From Startup to Industry Leader: LIVE RECORDING AT SCBIO CONFERENCE

Have you ever played the game, Operation? The patient’s nose would light up and buzz if your tweezers touched the side. Neurophysiology is a lot like that game.

In this episode of the Global Medical Device Podcast, Etienne Nichols talks to Shawn Regan, CEO and Co-founder of Rhythmlink International, at the South Carolina Biosciences (SCBIO) Conference.

From startup to industry leader, Rhythmlink is a company that designs, manufactures, and distributes medical devices that physically connect patients to machines to elicit or record neurophysiologic information.  

Rhythmlink’s products are used during risky surgeries to help prevent or reduce paralysis, identify tumors, map the nervous system, and monitor brain waves. Its devices were the first of their kind to be cleared by the FDA to work specifically in MRIs.

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Some highlights of this episode include:

• Shawn describes neurophysiology as electrodes put on or under a patient’s skin to monitor their nervous system in real-time to identify dangerous situations.

• As a startup, Rhythmlink recognized the need to change from reusable to disposable products. Although the company did not know when that was going to happen in the medical industry, they knew it would and why.

• Early on, Rhythmlink experienced several challenges as a medical device company. It didn’t have any money, patentable technology, or intellectual property (IP). Co-founders had an idea, figured out how to create it, and bootstrapped it. 

• Collaborating with the FDA 20 years ago was easy and straightforward. Rhythmlink wanted to know how to submit a 510(k) to get FDA clearance.

• Rhythmlink’s electrodes can be put on and left on during an imaging study to allow the brain to be monitored more often, which results in much better clinical information quicker and consistently to find and treat dangerous situations.

• Rhythmlink decided to automate some of its products because shipping rates changed, led to higher quality products, and customers liked the products better.

• Rhythmlink makes its products in China and sells its products in the United States, European Union (EU), and nine other countries.

• Cost-Benefit Analysis: Rhythmlink’s regulatory strategy is to identify all the different regulatory requirements for all the different countries the company wants to be in and make sure there is enough of a market to be worthwhile.

Links:

RhythmLink

Shawn Regan Email

South Carolina Biosciences Organization (SCBio)

South Carolina Research Authority (SCRA)

FDA - Medical Device Overview

Centers for Medicare & Medicaid Services (CMS)

Plan, Do, Check, Act (PDCA) Cycle

European Union Medical Device Regulation (EU MDR)

EU Medical Devices Directive (MDD)

The Greenlight Guru True Quality Virtual Summit

Greenlight Guru YouTube Channel

MedTech True Quality Stories Podcast

Greenlight Guru Academy

Greenlight Guru

Global Medical Device Podcast Email

Memorable quotes from shawn regan:

“If you remember the game operation when you touch the side and the nose buzzes and goes off, it really is a lot like that.” 

“With our electrodes, the ability to put the electrodes on once and keep them on and leave them on during an imaging study allows the brain to be monitored more often.” 

“You get much better clinical information quicker and consistently all the time. So, you’re able to find those dangerous situations and then treat them.” 

“For our products, not every country has made the switch from reusables to disposables. All of the products that we make are disposable products, none of them are reusable at this point.”

Transcript

Announcer: Welcome to the Global Medical Device Podcast, where today's brightest minds in the medical device industry go to get their most useful and actionable insider knowledge direct from some of the world's leading medical device experts and companies.

Etienne Nichols: Welcome back. This is Etienne Nichols, the host of today's podcast. Today is an interesting episode because we're actually recording on site at a conference, SCBio in South Carolina. So this was really a fun episode to do. It was with Shawn Regan from Rhythmlink. Rhythmlink International is a 20 year old 300 employee Columbia, South Carolina medical device company that designs, manufactures, and distributes devices that physically connect patients to machines to either elicit or record neurophysiologic information from a patient. Rhythmlink's devices are often used during risky surgery, to help prevent or reduce paralysis, identify tumors and map the nervous system. Their products are also used to monitor brain waves, to ID seizures and strokes in the emergency department, ICU. And these products were the first of their kind to be cleared by the FDA to work specifically in MRIs. Rhythmlink also works with a variety of other companies who utilize and leverage Rhythmlink's internal capabilities to create partnerships to develop and manufacture OEM and custom solutions for companies such as Johnson& Johnson, NuVasive, Synthese, and SI- BONE. Rhythmlink has been PE back since 2019. It's enjoyed being named Inc 5000 Fastest Growing Companies list eight times. And has been named one of the best places to work in South Carolina for 10 years running. So, the name of today's episode is, From Startup To Industry Leader. And as I mentioned, this is a live recording, so sound quality may be a little bit different than you're used to, but hope you enjoy today's episode.

