Persevering and Pivoting - The Entrepreneur’s Companions

Written By Patrick Kothe
 
 
 
 

Joe Landolina is CEO of Cresilon, a company that has developed a technology and product intended to stop bleeding quickly and reliably. In this episode Joe shares how he began his journey at age 17, how a short project has turned into more than a decade of hard work, the impact pivots made on his team and investors, why open communication is best for the team and the well-being of the founder, and the importance of doing things the right way - even if it means delays and more investment.

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Episode Transcript

This transcript was generated using an automated transcription service and is minimally edited. Please forgive the mistakes contained within it.

[00:00:31] Patrick Kothe: Welcome! I've had a lot of plans presented to me that show a graph with a straight line, moving up into the right. Often with a hockey stick. Hey, I've been guilty of that too. My experience is that real world performance never looks like that. There's going to be hills and valleys caused by things that are outside of our control, or things that we did a poor job of predicting or executing on. The real chart usually looks more like a roller coaster with the timeframe longer than originally expected. Call it false optimism, or maybe telling someone what they want to hear, but predictions rarely match reality. The problem is that plans set expectations and then other plans are built with yours as a baseline. When you're at a startup and financial plans are even more important, the stakes become even higher.

Our guest today is Joe Landolina CEO of Cresilon, a company that's developed a technology and product intended to stop bleeding quickly and reliably. Joe has a very interesting story, which we'll share in a few minutes. What you're going to hear is how he and his team have persevered and pivoted. Leading to huge changes from their original plan. How they manage the business during this time is also very interesting and contains some great lessons. Here's our conversation.

Joe, startups are really pretty easy, aren't they? You have an idea, you go into the backyard and shake the money tree and get all that you need and you bring your friends along and, then in a few months, uh, the cash is rolling in. That's, That's kind of your experience, isn't it?

[00:02:27] Joe Landolina: Definitely. I wish it was that easy, especially in a regulated industry like biotech, but it's a lot of fun. I'll say that.

[00:02:34] Patrick Kothe: Yeah. So we're going to, we're going to talk about, perseverance and pivoting in this episode, but to get started, tell me a little bit about your background. How you got involved in the technology that you're involved in.

[00:02:48] Joe Landolina: Of course, I have a bit of an unorthodox background. I'm a chemical engineer by training. I did my undergrad and my graduate work at NYU in New York, but before that I was lucky. My grandfather was a former employee of Hoffman LaRoche, who in retirement had a second career as a winemaker. And I grew up on a vineyard with a chemistry lab a few paces across the street from my house, and a grandfather had learned lab safety in the 60s, and that meant that the day I learned how to walk, I was thrown into a lab and said, the best way to learn chemistry is to mix some things together and hopefully don't blow yourself up.

I had a really early exposure to chemical lab research and my parents were not as thrilled as I was,that I had that exposure so that they cut a deal with me, which was, do anything you can, but first go and learn lab research the right way. And so when I was about 14 years old, I got to do a summer program in chemical research at Columbia University, where we were working in tissue engineering in the early days, which is just taking a plant based scaffold and using that scaffold to grow a patient stem cells into a target tissue. And in my case, it was cartilage and like any 14 year old, I decided, what I was going to do for the rest of the summer was go home and make my own cartilage and,

[00:04:01] Patrick Kothe: I can tell you at 14, that's not what I was thinking.

[00:04:05] Joe Landolina: tell me about it. I had a very interesting childhood, but needless to say, I came nowhere close to making cartilage on my own. but what I did come across was this blend of two polysaccharides, so long chains of sugar that were derived from algae. And the only reason why I was working with algae is that my chore as a 14 year old, whenever my parents were angry at me, which was basically all the time, was to go and rake all of the ponds of algae, so that they would look nice for customers coming into the vineyard. and effectively, what I discovered out of that was this material that would stick to skin and wouldn't let go until he wanted it to. And I had this idea, which was, could you take that and use it to at least stop a bleeding wound for a patient that had a gunshot wound or a stabbing? So you can get them to the next level of care without them bleeding out and dying. And over the last 13 years, that idea became Cresilon, the company that we founded back in 2010.

[00:04:57] Patrick Kothe: So did you move right from university into this company?

[00:05:02] Joe Landolina: So I, I was 17 when I started this company, so I was a freshman at university. I was admittedly not the best student, because it was us working a nine to five or whatever in the startup world that actually becomes maybe more like eight to eight or something like that, and then going to classes in between.

But this was effectively my entire academic career was us launching the company, getting it to a point where we had a prototype. And then when I graduated from both programs in 2014, we went full time immediately on the company.

[00:05:33] Patrick Kothe: That's not a pathway that you find from a lot of entrepreneurs. What was that like? It must have been, challenging, lonely, scary, all the above.

[00:05:44] Joe Landolina: It was definitely very interesting. I think the benefit that I had was that as a 17 year old starting this, the biggest strength you have is naivete, not realizing the challenges that lie ahead. And so you're perfectly happy running into a brick wall headfirst over and over again, because you think that the brick wall you've run into is the last.

And it makes it really easy not to realize how rocky a road would lie ahead. And I think if 17 year old me knew that it would cost nearly a hundred million dollars and a decade, to be able to get this product to market, I would have been dissuaded because that would have seemed impossible. But instead, taking it piece by piece made it manageable.

And instead we were solving one challenge at a time, as opposed to looking at the entire world or the entire path ahead of us.

[00:06:32] Patrick Kothe: At 17, you typically don't, know the value of mentorship. Did you have mentors at that point?

