it, when the FDA defines efficacy, it frequently does not align with what the insurers define efficacy as. It's interesting. The the FDA, you know, we had an eight-point composite endpoint involving all sorts of factors, some of them, you know, asymptomatic radiographic outcomes were were almost equally as important as whether or not somebody was reoperated, right?

Greg Lambrecht 34:22

In the FDA's endpoint. And from an insurance standpoint, all they care about is reoperation rate. That's it. How early does it happen? How often does it happen? And how is how expensive is reoperation? Yeah, you know, all cause. And and that's rational from their perspective, but it wasn't the FDA's point of view. And so, you know, I think if I had negotiated with the insurance companies, maybe I would have been able to sell a reopt endpoint to the FDA, but maybe not, right? So I'd I'd very I like in the end, the constraint on the broad application of a new medical device is the payer. Yeah, that they are the ones. The FDA is always worried they'll give FDA approval and all of a sudden this thing's gonna be everywhere. No, not if it needs a new code. Yeah, , it's gonna take a while, and you're gonna have to prove to societies and insurance companies that you are worth paying for. And so it is a risk of multiple new clinical trials. Luckily, we have the one that proves both.

Why US Payment Waste Drives Costs

Geoff Pardo 35:21

Yes. Which leads us to another interesting topic, and particular you have particular insight here because of how global you you've been for, you know, really throughout your career, and you've seen how things are paid for in different countries and and now wrestling with the US system. And I know you're a capitalist at heart as well, so but but how would you you know the problems in our system are so many? I mean, there's so many, you know, conflict of interest, as you pointed out, and so much cost that is you're probably not well directed. So I'm curious as you reflect upon selling in different countries and and and now the experience in the US, are what are the things we should be thinking about or or maybe considering to help streamline this so that patients are getting access to the best care? And you know, we spend 18, 19% of our GDP on healthcare. I mean 50%, maybe even 100% more than other well-developed countries. So there's a clear problem here. Uh so it can't be just, you know, I think there's concerns on both sides, but how would you think about addressing this? Because I think it's the biggest, one of the biggest issues we face as a medical device industry.

Greg Lambrecht 36:40

It absolutely is. It's not only that we spend one and a half to two times as much as other countries, our efficacy is worse, right? Life expectancy, , general health and well-being, you know, the level of disability, there's almost no excuse at this point. We can't say we're leaders in medicine and then have the life expectancy that we have, no matter what the fentanyl crisis did. I mean, just overall, we don't deliver as well as other countries. So, you know, the the the striking difference between my commercial experience in Europe and Asia Pacific and the United States is the extent of single payer coverage or national coverage, government-related healthcare. You know, the the best systems that I've seen across the world, Australia, Germany, Singapore. Germany's big. It's right, 85 million people. You know, it's it's not a small country. So we can't use the excuse that it's a small European country. It's not nothing. And their healthcare system works with a government payer that everybody has access to and private insurance on top. So, you know, you can opt out of the government insurance and go into private insurance coverage, but if you do that, you can never go back. So nobody chooses, or very few people choose, the fully private side because it means that they've cut themselves out of the government side forever. Uh, so you know, a government system based on a percentage of the tax collections and it being available to everybody equally across state lines.

Greg Lambrecht 38:17

They have 15 states, not 51 like us, 51, 52, is an extremely efficient way of delivering basic health care. And the private insurance on top is a choice by the employed or by the retired. You can pay for additional coverage to be able to select a particular doctor, go to a particular hospital, have a certain type of room, things that are in addition to your basic healthcare. Now, why is that a better system? Right now in the United States, we have 51 different healthcare systems across our country, each state regulated. And that means essentially 51 different health insurance markets and multiple insurance players in most markets. So a physician's office needs to gain prior authorization for a given procedure from, you know, three to four different major insurers that are in their market. And each one of them has a different reject rate, a different requirement rate for each of these prior authorizations. And so they employ staff to fight the prior authorization battle. And then they employ staff to bill appropriately from the physician side. The facility does the same thing. The facility is also fighting for billing on the back end.

