Medsider: Learn from Medtech and Healthtech Founders and CEOs - Silicon Valley Approach to Medtech: Interview with Oncoustics CEO Beth Rogozinski

Episode Date: June 21, 2024

In this episode of Medsider Radio, we had a compelling chat with Beth Rogozinski, CEO of Oncoustics. The company uses advanced AI to analyze ultrasound data to offer a cost-effective alternative to traditional diagnostic methods. Beth has held a variety of leadership roles in the field of digital health, including the development of the first FDA-cleared prescription digital therapeutic. She advises numerous startups and accelerators and has consulted with organizations like Stanford, UnitedHealth, and the National Mental Health Innovation Center. She is a guest lecturer at UCSF Health Hub and Columbia’s HIT Lab and serves on BIO’s Digital Health committee. In this interview, Beth shares her insights on the importance of persistence and resilience in fundraising, the value of engaging with a diverse range of investors, and the need for a strong narrative about your technology, particularly when it involves AI capabilities.Before we dive into the discussion, I wanted to mention a few things:First, if you’re into learning from medical device and health technology founders and CEOs, and want to know when new interviews are live, head over to Medsider.com and sign up for our free newsletter.Second, if you want to peek behind the curtain of the world's most successful startups, you should consider a Medsider premium membership. You’ll learn the strategies and tactics that founders and CEOs use to build and grow companies like Silk Road Medical, AliveCor, Shockwave Medical, and hundreds more!We recently introduced some fantastic additions exclusively for Medsider premium members, including playbooks, which are curated collections of our top Medsider interviews on key topics like capital fundraising and risk mitigation, and a curated investor database to help you discover your next medical device or health technology investor!In addition to the entire back catalog of Medsider interviews over the past decade, premium members also get a copy of every volume of Medsider Mentors at no additional cost, including the latest Medsider Mentors Volume VI. If you’re interested, go to medsider.com/subscribe to learn more.Lastly, if you'd rather read than listen, here's a link to the full interview with Beth Rogozinski.

The FDA is going to object and question our science. The payers are going to question the efficacy and the health economic outcomes of what we're doing. The clinicians actually should question and tests as well. And of course, it happens with the investors who question and test us and everything. So it's just part of the job that we need to be able to answer all of the questions. We're looking to create things sometimes in the world that have never existed before. And so it's contingent on us to be able to explain it and to be able to address all open questions from all angles. Welcome to Medsider, where you can learn from the brightest founders and CEOs in medical devices and health technology.

Join tens of thousands of ambitious doers as we unpack the insights, tactics, and secrets behind the most successful life science startups in the world. Now here's your host, Scott Nelson. Hey everyone, it's Scott. In this episode of MedSauder, I sat down with Beth Rogazinsky, CEO of Uncustics, a company developing low-cost, non-invasive AI solutions for disease monitoring. Previously, she held a variety of leadership roles in the field of digital health, including the development of the first FDA- cleared prescription digital therapeutic. Beth advises numerous startups and accelerators and is consulted with organizations like Stanford, United Health, and the National Mental Health Innovation Center, amongst others.

Here for the key things that we discussed in this conversation. First, clinicians, regulatory bodies, and commercial stakeholders, all likely have very different requirements. Address each of them early in the development process. Engage with these key decision makers as soon as feasible to ensure your product is commercially viable. Second, FDA can be your best friend if you engage the right way. Consider them a part of your team.

However, before approaching the agency, evaluate whether it's really necessary for your product. Your solution might be eligible for a simpler and more straightforward pathway. Third, fundraising for startups requires persistence, building relationships with a wide range of investors early on, and having a clear narrative about your technology. Engage with prospective capital partners, even if they typically invest in later stages, and don't limit yourself to investors strictly within your niche. Before we jump into this episode, I wanted to let you know that the latest edition of MedSider Mentors is now live.

