In today’s episode, Alec and Bryce talk to Brian Ward. Brian is the founder and chief executive officer of Aroa, a company of much discussion in the Equity Mates’ Facebook group, and a company that featured in our summer series. Brian has been responsible for leading the Company’s growth from start-up through to becoming a vertically integrated medical device business with substantial US sales and a developing international presence.
In today’s episode, we discuss the climate that the company is operating in – the historic process for soft tissue regeneration, and some of the different technologies being trialled at the moment. Then Brian talks about the journey of founding Aroa, including the experience and background he brought to the table, and his entrepreneurial learnings. They speak to the pipeline for Aroa for the next few years, the risks and challenges in the current environment, and what success would look like for the company.
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Bryce Leske: [00:00:55] Welcome to Equity Mates, a podcast that follows our journey of investing, whether you're an absolute beginner or approaching Warren Buffett status, our aim is to help break down your barriers from beginning to dividend. My name is Bryce and as always, I'm joined by my Equity Mates friend. How are you? [00:01:09][14.2]
Alec Renehan: [00:01:10] I'm very good, Bryce. I'm very excited about this interview. A big part of what we want to do this year speaks to more company leaders. Yes. Get you to get it straight from the horse's mouth. Yes. And this one is an exciting one because we talked about this company in our summer series and now we've got the CEO on. [00:01:27][17.3]
Bryce Leske: [00:01:27] Absolutely. One of the challenges as a retail investor is getting access to the leaders of public companies that we can invest in. So it is our pleasure to welcome Brian Warde from Arawa to the show. Brian, welcome. [00:01:38][11.0]
Bryan Ward: [00:01:39] Hello. Yes, it's great to be here. [00:01:40][1.4]
Bryce Leske: [00:01:41] So Brian is the founder and chief executive officer of Aroa. If you have listened to our summer series, then you will know what we're talking about. Otherwise, go and have a listen to that episode where we do a bit of a deep dive on the company. Brian has been responsible for leading the company's growth from start right through to where we are today, taking it from the start up stage and then vertically integrating medical device business with substantial US sales and a developing international presence. So we're going to unpack a bit of that, as well as how Brian thinks about leadership and, you know, people in culture. So let's get stuck in. [00:02:15][33.6]
Alec Renehan: [00:02:15] Yeah. Now, Brian, we love to hear CEOs and founders talk about their companies in their own words. So rather than us explaining what a road does to kick us off today, can you tell us how you would describe a role? [00:02:29][13.9]
Bryan Ward: [00:02:30] Sure. Yeah. So a role as a medical device company operating in the regenerative medicine area. And what we're all about is unlocking this field of regenerative medicine for everybody. So many patients have difficulties in healing after surgery or after they've had complex wounds. And those wounds can be, you know, they can be open for many years. What we're doing is we're bringing a class of regenerative technologies to the wide mass of patients. So typically, these types of products have been very expensive and rationed only to the most severely affected patients. There's a huge opportunity to make them much more widely accessible and therefore increase and improve the outcomes for many more patients. So that's what we're about. We're about providing these high-quality products for many more patients. So many more patients can benefit from them. [00:03:35][65.3]
Alec Renehan: [00:03:36] Now, just for people who aren't familiar with some of that terminology, when you're talking about regenerative, regenerative, tough on one, I'm going to try that. You're talking about things like artificial skin after people get, you know, complex surgery or burns and stuff like that. That's correct, isn't it? [00:03:59][23.1]
Bryce Leske: [00:03:59] Bandaids. [00:03:59][0.0]
Bryan Ward: [00:04:02] There are lots of patients that have different sorts of injuries, different sorts of wounds that just don't heal. And so what we're doing is giving them products that really accelerate that healing process and help them heal. And there's a bunch of different knows it can be externally on the outside of the body. It can be internally and some complex procedures like hernia repair. There's a whole wide field here and it's a newly emerging field of medicine. So, you know, we've had devices and we've had biologics. What we've realized is actually there's the potential to be able to unlock the bodies and transmit capacity to heal with the right technologies. And so, you know, it opens up a whole new field of medicine. And it's a really interesting emerging field of medicine. And that's what we're focusing on. [00:04:02][0.0]
