August 14, 2025 • 37 mins
“Unlike radiation therapy that's got toxicity to it as it enters the body and exits the body and leaves large areas of necrotic tissue, histotripsy is very different in that there's generally no damage going in or going out.” HistoSonics’ CEO Mike Blue explains about the Edison system. He then in depth with BI analyst Matt Henriksson on how the Edison histotripsy technology destroys targeted cancer cells, how it differentiates from other cancer treatment options, and how the company plans to expand the use of Edison from lung cancer to kidney, pancreas and prostate indications. Also tune in to learn how the recent acquisition announcement can accelerate its momentum to build out the clinical data and commercialization of Edison.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:16):
Welcome to another episode of the Vanguards of Healthcare series.
My name is Matt Hendrickson, the medical technology analyst at
Bloomberg Intelligence, which is the in house equity research platform
of Bloomberg LP. We're pleased to have with us today
Mike Blue, CEO of Histosonics, a privately held medical device
company that is applying histotripsy to destroy liver tumors. Mike,
(00:38):
thank you for joining us today.
Speaker 2 (00:40):
Thanks Matt, great to be here.
Speaker 1 (00:42):
Likewise, and Mike, I'm just going to start with what
is histotripsy?
Speaker 2 (00:47):
Yeah, So, the technical way to describe it is we
use the mechanical properties of therapeutic focused ultrasound to mechanically fractionate,
ultimately liquefying targeted tissue. I would say, more broadly, think
of it as its external beam therapy. So we use
ultrasound energy outside of the body, very high power ultrasound energy,
(01:11):
so different than what you use to image into the body.
And we deliver these sound waves into the body and
when they collide at a focal point, they create pressures
that mechanically destroy and liquefy the targeted tissue. And then
the elegance of that is that the body then generally
knows how to naturally process that liquefied area. So unlike
(01:33):
radiation therapy that's got toxicity to it as it enters
the body and exits the body and leaves large areas
of necrotic tissue, HISTA trips is very different in that
there's generally no damage going in or going out. You're
liquefying tissue and ultimately the body process.
Speaker 1 (01:49):
Is that okay? Interesting because it also sounds very similar
to another kind of relatively new term in medtech. Are
not in a relatively new but understand term lithotripsy, And
you know, you see that in kind of the intravascular
lithotripsy cases now like shockwave things like that, And you know,
(02:10):
I see, you know, I look at lithotripsy and it
literally means breaking a stone. Is that the same kind
of breaking a tissue type of thing with is the
liver tissue?
Speaker 2 (02:20):
They're very similar, and I would differentiate them by lithotripsy
is is it's it's not as eloquent or elegant, So
it's shock scattering. It's exactly what you said, you're you're
blowing up, whether it's plaque in a in a blood
vessel or a kidney stone. Using lithotripsy to do that,
(02:41):
our precision is is significantly greater than that. That allows
us to fractionate tissue at a at a sub cellular level.
So instead of hitting a stone and and blowing it
in the chunks, as an example, we've got intellectual property
around how to use histotripsy in a kidney stone or
a gall bladderstone where we can erode it into a
(03:03):
fine dust. So the level of precision with histotripsy is
just far greater than anything that exists today, including lethotripsy,
which is a great technology. They're just similar but very different.
Speaker 1 (03:14):
Okay, And so basically we just have to have histotripsy
in our dictionaries as much as we have lithotripsy.
Speaker 2 (03:21):
As years from now, I promise you everyone will know
the word histo tripsy.
Speaker 1 (03:26):
Yeah, and years from now everyone will know. But today
and many years ago, that wasn't the case. So what
about the founding of histosonics and how did that come
about with finding this technology as a potential treatment option
or a way to destroy liver tumors. And then for
(03:47):
your path itself, what was your career trajectory that lended
you as the CEO role at Histosnics currently.
Speaker 2 (03:56):
So I'll start with the origins or genesis of to tripsy.