We just published volume 6, which summarizes the key learnings from the most popular interviews over the last several months with incredible entrepreneurs like Dan Rose, former CEO of Limflow, Dr. Stephen Michelson, founder of Ferapulse, and current CEO of Field Medical, and other leaders of some of the hottest startups in the space. look, it's tough to listen or read every Medsider interview that comes out, even the best ones. But there are so many valuable lessons you can pick up from the founders and CEOs that join our program. So that's why we decided to create Medsider mentors. It's the easiest way for you to learn from the world's best medical device and health technology entrepreneurs in one central place. To check out the latest volume, head over to MedsiderRadio.com forward slash mentors. Premium members get free access to all past and future volumes.

And if you're not a premium member yet, you should definitely consider signing up. In addition to every volume of Medsider mentors, you'll get full access to the entire library of interviews dating back to 2010. You'll also be able to see all of our playbooks, which are thematically handpicked collections of the most insightful interviews covering topics like capital fundraising, early stage development, regulatory challenges, reimbursement, M&A, and much more. And last, considering that fundraising could be one of the most daunting tasks for any startup, we curated a database of over 700 VC funds, private equity firms, angel groups, and more, all eager to invest in medical device and health technology startups. access to this database is a premium member exclusive, so don't miss out. Learn more about Medsider Mentors and our premium memberships by visiting MedsiderRadio.com forward slash mentors. All right, without further ado, let's jump right into the interview.

All right, Beth, welcome to Medsider Radio. Appreciate you coming on. Happy to be here, Scott. Yeah, look at forward to a fun conversation. I know you're in the throes of running a startup as a CEO, so I definitely appreciate you carving out some time to make this happen. And at the outset of this particular episode, I recorded a brief bio on your background, but I usually like to start here.

If you can give us an elevator-style pitch on your professional career leading up to running on Koustics as CEO, that'd be helpful. Yeah, yeah, happy to. So my background, unlike a lot of folks that are in health innovation, is more from the tech side and less from the health side. So it started my career in the Silicon Valley. Actually, I spent the entirety of my career in the Silicon Valley. I was at high-end companies like Silicon Graphics.

I actually there helped to start the Visual Workstations team. We were credited with raising the stock price by over a third, about 35%. Was then recruited by XSGI colleagues to work on an open system digital video editing suite. That was called Final Cut. We sold that to Apple. Apple still sells that software today. Was then at a big data and data analytics company. We had software quite like double-click.

We were counting ads and impressions. We took that one public and later sold it to. Euro-R-S-CG, was then at a Kleiner-Perkins-funded startup where we worked on the 802-11 and 802-16 standards. So you can tell, died in the wool tech. But it was when I was at the Biner Company that I looked around and saw that while our healthcare system was woefully broken and really undigitied. And that was 2008.

So I put my first health app in the App Store in 2008. It was an app for Zen Meditation for Anxiety and Depression. And while I am not sitting on the Calm Empire today, it was a little too early. It really changed the trajectory of my career. So from that point, I started working on clinical validation around these types of apps and intervention. And then in 2013, I got involved with a company and helped to start a company called Pear Therapeutics. And at Pear, I helped to build, I was chief product officer and helped to build product engineering and design. And then we had the first software as a medical device that the FDA ever cleared.

I actually helped to spin up Enkustics when I was still operationally involved with Perr. Originally, I was a business advisor for Enkustics and bringing it out of Stanford and out of the postdocs lab that said as my co-bounders lab there at Stanford. And I stepped up to become a CEO in late 2019. So it's been a circuitous path, but I'm happy to really be here at Enkustics because I think that we've got both amazing technology. but also a phenomenal ability to impact health care across the board and really address unmet uncalc need. Yeah, that's awesome. Some of the companies that you mentioned in highlighting stops along your career, never see.

