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Interview with Dr John C Joe, CEO | Vigor Medical Systems , Inc

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Script of Interview

Interviewee                                             Dr. John C. Joe (JCJ)

Position                                                   Chief Executive Officer

Company name                                     Vigor Medical Systems, Inc.

Company website URL               

Interviewer                                             John D. Evans, CFA (JE)

Interview conducted on                       14th  August 2020

About Dr John C. Joe

JE: Okay, so I’m looking forward to this. Thanks for thanks for making the time. Okay, so, check. Let’s officially start the interview of Mr. John C. Joe, MD, MPH Chief Executive Officer Vigor Medical Systems Inc. in Houston, Texas. John, start off in tell us a little bit about yourself. Personally, your background and a little bit of your professional overview, your studies and specialization.

JCJ: I’ll just go in chronological order. As you mentioned, I’m in Houston, Texas and I went to university here in Houston and then went out of town for medical school, but still in the state of Texas, and then came back to Houston to the Texas Medical Center for my training after medical school, first trained in general surgery for a year and then in family medicine. In the US family medicine is a three-year residency training program after medical school. Other parts of the world may call this general practitioner primary care but we have formal study in internal medicine, obstetrics and gynecology, pediatrics, surgery, and a number of sub-specialties, cardiology, pulmonology, etc. So, a broad background, and then I’ve been interested in population health and looking at how to improve not just individual patients’ health, but large groups of people. So I obtained a Master’s in Public Health as well to learn statistical methods and administrative and research tools during this program. I went on to start in private practice in the US in primary care for a few years, then was recruited back to the Baylor College of Medicine where I had done family medicine residency, and when I joined the faculty, I was a teacher and administrator and direct patient caregiver. So in wearing those multiple hats, I gained a broad range of work experience. The administrative work, though, was very interesting because it ended up leading me down a different path in my career than most of my peers from private practice as well as academic medicine. One of the things I secured funding for as a condition of taking the position in the medical school and running the clinic was funding for an electronic record system. This was in the late 90s when medical software was still in relative infancy. I got the funding nevertheless and implemented the software, but after more than a few occasions, being at the clinic at eight o’clock at night, along with some of my colleagues that worked for me, trying to finish our records on the computer system, I thought “there must be a better way, this is not sustainable.” One of those ways was to have the patients enter their own data from home or work. The Internet was just in its infancy at the time in 1997. The Internet bubble was just starting to grow and it wasn’t anywhere near bursting yet. There were a few web portals available in other industries, but not in health care. So I approached some investors about launching the company to create that product. Without going into all the details, we can get into that later, I started down the path of becoming an entrepreneur, starting an internet business – one of the first digital health businesses while maintaining my faculty position at Baylor. I continued for another 20 years as both entrepreneur and academic physician until recent years when I retired from the faculty and focused on consulting and on being a serial entrepreneur.

JE: Okay, that’s interesting and I’m going to diverge, but I know you have a strong involvement in technology. But that is not something that you studied at the university level. So all of that expertise you developed and acquired after you joined industry and sort of developed that expertise yourself, is that correct?

JCJ: I did have a small educational foundation. I was in this transitional time when I was in high school. I started off using the slide rule and punchcard programming at the first half of high school and in the second half we got our first computer lab that had Apple IIs and Commodore 64s. So, I learned basic programming in high school before I left for university. My first year at university was also the first year that the university had a microcomputer lab for students. Instead of doing punch card programming as the previous classes had done, I was able to take Fortran and Pascal programming classes. It was really fun back in those days, programming video games and some other routines, but after two or three times up at 3 a.m. trying to find one or two characters…

JE: The image has frozen. Okay, it’s fortunately this is going to be an edited tape so we can. This is not going to be a live broadcast but I think we may experience that today. It’s been a bad day for internet in China this week, there’s been a lot of disruption. So you were, you were just at the point of being speaking about being up at three o’clock in the morning, before, before things froze. So let’s just continue on from there.

