Entries Written By Spencer Kelty
For this week’s Investor Spotlight, I spoke to Dr. J. Michael Bennett, an orthopedic surgeon with years of experience serving the Houston community.
Aside from the potential returns, what made you decide to get started with investing?
Over the years I’ve learned that it is best to diversify as opposed to putting all your eggs in one basket. I’ve always looked at and been involved with a number of different investing opportunities. I’ve been looking at startup healthcare companies for over five years and that’s how I found out about AngelMD.
I got involved with AngelMD two years ago before anyone else in my local region (Houston). I started researching a company named VICIS when I stumbled on AngelMD. I went to the website and learned about the company. I ended up reaching out to AngelMD and talking to CEO Tobin Arthur. I was impressed, so I started introducing physicians to the platform.
Looking back, what have you learned and what would you have done differently?
I don’t have any regrets. I always look forward and learn from my mistakes. If anything, it would have been nice to find out about AngelMD a little earlier. I think that an opportunity like AngelMD to invest in healthcare startups would have been nice to have ten years ago.
What gets you excited about a potential deal?
It has to be something that I think will be a game changer. It has to either benefit the patient or streamline services. It has to be something that’s novel, and something that can be scaled. The company has to have a solid base and team. You can have an okay idea, but if you have a rock-solid team with an exit strategy, then I’m interested.
What warning signs do you look for?
I look for a few things. I look for how long the company has been trying to get funding and how long they have been in existence. Some warnings signs are if the company doesn’t have a reliable timeline and if they don’t have a good exit strategy. I look to see the backgrounds of the team members and the CEO, including how many and the results of the companies they have been involved with.
How much of a role does healthcare play in your portfolio? Do you see that changing?
I try to diversify, but essentially most of what I’m dealing with right now is healthcare related. It all comes down to our motto “Invest in what you know,” and as a healthcare provider, this is what I know.
What attributes do you look for in an entrepreneur?
The first thing I look for is the ability to listen. They need to be adaptable and listen to their staff and advisors. I like it when they are passionate and have a vision, but they need to be able to pivot. The industry can change and you have to have a plan A, B, C and D.
Is there other advice you could offer people who are looking to invest?
Invest in what you know. It’s our motto for a reason. I recommend that everyone do their due diligence when it comes to investments. The more knowledge that you have about trends in the healthcare sector, long-term outlook in the company – the more knowledge you have, the better.
It can be exciting, but you have to be willing to ride out the ups and the downs. It’s never a sure thing, but you can hedge your investment with information and knowledge, and I believe that is what AngelMD is the best at.
What are 3 things you’re really excited about right now?
First, I’m excited about regenerative medicine. There is a lot promise in regards to cartilage regeneration and using biological scaffolds. It’s very early still but I think it is the future of orthopedics.
I’m also very excited in regards to virtual and augmented reality in healthcare. I think the next phase of training surgeons new techniques is through augmented reality and virtual reality.
The third thing is the current interest in artificial intelligence. With big players like Apple and Amazon producing new technologies, it is setting up the infrastructure of a healthcare artificial intelligence database. I can see that being the next big thing in medical management and disease prevention.
What was the last book you recommended to someone?
It’s called Ready Player One. It’s a science fiction novel about a dystopian future where there is no transportation due to a massive oil crisis. The only way people escape their daily realities is through an alternate universe via virtual reality called “The Oasis”. It exemplifies a very scary reality of what could happen if we replace human interaction with technology, something that is not too far fetched. I also recommend “Talk Like TED” which highlights some of the best TED (Technology/Entertainment/Design) talks and looks into why those talks are so profound and how each speaker utilized some key characteristics to take a talk from “great to unforgettable”.
For this week’s #startupspotlight we talked to Joshua Mecca, President of M&S Biotics.
In August of 2013, Joshua Mecca was preparing to have a kidney transplant. Before going in for surgery, he set out to learn as much as possible about the mechanics of the operation.
During his research he realized the processes in the operating room were outdated, and may put the patient under unnecessary risk. Specifically due to the manual counting of surgical items in the operating room.
According to Mecca, fourteen percent of operative time is spent counting surgical sponges alone. Since this is done manually, one in eight surgeries have a counting discrepancy. In some cases, surgical items can be left behind, which can result in serious complications for the patient.