It reminds me just how amazing like the Silicon Valley ecosystem is, right? Just incredible. A lot of people knock on kind of San Francisco these days, but like the valley is just untouchable in terms of just the sheer amounts of innovation that comes out of a relatively small geography. And still is. And when there's a lot of, a lot of my colleagues, even back from the, from the Silicon Graphics days, are now moving into health care. And saying earlier, Scott, that in 2008, I realized that health care was broken and the system, as it exists, was, what is really well designed for acute care. It's really well designed.

If you were to have a heart attack, they could land a helicopter on a field, swoop you up, save your life. And then you'd be released from the hospital to go out and eat a hot dog. So what the system wasn't well designed to do was to take care of chronic disease and chronic disease management. And today, and even back then, 90% of all morbidity and mortality, the bulk of every penny paid is on chronic disease management and not acute intervention. But even in 2024, healthcare is, I think it's Grandview Research, has health care as the fifth leaf digitized industry globally, just ahead of mining where we're still. you think shawl, right? And this is an industry that impacts every single one of us, whether you're in health care business or not,

everybody has health care needs. The largest part of most nations' GDP, it's a trillion dollar in your industry, and we're just ahead of shawls. Yeah. That's a great analogy. Never proud of myself as a coal mire, but maybe that's a good descriptor.

Just hearing your thoughts and the way you frame up where we're at in the health care system in terms of the digitization of it. It reminds me that this Twitter thread I was reading over the weekend, I think. This guy, he's not in health care. He's in kind of more of the consumer e-commerce space. And he was a lot of familiarity with China. He speaks to Mandarin even though he lives in Austin.

And he was like, I look, this is my experience, getting a bunch of basically proactive preventative tests in China. I think he did it in Japan, actually. He was like, it cost me like 500 bucks. And there was this long-re list of tests. I couldn't even make it to step one here in the U.S. because I had to get a referral from a primary care doc that needed to fax something. And it was like, hearing someone else that's not in health care kind of outline their experience,

it just reminds me of this is a beast that needs to be improved upon greatly. Absolutely, absolutely. And when a lot of people say it, our system is care and not health care. When we're still in a realm where we're moving from fee for service to capitation, while a lot of people think we are completely fee for service, I don't think that's true any longer. And I think the data shows that out. But we're still in that transition in that pathway.

So for most of us, to actually get the kind of preventive services that you're talking about, you're right. It's multiple referrals. A lot of times high-end tests that are highly expensive, a lot of out-of-pocket that we need to really get in front of. And I think that one of the things that acoustics is promising, but I think a lot of robust health innovations, next-gen health innovations are going to promise is tapping into a new business model, where we move away from fee-for-service to address chronic disease management and move away from acute interventions. Very good.

We're going to certainly go back in time and learn a little bit more about your journey with Oncustics, but let's touch on that briefly. Give us an idea of kind of what your core technology solves for, and maybe as if, talk to me as if I'm a sophomore in high school and I really don't know what this is at all. Yeah, sure. So what on acoustics does is we apply machine learning to the raw sound signal from ultrasound devices. And there's a wealth of information in this raw sound signal. So I'm going to start a little bit with how ultrasound works. The way that ultrasound works is the ultrasound transducer, right? It's right in the name, sends at the sound signal. And that sound signal bounces off the tissues in your body. And then that sound signal comes back to the ultrasound device. And where it gets transducer. transmitted into what we call the B-mode conversion, via the B-mode conversion, into the grainy gray-scale images that we see. So the device itself is both a microphone, sending out the sound waves, as well as a receiver receiving those sound waves back, and then this conversion, this physics conversion,

