June 15, 2021
Sean Salmon, Executive Vice President and President, Diabetes Operating Unit, says Medtronic’s diabetes unit is reinvigorated by acquisitions, new internally developed products and a partnership with a private equity giant.
As the Diabetes business, we understand that diabetes comes with a heavy mental burden. Our job is to do everything we can to ease that burden and try to make the disease as invisible as we can. In this MedtronicTalks podcast episode, Salmon explains why the diabetes community is excited about Medtronic’s pipeline and what the company is doing to meet those higher expectations.
Medtronic has made some strategic acquisitions over recent years – especially for our Diabetes business. First, we acquired Nutrino and Klue to enable the future of diabetes therapy through artificial intelligence. Nutrino helps us improve our predictive analytic capabilities around mealtimes and helps with the identification of what’s being consumed with greater accuracy. Klue’s gesture technology helps identify when that food is being consumed. Most recently, we acquired Companion Medical which provides an incredible opportunity to meet the needs of more people living with diabetes. By adding InPen to our portfolio, we can now address patients who choose multiple daily injections (MDI) instead of automated insulin delivery.
Tom Salemi (00:00):
Hey everyone. This is Tom Salemi of DeviceTalks. Welcome to our newest member of the DeviceTalks podcast family. It's called MedtronicTalks. Our constant search to find new ways to bring you insights in the medtech industry led us to the fine, fine folks at Medtronic. They've agreed to make their senior leaders available to us and to you. In each episode, we'll discuss the opportunities and challenges facing one of medtech's clear leaders, so you'll have an inside view on what makes Medtronic go. We'll ask the questions, Medtronic will provide the answers, and our great network of sponsors makes it all possible. So sit back, hop on a treadmill, take the dog for a walk. Whatever you do when you listen to a great podcast, and let's listen to how Medtronic is getting the job done. Let's go.
Tom Salemi (00:43):
All right, everyone. This is Tom Salemi. Welcome back to the MedtronicTalks podcast. We're going to talk about the Diabetes operating unit today. I had a chance to speak with Sean Salmon. Sean is executive vice-president at Medtronic, and president of the Diabetes group. We talked a lot about what a special connection the diabetes community has with the medical device industry, and in particular, how Medtronic is working to connect even more closely with that community.
Tom Salemi (01:11):
We talked about the company's string of acquisitions and what it takes to incorporate new businesses and new people into Medtronic. And lastly, we hit upon Medtronic's unique partnership with The Blackstone Group, a private equity group that is working with the Diabetes unit to foster innovative ideas. Great conversation. It's great to talk with Sean, who's a fellow BU alum. And I know you'll enjoy this conversation.
Tom Salemi (01:40):
First I want to introduce our sponsor for this episode, BMP Medical. I had a chance to speak with Ed Kangas. Ed is the vice-president of sales and marketing at BMP. Ed, tell us a bit about BMP.
Ed Kangas (01:55):
Thanks, Tom. BMP Medical is a third generation family-owned business, with 43 years of experience in the plastics manufacturing industry supporting original equipment manufacturers. We're ISO 1345. We're FDA registered, and MediCredit credited. Our customers look to us to provide production support and plastics injection molding, injection blow molding, two-shot molding and insert molding. The markets we support are primarily the medical device, diagnostics, and life science markets.
Ed Kangas (02:22):
Our job at BMP Medical is to take our customers concepts to production, and finally to a finished goods state. Our goal is to deliver programs that help accelerate their go-to-market success. Over the past year, we've had the privilege of partnering with the company to support the manufacturing of a sample collection device to aid in identifying COVID-19. We're incredibly proud that the solutions we provide on a day-to-day basis can help improve patient lives.
Tom Salemi (02:49):
Sean Salmon, welcome to the podcast.
Sean Salmon (02:51):
Thanks Tom. I'm happy to be here.