So invented by a group of ultrasound researchers at the
University of Michigan back in two thousand and one, So
this is twenty five years almost of development both at
the university and the company which was founded eight years later,
and it's a really cool story. They were asked. So
(04:18):
they were a group of ultrasound researchers in a hi
FU lab high intensity focused ultrasound using thermal properties of
therapeutic focused ultrasound to ultimately burn and a cross tissue
similar to radio frequency oblation of microwave. You just used
sound waves to do that. And they were approached by
a group of pediatric cardiologists to do a pretty invasive
(04:41):
procedure and children that's got high morbidity where they create
a pin sized hole in the pediatric symptom to create
a flow channel. And knowing that this group was doing
high FU, they asked if there was a way to
do this procedure not invasively, and really you need to
with incredible precision. You need to create this pin sized
to well, hiyfoo doesn't allow you to do that like
(05:02):
radiation therapy. It's got a number effector a gradient effect,
so you've got varying degrees as it spreads. And so
they knew they had to do something different, so theyverted
the way that Haifu was being done and they began
to use incredibly high amplitude. It started as industrial strength
power to deliver both bursts of energy at a focal point,
(05:22):
thousands of ultrasound pulses colliding at a single point, and
you're talking about millimeters in scale. And they created the
pin sized hole in a pediatric septum, and that began
the discovery of what else could this be used for.
And it was a couple of years after that they
literally coined the phrase histo tripsy histo meaning tissue tripsy
(05:45):
being the breakdown of and then the company was founded
years later. My background is now twenty five years in
the medical device sector, exclusively in interventional oncology. Worked for
the biggest company he's in the world. Started my career
at Boston Scientific, have worked for Metronic and Johnson and Johnson,
(06:05):
but my passion as early stage startup companies was fortunate
to be in two prior to this, super Dimension and
New Wave, which I was the commercial leader for sales
and marketing, ultimately got acquired by Metronic and Johnson and Johnson.
And then in twenty sixteen when New Wave was acquired
by Johnson and Johnson, there was an investor in new
(06:27):
Wave that a series a lead investor in Histo Sonics
and they were looking for a CEO with oncology and
device background, and it was just perfect timing for me
in my career. And honestly, I felt I've always represented
best in class evolutionary products and companies. And when I
(06:47):
first saw my first bubble cloud and we can talk
about that in a product demonstration, I thought, we have
the opportunity here if we do this the right way,
to literally revolutionize not only cancer care but human health.
Years from now, histor tripsy will be used everywhere in
the body, from the brain through the body for both
benign and malignant tissue. Which is why I say years
(07:08):
from now, everyone's going to know the word histotripsy.
Speaker 1 (07:11):
Yeah, and I think we'll definitely dive into the histotripsy
and the Edison system itself in a couple of minutes.
But you know, with your experience in the interventional oncology side,
how have you seen the treatment of liver cancer changed
throughout your twenty five years.
Speaker 2 (07:31):
Unfortunately, it hasn't changed much five year survivals so and
we need to distinguish a couple of things. First, liver
cancer is generally acc primary liver cancer, so when someone
says liver cancer, it's they're generally referring to hepatocellular car carcinoma,
which is primary liver cancer. Unfortunately, five year survival rates
(07:52):
are seventeen or eighteen percent. That has not changed. There
are new treatments for those patients, but none of them
are incredibly effective, otherwise we'd be changing the five year
survival rate. The reason for that is many are discovered
late at more advanced stages. So only twenty percent of
patients who have HCC are surgical candidates, so it means
(08:15):
eighty percent of them unfortunately or not. There's other things
that you can treat them with, but generally they just
continue to recur. There's a much more there's a much
larger patient population, however, who have tumors in their liver,
and it's important to distinguish from another primary origin. There's
a far greater number of those patients. So women with
(08:36):
breast cancer when it's metastatic, it'll oftentimes end up with
liver tumors, pancreatic cancer. Most times patients end up when
it's advanced, ends up with liver tumors, neuroendicome cancer, klangiocarcinoma.
We've treated well over thirty different types of pathologies cancer
of an origin that ends up in the liver. The
(08:57):
reason for that is that the liver is the largest
org that processes the most blood, and so you're processing blood,
you're processing nutrients, you're also processing cancer cells, and so
they deposit there, tumors develop there, and a lot of
these patients ultimately end of unfortunately pass away of liver failure.