Etienne Nichols: Welcome everybody to the Global Medical Device podcast. I'm excited to be with you guys today. It's a little bit different for me. Usually I'm in my guest bedroom, today I'm in front of you guys. So for those of you listening on the podcast, you may have some different noise in the background, but that's what's going on here. Today I'm excited to be with Shawn Regan. He's the CEO of Rhythmlink. We got some introduction. I'd like to dive into your background. So you were originally a neurodiagnostic tech, but you've changed things.

Shawn Regan: So my background really is clinical. Out of undergrad, trying to figure out what I wanted to do. I ended up taking a job with a company that does something that probably, haven't heard of but it's called Neurophysiologic Intraoperative Monitoring. And essentially what we would do is we would... I worked for a company that got contracted out to go to hospitals, to bring a bunch of equipment into the operating room, hook a patient up with a whole bunch of different electrodes that would go on or under the skin. And you would monitor the nervous system essentially in real time, to try to identify dangerous situations and prevent most likely paralysis from happening. So if you remember the game Operation, when you touch the side and the nose buzzes and goes off, it really is a lot like that. And that's probably pretty much all you need to know. So, I knew I wanted to be in healthcare field. I knew I wanted to help people and this actually lined up really well with what it was that I studied and I did. And so learned this skill and this trade and I got into neurophysiology and we used a whole bunch of different devices in that. And that eventually ties us to where we get to today.

Etienne Nichols: So when we talk about Rhythmlink today, 200 employees... I've got a few notes here, but you guys design, manufactures, sell devices used to monitor the nervous systems. It's a big change. So one of the things I was curious about... Let me first state that the title of today is, The Startup To Industry Leader. What did that look like in the early days?

Shawn Regan: All we did was essentially recognize a need out there that we felt. So myself, having that clinical background using these products, we knew a couple things. One is that, eventually in the industry that we were in, they were going to change from reusable products to disposable. And we knew that was going to happen, we just didn't know when. And we also knew that, the reasons why it was hard to move from a reusable product to disposable. Which really, basically, came from the issue of getting these things made, having them made well, having a continuous supply of them and really someone understanding that once the product got out there in a disposable fashion, that it was going to be a wave and it was going to continue to take things over. So we looked at these relatively simple devices which our original products are... They're little subdermal needles that get slid right underneath the skin. They're attached to a wire. They have a touch proof connector that gets plugged into an amplifier. And we looked at them and we said," These don't look complicated." And I remember this is 20 years ago." These don't look complicated, let's make these ourselves." And we said," Great, let's do it. How hard could it be? Let's start a company." So we did... We started a company. And there's three of us that founded the company. I was a clinical person, there was one other clinical person who also worked in the capital equipment area and then there was more of a business oriented partner. And we all had jobs, but we started the company essentially in our spare time. And I think in July of this year, we'll celebrate officially being a company of 20 years. We didn't really know what we were doing. Which was both scary, but also in retrospect it was awesome, because we didn't know all of the challenges that we would have. If we did, we probably wouldn't have done it in the first place.

Etienne Nichols: So starting a company is hard enough, but you started a medical device company. What would you say some of the unique challenges that you faced early on?

Shawn Regan: Well, I don't know if they're unique, but for us... One of them is we didn't have any money. So we didn't have any patentable technology. We didn't have any IP, this wasn't born out of an incubator or anything like that. So we had an idea and we had to try to figure out how to do it. So we bootstrapped it ourselves and that was both good and bad. It was great because we were able to do it. We were able to maintain control. We were able to do all the things that we really wanted to do. At the same point, we put ourselves at tremendous financial risk. We put all of our savings into the companies. We quit our jobs. We were running a medical device company out of a kitchen and a living room. We didn't even have a garage to move stuff into.