“The more surgeons, nurses, supply chain managers, and hospital executives we spoke with helped us understand that the problem was even more comprehensive. For example, less than 20% of the instruments brought into the operating room are even utilized through the course of the procedure,” claimed Mecca.
With a graduate degree in bioengineering, and years of experience in computer science, Mecca had a unique skill set to tackle this problem.
M&S Biotics uses Radio Frequency Identification (RFID) antennas and passive tags coupled with Artificial Intelligence to track surgical items.
“Using our RFID system, we can determine which instrument is being used vs. not being used, and how long a particular item is being used for. We then apply machine learning algorithms to this data to determine instrument utilization by surgeon and by case,” Said Mecca.
The RFID technology used in M&S technology combines the precision of circular polarized RFID fields, and the range of linear polarized fields. This allows for instruments to be tracked accurately without fear of going out of range.
According to M&S Biotics, around 40% of hospital expenditure is directly tied to the operating room. For a typical hospital with an 8-hour surgical day, each 1 percent improvement in OR efficiency is a savings of more than $50,000 per year/per OR. That adds up for mid to large sized hospitals operating many ORs.
“If our technology was integrated into all hospitals across the U.S it could reduce billions of dollars in costs for the healthcare system. More importantly, the data we collect will help Supply chain create more standardized surgical sets/ preference cards creating better clinical outcomes for patients,” Said Mecca
Unlike most medical devices, the M&S Biotics technology is not focused on a particular patient population. By reducing OR time and simplifying the processes, all surgeries can become more efficient.
How did you get involved in investing?
I’ve been a practicing radiologist for 10 years, mostly in a private practice setting. Over the years I’ve considered a number of times going back and getting some additional education, potentially an MBA, to get more involved in the entrepreneurial side of things. It was pretty timely when I was approached by AngelMD and I got a chance to meet with Tobin Arthur and talk with him, and got to learn about the syndication process. This is an area where I can expand my professional expertise outside of clinical medicine. Since AngelMD was my first investing experience, there was a lot of learning on the fly, learning from other AngelMD members, and doing a lot of research. Until last year, I had no real knowledge of investing.
How has AngelMD helped introduce you to investing?
The process of investing has been fairly straight forward as AngelMD has done a good job of providing information necessary for investors to do their due-diligence before getting involved in a syndicate. Being a syndicate lead has a lot more of a learning curve. I was able to work under a seasoned syndicate lead, for the companies I have syndicated, making it a lot easier.
What do you look for when investing?
I’m looking for things I understand. I try to stay away from areas of medicine that I’m not familiar with and require more background research to get up to speed on before I put money down. There are so many thing in the medical device space that I do understand, so many that I can just stick in my small area and have plenty to look at. I look for something that fills a need that I myself have, and based on that I see how a product could solve it.
What do you look for in becoming a syndicate lead?
In order to lead a syndicate you need to know the area really well. There is no way that I could do my due-diligence on a company in an area that I don’t have pre existing expertise. Im looking for companies with defensible IPs, that fill a niche with the solution to a problem, and are in fields with barriers to entry. They have to have a strong team with a history of strong execution. They have to have a concrete exit strategy.
What advice would you give to potential physician investors?
For physicians getting into investing, the mantra of “invest in what you know” makes a lot of sense. Learning to do proper due-diligence is crucial. There are a lot of flashy things you could get distracted by in a pitch deck, if you don’t take the time to look into it you can get fooled. For physicians this isn’t something we are trained in.
For non physician investors, it’s more difficult. There is a lot of information asymmetry in investing in the medical space. The importance of having a medical expert opinion can’t be overstated.
For this week’s startup spotlight we spoke to Tom Clement, CEO of Aqueduct Critical Care, Inc. The Aqueduct Critical Care team is developing devices to manage acute and chronic Cerebral Spinal Fluid (CSF) problems.
Clement is a seasoned medical device veteran and has brought eight medical devices to market and started a number of medical device companies including Pathway Medical Technologies and Cardiac Insight. He recently helped launch the medical device incubator Mercury, an initiative of the Biomedical Innovation Partnership Zone in Bothell, Washington.