That is a significant number of the patient population that
(09:18):
is totally underserved today where we're making a dramatic impact.
Speaker 1 (09:22):
That's actually interesting because yeah, because I always think, you know,
when you think of metastatic cancer, you know, and we're
talking about liver cancer, we're talking about how the cancer
is spread from the liver, but you make it sound
like it's the case where actually it's the cancer is
going elsewhere in the body and has been now in
the liver, and so now there's tumors in the liver.
Speaker 2 (09:40):
There are more women with metastatic breast cancer so breast
cancer is their primary and who have tumors in their
liver from the breast cancer than there are in the
US primary HCC liver cancer. So more women are actually
affected from their breast cancer than there are patients with
HCC in the US and Europe. So it's significant and
(10:02):
generally there's there's no option for them if they're advancing
to the liver. It generally means whatever chemotherapy, systemic therapy,
even immune therapy on is not effective. Otherwise it wouldn't
wouldn't be in the liver now, and you have liver
tumors and we provide a solution for those for those patients,
which is incredibly meaningful and the same is true for
pancreatic cancer and many others.
Speaker 1 (10:23):
Yeah, and so when I'm thinking then of like you know,
the first pharmaceutical option that comes to mind is usually
get true to that is that for also metastatic liver
cancer as well, or is that just for primary liver cancer.
Speaker 2 (10:37):
Cotrud To is for both primary and metastatic.
Speaker 1 (10:42):
Okay, Okay, so it is a treatment.
Speaker 2 (10:44):
Yeah, there's a lot of nuances and levels to our
to our story and what we do when we physio
mechanically break down these cells at a subcellular level and
then ultimately large volumes at a subcellular level, we also
significantly reduce pressures in those areas where the tumors are.
(11:07):
That reduction of pressure allows for better blood flow, and
our hope is we'll prove this out long term that
there's great synergies between what we do not invasively and
breaking down tissue and large tumors and then giving the
ability for a systemic therapy, whether it's chemotherapy or something
like the true to get to its target more effectively,
(11:28):
and then specifically with immunotherapy. We believe and have seen
this in the animal models. We do great synergies mechanistically,
they work slightly differently and they complement each other. So
long term, our hope is, of course we'd like we'd
love for patients to not have to take as much
systemic therapy, no matter what it is, because that often
has pretty significant side effects. But we also believe we
(11:51):
can do that through enabling just more effective treatments.
Speaker 1 (11:55):
Yeah, and I think that kind of is a good
segue for us at diving deeper into the Edison system
and what those treatment options look like. So we talk
about histotripsy, we talk about the cloud bubble. Exactly what
can we dive deeper into that cloud bubble because you know,
it's it seems like it just sounds, so you just
(12:19):
pointing it there and it makes a cloud bubble. But
it's got to be a much more complicated pathway for
the surgeons to understand what they're targeting things like that.
So if a patient is diagnosed with lung cancer, whether
it's primary, whether it's metastatic, what does the surgeon do
to get you from that point of diagnostics to the
(12:40):
actual getting to the surgery table and utilizing the Edison system.
Speaker 2 (12:44):
Yeah, So there's two significant parts to what we do.
The foundation of the company, which is histotripsy, and to
elaborate more on the bubbles that you refer to. So
it's a pressure threshold phenomena. So when these all when
I had meant that these ultrasound beams, incredibly high amplitude
ultrasound beams, they all converge and collide at a focal
(13:07):
point that is established through our therapy transducer. It's a
fixed focal length, but when they collide, we at some
point as they're colliding, we cross a pressure threshold. And
when we cross it, the physician who's doing most of
their work just at our console, at the user interface,
they see what looks like a bright light appear under ultrasound,
(13:32):
and that bright light is the bubble cloud. It's literally
a cloud of millions and millions of nanometer sized bubbles
that are instantaneously rapidly expanding and collapsing. And as they
as they expand and collapse, they are crushing. Back to
the word tripsy, they're crushing that tissue at a subcellular level.
