Medsider: Learn from Medtech and Healthtech Founders and CEOs - Why Your Medical Device Should Generate Revenue for End Users: Interview with Cognetivity CEO Sina Habibi

Episode Date: August 8, 2022

In this episode of Medsider Radio, we sat down with Sina Habibi, CEO of Cognetivity.Sina has a Ph.D. in engineering from the University of Cambridge, where he met his business partner Seyed-Mahdi Khaligh-Razavi. The two co-founded Cognetivity Neurosciences, which develops cognitive assessment tests for clinicians and patients to detect cognitive impairment, including dementia. In this discussion, Sina shares the importance of collaborating with regulators and end users, why he primarily focuses on the value of revenue generation versus cost savings, and the benefits of teaming up with an expert fundraiser. Before we jump into the conversation, I wanted to mention a few things:If you’re into learning from proven medtech and healthtech leaders, and want to know when new content and interviews go live, head over to Medsider.com and sign up for our free newsletter. You’ll get access to gated articles, and lots of other interesting healthcare content.Second, if you want even more inside info from proven experts, think about a Medsider premium membership. We talk to experienced healthcare leaders about the nuts and bolts of running a business and bringing products to market.This is your place for valuable knowledge on specific topics like seed funding, prototyping, insurance reimbursement, and positioning a medtech startup for an exit.In addition to the entire back catalog of Medsider interviews over the past decade, premium members get a copy of every volume of Medsider Mentors sent to their door at no additional cost. If you’re interested, go to medsider.com/subscribe to learn more.Lastly, here's the link to the full interview with Sina if you'd rather read it instead.

If someone tells you that we have no competition, it means that they have not done their homework well. So you need to map your competition around how your solution solves that problem versus other solutions for that problem. Because all problems in the world are being solved maybe badly, but being solved. So find out how your solution sits there and how you can build the commercial enterprise around that product. Welcome to MedSider Radio, where you can learn from proven med tech and healthcare thought leaders through uncut and unedited interviews.

Now, here's your host, Scott Nelson. Hey, everyone, it's Scott. In this episode of MedSider, I sat down with Sina, the co-founder and CEO of Cognitivity Neurosciences. He's got a PhD in engineering from the University of Cambridge, where he met his business partner, Syed. The two co-founded Cognitivity, which develops assessment tests for clinical. clinicians and patients to detect cognitive impairment including dementia. Here are few of the key learnings that we chatted about in this interview. First, get input from experts at every step of the development process, starting with regulators and working back to your end users.

Regulators, of course, will let you know what's needed to get your device or technology to the finish line, while end users will help you drive towards a compelling product offering. Second, think about the value and benefits of your products first. Cost savings should come second. Cognitivity, for example, is focused on showing clinicians that their product can generate revenue for clinical practices. Making sure users get a return on their investment is key to seeing early adoption of your technology. Third, team up with fundraisers who have experience raising money in your field. Worry less about dilution and focus more on raising smart capital. A small piece of a large cake is worth more than a big piece of a smaller pie. Okay, so before we jump into the discussion, I wanted to let you know that we just released

the first volume of Medsider Mentors, a print-based book that summarizes the key learnings from my favorite Medsider interviews over the past six months. Look, I fully realize 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 glean from the founders and CEOs that join our program. So that's why we decided to create Medsider mentors. It's a way for you to learn from the best thought leaders in our space in one central place. Here's a teaser of what you'll see in this first volume. Garhong Kong, founder of Health Quest Capital teaches you how to successfully pitch your startup. Patricia Ziliak, CEO of Ivansons, discusses what you really need to know about clinical trials.

Jared Bauer, CEO of Ionic Sciences, shares best practices for avoiding obstacles in your startup journey. That only scratches the surface, so if you're interested in learning more, head over to medsider radio.com forward slash mentors. If you're a premium Medsider member, you'll get free digital access and a print version sent straight to your door. 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. This includes conversations with experts like Erica Rogers, CEO of Silk Road Medical, Dr. David Albert, founder of LiveCore, and so many others. Learn more by visiting

MedsiderRadio.com forward slash mentors. Again, that's Medsiderradio.com forward slash mentors. All right, without further ado, let's get to the interview. All right, Sina, welcome to Medsider. Appreciate you coming on. That's a pleasure to be with you. Yeah, definitely looking forward to the conversation, learning a little bit more about the company you're building at Cognitivity. But let's start with a little bit more about you.

So without getting into the weeds, can you provide us a kind of a high-level overview of your professional background before starting the company? Absolutely. So I'm a mechanical engineer of our background. I got a scholarship to go to University of Cambridge to do research in, synthetic biology, building nanobiocensors there. I got excited by the world of ventures.