Greg Lambrecht 39:36

And as a result, and with the varying insurance policies that are out there, plus the different negotiations between the facility and the physician's offices and the various insurers in each of these markets, we have a lot of headcount that are not delivering health care. They are fighting for prior authorizations and payment. A lot of headcount. When I'm in Germany, I'm in a procedure, they do the procedure, they enter the codes in the operating room of what was done, and the government pays them within a week. There's nobody there. There's somebody handling facility finances, but that's about it. It it eliminates a whole category of overhead in the facility and the in the physician side when you have a national pair that works equally across state lines or largely equally across state lines. I would love it if this, you know, it sounds socialist of me because I am a capitalist, but having sort of health insurance provided by Medicare across the country with the ability to add private insurance on top for people that want to pay for it. I really do believe in that. Just to eliminate the bureaucracy. The one thing you talk to physicians about, you know, what they hate about their jobs, it's dealing with insurance companies.

Geoff Pardo 40:55

Yes. I would say that's a huge cause of burnout. And yeah, I mean, patient dissatisfaction. So it is pervasive. And, you know, I too am, you know, have always sort of hesitated to think about a single payer or single payer with this sort of private insurance layer. But I agree. You see the you see the armies of people in the cost that is dedicated, and you think about how that cost is really not, you know, it's not really improving anything. It's sort of just wasted dollars that could go in so many different more productive directions.

Greg Lambrecht 41:33

Yeah, that's it's not decreasing our healthcare expenditures, right? It's not increasing our efficiency of of healthcare delivery.

Geoff Pardo 41:39

Yeah.

Greg Lambrecht 41:40

And then when you think about it, the the you know, you go all the way to the Swiss direction, which is eliminate eliminate for-profit health insurance. Uh, you know, their their basic argument was who who does who is benefited by the profit margins of a private health insurance company, right? You know, that that's just if you think about a 15% margin for private insurance on a whatever it is, 18% of GDP. Yeah, you know, you you can understand why United Healthcare's stock price is up high, right? But who's that helping?

Geoff Pardo 42:14

Yeah. Yeah. And , you know, unfortunately, the way they make money is to create that spread between the insurance premiums they come in and what they pay out. And so there's a there is that conflict of interest we talked about. And and you know, on top of that, most people are staying with their private insurer for three or four years. So there's not a real incentive to think long term about the long-term health of these, their member population.

Greg Lambrecht 42:41

It was remarkable the negotiation with Barricaid and the Australian government payment system. They asked us for our clinical data. And we gave them our clinical data, and they gave us a reimbursement price that almost rivals the US price. They said, This is how much money you save us over five years. Right. And and I was like, Well, that was rational. Did you pull yourself off the floor? I'm sorry, what did you say? Yeah, it it's it was shocking how clear-headed that was. Now they they've had their struggles too. I don't want to make it sound like it's it's super easy everywhere. And I know that cervical discs, which are a great technology, cervical artificial discs, really struggled in Australia for years to get the appropriate reimbursement for them, but but but ultimately did. So it's, you know, I mean the current process in the United States is you know, get the CMS to pay you a a to develop a code for your procedure, get the societies to back a CPT code, get that CPT code valued. These are all very similar in Germany and Australia, right? You need societal support to issue , in their case, an OPS code, and you need they have a very interesting way of pricing a procedure in Germany that I thought was sort of beautiful. You they have a they have a cost collect they have a group of cost collection hospitals, 300 or so across their country, and your procedure needs to be done in those cost collection hospitals, and the facility needs to essentially pay you without any reimbursement.

Greg Lambrecht 44:15

So the facility has to believe in the value of the procedure so much that they're willing to lose money for two years. And you're essentially that gives enough data to the government for them to be able to calculate the value of this new CPT code or OPS code. And and so it's really a partnership between the procedure technology provider and the facility to absorb this burden of paying for a device without being reimbursed for it, with the knowledge that if they do that for two years, then there will be an appropriate payment code for that device. Talk about a constraint on broad broad use of a new technology, right? They have to lose money for two years to adopt a new technology so that it has a payment code. And trust me, the the physicians won't do that unless they believe it works, right? They it that it's delivering benefit to the patient. It is a it is a fundamental flaw of our private insurance company as well, that that that they, you know, you said three years. I've been hearing a year and a half to two years. Wow. They don't care about adverse events that occur after their coverage window. And and you know, when you say it's one and a half to two years, the patient has a discectomy, let's say at month 14 of their health insurance coverage with this company. So, you know, even if there's a six-month high reherniation rate and your benefit is, let's say six months out, with us we're lucky, it's three months. Uh, so it's not a very strong argument from the insurance company to say that somebody else would be paying for it. But if it's if it goes beyond their window, they're like, I don't care, that's somebody else's problem.

