Market Pulse & Strategic Insight: May 2025

May 14

Written By Sandeep Palakodeti

Shaping the Future of Medtech, One Company at a Time

Executive Summary

May’s medtech news cycle reinforces the continued strength of Waterston Capital’s operator-first model and validates our core thesis: strategic acquirers are hungry for de-risked innovation, health systems need solutions that reduce friction in care delivery, and macro uncertainty is creating favorable conditions for high-efficiency venture building.

Highlights this month include:

Tariffs and supply-chains have dominated the recent news cycle — our focus should remain on domestic innovations and partnerships for now
Breakthroughs in minimally invasive care (Solenic, Shockwave, Medtronic)
Strategic M&A in musculoskeletal and neuro-rehab care (Zimmer Biomet, Kandu)
Federal rulings with implications for diagnostics and LDT oversight
An evolving landscape for wearables and university tech transfer strategy, with major implications for sourcing and IP development

Waterston is well-positioned. Our model deliberately emphasizes:

Licensing full-stack medical technologies (not pharma, not minority equity)
Clinical and regulatory validation before significant capital deployment
Clear exit targeting with built-in feedback loops from strategic acquirers

A Note from Brett

As larger strategics reduce internal R&D and turn to derisked, acquisition-ready innovations, Waterston’s thesis is only growing stronger. We’re building companies the market actually wants—validated early, shaped by strategic feedback, and built for efficient exit. In a turbulent macro environment, the best defense is speed, focus, and execution. That’s exactly what our portfolio delivers.

Breakthrough Technologies Worth Watching

Shockwave Medical and J&Jlaunch FORWARD CAD Study

(4/7/25)

Shockwave Medical, part of Johnson & Johnson MedTech, has launched the pivotal FORWARD CAD study to evaluate its new Javelin Coronary IVL Catheter, designed to treat calcified coronary artery lesions with targeted sonic pressure waves. Aiming to offer a safer alternative to atherectomy, the device is now being studied in patients across the U.S. and U.K. to assess its safety and effectiveness.

Waterston Take: Lithotripsy is displacing legacy atherectomy tools in calcified lesions. As this category matures, J&J’s investment validates Waterston’s focus on niche, high-growth categories within cardiovascular intervention—especially technologies with shorter regulatory paths and strong KOL backing. Interesting to see the crossover from an Urology technology being used in a Cardiology use-case. We continue to ask ourselves how various technologies in our portfolio could be used across different verticals as well.

Solenic Medical – Magnetic Precision for PJI Treatment

(4/5/25)

Solenic is pioneering magnetic field-based heating to eradicate biofilm on metal implants, offering a non-invasive alternative for prosthetic joint infections (PJI).

Waterston Take: This is a prime example of a high-impact technology that could radically reduce surgical complications and hospital stays. Waterston continues to prioritize device innovations that enable earlier interventions and reduce the total cost of care. We have several of these infection prevention devices in our Phase 1 pipeline and will note Solenic as a potential strategic.

Medtronic’s OmniaSecure – World’s Smallest Defibrillator Lead

(4/26/25)

Medtronic has gained FDA approval for its OmniaSecure defibrillation lead, designed for right ventricle placement to treat life-threatening arrhythmias. Built on the proven SelectSecure platform, OmniaSecure is just 1.6 mm in diameter, and aims to reduce vascular complications and valve issues often associated with larger leads. Already approved for adults and adolescents, the lead showed strong results in clinical testing, with additional studies underway to expand its use in left bundle branch area pacing.

Waterston Take: The electrophysiology space is a major M&A driver. Strategics like Medtronic want small, adaptable platforms to pair with existing IP and infrastructure. OmniaSecure represents the kind of incremental, low-friction innovation we aim to cultivate and build within our portfolio. Finding technologies that can be easy “plug-ins” to already existing devices could provide smart wins.

Strategic M&A

Zimmer Biomet Acquires Paragon 28 – ASC-Oriented Ortho Play

(4/21/25)

This $1B+ acquisition strengthens ZB’s musculoskeletal portfolio, emphasizing foot/ankle segments and ASC penetration. ZB is doubling down on the high-growth foot and ankle segment, signaling strong conviction in specialty-driven musculoskeletal care. Execution will hinge on the successful integration of Paragon’s focused commercial channel and technology into Zimmer’s broader infrastructure. Near-term upside comes from ASC expansion and global growth, but realizing full value will depend on maintaining Paragon’s entrepreneurial speed within a larger organization.

