Welcome to “Innovators & Insights,” an interview series hosted by Chris Strohsahl, President & CEO of Drummond Scientific, where leading minds in the life sciences industry share the latest industry trends, groundbreaking innovations, and pivotal stories from their professional journeys. In the first edition, Chris sat down with Nate Davis and Brandon Johnson, the co-founders of StudioDx, a company helping diagnostics start-ups find the resources and support they need to enter the market successfully. In this dynamic conversation, Nate and Brandon share the keys to building a successful start-up––exploring the importance of quickly identifying product viability and market acceptance, as well as utilizing collaborative partnerships throughout the diagnostics ecosystem to shortcut the transition from concept to commercialization.
Chris Strohsahl: Can you describe your professional backgrounds and how you came to be here?
Nate Davis: I have a background as a scientist. For six and a half years, I worked at RA Capital Management, making public and private investments in the life sciences sector. Before that, I was with another venture fund and spent three years helping to run and grow a startup.
Brandon Johnson: Years ago, I started a company called Boston Microfluidics, partnering with LabCorp in their response to Theranos. Since then, I have been working as a consultant. I established a Clinical Laboratory Improvement Amendments lab, launched a few other startup companies, and now I am concentrating on StudioDx.
CS: I think it was Reid Hoffman who said, “One of the greatest preceding lines to a venture is ‘this should exist.’” Can you tell us about the origin behind StudioDx?
ND: StudioDx was born out of my frustrations as a diagnostics investor, watching companies repeat the same mistakes and lack the infrastructure to correct them.
BJ: One day, Nate and I sat down and mapped out everything a startup diagnostics company would need––regulatory strategies, Food and Drug Administration (FDA) experts, and a core set of offerings. Then we realized, “Hey, there’s a whole company here.”
CS: Between us, we probably have about 50 years in the diagnostics space––and we certainly have the scars to prove it. What fuels your passion for this industry?
ND: Diagnostics helps to shape a patient’s care pathway. If diagnostic testing happens in the wrong place or at the wrong time, the whole care pathway suffers. When I was working on the therapeutic side, I really saw how diagnostics lent itself to changing the way we deliver care.
BJ: For me, it’s an engineering principle. If you get the problem definition wrong, you’re probably going to have a bad solution. Diagnostics is the best way to get the problem definition correct.
CS: What are the key societal, governmental, and technological trends you’re seeing that have the potential to drastically change the diagnostic landscape?
ND: Right now, we’re still seeing the impact of regulatory flexibility from the FDA. It took more than a decade for the FDA to allow at-home pregnancy tests, but COVID-19 has really made a difference. Even though the COVID-19 tests aren’t particularly sensitive or specific, the FDA is giving consumers more control and starting to see at-home tests as part of a diagnostic paradigm.
CS: From a technological perspective, how do we make these diagnostic devices better?
BJ: First, there’s human factors, or how we make something usable. There are countless tests and technologies moving into the home, and they must be user-friendly.
On the other hand, we have automated assembly. Without the level of automation available at Drummond, companies can’t reach a realistic price point. They end up in the valley of death–a period where they need $50 for something that should be $10–and go out of business because no market segment is willing to pay.
CS: Cost matters. And when it comes to driving those costs down, learning through failure is crucial. What are the biggest mistakes you’ve seen developing diagnostic companies make?
ND: The biggest mistake is not building for scale. There are eight billion people on the planet; we need to be building systems that operate on the same scale at which we deliver care.
This mistake happens at the manufacturing level. Too often, people build lines to serve 10 million people and end up with a much smaller fraction of the market than they anticipated because they didn’t build to the right price point.
CS: If you were to create a Venn diagram for a successful diagnostics company, what would that look like?
BJ: You need a sound regulatory strategy, a thing that works at scale, and access to the real decision-makers. I see so many companies do the whole thing backwards–– they create the technology, figure out what their product is, apply for FDA clearance, and then start talking to payers. Do it the other way around and talk to payers up front.
It’s also crucial to design your company with an ecosystem that can support a small team achieving FDA clearance and getting to market. That means having common equipment, having flexible R&D team members, and building a resilient company. To survive the ups and downs of diagnostics, you have to stay small.
CS: Ironically, you’re not just guiding folks through the entrepreneur journey, you’re walking it yourself. What do you look for when you bring a partner into StudioDx?
BJ: Failure helps. The only way to really solve a problem is to make a product that’s impossible to misuse.
There are great, insightful people who want to make this ecosystem better—those are the folks we look for at StudioDx. We also look for people who are willing to say ‘no.’
CS: If you could add one thing to the StudioDx ecosystem, what would it be?
BJ: I would like to see more entrepreneurs with a real vision for what they’re trying to change about healthcare.
ND: Experienced teams who are willing to share their stories of failure. Those are the stories that really make a difference, because you can learn from others’ mistakes and recognize that what we’re doing is hard. Failure is natural.
CS: Your enthusiasm for diagnostics is—to pardon an extraordinarily bad pun––infectious. What’s the one thing you hope people take away from your work?
BJ: Our goal is to be a place where people can come with a really good idea, and we can provide everything from commercial instruments to high-throughput lab testing equipment to true FDA experts who really understand the process. We’re also working to build relationships on the payer side. Ultimately, we want to have everything and everyone you need to get your product to market.
Success is what you do when you’ve tried everything else––and Nate and I have done it all. You may want to pursue a risky path, but you’ll do it with your eyes open.
CS: I’m always looking to build out my library. Can you recommend a book that’s helped you professionally?
ND: Benjamin Graham’s Security Analysis. As an investor, it’s important to remember that the markets have no short-term memory. They go up and down, but they always come back.
BJ: Difficult Conversations by Sheila Heen, Douglas Stone, and Bruce Patton. As a start-up, you’re going to have to have difficult conversations. This book helps you do it well.
