February 24, 2026 • 28 mins
Dr. Victor Van Berkel lost his father to lung cancer — the deadliest cancer in the U.S., in part because it’s so difficult to detect early. That loss inspired Breath Diagnostics, a start-up using breath samples and microchip technology to identify cancer. But groundbreaking science doesn’t always translate into a sustainable business. After years of stalled leadership and mounting debt, investor Ivan Lo stepped in — buying the debt, restructuring the company and becoming CEO. When a Mayo Clinic partnership revealed they needed to fix some technical issues first, they hit pause to get it right — even if it meant going it alone for a while.
In this episode, Ben Walter and Kathleen Griffith speak with Victor and Ivan about making hard bets, the real costs and rewards of scientific startups and why leading with conviction sometimes matters more than consensus. These are The Unshakeables.
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Speaker 1 (00:04):
Ruby.
Speaker 2 (00:07):
Lung cancer is the leading cause of cancer deaths in
the US. It kills more people than colon cancer, breast cancer,
and prostate cancer combined every year. Why? It often grows
silently without symptoms, and by the time it's finally detected,
it can be too late.
Speaker 3 (00:24):
My dad died of lung cancer. He was a carpenter
and he was working on framing a house one day
and he dropped his hammer and you couldn't make his
hand pick the hammer up, like you couldn't figure out
how to pick the hammer up anymore, and so we
thought he was having a stroke.
Speaker 2 (00:39):
That was Dr. Victor van Berkel's first indication that his father wasn't healthy. And by the time hedropped his hammer, the cancer had spread to his father's brain. As a thoracic surgeon, Dr. Van Berkel lknew there had to be a better way to diagnose lung cancer, so he and his colleagues at the University ofLouisville came up with tech that would capture the chemical compounds in the human breath and testthem for cancer biomarkers.
Speaker 3 (01:04):
And so we started a company to see if we
could get this to a point where it would be
a commercial product that we would be able to get
out into the community.
Speaker 2 (01:14):
There was just one problem.
Speaker 3 (01:16):
The people who started this company were me, another thoracic surgeon,
the chemist, and the chemical engineer.
Speaker 2 (01:21):
So a bunch of business people, yeah, exactly.
Speaker 3 (01:24):
A bunch of very, very business savvy people. That is
definitely who we are. So we had no idea what
we were doing from a business standpoint.
Speaker 4 (01:31):
The company had debt, had leadership issues, structural challenges, and
so I spent a lot of my own money buying
a position.
Speaker 2 (01:39):
Now the company had an outsider in charge, no experience
in MedTech, no experience as a CEO, and everything had
to change if the company was going to survive. Welcome to The Unshakeables. From Chase For Business and Ruby Studio from iHeartMedia, I'm Ben Walter, CEO of Chase For Business. There's nothing small about the impact small businesses have onAmerica. They don't just drive our economy, they define our communities, create opportunities, andinspire the next generation of dreamers and builders. On The Unshakeables, we are sharing the daringmoments of business owners facing their crisis points and telling the stories of how they got through it. Kathleen, how are you today?
Speaker 1 (02:27):
I'm good.
Speaker 4 (02:27):
I'm good.
Speaker 1 (02:28):
I'm excited to hear more about today's company.
Speaker 2 (02:30):
Yeah, this one's a little science heavy, so I had
to brush off some of my high school chemistry. Fortunately,
my daughter took it last year, so I had to
review some of it, but I did have to brush up.
Speaker 1 (02:39):
It's for the good of humanity, so a little mental
strain over volatile organic compounds is worth it, I think absolutely.
Speaker 2 (02:47):
But I think I'll let the experts tell us about them.
On today's episode, Breath Diagnostics from Louisville, Kentucky. One of
the experts we have today is Dr. Victor Van Berkel.
Speaker 3 (03:00):
Professor of surgery at the University of Louisville School of Medicine. I'm the division chief of thoracicsurgery within the Department of Cardiovascular and Thoracic Surgery, which means that I spend mostof my time operating in people's chests on lungs and esophagus and things like that.
Speaker 2 (03:17):
Victor is conducting cutting edge research out of Louisville, which
we're going to talk about on the show today. But
you may be wondering what makes Kentucky a hub of
innovation for a thoracic surgeon.
Speaker 3 (03:27):
Most people in Louisville still smoke, so there's a pretty
high incidence of lung cancer around these parts, and so
most of my week is operating on people who have
lung cancer to remove it from them.
Speaker 2 (03:40):
For people who work on lung cancer day in and
day out, it's hard not to notice that the tests
for catching it just aren't that great. The reality is
that we often fail to diagnose it in a timely manner.
Cancer screening is a hard problem.
Speaker 3 (03:53):
Big problem with lung cancer is that the vast majority
of people, when they're diagnosed, they're already at stage three
or stage four, because unfortunately, most people with lung cancer
don't have any symptoms.
Speaker 2 (04:06):
Victor did what many of us do when we're frustrated
by a problem we keep seeing. He thought, there's got
to be a better way.
Speaker 3 (04:13):
And then you start thinking about it and you're like, well,
I could do this experiment and that would help. And
then you have to figure out, well, how am I
going to get the money so that I can do
this experiment, and then you start writing grants and then
pretty soon you have a lab.
Speaker 2 (04:23):
Victor was used to being in the lab. He had
started out in research before he moved into surgery.
Speaker 3 (04:29):
I like thinking about bigger picture problems and trying to
find truth with a capital T.
Speaker 2 (04:34):
Truth with a capital T. Yeah, what does that mean
to you?
Speaker 3 (04:38):
A lot of research and a lot of what we're aiming for when we're doing research is finding bigger answersthan just the person that's right in front of you. As a clinician, I love sort of smaller T truths of like, okay,this is a person with this problem that I'm going to try to help fix and I'm going to help get them through this.
Speaker 2 (04:58):
Where Victor's big T universal truths overlapped with little T personal truths was in screening for lungcancer. He knew that if he could figure out a better way, he could not only help individuals he came incontact with, but potentially save millions of lives. CT scans are the current lung cancer screeningprotocol and while the scans show nodules on lungs, the scan can't tell you what the nodule is.
Speaker 3 (05:22):
Come and see somebody like me, and I look, yeah,
that looks troublesome. So I'm going to cut it out.
And you have an operation, and most of those don't
end up being cancer.
Speaker 2 (05:30):
And then you've had invasive surgery that you didn't need
to have.
Speaker 3 (05:32):
Right, and it's tough on the patient, it's expensive for
the medical system, and then ninety six percent of the
people never needed to have happened.
Speaker 2 (05:40):
Of course, that's for the people that actually do get
screened for lung cancer at all.
Speaker 3 (05:45):
People don't want to know what the answer is, especially
people who have smoked their whole lives. They sort of figure, well,
I deserve this, which is ridiculous, like nobody deserves to
have cancer, but they feel like I did this to myself,
so be it. That is the real passion of what
drives me towards wanting there to be something better than
the CT scan.
Speaker 2 (06:04):
So what's better A breath test? A breath test, and
that's not to be confused with a breathalyzer test, which
I'm sure most of you know measures blood alcohol content.
But the way it works can help understand what Victor's describing.