Geoff Pardo 45:57

Yeah. Yeah.

Greg Lambrecht 45:57

That is a broken system.

Staying On After Hiring A CEO

Geoff Pardo 45:59

Right. Exactly. Exactly. I mean, so there's so much in there, you know, the how we think about primary care, diagnostics, you know, all the things that can help prev you know prevent longer-term disease. Yeah. But, you know, the and there's so many th this could be an an episode unto itself. There's a couple other things I wanted to ask you about. One, you know, you've you've you are in the unique position where as founder of intrinsic, you have stayed with the company even when you're you stepped down as a CEO. Yeah. And you know, I think that's remarkable because you're you're you're a very charismatic leader. You're someone who obviously have built a company where people have been extremely loyal to you know over the last 20 years. And I'm curious how how chall you know, how how would you give advice to a founder who with a new CEO coming on board where you're staying with the company? I mean, how do companies sort of adapt to that? Because as a as a director of you know, these companies, you know, the traditional adage is, well, it's a root that's gonna be super difficult because people will look to Greg, not to the new leader. And how do you kind of manage that situation so the new leader is actually in place and able to lead effectively? How have you been able to do that so well?

Greg Lambrecht 47:22

Oh well, I appreciate that the assumption that it was so well. I hope it was or has been. Look, I think it comes from number one, recognizing what I'm good at and what I love to do versus what I felt I had to do. So I realized when I stepped back from being CEO that there were parts of the CEO job I didn't like, and there were parts of it that I loved. And so what I did when Kerry Hagan joined and now Keith Valentine, two really great leaders, was be able to take them aside and say, here are the parts of being a CEO that I loved, here are the parts that I absolutely hated. If you want help with anything, I'm there to help you. My goal is to get this company to be successful. That's the most important thing to me. That's why they are here leading this company is to make this company successful. That's why I want to be here. That's why my BP of RD or RBP of RD wants to be there. The goal is success of the company and treatment of the patient. Our whole goal is to get through the government, the insurance companies, through the hospitals, through the physicians to the patient. And if that's your goal, this is the right place. I am here.

Greg Lambrecht 48:30

These are those, these are the parts of being a CEO I love. If you would like help with those in particular, I'm really happy to help you in any of those. And, you know, and make myself available to them and then say to them, what is it that you want me to do as founder to help this company be successful? I think it's just being open, honest, and and honestly, as founder, inventor, having the slow self-awareness of what it is. CEO sounds like a great title, right? You're you're in control. Finally, you can drive this thing forward and you're gonna get it to the end. And this is the only position from whence I can drive this forward. And that's simply not true. CEO is a role, like CFO, like chief operating officer, like CTO, like it's it is a role that has specific responsibilities. And and I've come to realize that I like and don't like some of those. And if I can find somebody who's who loves the things I don't like and is really good at them, we make a great team and partnership. Uh and so Carrie was that way, and and Keith Valentine now is spectacular at the things that I didn't like to do, and he loves them. Yeah. And so, you know, that's it's finding those people to fill those those roles. CEO is a great role. And I have to admit, I love being a board member, right? But still, as founder, my responsibility is to defend the interests of common.

Coravin And Marketing Behavior Change

Geoff Pardo 49:49

Yeah. Yeah. And I think you said self self-awareness. It's one of the biggest, one of the hardest things I think for us all is to really, you know, be able to reflect and sort of objectively think about what do we do well, what don't we do so well, how would the organization, you know, benefit. So I think that's that's super important. The la last topic I wanted to cover, and again, there's some of these topics I feel like we we need a lot more time. But Coravin is so interesting. I mean, I'd love for you to I'm sure most of the list audience will know about Coravin, but maybe a brief description of Corbin. But what I'm really curious about is it's such a different business than than what you've done on the medical side. Are there anything any things that you've been able to pull either from you know the more consumer-oriented experience of Coravin back to intrinsic or vice versa? I'm just fascinated by by how you've been able to develop two, you know, really important products in vastly different industries, and there must be some kind of cross-pollination that's taking place.

