Medical Informatics Corp., Rice University, United States of America

welcome back ladies and gentlemen we are now down to our last finalist please give a warm welcome to team medical informatics call from Rice University United States of America so let me remind the team so you have 30 minutes for the whole presentation but after five minutes is going to go fully interactive okay please keep an eye on the two ladies in front here they will show you the time and then you have to time warnings before the end 13 minutes before the end and one at one minute before the end ok so I think we already good luck we will start the clock as soon as you start six million Americans will visit an intensive care unit this year and one in five will not survive health care professionals are desperate for better real-time tools to help diagnose and treat their patients my name is dr. Emma Foust and I'm the CEO of medical informatics Corp at medical informatics we provide better real-time tools to doctors and nurses to improve patient outcomes in a critical care environment doctors have to ask this question every day what is wrong with my patient they use bedside monitoring devices to track the minute to minute status of their patients they have to take in data coming from all these unconnected monitors aggregate it and interpret it in their heads they're looking at physiological data such as EKG and blood pressure doctors are looking for information that's hidden within these signals to help determine whether their patient has a particular condition or not but there's a problem with a typical patient generating over a hundred million data points per day doctors are facing data overload they have to deal with too much raw data and not enough information our solution to the data overload problem is our software platform sick bay sick bay can collect store and process all of the physiological data coming from every bedside monitoring device in a hospital we take all that data coming from unconnected devices put it in one place one format and then deliver disease specific metrics directly to the doctor in real time this is how we do it a patient comes into an ICU environment they're hooked up to a bedside monitor this monitor generates data which is then put in the hospital's internal network our servers sit on that network and listen for that data and collect it we then take that data analyze it and then give doctors disease specific information through their mobile devices we call this real-time clinical decision support this means we can put critical patient monitoring data at a doctor's fingertips so they can make better faster decisions disease specific information is delivered to doctors through applications that sit on top of our platform each application is developed for a particular disease and patient population for example in Thailand there are over 10,000 deaths per year resulting from traffic accidents and brain trauma with a single app we could save up to 5,000 lives per year because a doctor would not have to guess what the right blood pressure is for their patient the sick bay platform is already developed and tested from 2009 to 2011 we ran the system as a beta trial at the University of Virginia's Medical Center in 2012 we signed our first client Texas Children's Hospital because the sick bay platform is a platform technology we have the capability of running a variety of different applications on our system the first application that we would like to focus on developing is the alarm management app which professor Rusin will explain to us in further detail thank you dr. Foust in a typical 500 bed hospital nursing staff will have to respond over 70,000 alarms each day and often they receive these alarm notifications through their mobile device and typically they receive multiple notifications at once the problem is that the nurse has no way to know which one of these alarms to manage first when over ninety percent of alarms in these hospitals are false alarms she has no way of understanding which alarm is a true critical event and hospitals spend over a hundred thousand dollars each year for this in added solution medical informatics has a better way we propose to bring the monitor to the nurse instead of the nurse to the monitor at the point of notification we can provide the complete clinical context of every alarm this means that within seconds a nurse can determine whether this alarm is a true critical event or not by providing real-time information to these professionals we can increase response times and improve patient outcomes medical informatics has assembled a premier team of professionals to bring the sick bay platform and alarm management application to the global healthcare market our company is led by dr. Foust who has her PhD in electrical and computer engineering and experience in venture capital Chris wrath is our chief financial officer he has experience in consulting risk assessment and medical device development through NASA Jessica Finland is our vp of marketing and sales and has almost ten years of his experience in direct sales to hospitals Kurt Walker is our chief medical officer he has over 30 years of experience in emergency medical care Ralph krogh is our chief compliance officer he has over 30 years experience as a project lead in medical informatics projects at both NASA and Lockheed Martin and I dr. Craig Rusin chief technology officer and professor of medicine at Baylor College of Medicine in Houston Texas I am the developer of the sick bay platform I was invited to present this technology and talk about real time clinical decision support at the TEDx conference in Houston Texas our company is also supported by a strong board of advisers who have deep experience in technology entrepreneurship venture capital and medical software development medical informatics is a member of conscious capitalism