JCJ: So I took programming classes in university, but that was continuing a hobby that I had in high school. I was already focused on a career in medicine. At the university after my second or third time being up at three in the morning trying to find one or two characters that I had miss-keyed that caused my program routines to crash confirmed that I was not going to be a programmer. At the same time, I knew that computers would change the world someday. So, I put those classes in the back of my mind and after I went to medical school, I knew there were tech tools that I wanted to leverage. After I became an academic and administrative physician, I began implementing software to improve clinic efficiency and research processes. From this time, I started doing more on the job training and learning as new technology came to market. Ongoing learning about new technology was necessary in healthcare, but actually the industry was the worst at learning IT. Healthcare was slow to adopt new information technology that was developing.

JE: Now, you’ve obviously had a very strong involvement around the Houston area. What about since that time, has your business become a little bit more international? You’ve been involved in consulting. Do you travel a fair bit to other locales?

JCJ: Yes, that actually started fairly early in my academic medicine and clinical research work. That’s an international business since English language medical journals are read widely in different parts of the world. In my case, it wasn’t so much clinical research as it was applied medical informatics. Back in 2000, I remember my first trip to Singapore for the e-Health Asia conference where I was invited to speak. I had been speaking at conferences in the US in the late 90s regarding the software that I implemented and some of the technologies that we were using in the clinic. At Baylor, after implementing electronic records software in my clinic, we rolled out the software across the entire medical school in all of its different departments and specialties. I moved from being medical director of my clinic, to being the director of medical informatics – clinical information systems for the whole college of medicine. At that time, we didn’t have our own teaching hospital, we had many affiliated hospitals that were owned by other organizations for our hospital-based care. The management of those affiliated hospitals began paying for part of my time from Baylor to help them implement information systems within the hospital setting and then integrate our clinic information to the hospitals. I spoke at conferences about the IT work that we were doing at our institutions, and people began inviting me to speak farther abroad. I went to Singapore, London, Shanghai, and elsewhere to speak at conferences and met people who asked me to consult for them in implementing systems the same way that our affiliated hospitals here in Houston had asked me to help.

About Vigor Medical Systems

JE: Okay, now we’re going to turn to Vigor Medical Systems in a second, which you’re CEO of, but it sounds like you still have other peripheral activities, Vigor is not 100% of your time. How much is his Vigor of your life? And how much are you still doing other things these days?

JCJ: Vigor takes up the majority of my time. But for the last 25, maybe 30 years I’ve been a multitasker and always had at least two or three titles at any given time. It’s been helpful because it’s cross pollination of views, having been purchaser or consumer, as well as the vendor or supplier, I understand both worlds. I don’t spend much time practicing medicine now but I’m still fully licensed and maintain hospital privileges. So I eat my own cooking so to speak, and I understand what it’s like on the front lines. That’s extremely helpful in introducing products or services to understand the user experience required.

JE: Okay, so let’s now turn to Vigor medical system. Give us a general overview of the company where it is currently, facilities, number of staff. Is it still in the R&D stage or is it all operational?

JCJ: So, just a quick background on this company – its technology was invented at Duke University by students. They were friends of one of my kids who attended Duke University. I was initially an informal mentor to them and the University did a fine job of helping them patent the technology, register a company, and obtain seed funding. So students did the R&D work, created an early prototype, completed clinical trials, and proved their technology. After they incorporated their business, I came on board as Vice President of Software, bringing my digital health expertise to their medical device technology. They had another person serving as the CEO, and gradually I replaced that person and became CEO. All this happened during the past four years or so. The company now is going through regulatory approval processes for medical devices in various countries and also business development for clinical partnerships and potential distribution, sales, and support partners.

JE: So it was a son or daughter that had the initial connection to Duke as opposed to yourself.

JCJ: That’s right. I had some very loose connections. It was through my daughter that I became more closely connected to her classmates – the founders and inventors – and then with faculty members who were advising them. We actually have the former chancellor of the University as one of the early seed investors. The head of technology transfer is also one of our investors and I have since come to know other people there.

JE: Interesting. So just as an aside is your daughter exploring a career in the field of medicine as well?