Challenging the Status Quo
Aqueduct’s technology is an innovation on traditional gravity fed temporary CSF drains. The technology currently used for drains is passive and largely unchanged for decades. Adjustments have to be made manually resulting in the need for constant monitoring from a skilled nurse. Aqueduct aims to change this industry standard.
“If a patient sits up as little as two inches and their CSF drain isn’t adjusted, it can make them sick, and from there they can go downhill pretty quickly,” explained Tom Clement.
Aqueduct’s technology, consisting of a single use Smart External Drain (SED) cartridge, and the SED console, eliminates the need for constant monitoring. The SED automatically adjusts for patient movement while maintaining the physician-prescribed settings. The technology is designed to both increase the ease of use and safety when managing patients with external CSF drains.
The IP behind Aqueduct was spun out of the University of Washington in 2013. Aqueduct has since received FDA clearance, with two 510(k)s completed and a third in progress.
“In my 35 years of experience this is the fastest I’ve seen a product get into the clinic,” said Clement.
Due to the nature of the product, the FDA didn’t require clinical testing. However, Aqueduct is conducting its own post market study and is currently enrolling patients at multiple sites under a protocol that compares current technology to Aqueduct’s SED in a clinical setting.
A market changer
The CSF drain market is dominated by two companies with virtually the same technology. Aqueduct represents the first major change in gravity based CSF drains in 60 years.
“We expect [our SED] to become the standard of care for all patients being managed on temporary CSF drains. If someone gets sick on the current technology, and the hospital gets sued, they will be asked “why wasn’t the patient on Aqueduct technology?” claimed Clement.
Aqueduct is currently focusing on expanding its reach and confirming its value proposition for hospitals across the country.
For this week’s #startupspotlight, I had the chance to visit Concure Oncology’s Mercer Island offices to learn about their exciting technology and expert team.
One in eight women in the U.S. will be diagnosed with breast cancer, triggering a long and painful treatment process. But what if there was a better way?
Enter Concure Oncology
The technology behind Concure Oncology was discovered in 2013 by CEO Sandra Rorem during a consulting engagement for a company that owned the rights to technology for breast stabilization for precision during surgery. Rorem immediately recognized the value of the technology to breast cancer patients.
While the technology was not commercialized at the time, much of the initial work had been completed. Patents had been filed and the results of the clinical studies would soon be published.
In 2014, after working to help separate the IP from the broader holdings of its owner, Rorem and two co-founders purchased the Breast Microseed Treatment equipment and IP. Concure Oncology was born. The team moved the technology to their new offices on Mercer Island, WA.
Over the next several years, the Concure team built their quality system, became ISO certified, and created the regulatory and marketing infrastructure to make the Breast Microseed Treatment available to women throughout the U.S.
How Breast Microseed Treatment can change the patient experience
The technology enables placement of tiny radioactive “seeds” in the breast following a lumpectomy. The company’s template grid and the fiducial needle are both part of a patented medical device called the Breast Microseed System. The system enables exact placement of the seeds to achieve the best possible results.
The treatment offers women an alternative to enduring weeks of high dose rate radiation therapy following lumpectomy. The Breast Microseed Treatment is delivered in a single procedure that usually takes less than an hour. The treatment boasts an observed local recurrence rate of just 1.2%, and fewer side effects than other treatments.
“Breast Microseed Treatment has the potential to be the treatment of choice for most early stage breast cancer patients.”
– President and CMO Mike Ribaudo.
Watch to see Byron Stuck, Director of Operations, demonstrate the technology.
The Market for Microseed
Early stage breast cancer is a huge market. Over 255,000 new cases of breast cancer are expected to be diagnosed in 2017 in America alone. Nearly one-third of these women will initially be candidates for Breast Microseed Treatment.
“We don’t have to get a third of the market, that’s just an indication of how big the market is. We can get five percent of the market and be wildly successful for our investors,” CFO Kevin Kelley claims.
With a 98 percent patient satisfaction rate, the technology promises to be an exciting option. And with reimbursement comparable to established treatments, microseed is an attractive option for hospitals as well.
Concure first commercialized the technology in late 2015, and signed their first contract with Seattle’s Swedish Cancer Institute as their proof of concept site. Since the start of 2017, the company has built a robust pipeline of interested partners. With over 200 procedures to date, the technology is well proven.