Etienne Nichols: So how long before you took funding?

Shawn Regan: Well, we never really took funding. We got a grant from SCRA from SC Launch, probably about eight or nine years in. But at that point we were pretty well established. So we never really got any funding. 2019, we partnered with a private equity group, for a variety of reasons. So now in a sense we have access to more capital than we had before. We can do things, and we have done things with that, particularly on the acquisition front. But that's a far cry from where we were at the very beginning.

Etienne Nichols: Well, so early on, you had a possible way of getting money. I remember you telling me a story about someone giving you a cheque. Can you tell us about that?

Shawn Regan: Well, my dad wrote a cheque that we never cashed. And I remember going to him and saying," Just in case we need money, can we borrow money from you?" And I think he wrote a cheque for$ 30,000. That we never cashed, but we kept up on a cupboard, pinned up there. And it was really just in case money... Because at that point we had tapped out everything and... If anything had really gone wrong, then you're done. The margin of error is so thin that... But we never had to cash it, which was great. And it was awesome to be able to say," Hey dad, you can just void that cheque." It was exciting, but it wasn't a lot of fun. I was a lot younger and wasn't married yet, didn't have kids yet. Didn't have a lot to lose. That part made it a lot easier to be able to do that.

Etienne Nichols: So you were acutely aware of the need, you understood the pain and maybe you even had an idea of how you were going to do this, but what were your thoughts when you started talking to the FDA or did you start talking to the FDA? What'd that look like?

Shawn Regan: Sure. So 20 years ago, things were much different on that front. And I don't want to say it was easy, but it was pretty straightforward. I think we got in touch with the FDA sometime in August of 2002. Submitted a 510( k)... We called them and we just said," How do we do this?" And we asked and we went online and we looked at other 510( k)'s and we started filling out a 510( k). Back then it was a lot different. Back then you just had to really say," These are the things that we promised we're going to do. And when you audit us, you can check and you can make sure that we're following what it is we're supposed to do." We submitted in August and we got our 510( k) clearance in December of 2002, then had our first sale in April of 2003. So it was fast and we didn't have to do any of the biocompatibility, we didn't have to do any clinic... there was none of that. So in that sense, we were also very lucky or smart... If you want to go there, because we picked the right type of industry, the right type of product where we could do this. The right timing to do... It's a disposable product. So there's a lot of turns, our cash flow was always really good. Not that was something that we knew at all that was really just essentially luck in a certain sense.

Etienne Nichols: Well, it's interesting because when I talk to people who maybe developed devices early on... Well, when I say early on... Well, I'm just using your time reference as, early 2000s, late 90s. At least they typically tell me that the collaboration was not necessarily there or maybe it was not as desirable as it could be. Whereas, now the FDA is really encouraging a lot of collaboration. Maybe your story's slightly different and I can't help but wonder... Did you come in with more of a beginner's mindset and could that have helped?