I did a bit of work in different industries from management consultancies to manufacturing and also a bit of finance, number crunching because of my heavy mathematical background. I did a little bit of work in a hedge fund, but where I got the most biophobic. was the world of ventures where you have all of these combined in a very fast-paced environment. You have a bit of technology, you have a bit of finance, you have a bit of science, and all of them all working very, very fast together. So I became the president of Cambridge University entrepreneurs. It's a very exciting society, is completely student-run, raise money from the Cambridge Cluster. We've got 3,000 companies around University of Cambridge, all tech, high-tech

companies, get the money from the tech cluster and we run business plan competition, bringing some of those successful entrepreneurs from the cluster. There's a little bit of, they call it Silicon fan as opposed to Silicon Valley. Heavy in life sciences because of Cambridge University's influence. That's where DNA was discovered. First, electron microscopy was discovered. There's a huge background to this ecosystem. And that's where you get to see all active work. And that's where we started. I met my co-founder and the whole journey began with the company. Got it. That's a super helpful background. So based on kind of my background research, it looks like the company sort of, they sort of formally started around the 2013 time frame.

So can you give us an idea of how sort of the idea was sort of born and what led to sort of the, that's certainly the aha moment, but like, you know, caused you guys to realize, hey, this is, this is a thing and I think we need to build a company around this idea. Absolutely. It came about when my co-founder, who was a computational neuroscientist, he was studying human vision, human brain as part of brain mapping project. He was studying human brain, particularly during vision. What parts of the brain activated when we see things?

And for how long this activation continues? What's the communication between different parts of the brain? And using functional MRI predominant. if fMRIs are used to map brain activity during a specific task, in this case, vision. So he registered a strong signal when one of the participants in his study were shown a picture of animal. And he brought it to me, and this is basically an abnormality, he brought it to me. This is interesting. Let's have a look at it. The more we dig, the more we found literature on this.

Something built deep in us over the years of evolution, which has become an instinct in responding to pictures or scenarios where animals are present. This is due to what we call food or fear phenomena. So during two million years of hunter-gatherers, it would walk for days looking for animals. That's why we spread around the world. And we were looking for animals, repeating this for such a long time, built a very strong instinct in humans. Not only humans, other primers have shown the same type of responses. So this was the observation, and we started building the solution around this observation.

Got it. Okay, cool. And so give us an idea of kind of, kind of, where the company currently is in terms of its life cycle and kind of where things are in the, where things are at kind of over the near term horizon. We have validated the technology. So 2013 observation until 2015, 16, early proof of concept clinical trials. 2018, we start our pivotal clinical trial, which expanded to 11 NHS trusts. These are different areas of London being supported by a healthcare provider, each of which is called a trust.

So it was a massive undertaking. We completed that trial, successfully validated the technology, got CE marking and FDA. registration. Now we can market the products. FDA clearance came end of last year. Now we have signed our first commercial deals in the US doing some pilots with big healthcare providers. You're also in the UK, in a few of those NHS Trust that I mentioned. And you're also in the Middle East. So at this stage, we are building the commercial momentum that we have in order to scale up the company. Okay, okay. That's helpful.

And I know we're going to get into a series of questions here around kind of what you've learned, not just, you know, by built, you know, through building, you know, cognitiveity, but just, you know, some of the other insights that you pulled from your kind of your startup experiences at, you know, as leading the Cambridge Entrepreneurship Club as well. But before we go there, most of those clinical and regulatory milestones that you just mentioned, Sina, those are with respect to, is it Cognica? How do you pronounce? One of the platforms, right?

Cognica. Cognica. Okay, got it. Got it. Okay. And am I correct? Are those reg and clin milestones kind of associated with that platform? Okay.

And then you've got another one called Optamine. Can you kind of explain the difference between the two? So Cognica is a medical product. used by medical professionals in order to assess cognitive performance clinically. So I keep using clinical in this context, and the output is a clinical output based on which the patients will start their diagnostic pathway. So you can call it a screening tool. Optimine is more of a health or well-being process.

product whereby users can benchmark themselves versus themselves and see if any changes in their lifestyle has an impact on cognitive well-being over time. So they can do more of what's helpful and less of what's harmful. Got it. Okay. Perfect. That's helpful. So that serves as a nice transition into kind of the what the early versions of both products maybe maybe looked like. So if you can take us back to, you know, that 2000, 2013, 2014 timeframe, you've got this idea, right? Like you mentioned your co-founder, kind of, you know, saw under functional, functional MRI that like, wow, there's this, there's this cognitive response when we as humans, you know, see an animal. So, you know, as you start to think, okay, there's a product here. This has legs. What were some of the key

learnings as you kind of iterated, you know, on those alpha and beta versions that, you know, when you look back at that kind of that time window, some things maybe you did right or maybe some things that you wish you could have, you know, redone? Wow. Okay. So there's plenty of we would do differently, particularly because what we started back in 2013, 14, was being frontier of a full-blown sector now known as digital health. So there was not much that we can look at in form of peers or examples that have gone down the pathway, both from regulatory point of view, product development. So we had to do a lot of the work ourselves.