Bryce Leske: [00:04:55] Yeah, it's a fascinating space. So you've taken a rower from start up stage. So I'm wondering, what is your sort of background to be able to start a medical company like this? It's not something that Ren and I would just be able to get off the ground. So what is your experience? And then are you able to talk us through the entrepreneurial journey that you've been on, some of the main challenges you face to get to, I guess, the IPO and now. [00:05:20][24.6]
Bryan Ward: [00:05:21] Yeah, sure. So, you know, I've spent my career working in the life sciences, so I started my initially I trained as a research and worked in clinical practice. I got excited. I've always been interested in new product development, and I worked for a medical technology company here in New Zealand, a global company, and then just got kind of interested in the industry side of the life sciences. So I've worked in a range of different multinationals right around the world, starting off in technical roles and then progressing more onto the commercial side of the business. So, you know, I've had experience in a wide range of areas and it's been a great background to then go and start a company. I'm certainly not a deep expert in any one of those areas, but I've got a general kind of understanding of how this industry works. Hmm. Yeah, just in terms of the journey, the journey. I started the company 11 years ago, so it was myself and I had a PhD student within contracted and some scientists from a research institute just to kind of get things going and then pretty quickly built the scientific and technical team. So what's really interesting with a life science company to compare it to something like an ice tea company, a software company is it takes a long time to develop a product. You have all of this regulatory quality overlay and all these requirements you have to meet. So it's a long time from starting a company to begin to sell a product. And so we went through this journey of a real intense focus on product development where people aren't kind of sure. It's just like a science experiment shows us a real company and then five years later, pop out with our first product, which is commercial. So takes a lot of confidence from those early stage investors to get in behind the company to keep on investing and the absence of sales. But then those sales start to come. And, you know, in doing that, you start to develop this platform that you can build on. [00:07:31][129.8]
Alec Renehan: [00:07:33] So, Brian, as we mentioned, we did this. We looked at a row in our summer series. And one of the big things that we took away was the I guess the competition that's starting to exist in this Reginette regenerative medicine space. And so it sounds it feels like there's been a big step forward in the treatment of, you know, soft tissue injuries and in repairing that stuff. And now there's a lot of competitors with slightly different solutions, some synthetic, some organic, but all chasing not that big, I guess, prize or this big market that exists. So how do you think about your competitors? And I guess how do you think Arawa differentiates themselves from the competitors out there? [00:08:20][47.8]
Bryan Ward: [00:08:22] Yeah, you're absolutely right, I mean, this sort of I think when there's a good opportunity, you'll get competitors. I mean, that's kind of like validation of the opportunity to sort of think about the different technologies that different companies and how they participate in this industry. And what you tend to find is that different patients have different needs and different technologies tend to address tend to be better in one area than another. So the opportunity is enormous. It's not an industry where it's the winner takes all. It's an industry where you'll find several participants that do well. So I think there's this space for several players here. There's also space for innovation. And, you know, when we look at the space, there's an enormous opportunity for innovation and there's enormous opportunity to improve patient outcomes. And so, you know, I think in that sense thing, you look at the players and go back to some very large companies and small companies, I think the large companies tend to be slightly less innovative. They tend to be more locked in on those establishing franchises. New emerging companies tend to be much more nimble, much more able to adapt and innovate. And I think, you know, this is an opportunity for everyone. I think it's also a market that's going to grow a lot. And so I think I think there's enormous opportunity for a number of companies to do very well in this space. [00:09:59][96.8]
Alec Renehan: [00:10:00] So when we were looking at some of these competitors, we found it quite funny, I guess a wide array of, I guess, basis for these products. You know, some of your products are made from sheep and then others from cows, some from pigs, some from their own patient skin cells. We were just wondering, I guess, how do you even land upon that? Like, why did you decide sheep was better than cow or pig? Is it just because you're from New Zealand and there's [00:10:30][30.8]