Tom Salemi (02:54):
Great to have you here. The Diabetes business at Medtronic has been, I think, one of the more active on the acquisition front, and I want to understand how those different pieces fit into the larger puzzle. But before we go there, I'd love to just learn a little bit how you found your way into the medtech industry. You've been here for quite a while.
Sean Salmon (03:12):
Yeah. It's more than 30 years I think now. I kind of lose count. It was really by accident. Literally by accident. I was trying to be an athlete in college, and I wound up getting injured, and wound up on the table-
Tom Salemi (03:28):
Sean Salmon (03:28):
... getting my ankle operated on. Reconstructed. I just got really fascinated with the whole space of healthcare. I still maintain my pre-med status even now. But I was going down that track until working in an academic, medical environment in Boston. It's where I'd gone to school. And I was just sort of horrified by what that side of medicine was really like. I got fascinated by technology. Didn't wind up going to medical school. I wound up becoming a clinical specialist in the field, and worked my way through sales ranks and into marketing jobs. Started out with a pioneering angioplasty company way back in the day. A company called USCI ... Bard.
Sean Salmon (04:13):
Then I worked, trying to convince them to get into different areas of medicine, including this novel idea of putting a piece of metal into the coronary to hold it open, and it wouldn't tear it. Kind of formative when I was working in the hospital side of things. I spent too many times riding on the chest of the patient down to the OR, balloon would tear the artery, and you'd need to repair it.
Tom Salemi (04:33):
Sean Salmon (04:34):
I couldn't convince the team at the time that that was a good idea, so I wound up going to Johnson & Johnson Interventional Systems. There's a long saga from there, but really that's kind of a storied history of just this remarkable process in the area of minimally invasive technology to treat coronary conditions. Which I had a personal connection to. My grandfather died of the disease. My grandmother had it. So like a lot of people, you find a way in there.
Tom Salemi (05:00):
Sean Salmon (05:00):
Maybe 10 years into that career I decided I should probably know something about business. I went off and learned that. I did start-up company. I worked in the pharmaceutical industry for a while too, in advertisement. So I learned a lot about a whole bunch of disease conditions, but sort of a background of all the risk factors. Hypertension. Diabetes is one of the areas I've worked in. Dyslipidemia. But I've spent the last 17 years at Medtronic, mostly on the cardiovascular side. Which I still do some of that. Of course, we're in the diabetes business now. So it's been just a remarkable, rewarding career. I just get excited to go to work every day to see more of what we can do.
Tom Salemi (05:42):
That's great. Can't ask for much more than that. I wasn't going to bring up our college connection, but you mentioned college. I went to BU. I think we overlapped by a year or two. What sport were you playing there when you got injured?
Sean Salmon (05:52):
I was trying to be a track athlete. Truth of the matter is I was not good in my best events to try to make me a decathlete. I think I kind of peaked in high school and it was over from there.
Tom Salemi (06:03):
That's all right. Not a lot of money in track I guess either.
Sean Salmon (06:05):
That's true. That's very true.
Tom Salemi (06:06):
You didn't miss out on a lucrative BU hockey career, or pro-hockey career. That's a great summation. I think it's frequent in medical devices where you see folks enter the clinical side first and then decide to pivot. Do you feel you're tapping into some of the same energy that you were tapping into when you were in a hospital treating patients? Is there that same sort of caring for patients in what you do now?
Sean Salmon (06:35):
Yeah. I think there's really no replacement for having that connection to what the real world's about. Just seeing the bad things that can happen and the wonderful things that can happen in healthcare, they just keep you grounded about what matters. I'll remember forever when you see those family members wringing their hands in fear when their loved one's on the table being treated. It's a really, really rewarding situation where they all relax, and the patient comes through and does really well.
Sean Salmon (07:06):
And the opposite's true also. Something bad happens with complications there. It personalizes a lot of what that's about. So if you're driving through all of the motivating reasons why you want to get a team aligned to do something in medtech, I think having that real connection to what matters and just keeping yourself grounded in that every day.