and we seek to promote the a more effective and efficient health care by using existing technologies of existing health care technologies more efficiently and more effectively and now just our marketing and sales vp will talk about our sales strategy before we before we move on can i establish where we are at the moment because i read you've got this pilot test at Texas Children's Hospital and the clinical interface is currently under development what is the status of that are you is it running as its proven where are we so you just want to know the status of where we where our product is now yeah Kurt so currently we have a pilot operational at Texas Children's Hospital it's running in this cardiovascular intensive care unit the entire back end is constructed and is used is being used for approximately 13 research projects within the hospital Jess will actually talk more about the status of the pilot in the marketing section we have taken a top-down approach to sizing the big data and healthcare market research firm gartner Forrester and IDC indicates the North American annual spent big data and healthcare will reach 2.7 billion dollars this year this segment is expected to grow rapidly over the next five years due to the expansion of medical tourism throughout Asia for the alarm management industry we've taken a bottom-up approach to sizing the market our competitor's price their alarm management application at two thousand dollars per phone when doctors are on call at a hospital they carry one phone and care for an average of five patient beds at a time with 1 million hospital beds in the United States the North American annual spend for the alarm management industry is four hundred million dollars we plan to take a dual sales channel approach to reach our initial customers using a direct sales force our sales pipeline is already strong due to our initial customer Texas Children's Hospital and our management teams professional network we're going to sell to ICU administrators who are the decision-makers at large research hospitals these hospitals will give us industry credibility and help us establish relationships with researchers we're also going to sell to the c-level executives at small specialty hospitals these are much less bureaucratic organizations and we'll have much faster sales cycle times than the large hospitals will also be able to bring immediate revenue to our bottom line through these hospitals as we've mentioned Texas Children's Hospital has signed for our first customer for those of you who may be unfamiliar with Texas Children's this is the largest Children's Hospital in the United States with more than 500 patient beds they are also a renowned research institute known especially for neonatal care our pilot at Texas Children's Hospital is a research installation in the cardiovascular intensive care unit we have been gathering data from every bedside monitor since December of 2012 and using it for various research projects we've also made headway in the small specialty hospitals next this is a 75 bed hospital system just outside of Houston they have signed a letter of intent to purchase the sick bay platform in alarm management application as soon as they clear FDA approval Aaron Cassidy is the CEO of nexus hospital and she is desperate for an alarm management application and is completely unsatisfied with all products on the market today in the big data and healthcare market there are several companies who are gathering data from bedside monitoring devices but they're not doing anything with the information only medical informatics will provide an integrated solution for real-time clinical decision support in the alarm management industry there are two companies who provide texting and messaging capabilities but no clinical context along with the alarm our alarm management application provides that clinical context so nursing professionals can make decisions at the point of care we've set up strong competitive barriers that cannot easily be mimicked by another company we have already overcome a very difficult technical problem by completing development of the sick bay platform which took several years to develop we intend to file a provisional patent which will cover sick Bay's data gathering algorithms we also have a strong pipeline of apps in development with the alarm management app that we've already discussed and 12 others soon to follow and as we've mentioned we've established pushed our first customer which has already given us industry credibility they are also a referenceable customer that we can continue to use as we sell to other institutions and now mr. ralpherz hbu sorry before you go on for me it seems that your program is excellent but many times even even even though the program is very good the implementation maybe is more important the technical support the manpower of the people who will keep the program going please clarify about this because i believe that i think the hospital would look into this modern maybe the program itself yes so you're asking about the additional staff that we would require to support the installation in a hospital installation and also the maintenance maintenance off off off the program and whatnot yes our initial plan is to work with hospitals that are in the houston texas area Houston has the largest medical center in the United States and there are a hundred thousand beds in the Medical Center in Houston so since our team is located in houston we will use our own support staff and the funding that Chris will talk about to hire additional staff to service the hospitals with the initial installation and then hire a support staff we will likely use an outsourced support staff for very first level and then the second level would be manned in-house so in my background I've worked for a software company for almost ten years and while I sell to the