When you drink, some of the alcohol you consume passes
through the stomach lining into the bloodstream. That's why we
get drunk. As the blood circulates, it takes that alcohol
(06:27):
all over the body, including the lungs. So when you
exhale into a breathalyzer, you're breathing out a percentage of alcohol,
which that machine measures. And if you can exhale alcohol,
you can also exhale a lot of other compounds.
Speaker 3 (06:42):
You have hundreds of chemicals that you're breathing in and
out all the time, and there's a lot of diagnostic
information that's available there if you can just trap those
chemicals and see what they are.
Speaker 2 (06:53):
Just like a breathalyzer traps alcohol to measure it.
Speaker 3 (06:56):
The problem is is that a lot of chemicals that
are in your breath are very reactive, so they react
with one another, They react with the air.
Speaker 2 (07:03):
Right, they're volatile and they break down into other things. So the trick is to capture those chemicals,stabilize them, and then run tests on them. I know that sounds hard, but Victor and his colleaguesfigured that out. They capture the chemicals on a microchip and look at them with a mass spectrometer, which is a very expensive machine. You don't really
need to know what that is other than it measures
(07:24):
the chemical compounds. Okay, moving on.
Speaker 3 (07:27):
We found that with this breath test we had a
really good sensitivity and specificity.
Speaker 2 (07:34):
That means the breath test that Victor and his team made detected the presence of lung cancer inpeople who had it. Now they just had to launch the company to spread the word.
Speaker 3 (07:44):
We had no idea what we were doing from a
business standpoint.
Speaker 2 (07:47):
They brought in a CEO to help them out.
Speaker 3 (07:50):
The first kind of CEO a company was a business guy. Here,
we did some things that were important for the company,
like we secured the intellectual property, we got patents, but
was ultimately just not moving stuff along very well. Some
of that was a lack of experience on our part,
but also a lack of experience in this particular field
for him in pushing things forward.
Speaker 2 (08:10):
So they brought in another.
Speaker 3 (08:12):
A very enthusiastic business guy, brought in another engineer, chemist,
and the two of them started building more of a
commercial prototype of what we would use from a company standpoint,
and they were able to get that started and start
us on doing the pilot studies here at UFL. With
the commercial stuff. He had more of a medical background
(08:33):
and did a nice job of doing a lot of
quality control stuff and building devices for us.
Speaker 2 (08:38):
But they weren't able to hook investors.
Speaker 3 (08:41):
And I think he also structured the company in a
way that put the company somewhat in debt to him,
and that also made it challenging from an investment standpoint
to have money brought in that would be first going
to pay off his debt rather than going to the
good of the company.
Speaker 2 (08:57):
So this is really interesting for our listeners. We have a lot of people who start businesses and all kinds ofstructures. So I want to talk a little bit about forgetting the individual and what happens. So
now you have a CEO who you think is a
wrong fit, who structured the company in a way that
makes investment difficult, But you need investment in order to
get this thing going, So how do you sort of
get around that?
Speaker 3 (09:14):
I would say where things really changed and we started
to get a lot of traction is when Ivan came along.
Speaker 2 (09:21):
Ivan Lo the current CEO of Breath Diagnostics. He's been
with the company for a few years now and got
the company moving forward. But it was a major undertaking,
one we'll hear about in just a few minutes. So Kathleen,
Breath Diagnostics pretty interesting company.
Speaker 1 (09:42):
I have to say. That is what I love about
the show is just as a learner. I have no
idea what we're going to get. We're in breath diagnostics today, yep.
Speaker 2 (09:51):
I'm always fascinated by companies that are founded by technical
experts as opposed to business people, because, particular, if you're
talking about the innovation front, the science matters a lot.
Now clearly the business part matters too, but if you
don't have the science, then it's just snake oil. It's
not the first time I've ever seen a company founded
by technical experts but not business people, that has struggled
(10:13):
in the early days, even when the underlying science was
quite good. And by the way, I did love his
thing about big ta Truth. I want to talk about
that big Tea truth thing for a second because we've
talked a lot on the show about people's motivation to
start a business. And some people's motivation to start a
business is to make money for their family. Some people's
motivation to start a business is to be able to
work their passion every day. Some people's motivation is to
(10:36):
just have direct impact on their clients. And he talked
about this deeper. I want to have impact at scale.
That was his big Tea truth, a discovery that could
help not just two people or ten people or twenty people,
but hundreds or thousands or millions of people. That's a
whole class in and of itself of why people start businesses.
And it's quite different.
Speaker 1 (10:54):
Yeah, I'd never heard that take before. But the idea
of the individual can be so compelling, right because you
have such proximity to helping one person the one to
one customer experience, but really thinking about the collective and
what that looks like and how you can drive scale
and to not get lost at the individual level.
Speaker 2 (11:13):
I also love businesses where the impact is so tangible.
There's been a lot of talk lately about how Silicon
Valley has lost its way because it's basically spent the
last ten years figuring out how to sell better advertising
algorithms to people and keep eyeballs on screens in a
way that's rotted our brains and all that kind of stuff.
Whereas when you talk about some of the new generation
of companies, both in Silicon Valley and not, they're solving
manufacturing problems, they're solving healthcare problems, they're solving physical atom problems,
(11:37):
not bits on a chip problem. And I think that's
really interesting.
Speaker 1 (11:41):
Yeah. So even with Elizabeth Holmes and Theranos as an example that we've all read about or heardabout in the news, Breath Diagnostics should still be an investable proposition.
Speaker 2 (11:53):
I mean, it sounds like from what he said, they're
lucky they made it. When I see companies mounted up
with debt early in their existence, very hard to climb
out of that, especially if the death holders don't understand
that what they really hold is equity. Yeah, full credit
to Victor and the founders for recognizing early that they
weren't business people, that they were scientists and doctors. Now
it's also proof that just because you say this person's
(12:14):
a business person doesn't mean it's going to work.
Speaker 4 (12:16):
Yeah.
Speaker 2 (12:16):
It has to be the right business person with the
right skills at the right time, who does the right thing. Yeah.
And there's a lot of variables in there, any one
of which could make that not come off. So that's
not a panacea for anything. But I give them credit
for realizing it, and they realized it more than once. Okay, Kathleen,
let's get back to the story. I think we should
start by introducing the CEO who actually did come in
and stick around joining Breath Diagnostics on today's show, Ivan
(12:40):
Lo All right, Ivan, I'm really looking forward to picking
up the story with you, so welcome to the show.
What got you interested in this company? As I understand it,
you spent most of your time in mining before this.
Speaker 4 (12:52):
It just so happens that in the Canadian capital markets,
a lot of the money that flows into mining things
around the world all stem from Canada. The market's doing
really well for the Canadians as a result of that.
Speaker 2 (13:03):
Right, yeah, exactly, because you have plenty of it. Yeah.
Ivan was in mining of all things for years and
what is essentially private equity. He'd made some money and
saw deals cross his desk every day. But just like Victor,
the work Breath Diagnostics was doing was personal for Ivan.
Speaker 4 (13:20):
My dad was diagnosed with lung cancer and he beat
it the first time, and then just based on the
current standard of care, the follow ups became later and
later in eventually when he caught it the second time
and he came back with a vengeance and it was
too late and he had passed away. I get deals
presented to me on a daily basis. I took an
immediate interest, but of course you have to see if
there is actually something there, and the more I looked
(13:42):
into how breath research was progressing, the more I realized
that this company solved a lot of the challenges that
the breath diagnostics world were facing.