(13:55):
That bubble cloud is created and it's static and when
it comes on in the physics sees it on our
user interface, it's instantaneous destruction of that targeted tissue. And
then we move it and we move it around the robot,
the robotic arm, which is the second part of the story,
the Edison robot, so hista tripsy. We create this cloud
of bubbles that's killing tissue at a subsear level, and
(14:17):
then the robot moves it through the prescribed volume that
the physician determines. So we have the foundation of the company,
which is hista tripsy. What we've developed as a company
is the Edison platform, And the goal when we began
development of the Edison system seven eight years ago was
(14:38):
to build a platform that was virtually finished when we
got our first FDA clearance, which is now in the liver,
but it was finished from the perspective of what can
it do next. It's a beam therapy, so conceptually they
theoretically it should be. It should be a beam can
go anywhere in the body, especially if you can get
through bone or obstruction, which we can. So the goal
(15:00):
was to build a system that could be used throughout
all these numbers of broad numbers, significt numbers of clinical
applications over time and do it quickly with the same system.
And so the Edison was designed to be virtually a
specialty agnostic. So today it's liver surgeons, it's interventional radiologist,
it's some radiation oncologist, but it's been designed that any
(15:24):
physician can use it. So urologists are now using it
to treat kidney tumors, pancreatic surgeons, or interventual radiologists for
pancreatic tumors, a urologist again for the pros state, it'll
be neurosurgeons in the brain. So it's been so it
was intentionally designed from the beginning to be used anywhere
in the body. So it's a mobile system. If it's
(15:45):
going to be used by any specialty, it also needs
to integrate into any procedural room. So if you wanted
to do it in the ore, you can do that.
It's mobile, it's on and wheels. It could be moved around,
so it could be moved around from operating room to
operating room, or in an interventional radiology suite, or in
a CT scanner, or in any simple procedural suite. Because
it's not invasive, we don't need a sterile environment. We
(16:05):
don't even need a clean environment because we never go
into the body, and so it can it can literally
be done anywhere, and so so that is what we
have designed to enable once we had our first clearance,
which we have in liver, to go as fast as
we can throughout all the clinical applications, and then it's
just clinical and regulatory consideration. How much data does the
(16:28):
FDA need to get an indication in a new application.
Speaker 1 (16:32):
Yeah, and let's let's dive deeper into that clinical data,
because that is the trend we're seeing at medtech, is
needing more clinical data to support an FDA approval, support reimbursement,
support the launch. The trial behind the FDA approval was
the Hope for Liver trial. What what did that trial
help demonstrate for the Edison system.
Speaker 2 (16:54):
So it's a it's a unique study in that all
those different pathologies that I'm mentioned we treated. So generally,
if you're to look at locally directed liver therapies, other therapies,
they're treating either HCC primary liver cancer or colorectal METS,
which is the most common type of metastatic tumor to deliver. Unfortunately,
(17:16):
fifty percent of patients with colorectal cancer have liver mets,
and so generally liver directed local regional therapies or drug
therapy are focused on one of those two. Our pivotal
clinical trial was far beyond that. We treated patients all
the cancers that I had mentioned, breast, prostate, pancreas, brain
(17:38):
cancer that had metastasized to the liver, uval melanoma, which
is oclear of cancer, that has metastasized the liver, so
as a broad spectrum of patients and primary cancers, and
the goal was to demonstrate that we could safely measured
by SAEs serious adverse events, safely target and any of
(18:01):
those different types of tumor types and that they didn't
recur or you didn't have local tumor progression, meaning we controlled,
we killed the tumor, and at least radiographically, a radiologist,
an independent radiologist would look at the films and say
that that tumor is dead and it's no longer there,
and so super excited that we just published our one
(18:22):
year data. So we're following these patients out to five years,
and our one year data shows a local tumor control,
meaning the tumor that we treated and destroyed. Again from
an independent reviewer radiologist, there's no enhancement of that area meeting.
