Uncovered: EMvision Medical Devices

Alec: [00:00:13] Welcome to another episode of Equity Mates, the podcast that follows our journey of investing, whether you're an absolute beginner or approaching Warren Buffett status. Our aim is to break down your barriers from the beginning to dividend. My name is Alec or Ren and today I am not joined by my equity buddy Bryce, but I am excited for this one. It is a particularly special episode. At the start of the year, we launched a segment uncovered. There are so many great companies out there, so many potential investing opportunities, but unfortunately media analyst coverage really focuses on the biggest companies, the top end of town. And what we wanted to do with Uncovered was to look at the smaller end of the market and find those fascinating stories worth telling. After a few segments on the Equity Mates podcast and realising how much we love telling these stories, we have gone and launched a separate podcast uncovered by Equity Mates, where you're listening to this podcast right now. You will be able to find it. And for this very first standalone episode of Uncovered by Equity Mates, I'm joined by Scott Kirkland, who is the co-founder and CEO of EMvision Medical Devices. ASX Ticker EMV. They are working on a portable brain scanner for stroke victims. Now, I won't get into the data around strokes, but a lot of it really blew my mind. Scott does a great job of unpacking it in this episode, but it is worth noting that and vision encapsulates everything we are trying to do here with uncovered by Equity Mates. It's a small ASX listed company that doesn't get a lot of media attention. It's working on a really hard problem and if it's successful, it could have a profoundly positive impact on people's lives. So good luck to Scott and the EMvision team. Now, before we get to it, I want to stress this is not a buy hold or sell recommendation. What we're trying to do here with Uncovered is tell the story of these companies, but it is the starting point of your research process. Seek professional advice if you need it and make your own assessment. And another important reminder that while we are licensed, were not aware of your personal financial circumstances. Any advice is general advice only. But with that said, let's jump into my interview with Scott Kirkland for our very first standalone episode of Uncovered by Equity Mates. Scott, thanks for joining Uncovered by Equity Mates. 

Scott: [00:02:36] It's a pleasure to be here. 

Alec: [00:02:37] Now, this is a fascinating story, one that I wasn't familiar with, and I really want to start with just the, I guess, the issue of strokes, because some of the stats really astounded me. So let me just write some of them out. One in four people globally will have a stroke in their lifetime. Worldwide, it's the second leading cause of death and the third leading cause of disability. They're pretty astonishing numbers. Can you bring us back to Australia? How big an issue is strokes in Australia? And can you give us some of the numbers ? 

Scott: [00:03:12] They're pretty, they're pretty alarming when you read them out. So in Australia there's around 50,000 strokes each year and the health economic impact is estimated at around $6 billion per annum. So it is a life changing event. It's a huge societal burden, it's a huge health economic burden. There are very effective treatments. So that's the positive. 

Alec: [00:03:34] Yeah. On the treatments, like before we start talking about the role that EMvison wants to play, it would be good to understand, you know, the world as it is now and how strokes are monitored and treated today. 

Scott: [00:03:45] So with a stroke, there are two types. There is either a blockage in a blood vessel and a skimming stroke or a bleed of a ruptured blood vessel, haemorrhagic stroke. Blockages account for about 80%, and what is consistent across both types is time is the brain. So there are millions of brain cells dying every minute. The quicker it can be diagnosed, the quicker it can be treated, the better the outcome and the treatment paths are very different. If it's a blockage, you want to restore blood flow in the brain. There's a drug known as TPA. It's a bit like Drano, a bit more sophisticated, clears the blockage, restores the plumbing in the brain. If there's a bleed, there might be neurosurgery trying to control that bleed, lowering blood pressure, very different treatment pathways. But the earlier clinicians can figure out the type of stroke, diagnose, treat, the better the outcome today the workhorse in stroke is. Great images and they have been the workhorse for whole lot of brain imaging since, you know, seventies. And they obviously get better each year but they are still very, very large machines. So even the smaller mobile versions of 600 odd kilos, they're driven like a forklift that big. There's a whole lot of infrastructure investment and they need specialist operators. A radiographer.