turns those sound waves into gray-scale images that human beings can see. What on acoustics does is we capture all of that raw data, and we map the tissue acoustic properties as it's moving around those tissues, enabling us to go beyond what can even be seen by the human eye. So as you can imagine, everything in the universe is going to send back a different acoustic signature. And that's the same with the tissues in your body. And our technology and software fundamentally is creating tissue acoustic biomarkers by measuring how these sound waves scatter back through the body. Got it. On the website, we'll link to it in the full. write-up on Medsider, but it's oncustics.com. So it's spelled O-N-C-O-U-S-T-I-C-S-O-N-C-I-C-S-O-N-C-E-S-O-NC-E-C-E-R-E-E-R-E-E-R-E-E-R-E-R-E-R-E-R-E-R-E-R-E-U-R-W-A-W-A-W-E-E-E-A-W-E-E-A-W-E-E-E-E-E-A-R-E-E-E-E-A-L-E-E-E-E-E-E-L-E-E-E-E-E-L-E-E-E-E-E-L-E-E-E-E-L-

a near-term kind of fit, and then maybe where you see the company going in the next three to five years? Yeah, yeah. So for us, as a small startup, I always tease my team, our key to successes, we wake up every day and decide what not to do. So while this is an approach that can work on any anatomical area, the body that the ultrasound needed, we're initially focused on a single market, which is around liver disease. What I'll do, Scott, is I'll explain a little bit about how we innovate and democratize access. to liver diagnosis. And we could talk about some other etiologies a little bit later. But importantly for the liver, liver disease is one of the fastest growing causes of morbidity and mortality globally. EUSLIA health estimates that fatty liver disease impacts up to 46% of the U.S. population.

The WHO estimates that over 2 billion people globally have or are at risk of liver disease, largely being driven by a condition called non-alcoholic fatty liver disease, now recently renamed Maville, metabolic associated steatal liver disease. This liver disease is going hand in hand with the obesity epidemic and the diabetes epidemic. So as you can imagine, as these rates are rising, so is liver disease. Now, interestingly, this disease is most often asymptomatic until it reaches very advanced stages. So like I was saying, with UCLA health, most of those people are walking around with liver disease and they don't even know they have it. So current preventative approaches to catch and diagnose this type of liver disease are complex and time-consuming. We talked about multiple

referral and specialists involved. In this case, it also involves high-end imaging like MR or CT or highly invasive biopsy. And instead, what on acoustics can do, and our first indication that we're submitting to the US FDA is going to be called the onyx liver assessment solution, the clinical decision support tool, that where a patient can actually get banned for liver disease in any clinician's office at point of care. And the exam is intended to be painless, seamless, and done in five minutes. So this is really a preventative approach to get in front of this disease while the liver can actually reverse the disease and or treatments and therapeutics can be introduced into the patient. Got it. This superheaval overview. So in theory, like this could be

once you have full clearance from FDA, this could be used in a primary care office in a simple, I'm thinking probably five-minute tests, maybe not even that. Yeah, exactly. And primary care is an eventual and clinical user for us, and we've actually already introduced the onyx to several primary care docs. Initially, we'll get this out to hepatologists, to endocrinologists, because of the bidirectional relationship between liver disease and diabetes. But really at the end of the day, the patient journey, as we envision it, is the patient

would come in and the care team worker that is maybe putting us a spideastardial. thermometer on to take blood pressure reedy. Weighing the patient would also be able to do this liver scan so that by the time the doc gets in to see her patient, she's armed with the data that she needs to make an informed decision about what to do next with that patient. That's exactly then. It's a great opportunity, especially with new medicines and new interventions that are coming on to market to address the disease. Got, I like that analogy of similar to almost all of us have experienced going to a console, whether it's in the ER or a primary care or a specialist, automatically the blood pressure cuff is thrown on. You can see a scenario where Onyx is used quickly, right, to either rule out how you labor disease. So that's great. So with that said, let's go back in time a little bit and spend the next maybe 20 minutes or so, 20, 30 minutes, learning a little bit more about just the journey that you'd add on acoustics. And feel free to layer in a lot of your previous experiences, too, especially those at Pear,

since this is very much a digital play. So first question on the docket is really around early stage development, right? You've been with acoustics for about six years or so, right? First couple were as an advisor, four plus almost four years running the company as CEO. I'm sure the system now that you're submitting to FDA is probably a bit different, right, than what it was three or four years ago. With all of that in mind, for other founders or CEOs of early stage startups that are in the throes of trying to iterate quickly with limited resources, do you have a few pieces of advice, for them that whether it's decision-making or whatnot around how to do that effectively with limited capital. Yeah, yeah, excellent question.