Speaker 2 (13:53):
Okay, so you were pretty taken with this idea. You're
not just an investor, you're the CEO. I mean, that's different.
So tell me how this went down.
Speaker 4 (14:02):
When Breath Diagnostics came to the table, they were struggling
for cash. I saw an opportunity to step in and help.
So the company had debt, had leadership issues, structural challenges,
but I just felt a calling to fix it because
the technology was amazing, they just were missing a few
components within that. And so I spent a lot of
my own money buying a position in a healthcare startup,
(14:24):
which is what Breath Diagnostics was at that time. So unfortunately,
a lot of the capital that we put in, and
it was in the millions of dollars, went to old
debt to restructure the company so it can be financed
properly by future investors, which is what it's going to require.
Speaker 2 (14:38):
So you essentially turned the debt into equity, right.
Speaker 4 (14:41):
That's exactly what we did. Yeah, and so it was
skinning the game. I don't take a salary. I haven't
for the last two years. And the whole point of
it is, let's get this company commercialized.
Speaker 2 (14:50):
But it took a while to get the deal done.
Speaker 4 (14:52):
It was the longest deal I've ever done in my life.
Speaker 2 (14:54):
Wow.
Speaker 4 (14:54):
when we kind of restructured. And it took about a yearto convince the debt holders to restructure all of that debt. I ended up coming in with a couple offriends and bought out that debt and we restructured the company from that perspective so that wecan make it financeable.
Speaker 2 (15:08):
I haven't spent his own money to pay off the
company's debt to give Breadth Diagnostics a shot at survival,
and some folks weren't happy about it.
Speaker 4 (15:16):
I've never financed a company and have the company be
upset with the financing. There was other investors in the company,
and these investors invested under the same pretenses I did,
wanting to help people, and so I didn't want to
crush them to the point where now their investment's nothing
and we start over. It would have been the smartest
thing to do and the easiest way to do it,
but we worked around that and made sure that all
(15:38):
the previous investors were protected, so that if we're successful,
they'll see success. The outgoing management team is going to
be pissed off because they've been working at this for
many years and they believe it's their company.
Speaker 2 (15:50):
One big sticking point was the way they were trapping and measuring the volatile organic compounds.The researchers are always studying and advancing the technology and they'd come up with a betterway to measure it. Over the years, the old management team was moving forward with the microchip.They knew worked, but Ivan knew that the researchers had a new better one..
Speaker 4 (16:08):
The company spent many years on the old one. Now the old one still might work, but it's just not asgood as the new one. And so we had to make a decision. Do we stick with the old one where we spentthe last two, three years researching and analyzing and finding good data for it and creating all thesedocuments for it? Or do we go with the new one? And so, we made a decision. Well, all of the newpapers that the university is coming out with using our technology rely on the new chip. So now it's upto us to follow that and I don't want to spend the next three years determining, which at those pivotalmoments you either have to make a decision of whether you go with this or you go with that. And thatwas probably one of the oh shit moments because now the last three years prior to me joining, all thatwork is down the drain.
Speaker 2 (16:57):
The way Ivan talks about the research is really interesting
because he's not a scientist. He had to absorb all
of this when he came on. Some may say that
someone with a medical background would make a better CEO
of a MedTech company, but Ivan disagrees.
Speaker 4 (17:11):
I think it comes down to the passion. Two years ago,
if I were to present this deal to an investor
and I was that investor, I'd say, look, Ivan, you
have no experience. You're not going to be able to
do this. Medtech is one of the most difficult challenges.
But today I think I'm much more comfortable, even speaking
to the scientists and the healthcare professionals on our pathway,
(17:31):
the workflows, the commercialization roadmap. You learn a lot very quickly,
especially if you spent every night researching. As Ivan brushed up,
he also saw the old leadership of the company phase out.
How did that process go? Leadership transitions can be tough
for companies and what did you change versus what did
you keep the same? The management left kind of abruptly.
(17:52):
There was a lot of gaps, and then when I
took over operationally, I had to look at the landscape
of Okay, well where's the company and what are we
going to focus on. We decided that we needed to
start doing things internally. That's probably the biggest light bulb
moment now.
Speaker 2 (18:07):
When Ivan says do things internally, he means being able
to take the chemicals they've captured on their microchips, test them,
and analyze the data themselves. At the company. It's a
little over my head, but Ivan says that any chemist
will understand it. The only thing is that to analyze
the chip you need to have a mass spectrometer.
Speaker 4 (18:26):
These machines are really expensive.
Speaker 2 (18:27):
Yeah, okay, so it's capital intensive.
Speaker 4 (18:29):
It's very capital intensive. So we've worked for many years
looking for a third party partner.
Speaker 2 (18:34):
He found one in the Mayo Clinic, which is of
course the Mayo Clinic. It's been voted the best hospital
in the US for the last seven years and as
a world renowned research clinic. A partnership with the Mayo
Clinic gave breath Diagnostics credibility and access to the mass
spectrometers they needed.
Speaker 4 (18:52):
When I joined, part of the selling point was a partnership with the Mayo Clinic. If they're going to helpyou out, it's going to be a big deal. They had been waiting very patiently for the company to raise capitalto move forward with it because they believe in our technology. And we finally did when I joined andthe first set of data showed up pretty inconsistent.
Speaker 2 (19:11):
The samples Breath Diagnostics tests are volatile organic compounds and
are highly reactive with anything else they come into contact with.
I even quickly realized they would need to completely isolate
their tests to get solid data.
Speaker 4 (19:25):
So I went back to the Mayo when I said, guys,
we want to be partners long term, and I don't
want you guys to keep wasting your resources on us
until we figured it out. And so that's when we
made the decision to pause that relationship.
Speaker 2 (19:41):
And pausing the relationship with the Mayo Clinic meant that
the newly debt free company would have to go find
a mass spectrometer of its own to be able to
complete their pilot studies and prove the technology. I have
to ask how much does one of these machines cost?
Speaker 4 (19:55):
Well, the one that we have is probably close to
a million dollars, okay, five hundred grand on the low
side up towards of a million dollars. But then you
need the expertise to run it.
Speaker 2 (20:03):
That ain't nothing.
Speaker 4 (20:04):
It ain't nothing, especially for a startup that has struggled
with financing.
Speaker 2 (20:08):
But you bought one anyway.
Speaker 4 (20:09):
We bought one anyway, and I can tell you we have made more progress on the analytical methoddevelopment side in two weeks than we did in the entirety of the company.
Speaker 2 (20:18):
Wow. Just because you controlled the entire process.
Speaker 4 (20:21):
We control the entire process. That's exactly it. So I
think that's really important, especially when it comes to MedTech,
that you do control the entire process.
Speaker 2 (20:28):
Are you still a pre revenue company?
Speaker 4 (20:30):
We are. I think we're going to look to change that next year. I think the amazing thing about ourtechnology is that we can predict the onset of disease. There's all kinds of trials going on where they'relooking for inflammatory biomarkers, and the drug companies associated with that believe that ourtechnology can capture those much more accurately and repeatably and much simpler as part of a lot ofthe clinical trials that these pharma companies are doing. So there's a lot of opportunity for near-termrevenue.