Alec: [00:05:00] Yeah, Yeah. 

Scott: [00:05:01] So that's the gap. So there isn't anything that's portable, that's like an ultrasound, you know, easy to use can be brought to the patient that can be operated by anyone with the appropriate. Training and health care professionals, appropriate training, and that's the gap. But ultrasounds really about the brain. So that's really the gap we're feeling. So like ultrasound, but imaging the brain at the point of care. 

Alec: [00:05:20] Yeah. Okay. So time is brain. That's I like that one. That's a good line. So that's the, I guess, the world as it is now. Let's talk about the world that you guys are trying to build in the change are trying to affect this technology that came out of the University of Queensland and their commercialisation company Uni Quest wrote something about the device that I think frames the scale of the EMvision. Uni Quest wrote This device could well have the same life saving potential as the widespread introduction of defibrillators 20 years ago. Big call.

Scott: [00:05:55] I like that. Yeah, I'd like that. And there's a whole pack of whack a story we can talk about. Would Packer, I think, fall off a horse at a polo match? Had a heart attack. An ambulance happened to be there with a defibrillator. Saved his life. He then spent, you know, millions of dollars to roll them out widely across New South Wales. But it is a huge market. Absolutely. But I think for us, we don't want to be, you know, a 343rd seat manufacturer where we're focusing on a one of a kind device or devices in an ecosystem with effectively no or very little competition. Yeah. So that's one of the important elements to appreciate. We're not trying to replace CTO MRI. We're focusing on the environments where clinicians need brain imaging. They need a more objective view of what's going on with the patient. But CT isn't practical or accessible. 

Alec: [00:06:45] So the the ambulance portable device or even just the backpack version is pretty fascinating. And I guess for the one in the hospital, you understand, like, you know, rather than taking a patient to the device, you can sort of constantly monitor them in where they are in the hospital. But for the ambulance in the portable one, can you talk to us about, you know, the use case and the potential for that? 

Scott: [00:07:07] Sure. And we're taking all the learnings from a hospital device and transporting that to our ambulance version. The next milestone we have coming up into this quarter is the fabrication of advanced prototype. And then we roll into healthy volunteer studies with that device. So the next year we're slated for road and air ambulance trials. So it's moving along nicely. The headset we're targeting on a ten kilograms cat literally carried in the backpack by paramedics. They can bring it into the scene. You know, if the patients had stroke on the third floor of their apartment building, then bring it up, scan the patient at home. And there's a few things that we really want to help answer. The first of which, is it a stroke or not? Right? Because up to 50% of patients presenting with stroke-like symptoms can have a mimic. So, oh, well, a migraine, epileptic fit, rare cases, brain tumours. So figuring out is it a stroke or not first. 

Alec: [00:08:02] And in the world today you don't know that until you get them to the hospital and scanned. 

Scott: [00:08:07] There's something called stroke scales, which is almost like a physical exam slash questionnaire that paramedics could administer. But it's helpful, but it's not super sensitive and specific.

Alec: [00:08:19] Yeah, it's not a brain scan. 

