Ryan Shelton, PhotoniCare - Middle Ear Scope | LSI USA '24

Ryan Shelton  0:05  
Photonicare is a medical device company. We have developed the first tool to be able to visualize the middle ear directly. You can see it in this picture. I'll talk a little bit more about it shortly. So make sure this guy's working here. There we go. So quick overview. First device cleared for visualizing the middle ear directly. Brand new revenue source for providers. We did a lot of work early on going out and getting new CPT codes where previously there was no revenue to be had. It's a big barrier for us that we've, we've, we've established early commercial traction. We've done more than 20,000 patients on the commercial side, validating product market fit. We completed clinical validation. We've done published three different publications around clinical trials showing 91% accuracy for visualizing fluid through the intact eardrum. We have a large 800 patient, randomized, controlled trial currently underway, the outcomes based interventional it's really driving a lot of our continued reimbursement work. And then we have strategic support from great investors, including OSF healthcare, one of the largest health system venture firms, Sony, consumer electronics company and several other venture funds. So a little bit about the problem. Many of you are probably familiar with ear infections, either through a child's son, daughter, niece, nephew, may have had them yourself. You've all been in to get ear exams with the otoscope. Stick it in your ear. That tool is essentially a magnifying glass, and it has a lot of limitations. They do 180 million ear exams a year just in the US. Is a very high volume procedure. About 50 million of those are directly related to ear infections. The problem is that in primary care, 50% of the time these diseases are misdiagnosed, and that's because the otoscope, which has been around for 150 years, does a really poor job. It's essentially just a magnifying glass. You're looking at the surface of something you really need to see what's behind it. They don't have the information that they need. As a result, there's a lot of over prescription of antibiotics due to over diagnosis, and also a lot of overuse of tube surgeries, most common surgery in kits. This is a surgery that's done under general anesthesia. About a million of them each year. Last statistics I saw published, 7% of all kids get surgery for this disease. That is a wild statistic. So it's a big problem. The problem stems from this. This is the otoscope. You guys are all familiar with. You've all seen you've all had it stuck in your ear. It's been around for 150 years. Its only job is to look at the surface of that eardrum, and then, you know, the clinician has to guess at what's going on behind it. What's happening in the background is this middle ear fills up with fluid. That fluid can be clear, it can be full of pus. They need to know one, is the fluid present, and two, what type of fluid is it? Is it is it clear, or is it full of pus? Because that's what drives decisions around diagnosis right now, they've got to do all of that based off of an image like this. What can we say about that image? It's obviously red. That's kind of that's kind of it. I mean, you can take some patient history and but it's extremely subjective. You know, there's another one also red. Is this inflammation? Is it infection? What should we do with it? Right? That's the big problem. So we still give them these images that they're used to, but then we also overlay a depth image through the eardrum, and this is what it looks like on the left here you see a healthy, well, healthy. It's got inflammation, but there's nothing back there, right? That's a case where we don't need to give antibiotics, we don't need to refer for surgery. There's no disease back there. It's inflammation. Inflammation can actually happen because the kid's been crying in the waiting room for the last 10 minutes. Doesn't have to be because of any problem in the middle ear. On the right side, you see a case where there is fluid, and that is an infection, and there's turbid fluid back there, it's purulence, it's pus, and we can visualize that directly and give them the information they need to make the differential diagnosis appropriately. So where's the value on the clinic side, there's two big points. One better diagnosis, they effectively double their diagnostic accuracy, and we've published that in peer reviewed journals. Another one is the business case. We went out and established new reimbursement codes that are getting paid right now, on average, about 50 bucks per exam, and we're continually increasing those rates, essentially giving them a completely new revenue stream. The otoscope cannot be reimbursed at all. It's included as part of the EM visit. They get the visit for the office they may get 4050, bucks for the office visit, and that's it. This is all on top of that, effectively doubling their revenue on the visit on the payer side. Why would they pay for this? Well, we're reducing a lot of unnecessary costs. So unnecessary antibiotics, unnecessary visits, unnecessary surgery. So surgeries are $5,000 apiece, and there's million of