hospitals our software I'm also in our support group and operations and I work with our support staff as well in Thailand on this kind of talent people very difficult to find you might be able to recruit them in the beginning but how to keep them I'm not so sure whether you have that kind of problem in the States or not how to keep the people especially in the IT yes so in the second level of support staff we're part of the funding request that we need is to hire these professionals that are experienced with it and they will have a higher salary so that we can keep them with our company so there are challenges with having the right professionals in that in that position yes excuse me oh sorry so in this particular business model the hospital has to invest on your system am i right because so how would they justify the money they'd be going to spend on this system in I mean are they going to reduce the number of nurses so is there real value added proposition that I can see I'm not talking from I'm not looking at from a different point of view because your customer is the hospital and they will have to invest so if they want to invest there must be a return of investment for them what is that that you can now convince me oh we've talked to our initial hospitals there's sort of two groups that are concerned with getting returns on the investment first you have your people on the ground who are doctors and nurses they will see soft ro is which means that they'll actually experience time savings and improvement in operations because we'll have apps to address certain operational issues like the alarm management app the second level you must another stakeholder in the hospital is the administration they're looking for more of hard ro is where they want to see revenue being generated in the application that i talked about such as the cerebrovascular autoregulation where we're talking about managing the blood pressure of a patient we're already working at Texas Children's Hospital to enable that and the doctors want to use the application as a consult tool so that they can actually submit for billings for the hospital to generate revenue by using our tool so in that way the administration and administration will see actual revenue generation I have a quiz at the same doubt that what I need for the hospital do they can save them because you are clearly stated that the saving more lives and the hospital if they install the system what can they making in the PR or what in it and then they have to comparing with or without your installation what is in it for them the advantages you must be can you better clear lake calif I for us so you're asking when the hospital installs the software what kind of benefits will they see on on top of the the savings and the time and money savings we are just in the initial installation at Texas Children's it's been installed since december of 2012 our plan is to create several white papers and case studies based on the data that we're gathering so that we can document these kinds of things that the hospital considers to be benefits of our software so we're going to work with Texas Children's Hospital very closely to document those things let's say that an important thing is to monitor the blood pressure what's the risk or what's the happening right now for let's say a standalone blood pressure machine and manufacturers already got an app that's communicating between its device or its machine and a device and that the hospital says well we already have the main one is we have one or two of these you know that why should we spend on this whole thing when we really got critical ones right now already provided or are they not provided so what you're asking for is why a competitor can't actually come into our space and and also just not what I'm really asking is what's the risk that that you're providing a complete package that's not as that has full value but you can actually get that a third or a half of that value just out of one or two machines that already that manufacturers got something communicating to a device that a nurse or doctor has in hand so the answer to that question is that oftentimes the data that's required to provide these disease specific metrics require multiple devices the problem is that those multiple devices are often made by different manufacturers so you might have one bedside monitor taking a blood pressure measurement another monitor that's doing near-infrared spectroscopy in the brain but you need to combine those two signals in order to get the actual piece of information need to make a decision and right now there's no way to fuse those pieces of data together synchronize them and then process them and that's what our system provides so competitors in big data on IBM XL medical electronics how far do they go or what are they going to do you see them as entering this field and stronger and more competitive manner so IBM and Excel medical electronics are working together to gather data from bedside alarm bedside monitors they're not gathering data from every monitor and what they're doing is taking the data and putting it into their proprietary IBM language and doing nothing more with it they're just gathering the information and it could be used for research but it is not intended to be clinical at all I've actually met with the IBM folks because they came down to the University of in Yunnan to look at our system their point of view is that this isn't a space that they want to enter their big thing is selling it to stock traders right because there's far more value there they don't have to go through the FDA approval process to actually you know make money on that so they see the medical field as interesting that they can write a white paper about but nothing really that they're going to pursue in greater detail I got a question who actually owns the patent for this whole