Shawn Regan: Yeah. It's such a long time ago. It might have just been like," Hey, can you point us in the right direction?" And they did. And really you go back and occasionally I'll pull out that first 510( k) and look at, and there's not a ton of stuff in there. So part of it is I think its Just that's the way things were back then. These days and in particular... This is probably eight years or so ago, when we did... Working through the FDA and doing a lot of collaboration with them on some projects for products that are MR Conditional. So these are products that can be used in an MRI setting under certain conditions. And really it was the first time that a company got FDA clearance for products to be used in a 1. 5 and a three point Tesla coil. Are not implants, but these are electrodes that are on the skin. To be able to record brain waves basically. And so we went to the FDA before we were going to do this because there really weren't a ton of predicates out there. And there had been a lot of implants that had been cleared through the FDA to be used in an MRI under certain conditions, but nothing that was like on top of the skin. So there's a whole series of different questions as far as safety and efficacy goes and we worked a lot with them. We worked with the FDA, it was a really good collaboration. We worked with an outside testing company and really the three companies triangulated, did a ton of work. And that ended up being really successful. We were the first company to come out with an FDA cleared product in that space. It's been a really successful product for us. It's safe. It's effective. It's made really a big difference in people's lives. We were essentially able to be able to monitor people's brains easier and for longer periods of time. Oftentimes what'll happen is, someone will come in with some type of an altered conscious state. They're having a seizure or they're not acting the right way. And they'll put a bunch of electrodes on the head. It usually takes about 30 minutes to put the electrodes on. It has a really trained special person to be able to do it. They're not always available. So it can take a long time to get electrodes on the head to figure out what's going on with the brain, so that you can figure out how to treat the patient. Then if you want to image the patient, you have to take all those electrodes off. Image the patient in a CT scan or an MRI, and then find that person again, put the electrodes back on the head. So you keep doing this dance. And what happens is, ultimately the brain doesn't get monitored as much or as often as you'd like. So with our electrodes, the ability to put the electrodes on once and keep them on and leave them on during an imaging study, allows the brain to be monitored more often. So you get much better clinical information, quicker and consistently all the time. So you're able to find those dangerous situations and then treat them. So it is a big deal, but the MRI is a scary place. You can get burns very easily. That's usually the big thing that happens. And putting that type of a product on a patient, especially if they're not conscious or they're sedated and you're heating these electrodes up and they're burning, that's a terrible situation. It was really a wonderfully collaborative effort. It was a lot of work. One of the cool things that we found is that as we were able to do this, we really set the path for the FDA in the way they wanted these types of products tested, and the level of safety that they're really looking for. So we do have one competitor now in this space, but the way that they did their testing compared to ours was a much lower bar. So their IFU is filled with all kinds of restrictions and additional conditions that they have to meet that we didn't have to meet. I think because we really collaborated well with the FDA. And that's been good for us, because we basically have got a better product. We've got a product that's easier to use, it's safer. And the industry has recognized that as well.

Etienne Nichols: I like what you said there about," This was a newer, or maybe there wasn't quite a competitor in this space." When that happens, and you're in a blue ocean situation. You have a lot of options and you took the high road. And there's two benefits that came out of that. If you really do your thorough testing and thorough development, you're going to pave the way and increase the barrier entry for other companies, I would assume. And then you're also going to really help the patient because our goal is medical device professionals I would hope, is to improve the quality of life. And it sounds like that is one of the side benefits.

Shawn Regan: Yeah. We're getting to really why we're here in the first place, halfway through this.

Etienne Nichols: Sorry guys.

Shawn Regan: But I do that all the time. For me it's a given, that's why I do this. I want to be able to help people. It's something I've been interested in my whole life. But that's what we're doing here really. For us as a company, it's an easy choice because you don't want to do a poor job. You don't want to do something that's not going to have... Coming from a clinical background, the data that our products are... They take data from the patient and they route it to a machine. That machine does something to it so that you can do something with the information. It's garbage in, garbage out. If you get poor data in the front end, you can't do what it is you want to do. As a clinician, that was one of the worst things you could deal with. Just crap data. It made your life horrible. So, it's got to be a good product. It's got to be safe. You can't be hurting people while you're trying to help them. So for us, it's easy because that I think is built into our DNA. It's the way that we run the company.

Etienne Nichols: Yeah. And maybe we should ask if there are any questions at this point, just to wake the audience up.

Shawn Regan: Think they're sleeping.

Etienne Nichols: I know they trust us, so it's possible. They'll probably listen the recording if they have to. So, we talked a little bit about how you collaborated with the FDA. You saw a need, you met that need. That was the goal. You started collaborating with the FDA. So let's fast forward a little bit to manufacturing. How did that look like when you started coming up with the product? What did the manufacturing look like?

Shawn Regan: Yeah, sure. So this is a fun story. So as we got started, we had a product, we had a design. We actually went to... And so I know this is being recorded?

Etienne Nichols: Well, I think.

Shawn Regan: So we actually went to the state of South Carolina and we said," We have these products, we want to make them, where do we get these made? Can you connect us with companies that do that?" And they didn't, they couldn't. They said," There really isn't any place to make these here."

Etienne Nichols: This is 20 years ago.