Scott: [00:08:21] It's not a brain scan. Exactly. And, and it's all about combining outputs from a brain scanner with those tests, as they would with a CT. So paramedics run the scan and it's very quick, you know, so our first generation device, you know, targeting under 5 minutes for the scan process, the outputs can then be sent to the hospital, to the neurologist. And again, we want to ask, is it a stroke or if it is a stroke, what type is it? The escaping the blockage or hemorrhagic bleed? Where is it? Show us a picture. Where is it? Approximately in the brain and figure out where we first, where do we send them? Because maybe the nearest hospital is in the right place. It might be better to go further to a comprehensive stroke centre that has the drain on the TPA that we were talking about earlier, or something called Thrombectomy, which is the surgery to remove the clot or, you know, really where we're ultimately heading. We're working with a group called the Australian Stroke Alliance, and longer term ambition is to open the door to being able to administer those drugs on scene. And they have something called a mobile stroke unit operating in Victoria at the moment. It's a multi-million dollar truck with a CT scanner on the back inside rather, and a van following behind with specialised staff, and they're turning up to code strokes or suspected strokes within 40 kilometres of the Royal Melbourne Hospital. And they tell us stories about seeing patients that have paralysis all down one side of their body and they'll assess them, they'll look at their symptoms, their history, they'll give them a scan and if they're eligible they'll treat them and literally 45 minutes later they can move their arm, they can move their leg, you know, they can walk out of hospital on their own steam. And but this very small amount of patients that are receiving that level of particularly what's called golden hour care. So the idea is if you have something portable, lightweight, operated by paramedics, you don't need to customise an ambulance. You can deploy that widely, not just urban, but particularly regional rural settings, remote communities where there's a really big need. 

Alec: [00:10:14] It's really really exciting and it's quite inspiring to like, just think about all of the incredible medical devices and new drugs that are being developed. And you know, you talking about the potential use cases, it's it's great to hear. It makes me feel confident that if I'm one of the one in four people that unfortunately have a stroke, that, you know, you're working on better and better. I said, help me. 

Scott: [00:10:36] Touchwood would. You're not. But yeah, it's the future is definitely bright. And I think, you know, 20 years ago it was in that case with stroke. But but the future is definitely getting brighter, that's for sure. 

Alec: [00:10:47] So let's take us back to the University of Queensland. And I guess take us through the journey of how this technology was developed and. I guess that where it is now. 

Scott: [00:10:55] Sure. Sure. So going back a bit, the journey with the underlying technology that the University of Queensland started around 2008 2009, very talented research team of the 2020 individuals there, led by a a Bush professor in the bush and Stuart Crozier. Stuart Crozet is now our chief Scientific Officer. 

Alec: [00:11:15] I'm just sorry to interrupt, but to pause on their credentials, I think Stuart was instrumental in developing the MRI. 

Scott: [00:11:23] Instrumental in developing an image correction technique and IP that is now in two thirds of all MRI's. So he's lost GE and Siemens and it's like billions of scans worldwide have been impacted. So that's Stuart's got fantastic credentials. So when we came along 2015, 2016, there was a very promising concept idea in the lab, this, this, you know, miniaturised prototype that could image the brain, but we needed to take it out of the lab and develop a prototype that would be suitable to go on patients. And, you know, we did that with a successful proof of concept study. We ran at the Princess Alexandra Hospital with our earlier clinical prototype, which I don't know if you've seen a picture. It looks a bit like R2D2. It's it's it's got that kind of it's even blue and white. But it's small. And we could prove the concept. We could take the imaging to the patient. We could capture signals that our algorithm team could make sense of. And see we got this capability to differentiate between stroke types. Is it a bleed? Is it a blockage and generate images? So from there, fast forward, we had to go from a clinical prototype to a what we call a commercial unit, so designed for manufacture, robust meeting international medical device standards. And we're now running much larger trials to generate the data we need for FDA to begin marketing the product. 

Alec: [00:12:42] Yeah, via the trial process for any medical device or anything like that. It just seems like just a long, long time. And so you started Princess Alexandra Hospital in Brisbane and then you had your first clinical trial in Liverpool Hospital in Sydney and you're now preparing another clinical trial, Royal Melbourne Hospital. I imagine you're getting the frequent flyer miles up.