system is it medical informatics company oh it is the University Medical Informatics developed the software in-house and so we own the IP all right it's not currently patented but we will be seeking a patent provisional patent next month and do you need a FDA approval for this yes we do and how long were you away from that we are as soon as we have funding we will start start the FDA approval process which I continued into the as a software company medical informatics will seek to generate ongoing sustainable revenue through a software licensing model but also earn immediate revenue through initial installation and consultation fees prices will be on a per bed basis but minimum charges per hospital will apply in 2017 the revenue for sick bay will reach 9 million dollars and the total app revenue will reach 40 million over 40 million dollars with no materials or production costs expenses will largely be salaries and FDA compliance fees this will allow us to drive a rand operating margin of over eighty percent the standard operating margin for a software company can be anywhere from thirty to thirty to ninety percent that the average seems to be around six seventy six percent from the cash flow perspective yeah okay from the cash flow perspective operating cash flows will continue to rise over the next five years which will allow us to reinvest back into medical informatics to accelerate the development of apps because the sick bay platform and alarm management app or just the beginning with 13 other apps already in development we can drive revenue to over 50 million dollars by 2017 what this means is that apps will drive growth and incremental revenue to get started we are asking for a seed funding of 1 million dollars and next year we will seek to generate an additional four million dollars in series a financing this investment will produce a return of 64% IRR over the next five years the 1 million dollar and c funding will allow us to hire additional developers and to also pursue development of the alarm management app we will also seek to push the system through the FDA approvals which should take anywhere from six months six to nine months the four million dollars in series a financing will be used to hire additional staff to continue developing apps we will also produce we will also pursue the sea mark and the ISO certifications so we can do international sales to help us get through the regulatory compliance ha's we've hired the services of a med tech regulatory consultants with FDA and Cee mark expertise they will help us do everything from filing the paperwork to handling the FDA handling the audits we I have one question that your marketing must be very good because the you guys already get a contract from the Houston hospital they even though you cannot you still document that the benefits using after the installation so as an investor so I wonder not only the advantages also documented it is disadvantages and the problem they have encountered during installation of your your system so how you can convince us as the investor because you are in the session of the developing and no clear evidence of the benefits what the hospital really achieve after using their system right so what you want to understand if I understand it correctly is what the hospital's kind of getting out of our yeah how you convince the hospital before convince investor thank you so so to be clear you can actually use the sick based system without FDA approval you just can't use it clinically what that means is that you can't use it to make decisions upon the treatment of a patient but you can use it for research and that's what we're doing at Texas Children's and so through this platform we are able to develop these applications in a research capacity what that means is that the researchers and clinical staff at Texas Children's can apply for funding from the National Institute of Health and National Science Foundation bringing money into the hospital in terms of research grants then they can use that money to develop applications that we can then license bring through and commercialize so that we can bake and then use them clinically so they are getting a benefit in terms of in terms of research they are once we get initial funding will be able to bring this process bring the system through the FDA approval when the and then the hospital will be able to use it for quality projects a big a big issue in the United States right now is hospital quality management and there are there are lots of opportunities in this marketplace to improve the quality reporting metrics that the hospitals are going to be having to use for reimbursements and getting money from the government for health care payments discipline um you're asking for about a million dollars as a seed money right okay why would he not go and approach like a private hospital like you know me or something was big and you know convince them that this system can be developed rather than to come to probably for investors all the way down to Asia we wanted to visit Thailand it's beautiful here the people are wonderful and we've enjoyed our stay but as to why you know we're actually starting with the largest hospital children's hospital in the US and we are partnering with them to develop these next generation of decision support apps so could you help me understand your question a little bit would they not invest the 1 million dollars why would the children hospital not invest because it is such a great system that can help so many things from nurses time to you know charging why would they not invest the million dollars because it's not big money I can't really comment on that at the moment we are open to investment opportunities from any type of investor yes well other thing I would like to ask I believe the technology in medical you

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