Sean Salmon (07:28):
Now, in the Diabetes business, it's a little different because hopefully, if we're doing our job right, they're never going to get there. We don't want them to end up with those cardiovascular complications that I spent most of my career involved with. But I think it's, in a similar way, just having that understanding and empathy for what somebody living with this condition has to go through.
Sean Salmon (07:47):
It's just different than all the stuff you learn in business school.
Tom Salemi (07:52):
Absolutely. I do think that the diabetes community perhaps is the one that is most closely connected to medtech in that the patients there are so active in their care. They're such strong advocates. Literally track clinical trials. They want to know when products are coming out. It's obviously essential to them in every definition of the term.
Tom Salemi (08:17):
What is it like for you leading this group, knowing that you're serving such a passionate and invested population?
Sean Salmon (08:26):
Tom, I think that that's absolutely motivating to me. To know that you've got this community that's so involved, so engaged, and really rooting for success all the way around. They have high standards, and they're pushing the boundaries for all the things that are in the way of getting to those technologies.
Sean Salmon (08:44):
But I'd say that's a vocal group, an important group. Typically the type 1 space. And you find the complete apathetic population, type 2, where you kind of go through this cascade of failures before you get insulin. You're at the end of the line. By then, all the healthcare practitioners and the patients themselves have sort of given up hope that they can change their fate. There's just a lot of awareness issues. Even insulin itself is a kind of end of the line drug. It's viewed like a failure for everyone. The doctor didn't get the patient convinced they made bad choices.
Sean Salmon (09:21):
And that's a mischaracterization too, because you can do so much better by having that insulin therapy earlier in the course of the disease in type 2. So it's all over the place. I think what I've learned about diabetes is that it's a very personal disease and a very different experience for everybody who lives with it, no matter what type you have, whether it's gestational or if you've got type 1 or type 2. There's just very, very different experiences.
Sean Salmon (09:49):
When we think about innovation for services or products, we have to be really clear about what we're doing for whom in that pursuit. I think it's easy to characterize the market like that as one thing or another thing, but it's a lot of things, which makes it both interesting and difficult.
Tom Salemi (10:10):
Fair point. Let's talk about how that population, and your understanding of that population, how that has sort of informed your Medtronic strategy for diabetes. As I mentioned up at the top, you've made some strategic acquisitions in recent years. Nutrino and Klue. Let's kind of walk through a few of the acquisitions and how they fit into your portfolio.
Tom Salemi (10:35):
Let's take a quick break from this conversation with Sean Salmon to visit again with our episode sponsor, BMP Medical. I'm here with Ed Kangas. Ed again is the vice-president of sales and marketing at BMP. Ed, I understand BMP is working out of a new facility. Tell me about it.
Ed Kangas (10:52):
Sure, Tom. In 2019, we moved into a newly renovated 80,000 square foot manufacturing facility, with an additional 20,000 square feet of expansion space in support of our growth and the growth of our partners. We support our OEM partners from product design and development, R&D tooling, mold design and development, injection molding and injection blow molding production, including assembly and packaging. Currently, all of our manufacturing capabilities reside in a class A clean room. We also offer class 7 and class 8 assembly and packaging services. We are consistently investing capital and improving our facilities and resources to support our clients' growing critical applications.
Ed Kangas (11:28):
Some recent examples are ongoing implementation programs of IQMS, MediCredit creditation in support of risk mitigation for our customers, continuous training, and continued equipment and technology upgrades.
Tom Salemi (11:40):
That was great, Ed. And finally, how does BMP work with its medical device clients?
Ed Kangas (11:45):
We're incredibly proud to be manufacturing medical components and devices that matter. Trust, relationships, and a commitment to successfully outcomes are what we strive for at BMP Medical. We're proud of our history, family-driven culture, and our experienced, stable workforce. You'll always experience one-on-one personal touch when interacting with BMP Medical. Whether you are reviewing a quote, discussing validation protocols with our quality team, or reviewing mold design with our engineering team, you'll always experience a friendly, knowledgeable, and highly dedicated team.