them each year. You can do the math. It's a lot going on there that they're having to pay because of the 50% misdiagnosis rate driving a lot of overdiagnosis. In terms of competitive landscape, we're the first to market here in terms of visualizing the middle ear space. This quick comparison to some of our competitors. Biggest competitor here is the standard of care, the otoscope that's been around 150 years. It does a poor job with diagnosis. It does not pay them anything. But it's been here a long time. So you know, we're stacking up against the otoscope, some digital otoscopes, new companies popping up in that space. The problem with a digital otoscope, it gives you the same information. It costs more, and it still doesn't pay so there's just a lot of challenges around that, without actually increasing the accuracy of the device. There's some newer technologies company called otonexus, out of Washington State, using ultrasound. Problem with ultrasound is, unless you're going to fill the ear full of water or gel, you can't actually get past the eardrum. So they're measuring reflections off the surface of the eardrum and then essentially emitting mechanics of the eardrum to infer middle ear health. As far as costs, I put $0 down here. Obviously we don't give the thing away for free, but I'm pointing out the fact that there is no cost, acquisition cost for them. They're profitable in month one because of this reimbursement dynamic. So it's very easy for us to walk in their otoscope may be cheap, 500 $1,000 just how to buy it once. It's never going to pay for itself. So where are we today? Just quick recap, FDA cleared first device on the market in that category, clinically validated multiple publications with an ongoing RCT and a new path for reimbursement that we pioneered ourselves. We're the only technology can build those codes currently seeing about 35% coverage rate and $50 average payments. Now with commercial payers, we're seeing payments up to $120 on an exam. So there's a lot of opportunity here as we grow that reimbursement. Our priorities for 2024, pretty simple, complete this clinical trial, knock that out of the park. We're gonna get that completed by the end of the year. We're about a third of the way through it, but it's got a follow up period as well, and then increase our category three coverage rates. We have a category three code right now. Those are getting paid at the rates that I mentioned earlier. We're constantly working on getting that increased in terms of coverage rates new geographies. We've got a team that's led by a woman that's done this for 12 other companies, in terms of advancing coverage on category three codes, as well as converting the category one. And finally, this year, we're looking for strategic partnerships on eventually, this is going to be a distributed product right right now we are doing direct sales, but this is going to be sold by a Baxter Welch Allen, a Medline, Henry Schein, a McKesson. I mean, that's the channel moving forward. So we're looking to establish some of those strategic partnerships this year, as well as M and A for the potential future you saw in the first slide. I'm the COO. I'm not the CEO. There's good reason for that. Kerry really wanted to be here. He actually tore his patellar tendon, and he's desk ridden for the next few weeks, so he since his best you'll also notice I just shaved off about a five inch beard, so if you don't recognize me, that's why we got a great team. Carrie's an excellent leader. Great folks here, across the board, product finance, Kelly Petrucci, our VP of health economics, has done this multiple times with multiple companies driving the reimbursement on category three conversion to category one. As you grow the market, we've been really capital efficient. We've only raised about 16 million to get us to this point that's generating new codes, all of the work we had to do on policy, getting to two FDA clearances, and now through the first part of commercialization, we're raising $15 million we have a signed term sheet, and we're expecting a first close on that by the end of q2 love to talk to anybody about that. We're also entertaining strategic participation and having some of those discussions. Now, everybody's got a financial slide. I'm happy to dig through the model that generates this. You see, it's got a hockey stick like everybody else. The reason for our hockey stick is that this reimbursement, at some point, when we get the coverage, passes a tipping point, this becomes just an absolutely absolute no brainer. There's no reason they would not adopt this. So that's really what drives our acceleration in 26 and 27 is the extension of those reimbursement codes and the conversion of cat one. Wrapping up. This is the last slide. This is kind of a timeline in terms of the way we're thinking about value inflection. There's an opportunity in early 25 after we complete the clinical trial, driven off of the data that we have from that clinical trial and our coverage. And then in 2026 on the back of the category one conversion, which really opens up the entire market, makes it absolute no brainer. Happy to talk more. Come see me. Talk to me. Email me. Let's talk. You.