JCJ: No, actually, she is in a completely different field in the arts, she is a professional ballerina. But she was in what Duke called Interdisciplinary Studies, so in addition to arts, she is in business and digital media so she helps us as our webmaster.

JE: Very diverse background, interesting. Describe the actual product or technology, how it works, how a person would use it, what it does, the type of person who would be best suited to use it.

JCJ: Let me draw an analogy. Most people know somebody that has diabetes, where there’s abnormal blood sugar control, and most people with diabetes will need to check their blood sugar with a fingerstick device and then they have to modify their diet and take medication, sometimes injections of insulin. Diabetes is a chronic disease and one needs to monitor it and treat it according to objective data. For lung diseases such as asthma, chronic obstructive pulmonary disease (COPD), and others like cystic fibrosis and pulmonary fibrosis, these conditions are much harder to measure. The treatments are primarily based on symptoms and more subjective as feeling short of breath. I may feel frightened, breathe fast, decrease the capacity of my lungs, or cough a lot. It’s difficult to titrate medications and properly manage the disease based on subjective symptoms rather than data. In clinics and hospitals, there will be devices, sometimes the size of a refrigerator, that have tubes connected into which you exhale as hard as you can and as long as you can, depending on the specific stage of the test. Then that large device calculates your lung volume, flow rates, and a number of other parameters. Those large devices cost more than USD 20,000 but they are very accurate. There are cheaper and smaller lung function devices the size of laptop computers but they are less accurate. There are even hand-held devices that measure one or two lung function parameters, but those cannot be used to diagnose any lung diseases. Vigor’s revolutionary product takes the accuracy of the USD 20,000 refrigerator-sized device and compacts it into something that you can hold in your hand and carry in a pocket. Our device transmits its lung function data through wireless connection to a smartphone which uploads the data to a cloud server where authorized healthcare providers can review the data from anywhere in the world and help patients manage their lung disease better. This results in better clinical and financial outcomes as well as patient satisfaction and wellness.

JE: Now I’m very interested in the asthma application because I had mild asthma at one point in my life and I’m concerned, maybe one day, my daughter will, so is this sort of life Is it a wearable that monitors you or is it sort of like, once a day you blow into this machine? How does is it actually applied?

JCJ: It is a device that you carry with you or keep nearby. It’s about the size of a cell phone in terms of length, but it is thicker than a phone because it has a cylinder connected to a mouthpiece, which you blow air through, but our device has no moving parts. There are some efforts to create some of those laptop computer sized devices that have a turbine in them. That has some limitations because turbines require some calibration. Vigor’s device technology doesn’t involve any moving parts so it doesn’t require calibration. It’s something that you carry with you – anytime, anywhere, you can measure lung function and get a status and determine whether medication might be needed.

JE: Very interesting, very interesting. So it’s like a, a very miniature version of the big blow-in monitors that you talked about, that anywhere that you feel maybe your chest is tight, you can you can do a test, just to at that moment to see if there may be an issue. Is that the correct sort of usage?

JCJ: Yes, that’s right. We have two target markets. One is the individual patient market, somebody that has a lung disease and needs to be monitored. The other is somebody that’s in a hazardous environment with occupational health risk, like workers exposed to asbestos or silica, environmental airborne particles that may cause damage to the lungs over time. In addition to chronic disease management and occupational health surveillance use for our personal device, Vigor has another device for professionals like physicians. I mentioned the cost and the size of spirometry equipment – in the emerging markets, physicians often don’t have access to lung function testing for their patients. So even the physician is making subjective diagnoses based on symptoms, listening to the patient and not actually quantifying the lung volume or the flow rates. So there’s a large, unmet need in emerging market for affordable, accurate spirometry.