So one kind of framing thing that I will share is that acoustics actually has gone out and prospectively collected our data. So early in the tenure of the company, that's really the bulk of where our time was spent, was prospectively collecting this data. So I'm going to give a quick analogy here. If I wanted to make an AI on lung nodule, right, I was looking for lung cancer. I could contract with a hospital by 10,000 lung CTs with radiologist report and start training my model, right? With ultrasound, you can't do that. 99 plus percent of the time, the raw RF is thrown away. So early in the life of the company, it was a very small company.

We basically set up under IRB, under DCP, a data collection for this. So acoustics is sitting on the world largest RF signal data set and one of the largest city video sets for ultrasound. So early in the career of the company, that was really the main of the focus. Now, to the question of how others might follow and what we would maybe do differently is, and you're spot on that are the first iterations of what we were looking to present as the onyx were different than what we're looking to present now. And so our process was that we went directly to clinics and clinicians.

We asked them, what is it you'd like to see? What do you need? What do you want to know about your patient liver? What's the most important thing for you as a hepatologist or a primary care doc? And then when we package that and put that in front of the FDA, the response was, that's great, but that's a de novo. And one thing that as a business person that we really need to weigh is all of the multiple stakeholders that we have, right? The docs may want one thing, but the FDA is going to need something else.

And the commercial efforts may need a third thing, right? So I think one of the things that we as founders of health tech companies need to do and need to do it early and often is make sure that we're evaluating the needs of all of our stakeholders. And I'm going to go a step further in that some earlier companies, both companies that I'd been involved in and other things that I'd see, spent the bulk of their time focusing on regulatory and regulatory clearances. And then they had this FDA clearance and they hadn't really done commercialization. And then as we saw in 2023, a lot of these things just fell flat, right? It's really, you've got to have the payers and their mindset and their thought process in the room because it's a wonderful thing to develop health innovation, but somebody's got to pay for it. And contingent on us to figure that out early, to confirm it early, and to make sure that all of these horses are moving at the same pace as we're developing our technologies. Yeah, it reminds me of an interview.

And by the time this is live that this one will probably be up with Trent, that he's the CEO of Mercator Med Systems. But he mentioned something similar. some of the kind of pure play med tech folks will focus on regulatory clearance or in some cases, maybe PMA as an example. And not that it shouldn't be a focus, but if your product doesn't solve a real need, doesn't fit into the workflow, isn't going to be paid for, you're stuck with the clearance that now you have to maintain.

And so like that, there's a real cost associated with that. And so it's great, that's a great milestone to achieve for sure. But if you're not thinking about who's going to pay for this as an example at the end. And obviously, hopefully you're solving a real need and it fits into the workflow of a physician. a nurse, a technologist, et cetera. But again, who's going to pay for this really matters. Absolutely. No, it really matters. I couldn't agree more. And post our clearance at pair, right? So we had the first software as a medical device that the U.S. FDA ever cleared. Post that clearance. So I had been doing something, full thing before stepping up full-time to CEO at

acoustics. People would come to me and say, can you help us get clearance for this? And my answer was always, that's not the right question. The right question is, should we get clearance for this? Do you need 510K? Is that the valuable pathway? Because we know that a lot of these things, especially app-based things, they're really very safe. It may just be an exemption or generally regarded as safe kind of clearance without the need to jump through all of the hurdles of a 510K. And then secondly, to your point in Sanctly, Scott, is who's going to pay for it, right? You need to be validating that. And those decisions actually have to go hand in hand. Is that FDA clearance? Is a 510K going to enhance the value of what you're offering? Is it going to enhance the moat for your company?