We actually had a lot of conversations with regulators because this was such a nuance that they had not dealt with in the past. For example, in the past, you put a product in front of the regulators and you say that this is a product and this is what it says on the tin and they test it versus that and say, okay, now it does what it says on the tin. You are regulated and as long as you follow those procedures and build a same product, you're good to go. In our case, we're using artificial intelligence.

we collecting data, which is fed back to AI, which gets better as we go forward. So your product by definition is improving over time. So this is such a new one that we had to communicate and educate regulators, if you like, as we were going along. And they're using our example now for other entries to the space. So there's a lot that we could do differently. but we had to try an error. But also from the good parts that we've done is putting this in front of clinicians

at the very early stage and understand what your end users look into for adoption. So I really recommend that as part of product development, that initial feedback that can go back to your design cycle. it's easy to sit down and imagine a product that is ideal for your customers, but you can do all the hard work and you face a brutal reality that that's not the case. So one of the good things that we've done is from the very early days, we have in direct communication with end users, which are clinicians, and have taken a lot of inputs.

I personally, I think when we had proof of concepts, even not coded, just in a form of a PowerPoint presentation, I talked to 50 GPs that I reached out randomly to see if there is a product like this, would they be using it? If not, what they need to see. So that's one of the good things we've done. But the four of the clinical trials that we've designed could have been done easy. simpler, quicker, the pivotal study. So these are the stuff that if I go back, I would do more in form of the positives and negatives. Yeah, yeah, that's helpful. And when you think about even some of the startups that you've seen, you know,

through your experiences leading, you know, Cambridge University entrepreneurs, do you think that's where most of them kind of struggle? That's the area where they get hung up is they just don't get enough feedback from end users. I think that's one of the major issues in general with the tech, with the startups. You normally have extremely smart founders that they imagine and assume the end product. And it's, it's, you have to be creative. And just being driven by your customers is not accurate. It's not the right way to go.

but also you need to get those feedbacks on throughout the development of your products throughout the cycle. Got it. Let's transition and talk a little bit more about kind of your clinical, how you've approached kind of the regulatory paths with both of your platforms, right? And if I, you mentioned earlier, Cognica is FDA registered and I think C marked, correct? I have that right. But Optimind, is that the case with Optimine?

at all? Is that, is that a regulated platform for product? Well-being product. Well-being product. They have lower bar. You're not dealing with a clinical decision. So that's where the tech industry actually focusing now because the regulatory bar is a lot lower. And for consumer health, that's where most of the focus is at the moment. Got it. Let's talk a little bit about that, right? That trend. because I've seen the same thing, and I've been involved in both, in startups and both that operate and kind of both, I guess, spheres, you know, for lack of a better description where, you know, with devices that are highly regulated versus those that kind of like

tow the line between, you know, kind of a consumer wellness product and a medical device. And so how have you kind of, how have you been able to balance those, especially as it relates to optimine, right? And that pivot to maybe a consumer platform. Can you walk us through kind of your thoughts around that? It's very simple. We're focusing on the medical product. moment. So there's a lot of noise out there. When you're not regulated, you can claim anything.

And that's the area which it's hard to stand out. It's become more of who's got more marketing budget to get more eyeballs and more influences on board. But in what we have strategized, we have a scientific deep IP product that is validated. We want the professionals of the world of the space in clinicians, be our early adopters in the medical realm. And then when that adoption is there and when that reference customers are there, then you can have a well-being product which is using the same background science. So this is how we stand out. out in terms of the well-being product. It's something put it in the simplistic terms.

It's a blood pressure tool that your clinician uses in his office, and then you can get a consumer version of it at home. So that's our strategy there. It's not to go actively around getting optimized out and try to push that product out. Got it. This conversation reminds me of one I had with Rohan, whose last name is escaping me now, but he's the founder of Lee Therapeutics.