JE: So the people who would use this, whether it’s a physician or an individual user, when they do the test, so the information is going to Vigor. So it’s a private medical company that would do the analytics and give feedback or would it go to a hospital? Who’s doing the diagnostics and giving a response to the patient or physician

JCJ: For the individual patient, the protocol followed in the clinic or hospital using expensive machines is a very similar to the protocol using our local devices – the data generated can be reviewed by a doctor on the screen of our professional device or the data are uploaded to the internet and can be printed out from software for the physician to make the interpretation, diagnosis, and staging the same way they would by looking into the large, non-portable devices. What we add in accumulating the data, however, is ability to look at multiple tests over time for the same patient or comparing populations of patients that may have similar characteristics as the one that the physician is seeing at that moment, and by analyzing data over a larger population, identify or predict patterns of exacerbations. So another of our products besides our devices, is software that analyzes large amounts of data from patients, using artificial intelligence and machine learning to process longitudinal data from individuals or pooled data for populations of patients. We look for associations, then we begin to correlate different factors that may be predictive of when a patient’s condition will worsen. This is a product that will be released later because additional regulatory approvals are required for that software. That’s where value will come in the future to advance the state of care, advance the knowledge base of lung diseases and that should be valuable to pharmaceutical companies that develop therapeutics and to researchers that are tracking what is effective in drugs or other therapeutic measures.

JE: So you mentioned a moment ago, it’s going through the regulatory application process and in different countries, which countries are you focusing on now? And when do you expect those first regulatory approvals will be given?

JCJ: The four largest markets are the US and Europe, then the other side of the world, China and India, because of the sheer population and also the lack of equipment in many parts of China and India. So we have Western hemisphere and Eastern hemisphere markets that are the prominent ones in our processes that will probably take us through second half of next year before regulatory approvals are granted. And then there are a number of other countries in the Middle East and South Asia where there is high prevalence of lung diseases and also in Latin America and Africa. Really, the global prevalence for asthma and COPD in just those two conditions are more than half a billion people affected. When we also consider other lung conditions, as many as 1/7th of the world’s population could be our target market.

JE: Is it just one regulatory application in the EU to get approval for all of the EU now 27 states?

JCJ: Yes, that’s right. With Brexit we will have to go through a separate process from the EU. But for the EU countries it is one process.

JE: Okay, now this is interesting because I have a personal interest in Brexit Have you started a new application just for the UK now that it’s no longer in the EU?

JCJ: We haven’t yet but we’re working with legal advisors on that. There is some possibility as UK works with the EU that they can use the same regulatory scheme for medical devices as the EU but we have contingency plans in place if we must do a separate submission. So at the moment, we’re working with our legal advisors and waiting for additional direction before starting the UK process. I think the UK hasn’t decided yet.

JE: I think it’s looking highly likely as a no deal. So I suspect if you want to use the UK, there may be a separate application. Just a personal opinion. The rollout and the application, the first target market, are you going to sort of look at hospitals or physicians or are you going to market directly to individuals? And then the second related question is, what about the physical manufacturer of these devices? Presumably that would be done by some different company that may be a partner for them to you?

JCJ: Yes, in this day and age, it’s becoming much more common to utilize contract manufacturing services. A decade or two ago, a startup company that’s trying to make medical devices, particularly devices that are highly specialized, may have to raise funds for the manufacturing process internally, but now there’s a level of sophistication in the global contract manufacturing firms that it’s more likely than not feasible to find a capable contract manufacturer. Multiple countries can now create fairly sophisticated and specialized devices such as ours. So, we have not invested in any factories or manufacturing facilities. We have some contract manufacturing partners and are continuing to speak with others. We plan to source as close to the target market as possible given the politics and economics these days of trade and supply chains. We plan to have multiple manufacturing sites around the world that are within our target markets.

JE: And your initial customers, will they be sort of public health hospitals, individuals, all of the above?

