In this episode, Legislate meets Rich Simmonds, CEO of Orthoson. Orthoson is a spin-out from the university of Oxford, which is developing a novel ultrasound based treatment for lower back and neck pain, which is significantly safer, less invasive and more cost-effective than current surgical options. Rich shares the peculiarities of contracting in the medtech world and what it means to create contracts for the long term.
Listen to the episode below:
Boosting productivity whilst reducing isolation and burnout
Giving parents the tools and resources to run a nursery from anywhere
Why putting in LEDs is not enough
What are some of the key coworking space contracts and what to expect from a startup acquisition
Charles Brecque: Welcome to the Legislate podcast, a place to learn about the latest insights and trends in property technology, business, building, and contract drafting. Today, I'm excited to have Rich Simmonds on the show CEO of Orthoson, a spin-out from the University of Oxford, which is developing a novel ultrasound based treatment for lower back and neck pain, which is significantly safer, less invasive and more cost-effective than current surgical options.
Rich, welcome to the show. Would you like to share a bit of background about yourself and Orthoson?
Richard Simmonds: Yeah. Thanks Charles. Thanks for the opportunity. And thanks for your time. Great to be on the show. Yeah so I joined Orthoson, in 2018, actually as employee number one and given the keys to the building effectively and a little bit of funding and said, Hey, look, we've got this great patent portfolio, go see what we can do with it. And I've been having a lot of fun building the vision, building the team since then it was in real contrast to what I was doing before. I was
in a big corporate organisation called Terumo, a Japanese global company. I was employee number 45,000 and something. And to go to employee number one was really first of all, refreshing a little bit scary, but also very refreshing just to be able to get things done so quickly and build vision with some really
amazing people. Just a little bit about Orthoson. You gave a little bit of an introduction. You were pretty close to the mark. We are a spin-out from the University of Oxford. And we're focused specifically on low back pain and in the future neck pain, as you mentioned, and we have a technology which is minimally invasive and motion restoring.
So low back pain is the largest cause of disability. And the days lost to disability for low back pain is larger than any other in the developing and developed world. But the solutions are very limited. So if you're not lucky enough to benefit from physiotherapy, then the surgical options are almost none. They're very, certainly very extreme. What we can do is we can take a degenerated intervertebral disc. We can restore the mechanics of that with a very simple procedure that will take around about an hour or an hour and a half. With the patient up and around moving around the same day, the only intrusion will be a needle into the intervertebral disc. So the patient will be spared much of the trauma that comes from a fusion or a total disc replacement, or one of the other very invasive procedures for this condition.
Charles Brecque: That really sounds like an amazing solution for a disability, which everyone knows of, but maybe don't quite realise how big it is. So going from employee number one, to building the company now to a couple of dozen employees now I imagine
Richard Simmonds: Actually there's 15 of us now there'll be 20 within the next few months, we've got a pretty active recruitment programme.
Charles Brecque: Great. So one to 20 in several years, what's been your favourite moment so far?
Richard Simmonds: So really good question. My favourite moment I think was when we completed the seed funding round in October, 2019, because it was the first real external validation. The people really understood how big the problem was and how great our solution was. The part that gives me the most pride is the quality of the team that we now have. Almost all of the team have a PhD.
They're so diverse. Ethnically linguistically. And in terms of their skills are software engineers. We have clinical people, we have acoustic physicists. We have electronic engineers, biologists, and chemists and it's such a great team. So I think watching them watch them really hit their milestones, watching them work together so effectively is certainly the thing that gives me the most pride as I sit maybe, and have a glass of something on new year's Eve this year. That will be the thing that I look back on over the last 12 months, for sure.
Charles Brecque: I can definitely relate to the enjoyment from building a team and seeing them grow. Going from employee 45,000 to employee number one and then now building a team. What do you wish you'd known before doing all of that?
Richard Simmonds: Yeah, that's an interesting question too. The challenge that you don't appreciate when you're in a corporate, is the level of risk that the large venture capital funds are prepared to take in early MedTech or biotech is pretty limited.
