16 Mar #OrthoInsider feature interview with Dr Matt McGirt Vice President of Clinical and Commercial Development at Mammoth VC

The risks involved with early-stage venture capital investment in the healthcare industry are well established. An uncertain road to product adoption in a highly regulated and nuanced industry, challenging reimbursement pathways and a lack of understanding of cultures in healthcare are all things that can ultimately lead to failure.

One way to reduce risk is to work with partners who have experience at every stage of the development ecosystem, and probably no one understands this better than Dr. Matt McGirt.  A practising neurosurgeon based in North Carolina, Dr. McGirt is also an internationally renowned author of more than 300 peer-reviewed articles and textbooks and one of the founding members of the American Spine Registry, creating a data sharing network between more than 200 US hospital systems.

With more than a decade of experience consulting directly with government and commercial healthcare payers and Fortune 100 companies, he is also Vice President of Clinical and Commercial Development at venture capital and private equity fund Mammoth VC, which invests in early to growth-stage life science and biotech companies.

We spoke to Dr. McGirt about his viewpoint as a clinician scientist and entrepreneur, some of the common pitfalls facing medical device company founders and management teams, and the criteria Mammoth VC look for in their portfolio companies.

“As these past two years have dramatically demonstrated, worldwide healthcare and tech are perhaps the most critical components of the national and global economies,” he said. “Innovation in healthcare – while already vigorous – has been dramatically accelerated by the massive amounts of spending on fundamental and clinical life sciences research.

“If there’s one sector of the worldwide global economy to invest in – particularly in the United States – healthcare, biotech and life sciences are all vying for the top spot. The market is strong, and if one were to get into private equities you would want to get in at a macro-scale to a growing and strengthening market, where both private entities and government entities are investing heavily.”

As a physician who emerged as an innovator within his clinical peer group, Dr. McGirt believes he has a unique perspective, as well as the relationships and skills, that allow him to operate in the venture capital space. And he is surprised more doctors haven’t followed a similar route.

“This is an under-utilised pathway for physicians who find themselves achieving in the clinical realm,” he said. “When picking and choosing the right health tech companies, it is a massive advantage to have spent half a lifetime in the field seeing healthcare administrators make purchasing decisions, and why doctors and patients choose or don’t choose medical technologies and services. You cannot teach that in a business school classroom or learn it on Wall Street.

“Merging my years in the field and consulting with all the major players in the development ecosystem creates my value add as a clinician scientist and entrepreneur, and it’s a transition more leading physicians should consider. A lot of venture capital and private equity decisions makers are outside the shop window looking in, but your success rate and accuracy goes up ten-fold when you’re inside the shop.”

And it is this expertise and approach that Dr. McGirt believes is at the heart of Mammoth VC’s investment strategy – eliminating or reducing the blind spots that exist within traditional venture capital dogma. 

“It takes a true content expert in the clinical field to validate if a technology is going to address unmet clinical need,” he said. “It’s hard to understand FDA pathways and government reimbursement if you haven’t gone through it, and a lot of institutional investors stay away from healthcare because of this factor.

“But at Mammoth VC we have clinical content expertise not as consultants, but as general partner managers. We also have a unique limited partner base representing payers, Fortune 100 companies, hospital administrators, researchers and physician leaders from a multitude of spaces that allow us to get immediate, trusted insight on product market fit in real time.”

With a multitude of regulatory pathways, timelines and investment levels required for FDA approval, Dr. McGirt is clear about the tenets Mammoth VC operate by when selecting portfolio companies. And two of the companies that exemplify their approach are MiRus, pioneers of the MoRe® Rhenium-based Superalloy, and bone imaging specialists MRIguidance in the Netherlands. 

“Firstly, we avoid preference-based products or companies with a binomial outcome that either succeed or fail,” explained Dr.McGirt.  “We also don’t like companies built around singular additions to the healthcare market. We need to know and have laid out a clear pathway for soft landings that are exit ramped along the way that still offer a growth in profit if the product isn’t the exciting addition to healthcare we thought it would be.

“We like companies with a strong IP position that can contribute in a multitude of services or products and there needs to be strong, proprietary protection of the technology so it can’t be reproduced by somebody later. 

“The MiRus Superalloy has complete proprietary control, and is the first new alloy approved in 40 years by the FDA. It can launch and grow in 20 different vectors in all service lines of healthcare, which is the polar opposite of limited products and services.

“MRIguidance is also proprietary, and highly protected. We were approached as KOLs and led a special funding vehicle, and will be deploying their Series A. The scalability is incredibly broad reaching into all branches of healthcare.

“We are mitigating the risk typically associated with Series A, B and C investing in healthcare. Ultimately we want to democratise access to elite private funds, giving access to high quality and top performing venture capital to thousands of non-institutional and institutional investors alike, which does not exist right now.”

Visit mammoth.vc for more information on how Mammoth VC investing in ambitious and carefully curated health science and tech companies at Series A and beyond.