Avi Penner, Chief Executive Officer at InSeal Medical Ltd
Julio Martinez-Clark: Hello Avi, thank you for joining the call. I am honored to be on the phone with you, and I really appreciate the time you are taking to speak with me about my research on this EU MDR topic. Let's start with the first question: Shall Medtech companies still consider Europe as their first commercial market before they seek FDA approval?
Avi Penner: When we started with the previous company and also with this company, going back 10-15 years, maybe even 20 years, I would say that the European market definitely was the first to be approached, as it was much easier, facing regulations that were significantly lower regarding the approval of devices than in other markets at the time. It was much easier to get approval for a clinical trial in order to start the evaluation of devices in Europe, compared to the US. Everything was easier, faster and cheaper. Starting about five years ago, maybe a little bit more than that, the European regulations became tougher and tougher every time, getting closer to the US FDA regulations. On the other hand, the FDA started to lower the bar because they understood that technology is not coming to the US anymore, but rather placed in the markets outside of the US. In order to bring it back to the US, the FDA started to lower the required regulations. For example, implementing the Early Feasibility Studies (EFS) program.These innovative pathways makes it much easier to start in the US today, while in Europe it has become much harder to start. Even getting an approval for conducting a clinical study in Europe today is becoming a challenge requiring more supporting data than required few years ago and to receive the approval for product marketing (CE Mark) in Europe is becoming a major challenge. The requirements are actually not very different than those required today by the FDA. There is one big difference that I see between the US and European agencies, in favor of the US, and this is the level of confidence that you have in the process when you enter it. The FDA encourages you to communicate with them and schedule meetings as soon as possible in order to allow the Company get feedback on its plan. So, if you can present your plans for the approval process to the FDA - a pre-clinical, clinical trial program etc. and receive FDA’s feedback. In Europe, that is not the case at all.
Let me share with you an experience we had several months ago. For improving the product efficacy and safety we came up with a very small change in the product design. As our product is a class III device per MDD every change must be confirmed by the notified body. We approached our notified body which for some totally unjustified reason classified it as a major change that requires a clinical trial before allowance. So, we prepared a plan and sent it to the notified body saying: “This is what we are proposing to test in order to get your approval for the change. This is the risk analysis, this is the change, this is the validation plan that you were suggesting. What do you think? Is this something that you are going to approve assuming that we are going to pass all of these stages?” And the answer was: “We are not going to give you any feedback, as we are not allowed to consult. Please implement whatever program you find appropriate, and after completing the evaluation send us the results and we will then consider the application and decide if suggested change is allowed or not .”. This is a major difference and issue. You are starting to work on a program, investing millions of dollars in it without any confirmation that, at the end of the day, assuming all outcomes be positive, it be sufficient to support the device approval. They then might say: “You know what, if you would collect a different parameter in the clinical trial or if there were ten patients more in the clinical trial, that would make the difference for us.” That is a major issue, even now that we have expanded our manufacturing facility. So, we have a clean room of X. We wanted to increase its area to Y, so we added a design of the clean room and a calibration plan of the clean room. As a next step, we submitted our plans to the notified body to make sure that whatever we are going to test, is going to be applicable and accepted by them. Again, we received the same answer: “We are not going to give you any feedback. Go ahead, run your test plan and send us the results, and we will decide then.” We did so, and then they got back to us saying: “You know what, could you also check the bioburden on this specific component? That is something that we feel is also required for allowing this change.” I mean, come on, do that earlier and save me the couple of weeks that we now have to wait for the bioburden. Why waste our time and money? Accordingly, all the manufacturing was shut down, as we cannot manufacture until they approved the new manufacturing facility. The uncertainty that exists in the European regulations today is awful. It is totally unacceptable, and I don't see how companies would be able to live with that. In order to put an end to this process, there has to be some amount of certainty — a factor that is totally lacking today. I don't know why that is the case, as in the past, they used to give feedback. I think it is the EU MDR that drives everyone mad. Companies do not know what is going to be required; maybe it is the pressure from their authorities that grant them the license for the notified body. I do not know what it is, but something is wrong in the process today. So, that is something that I feel very comfortable sharing with you because I think it is something that is going to bother every company that is going to Europe today. In the past, the US had also always been a moving target; don't take me wrong. It is not as if the FDA gives you an answer, they are not going to change it afterwards. They might, but at least you have something that you can rely on. So, if you ask me today, the answer is, I would go for the US first, not for Europe, due to the uncertainty.