Bryce Leske: [00:10:33] a lot of safai? [00:10:34][0.3]
Bryan Ward: [00:10:34] Yeah, I'd say yes. I mean, it's interesting. I mean, there's been you know, this whole field has developed a lot over the last 20 years. And so, you know, if you go back 20 years ago, people thought that, you know, you could just use synthetic products or really simple products to provide this biological function and healing. And so it was all about these pure products being the basis of helping with healing. And the reality is that actually biologics, you know, biological materials are this complex mix of molecules that have lots of cues and lots of structural features that allow you to allow the body to heal. You know, in terms of different types of animals, you know, there's not really, you know, when you sort of getting down to the basic biology, there's not really a lot of difference between the species in terms of the structure of these tissues. What's important is their composition. And so each of these different tissues has quite a unique composition. And the composition is so much like the code to healing. And so you can get tissues that turn over very quickly or regenerate themselves as part of the natural cycle of tissues in the body really rapidly. And they're more suited to these regenerative applications. And that's the type of tissue that we use. So it has a lot of it within that type of tissue. There's a lot of these signals that are important in helping tissues heal. [00:12:14][99.6]
Bryce Leske: [00:12:15] So, Brian, obviously these sort of life science businesses are very much out of our circle of competence as investors. But it's a space that is only going to become more important over the next sort of 10 years or so as investors like when we're comparing you with competition and the whole sort of space, what should we sort of be thinking about to differentiate you from your competitor? Like, is it product pipeline? Is it your international exposure, sales structures? What sort of. Yeah. Should we be keeping an eye on. [00:12:45][30.1]
Bryan Ward: [00:12:46] Yeah. I mean it's all, it's all of those things really. It's, it's, I think confidence comes with approved products in major jurisdictions. So having achieved the ability to sell, which really shows that you have the regulatory and quality requirements, there's actually a real market there for those products. I think that's important. A platform technology that can lead to several products. It's not just a one-shot wonder. It's something that can build value over time. A technology that has a long a long period where it can deliver value for patients, so things like, you know, proprietary knowledge, patient, good, solid patients and an expanding patient need. I think it's important, you know, sales and marketing absolutely pivotal. So, you know, the platform from which to sell. So salespeople, sales people that know the market or the structural and operational issues around that, having that set up pipeline, you know, I think, you know, for our sort of business, it's you know, it's very much our strategy was like, you know, get our first product commercialized, but be really sure that over time we can develop products of increasing value in much larger markets over consecutive years. And that's sort of how we built our business. So, know, I think all of those things are important when [00:14:24][98.1]
Bryce Leske: [00:14:24] you are all about getting fit. You've bought the garment, you bought the golf membership, you bought the gym membership, and you're on the mind MasterChef. And even in lockdown last year, you bought those resistance bands of Instagram that from memory didn't even come. [00:14:38][13.6]
Alec Renehan: [00:14:39] No, look, they didn't come. But all of that effort really was canceled out by the numerous menu log orders that were a real staple of my lockdown experience. [00:14:49][9.5]
Bryce Leske: [00:14:50] Well, we've just headed into a new financial year, so I think it's time you get money fit with Virgin Money, our latest sponsor. [00:14:57][7.0]
Alec Renehan: [00:14:58] That's right, Bryce. With a high interest savings account bundled with a seriously rewarding everyday transaction account, you can manage your money easily on the go smash your savings goals and be rewarded for it. [00:15:10][11.9]
Bryce Leske: [00:15:10] And with the Virgin Money Go transaction account, you can earn rewards on your everyday spending with zero monthly fees. Sounds like just what you need. Rame. [00:15:19][9.3]
Alec Renehan: [00:15:20] Yeah, the FBI. Twenty one get it didn't quite work but if y twenty to get reward money it might be to go [00:15:28][8.4]
Bryce Leske: [00:15:29] back to your own bait. Virgin money terms and conditions and monthly criteria apply. Now let's get back to the show [00:15:35][5.7]