[00:06:40] Joe Landolina: So we were amazingly lucky. I think that one thing that we did well from the very beginning from day one was that we recognized that at least my strength as CEO and co founder was that I could build a team of people who knew more than I did. And so we launched by joining their venture competition.

We took first place at the engineering school and second place at the business school where my co founder Isaac was a student at the time. And the thing with that competition is they required you to take at least three mentors through their network, and that was amazing. In fact, one of the mentors that was assigned to us in 2010 is still an advisor to the business today. He's 88 years old, and we have breakfast every single Wednesday morning. And we have for the last 13 years, and it's been amazing to have that consistency of mentorship, but the one thing I will say is that as businesses change in stage and in size and scale and the types of problems that you solve change, the types of mentorship that you need change, and so that's a rare example that we have a mentor that was able to support us all the way through, but, we've always supported ourselves and surrounded ourselves with people who have done this before, at least in the parts that we're able to find.

[00:07:58] Patrick Kothe: So let's talk about Cresilon, talk about the problem that, that you're solving. Tell me a little about the problem, a little bit about the customers. Where the application is, this product is.

[00:08:08] Joe Landolina: So the problem is bleeding, put simply, whether that's traumatic bleeding, things like gunshot wounds or stabbings, motor vehicle accidents, et cetera. Or just routine surgical bleeding. You make an incision and the patient believes you need to stop that bleeding. As a young kid, I assumed that in either of those cases, the world would have a standard of care that just worked and did effectively and consistently. And the answer to that problem is that really there's nothing that really works that well, and so the average way to stop bleeding takes at least five minutes with pressure. And if we're talking trauma, and we look at just the U. S. military, 91 percent of battlefield mortality is owed to what is called preventable hemorrhage, meaning it's a bleed that could have been stopped if only there were a more efficient product on the market. And if we look at the surgical suite, especially in animal health, which is a market that we've, that we started out in and that we've had great results in our products, have now been used in over 45, 000 procedures across the world, in veterinary surgery. And the vast majority of cost and waiting is just sitting there waiting for the patient to stop bleeding. In animal health what we lovingly call pressure in a prayer, where you pay someone an hourly wage to sit there with a finger on a bleed because there's nothing else better to do. Whenever a patient is bleeding, it's additional risk to that patient, it's cost to the healthcare system, and it's taking up space in an OR or an ER where the next patient can't be treated.

And so there's a massive problem in being able to stop bleeding quickly and effectively with a technology that is not overcomplicated, meaning something that could be used right out of the package without special preparation that can be used on anything that's bleeding, from gunshot wounds to neurosurgery to, small nicks and scrapes and everything in between. And that's where our technology comes in.

[00:10:00] Patrick Kothe: Bleeding is obviously, something that's been going on for, for, since, you know, Time started. What have been the challenges with coming up with a solution to stop bleeding?

[00:10:17] Joe Landolina: Really interestingly, we took a very odd path through innovation, and I think one of the common threads that we'll be talking about today is Cresilon's unorthodox path. We did a lot of things, quote, the wrong way, and I think that a lot of our success comes to the fact that we didn't follow the preordained path that most biotechs or medical device companies follow.

But with regard to this product, instead of finding a target and saying, We're really interested in improving the efficiency of factor 12 activation or something like that, and finding some drug or some API that targets that or some material that mediates a pathway. We instead found this material, I stumbled onto it, I was 17 years old, that 10 percent of the time inexplicably did things that I had never seen or heard of.

We could take this material and put it onto an actively bleeding wound and it would immediately stop it. But 90 percent of the time it would do nothing. And so this innovation pathway that we got was that we knew that we were on to something. We had this platform, but we didn't know how it worked. We didn't know what was lending that effect to it. We didn't know how to control it or what the variables at play were. And so the earliest years of innovation here, it wasn't us chasing a pathway. It was us finding this material and trying to learn the secrets of the material itself. Find out how to control it, how to quantify it, and how to be able to deliver that at the level of quality and level of quantity that the market and customer would eventually require.

And so it was a bit of, it was a bit backwards compared to how typical pharmaceutical development goes.

[00:11:55] Patrick Kothe: When you think about, everyone as an individual, everyone, every wound is slightly different. the mechanism for clotting, may be different in, in, in different people. So you've got all of these variables and you're trying to come up with the one solution. Talk to me a little bit about how you develop something in such a, such a strange environment but that you have all these variables.

[00:12:24] Joe Landolina: So bleeding is one of the most difficult situations to attend to as an engineer, right? Because it's a highly dynamic system. Everything is moving. Your patient is breathing. There's blood in the way. And so one of the challenges that we deal with as a team is that you can do as best you can on the bench to replicate what a bleeding environment or what a bleeding injury looks like, but you're never actually going to know whether the product works until you implant that product into a patient because every patient is different, just as you said. And so 1 of the 1 of the tenants core tenants that we built Vetigel and our technology platform around is this understanding that we will not over engineer.

There, there's a level of simplicity. It's effectively two sugars in water, that make up the product. There's not a lot of engineering that goes into it necessarily if you zoom all the way out. Now, when you look into the microscopic or the atomic level of the product, it's a completely different story. It has to be, it has to be designed to perfection, but it allows this responsivity, where it's a material, that it doesn't matter if you're bleeding water, it doesn't matter if you're a dog or a whale or a dolphin, or some exotic bird,that neither you nor I have heard of before. It just works, because it's a simple material that does nothing other than build a mechanical barrier in response to an injury.And it allows us to have this great versatility, that again, if we were looking for it, If we set out on a journey to find this, we likely wouldn't have found it. We stumbled onto the building blocks that, that got us there. Really the R& D that we do is about honing it in the right way.