Shawn Regan: This is 20 years ago. So what we ended up doing is, we actually hired someone who was an ex- pat, who lived in China, who went to the USC... Is in the MIBs program... It's now the Darla Moore School of International Business or it's the international business track, and hired him. And that person helped us find a contract manufacturer in China to make our product. That's what we did. We went over there, we interviewed a whole bunch of contract manufacturers. We picked one, they started making our product and away we went. We had a contract manufacturer, they were doing a halfway decent job. We had a product now that was cleared, we were selling it. At this point we start quitting our jobs and working on this full time. So the plan always, was to move away from a contract manufacturer. We didn't exactly know what that was going to look like but we were concerned with IP and ownership and everything else. And predictably, a couple years in, the contract manufacturer, for lack of a better term, screwed us over. And took our product and our design and withheld shipments from us and said," Here's a new contract. We want you to sign it." And at this point we knew that they were making it for other people.

Etienne Nichols: It was basically, blackmail.

Shawn Regan: Yeah. They tried to blackmail us into signing a contract that would make it impossible for us to get this product made elsewhere in China. And we said," No." And so not so nice words. And essentially, we started our own company there in China. And we opened up our own company to do manufacturing. And about a month and a half we spun a company up. We created our manufacturing line. We'd hired people, we'd transferred over. Everything that we needed to do and we started making our own product with our own factory and our own people. That was a do or die type of moment. We really didn't have any other choice. The first go around, we didn't have any choice really, but to find a contract manufacturer in the first place. We didn't have money, we didn't have expertise, we couldn't figure out any other way to do it. And then they tried to blackmail us and we had to start something up. So we have a wholly owned foreign entity in China that we've been running and operating for, I think 16 years now, something along those lines. You can't tell the Rhythmlink story without telling that story that has in certain ways locked us into a lot of different things. I know that, especially now, you talk about China and you talk about reshoring and all of that. I would hope that some of you have questions. I'd love to answer questions about it. Gentlemen in the front, Chris.

Question Asker: Interactions with FDA, did you have any interactions with CMS over those-

Shawn Regan: No, we didn't have any interactions with CMS because we're not selling the products there. So, FDA and typical inspections that we've had over the years here at the facility in Columbia, South Carolina and in Shenzen, China over there. But no, we didn't have any interactions there. Oh, sorry. No-

Etienne Nichols: Let us just repeat the question for the recording as well. So the question is, did you have any interactions with the Centers for Medicare and Medicaid?

Shawn Regan: No. Sorry, I thought you were talking about something else. Because the types of products that we have and where they fit in the DRG and everything basically, we didn't have to worry about reimbursement for the products that were there. Yes. So the question is," Why did you open essentially a company in China versus in South Carolina?" The answer is... there's a lot of answers. One is the supply chain was already there. The ability to do it, the skillset for the labor force was there. It wasn't here in South Carolina. So for our products, they're electrodes, which means that essentially, there's a wire that's attached to them. Most of the products have a wire. A wire is something that's really hard essentially to automate and to move around, so you have to put a lot of hands on it. And at that point, being able to get hands to do the job and to do it well, was one of the things that we really needed to be able to do. Plus we needed to do it really fast, because we had to build product quickly enough before our reserves ran out. So we only had two and a half months of product. We needed to do something right away and super quick. We've looked at reshoring and we've brought some of that reshoring back. We've done some automation, but it's still... Even that it hasn't made a ton of sense for us to do it. When you look at where you're going to make the product, where does it make most sense to do it? It still doesn't make a ton of sense to do it that way. Unless you could fully automate and almost have no one touch the product. That's really the thing that would make the most sense. And we tried a lot of that and it just doesn't work as well as actually having the hands on the product the way that we want it. Yes, Katherine. Sure. So the question is, automating some of the products that we make and stories behind that. So we spent a year and a half, we invested a whole bunch of money into different pieces of automation equipment. Expanded the facility, brought in clean rooms and a couple things happened. There's three things that happened. Some of the shipping rates changed, which changed the cost benefit analysis of bringing the product here. The idea is to bring it here in mass and then package it here, versus having it be packaged elsewhere. So shipping rates changed a lot which got rid of a big advantage of doing that. And really the product was a higher quality that the ones that were built at our facility in China and our customers liked them better. So it was ended up being a pretty easy decision... Once we came down to whether or not we could continue to do this. The customers liked them better, they were higher quality. So we moved that process back.