Ed Kangas (12:18):
We work endlessly to provide optimal value, and the size of our company allows us to be agile to your evolving requirements. Whether you have a new device concept, an improved design, or molds to be transferred, we'll work with your team to provide the best and most efficient solutions possible.
Tom Salemi (12:34):
Excellent. Well, thanks so much for sponsoring this episode of the MedtronicTalks podcast, Ed. For more information about BMP Medical, go to BMPMedical.com. And now, let's get back into this interview with Sean Salmon of Medtronic.
Tom Salemi (12:52):
You've made some strategic acquisitions in recent years. Nutrino and Klue. Let's kind of walk through a few of the acquisitions and how they fit into your portfolio.
Sean Salmon (13:01):
I always think about strategy in answering that question of what are you providing to who. It causes you to really focus on what is value processes you offer. You know, I think we got a little bit astray in the Diabetes business. We didn't really organize around who are we trying to serve. It's really that intensively managed patients. The ones that are using both background or basal insulin, as well as mealtime insulin.
Sean Salmon (13:28):
We used to sort of decide where it is that a patient should go in their journey to get the best outcomes. We had one solution. It's this pump solution. In the United States, which is the most heavily penetrated market for type 1. That's probably about 30, 35% of the patients actually get to the sophisticated automated insulin delivery. That we've been at for multiple years, multiple decades now, and making it better and better.
Sean Salmon (13:55):
It's even less common in the type 2's of course. And then we get outside the United States, maybe it's 10% of the population.
Tom Salemi (14:01):
Sean Salmon (14:01):
So the vast majority of people using background and mealtime insulin are doing what they call multiple daily injections. Your ability to control your blood sugar on multiple daily injections is thwarted by a lot of things. What you eat, what activity you do, how you respond to the food you eat. The insulin will take all kinds of different stressors in your system, things from puberty to just mental stress. The fact that we were only offering one solution to get people to a place where their blood sugar is in a really healthy range, not too high, not too low, has worked every day for patients. Your mood, how you're going to be interacting with people around you. Just by having excursions with your blood sugar high or low.
Sean Salmon (14:47):
And then of course, it gets more dangerous than that. You could wind up in an emergency room in a coma from having too low a blood sugar. You could have a car crash. You could have a diabetic ketoacidosis, and that will lead you into a coma from high blood sugar. And then over time of course, if you're running really high blood sugars for a long time, no matter what type of diabetes you have, you're damaging your small vessels. It can affect your vision, your kidney health, and your cardiovascular health at the time. So it's really something... You've got to be in that kind of normal range of blood sugar.
Sean Salmon (15:18):
So I say all that just as pretext for what decisions we want to make. We want to focus on that right patient. The ones facing intensive risk, and manage what we want to do in a way that we can get them great outcomes. Keep that blood sugar in great control. But reduce and reduce and reduce all of the kind of decisions they have to make. The mental, physical and emotional burdens that are placed on them by this disease by simplifying things.
Sean Salmon (15:44):
So the first one we wanted to do was to really expand our paradigm about you should be able to choose how you want to get your insulin. I talked about how diabetes is a personal disease. Some people really, really don't want anyone to know they have diabetes, and the type. So wearing a big clunky pump on them is not something they want the world to see, so that discretion is important.
Sean Salmon (16:05):
Or you could live in a country, somewhere where you just don't have the healthcare resources to allocate money to such a good and sophisticated solution. You want to do something simpler. So we purchased a company called Companion Medical, which is the first and only FDA-cleared smart insulin pen. It's a pen and it's an app system. What it does is allows us to collect the information from our continuous glucose monitor, anyone, frankly. Or blood glucose that we use in the finger stick. And then correlate that with how much insulin do you have, how many calories have you eaten, carbohydrates have you eaten?