Or are you going to be better spent to just move faster and get a product on market and make fewer claims against that, right? Because a lot of this is how we talk about products and how we build claims around those products. Yeah, yeah. It's such a good point. I want to circle back around maybe in touch on your experience in an advisory capacity at United Health. But before we go, they were on this topic of kind of navigating sort of the regulatory May. which is no small feat, I think, for any device or health tech kind of play. But you've seemingly been able to navigate this, even with, I think, novel kind of software, right? Machine learning and AI maybe were a little bit further along, but it's still very new to regulatory bodies. When you think about how you've engaged with maybe FDA in this case and help them understand what you're trying to do,

have there been kind of some tips that you've picked up on the way or learning experiences for other maybe founder CEOs that are also trying to introduce some pretty novel technology or therapies into the market? Yeah, I would say, first of all, fundamentally and strategically, I see the FDA as collaborators in innovation, right? And I really balk against the idea that they're antagonistic, right? When people have an antagonistic approach to the FDA, I think that they're approaching it all really wrongly. I think that it's contingent. Their jobs are to ensure that the products that are being delivered to patients are safe and effective. And then it's money went wealth then.

So we approach from that kind of collaboration perspective that we're all here trying to advance innovation for patients, safe and effective innovation. And I'd say that with that as a mindset, a rule of thumb is to get in early and get their feedback and advice. Engage with a regulatory consultant early. There's a process in and with the U.S. FDA where you can do pre-st admissions, where you can take meetings, both informally, get formal feedback. as well as even informal. But it's important to begin those communications and conversations early and to engage them as part of your team. Yeah. Such a good point about even just the high level kind of mindset, right, that if you start out engaging with people on the other side of the table in a very antagonistic way,

usually not probably going to result in the best outcome, right? And at the end of the day, it's the people at FDA, the people trying to do their job and may seem frustrated at some points, right? And equally so, maybe on their side too, right? It may seem frustrating dealing with the sponsors, submissions. But such an important framework to be mindful of is how are you engaging? How are you approaching them? Are you approaching it open-minded or just trying to shove something down the throat, so to speak?

And I think, too, it's actually just good practice. We need to owners and executives at these companies. We need to be able to answer all objections, right? And the FDA are scientists at their core. And if we can't answer the scientific questions about the innovations that we're bringing forth, then how good are they really, right? We've got to be able to answer those objections. But we're going to get this as founders of companies across the board, right?

The FDA is going to object and question our science. The payers are going to question the efficacy and the health economic outcomes of what we're doing. The clinicians actually should question and tests as well. And of course, it happens with the investors who question and test us and everything. So it's just part of the job that we need to be able to answer all of the question. We're looking to create things sometimes in the world that have never existed before. And so it's contingent on us to be able to explain it and to be able to address all open questions from all angles. Yep, no doubt.

Let's shift gears a little bit to fundraising, because I know not only do you have a lot of experience in the startup, ecosystem, but you said all you also set on a lot of the boards. And this is obviously, you know, one of the, one of the, the biggest hurdle to try to overcome this constant need to ensure that your company is well funded and capitalized. So I know acoustics, it looks based on our research, you raised slightly over $5 million in, in 2022 via Seed Round, a timeframe or, I guess, to fundraising environment that was not pretty in 2022 nor 2023. When you think about what it's specific to acoustics or really other companies that you've helped raise money for, are there a couple things that you think other founders or CEOs really need to get right as they, as they

approach that process? That's a tough question. Hey there, it's Scott. And thanks for listening in so far. The rest of this conversation is only available via our private podcast for MedSider Premium Members. If you're not a premium member yet, you should definitely consider signing up. You'll get full access to the entire library of interviews dating back to 2010. This includes conversations with experts like Renee Ryan, CEO of Cala Health, Nadine Miarid, CEO of CVRX, and so many others. As a premium member, you'll get to join live interviews with these incredible medical device and health technology entrepreneurs.

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