Scott: [00:13:07] Yeah, that's, that's true. Just on your own, your comment about the process, it does take time. It's a medical device. You know, you need to prove it's safe and effective and we are doing something novel. So you need to prove from ground principles. You know, you're not another ultrasound or another seat, but, you know, you compare it to phase three drug development. You know, our clinical trials are less than $4 million at the moment. Right now, phase three is 5150, you know, so. So you don't have, you know, that binary risk element that you can get in pharma. So it does take a long time. But I think there are quite a few advantages with the medical device pathway. So we ran that proof of concept study at Princess Alexandra in Brisbane. We're now running a multi-center study which has three sites. So Liverpool and Royal Melbourne, both those sites are alive and enrolling and then the Princess Alexandra will be enrolled hopefully by the time this is where enrolling patients up in Brisbane and there are a couple of phases to that. There's a pre validation phase focussed on generating safety data, hardware verification, usability and more data to feed into our AI models. And then there's a subsequent validation phase to confirm our sensitivity and specificity. And so at the end of the process we go to the FDA and TGA, etc.. 

Alec: [00:14:18] Yeah, okay. Yeah. And so early days. But what, what have you seen so far?

Scott: [00:14:23] From the current study?.

Alec: [00:14:24] Yeah. 

Scott: [00:14:25] So stay tuned on the ASX. 

Alec: [00:14:27] Yeah, fair enough. Fair enough. 

Alec: [00:14:35] When I was researching and vision. It's interesting to see just how much government has got behind it. New South Wales Federal Government, I'm sure all the state governments, but also I guess the stroke advocacy community. So tell us what that journey has been like. Did they get it from day one? Was there a bit of education that had to go with these groups?

Scott: [00:14:55] Well, when when we arrived in Brisbane and met the research team and visited the lab, they actually had three lightweight portable scanners. They had a brain scanner, they had a torso scanner and they had a skin scanner. And so we evaluated all three. And the reason we took the brain scanner forward is because every clinician, every nurse, every paramedic, every neurologist that we talk to as part of our research process said this is a good idea. We need this. All right. So so of course, there's always scepticism. Show me DOD or show me more data, which is normal. But no one said this is a bad idea. So that that gave us a lot of confidence that we're starting with a genuine unmet need. And then in terms of the grants have been fantastic. So it's close to $20 million that we've secured in non-dilutive grant funding. And, you know, I mentioned earlier, there's about a $6 billion economic health economic burden in Australia. So you can understand why the government's motivated to support innovations that can reduce that burden. But also if we can keep manufacture local, you know, if we can create more STEM jobs. They're all good value add. 

Alec: [00:15:59] So yeah, it's really exciting. The I guess the health technology that's coming out of Australia, there's obviously some of those big names that you think about, but the amount of innovation that's happening in universities is pretty exciting. 

Scott: [00:16:10] I think we definitely punch above our weight. Absolutely. 

Alec: [00:16:12] Yeah. So let's turn we are a business podcast here, so let's turn to the business and what it could look like going forward. And I guess let's start, General, what would the commercial market look like and the business model look like? 

Scott: [00:16:27] So to sell a lot of units, you need to be flexible, right? So I'll talk about the purchasing models first. So we're planning two different models, CapEx and OpEx models. I've got two devices under development. One, a cart based for hospital environment. One's a helmet based for an ambulance environment. Okay. So the pricing models are a little different. 

Alec: [00:16:48] And just explain that so people can visualise it. The cart based is literally you wheel a cart with an end to the patient as opposed to the previous iteration where you wheel the patient to the CTO, MRI scan and then helmet based is installed in an ambulance, correct? 

Scott: [00:17:01] Yeah, Carried in a backpack operated by trained paramedics, brought in, you know, connected to tele stroke. But so with the first generation, the hospital system, we're looking at about 150,000 us for the capital equipment which is about 25 Aussie roughly that is in line with mid to high end ultrasound and a fraction of CTO MRI. There's consumables. So there's a disposable cap. There's something called a coupling media, which is a bit like ultrasound gel which helps. It's contained in the headset, helping us signals penetrate into the brain. We're looking at about $25 per scan, right? Naturally, medical products, you're targeting healthy margins in the capital equipment, but even healthier on the consumables. And then there's preventative maintenance and service. You know, annual contracts can be about 10% to capital equipment per annum. So is that the other model is a OpEx monthly subscription. And we did a lot of research with a group called Idea Medical for the US in particular to understand, you know, do they prefer, do they want to pay upfront? Do they, you know, they want leasing models, what's the preference? And it was basically kind of 50-50.