Speaker 2 (20:55):
Oh so for more than just lung cancer, it could
detect other things.
Speaker 4 (20:58):
Yeah, So the ability to predict pneumonia in post-op cardiac
surgery patients.
Speaker 2 (21:03):
Doesn't that kill people like as much as the surgery
is when they get pneumonia afterwards, it's a huge number, right, It's.
Speaker 4 (21:08):
A huge number, and it's a huge burden to the hospital.
It's a huge burden on the surgeons because no matter
how good they perform that surgery, there's a chance of
catching in the morning. Now, if we can predict it,
we can pre treat it and arguably prevent a lot
of those issues.
Speaker 2 (21:22):
Wow, So what's the status of your trials now?
Speaker 4 (21:25):
Today? We're in validation mode and we're getting really close
to finalizing that for a product that we can use
in predicting pneumonia, for example, in post patients cardiac collective surgery.
From there, we can prove that this breath technology is
a platform, meaning we can use it to diagnose a
lot of diseases. So my goal within five years is
not just to be able to screen for lung cancer
(21:47):
and pneumonia. But we know, and I don't know if
you've been following the health world, like Function Health, everybody's
paying thousands of dollars for the scans that are not
even have to approve because they want to know. There's
no better medium to detect and predict diseases than the breath.
It's immediate, it's not filtered, it comes directly from the blood,
directly from your airways, and we can look at that.
(22:07):
So in five years from now, I would hope that
everybody at a clinic will walk into their doctor's office,
take a breath test, get baseline levels, and every six
months or every year they take another one to see
if certain Bible markers are elevated, and if it is,
go see a doctor for a follow up.
Speaker 1 (22:27):
Ben the story just gets more and more amazing to me.
I mean, he had to take on so much work,
pay off all that debt just to get the company
up and running. Most people wouldn't have taken that on.
Speaker 3 (22:39):
No.
Speaker 2 (22:39):
In fact, his words, he basically bought his position a CEO.
He essentially bought in enough of the company that he's
running it. Yeah, and it was also brave because he's
not a medical expert. I mean, he had a lot
of medical experts there, but he said they couldn't find
someone who knew how to do all this stuff.
Speaker 1 (22:53):
So it's me, is there one area that you think
of when someone's coming in to determine whether it's an
investible prop position that they really need to key in
on more than others?
Speaker 2 (23:03):
It always starts with is it a good business idea
or not? Because if it's a bad business idea, nothing
else matters. Now there's a broad interpretation of what's a
good business idea. You can have a lousy product under
a great brand and if the brand resonates. Think how
many brands you've seen do well that don't make a
really high quality product. Yeah, as long as it's a
good business idea, I think it all comes down to
people and finances. It has to be the right business
(23:25):
person with the right skills at the right time, who
does the right thing.
Speaker 3 (23:28):
Yeah.
Speaker 1 (23:29):
What I thought really showed a lot of bullishness in
the space was deciding to walk away from Mayo Clinic.
And their machines and invest over a million dollars into
their own machines so that they could make significant progress.
Speaker 2 (23:46):
That was a lot, Yeah, to pause that partnership as
a high risk, high reward move for a small startup
like that. There's a credibility that comes from working with
an institution like that that they had to give up.
And in addition, they had to then go out and
spend a million bucks, which is not a small amount
of money for anybody, or certainly for that company. That
was a gutsy decision. That was them betting on themselves
and their idea, which I give them a lot of
credit for. But still they were trading speed to market
(24:09):
and confidence against credibility and cost. So it was like
lots of credibility but slow versus speed and confidence. And
that's a trade to make.
Speaker 1 (24:19):
Yeah, and that's a good one other people can use to.
Speaker 2 (24:22):
Yeah, And look, if it didn't come off, it probably
could have cost them the company. So if you own
a business, there might come these times where you have
to make a decision. Is this a bet the company moment?
Speaker 4 (24:30):
Right?
Speaker 2 (24:30):
Because it was, Yeah, and they bet the company and
it worked out. But you know, it doesn't always so
credit to them for it working out and good lesson
in terms of like no going in, am I ready
to make a bet the company moment?
Speaker 1 (24:42):
Can we talk a little bit about the data versus
instinct because they've been in validation mode for what feels
like forever. They're trying to do it in all the
right ways, with getting FDA approvals, running all of the
right clinical trials to make sure that this has all
the empirical evidence it needs behind it. But how how
long is too long to be validating before you've really
(25:06):
tried to bring it to market to these various kind
of target cohorts that you were talking about.
Speaker 2 (25:11):
Given the background that Ivan gave us and the fact
that they had some misfires, it's definitely been too long.
That said, in both medical device and drug development, these
time scales are not unusual. It's really different than a
consumer company got to be paid. And by the way,
a lot of people bemoan this, but that's part of
why the margins for the things that do work out
are so high, because it takes years, it's capital intensive,
(25:33):
and it's high risk, and a lot of times it
doesn't come off. In farmer they always say the first
pill cost six billion dollars in the second pill cost
a quarter. I get it. It's the nature of breakthrough development.
It's high risk, high reward. When you're trying to find
product market fit. In a consumer good, you can get
eighty percent there and be like, let's push the button
and see what happens. That's not a thing in medical devices,
(25:54):
like you have to go through clinical trials and you
have to prove it.
Speaker 1 (25:57):
I liked his idea about going after the end consumer
or going to clinics. Everyone's now getting so proactive about
functional health and owning their own health and doing their
own diagnostic testing.
Speaker 2 (26:07):
Yeah. I think it'll be a good idea. They're going
to want to only bring something to market that they
think has actual, real clinical value, so I think it
could help with their path to revenue. I don't think
they would ever be comfortable therefore short changing the validation process.
They genuinely are trying to solve the problem.
Speaker 1 (26:21):
And that tells you everything you need to know. When
he's investing a million dollars in this machine instead of
a Ferrari, he's serious about it.
Speaker 2 (26:30):
Yeah, another great one, Kathleen. I really hope they make it.
I think this is going to be a fantastic company
for the world. I hope they pull it off because
I think it'd be great for humanity.
Speaker 1 (26:37):
Yeah, this is a big one, attacking a huge problem
and trying to change the world for the better.
Speaker 2 (26:43):
Ivan, I want to ask you one last question. We
have lots of listeners who own small businesses or want
to start one. What's your one piece of advice for them.
Speaker 4 (26:52):
Be very deliberate about your fundamentals early because they can
compound faster than momentum itself. So don't skip structure at
the beginning of the company. It's really cheap. Pay five
hundred dollars and have a lawyer. Structure your company properly
so that there's clear ownership, accountability and a clean cap table,
especially if you're going to be looking to raise capital.
(27:13):
So as long as you structure it correctly. The goal
isn't to protect control, which I think a lot of
founders do. That's all they cared about, But especially for
first time founders, the goal is not to protect control,
is to build something durable with the right partners.
Speaker 2 (27:29):
Awesome, Ivan thank you for being on the show.
Speaker 4 (27:31):
This is terrific, Ben, Thank you very much. It was
an Honor.
Speaker 2 (27:37):
Thanks so much for listening to this episode of The Unshakeables.
If you liked this episode, please rate and review it.