Etienne Nichols: How do you make those decisions? And it sounds like you just did the PDCA. We throw on acronyms, the Plan- Do- Check- Act. Was there more to the decision than" Let's just try this" or?

Shawn Regan: No, it was a really difficult decision to make because no one wanted to do it. This is a good example of... Essentially, in retrospect, it ends up being obviously not successful or you could call it a mistake. But we didn't know that at the time and the variables change over time as well. When we started sending out the product that we made by machine and we started getting customers saying," Why did you change your manufacturer? This is worse. We don't like it, change back." And you couple that with that the quality was less coming off the machines and it costs more, then it becomes an easy question. We still worked really hard on trying to figure out," Can we really make this work or not? Can we continue to invest? What's it going to look like at scale? How can we add more to it?" But at some point it becomes really clear. It didn't make sense to do so.

Etienne Nichols: Yeah. That makes sense. So, you were building your product in China then and it sounds like you weren't distributing in China. Were you global at that point or was it just the US?

Shawn Regan: Yeah, we've been... Well, not global, but we sell definitely outside of the US. At this point, we're probably sell into about 10 different countries, including the EU, which is in an interesting spot now because of the move from the MDD quality management system to the MDR. But yet we don't sell into China, we haven't sold into China. So at this point we're locked into about 10 countries plus the EU.

Etienne Nichols: I would be interested to hear a little bit about your regulatory strategy. I'm sure it's evolved since you first started. Are you able to tell that story?

Shawn Regan: Sure. Regulatory wise, what starts getting interesting is trying to piece together all the different regulatory requirements for all the different countries you want to be in, and making sure that there's enough of a market out there to make it worthwhile for you to do. And how cumbersome does all of that become. And then it becomes a big cost benefit analysis to be like," Well, we want to be in this place, but..." And for our products, not every country has made the switch from reusables to disposables. All of the products that we make are disposable products. None of them are reusable at this point. Some countries aren't at that point yet, and some countries are getting there. It just really becomes a business case analysis type of study to look at.

Etienne Nichols: So as a company... You mentioned MDD to MDR, how have you analyzed that? And what's your ultimate strategy? Can you speak to that?

Shawn Regan: Sure. So for those of you who don't know, there is a new standard that the European union is moving to. And I don't even remember what the acronyms are for, Medical Device Directive is probably MDD. I don't even know what MDR is. The move to MDR, it's going to be a lot more expensive, a lot more cumbersome, a ton more work. To make a long story short, you have a lot of companies in the world who are refusing to move from MDD to MDR, simply because it's too burdensome. We knew that going in... My stance was" Great, if no one is doing it, that's where we want to be." Because we want to be a company that can still do the types of products that we want to do. Part of what we do is sell our products to the end user, but we also do a lot of business with companies coming to us and contracting out our services and our expertise and our manufacturing. So there's a lot of big spine companies who have come to us, who are interested in making products that help them monitor the nervous system while they're putting in all the spinal implants. And having the ability to say to them," Hey look, we are CE certified. We can sell our product into the EU." That's a big sell, especially when it comes to those types of projects. So our thought was great. My thought was," Great, let's do this. It's hard. Great. I know it's hard. It's going to be expensive. Great. We know that we can do that. Is it really going to be that hard?" The answer is" Yes" and eventually the quality and regulatory and engineering and operations, and they finally broke me down. So, we made a decision in this past December that we're not going to do it and we're going to keep our MDD until that expires in 2024. What that means for us is that we won't be able to put new products on the market in European union. And that again is a business case type of thing. It just didn't make sense for us, for everything they wanted us to do to become certified for MDR. It really didn't make sense for us to do. So, I reluctantly said," All right, fine. Let's do it." I listened. I'm hoping in the future that they will change some of the regulations because there are a lot of companies who are not going this route. And I think that they're potentially going to have to change, they're going to run into some supply chain issues with just having medical devices and products available. Since so many manufacturers are foregoing that new standard.