Waterston Take: The transaction highlights ongoing consolidation opportunities in orthopedics, especially for assets with ASC positioning and differentiated clinical portfolios. Portfolio convergence around outpatient, specialty-driven orthopedics is accelerating. ZB’s move reaffirms our focus on MSK devices with quick procedures, clear reimbursement, and proven commercial traction. It also strengthens Waterston’s conviction in high-quality musculoskeletal targets with minimally invasive outpatient/ASC potential baked in.

Tyber Medical, Intech, Resolve – Merger Creates Global CDMO

(4/24/25)

Formation of an end-to-end musculoskeletal contract manufacturing platform. Tyber Medical, Intech, and Resolve Surgical Technologies have merged to create a new global Contract Development and Manufacturing Organization platform. This new entity aims to accelerate time-to-market for musculoskeletal devices by offering OEM partners an end-to-end development and manufacturing solution with global reach, deep technical expertise, and agile scalability.

Waterston Take: This signals a rising demand for turnkey device development and leaner timelines. Our Phase 2 companies benefit directly from this macro trend—we’re already exploring vendor expansion for development and might consider some of these larger players to accelerate our prototyping, design, and production phases.

Kandu + Neurolutions – NeuroRehab Full Stack Play

(4/8/25)

The Kandu, Inc. merger combines telehealth services with non-invasive brain-computer interface (BCI) technology for stroke recovery. The new entity raised $30 million in financing, co-led by Ally Bridge Group and AMED Ventures, to accelerate commercialization efforts. Kandu, Inc. aims to offer a fully integrated, home-based stroke rehabilitation experience, spanning from immediate post-acute care to chronic recovery. Kandu addresses a fragmented, underserved market with a differentiated full-stack solution, but execution risk around seamless device and service operations remains high. Early CMS reimbursement and payer traction de-risk initial adoption.

Waterston Take: Proprietary recovery data could power a valuable second act in AI-driven care, positioning Kandu for strategic acquisition by MedTech consolidators or neuro-focused pharma. This deal also reinforces two things: (1) neuro remains hot, particularly in decentralized care delivery, and (2) Brain Computer Interface players with hybrid service models are attracting capital. Waterston continues to monitor this segment for downstream acquirer alignment (Abbott, Medtronic, neuro-focused pharma).

Policy & Regulatory Environment

Federal Judge Blocks FDA Oversight ofLab-Developed Tests (LDTs)

(4/16/25)

The court ruled that the FDA lacks the authority to regulate LDT SAS devices. CMS oversight under CLIA continues—for now. A federal judge struck down the FDA’s rule to regulate LDTs as medical devices, and the FDA is unlikely to appeal. For now, labs will continue under CMS’ CLIA program, but future legislative or state-level efforts to reform LDT oversight remain possible.

Waterston Take: Diagnostics remain a murky regulatory zone. Waterston will remain laser-focused on technologies with defined regulatory pathways (e.g., 510(k), PMA, DeNovo) to avoid capital entrapment. We continue to advise Phase 1 sourcing partners against LDTs unless clear monetization paths exist and will monitor shifting LDT regulations.

AdvaMed Commentary – Tariff Exemptions Urged for MedTech

(4/22/25)

AdvaMed’s CEO warns that medical device tariffs would disproportionately hurt U.S. innovation and job creation. Scott Whitaker argues that while efforts to correct trade imbalances are important, applying tariffs to medical technology would harm a vital U.S. industry. He emphasizes that MedTech is largely U.S.-based, highly regulated, and a global innovation leader, supporting millions of jobs. Because companies can’t easily adjust pricing or relocate operations, tariffs could cut R&D, reduce jobs, and limit patient access. With most firms being small and reimbursement fixed, the impact could be severe. Whitaker urges policymakers to exempt MedTech from tariffs to protect innovation, jobs, and public health.

Waterston Take: This underscores our U.S.-based manufacturing bias. Many of our design and prototype partners are anchored domestically, insulating Waterston from most tariff shocks, but still a key issue to watch closely. It’s also a timely reminder to continue supporting re-shoring strategies in validation and production. We need to be mindful of evolving trade policies, especially those that could disrupt supply chains, inflate costs, or threaten the viability of early-stage MedTech ventures. At the same time, this climate presents an opportunity: by supporting resilient, U.S.-based manufacturing strategies and engaging with policymakers through industry groups, we can help shape an environment where MedTech innovation continues to thrive.