JCJ: We’re looking at economies of scale, definitely not marketing to individuals. We are looking at larger organizations. Our target is the value-based care provider organizations. In the US, there is unusual, fragmented healthcare financing – you have private insurers, government safety net programs, non-profit organizations that serve as providers. The history has been volume-based care to enrich providers whether it’s a physician or a hospital that gets paid on the basis of each individual encounter or procedure. Because of that volume-based reimbursement model, America has the highest per capita health care expenses of any country in the world yet its outcomes are ranked below the 20th country. So there has been a steady shift away from volume-based reimbursement towards value-based reimbursement. Instead of paying based on procedures and patient appointments, it is paying based on the clinical outcomes and how many times a patient been readmitted for the same condition. if the patient has been admitted multiple times within a certain window, then the payer, whether government or private insurance, may penalize the provider. So, the emphasis is slowly shifting towards prevention and wellness. Countries like Canada, UK and Australia with national health systems have already been valued-based with a fixed pool of money to pay for health care for as many as possible. Vigor’s devices and software, by gathering data and optimizing patient management, and then using pools of data to determine patterns and predict when to intervene, is totally aligned with value- based care and philosophy. So those are the types of organizations that Vigor seeks as clients.

JE: I’m interested in that because having spent a lot of my life in Canada and the UK where there is a large public healthcare system. So you’re depending on the country, maybe targeting the private sector in other countries may be targeting the public sector. Presumably, the public sector may be one of the primary targets in China. Is that correct?

JCJ: Yes, since the government has been a significant payer for health care. There is an emergence of the private insurance industry with a growth in the middle class, but we’re in a value conscious environment. I think in the private sector, there’s going to be an emphasis on value-based care, particularly with the technology that’s becoming available. Take diabetes for example – in China, there are pilot projects to do remote management of diabetes using blood sugar meters that transmit data via Bluetooth to the patient’s cell phones, then to a central monitoring center. The government has funded projects on remote diabetes management, as well as heart disease management. This year, the government elevated chronic obstructive pulmonary disease (COPD) to be one of the top five national health priorities. COPD is probably the fourth leading cause of hospitalizations and death after cancer, heart disease, and stroke. So, there’s a significant interest in better management using technology. It is very good timing for us.

JE: So you said that probably in the second half of next year you’ll be, you will have received some or all of the approvals and become operational. So when the company becomes more mature, say in three years’ time, what will be the particular services it does directly, and what partners will work with to deliver sort of the whole ecosystem of this.

JCJ: As we see the shift towards value-based care, we’ll see that doctors’ ofices shift their personnel to having care managers contacting and following up with patients electronically to ensure they stay on treatment plans that we’re digitizing. There are some companies that are doing this already with diabetes and heart disease. In the US, there’s a company called Livongo that is about six years old. They went public last summer, in July 2019. Just last week, it was announced that they are going to merge with Teladoc which also went public last summer in July. These companies are good examples of adopting technology in ongoing chronic disease management, starting with diabetes. I know similar companies in Asia, that haven’t IPO yet, but I think some of them will. The parallels to Teladoc in the US in Asia would be Ping An’s Good Doctor and Tencent’s We Doctor telemedicine programs. They are initially geared more towards urgent or acute care, but they also recognize the need in primary care for ongoing disease management. They will need different specialty and technology resources for diabetes and heart disease like Teladoc in the US. There are hardly any digital pulmonary health tools, so we aim to be the supplier of telehealth providers in three years in addition to supplying national health systems, private managed care systems, and other value-based care provider organizations.

JE: You as you said before, you’d probably outsource the physical manufacturing of the device, but presumably you’d remain at the center of the data analytics as opposed to outsourcing that. That’s something that Vigor would always consider a core activity. Is that correct?

JCJ: That’s right. Whereas we contract mechanical and electrical engineers, we employ our own data scientists and analytics specialists.

JE: Okay. I had a conversation earlier in the week with a biopharma company and they were explaining to me the concept of CDMO. And it sounds like there’s an analogous concept there. They were the CDMO to produce the bio ingredients and all of these things. Your CDMO will be the contract manufacturer for your physical devices. Is that a correct analogy?

JCJ: Yes, that’s right. Over time, the devices will become commodities. Someone else, a venture capitalist that I spoke with, after I explained our business model, he said, “Oh, I get it. You’re in some ways like the inkjet printer manufacturers, where they produce the device but their recurring revenue comes from the sales of ink cartridges.” And I said, yes, in some ways you could view our devices over time as a commodity and it’s really the data stream from the devices and the intelligence the data can provide that is the source of value. Thus, we can contract out manufacturing more easily than pharma companies.