Alec: [00:18:09] Okay. 

Scott: [00:18:09] You know, it depends when you talk to us how much budget I've got left, etc., But we know we need offer subscription models in certain markets. So approximately 8000 US a month, you know, fixed term, you know, everything bundled in the device training, accessories, consumables, but a quota of consumables. And if they go above, there's a surcharge. So those are the two mainstream purchasing models and then the market itself. So again, focusing on Gen one first, we're looking at ICUs, stroke wards and regional emergency departments. Okay. And the use cases are slightly different based on those in ICU and stroke wards. We're looking at a monitoring paradigm after treatment to keep a closer eye on patients. So today there is nothing by the bedside to image the brain, right? And have they had a secondary bleed, recurrent strokes, all these complications that can occur, They have to, you know, white symptoms appear send them down to MRI. A few days later, it's can be too late. So at a larger hospital, that's where we're focusing on. And then at a smaller regional centre, they may not have a seat or someone to run that. CT There's a role at the front door. 

Alec: [00:19:13] Yeah, that's probably something that's worth drilling down on. So with a C.T. or an MRI, you need a trained radiographer with your devices. Is it Any doctor can use. [

Scott: [00:19:24] It, any doctor, any nurse. In our clinical study at the moment the nurses are doing a lot of the scans as long as I've had the training and it's, you know, it's half a day's training. At the moment, Yes. So it's not not exhaustive, but, you know, going back to ICU stroke wards, regional aid centres in the US, we estimate there's about 10,000 opportunities in Germany, France, UK, about 6500 in Australia. So based on that price point we talked about, it's about a $2.5 billion market with those regions. And then you add in South Korea, Japan, China, Latin America, and that number gets very, very big.

Alec: [00:20:00] So you're talking about like a global opportunity here when you're going through the clinical trials. Is it can do one clinical trial and then send that data around the world or do you have to go to a different regulator and do different things? 

Scott: [00:20:13] What we're doing is designing our study to generate data that we believe will support the major markets and generally meet FDA, you know, CATG and certain regions as harmonisation as well. So. So historically if you've had CE mark, there's been a harmonisation back to TGA, which is almost an administrative process essentially. So, so looking at that, that that market size within if we drill down a little further and we talk about, okay, we want to get a foothold with our, you know, our initial market, we believe it's in primary and comprehensive stroke centres. So these are the big stroke hospitals that they're looking at for the most patients. And, you know, if we look at the US it is about 1600 of those, you know, similar numbers in Germany, France, UK and we have estimated it's about a $350 million opportunity. So that's what we want to start right and get a foothold and then grow from that. 

Alec: [00:21:05] And this is, you know, you're selling into hospitals and, you know, government health care systems. What's the sales process like there? And I imagine it's quite different to, you know, a B2C product selling to these sort of big buyers. 

Scott: [00:21:19] Yeah. So there's a few things you need, particularly for new technology. You need an effective podium strategy. So the percentage of the market that's going to adopt your product will really depend on what's the body of evidence you have out there. And there may be a portion, call it five, 10% that are early adopters that will take on a new innovative technology earlier. And then there's a portion that are going to wait for some more evidence, more trials, etc.. They want to see, you know, outcomes published in the major journals, New England Journal Medicine, you know, the Lancet, those kinds of things. So the process that you have to go through generates the evidence. You know, the ultimate goal is to get into guidelines. That's not an overnight journey. But there is a process and a pathway to get there. And then in places like the US as well, there's strategies around reimbursement, something called the new Technology I Don't payment program we're looking at because it's not just what are the cost savings you can generate, but what are the, you know, the revenue generation opportunities as well by deploying your device. So but it's not just convincing, you know, a key opinion leader and urologists you know that's eminent that that that your device has value. You've also got to convince the finance department. 