Market & Macro Trends

Wearables Market Surges – $21.2B by 2028

(4/9/25)

Clinical-grade wearables are replacing niche fitness devices. Key players include Apple, Dexcom, and early-stage diagnostics innovators. Wearable health devices are evolving from fitness trackers to clinical tools for managing chronic conditions. The market, projected to grow from $17.8B in 2023 to $21.2B by 2028, is driven by advances in sensors, AI, and demand for proactive care. Companies like Apple and Dexcom are creating multi-use devices, positioning wearables as key players in personalized, preventative healthcare.

Waterston Take: Waterston is actively screening wearables that extend beyond wellness into chronic disease management and remote monitoring. Expect increased emphasis on real-world data capture in future sourcing efforts. As wearable health devices advance from fitness tracking to FDA-cleared diagnostics, they’re unlocking new opportunities in decentralized care and remote patient monitoring. We should note the strategic value in these technologies at the convergence of consumer tech and clinical-grade diagnostics.

Universities Losing Millions on Patent Strategies

(4/23/25)

A recent study found that most U.S. research universities lose millions annually on patenting, largely due to hidden costs like faculty time and expensive tech transfer operations. This challenges the long-held belief that patents generate revenue. When full costs are accounted for, research—not commercialization—may offer a better return on investment.

Waterston Take: This validates our Phase I outreach model: co-developing diligence, reducing upfront licensing costs, and aligning incentives with commercialization. We will continue to offer preferred IP partnerships that improve ROI for tech transfer offices. This finding presents both opportunity and risk. On one hand, it validates our approach of forming preferred partnerships—helping institutions focus IP spending on technologies that align with our thesis. On the other, as universities cut back, promising medical technologies may never get developed or patented, limiting our pipeline.

NIH-Backed NeuroTech Harbor Launches at JHU/Howard

(4/4/25)

NeuroTech Harbor, a partnership between Johns Hopkins and Howard University, has received major NIH funding to accelerate neurotech commercialization. Led by Dr. Youseph Yazdi, the initiative reflects a broader trend of investing in brain health innovation and building more diverse MedTech ecosystems. With growing federal support, early-stage neurotech ventures are increasingly positioned for strong market traction and venture capital interest.

Waterston Take: NIH’s backing of NeuroTech Harbor signals strong federal support for early neurotech, reducing risk for VCs. Faster academic-to-market transitions mean more fundable devices, especially neuromodulation and brain diagnostics. We are watching for strategic exit potential and leverage of non-dilutive capital as a growth accelerator.

Closing Thoughts

The medtech sector is entering an era defined by consolidation, precision, and outsourcing. From FDA approvals of smaller, smarter devices to large-scale mergers targeting ASC-friendly tech, the path forward favors lean, focused, and acquisition-ready innovations. Waterston is positioned at the inflection point of this evolution. While strategics scale back internal R&D, they are actively seeking externally de-risked technologies with clear regulatory paths and strong clinical signals. Simultaneously, academic institutions are rethinking how they commercialize IP, creating a perfect moment for Waterston’s model: partner early, validate fast, and build intentionally for exit. Key themes emerging this month:

De-Risked Innovation is the New R&D: Strategics like Medtronic and Zimmer Biomet are sending a clear message—they’ll acquire precision-validated, miniaturized, or ASC-ready platforms rather than build from scratch.
Domestic Manufacturing & Tariff Insulation: The industry is rallying around U.S.-based production. Waterston’s domestic validation and supply chain positioning creates resilience amid policy uncertainty.
Clinical-Grade Wearables & Neurotech Acceleration: Data-generating diagnostics and neuromodulation tools are gaining serious traction—with federal support, strategic interest, and reimbursement tailwinds aligning.
Academic IP Realignment: Tech transfer offices are under pressure to prioritize commercialization over patent counts. This enhances our sourcing model and strengthens our early-access thesis.

Waterston Capital is Leading the Shift

We’re not following trends—we’re operating ahead of them. The Waterston model stands apart:

✔ Buy smart — We source full-ownership deals from the country’s best academic institutions, aligned to real market demand. ✔

✔ Build lean — We run capital-efficient Phase II companies with clinical, regulatory, and commercial discipline.

✔ Sell intentionally — Our Phase III process reverse-engineers exits with strategic partners engaged from day one.

Waterston doesn’t just fund innovation—we shape it into acquisition-ready companies with precision, speed, and strategic alignment.

WATERSTON CAPITAL MARKET PULSE & STRATEGIC INSIGHT

Sandeep Palakodeti