[00:14:02] Patrick Kothe: You've got, priorities. you've got a, a traumatic wound. The first priority is to stop the bleed. But once the bleed is stopped, now you've got material there that could have longer term impact. I think, yeah, correct me if I'm wrong, but I think Krazy Glue was used in the Korean War, invented in the Korean War, I believe, that would immediately stop things. But... There were some issues with Krazy Glue after it was stopped. Is that correct?

[00:14:35] Joe Landolina: Exactly. So there are lots of things that stop bleeding. There are lots of chemical things. there's everything from crazy glue to pit viper venom,that instantly curtles blood. There was a product on the market for years, that worked by, Inducing a severe exotherma, effectively boiling the blood, to cauterize the wound, in a chemical fashion, which obviously creates more harm, but if you're alive, then at least you've survived the injury.

And so there are lots of things here, that have applicability, but they all have severe drawbacks. And so one of the benefits of this material, because it's plant based, and in fact, we didn't, I didn't mention this earlier, but the two polymers that we're using are not novel in any way. The novelty in them is the way that we purify them and the way that we mix them, but these are things that have been used for 50 plus years across the wound care industry and so the toxicology profiles, the biocompatibility, the reabsorption profiles are well understood. And so, as a young team in the beginning, there was a lot that we didn't need to rebuild. We were standing on the shoulders of work that had been done over the course of decades prior to us actually taking on this project.

[00:15:47] Patrick Kothe: So when you started taking it on, did you build out, these are the user needs, these are, based on history, these are the things that, we've learned, these are the things to stay away from, these are the things that we need in this particular product. Did you have a full understanding of the user needs and design criteria for the product?

[00:16:07] Joe Landolina: So one of the things that I've, I was a big proponent of in the beginning, and I still am today, is that,the customer is king. In this, right? We as engineers cannot make our own design criteria because what an engineer thinks is valuable for a clinician or for a patient sometimes will translate over. But most of the time you have to start with the customer and start with the customer's needs. And so one of the very first things that we did as early as 2 years into the founding of the business was we were buying booths at every exhibition that we possibly could for trade organizations. Things like the American Veterinary Medical Association or EMS World, which is a large EMT conference and convention to allow us to get in front of customers and present the data that we had and say, hey, we're building this.

What do you like about it? What don't you like about it? Where are your pain points? I talk my way into ORs. I talk my way into training. alongside military medics, through TCCC, which is tactical combat casualty care, just to see how are our competitors used today? What are the drawbacks? What are the benefits of these products? And how can we best engineer our technology to support the needs of the customer? And so that was with us from nearly the very beginning.

[00:17:24] Patrick Kothe: We're going to get into all of the steps to get there, but what does the product look like today? How is it delivered? What is it? What exactly is the product today?

[00:17:36] Joe Landolina: Sure. So our flagship product,is under the brand name Vetigel, which is an animal health broad indication hemostatic device. And so that, that means everything from neurosurgery to trauma and anything in between. And it is a pre filled five milliliter syringe, that's filled with this beige paste. It funnily enough, looks like hummus, both in color and in consistency. And all you do is you take the syringe out of the pouch that it comes in. It's provided entirely sterile. You uncap the syringe and then you deploy that product onto whatever's bleeding. And in under 10 seconds, the bleeding stops, and then you can peel off the gel and underneath the gel, there's a clot that the patient has formed. So none of our material stays behind. It's all the patient's own fiber. And then that surgeon can move on with the surgery, whatever that surgery may be.

[00:18:27] Patrick Kothe: it goes on, 10 seconds later, the bleeding has stopped. Immediately at 10 seconds, you can pull your product off and the patient's own, compensatory mechanism has, stopped, stopped the bleeding.

[00:18:41] Joe Landolina: So again, it is a little bit more nuanced than that. It depends on the health of the patient, right? But as an example, in spine surgery, which is one of the most critical areas for hemostasis, because if blood is obscuring the spinal cord, you run the risk of hitting the spinal cord while you're doing surgery and causing harm to the patient. In that case, the product is left in for 10 seconds. It's peeled off and you have an entirely dry field, meaning that there's no blood in the way and you can visualize what you're looking at. In something a little bit more traumatic or larger, something where you don't know what the patient's clotting abilities are, because again, this requires the patient to be able to produce their own fibrin for it to be working that quickly, the gel will always stop bleeding within about two or three seconds. The removal could be as long as five minutes if the patient is clotting compromised.

[00:19:33] Patrick Kothe: How would they know whether it's going to be ten seconds or five minutes?

[00:19:37] Joe Landolina: So typically, about 95 percent of the surgery is where it's done. The product is resorbable, it will be left in the injury, and sewn over. And so they're not actually gonna remove it at all. In some of the cases like spine surgery, then you've done, for that type of surgery, it's such an expensive and critical surgery that you've done extensive testing before the patient is in surgery. You know exactly what their clotting ability is and you can plan around it and we provide guidelines for our clinicians on that.

[00:20:06] Patrick Kothe: So the product is out in veterinary application. Where do you stand with human application?

[00:20:13] Joe Landolina: So in June of this year, we've, we received our first FDA clearance for use in humans and that's just a minor external bleeding indication. We see that more as a stepping stone, and then two days later, after that, after that clearance came through on June 30th, we submitted for a product by the name of TraumaGel.

And TraumaGel is Cresilon's major trauma product. So that's for external moderate to severe hemorrhage. So think gunshot wounds, stabbings, both military use as well as emergency medicine use, and that's currently under review by the agency. And so if all goes to plan, then assuming that product is cleared by the FDA, we intend launching that into the human market in the US next year.