In our next episode, we're talking to a veterinarian whose
entire life and business was built around one dog.
Speaker 1 (27:51):
I've had this dog for almost ten years. I can
never tell that part of the story without crying. It's
truly the moment that changed everything.
Speaker 2 (28:02):
I'm Ben Walter and this is The Unshakeables from Chase
for Business and Ruby Studio from iHeartMedia. We'll see you
back here soon.
Ruby.
Speaker 2 (00:07):
Lung cancer is the leading cause of cancer deaths in
the US. It kills more people than colon cancer, breast cancer,
and prostate cancer combined every year. Why? It often grows
silently without symptoms, and by the time it's finally detected,
it can be too late.
Speaker 3 (00:24):
My dad died of lung cancer. He was a carpenter
and he was working on framing a house one day
and he dropped his hammer and you couldn't make his
hand pick the hammer up, like you couldn't figure out
how to pick the hammer up anymore, and so we
thought he was having a stroke.
Speaker 2 (00:39):
That was Dr. Victor van Berkel's first indication that his father wasn't healthy. And by the time hedropped his hammer, the cancer had spread to his father's brain. As a thoracic surgeon, Dr. Van Berkel lknew there had to be a better way to diagnose lung cancer, so he and his colleagues at the University ofLouisville came up with tech that would capture the chemical compounds in the human breath and testthem for cancer biomarkers.
Speaker 3 (01:04):
And so we started a company to see if we
could get this to a point where it would be
a commercial product that we would be able to get
out into the community.
Speaker 2 (01:14):
There was just one problem.
Speaker 3 (01:16):
The people who started this company were me, another thoracic surgeon,
the chemist, and the chemical engineer.
Speaker 2 (01:21):
So a bunch of business people, yeah, exactly.
Speaker 3 (01:24):
A bunch of very, very business savvy people. That is
definitely who we are. So we had no idea what
we were doing from a business standpoint.
Speaker 4 (01:31):
The company had debt, had leadership issues, structural challenges, and
so I spent a lot of my own money buying
a position.
Speaker 2 (01:39):
Now the company had an outsider in charge, no experience
in MedTech, no experience as a CEO, and everything had
to change if the company was going to survive. Welcome to The Unshakeables. From Chase For Business and Ruby Studio from iHeartMedia, I'm Ben Walter, CEO of Chase For Business. There's nothing small about the impact small businesses have onAmerica. They don't just drive our economy, they define our communities, create opportunities, andinspire the next generation of dreamers and builders. On The Unshakeables, we are sharing the daringmoments of business owners facing their crisis points and telling the stories of how they got through it. Kathleen, how are you today?
Speaker 1 (02:27):
I'm good.
Speaker 4 (02:27):
I'm good.
Speaker 1 (02:28):
I'm excited to hear more about today's company.
Speaker 2 (02:30):
Yeah, this one's a little science heavy, so I had
to brush off some of my high school chemistry. Fortunately,
my daughter took it last year, so I had to
review some of it, but I did have to brush up.
Speaker 1 (02:39):
It's for the good of humanity, so a little mental
strain over volatile organic compounds is worth it, I think absolutely.
Speaker 2 (02:47):
But I think I'll let the experts tell us about them.
On today's episode, Breath Diagnostics from Louisville, Kentucky. One of
the experts we have today is Dr. Victor Van Berkel.
Speaker 3 (03:00):
Professor of surgery at the University of Louisville School of Medicine. I'm the division chief of thoracicsurgery within the Department of Cardiovascular and Thoracic Surgery, which means that I spend mostof my time operating in people's chests on lungs and esophagus and things like that.
Speaker 2 (03:17):
Victor is conducting cutting edge research out of Louisville, which
we're going to talk about on the show today. But
you may be wondering what makes Kentucky a hub of
innovation for a thoracic surgeon.
Speaker 3 (03:27):
Most people in Louisville still smoke, so there's a pretty
high incidence of lung cancer around these parts, and so
most of my week is operating on people who have
lung cancer to remove it from them.
Speaker 2 (03:40):
For people who work on lung cancer day in and
day out, it's hard not to notice that the tests
for catching it just aren't that great. The reality is
that we often fail to diagnose it in a timely manner.
Cancer screening is a hard problem.
Speaker 3 (03:53):
Big problem with lung cancer is that the vast majority
of people, when they're diagnosed, they're already at stage three
or stage four, because unfortunately, most people with lung cancer
don't have any symptoms.
Speaker 2 (04:06):
Victor did what many of us do when we're frustrated
by a problem we keep seeing. He thought, there's got
to be a better way.
Speaker 3 (04:13):
And then you start thinking about it and you're like, well,
I could do this experiment and that would help. And
then you have to figure out, well, how am I
going to get the money so that I can do
this experiment, and then you start writing grants and then
pretty soon you have a lab.
Speaker 2 (04:23):
Victor was used to being in the lab. He had
started out in research before he moved into surgery.
Speaker 3 (04:29):
I like thinking about bigger picture problems and trying to
find truth with a capital T.
Speaker 2 (04:34):
Truth with a capital T. Yeah, what does that mean
to you?
Speaker 3 (04:38):
A lot of research and a lot of what we're aiming for when we're doing research is finding bigger answersthan just the person that's right in front of you. As a clinician, I love sort of smaller T truths of like, okay,this is a person with this problem that I'm going to try to help fix and I'm going to help get them through this.
Speaker 2 (04:58):
Where Victor's big T universal truths overlapped with little T personal truths was in screening for lungcancer. He knew that if he could figure out a better way, he could not only help individuals he came incontact with, but potentially save millions of lives. CT scans are the current lung cancer screeningprotocol and while the scans show nodules on lungs, the scan can't tell you what the nodule is.
Speaker 3 (05:22):
Come and see somebody like me, and I look, yeah,
that looks troublesome. So I'm going to cut it out.
And you have an operation, and most of those don't
end up being cancer.
Speaker 2 (05:30):
And then you've had invasive surgery that you didn't need
to have.
Speaker 3 (05:32):
Right, and it's tough on the patient, it's expensive for
the medical system, and then ninety six percent of the
people never needed to have happened.
Speaker 2 (05:40):
Of course, that's for the people that actually do get
screened for lung cancer at all.
Speaker 3 (05:45):
People don't want to know what the answer is, especially
people who have smoked their whole lives. They sort of figure, well,
I deserve this, which is ridiculous, like nobody deserves to
have cancer, but they feel like I did this to myself,
so be it. That is the real passion of what
drives me towards wanting there to be something better than
the CT scan.
Speaker 2 (06:04):
So what's better A breath test? A breath test, and
that's not to be confused with a breathalyzer test, which
I'm sure most of you know measures blood alcohol content.
But the way it works can help understand what Victor's describing.
When you drink, some of the alcohol you consume passes
through the stomach lining into the bloodstream. That's why we
get drunk. As the blood circulates, it takes that alcohol
(06:27):
all over the body, including the lungs. So when you
exhale into a breathalyzer, you're breathing out a percentage of alcohol,
which that machine measures. And if you can exhale alcohol,
you can also exhale a lot of other compounds.
Speaker 3 (06:42):
You have hundreds of chemicals that you're breathing in and
out all the time, and there's a lot of diagnostic
information that's available there if you can just trap those
chemicals and see what they are.