And they actually took a little bit of an opposite approach where they launched with their wearable device as a consumer product, namely because it was just, there was a lower barrier to entry and they could launch faster. They used a lot of those early insights, right, from consumers and clinicians that just had access, you know, easier access to the product. And they used a lot of those findings to inform,

you know, their clinical device, which is regulated and they're pursuing, you know, with a little bit more scientific rigor. And so a little bit of a different approach. But I see, I see where you're going with that thought where it's like you're able to succeed with Optamine because of what you've been able to substantiate with, you know, Cognica is what it sounds like. Exactly. There are different approaches. Again, when you go to the consumer space, when you go B2C, there are different factors involved. There's a different marketing strategy, marketing budget, and there's no one way or one answer to this. You can get a lot of data that can inform your product for the medical product if you go on the B2C model. But again, for us standing

out from a lot of stuff out there was the point that we made to stay clear from the consumer market for now, why we build those verticals in the clinical space. Okay. Cool. That's helpful to get your thoughts on kind of those two approaches because I see it as, I mean, there definitely seems to be a trend, right, with companies kind of either approaching both kind of markets. and maybe maybe in a different order, but it's interesting to hear your take on how you've done that

at cognitiveity. With that said, Sina, let's jump to scientific evidence, right? You mentioned that, you mentioned your pivotal trial a couple of times now. When you think about how you've approached really clinical affairs in general and building out kind of a clinical roadmap and substantiating your platform with data, are there any like key lessons that you've learned along the way that would be helpful for, you know, for other, you know, startup founders and CEOs that are kind of in that same boat? There are, but it could be very specific. Let me think about something a bit more generic. I think it's really worth having a few different opinions and also work this backward from what regulates. Again, same way that you approach with your product in getting as

much as feedback as you can from your customers or end users. I'd start with the regulators, try to understand and work it backwards, what they need to see in order to be satisfied that your product can do what you claim it, it will do. So I would start that initial conversation and you can always communicate with the FDA, MHRA, that these bodies, their agents, they're responsive. Again, backlog might be too long now because of COVID with all regulators. But we had great experience with both FDA agents and an MHRA in that we ran by them what we're trying to do. They never tell you that do this or do that, but they will make you aware of the risks and things that you might have overlooked.

So I recommend and also get as many as input to this from different bodies. There's lots of consultants out there because, again, you can go and design a clinical trial protocol. It sounds, it's ticking the box, but there's so many nuances that might have not been considered and some little changes in your design can have a huge. impact on the length of the trial, the cost of the trial. So I would spend some money at the very beginning of designing this and bringing some specialists from different groups to gather all inputs because it's going to save a lot of resources down the line and also time.

Got it. And so what I mean, the two things that I, that I, that kind of stood out, you know, hearing you describe kind of your thoughts on on how to, you know, maybe some best practices here is definitely start with the end of mind, right? And reverse engineer like the path on how to get there. But, you know, when thinking about that, you know, once you sort of define what that path looks like, it's a mistake to kind of just maybe, you know, work in a, you know, work with like one, one group of consultants or one consultant specifically. I mean, it's, it's ideal to get, you know, feedback.

Even if maybe one is, one is sort of your lead, right? but it's, you know, it's invaluable to sort of get some different, different, different, you know, thoughts on the approach. Absolutely. I think the cost of probably, you, your cost might, again, depends. Just putting some numbers as a ballpark figure, maybe tens of thousands of dollars spent at the very beginning can save you literally millions of dollars down the line in form of the trial design and the length of it.

So absolutely get multiple views on it and design an efficient study for what you want to claim. And what you want to claim, you need to run it by end users. Make sure it's been taken up and also make sure it's reimbursed. You can take all of these boxes, talk into consultants at the very beginning, not building something that then you have to find a good fit for it later on. on. Yeah. Yeah. You mentioned reimbursement. Let's chat about that a little bit, right? Because that, arguably, in some scenarios, is maybe the most important aspect to any, any business is like, you know, who's going to pay for this, right? How is this going to be, you know, covered and

reimbursed? And so with that said, I talk to us a little bit more about, you know, Cognica and Optimine. I'm assuming Optimine is kind of more of like a cash pay sort of, you know, platform, but Is Cognica? Is that covered and reimbursed by both insurers? Or generally speaking, how have you approached that game? So there are reimbursement codes for cognitive assessment, computerized cognitive assessments. So also, again, one other point to consider here,

digital health, a very new sector. Regulators are catching up games, and payers are even behind regulators. in that stream. So be aware of that. And there are reimbursement codes for computer as cognitive assessment. However, these are designed by or optimized based on the time spent with the patients, which is counterintuitive to what we do because we do this more accurately, more quickly. And this is where the whole discussion around value-based healthcare is going in that at the end of the day, the output is important and the outcome is important, not that specific

time or that specific task done during the process. 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 Mierrez, 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. In addition, you'll get a copy of every volume of MedSider mentors at no additional cost.

To learn more, head over to MedsiderRadio.com forward slash premium. Again, that's Medsiderradio.com forward slash premium.