When you are a preclinical stage company like Orthoson convincing the larger professional VC to take a chance on you is a challenge. They tend to restrict themselves specifically to clinical stage or to growth stage opportunities. And so I'm very grateful to the group of investors that we have, they really see what we are capable of and where we can take this technology.
And so now we've been through, our seed and our series A round on , a much stronger footing, I think it'll mean that those VC missed out last time around and I wish I'd been able to spare a few telephone calls to a few of those guys, knowing that there was a better group to focus on. Those with a bit more vision and a bit more entrepreneurial spirit.
Charles Brecque: Hopefully as Orthoson goes through its milestones the more institutional VCs might still want to join the ride.
Richard Simmonds: With our series A, we're bringing in a couple on board and they should have come on two years ago and got a better deal, but that's up to them.
Charles Brecque: Better, late than never. Orthoson is preclinical. What's the plan for the next couple of years or the big vision?
Richard Simmonds: Yep. So we have a very broad patent portfolio. We're very lucky. Both things we've licensed from the university and that I've gone out and licensed from third parties.
So we have a portfolio now that can treat multiple conditions within the area of spine and low back pain. And so our vision now is to build up these platform technologies so that we have a very clear first target. And then we have a plan to approach these other secondary indications.
As we progress. So as we get into the end of 2023, we'll be targeting the treatment of our first humans in a clinical trial. And as we get a couple of years beyond that, we'll be in large-scale randomised controlled trials. We will be looking to have very close relationships with the FDA and getting close to our CE mark.
And really looking to disrupt a market that's very much in need of a new treatment option for this patient.
Charles Brecque: Whenever I meet someone with low back pain and I tell them about Orthoson they always ask, how do I sign up? Hopefully you can come to market much sooner but as legally possible.
Richard Simmonds: Absolutely. And the regulator defines the timeline. It's the FDA or the CE mark that defines our timeline. Right now, fusion dominates in this area and fusing a joint, which is effectively what we're doing in the lower back is not something anybody would tolerate in their hip or their knee or their shoulder these days. But yet we do tolerate it in the spine. And we are on the cusp of something very big, very new, very novel and disruptive, which is minimally invasive motion restoring treatment.
Charles Brecque: Very exciting. So as a startup CEO I imagine you interact with many contracts and I imagine the medical angle also brings its own set of nuances to contracting, would you be able to share what are the key contracts you interact with most frequently and how the medical aspect influences how you interact with contracts.
Richard Simmonds: Yes. So the key contracts we deal with on a routine basis or regular basis are NDAs and also licence agreements to bring IP into the organisation, to get access to it.
As far as NDAs are concerned, they can be pretty diverse. So it could be with collaborators. But it's often with individual surgeons or surgeons working out of an institution, they either have inventions or they have advice and guidance that they can offer us on how to go to market more quickly. So the NDA can become quite a diverse tool. Sometimes we're working with a very large organisation . Sometimes we're looking at working with a university where we really have to try to use their template for the NDA. If we want to get it through in anything like a timely manner.
And other times we're working with individual surgeons or small organisations, in which case it's much easier for us to supply our own template.
So as an organisation, that's trying to limit its legal costs, but also trying to shore up its IP. As effectively as possible. It's quite important to pay attention to the details of those things.
Charles Brecque: Definitely. And I think friction in the legal processes is something at Legislate we've been focused on since day one. And I think one thing that we don't appreciate is a lot of the friction starts from having a template, which is one sided. And if you start from the middle right from the beginning, then there isn't much to negotiate. So I think, yeah having the right templates where you can start from the middle, especially with the smaller organisations and maybe those individual surgeons can definitely help get them across the line faster. But for the bigger organisations I think we're still working on a solution which can help that.
Richard Simmonds: I couldn't agree more with the one-sided part of what you say, because.
One of the defining characteristics of med tech is that things are long term. So typically when you're signing an NDA, it's because you're starting what will become a relatively long-term collaboration and like any long-term relationship. It has to be built on a level of trust too. If the template comes through very one-sided and you're going to be starting to negotiate the finer points of an NDA. It's not a great place to start a relationship. That's usually a good sign that it's not actually going to be a relationship that survives the long journey to market.
Charles Brecque: Absolutely. So I imagine if it's very one-sided that might cause some issues.