Speaker 2 (06:53):
Just like a breathalyzer traps alcohol to measure it.
Speaker 3 (06:56):
The problem is is that a lot of chemicals that
are in your breath are very reactive, so they react
with one another, They react with the air.
Speaker 2 (07:03):
Right, they're volatile and they break down into other things. So the trick is to capture those chemicals,stabilize them, and then run tests on them. I know that sounds hard, but Victor and his colleaguesfigured that out. They capture the chemicals on a microchip and look at them with a mass spectrometer, which is a very expensive machine. You don't really
need to know what that is other than it measures
(07:24):
the chemical compounds. Okay, moving on.
Speaker 3 (07:27):
We found that with this breath test we had a
really good sensitivity and specificity.
Speaker 2 (07:34):
That means the breath test that Victor and his team made detected the presence of lung cancer inpeople who had it. Now they just had to launch the company to spread the word.
Speaker 3 (07:44):
We had no idea what we were doing from a
business standpoint.
Speaker 2 (07:47):
They brought in a CEO to help them out.
Speaker 3 (07:50):
The first kind of CEO a company was a business guy. Here,
we did some things that were important for the company,
like we secured the intellectual property, we got patents, but
was ultimately just not moving stuff along very well. Some
of that was a lack of experience on our part,
but also a lack of experience in this particular field
for him in pushing things forward.
Speaker 2 (08:10):
So they brought in another.
Speaker 3 (08:12):
A very enthusiastic business guy, brought in another engineer, chemist,
and the two of them started building more of a
commercial prototype of what we would use from a company standpoint,
and they were able to get that started and start
us on doing the pilot studies here at UFL. With
the commercial stuff. He had more of a medical background
(08:33):
and did a nice job of doing a lot of
quality control stuff and building devices for us.
Speaker 2 (08:38):
But they weren't able to hook investors.
Speaker 3 (08:41):
And I think he also structured the company in a
way that put the company somewhat in debt to him,
and that also made it challenging from an investment standpoint
to have money brought in that would be first going
to pay off his debt rather than going to the
good of the company.
Speaker 2 (08:57):
So this is really interesting for our listeners. We have a lot of people who start businesses and all kinds ofstructures. So I want to talk a little bit about forgetting the individual and what happens. So
now you have a CEO who you think is a
wrong fit, who structured the company in a way that
makes investment difficult, But you need investment in order to
get this thing going, So how do you sort of
get around that?
Speaker 3 (09:14):
I would say where things really changed and we started
to get a lot of traction is when Ivan came along.
Speaker 2 (09:21):
Ivan Lo the current CEO of Breath Diagnostics. He's been
with the company for a few years now and got
the company moving forward. But it was a major undertaking,
one we'll hear about in just a few minutes. So Kathleen,
Breath Diagnostics pretty interesting company.
Speaker 1 (09:42):
I have to say. That is what I love about
the show is just as a learner. I have no
idea what we're going to get. We're in breath diagnostics today, yep.
Speaker 2 (09:51):
I'm always fascinated by companies that are founded by technical
experts as opposed to business people, because, particular, if you're
talking about the innovation front, the science matters a lot.
Now clearly the business part matters too, but if you
don't have the science, then it's just snake oil. It's
not the first time I've ever seen a company founded
by technical experts but not business people, that has struggled
(10:13):
in the early days, even when the underlying science was
quite good. And by the way, I did love his
thing about big ta Truth. I want to talk about
that big Tea truth thing for a second because we've
talked a lot on the show about people's motivation to
start a business. And some people's motivation to start a
business is to make money for their family. Some people's
motivation to start a business is to be able to
work their passion every day. Some people's motivation is to
(10:36):
just have direct impact on their clients. And he talked
about this deeper. I want to have impact at scale.
That was his big Tea truth, a discovery that could
help not just two people or ten people or twenty people,
but hundreds or thousands or millions of people. That's a
whole class in and of itself of why people start businesses.
And it's quite different.
Speaker 1 (10:54):
Yeah, I'd never heard that take before. But the idea
of the individual can be so compelling, right because you
have such proximity to helping one person the one to
one customer experience, but really thinking about the collective and
what that looks like and how you can drive scale
and to not get lost at the individual level.
Speaker 2 (11:13):
I also love businesses where the impact is so tangible.
There's been a lot of talk lately about how Silicon
Valley has lost its way because it's basically spent the
last ten years figuring out how to sell better advertising
algorithms to people and keep eyeballs on screens in a
way that's rotted our brains and all that kind of stuff.
Whereas when you talk about some of the new generation
of companies, both in Silicon Valley and not, they're solving
manufacturing problems, they're solving healthcare problems, they're solving physical atom problems,
(11:37):
not bits on a chip problem. And I think that's
really interesting.
Speaker 1 (11:41):
Yeah. So even with Elizabeth Holmes and Theranos as an example that we've all read about or heardabout in the news, Breath Diagnostics should still be an investable proposition.
Speaker 2 (11:53):
I mean, it sounds like from what he said, they're
lucky they made it. When I see companies mounted up
with debt early in their existence, very hard to climb
out of that, especially if the death holders don't understand
that what they really hold is equity. Yeah, full credit
to Victor and the founders for recognizing early that they
weren't business people, that they were scientists and doctors. Now
it's also proof that just because you say this person's
(12:14):
a business person doesn't mean it's going to work.
Speaker 4 (12:16):
Yeah.
Speaker 2 (12:16):
It has to be the right business person with the
right skills at the right time, who does the right thing. Yeah.
And there's a lot of variables in there, any one
of which could make that not come off. So that's
not a panacea for anything. But I give them credit
for realizing it, and they realized it more than once. Okay, Kathleen,
let's get back to the story. I think we should
start by introducing the CEO who actually did come in
and stick around joining Breath Diagnostics on today's show, Ivan
(12:40):
Lo All right, Ivan, I'm really looking forward to picking
up the story with you, so welcome to the show.
What got you interested in this company? As I understand it,
you spent most of your time in mining before this.
Speaker 4 (12:52):
It just so happens that in the Canadian capital markets,
a lot of the money that flows into mining things
around the world all stem from Canada. The market's doing
really well for the Canadians as a result of that.
Speaker 2 (13:03):
Right, yeah, exactly, because you have plenty of it. Yeah.
Ivan was in mining of all things for years and
what is essentially private equity. He'd made some money and
saw deals cross his desk every day. But just like Victor,
the work Breath Diagnostics was doing was personal for Ivan.
Speaker 4 (13:20):
My dad was diagnosed with lung cancer and he beat
it the first time, and then just based on the
current standard of care, the follow ups became later and
later in eventually when he caught it the second time
and he came back with a vengeance and it was
too late and he had passed away. I get deals
presented to me on a daily basis. I took an
immediate interest, but of course you have to see if
there is actually something there, and the more I looked
(13:42):
into how breath research was progressing, the more I realized
that this company solved a lot of the challenges that
the breath diagnostics world were facing.
Speaker 2 (13:53):
Okay, so you were pretty taken with this idea. You're
not just an investor, you're the CEO. I mean, that's different.
So tell me how this went down.
Speaker 4 (14:02):
When Breath Diagnostics came to the table, they were struggling
for cash. I saw an opportunity to step in and help.