Alec Renehan: [00:15:36] on the sales and marketing point. It would be interesting to get your thoughts on that because to our untrained eye, so correct us if we're wrong, but it feels like there are almost two competitions going on in a business like yours. The first is to develop the best products and, you know, to make sure they've got good applications and they're better than their competitors. But then the second competition is actually to convince, like the key decision-makers, IT doctors or hospitals or whoever, whoever's making the decision about what product to use, that it's the right product. And I'm sure there's plenty of examples of businesses that have developed the best product but haven't been able to sell it to the key decision-makers and therefore have lost to a competitor. So, I mean, no one. Is that is that right? And number two, how do you think about sales that in that context? [00:16:26][49.4]
Bryan Ward: [00:16:28] Yeah, it's a good question. Yeah, you're right, I mean, there are people that develop great products that never are commercially successful. So right from the outset, you can have a clear commercial strategy that's a great product, differentiated product, but then how you can sell it. What's really important in this industry is clinical results, clinical data, and the ability to very influential people, what we call chaos, to be advocates for your product and to recognize the value in your product. So typically what you do is run clinical studies that validate, validate the effectiveness of the product, the safety of the product, have that data that you then work with leading clinicians to become strong advocates for your product. So that's kind of one step on the other side. What you're also doing is you do have to be able to gain access to hospitals, be able to promote the product to physicians as well. So there's a number of sort of parallel paths that you take here that are in health care. Certainly, data is really important, having good clinical outcomes, being able to demonstrate that your product works. That's absolutely critical. [00:17:50][82.1]
Bryce Leske: [00:17:52] So, Brian, let's take a step towards the future, I guess, and have a chat there. What is in the product pipeline for a grower and what are some of the markets that you're sort of focusing on over the next sort of 10 years? [00:18:06][13.4]
Bryan Ward: [00:18:07] Yeah, OK, so from a product pipeline perspective, we've in the last 12 months or so, we've launched a new product, which is a product for soft tissue reconstruction called Marriotts. So that's our major focus at the moment. And it will be over the next 18 to 24 months. We're also developing a pipeline of new products. So we have Symfony, which is a product for use in people with really impaired healing. It's sort of it's our original technology posted with an additional technology. And so we've had that approved recently. We'll do some clinical work on that product in the next 12 months. And then that was we'll begin a launch of that product in twenty, twenty two. We're also have a new platform, which is a very innovative platform that combines our existing technology with a new hardware device for managing something called dead space, which is something that happens when you remove tissue from a patient during surgery. It's prone to having complications where the wound heals really poorly. So we're developing a completely novel new therapy for that area. We think it's a huge opportunity for the company that's still a couple of years away. So as we build out the company, we will be very from a sales and marketing perspective. We were very well positioned to commercialize that product in the next couple of years. [00:19:40][92.8]
Bryce Leske: [00:19:40] Before we move on, we're just going to take a quick break and hear from our sponsors. [00:19:44][3.7]
Alec Renehan: [00:19:45] So sticking with the theme of the future, looking at your business and looking at your plans, what do you think of some of the biggest risks to your business right now? [00:19:55][10.1]
Bryan Ward: [00:19:57] Yeah, it's a good question and knows I think for us at the moment, we're ninety five per cent focused on the US and so and we have a lot of opportunity outside outside the US and the rest of the world. I think there's a lot of things going on and it's very easy to kind of get distracted and try and do too many things. And so for us, I think most of our energy will continue to be directed towards the US building our sales team out there putting, putting, putting in place the infrastructure that we need. Know, I think we've got to be careful not to spread ourselves too thinly and to try and grow our business in the rest of the world without that becoming too much of a distraction on the US business. And so I think that's a tension. I think if you look at the lot of the risks and lies in the life science businesses like regulatory quality, product development, manufacturing, you know, we've checked those boxes with where we've been doing that for quite some time now. And I think those sorts of risks are mitigated, I think, within this process. [00:21:05][68.0]
Alec Renehan: [00:21:06] So final question on future plans. If you think 10 years into the future or 20 years, what does success look like for you? [00:21:15][9.6]