Sean Salmon (16:43):
Now we can give information to the patient that helps them get to a better, healthier blood sugar range, but at a lower technological hurdle. At a lower entry point for cost. And without adding a whole bunch of new effort or difficulty.
Sean Salmon (17:01):
Right now, that's important, because we've already seen people whose time that they spend in a normal blood sugar range... Just by having this information on their phone, where they can see how much insulin do I have. I have a calculator that when I eat something, it tells me how many grams, how much insulin's there. It tells you how much insulin you can take, and that limits your mistakes.
Sean Salmon (17:22):
So that time in the normal blood sugar range gets a lot better by about five points. That's a really big health improvement in the world. The other two acquisitions we've made, one was called Nutrino and one was called Klue. The first one, Nutrino, it's a machine learning platform first and foremost, and it also contains the world's largest food database. So one of the problems, if you have to put into your calculator how many grams of carbohydrates you have, it's really, really hard to guess. Try it at a restaurant. It's even harder still.
Tom Salemi (17:59):
Sean Salmon (17:59):
We have this really good content of what's in food, and it's not just carbohydrates. How much fat or how much protein is in it, that can also affect that. At the surface level it's like, "Okay, great. You've got this sort of accurate way to get information on carbs." But that's adding a lot. You're asking people to log all that food.
Sean Salmon (18:17):
What we also can do is, using a bunch of passive and active collected data, we can tell that you're a creature of habit. Tom, you probably eat about the same thing every day for lunch at about the same time. Especially during the pandemic.
Tom Salemi (18:34):
Maybe. No comment.
Sean Salmon (18:35):
So you think about okay, well, that's interesting. Now, what do you do with that? Well, your body's pretty smart. Your pancreas is really smart. And you're about to sit down to lunch, you're thinking about eating lunch. You're already starting to take your blood sugar lower. The pancreas does this all by itself. We can do the same thing. We can use machine learning to predict your behaviors. We know you're likely to be eating lunch. We can start to take your background insulin to a place where your blood sugar's going lower, and then when you're eating, you can tell us what you're eating. Probably in big slots.
Sean Salmon (19:09):
I've had a usual meal. A little more than I normally do. Or a very, very prescriptive meal. I'm having this baked potato and some salmon or whatever it is. You can put the whole meal content in there. So that was this Nutrino acquisition. It allows us to know what's in food, and then be able to track when you're about to do something.
Sean Salmon (19:26):
But what was really important is to know when somebody's [inaudible]. And we bought this company called Klue. It came out of the Stanford Group. Where, by gesturing on a wearable, you would know that somebody's eating or drinking with 99.9% accuracy. So it's super accurate.
Tom Salemi (19:45):
Sean Salmon (19:45):
And why that's important is I know when Tom's about to sit and eat something, and I can start to take his background insulin down if I'm using an automated system. Where you're support to announce your meal, take a bolus insulin beforehand, and then correct it with if you need to because you got it wrong.
Sean Salmon (20:03):
When you think about that burden, that's hundreds of decisions that someone makes every day. Now we can really automate it. We can know you're about to eat. We can remind you to take that insulin that you haven't done, or deliver it because we can detect that you're eating, and we know your blood sugar's headed and all kinds of things in that realm.
Sean Salmon (20:21):
So it's really a lot of platform technology that we're going to put into both pen and pump solutions that simplify all that complicated stuff I just talked about. So you don't really have to think about it. It's sort of autopilot. The holy grail for this is to have this closed loop. If you aren't interested or can't afford to go the full automated insulin delivery system, we can still remind you to take your insulin at the right time, and drive your health outcomes even higher.
Sean Salmon (20:54):
We did one small study where we got about the same amount of benefit. We measured something called A1C, which is like a summary report card at the end of the quarter. Tells you how well did you do at measuring blood sugar. With just reminding people to bolus, we get about the same improvement as we did by automating that insulin pump delivery. So really a big health improvement.