So the company had debt, had leadership issues, structural challenges,
but I just felt a calling to fix it because
the technology was amazing, they just were missing a few
components within that. And so I spent a lot of
my own money buying a position in a healthcare startup,
(14:24):
which is what Breath Diagnostics was at that time. So unfortunately,
a lot of the capital that we put in, and
it was in the millions of dollars, went to old
debt to restructure the company so it can be financed
properly by future investors, which is what it's going to require.
Speaker 2 (14:38):
So you essentially turned the debt into equity, right.
Speaker 4 (14:41):
That's exactly what we did. Yeah, and so it was
skinning the game. I don't take a salary. I haven't
for the last two years. And the whole point of
it is, let's get this company commercialized.
Speaker 2 (14:50):
But it took a while to get the deal done.
Speaker 4 (14:52):
It was the longest deal I've ever done in my life.
Speaker 2 (14:54):
Wow.
Speaker 4 (14:54):
when we kind of restructured. And it took about a yearto convince the debt holders to restructure all of that debt. I ended up coming in with a couple offriends and bought out that debt and we restructured the company from that perspective so that wecan make it financeable.
Speaker 2 (15:08):
I haven't spent his own money to pay off the
company's debt to give Breadth Diagnostics a shot at survival,
and some folks weren't happy about it.
Speaker 4 (15:16):
I've never financed a company and have the company be
upset with the financing. There was other investors in the company,
and these investors invested under the same pretenses I did,
wanting to help people, and so I didn't want to
crush them to the point where now their investment's nothing
and we start over. It would have been the smartest
thing to do and the easiest way to do it,
but we worked around that and made sure that all
(15:38):
the previous investors were protected, so that if we're successful,
they'll see success. The outgoing management team is going to
be pissed off because they've been working at this for
many years and they believe it's their company.
Speaker 2 (15:50):
One big sticking point was the way they were trapping and measuring the volatile organic compounds.The researchers are always studying and advancing the technology and they'd come up with a betterway to measure it. Over the years, the old management team was moving forward with the microchip.They knew worked, but Ivan knew that the researchers had a new better one..
Speaker 4 (16:08):
The company spent many years on the old one. Now the old one still might work, but it's just not asgood as the new one. And so we had to make a decision. Do we stick with the old one where we spentthe last two, three years researching and analyzing and finding good data for it and creating all thesedocuments for it? Or do we go with the new one? And so, we made a decision. Well, all of the newpapers that the university is coming out with using our technology rely on the new chip. So now it's upto us to follow that and I don't want to spend the next three years determining, which at those pivotalmoments you either have to make a decision of whether you go with this or you go with that. And thatwas probably one of the oh shit moments because now the last three years prior to me joining, all thatwork is down the drain.
Speaker 2 (16:57):
The way Ivan talks about the research is really interesting
because he's not a scientist. He had to absorb all
of this when he came on. Some may say that
someone with a medical background would make a better CEO
of a MedTech company, but Ivan disagrees.
Speaker 4 (17:11):
I think it comes down to the passion. Two years ago,
if I were to present this deal to an investor
and I was that investor, I'd say, look, Ivan, you
have no experience. You're not going to be able to
do this. Medtech is one of the most difficult challenges.
But today I think I'm much more comfortable, even speaking
to the scientists and the healthcare professionals on our pathway,
(17:31):
the workflows, the commercialization roadmap. You learn a lot very quickly,
especially if you spent every night researching. As Ivan brushed up,
he also saw the old leadership of the company phase out.
How did that process go? Leadership transitions can be tough
for companies and what did you change versus what did
you keep the same? The management left kind of abruptly.
(17:52):
There was a lot of gaps, and then when I
took over operationally, I had to look at the landscape
of Okay, well where's the company and what are we
going to focus on. We decided that we needed to
start doing things internally. That's probably the biggest light bulb
moment now.
Speaker 2 (18:07):
When Ivan says do things internally, he means being able
to take the chemicals they've captured on their microchips, test them,
and analyze the data themselves. At the company. It's a
little over my head, but Ivan says that any chemist
will understand it. The only thing is that to analyze
the chip you need to have a mass spectrometer.
Speaker 4 (18:26):
These machines are really expensive.
Speaker 2 (18:27):
Yeah, okay, so it's capital intensive.
Speaker 4 (18:29):
It's very capital intensive. So we've worked for many years
looking for a third party partner.
Speaker 2 (18:34):
He found one in the Mayo Clinic, which is of
course the Mayo Clinic. It's been voted the best hospital
in the US for the last seven years and as
a world renowned research clinic. A partnership with the Mayo
Clinic gave breath Diagnostics credibility and access to the mass
spectrometers they needed.
Speaker 4 (18:52):
When I joined, part of the selling point was a partnership with the Mayo Clinic. If they're going to helpyou out, it's going to be a big deal. They had been waiting very patiently for the company to raise capitalto move forward with it because they believe in our technology. And we finally did when I joined andthe first set of data showed up pretty inconsistent.
Speaker 2 (19:11):
The samples Breath Diagnostics tests are volatile organic compounds and
are highly reactive with anything else they come into contact with.
I even quickly realized they would need to completely isolate
their tests to get solid data.
Speaker 4 (19:25):
So I went back to the Mayo when I said, guys,
we want to be partners long term, and I don't
want you guys to keep wasting your resources on us
until we figured it out. And so that's when we
made the decision to pause that relationship.
Speaker 2 (19:41):
And pausing the relationship with the Mayo Clinic meant that
the newly debt free company would have to go find
a mass spectrometer of its own to be able to
complete their pilot studies and prove the technology. I have
to ask how much does one of these machines cost?
Speaker 4 (19:55):
Well, the one that we have is probably close to
a million dollars, okay, five hundred grand on the low
side up towards of a million dollars. But then you
need the expertise to run it.
Speaker 2 (20:03):
That ain't nothing.
Speaker 4 (20:04):
It ain't nothing, especially for a startup that has struggled
with financing.
Speaker 2 (20:08):
But you bought one anyway.
Speaker 4 (20:09):
We bought one anyway, and I can tell you we have made more progress on the analytical methoddevelopment side in two weeks than we did in the entirety of the company.
Speaker 2 (20:18):
Wow. Just because you controlled the entire process.
Speaker 4 (20:21):
We control the entire process. That's exactly it. So I
think that's really important, especially when it comes to MedTech,
that you do control the entire process.
Speaker 2 (20:28):
Are you still a pre revenue company?
Speaker 4 (20:30):
We are. I think we're going to look to change that next year. I think the amazing thing about ourtechnology is that we can predict the onset of disease. There's all kinds of trials going on where they'relooking for inflammatory biomarkers, and the drug companies associated with that believe that ourtechnology can capture those much more accurately and repeatably and much simpler as part of a lot ofthe clinical trials that these pharma companies are doing. So there's a lot of opportunity for near-termrevenue.
Speaker 2 (20:55):
Oh so for more than just lung cancer, it could
detect other things.
Speaker 4 (20:58):
Yeah, So the ability to predict pneumonia in post-op cardiac
surgery patients.
Speaker 2 (21:03):
Doesn't that kill people like as much as the surgery
is when they get pneumonia afterwards, it's a huge number, right, It's.