Julio Martinez-Clark: Ok, and what about other markets, parallel to the FDA? If you are interested in starting to generate new revenue, would you still go to the FDA first, or would you consider other markets like the Middle East, Asia or Latin America?
Avi Penner: Well as to Latin America, we looked into this market in the past. Actually, the first clinical case with our vascular closure device product, was with Alexandre Abizaid in São Paulo, Brazil, which is an amazing high level clinical site. We definitely look at that time into Latin America and then we learned that the regulatory pass in Latin America, in order to get approval, is awful, at least in Brazil. It is not so much the regulatory pathway itself rather than the whole bureaucracy around it. You need approval from this agency, and from that agency, the imports need to be approved by, again, another agency. So, at the end of the day, when we tried to estimate the confluent, it was very hard to evaluate how much time it would take, besides that it would be a lot. It is not as if the path is shorter than in the US, and for sure the US is a larger and a better-appreciated market by investors. Marketing in South America is very interesting on one hand due to the very high price of medical devices there, which is higher than anywhere else I could find; but there is a good reason for that, which is that it is not easy to enter this market due to bureaucracy issues. So, if the bureaucracy was simpler, I would for sure consider it a good market, maybe a first to go market. Currently, given the combination of all these things, I would say that I would probably go to the US first, and as a second market - to be honest, I cannot say if it would be Latin America or Europe - probably Europe due to the distance, but that is secondary to everything.
Julio Martinez-Clark: Ok. So, What has been your company's experience with the EU MDR? would have been the next question, but I think you have already answered that with the first one.
Avi Penner: The main problem is that no one really knows much about the MDR today. It is something that I cannot understand how it is going to be implemented. I am sure that you are familiar with the EU MDR, and one thing that appears in the MDR is the fact that all the approvals that exist today are going to be canceled and we need to get a new approval. I mean, good luck with that! The extreme would be that all medical devices need to be reevaluated, you can't be grandfathering. So, what are you going to do to support that? No one can tell you today and of course, I do not believe that anyone considers that all devices that cannot get approved in Europe are going to start new clinical trials. That is not going to happen, there is not enough population to do that. So, what are they going to do? In my opinion, they need to find some mechanism, so they probably would go for grandfathering, although they said they will not. So, if no one can tell me today which way will be the cleverest to go with a product that already exists in the market, how we are going to grant its reapproval? I cannot really tell how we are going to get organized for that because we do not know the requirements, whether we need to do a new clinical trial or not. I would just love to have some clarification. One thing that I am quite confident about, is that they are probably going to postpone the initiation date of the MDR. I do not think that the notified body nor the competent authorities are really ready for that date. They will have to figure out some way to get out of this mess. For sure, I would not introduce a new device to the MDR now without some knowledge about the process, as there are still uncertainty and unawareness about the MDR requirements. Today, almost always, I think it is impossible to submit any more new devices via their own medical device directive. You have to do that via the new MDR. It is unclear to everybody, including the notified body, how they are going to approve new medical devices today and what the fate of the already approved ones is going to be. It might just be the lack of my knowledge, but from the feedback we received from the notified body, we get the impression that they do not have the answers yet.
Julio Martinez-Clark: For your information, it is not just you. I have been interviewing CEOs from different Medtech companies similar to yours, all sizes, and that is kind of the general consensus — confusion.
Avi Penner: I am happy to hear that, and I think that the press needs to publish that. It seems as if it was an issue for your company only, but it is not. It is a huge issue, especially for the European population. How are they going to be treated after May 20, 2020? I cannot imagine the debates we can expect.
Julio Martinez-Clark: Alright Avi, I think you have answered all my questions clearly. I really appreciate our time together.
Avi Penner: Thank you so much for the opportunity.