Bryan Ward: [00:21:16] Yeah, that's a great question. Our plan is to build a really large lifescience company that's globally a global leader in the space. We've taken this enormous opportunity. This is an emerging field and we can build a really large Australasian company. So that's our plan. You know, we think we're very well-positioned to do that. It's not a short term. It's not a short term business. You know, we're in this for the long haul and we think we can build an enormous amount of value over the next five to 10 years. [00:21:46][30.1]
Bryce Leske: [00:21:48] So, Brian, let's move to people and culture, because as we said at the start of the interview, it's one of those really difficult parts to for a retail investor to actually get information on. But yet all fund managers generally say understanding management is an incredibly important part. So let's start at the top. How do you think about leadership? Do you have a leadership philosophy as a CEO? [00:22:10][22.8]
Bryan Ward: [00:22:12] Yeah, I mean, I think purpose is really important and people being bought into the purpose of the company. And, you know, people want to get out of bed every day and know that they're doing something that's really important. And I think in our company, we're really clear about that. You know what? What we're aiming to do is unlock regenerative healing for everybody. You know, we understand that this is a very limited people have very limited access to this technology and we want to change that. And so I think people here are very motivated by that, not only at a kind of you know, that sounds like a great idea. But, you know, we see the outcomes that patients have from using our technology and the way that changes their lives. And I think that's incredibly motivating it. That helps us all work really hard to make this company successful. So I think the purpose, you know, having having a really good purpose, everyone working together to collaborate to make that happen is really important. [00:23:14][62.6]
Alec Renehan: [00:23:15] So if you move down from your focus and your philosophy as a CEO to the culture you're trying to build throughout the organization, aside from being purpose-driven and working together, are there any are there any key sort of tenets of the culture you're trying to build at Aroa? [00:23:34][18.3]
Bryan Ward: [00:23:35] Yeah, absolutely. Look, we work very hard to make sure that we support and get good ideas and that we draw people together and we have a high performing, challenging environment. So, you know, I think there are our values are very, very much around that, working together to get great outcomes and to collaborate to achieve those great outcomes. [00:24:07][31.3]
Alec Renehan: [00:24:08] Now, Bryan, we want to thank you for taking the time to join us today. If people want to find out more about arow, they can go to the website, or is there anywhere is there anyone else they should be going? Is there any social media that arose particularly active on [00:24:22][14.8]
Bryce Leske: [00:24:23] Brian Brines on Twitter? [00:24:24][1.0]
Alec Renehan: [00:24:25] Are you personally active on any social media? [00:24:26][1.8]
Bryan Ward: [00:24:27] Yeah, no, I'm not. But we have a LinkedIn account. We have a website. So that's probably great places to go. [00:24:34][6.7]
Alec Renehan: [00:24:35] Now, before we and I do just want to ask one final question. One thing I've been noticing recently is that the number of New Zealand companies listing on the ASX and doing incredibly well is something to behold. You know, A2 milk, obviously zero. Now, hopefully, Arawa follows in their footsteps. So my final question is, what's going on in New Zealand and how do we compete over here in Australia? [00:24:59][23.7]
Bryan Ward: [00:25:01] Oh, look, I think you guys I mean, the whole ASX has done really well. And, you know, there is you know, it's kind of interesting. I but I think it's becoming more and more one ecosystem. And so definitely some good things going on here. But look, I think there's a lot of movement between both sides of the Tasman, which I think is fantastic. And, you know, we sort of think of as we think of Australia being just down the road now, it's so easy. I just think, yeah, it makes sense. [00:25:29][28.3]
Bryce Leske: [00:25:31] Well, Brian, thank you so much for your time today. It's always a real joy to speak to the management of some companies that we actually have an opportunity to invest in. But I think my big takeaway from this as well is that it's quite exciting that there are people like you spending time improving these technologies that are only going to make our lives better in the future. And if I fall off my bike or have a serious car crash or whatever it may be, the technologies that you're building are going to make that healing process so much easier down the track. So a big thank you from our side. [00:26:05][34.0]
Bryan Ward: [00:26:06] Great, thank you, and thanks very much for having me on the show. [00:26:09][2.2]
Bryce Leske: [00:26:09] Our pleasure. [00:26:10][0.2]
Alec Renehan: [00:26:11] Thanks, Brian. [00:26:11][0.0]