[00:20:56] Patrick Kothe: And as far as surgical use, is that covered under the trauma, or is that a separate application?

[00:21:02] Joe Landolina: So that's a separate application. And so again, that's 1 of the benefits to what we're doing with Vetigel on the animal health side, because we can see every indication that we possibly can under that 1 product umbrella. In the human side, things have to be applied for a little bit more sequentially.

And so that product is currently under investigation for human use in surgery, and we, intend to file that at some point in the near future, but we're not quite there yet.

[00:21:31] Patrick Kothe: So let's, let's go back. Let's get in the time machine and head back 13 years, because you had a lot of things going on throughout, through that development cycle. So 13 years ago when you started this and you're 17 years old and you think, you know, a couple of things, what did you think the pathway was going to look like?

[00:21:55] Joe Landolina: So what I'll say first and foremost is that I tend to be, by role, I have to be an optimist, but the engineer in me, is a pessimist. I like to be very data based. And so when I started this company, it started mainly as an academic project. I had to be convinced of its efficacy myself, before I could go out there and realize that this would be a viable business.

And so when I started this company, in my mind, it was, this is a mechanism for me to get into a better medical school. I wanted to be a surgeon myself, and I thought that gaining experience here, while it likely wouldn't be viable and most startups would fail, it wouldn't be, it wouldn't be something that would take up 13 years of my life or something like that.

And very quickly, as we started prototyping and testing the product, we realized that we really had something special. And so the early years were really characterized. by two things. So the first of which was this realization that there was something this technology had to offer that we were not necessarily in control of. It was just there. We had stumbled onto something that had, as I say to my team today, a responsibility of good stewardship. When you see technology that is so differentiated, and so different than what's come before, there's almost a responsibility to pull the thread to the end. To make sure that it can get into as many hands as possible. And we started seeing that as early as the first couple of years of development of technology. And that's what kept us going.

And the second thing, which we were very lucky with, was that some of the early experiments that we had run were posted on the internet. They went viral, and so we got quite a bit of attention, both in our local communities, but also internationally.

And that brought in investors and supporters and potential employees that allowed us to have the resources to do what we needed to do from a very early stage.

[00:23:47] Patrick Kothe: Things don't happen without money, so you talk about investors. So you start it off as a project, it's in a lab, you're funded, you're able to do some things, but as you start to bring people in and start to make a company, you need investment. A investor investing in a 17 year old or 18 year old is a pretty risky proposition.

So tell me about the early days of fundraising.

[00:24:15] Joe Landolina: Definitely. And so it was the earliest days, frankly, were pretty standard. We diverged from that path around about 2015, when we'll get to that point in the story, but that was about five years in to, to the development. But the earliest years, we fought tooth and nail for investment. It was, it was very difficult, because obviously being 17 years old, you have to prove yourself.

We obviously didn't have resources of our own to pour into the business. We were struggling and subsisting off of meal swipes at the, at our residence halls, and there wasn't a lot that we could do to move the business forward. But we were lucky enough to have been able to leverage our university network. And so, uh, NYU was instrumental, in at least giving us a platform to get in front of potential angel investors, but still our first couple of, whether it was 100, 000 came primarily from family and friends and people that, were in our network, that, believed in what it was that we were doing.

And I remember our first investment check, we were told, look, we want to see proof of concept that this will work. And we want to see a patent or at least a provisional patent that shows that you've made some effort towards protecting this. And at the time from prize winnings that we had received from winning business plan competitions, we had exactly enough money to pay for half of each or at least one of the two things.

And so, uh, I made one of the most uncomfortable gambles that I ever made, which was, I put down payments on both of those things and just hoped that it would come through. And it turns out that the test that we needed to prove that, that the product would work, at least at that, that very small scale worked.

Maybe a complete fluke, maybe some luck, maybe a little bit of good science or some combination thereof, and it allowed us to cash that first investor check and start moving forward. And then as we started growing from there, we were helped quite a bit by virality. We, around. 2013 we had a video that was posted on the Internet that had over 140 million views on it, and that had about 8000 investors reach out to us to try to invest in the business in some way. And so we hired a full time employee, who was at the time in her MBA program, whose entire job is just to interview investors and select investors that would be most additive to Cresilon's mission. And at that time we were raising a small seed round of only a couple of million dollars, and we closed that out in just a few short weeks, and that was,something that could only happen in 2014, 2015.

[00:26:59] Patrick Kothe: Do you realize now how unusual that is that you're interviewing investors and not the other way around?

[00:27:07] Joe Landolina: I call it the pre Theranos days. And so you could get a lot further, with just a, with a compelling pitch and some interesting technology with some data backing it. And, and so nowadays, and, things are very much different. And when I advise entrepreneurs who are going through their first fundraise, it's such a different world today, but we were very lucky that we were able to avail ourselves of that.

And so those investors that came in and ended up, we didn't know it at the time, but being able to grow with the business. We were just, finding angel investors that were putting in high five figure low six figure checks into the business. And we built a raise that was somewhere around 4 million.

The intention with that 4 million was to go out and find partners to do everything for us. To merge with the orthodox path of MedDevice. And what that means was find a contract manufacturer who could do this for us. Find a CRO that could do the testing for us. Find regulatory consultants and advisors that could advise us through the process, and then find a commercial partner that would eventually take this to market. And in our minds, we would be able to do everything with the 4 million that we had raised, and we could at least bring this through the first 510(K), and we could ride off into the sunset and partner this off and, and then go move on with our careers. We couldn't have been more incorrect on that,and the very first wrench that was thrown into the works was manufacturing.