Sean Salmon (21:17):
This kind of leadership on that next wave of things. We've really pioneered a lot of things in this business. Continuous glucose monitoring we invented here. Really the perfection of that insulin delivery monitoring was done here. I think this is on the next level, where we just take it to just more and more anticipation and understanding what's there, and taking care of it in the background in a way that's non-intrusive and really gets people to live their life the way they want to, and kind of forget about their numbers and their diabetes as much as they possibly can.
Tom Salemi (21:50):
I can't imagine how exhausting that level of management must be, as you said, making hundreds of decisions a day that are literally critical decisions. How difficult has it been to integrate all those different technologies into your business? Did they come with employees and cultures that you had to... Or were you just buying the devices themselves and fitting them into what you had?
Sean Salmon (22:13):
No. When you buy companies, you don't ever buy people. You have to earn that.
Tom Salemi (22:19):
Sean Salmon (22:19):
You buy technology, you buy patents. Integration... I'm glad you asked about that, because it's really important that you weave that into a fabric that keeps what's special about what you bring to the company. That you layer into the context of bigger strategy that you're trying to go forward with. I've had a lot of experience with a number of different acquisitions over the years. I think what always works well is when you're just upfront about what role are you playing, what things could look like, and how you fit into the big picture. And just constantly remind everybody about how that all works.
Sean Salmon (22:53):
But you don't go in and just sort of take the products and leave the people behind. So I'd say they've been very, very seamless bringing all these acquisitions in, because I think people see the vision in what we're trying to do. We talked about the activated community. Everybody knows that this meal handling thing is the third rail of diabetes. It's so difficult. It's such a stress point for people. So we've put this vision together in how these components fit into it. It's very motivating. People really see it right away and say, "This is something I want to be involved in." It's been really fun.
Tom Salemi (23:33):
Do you put more effort into communicating with your patient community than perhaps other businesses do?
Sean Salmon (23:40):
It's a good question. I mean, the other business that I've worked in, the cardiovascular side, a lot of them, the patient's asleep on the table in the OR. So who's talking to that patient? But here, it's a lifelong relationship that we're helping to build. You go through this devastating period where somebody is newly diagnosed. Your child is newly diagnosed. Or you've had a cardiac event in the type 2 world, and you find out you have this disease you need to manage.
Sean Salmon (24:08):
You really want to try to get people through those areas of fear and get them to be successful in managing this disease that can feel very random. You can eat the same thing two days in a row and have a totally different reaction to that food. And it's just frustrating. We try to get people on board in a very personalized way. Get them on the technology. Support them through their whole journey to better and better health. That takes a constant amount of communication with them directly. Through people they trust, too. There's a lot of very vocal people in the community. If you are going to make a mistake, they're going to amplify that. If you do something that's great, the patient will amplify that, too.
Sean Salmon (24:48):
We are in the world of trust. So they're going to trust you with their disease. Trust you that you've got something that's going to help them. Trust you that they're going to get you through the friction points, the successes that they're seeking. And it could be simple things like even working through insurance problems that may pop up with the insurance.
Sean Salmon (25:08):
We call that in totality the experience that we're trying to really make better. Some of that's product related. Some of it's not product related. And really, the two core parts of our strategy are to drive innovation in product and services that are just at that better and better experience to help their disease fade into the background as much as it possibly can.
Tom Salemi (25:31):
That's a great objective. Let's talk a little bit about your automated insulin delivery system, the MiniMed™ 780G. I know you've released it in Europe. There's been a slowdown at the FDA. Give us an update on that.
Sean Salmon (25:45):
Sure. Now, we have part of it in the U.S already. We have something called the 770G, which is the same part of the platform. And what that does is it adds a lot of the connectivity features that were not there in the prior generations of the product. Specifically that you can now see your insulin data and your CGM data on your phone, and you can share that information with another caregiver.