There's no viable tumor that's over ninety percent, which compares
(18:42):
incredibly favorably to any other therapy that exists today, in fact,
including surgery. You can have surgery or even a transplant
and you get recurrences of tumors and so or at
least new metastatic tumors, and so we're incredible excited about
(19:02):
the early data that we have.
Speaker 1 (19:05):
Yeah, and actually, if I've read it correctly too, did
I also see in that journal article that the overall
survival at one year was seventy three percent for patients
with primary lung cancer and almost fifty percent for those
with metastatic cancer.
Speaker 2 (19:22):
Exactly, So, whether it was HCC or whether it was
a metastatic from another origin, that's right. And again that
compares very favorably with any other therapy or device that's
being used in the liver today. And there's a caveat
in that the patients that we were required to treat
for this first study were much more advanced than what
(19:45):
is in the data for other therapies. And the reason
for that the FDA, the agency had asked that we
not treat patients to have established potential treatment a standard
of care, so that they had to have either exhausted
all options or be intolerant to other options, which means
we were treating sicker patients, more advanced patients who couldn't
(20:07):
have other treatments. And the data that they were comparing
it to, and the data that you just compared it to,
is sort of standard of care. So generally those are
our earlier stage patients. So again, the data we think
is incredibly favorable.
Speaker 1 (20:20):
Yeah, and you know, it's you can't compare one year
to five year survival rates, but when you're seeing you know,
seventy three percent getting through the first year, it's that
looks like a positive first step to get to your
five year results, especially when we were talking about earlier
with a five year survival rate for lung cancer in
(20:40):
general is in the high teens only. So, like I said,
it's very exciting to see how that you know, the
two year up to the five year data looks for this.
As you know, we show in promising first year data
so far, and we.
Speaker 2 (20:53):
Know the appetite amongst the clinical community and patients themselves,
they're going to want data, and so we we are committed,
we're convicted on working with our academic partners to collect
that data. We've begun enrolling patients in what we call
our Boombox study. Boombox is designed to collect all the
(21:13):
different ways that our physician collaborators want to use histotripsy
because it's a non invasive beam therapy without toxicity, without
generally without side effects. It allows physicians to use it
in ways they've never been able to treat a patient.
And so, yes, what we're talking about right now is
curative intent. You want local tumor control because ase you're
(21:33):
trying to cure this person. And so that's when when
you talk about five year survival rates, that's the importance
of that type of data. So we're collecting that data
in Boombox. So if you register a patient who has
HCC primary liver cancer and you treat them with curative intent,
that gets registered into the Boombox study and we will
follow those patients out. It's obviously multi center. Most of
(21:55):
our users will be enrolling patients in Boombox and we'll
be to combine that data and ultimately look at five
year survival rates. But in addition to that, histachripsy is
being used in incredibly new ways that other technologies just
can't be used. And so even so you take you go,
you go through the disease progression, and you go all
the way down to patients who are UH terminal and
(22:19):
again patients with metastatic breast cancer, with with with pancreatic cancer.
It's very common. We're we're we're helping them live a
better life. Quality of life is really important. Because we
have a non invasive, non toxic therapy with almost no
side effects. We can relieve pain, We reduce pressures which
often build up in these livers and cause a lot
of pain. We can help a patient. The holy one
(22:43):
of the holy grails is we can treat them and
get them to a place where make their liver healthier,
reduced disease burdened, potentially make them resectible, which is still
considered you know, curative or transplantable. We've got some wonderful
case reports where we've shown patients who are unfortunately told
that they were terminal. You can imagine the anxiety. Everyone
(23:03):
knows that that anxiety. We all know someone and we've
literally treated them and gotten in to a point where
they could have a resection or a transplant with curative intent.
All of that data back to Boombox will be collected
in Boombox across all the different pathologies and so that
we'll be able to publish that data and demonstrate across
(23:23):
the use cases, pathologies, all the different ways it's being
used that it either improves quality of life, extends life,
and compares very favorably to all the other modalities.