Speaker 4 (21:08):
A huge number, and it's a huge burden to the hospital.
It's a huge burden on the surgeons because no matter
how good they perform that surgery, there's a chance of
catching in the morning. Now, if we can predict it,
we can pre treat it and arguably prevent a lot
of those issues.
Speaker 2 (21:22):
Wow, So what's the status of your trials now?
Speaker 4 (21:25):
Today? We're in validation mode and we're getting really close
to finalizing that for a product that we can use
in predicting pneumonia, for example, in post patients cardiac collective surgery.
From there, we can prove that this breath technology is
a platform, meaning we can use it to diagnose a
lot of diseases. So my goal within five years is
not just to be able to screen for lung cancer
(21:47):
and pneumonia. But we know, and I don't know if
you've been following the health world, like Function Health, everybody's
paying thousands of dollars for the scans that are not
even have to approve because they want to know. There's
no better medium to detect and predict diseases than the breath.
It's immediate, it's not filtered, it comes directly from the blood,
directly from your airways, and we can look at that.
(22:07):
So in five years from now, I would hope that
everybody at a clinic will walk into their doctor's office,
take a breath test, get baseline levels, and every six
months or every year they take another one to see
if certain Bible markers are elevated, and if it is,
go see a doctor for a follow up.
Speaker 1 (22:27):
Ben the story just gets more and more amazing to me.
I mean, he had to take on so much work,
pay off all that debt just to get the company
up and running. Most people wouldn't have taken that on.
Speaker 3 (22:39):
No.
Speaker 2 (22:39):
In fact, his words, he basically bought his position a CEO.
He essentially bought in enough of the company that he's
running it. Yeah, and it was also brave because he's
not a medical expert. I mean, he had a lot
of medical experts there, but he said they couldn't find
someone who knew how to do all this stuff.
Speaker 1 (22:53):
So it's me, is there one area that you think
of when someone's coming in to determine whether it's an
investible prop position that they really need to key in
on more than others?
Speaker 2 (23:03):
It always starts with is it a good business idea
or not? Because if it's a bad business idea, nothing
else matters. Now there's a broad interpretation of what's a
good business idea. You can have a lousy product under
a great brand and if the brand resonates. Think how
many brands you've seen do well that don't make a
really high quality product. Yeah, as long as it's a
good business idea, I think it all comes down to
people and finances. It has to be the right business
(23:25):
person with the right skills at the right time, who
does the right thing.
Speaker 3 (23:28):
Yeah.
Speaker 1 (23:29):
What I thought really showed a lot of bullishness in
the space was deciding to walk away from Mayo Clinic.
And their machines and invest over a million dollars into
their own machines so that they could make significant progress.
Speaker 2 (23:46):
That was a lot, Yeah, to pause that partnership as
a high risk, high reward move for a small startup
like that. There's a credibility that comes from working with
an institution like that that they had to give up.
And in addition, they had to then go out and
spend a million bucks, which is not a small amount
of money for anybody, or certainly for that company. That
was a gutsy decision. That was them betting on themselves
and their idea, which I give them a lot of
credit for. But still they were trading speed to market
(24:09):
and confidence against credibility and cost. So it was like
lots of credibility but slow versus speed and confidence. And
that's a trade to make.
Speaker 1 (24:19):
Yeah, and that's a good one other people can use to.
Speaker 2 (24:22):
Yeah, And look, if it didn't come off, it probably
could have cost them the company. So if you own
a business, there might come these times where you have
to make a decision. Is this a bet the company moment?
Speaker 4 (24:30):
Right?
Speaker 2 (24:30):
Because it was, Yeah, and they bet the company and
it worked out. But you know, it doesn't always so
credit to them for it working out and good lesson
in terms of like no going in, am I ready
to make a bet the company moment?
Speaker 1 (24:42):
Can we talk a little bit about the data versus
instinct because they've been in validation mode for what feels
like forever. They're trying to do it in all the
right ways, with getting FDA approvals, running all of the
right clinical trials to make sure that this has all
the empirical evidence it needs behind it. But how how
long is too long to be validating before you've really
(25:06):
tried to bring it to market to these various kind
of target cohorts that you were talking about.
Speaker 2 (25:11):
Given the background that Ivan gave us and the fact
that they had some misfires, it's definitely been too long.
That said, in both medical device and drug development, these
time scales are not unusual. It's really different than a
consumer company got to be paid. And by the way,
a lot of people bemoan this, but that's part of
why the margins for the things that do work out
are so high, because it takes years, it's capital intensive,
(25:33):
and it's high risk, and a lot of times it
doesn't come off. In farmer they always say the first
pill cost six billion dollars in the second pill cost
a quarter. I get it. It's the nature of breakthrough development.
It's high risk, high reward. When you're trying to find
product market fit. In a consumer good, you can get
eighty percent there and be like, let's push the button
and see what happens. That's not a thing in medical devices,
(25:54):
like you have to go through clinical trials and you
have to prove it.
Speaker 1 (25:57):
I liked his idea about going after the end consumer
or going to clinics. Everyone's now getting so proactive about
functional health and owning their own health and doing their
own diagnostic testing.
Speaker 2 (26:07):
Yeah. I think it'll be a good idea. They're going
to want to only bring something to market that they
think has actual, real clinical value, so I think it
could help with their path to revenue. I don't think
they would ever be comfortable therefore short changing the validation process.
They genuinely are trying to solve the problem.
Speaker 1 (26:21):
And that tells you everything you need to know. When
he's investing a million dollars in this machine instead of
a Ferrari, he's serious about it.
Speaker 2 (26:30):
Yeah, another great one, Kathleen. I really hope they make it.
I think this is going to be a fantastic company
for the world. I hope they pull it off because
I think it'd be great for humanity.
Speaker 1 (26:37):
Yeah, this is a big one, attacking a huge problem
and trying to change the world for the better.
Speaker 2 (26:43):
Ivan, I want to ask you one last question. We
have lots of listeners who own small businesses or want
to start one. What's your one piece of advice for them.
Speaker 4 (26:52):
Be very deliberate about your fundamentals early because they can
compound faster than momentum itself. So don't skip structure at
the beginning of the company. It's really cheap. Pay five
hundred dollars and have a lawyer. Structure your company properly
so that there's clear ownership, accountability and a clean cap table,
especially if you're going to be looking to raise capital.
(27:13):
So as long as you structure it correctly. The goal
isn't to protect control, which I think a lot of
founders do. That's all they cared about, But especially for
first time founders, the goal is not to protect control,
is to build something durable with the right partners.
Speaker 2 (27:29):
Awesome, Ivan thank you for being on the show.
Speaker 4 (27:31):
This is terrific, Ben, Thank you very much. It was
an Honor.
Speaker 2 (27:37):
Thanks so much for listening to this episode of The Unshakeables.
If you liked this episode, please rate and review it.
In our next episode, we're talking to a veterinarian whose
entire life and business was built around one dog.
Speaker 1 (27:51):
I've had this dog for almost ten years. I can
never tell that part of the story without crying. It's
truly the moment that changed everything.
Speaker 2 (28:02):
I'm Ben Walter and this is The Unshakeables from Chase
for Business and Ruby Studio from iHeartMedia. We'll see you
back here soon.
Hosts And Creators
Ben Walter
Kathleen Griffith
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