Sean Salmon (26:06):
You can also upload the reports automatically in the background to your healthcare provider so you don't have to hook up to a computer and download stuff on your office visits. So it really makes that workflow a lot better, and of course it's been helpful to have that automation, and upload it, in the middle of this COVID environment where nobody wants to have an unnecessary healthcare excursion. So it really helped telemedicine.
Sean Salmon (26:30):
Our age indication goes down to the youngest. We're holding out at aged two all the way through the whole lifecycle of the patient. But that same part of our platform, and that same ability of connectivity allows us to upgrade the algorithm, which is 780. And the difference between 770 and 780 is... Well, two things really.
Sean Salmon (26:50):
It's that you can set your normal blood glucose target lower than any other device in the market, including our 770. We can set it at 100. That's what you and I have. Normal blood sugar is our target value. And you can do that without risking putting people on low blood sugar. So that's really a big deal. People want to have a lower target. We want to be able to have as good of blood sugar control as we possibly can.
Sean Salmon (27:18):
The other thing it does is it starts to get toward that meal automation I was talking about, where if your blood sugar is going up, we can always... Every five minutes, we're in the background adjusting how much insulin you've got. When you eat, we can automatically bolus if you haven't corrected enough. For example, pre-bolus soon enough, where you haven't given enough insulin. We see the blood sugar going up, it automatically corrects that.
Sean Salmon (27:41):
It does that without having to tell you anything. It just does it in the background. We can do that every five minutes. So we see the trend of where you're going, and knows it's going to happen, and it automatically does that. So it's very forgiving in that way.
Sean Salmon (27:56):
The report card you get on that is how well did you do keeping that patient in-range? We're at 80% of the clinical trial now. We just had a patient of our glucose market experience. That's really remarkable to be in-range that often. That's even before we get to the automation. So we think we're getting closer and closer to that kind of nirvana of closing the loop.
Sean Salmon (28:22):
The 780 has just been phenomenal. It's really, really done exceptionally well. I get to be in these Facebook groups. See people who post their phone shot, their screenshot about their time in-range.
Tom Salemi (28:35):
Sean Salmon (28:35):
With 90%, 100%. It's just life-changing. You see these people who have been living with the disease for 30 years, and they've never had such good control. Not only that, it's been so easy. They don't have to do anything to do that. It's just taken care of in the background. It is truly remarkable how these devices can help people just feel successful in managing their chronic disease.
Tom Salemi (29:00):
So what is it you need from the FDA to release it in the U.S?
Sean Salmon (29:05):
Oh, we filed it with the FDA, so we're just waiting for it. The FDA has been crushed. This particular division, this particular flavor of FDA, has had the dual purpose of COVID diagnostics on top of the diabetes technology. So the entire industry has really been in waiting mode because of obvious priorities with COVID.
Sean Salmon (29:28):
The medical reviewers in particular who are pouring through the clinical data that backs up the device we've already submitted. That's really the constraint, so we're just waiting for that to come through.
Tom Salemi (29:42):
One of the more intriguing things about your business I thought was the partnership with Blackstone, the private equity group, coming in. Hadn't really seen something like that before, therefore wasn't quite sure what to read into it. Does this signal a buyout happening? Is there a spin-out? Talk to me about that relationship. What is it and what will it provide for Medtronic?
Sean Salmon (30:07):
Medtronic has got this embarrassment of riches, as you might say. In addition to the diabetes business, I oversee, we have so many incredible ideas that we can invest in. We can do anything, but we can't do everything. So how do you pick the right things to invest in across your enterprise, and make sure that you're making best use of your capital? How do you allocate that, from your P&L, to your balance sheet. Or in this case, it's with Blackstone's money.