Alec: [00:22:26] Yeah. 

Scott: [00:22:27] You know that there's a return there. 

Alec: [00:22:28] Yeah. [

Scott: [00:22:28] And we believe obviously devices cost effective enough, easy to use. There's a lot of advantages that we expect to generate. 

Alec: [00:22:35] Yeah, of course. So we're recording this on the 18th of July just to time box it. You're heading into reporting season. So there's obviously some things you won't be able to tell me, but I guess of what you can. What's next for EMvision? 

Scott: [00:22:50] Sure. So as a company, I mentioned how pivotal that earlier clinical study was for us, and that was with a smaller cohort, 50 patients. We're now in the midst of enrolling in this current stage, 150 patients. And as we progress through the study, we would like to be in a position to make insights, as we have previously from our earlier study. So I think this is a big opportunity for us to generate positive data out of our study we're running at present, but also in parallel, we are working on our go to market partnerships and what that looks like. We expect to use work with distributors for our major markets, particularly the US. We have, you know, some relationships with some of the large medical imaging OEMs as well as medical device makers. We're going to be in Chicago later this year at something called Arseny, which is one of the largest medical imaging conferences. And so as we in parallel, as we're running the clinical study and gearing up for the regulatory approvals process, we're setting up our commercial partnerships to try to help enter the markets like the US.

Alec: [00:23:52] And then one question we always like to ask when we have CEOs in the studio is, you know, we're long term investors here in Equity Mates and we love to think long term when we're speaking to company leaders. So if you think, you know, ten, 20 years down the line and what EM Vision could be, what does success look like for. 

Scott: [00:24:12] You ten, 20 years down the line? Well, something we've learned is and one of my colleagues is probably his favourite mantra is, is do one thing, do it, do it well. And what that means is we don't need seven products to be a multibillion dollar business, you know, with our current product stream, with the two brain scanners focusing on stroke, we could be a very. Cecil business, but there is opportunity using the same hardware and effectively a software upgrade to tackle other indications traumatic brain injury, people that fall car accident swelling in the brain. You know, there's there's there's a whole lot of opportunities to expand out our existing product line. And then, you know, like I mentioned, it's a it is a platform technology. You know, we own the rights for looking at lung, liver, you know, skin. But that's you know, we want to build a healthy business on our existing product line and then tackle tackle those other. 

Alec: [00:25:07] Yeah. 

Scott: [00:25:07] Other markets downstream. 

Alec: [00:25:09] Fascinating. Now, Scott, I want to say a massive thank you for coming in. One final question just before we turn the mikes on. You mentioned that National Stroke Week was coming up the seventh to the 13th of August this year. So for people that like me weren't aware of some of those stats around strokes, what should we be doing or what should we be aware of in national stroke week? 

Scott: [00:25:29] Yeah, I would encourage everyone to head to the Stroke Foundation website. There's some fantastic resources there. I mean, we're talking about providing portable, urgent brain imaging, which is a really important piece of the puzzle, but it's not the only piece of the puzzle. You know, it's also important for people to be able to recognise the signs and symptoms of stroke. And the better equipped people are to do that, the quicker they can call 000 and then brain imaging can play an important role. So Stroke Foundation is a fantastic advocacy group and, you know, we're proud to get behind that initiative. 

Alec: [00:26:03] Love it all. Scott, thanks for joining us today. Good luck with the clinical trials and what comes next. 

Scott: [00:26:09] Thanks, Alec. It's been a pleasure.

Alec: [00:26:11] Well Equity Mates. I hope you enjoyed that interview with Scott Kirkland, the co-founder and CEO of EMvision. If you want to learn more about EMvison, there is an article on the Equity Mates website that unpacks the company in a little more detail. The link to that is in the show notes. If you want to hear more episodes of Uncovered, head over to the uncovered by Equity Mates feed. Make sure you subscribe so you don't miss an episode until the next episode. Thanks for listening.