Are there any other issues or patterns that you've noticed in these years of looking at them and are there any particularities to a med tech NDA that might differ from an NDA in another industry?
Richard Simmonds: I don't know that there's too much in NDAs specifically. That's specific to the med tech industry.
One of the disciplines that has been drummed into me is that people tend to have an NDA. And because we have an NDA, we put it in place two years ago it's now okay. For me to disclose everything. To give the collaborator, the view under the kimono and feel safe that because you had that NDA two years ago, everything will be fine. And so one of the disciplines that I have brought to Orthoson is that we need to put in place an NDA for a specific activity. And mark the information that we think is confidential clearly as confidential, and because relationships do tend to be quite long and they tend to evolve it's important for us to update that NDA for new applications if we need to. We could be collaborating with surgeons over a period of four or five years. And because you put an NDA in four years ago, it does not mean that it's now protecting you, telling them everything. And I think the other piece is always to have a two way NDA, even if it seems initially as if you're just wanting to share. Having a two way NDA usually protects both parties and sets that trust relationship off on the right footing
Charles Brecque: Absolutely. I think one way is best if you are really the only one disclosing, but in most cases two way can help ease any form of worries someone might have.
I'm conscious that we've taken a lot of your time Rich so I'm going to ask you the closing question we ask all our guests, if you were being sent a contract to sign today, what would impress you?
Richard Simmonds: So I want to go back to the point we made earlier on Charles. The first thing that impresses me. Is this contract part of the start of a long relationship? And therefore the other person has taken the term sheet or taken the discussions we've had about our business objectives and tried honestly, To translate those into the contract or have they effectively tried to do as big a land grab as they can so that I have to negotiate back every single piece because if it is the latter, I know that I'm going to have to get more legal involvement.
I know it's going to take longer. I know that it probably starts the relationship off on a poor footing. So I'm looking for honesty and I'm looking for the start of a relationship to last the multiple years, it'll take us to get to market rather than one that's just about this particular part of the deal now and the objectives right in front of us.
You can often see that in the IP terms or the warranty, or other items in the royalties, even, or things that they put into the business relationship. I think maybe the other thing is the recognition that, because you're talking about a couple of years before you're making progress and you could well be working with somebody for a couple of years, a recognition that.
Some parts of the contract have to be left a little more flexible so that you can allow for the evolution of your business relationship into the future. So I like somebody who understands MedTech and understands because it's been a couple of years. You've you build that in, right from the
Charles Brecque: That's a very unique answer. We've had a combination of answers about paperless or about clarity but I think you've gone a step further by saying that actually a contract is a relationship. And if it's created with the vision of a relationship, then that is what's impressive because ultimately it means that the terms of the relationship will grow in the right way.
So that's a great
Richard Simmonds: If I could add one thing, Charles, it would be that, most of the time you don't take the contract out of the drawer, right? Most of the time you're business as usual, it's actually only in the extreme situation, that you usually need to refer back to the terms of the contract and say, Hey, we've had a disagreement or something's not working.
So I think if both parties start with the idea that actually we've got enough space for us to work. It's only in the event that something goes wrong, that we really fall back on many of the clauses in that contract. You can usually see that mentality reflected in the terms.
Charles Brecque: That's a very good point. And something that at Legislate we try to do. Is offer very standard plain English language and very neutral terms and in the middle, so that it provides a solid foundation for a good relationship but another thing that we're doing is extracting those restrictions and obligations from the contracts, so that a small business or someone who isn't familiar with contracts can see, what it is that they're responsible for and what would happen if something went wrong. Because, like with everything we tend to focus on the good and not the what ifs and the bad and at least surfacing that from the start can also help people know what they should do, what they shouldn't be doing as part of a contract from day one, as opposed to being surprised that they've breached a term of the agreement.
Thank you very much Rich for being on the Legislate show. Best of luck with Orthoson and I really hope that you progress with those trials and go to market as quickly as possible because many people need your solution.
Richard Simmonds: Absolutely. That's the plan. We're on it. Really good to talk to you. Thanks for inviting me.
Charles Brecque: Thank you. Bye-bye.
Richard Simmonds: Thanks, bye.