It turns out that the very thing that makes this product work, is, destroyed by gamma radiation or by any sterilization method by that means. And so what we were left with is effectively hummus in a syringe that needs to be made like a vaccine. And we realized that there are lots of vaccine manufacturers in the world and lots of hummus manufacturers, but none that were dumb enough to try to do it together in one product.

And so we were alone. And effectively, given this crossroads, which was either shut down the business or become an aseptic manufacturer as a bunch of college kids. And we obviously chose the latter path, but we didn't exactly know what we were getting into when we went down that path.

[00:29:18] Patrick Kothe: We're going to get into that a little bit more, but before we do, where did the, where did you discover the technology and who owned the technology?

[00:29:29] Joe Landolina: So again, it, fascinatingly, it was, so I discovered it in my, at my home laboratory, right? And again, this is where I was very lucky,to be able to have the resources that, that I had. NYU had no claim on the technology itself, so the intellectual property was wholly owned by me.

And we'd made the choice, because at that time, the tech transfer wasn't as well developed or as entrepreneur friendly as it is today, and that's changed for the better. And in fact, NYU was one of the universities that spearheaded making tech transfer better for the, for the entrepreneur. But at that time, it was very difficult.

We couldn't just transfer it into the university without losing a decent portion of the intellectual property. And we weren't willing to do that. Between 2010 and 2012, 2013, we were using a combination of my family laboratories, which, and when I say family laboratories, glorified kitchen counter and a winery with a bunch of equipment that was borrowed from Hoffman LaRoche in the late 70s. It was not fancy by any means, it was just a dedicated space with some beakers and balances and hot plates and other things like that were designed for wine, not for this type of chemical lab research. And then a few scientists in the community that were nice enough to donate some of their space to us, or let us borrow some bench space.

One of the front runners, or people who were most generous to us, was Dr. Dan Grandy. who was at the Feinstein Institute in North Shore, LIJ, out on Long Island, who let us use some of his research facilitiesin the early days before we could afford to go out and get our own.

Eventually in 2013, we decided that we needed to do research ourselves. And so I did what any good Brooklyn boy would do. And I went on Craigslist and I found an old 1930s school house that was broken down. And,we took over that building. It was in December of 2013. And I found an old dairy farm that had gone bankrupt and we rented a U Haul and we pulled casework out of the walls of that dairy farm, and we did everything from the flooring to the sheetrocking to the labs and eventually the clean rooms in that first space. And so we did it ourselves, and that was, again, only something that could have been done in 2013, 2014, but it was very Brooklyn. It was very do it yourself.

And it let us move forward without having to spend millions of dollars in overhead or in construction costs.

[00:31:58] Patrick Kothe: So you own the IP. you did some of the work at the university and then you pulled it out and, formed a space for it. When you were at the university and you're developing things, was any IP developed while you were at the university? Was there any issue there using university facilities and developing technology?

[00:32:21] Joe Landolina: So I wasn't using university facilities, besides maybe, running an experiment or two in my dorm room, which I, probably wasn't terribly well sanctioned, at that time either. Actually, there's a video of us, doing tests on, on pig blood, that I'd got from a local Brooklyn butcher. If you look in the background of that video, you can see dorm room furniture in the back. So we were,at the very least playing with blood in a dorm room. But, all of the research was done off site because we couldn't get access without getting into tech transfer, in some way.

Maybe naively, I didn't want to do that, and so we wanted to hold everything ourselves, and so we kept it close to the chest.

[00:33:03] Patrick Kothe: Did you know, did somebody tell you that? Or is that something that, that you thought about?

[00:33:08] Joe Landolina: So it was a bit of both. There were a handful of tenured faculty members that as we started pulling this aside, and one of them, I'm not going to name them by name, but she pulled me aside and said, Listen, Joe, my biggest piece of advice for you is keep this out of the university. Don't entangle yourself with this because as an undergraduate, you're free and clear of any obligation and you don't want to do anything that will make this seem otherwise.

And that came very early on in the development of this project. I think it was the summer after we'd, after we'd launched the company. And she called me on my personal cell phone and said, listen, before you do anything, I want to have this off the record conversation. And it was, incredibly helpful,to see that before we walked into a pitfall.

And again, I'm not knocking the tech transfer process, right? For companies that need the resources or can avail themselves of the resources of university in many places that's well worth it. It's just for us, and we were, we were very Brooklyn and, and very, very hell bent on doing it ourselves.

And the path that we chose worked for Cresilon.

[00:34:20] Patrick Kothe: Very valuable, advice that you got from that professor. So often, when things get intermingled, it just stops everything. And, pulling, things out of a university is not a trivial matter.

[00:34:35] Joe Landolina: Definitely.

[00:34:35] Patrick Kothe: 2013, you're, you've set up... A,manufacturing or research facility. Are you still in college at that point or have you graduated?

[00:34:47] Joe Landolina: I graduated in May of 2014, and so this was at the very end of college, which is why my senior year, I had a very special type of senioritis, which was, running the calculation of how many homeworks I needed to do in order to get a D or a C in a class, in, in order to pass, and, and, and I, I was, all in, by that point,but at that time, Cresilon still was not, we had opened that site to be able to solve the research problem.

Also, the fact that all of our employees at that time were NYU students. And so we needed something commutable from the, from the campus so that we can get our students or the student employees that we had to and from our offices while they were also going to classes. And that first research site, was about four subway stops away from the engineering campus of NYU, compared to the lab that we were using on Long Island, which was a two hour journey each way, with no cell reception. When you got out there, or my parents winery, which was at least a 90 minute drive, not accounting for traffic, and so, uh, we needed something close and local.