Speaker 1 (23:33):
Okay, that's interesting. Actually I had a very naive question,
but I believe you answered it for me. When you
talk about cure to intend, my intial thought was like, well,
aren't all these patients a cure to intend patient? But
then you talked about the terminal cases. Are those terminal
cases the ones that are excluded when you say that
you're only including the cure to intend patients in the
(23:53):
Boombox study.
Speaker 2 (23:55):
We will include all patients because we want to measure
a variety of of different outcomes, starting with quality of life?
Do we put this person in a better situation they
were in? And I will tell you know this began
again because it's non invasive and non toxic. Patients awake
from their procedures and generally they just go home and
(24:15):
if you talk to them, we've got we're collecting libraries
of patient testimonials. They'll generally tell you they feel really good.
And if they prior to the procedure, we're having discomfort
or pain and the goal was to eliminate that pain
because of a pressure built up or the location of
the tumor, they'll generally say and we've got to collect
this data in an organized fashion and get it published.
(24:36):
But they'll generally tell you almost immediately post treatment, oh
my god, I feel better. We get text messages from
spouse saying my husband or wife hasn't felt this good
in years. It's incredibly gratifying and it's really important for
a patient who has disease that unfortunately is not curative.
You know, the challenge with the liver, whether it's primary
(24:56):
or not, is that these patients often recur, and they
recur frequently. The benefit of histotripsy long term in the liver,
which is why we started and building our beachhead here.
You have a non invasive, non toxic solution for patients
who are going to continually get unfortunately new liver tumors
(25:16):
and so at some point, and it's a massive paradigm shift.
At some point, these patients are told there's nothing for you.
And the reason for that is everything else is invasive,
toxic or with side effects. Literally anything else you can
think of, from a surgical procedure to a device to
a drug, all of it toxicity, so all of it
has upper limits when you have to stop. That's what
(25:40):
makes histo tripsy so unique and so paradigm shifting, you
can repeat it over and over as long as that
the disease progression isn't too significant. Unfortunately, those patients exist too,
but the repeatability of this is like nothing that exists today.
And we're only talking about the liver, but imagine that
opportunity through out the entire body, which when we get
(26:01):
to the financing, I think is what excites so many
our existing investors as well as the new investors is
the future and we should all listening here as part
of this and the excitement around what the future means
if you have a benign lesion or a malignant lesion,
to be able to treat not invasively, and if you
need it again it's there for you as well. I
(26:24):
genuinely believe there's going to day where we're going to
look back and see I can't believe we used to
open up patients for that, And so that's where we're headed.
Speaker 1 (26:33):
Yeah, and let's jump into the business side of things.
Then you've got FDA approval last year. What has been
the commercial strategy for bringing the Edison system to the market.
Speaker 2 (26:45):
So we have a very skilled group of capital sales reps.
These are folks that have been selling high end capital equipment,
mostly robotics, in the industry for the last ten twenty years.
And the importance to that is that, you know, the
economics are never healthy in the US hospital system ecosystem.
(27:09):
It's I've been doing this for twenty five years and
I can't remember a year when someone said, well, the
economic health of hospitals is amazing right now. It's easy
to sell tech, high end technology and capital equipment. It's
really complex and it can be it can be very
time consuming as well. So we've got a group of
very skilled professionals, very first in the industry to help
launch the DaVinci robot with Intuitive Surgical twenty years ago
(27:32):
as one example. And the importance to that is you
really need people who can get to the c suite.
That's where these decisions are made. If you're going to
buy a you know, million dollar or more piece of
capital equipment, it needs it needs to be approved by
someone in the C suite. So you need people who
can operate and present and show value in in that
(27:52):
level of hospital administration to compel them that they're doing
the right thing for the patients that they support and treat.
And so it's it's a very skilled professional team sales
team that we've hired, and then we've got a group
of incredible educators who are there to walk a physician
and staff through training into adoption. Is they do procedures
(28:16):
ultimately want to get them proficient very quickly so that
they can be independent of us. And it's a group
of incredible professionals who a lot of whom have worked
in a hospital setting before. They're a nurse or a
radiology technologist or a sonographer and have now are in industry.
