GI Dynamics (ASX:GID) CEO Scott Schorer has had an uphill battle over the past year. His company has faced regulatory and compliance issues, negative shareholder sentiment and a number of other concerns.
But Schorer and his team are committed to righting the ship and saving a product they see as having no equal in the current marketplace – even if that turnaround requires difficult decisions be made.
“The main guiding light at GI Dynamics is that the EndoBarrier is a phenomenal product,” Schorer told MassDevice.com in an interview. “We are firmly committed to making sure that this technology survives for the patients and the shareholders. It’s worth saving.”
The EndoBarrier device is a plastic gut sleeve designed to prevent the absorption of nutrients from food as it exits the stomach and enters the intestinal tract to treat Type II diabetes and obesity.
(See Schorer and other leading minds in medtech live at DeviceTalks Boston on Oct. 2.)
Schorer said that he and the people at GI Dynamics see a huge potential in the EndoBarrier for treating individuals with Type II diabetes that other devices and treatments don’t currently provide.
“There’s a dire need to address Type II diabetes, because it’s not being addressed. The treatment is not being addressed. The disease state progression is not being attenuated by drugs or gastric bypass. Neither are sufficient, so there needs to be something, and as far as we know, this is the only thing on the horizon that attacks the diabetes problem,” Schorer said.
While there are companies looking to treat obesity, which can feed into diabetes progression, the technologies do little to nothing to lower blood sugar, Schorer said.
Despite the device’s benefits, the battle to move it, and the company, towards commercialization has been a rough one.
Last October, the company’s EndoBarrier device was removed by Australia’s medical device regulator, the Therapeutics Goods Administration, ending its commercial presence in the region.
Schorer said the removal came quickly, and that the TGA made its decision before the company had time to respond and address the issues.
The company had received notification of the removal only a month earlier, with the TGA classifying it as due to a lack of “adequate evidence of compliance with certain provisions of the TGA Essential Principles.”
“We had no time when we arrived to address the TGA. They had essentially made up their minds, I think,” Schorer said.
This May, the EndoBarrier’s CE Mark was suspended, with “nonconformances” noted as the culprit.
Schorer said that the new management team, himself included, knew that the company had a long list of compliance issues to address, but turned their initial focus on the highest priority items – patient and device safety.
“We spent a lot of time when we arrived making sure that 1st and foremost, we were comfortable with the device safety and patient safety. That meant reviewing all of the legacy data, then immediately moving to upgrade all of our risk management and risk mitigation strategies on all of the patient-associated risks. So that was done early and very positive,” Schorer said.
And correcting those issues is taking time, Schorer said, though he doesn’t think that the problems have moved the company off course.
“It’s taking longer to solve the issues that we have here. It’s not longer than anticipated, because in these turnarounds, there’s always about a year-and-a-half to 2 before you’re out of cleanup mode,” Schorer said.
More important to the the turnaround has been changing the culture of the company, Schorer said, and those changes have required significant cuts to personnel.
“We’ve completely restructured the team, and very few people are remaining from the old company,” Schorer said. “That had to do with a cultural change. It was very clear that the culture of the company in the past was not acceptable.”
Culture has been an essential part of all of Schorer’s strategies, he said, with a focus on building an atmosphere of accountability and trust.
“I always focus on building a really open culture, taking care of the employees and allowing them to do their jobs in a very focused environment,” Schorer said. “That’s something I learned a long time ago, and I’ve made pains to make sure that it’s a number 1 focus.”
Schorer and his team cut costs, implementing a 30% cut to the workforce to slow the company’s cash burn and buy it time to course-correct. He also shifted how the company communicated, specifically with it’s shareholders.
Despite facing negative sentiments, which Schorer said were justified given the company’s history, he said it was important to be open and communicative with the shareholders.
“We’ve been very open in terms of communicating with the shareholders. I don’t think the shareholders were getting the full communication in the past, but we are very open now. We have a shareholder call on Monday, and we don’t pull any punches,” Schorer said. “Having been in a number of turnarounds, the last thing you want to do is paint too rosy of a picture. It is what it is. Here we are.”
The company has seen its fair share of victories this year as well, netting reimbursement wins in Germany and the UK, alongside solid financials, Schorer said, and promising clinical trial data from multiple studies.
And more importantly, the company culture and trajectory have begun to shift, Schorer said, giving its Endobarrier, and its shareholders, something to hold onto.
“We have a core group of very committed people, employees, contractors, and we’ve built the scientific advisory board that’s world class and very tightly engaged with the company,” Schorer said. “I’ve heard from every single 1, these are prominent clinicians, they would not join our scientific advisory board if they hadn’t each individually reached the conclusion that we are safe and effective and a technology that’s worth working on.”
Through everything, Schorer imparted that the company is entirely focused on the EndoBarrier device, and its employees are dedicated to bringing it to market because they see the value, and potential, it has to change lives.
“That’s the number one thing that we focus on. If you don’t focus on that, you can’t be in healthcare because you have to be in healthcare for, number 1, 1st and last, taking care of patients – providing a clinical benefit that’s measurable, that’s differentiated and necessary,” Schorer said. “If you don’t have that, you really shouldn’t be pushing whatever technology you’re pushing. You need that. You need to believe that’s the most important thing.”
See Schorer and other leading minds in medtech live at DeviceTalks Boston on Oct. 2.