And then I remember it was Christmas Eve of 2013 when we got hit with the news that we could not manufacture this with a partner. We had to do it ourselves. And again, that crossroads came up, which was either shut down or do it ourselves. And the only place that was open was a clean room manufacturer on the West Coast because it was still business hours.

And I called and I made a gamble. I remember the first clean room we bought was $14,000 in parts that we had to assemble and build ourselves. And without thinking, I bought it. And just to show you how naive we were, our labs were on the second floor of this building. There was no elevator. And, I assumed the clean rooms would come in boxes.

And in fact, it comes in one massive crate, the size of a Volkswagen. And I didn't order lift gate service on the, on the freight service. And we ended up having to have one of our team members sit on 3rd Avenue to make sure that none of our friendly neighbors walked away with the copper wiring in our clean room.

We disassembled it on the street, broke it up piece by piece and reassembled it on the 2nd floor. And that was our 1st pilot plant.

[00:36:59] Patrick Kothe: I'm curious about your mental state at that point. Mental state meaning you had a dream of being a surgeon. You started this project and at some point in time you made a switch to say the surgeon thing either I'm going to put it in the back burner or it's over. When did that occur?

[00:37:24] Joe Landolina: Just to be very clear, I consider myself one of the luckiest people alive. Because if you had asked me as a kid what I wanted to do truly, it was that I always wanted to run my own business, and I wanted to do it in a field that solved a problem that mattered, that affected patient lives, and I just assumed that I had to follow a traditional pathway in order to be able to do that.

My assumption was that I would become a surgeon, and then one day, as a surgeon, I would come across a problem that was solvable and I would start a company and thatthat was always the end goal. and so even today, if you ask me what is my dream job is doing exactly what I do today.

And so in that time period, 2014, we had just come off of this massive media rush. We were in media internationally. I became a TED fellow. We were giving talks. We were on talk shows. We were solving a problem that mattered. And we had built a team that was doing good work and we were moving forward towards our goals, and we had never hit, or at least to that point, we hadn't yet hit any major hiccup. It was all up into the right. And so I was on top of the world, at that point, and I was doing exactly what I wanted to do and there was the only fear that was there was that, at some point, we would find something that would cause it to all come crashing down because I truly enjoyed the things that I was doing.

[00:38:43] Patrick Kothe: You hit this inflection point and you decide we're going to try and solve the problem. We're not going to walk away with it. We're going to try and solve the problem. At that point, $4 million, you thought that was going to be it. You mentioned before you're a hundred million into this thing.

So obviously a huge change. And you had angel investors who were in, in the deal at that point. Now you've got a completely different deal. What was that like to be able to go to your existing people and then go to new people and say, you know what? This is the new plan.

[00:39:19] Joe Landolina: I've skipped a step here. The 2014 step wasn't where we needed more capital. We actually were able to commission the pilot plant, make nine batches of sterile product. And then, that was when the reckoning happened. To give a bit of detail on that, over that next year, I graduated, we had all this media, we raised all of the money that we raised,the 4 million, we found a customer base, and so in that same, 8, 000 investors that tried to reach out to us, over 15 percent of the entire US animal health Market reached out to us to try to buy the product. And we had a waiting list that was 4, 500 customers strong. The product worked. We had a final working prototype that solved all of the needs of our customers and in our pilot plant, which was a 10 foot by 10 foot sterile room in a schoolhouse in Brooklyn, we made nine batches of product. And at that time we had a partner in the UK that was gearing up to do distribution for us in Europe, and so I took the first six of those batches, and 50 percent of all the syringes we manufactured, we sent to one of the top labs in the country to test for sterility.

And all 50 percent of those syringes came back as sterile. And so we threw a party, we had great celebration, right? That was the last, that was the last step. And I shipped the first three batches to the UK. I get a call at 3 30 in the morning, New York time from one of the team in the UK they said, Joe, we have a problem.

We've opened up the first crate of syringes and all of the syringes have turned black and, uh, to put it into context, the only way that a Vetigel syringe turns black is through a contamination, some sort of sterility event. And, this was the top lab for this type of testing in the country.

So I ran an experiment. I told them, hold on everything. I took the last three batches that hadn't been tested yet, and I opened up a few of the test syringes, and I licked them, and closed the syringe. Sent them to the lab, and they came back as sterile. And at that point, I realized that sometimes when you have novelty in a material, you can't use an off the shelf standard, right?

And this is one of the hardest lessons that I ever had to learn is that, as a kid, you think of these large institutions as infallible in a lot of ways, and then you start seeing them make mistakes and mistakes that can put your entire business at risk. And so in 2015, I made the hardest decision that I ever had to make, which was I pulled the entire plug on the launch.

We were ready. We had the waiting lists. We had our investors excited. We could have gone off to the races, and I pulled the plug and said, we're not launching under these circumstances. I won't put a patient at risk. And if we're going to do this, we have to build these labs ourselves.

I don't trust external labs. And in order to do that, we'll need at least 10 times the capital. And so in early 2016, after I pulled that launch, we went out to market and we immediately got term sheets from household name venture capitalists. But all of those term sheets, because again, this type of life sciences investing was new, it, we would have been the first venture deal for this type of brick and mortar manufacturing.

And nowadays there's a lot more of that, but these teams didn't really have a full understanding of what was required here. And so there were lots of hooks in the contracts and things that we weren't terribly comfortable with. And I, at the time, went to talk to an investor of mine who had, put in a couple hundred thousand dollars, and he said, listen, if you don't want to take that term sheet, I have some extra liquidity, I'll make a reinvestment. And so it was our existing investors, our angel investors that had come in for a hundred grand a piece or so, that ended up coming in for a couple million a piece or so. And so we have a large investor, who started as a hundred thousand dollars check, who's now written up to $25 million, into Cresilon.