Greg Lambrecht 50:55

Yeah. Yeah, in weird ways. I do spine and wine presentations for physicians to try to talk about the my two, my, my schizophrenic life. So Coravin is a way to drink any amount of wine from any bottle you own whenever you want, without having to think about when you're going to drink from the bottle again. We call it a by the glass system. And our tagline is better by the glass. And , you know, essentially what I came up with using one of the chemotherapy needles, high flow vascular access needles, was a way of pouring wine from a bottle without even opening it, way back in 1999, and then ultimately launched the product in 2013. So I was busy doing medical stuff with intrinsic, and so this was my nights and weekends kind of thing. So it's a simple handheld system that pours wine from a bottle, displacing the wine through the cork using a needle and replacing the wine with an inert gas argon. And then you pull the needle out, the cork reseals, you can put it back on your shelf and drink it again whenever. We've expanded from that simple handheld system to a series of systems who have another still wine product called Pivot.

Greg Lambrecht 51:56

And it we launched Champagne, Coravin Sparkling in 2021, 2022. So we're we're used in over 80 countries, we're used by wineries, restaurants, wine bars, consumers at home, the trade, distributors, wine stores to sample wines to their customers and restaurants for buy the glass and and at home for buy the glass. And you know, we're we're we've sold over two million devices. We serve 1.3 seconds or one glass. Well, every one point 1.3 glasses per second, that's what it is. About a million glasses every 10 days are served through a Corbin. So it's it's been way more successful than I thought it was going to be. It's got a reusable and a captured disposable in the Argon gas capsule or CO2 gas. The similarities and differences, I brought clinical trials to Corbin. I Carl Sagan was my hero. He said extraordinary claims require extraordinary evidence. And so I brought that sort of clinical perspective to wine, and and I still do it. I just did another one in here in London and in Manchester and in Switzerland last week, where we'll Corbin a bunch of bottles and we'll have control bottles and we'll blind taste them at three months and a year or two years to prove to the to the professionals that it actually works. So that that's the medical side coming into Coravin. I think both products, Coravin and Barricaid, are a change in behavior. Barricaid adds an implant to a procedure that didn't have one, and that's a perceived risk. And then Coravin, you know, my my biggest competitor is people saying, Well, I finished the bottle. Why do I need this? I finished the bottle.

Greg Lambrecht 53:28

And I'm trying to introduce them to a new lifestyle where I'm like, I can have a bottle too. I just have it from five different wines, right? I can have a glass of white, red, dessert wine, champagne on a Tuesday, right? And put them all back and drink them whatever, right? So there's a there's an implied change of behavior, and the reception to a change of behavior is very culturally dependent and very industry dependent. In medicine, it is that fear of risk, this new risk that you introduce. I love the benefit you're describing, but that risk scares me. I don't want to be the first surgeon on the block to use this new thing, and then I get blamed for failure. And and you overcome that by coming up with a great pitch, right? So working on, I think in consumer, I learned that your sales pitch needs to be short, punchy, and and get to the need quick. And the same is true. I brought that over into intrinsic for sure when we started to market in the United States in particular. How do you get it out in a sentence? Yeah, you know, ever all the benefits. You know, how do you say it in a sentence? That really helped, yeah. Um, on the on the medical side. And then surgeons love wine.

Geoff Pardo 54:39

So, you know, I think I was gonna say spine and wine right there. You got me.

Greg Lambrecht 54:44

Right, exactly. Exactly.

Final Reflections And Farewell

Geoff Pardo 54:46

That's awesome. It's a good life. Well, Greg, I can't thank you enough. This has been terrific. You know, we I forget how much, you know, I really have enjoyed our conversations over the years, and this being no exception. So thank you so much for for taking the time and and best of luck. The great, great things are ahead for for both companies.

Greg Lambrecht 55:07

Thank you, Geoff. I mean, it's great to talk to you as well. And , I will never forget our early days when you were were sitting on the board observing and and offering wise advice. And it's amazing that like the only downside with life is that it's too short to run to do three or four PMAs.

Geoff Pardo 55:23

Yeah. Right, exactly. Great. Well, thank you so much.

Greg Lambrecht 55:29

Thank you, Geoff.