Sean Salmon (30:41):
And Blackstone's partnership with us is helping us to... While we're working on driving some more near-term programs with our P&L dollars. And we used our balance sheet. We just talked about the balance sheet and add capabilities to build technologies out. Blackstone's something in the middle where you're using your same team, their money, on riskier projects on a little bit longer term. So what it means for us is we can drive near-term projects and really disruptive things that you may not have invested in because you'd have to compete for resources across an enterprise, or because the risk profile's so much higher. But you're doing that with your own people.
Sean Salmon (31:21):
So, you asked me about the integration and acquisition. Every one of those slows you down. You have to kind of rebuild everything. It's fundamentally broken when you buy it because you have to fit into all your systems, and all the specification of that. So you're not really integrating these technologies. From a financial lens, if you think about it, the return you get in capital you're investing off your P&L. It's success is always the highest. It's the best investment you can make. But your tolerance for failure there is pretty low. You want to make sure you're making safer bets.
Sean Salmon (31:51):
When you buy big acquisitions, your return on capital for that is pretty diluted, because you're weighing to de-risk everything. You don't want to take big risks. You tend to spend a lot of capital there. This is something in between, where it's de-risked because it's your people, but still sufficiently risky, and you're kind of built in a lot of things. That return on capital is somewhere in that middle.
Sean Salmon (32:13):
It is different. We don't use this a lot in medtech, but it's been commonly done in the farm industry.
Tom Salemi (32:17):
Sean Salmon (32:18):
Where they're taking phase 3 trials, for example, where it's a bigger trial, a much bigger bet. Do you want to make that bet with your own capital or somebody else's? It's a financial instrument, but at the same time, it's really, I think, an incredible way of allocating capital where it gets the best of both worlds. Where you can take bigger risks. Our partner gets really successful. If we do really well with these programs, they're going to make a great return, and we're going to get things that we may not have invested in because it's taking a bigger risk.
Tom Salemi (32:50):
That's a great point about pharma, and that is something we have seen there. But maybe I missed it. Is Blackstone working on or connected with specific projects or products? I got the sense it was rather open-ended.
Sean Salmon (33:03):
It's very defined. There are four programs, and we have joint steering committee meetings. They're on the journey with us. They're not just a passive financial investor. They're there with us making these decisions... through all the ups and downs of product development. It's been a good partnership.
Tom Salemi (33:22):
Excellent. Well, I guess this kind of relays into my final question. Is Medtronic in diabetes for the long haul?
Sean Salmon (33:27):
Yeah. We've got a really exciting opportunity in front of us. This is a very large market with lots of room that needs rapid growth. I'm not sure we played it right in the last couple of years if I'm honest with you, but I think we've really got the team in place. We've got the right investments from all those flavors of capital allocations we discussed. And just a patient population at the end of this that really deserves a better life. It's certainly not for the faint-hearted. It's a very difficult market. It moves fast. But it's exciting, and the things we can do here are really, really rewarding.
Tom Salemi (33:59):
Excellent. I'm grateful you took time to explain all that to us on the podcast. Sean, thanks for joining us.
Sean Salmon (34:07):
Thanks, Tom. Appreciate the opportunity.
Tom Salemi (34:11):
Well, that is a wrap. Thanks again for joining us on this episode of MedtronicTalks. It was great to have Sean Salmon and hear his story. Thank you again to BMP Medical for sponsoring, and thank you again for choosing to listen to this podcast. I'm Tom Salemi. I'm editorial director of DeviceTalks. You can find past episodes of the MedtronicTalks podcast on DeviceTalks.com. You can also find our DeviceTalks weekly podcast there, and information about our other DeviceTalks products. We have a bunch of them, including in-person events, which will be starting up in 2022.
Tom Salemi (34:48):
Until then though, keep listening to the MedtronicTalks podcast. You can find it and our DeviceTalks weekly podcast on all major podcast channels. Amazon, Google, Spotify, Apple. We're everywhere. So subscribe so you don't miss a future episode of the MedtronicTalks podcast. Thanks everyone.