And so we took a very unorthodox path where our investors doubled down on us. And it wasn't always easy. in fact it was hard because we were raising capital in, in drips and drabs and not in major tranches that allowed us to tackle it. But it took us from that point forward from 2016. It took us until October of 2020 before we had built 25,000 square feet of state of the art manufacturing and not a schoolhouse in Brooklyn and recruited a team that had done this before and that built state of the art laboratories and developed our own assays and validated those assays that we could do this quote, unquote, the right way, and, we're better off for it.

It was definitely, it was a painful four or five years of trying to get this together because it's not easy asking investors to pour capital into something that's highly capital intensive before we've even proven that we can do it. The entire four years there was a question to whether or not we could even make sterile product at the end of this.

And if it was sterile, would it destroy the efficacy? But,by 2020, we'd solved that problem,and we chose the best time in the world to launch a, a new life science product that requires in person training, right at the height of the COVID pandemic. But that's maybe a different story for a different podcast, but it was, it was harrowing to say the least, but we pulled through and we're lucky that, that we had partners that allowed us to get this done.

[00:44:41] Patrick Kothe: So Joe, that, that four year period, you're getting ready to launch, you've geared up, I'm assuming personnel, you've geared up personnel, you got all that going, you decide not to, you're run, now you're running out of money, trying to get it. Did you have to lay people off? What did you do to manage your resources?

[00:44:59] Joe Landolina: So we never once did a layoff. I have a very strong philosophy, toward, towards hiring, which is that, we do not treat people as resources that can be turned on and off at will. If you add someone to the team, they're a mouth to feed, they're part of the family, and if you show them that loyalty, hopefully they show you that loyalty in return.

there were years in 2019, especially as we were getting closer to the finish line, where I took no salary. I was paying payroll out of pocket for several payroll cycles, and some of our investors were stepping up and effectively floating us on a month to month basis as we were getting closer to the finish line.

And then, as we got to the very end, as we started doing that manufacturing, we were able to convert the advantage and open the floodgates and pull ourselves out ofthat holding pattern that we were in. But it was difficult because you can't argue with this type of biological testing.

And so when you make a process change, it's at the very least 14 days before you know whether or not the change was affected. And so you make a change, you wait 14 days, and if it fails, then you're SOL. You have to go back to the drawing board and you have to make another change. And so we couldn't tell investors whether it would be another two years before we got on market or another two weeks. And so it was a very difficult period of time because there was, there was a lot of development, a lot of wait and see, a lot of, trying to find the root cause of things, in order to get this type of manufacturing up. Because, I didn't mention it in particular, but the fact that this project is so novel, it meant that every single piece of equipment had to be custom designed and custom tested. And there were things like, if there's a certain screw that wasn't taken out and wasn't sterilized in the proper way, that can kill an entire batch in an aseptic process. And so you have to know your way around this equipment, and if you make one process change, it can affect six other things downstream.

And so there was a lot of learning, and you can't iterate rapidly, and that was the most difficult thing for us, because funnily enough, in Brooklyn water, there's a certain, there's a certain organism that's a slow grower. And what that means is that you have to have specifically trained operators to identify that organism.

And it only shows up on days 11 and 12 of testing. And you have to look for it, you have to know what you're looking for. and that's the canary in the coal mine. And so it took us years to figure out that was the marker to look for. And it took us people far more experienced than me.

I'm just more so the conductor. I make sure people have what they need. There was a woman who joined the team who we pulled out of retirement, who had designed major vaccine quality programs. And she was the one who, at first identified that canary in a coal mine, and another executive of ours who came out of Ethicon, who found the silver bullet that was able to put that issue to rest.

And between the two of them, and all the scientists that worked tireless hours, we were able to solve the problem.

[00:48:00] Patrick Kothe: So you mentioned you're the conductor and a conductor has a few constituents. You've got the audience, you get, you've got the band. as the conductor of a startup, you've got your employees, but you also have your investors and investors are typically not patient people. They'll be patient for a period of time and then it becomes, hey, you can't tell me this, I've been in this for so long. Tell me about how you communicate and manage investors to keep them on your side and also how you communicate with your employees to keep them motivated.

[00:48:51] Joe Landolina: So what I'll say is that it's never perfect. It's always a work in progress. But my strong philosophy here is that it's about communicating often and communicating in full. And so when there are risks in a process, being up front about those risks is the most important thing to do both to investors and to our employees.

Again, it's always very difficult, right? Especially when problems are financial and not necessarily technical, right? And especially in the middle of these issues where you're constrained in cash, sometimes you can't afford to greenlight six different projects at once. You have to pick the best.

Or most likely thing to work and take them sequentially, because if you flip on six switches at a time, you're going to break the bank, right? And so to employees, it's very hard to build level of confidence while also telling them that you're running out of capital and striking that balance is tricky.

I can't say that I always did that well, but at the very least, I think that we struck a good cadence with our team, where we were able to be very upfront about the challenges that we were facing, and bring them into the discovery process with us. And the same thing is true for investors where, you know, making sure that those investors are brought into the process with you.

That they show that you share in their frustration. Or do they see that you share in their frustration? And I think that was one of the most important lessons where there's, as a young CEO, you feel the need to always know the path forward. And I think sometimes the best thing to do for your investor base is to show if something pisses me off, I'm not going to hide it. If something frustrates me, if there's a risk or something that's keeping me up at night, I've realized as I've done this now for 13 years that the best thing I can do for my investors is to tell them, here are the things that keep me up at night, here are the things that are frustrating me in this process, and here are the resources that I need.