JE: Okay, now, you’ve just mentioned the involvement of the venture capital firm, you’re the CEO, but who, who are the owners of the company, is there a diverse group of, of shareholders?

JCJ: The company is registered in the US and initially the founders were the shareholders. They were able to obtain grant funding for the early development of the technology. Once they got past the early prototype stage, they had to raise additional capital. Some angel investors, including the former chancellor and some alumni, participated in a convertible note offering which was expanded to some parties outside the Duke system. This brought on board a seed stage venture capital firm and another angel network that consolidated funds from several angels into a single investment. We’ll have another round of funding for growth from institutional VC’s in the near future. That’s how we progressed so far, from grants, to angel investors, to seed stage VC.

JE: Now on your website, there’s reference to I think it’s Verge Healthcare Investors and there’s a relationship to J&J Labs. And there’s mention of being involved with a MedTech Innovator. I think I can understand the venture capital but what’s the relationship with J&J labs and what is the MedTech innovator?

JCJ: The seed stage venture capital firm I mentioned is Verge that you identified on our website and the other two are competitive accelerator or partnership programs. Johnson and Johnson innovation has an annual competition for bringing companies into its partnership program. They have physical JLABS locations, probably seven or eight of them around the world. There’s been one in Houston for a long time, but it’s focused more on surgical devices. They have one in San Diego that is more on genomic medicine, molecular biology and then they opened one in Shanghai last summer. I was particularly interested in that one because it was diverse and wasn’t focused around one specific area and because of the size of the China market. I decided to focus on the JLABS in Shanghai so we went through a competitive process and were selected to work closely with Johnson and Johnson. Their Chief Scientific Officer, Paul Stoffels, had been an entrepreneur starting the company that found early and successful treatments for Human Immunodeficiency Virus (HIV) disease. His company was acquired by Johnson and Johnson, and his personal experience going through that process led him to conclude significant innovation in startup or early stage companies can benefit large corporations that may not be the best environment for breakthrough innovations. So, they created a very well-structured program to partner with early stage companies with promising products. At some point, they find interest alignment and create partnerships or even acquisitions for Johnson & Johnson. The other program through MedTech innovator is not tied to one company like JLABS. The founder of MedTech Innovator had previously been a serial software entrepreneur who became a venture capitalist. Then, as a venture capitalist looking at medical technology companies, he saw that scientists that were often the founders lacked the necessary experience and resources to take something from lab development through regulatory approval to commercial success. They also struggled to find the right investment partners. So, while he was still a venture capitalist, he created the MedTech Innovator program to assist medical technology startup companies in getting the resources needed to improve their chances for success. MedTech Innovator is a nonprofit organization based in Los Angeles, California with an APAC office in Singapore. They have corporate sponsors including Amazon, Johnson and Johnson, Nipro, Olympus and a few other large corporations that cover a range of medical device, pharmaceutical, digital health, and technology expertise. MedTech Innovator also requires an application to a competitive process and selects few companies to join their partnership program. In our case, Vigor is paired with a global medical device company that could become a manufacturing and / or marketing partner.

JE: Okay, I mean, do they become sort of a longer term business partner? Do they possibly take equity in the company or are they just more like a mentor to assist your development or integration into local market?

JCJ: At a minimum, they perform a mentor role, but they often times will find partnerships for manufacturing, distribution, or product development. I don’t remember the exact percentages but around 20% of companies might be acquired in this process.

JE: Okay. So in three years’ time, how do you envisage Vigor?

JCJ: The primary thing that I can envision is that we’ll have products giving significant beneficial impact on the lives of people with lung disease, that their quality of life will be improved, and their diseases will be better managed. There will be greater cost efficiencies for the payers involved, and better health outcomes and quality of life for the patients involved. And because of the partnerships that we’re developing now, a number of outcomes could occur if our technology commercialization is successful, as I hope it will be. Then there’s a good likelihood in three years’ time that Vigor may be acquired. I’m not sure if we can IPO in three years’ time, but looking at some other companies in the cardiology and the oncology spaces, I think there is a 50% chance that we will be acquired in the next 3 years.