Etienne Nichols: Yeah. It's going to be interesting to see how that impacts the potential regulation. We were speaking with someone on the podcast recently who is just talking about how things are moving from clinical testing, to initiate in the US, so it's very interesting. I think I saw someone fall asleep. So I wonder if maybe we should go ahead and see if they have any additional questions while we're at it on this subject. EMDR is everybody's favorite.

Shawn Regan: Sure. So the question is," Have we seen supply chain disruptions because of COVID?" And the answer is, yes, everybody has. For us in particular... So COVID was and is, continues to be a trip. And specifically, for supply chain, I would say some of the biggest things that are going on now is shipping containers." And how do you move product around?" We send a lot of raw materials from the US to China and some of the semi- finished goods back. And we ship all over the world, not just from the US, but from other countries where raw materials are coming from all over the place. And the shipping containers are... They're super expensive now. Whether you're flying them over or you're putting them on the ocean and holdups in the ports. That's probably been the thing that has hurt us the most. We had a pretty good sense of what was coming when COVID happened and we've been conservative in the sense, as far as inventory goes. We've loaded up on inventory, raw materials, finished goods. We've been able to stay ahead of the curve in a lot of different ways, which has been good. We haven't really been crushed yet by anything in particular and hopefully it stays that way. Because it's going to continue to be an issue for... I don't know how long. It's not getting any better yet or it changes. It's like an accordion, it snakes and it moves back and forth and certain supply chains will affect other ones and you really never know where the next issue's going to pop up.

Etienne Nichols: Do you have any insights for companies who are maybe starting out with their manufacturing, trying to overcome that or?

Shawn Regan: It's tough to balance because you sink a bunch of money into inventory and raw materials and supply chains get better or they get worse or you don't have that. It's really hard. Personally, I usually tend to be pretty conservative or try to error on the safe side. So, I'm going to want to have more inventory, more raw materials. And for a really long time, and it's one of the reasons why we're here is just into an inventory is in principle wonderful. And you can reduce your inventories and you don't have that much money tied up in inventories and supply chain and raw material. But if something goes wrong, you're in trouble. So we've expanded what we would call our different levels. Our base levels of where we want to keep finished goods and raw materials. Just trying to get ready for the next disruption.

Etienne Nichols: We have one other question, I don't know if you still have it in your mind?

Shawn Regan: Sure. So the question is, talking about Rhythmlinks, OEM and other partnering and capabilities within the company. So let me take a step back for a second. So we're a company that designs... This is also probably... Would be good for us to get into. We're a company that designs, manufacturers, distributes products that either go on or in the patient to record or illicit physiologic information. So we basically try to identify when paralysis is going to happen, when strokes are going to happen, looking for seizures. So we put different products all over and in the body and we monitor the nervous system and we do that in the operating room. I'd mentioned that earlier, we also do this in the ER and in the ICU, where we're monitoring the brain, looking for seizures. We do it in a couple other different clinical settings. And one of the areas I alluded to earlier is doing some OEM. So we have companies that will come to us and say... Particularly usually what happens, they come to us and they say," We need to monitor a nerve root" Let's say the nerve roots coming off of L5- S1." We don't know how to do it. You can do that. We want to put the screws and the rods and the plates in there to stabilize the spine. When we go in there and we fix things. Can you help us make sure that those nerves are intact during the surgery?" So we say," Yeah, we can do that." So we'll leverage all of our 510( K)'S, the regulatory, the design distribution... One of the advantages of starting a company and bootstrapping it yourselves is that you have to figure everything out as you're going. So over time, over 20 years, I'd like to say we've got fairly decent broad and deep experience because we didn't have any other choice. We either had to figure it out ourselves or we couldn't do it because we didn't have any money, we didn't have any partners. So because of that, what we learned is that we can really leverage that in- house capability from manufacturing, design, quality regulatory. And we can help other companies with their products and their ideas. So we do OEM stuff for spine companies. We do it from implant companies. We do it for companies that are in the heart space, EKG companies. There's a bunch of stuff that we're starting to get involved with now. We have a team of folks who are going out and actively looking for different OEM and custom opportunities instead of just waiting for those opportunities to come for us. Essentially, if you want to connect a patient to a machine, that's really where we live and what we're good at.

Etienne Nichols: Awesome.