We were sending out frequent investor letters were the last section of that investor letter was a list of resources that we needed. And we were lucky that we had such a broad investor group that our investors were able to, even if they couldn't help financially, they were able to help in other ways to get us over the line.

And so it was just about building that community. Again, it didn't always work. And frankly, it's a testament to the personalities of the investors and employees that we attracted. Because even the best communication, It doesn't mean that'll win everybody over, right? And whether we're talking employees or investors, it's about selecting, for the individuals.

And I think we had gotten very lucky that we were very selective in the beginning because the investors we chose have been supporters and have been patient, frankly more patient than, than they probably thought they would need to be, from the beginning, even now. with Cresilon, I'm seeing an upswing of success.

[00:51:51] Patrick Kothe: And as you described earlier, leaders eat last and, it's painful. As you said, you're out of money, you're paying for employees out of your own pocket. That's a level of commitment that A lot of people don't understand what a CEO does and, going without, to try and keep the team together is something that a lot of us have done.

And it's painful and it makes you question your own commitment as well.

[00:52:23] Joe Landolina: Definitely. I mean, you, you get to see new lows. I think for me, it's something I've been, or I try to be very vocal about is founder mental health, because it's a very small group of individuals, that truly understand, what it means to be on that rollercoaster, because it's easy to look at the success stories as, as straight lines that go up and to the right.

I remember I was reading Shoe Dog by Phil Knight andI think a lot of the hardship that I faced was karma for the thought that I had when I read the passage where he was talking about on the eve of his IPO, he had to mortgage his house in order to pay payroll because they had such a low cash position, even on the eve of their success.

And it was only post IPO that they really started growing. And I thought to myself in the 2014 2015 years when everything came super easily and anything we needed was done. I was like,thankfully we'll never have to deal with something like that. And just a few short years later, we were,in a very similar position ourselves.

And so it's something about having that support system. And my wife and I, yeah. We only got married last year, but we've been together,for about 12 years. Having a support system, whether it's family or friends or other founders, that can be there that understand, or at least can support through that process, it's critical. The hardest years, what I'll say to any other founder that may be listening to this, was when I was trying to shoulder the burden myself and not sharing with my team.

And I think that the best thing you can do is, and again, there's always a balance, you don't want to scare people but saying, hey, this is the challenge I'm dealing with, right? I'm not disappearing for long periods of time to sit and stare at a wall.

I'm doing that to arrange backup funding, or I'm doing this to make sure that the lights will stay on tomorrow. And, here are the challenges that I'm facing. And this is why I need you operating on the plan that's here. It builds that trust with the team. But it also, it allows people to share in the stress.

And in doing that, it builds community and it helps you be able to move through that.

[00:54:26] Patrick Kothe: Joe, thank you so much for being so open about your journey. It's a fascinating journey. And as I said, it's about perseverance, it's about pivoting, it's about, an entrepreneur having an idea and through a lot of turmoil, keeping your hand on the rudder and taking this forward.

So I'm looking forward to your launch in the human marketplace and seeing where you guys go. Looking back at your journey, what are you most proud of? And what are you most looking forward to accomplishing in the future?

[00:55:08] Joe Landolina: Both of those things are pretty similar. I think the proudest moment that I had, earlier in the conversation, I said, I'm a pessimist, right? I need to see data. And the proudest day was when I got to see with my own eyes, our product save an animal life and a patient animal life, a patient that got up and was able to go back to their owners and pet parents and live a full, happy life.

And I think that looking forward, what we have on the horizon is saving our 1st human life. And then that's something that we've been working towards since the earliest years of starting this company and we're very close. We'll very likely see that in the next 12 months, and that's something that we're incredibly excited for.

[00:55:49] Patrick Kothe: How many of you were prepared to take on a challenge like Joe described when you were 17? Not me. I found his story to be fascinating. And there are still a lot of chapters that need to be written. A few of my takeaways. First when you're 17 mentors. It's not only when you're 17, it's every, every one of us. Having good mentors make a huge difference. What he did as he sought out people that could help him. Areas where he knew that he was not, uh, It didn't have the knowledge and we've got those areas ourselves. He also had generous people like the professor that gave him. Uh, him advice, on keeping his work outside of the university. We have people that come to us as well. If we're willing to be open to listen to them and willing to bring them in, make sure that when someone's giving you something for free, that you evaluate it and make sure that, you know, it's good for you as well. And the other thing was consistency in mentorship. He's got an 88 year old that he's been meeting with weekly. That's giving him advice and mentorship. The second thing was setting expectations of communicating. Uh, he, he described how he grew in that area. Originally was holding things and trying to be, you know, that person that, that rock But what he found out was learning and sharing helped him and all also helped us team, including investors. So, what he described was communicate often and communicate in full. That's going to be best to help, help to, to, uh, bring your team along and set the correct expectations. Finally, sometimes you just need to do things yourself. It can be extremely painful and it can slow things down considerably, but it may be the only viable way. We all look for shortcuts in here, but sometimes the best way is taking it in-house. So he moved manufacturing in house. He learned things that he needed to do on sterility move things in-house to assure, uh, that he was doing it correctly. And what that turns out to is to be best for the longterm success of the business.

Thank you for listening. Make sure you get episodes downloaded to your device automatically by liking or subscribing to the Mastering Medical Device podcast wherever you get your podcasts. Also, please spread the word and tell a friend or two to listen to the Mastering Medical Device podcast, as interviews like today's can help you, become a more effective medical device leader. Work hard. Be kind.​
 
Patrick Kothe
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