JE: So as CEO, you’re open to different outcomes, remaining independent privately going to an IPO or being acquired you, you’d consider your open to all of those different scenarios.

JCJ: Yes, and yes, I have been a startup CEO a few times around now. My first two companies were acquired and I am very well versed with the alignment of interests with investors, shareholders and the focus on generating shareholder value. When we generate value for our customers and target populations, we also generate value for our shareholders. If we do a good job with products and service, then someone’s going to recognize that in the market and we will find a liquidity event.

JE: Presumably Vigor won’t start generating revenue until after it’s got the initial regulatory approvals. Is that correct?

JCJ: That’s right, but there’s also a good likelihood we can generate some revenue beforehand. I have conversations now with different organizations that are very interested in investigational use of our products. What I mean by that is they’re not going to use it for diagnosing and staging patients, for which you have to have regulatory approval to use a device in that manner. Instead, these might be academic or research, commercial research organizations that are simply trying to collect additional data to correlate and to do planning and perhaps to do modeling for disease conditions, and also looking at effective treatments. In other words, patients won’t be diagnosed and described based on numbers coming out of our product. But the numbers coming out of our data will provide insights and intelligence into other processes that these organizations are interested in.

JE: They would be sort of characterized as consultancy or research relationships.

JCJ: Yes, that’s right. Primarily a research relationship.

About the Industry

JE: Okay. Very interesting. Very interesting. So I think you’ve given very in-depth discussion of Vigor medical system. And now I just want to sort of turn and see how it sort of fits into the industry and how do you categorize yourself as a sub sector of the health industry, the technology industry. What is Vigor is that a technology company, is it a healthcare company. What sort of SIC code could you attach to it? Or could you.

JCJ: The codes need further refining because this is an integration of some disciplines or verticals within the healthcare technology spaces. The term digital health has been applied to this area because our products are used by healthcare providers in healthcare delivery. But they’re clearly technology tools, information management. That’s the software component, the analytics, then the device technology, proprietary ability to measure lung volumes and flow rates. So it’s an amalgamation of different areas. The term digital health doesn’t explain everything, but it’s probably the single best term available.

JE: I have a personal curiosity of big public health care systems and I have some knowledge of Canada and the UK, a little bit about China. Are public health systems quicker or slower to adopt these sort of new digital health, than the private medical center. Can you make any generalization about the applications of digital health in either the private or public health care system?

JCJ: Yes. Historically, the public health system focused on safety net organizations and as such, they focused on what I would call bread and butter care. Often times, that excludes the latest technologies which have high price tags. Robotic surgeries and some of the latest medications are very expensive, so they may not be utilized by some public health systems. But the crisis of aging populations, flat tax revenues, and competition for resources from other sectors has caused governments to rethink and embrace innovation and technology. The National Health Service in the UK has created an innovation division that is collaborating with companies producing new technologies. The US government with highest per capita healthcare expenses in the world has also created some innovation programs, but primarily for the health care providers. That’s why we’re networking provider organizations and research programs where we can demonstrate clinical and economic benefits of digital health solutions. I mentioned the Chinese government has funded some pilot projects for digital health programs around diabetes and heart disease. We’re starting to see in the last few years a more innovative mindset amongst public healthcare providers in various countries. And I think that the whole pandemic situation is going to accelerate this as well, at least for telemedicine giving the ability to deliver care without people coming into a facility and picking up more disease than they came in with. That’s one driver of technology adoption and the added costs of COVID care that have been placed on governments are also going to drive more innovation and efficiency using technology.

JE: Well, that’s interesting. And I mean, I guess it’s hard to have a conversation today without talking about COVID. When I asked that question to the biopharma firm on Tuesday, what’s been the impact of the pandemic on you has it accelerated business? And he said something to me that was new, because I’m not a medical person. He said, it’s been a problem because we’ve not been able to do our clinical trials as quickly because people aren’t going to hospitals. And that’s slowed the whole process down. Now, do you have to go through clinical trials for your device? And so what’s been the impact of the COVID situation on the development of Vigor?