Shawn Regan: So those are things that we can help with.

Etienne Nichols: Yeah. That's good to know. A lot of our listeners are medical device startups that could potentially use that type of partnership, so it's good to know. So one other question I had because... Since I get to ask my own questions, I'm pretty lucky here. You've seen a lot of different changes. Your position is changed in the company. I don't know how many of people consider themselves a founder or maybe a potential CEO. What does that look like? How's that evolved?

Shawn Regan: You don't know what you're getting into when you get started. And that's fine and that's great. And it's not easy and it's hard. I am a co- founder. I've been the CEO for 15 years, something along those lines. And as the company changes, you have to change. You really can't ever become the bottleneck. If you become the bottleneck in a small company... We're no longer tiny anymore, but if you become the bottleneck in any company, you're in trouble. And your role changes as the company grows and you bring more people in and you have more capabilities and you need to really be able to step aside and let go. And that's a really hard thing to do, especially when it's your company, it's your baby. Especially when... Early on, you're running the razor's edge between disaster and continuing to push things along. So I think for me, hopefully one of the things I've done halfway decently is, evolve my position so that I'm not the bottleneck anymore. And I keep getting out of the way and keep bringing in people who can do the job that needs to be done better than I can. It becomes a bit paradoxical because the bigger you get and the more there is to do the less that you do. And it's a really weird, strange thing to not necessarily throw yourself into every issue into every project.

Etienne Nichols: You mentioned a phrase" Trust, but verify." So usually when we use that phrase, we focus on the verify, but it sounds like you're also saying you got to actually trust. At some point.

Shawn Regan: You absolutely have trust. If you don't trust, you'll never grow, you'll never not become that bottleneck. But the same point, especially when... You can really set yourself up, if you're never looking over your shoulder and never having some checks and balances, you can really find yourself in a pickle pretty quickly. Part of our core as a company and the people we want there, we want them to be accountable and everyone wants that. But that's something that we really try to bring into the company and make sure that the people that we're bringing in and that are continuing to do well in the company, they're accountable. They do what they say that they're going to do. They're reliable. They're trustworthy. It makes it easier to trust when you hopefully are working with really good people who share those values.

Etienne Nichols: Yeah. So I think we're getting close to time, but just thinking about, you're speaking to a lot of different types of medical device companies and we're in South Carolina as well. Any advice that you can give to those people who are starting out and maybe they're somewhere halfway between where you start, where you are now. Any insight you want to give? Last parting thoughts.

Shawn Regan: Sure. SCBio has really been pretty fantastic. So I've been involved with SCBio for a long time now. 15 years in a couple of different iterations. One of the things that was really interesting when SCBio was really ramping back up 15 years ago, is making connections between all the different companies and resources and organizations in South Carolina. And once we started to do that, I started to realize, there's a lot more here than we originally thought. And as the years have gone on and as SCBio has grown and the life sciences in South Carolina have grown, those connections keep getting stronger. And the state's doing really well, it's growing. SCBio has really been a big part of that. So where I'm tying that in is, the ability to reach out and make connections and ask for help, which is something that I don't always like to do. But to ask for help and to really lean on the people who are in whatever community you're in, whether it's South Carolina, wherever it is, they're going to be organizations you have to ask for help. You have to collaborate. You have to really lean on other people and trust that... And be vulnerable that you can say," Hey, here's my issue. I don't know the answer. Can you help me?" So I would always go that route. It's something I wish that I would do more. Every time I do it, I always come away pleasantly surprised, I'm like," Why didn't I do that earlier? That was really wonderful." So that's a piece of advice, I think that would be really helpful.

Etienne Nichols: Okay. Great. Well, thank you very much. It was an interesting conversation. For me, I feel like I learned a lot. For those listening, you've been listening to the Global Medical Device podcast. We've been speaking with Shawn Regan. If you want to learn more about what he does and what Rhythmlink does, you can look at the show notes. It really enjoyed it. This is powered by Greenlight Guru. So we are the only medical device success platform that is specifically for medical devices. So if you're interested in learning more about Greenlight Guru, go over to www.greenlight.guru. Thank you for listening and enjoy the rest of the show. Thanks guys. Thank You.

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