JCJ: We have had both positive and negative effects. Positive effects are that regarding the clinical research, we’ve already completed the trials for our device so we’re not hampered. We’ve already submitted the data in these trials to regulatory agencies who have decided they are acceptable and told us “you fulfilled your clinical trial requirements.” Another positive is that some of the research organizations that we’re talking to are specifically interested in our technology, so that their research subjects will not have to come into the clinic or hospital to get their lung function measured. Their research subjects can utilize our devices in their homes and submit the necessary data without having to go to the research site. So we provide a really valuable solution. On the one negative side, in some of the countries where we have personnel and are doing some of our development work, the lockdowns of people at home for periods of time have hindered some of our personnel going to their offices where they have test equipment. They work from home with their laptops, but they don’t have the large lab device at home for device accuracy testing, for example. But overall, we have more positive effects from the COVID situation than negative.

Concluding Remarks

JE: Okay. Okay. So that covers I think most of the healthcare industry, we sort of jumped ahead. When we were talking about Vigor, you’ve already given a good overview of the association with Duke University and Jlabs. So we don’t need to repeat that. So let me just close off because we just run a little bit over an hour and just sort of summarize and capsulize a few things you’ve said. For the next say 18 months with regards to either funding, development, regulatory approval, what do you see as the key events? And when do you see them happening?

JCJ: Definitely regulatory approvals would be the highest priority because that allows commercial marketing. While we’re working with the regulatory agencies, we’re also working with potential customers, developing their use cases and helping them redesign their care process focused around proactive management rather than reactive treatment of patients, so that they can achieve better outcomes and lower cost, long term in the US in particular. And then the other area is the development of strategic partnerships – organizations that have medications to treat lung diseases, their interest align with us because we can help diagnose. Their products won’t be sold without patients being diagnosed. And then their products won’t be used properly if there’s not a way to measure the progress of the patient. So, so we help companies with pharmaceutical products achieve better outcomes. Their customers realize greater value when Vigor is involved. We’re also looking at other use cases – one of those is anytime somebody undergoes general anesthesia for surgery procedures, there’s a well-established medical literature foundation for assessing a person’s lung function first, before we put them under general anesthesia. If somebody has abnormal lung function, best to know that in advance to plan proactively for the anesthesia rather than in the middle of the surgery, the anesthesiologist notices the patient’s oxygen level dropping, the parameters going awry and tries to find the medications to apply emergently. That results in post-operative complications, separate from the surgery the patient had. In the US and Europe, it is fairly regular practice to assess lung function before surgery, but in the rest of the world it is not done consistently, if at all. So, there’s potential collaboration with anesthesia and surgical device companies to market our spirometers to assess patients and improve surgical outcomes.

JE: Okay, I’m getting unstable call connection again on WeChat. So let’s just summarize it and conclude now. You finished your clinical trials, but you’re still thinking it’s not going to be the second half of next year until you get regulatory approval. And so another year to wait for that.

JCJ: That’s the most conservative estimate. There are some potential opportunities for fast-tracking, but that’s not guaranteed unless a regulatory agency tells us that’s what they are going to do. COVID is primarily a respiratory disease but creates many problems. The greatest morbidity comes from lung infections and respiratory failure. There have been many reports that patients’ lung function can recover completely, but some patients’ lung function might still be abnormal 3 months after the virus is cleared from their body. So there is a need for monitoring the trend of lung function, so there is a reasonable possibility of fast tracking.

JE: Okay. And then on the final point you said there will be another round of funding, I think it probably won’t be this year. So will that be to increase staffing increase technology? What would the next round funding be used for?

JCJ: Yes, it’s what we call growth funding. As we’re doing the partnership development, we’re creating plans with partners. Executing those plans will require people both on the partner side and the Vigor side, so we need more funding to hire additional personnel.