Speaker 1 (28:36):
And then you know the other thing too. This has
been some of the news, and we'll get the big
news is obviously the recent Well acquisition. But the other
news I saw too, which with regards to sales and
the business model is increase reimbursement coverage and I recently
got Blue Cross blue Shield coverage. How has the reimbursement
(28:58):
overall been in kind of expanding this histotripsy technology for
treating lung cancer.
Speaker 2 (29:04):
Everything you just mentioned there are really important. It's like
a puzzle that needs to come together to make a
launch of a new novel, disruptive piece of capital equipment,
especially succeed and a therapy, a therapy that is new
to the world and still has a ways to go
in terms of collecting clinical data. So you need all
(29:26):
of these elements to form the recipe for a very
successful commercial launch. And so, knowing how important reimbursement was
going to be to the hospital economic model, back to
needing capital, sales reps who can get to the c
suite to make the right presentation, we began working on
reimbursement five or six years ago, and the process is
(29:48):
you work with the AMA to get to demonstrate to
them that you've got something new and unique and disruptive
and valuable, which we were able to successfully do. So
the AMA issued us a code specific to histotripsy of
malignant liver tumors, and then you work with cms to
establish a payment and we have been fortunate that they
(30:09):
see the value in the technology. The national Medicare average
has been seventeen dollars that is commensurate with surgery or
radiation therapy, which we think is appropriately valued based on
the procedure. And so the economic model for the hospital
(30:32):
generally works really well, and they generally look for a
payback period. A hospital will in less than three years
and we achieve that hurdle. In addition to and we'll
wait for the final rule this October, but the proposed
rule from CMS is that they will be taking reimbursement
actually up for us a little bit. So we think
that's the right decision clearly, and it just means better
(30:56):
access for patients around the country. And then in addition
to that, we've had some really fortunate positive coverage decisions
from commercial payers and we expect more and more of those,
but the most recent and they should get a shout
out and credit is high marked cross blue shield of
New York, Pennsylvania, Delaware, and West Virginia who have a
(31:18):
positive coverage decision, which is great for the seven million
lives that they cover in those states.
Speaker 1 (31:24):
Yeah. I liked how you called it a puzzle piece
of everything, the clinical data, the reimbursement, because it is
so true with medtech, how you need all these things
to work together to get an actual product out and commercialized.
I also don't think you expected me to wait until
the thirty two minute mark to talk about the big
acquisition news. But you know, a two point twenty five
(31:47):
billion dollar acquisition that's a big, big development for histosonics.
So how do you combine all those puzzle pieces together,
all the developments that histo trip so he can do
in the long run with this new acquisition. How did
all those pieces together play out so where you see
(32:09):
histosonics and histotripsy itself in five to ten years.
Speaker 2 (32:14):
Yeah, And I don't know if we hadn't have been
so thoughtful years ago, well before launch, making sure that
we had each piece as much as we could solve
for that would all come together if we'd be having
this conversation right now. And it all starts with the
patient experience. You know, the patient experience has for this
type of deal had to be exceptional. And you know
(32:37):
these investors, we've known a lot of them for well
over a year since launch. They talked to our customers
and sometimes they talked to physicians who were willing to
give their testimonial. I mean, it all starts with utilization,
how it's being used, and what are the patient outcomes,
and so they were very confident in those. And then
(32:58):
clearly the business is really important too. And so I mean,
if you look, if you compare our launch over the
first year or eighteen months, it's historic when you compare
it to companies and we love to use them as
our analog is Intuitive Surgical. I mean, it's incredibly impressive company.
Eight billion in revenue, one hundred and eighty billion dollars
(33:22):
market cap. You know, if you look at the first
couple of years of launch, we compare incredibly favorably, or
the Makeo surgical robot that was acquired by Striker we complete,
we can compare incredibly favorably. It is pretty historic in
terms of what we've been able to achieve in the
first year. So and that happened because we've got all
(33:43):
the other elements in place, and so that's how we
were able to put this consortium together and compel them
to make such an incredible offer to be majority owners
in the company. And this group is global, This group
has deep pockets. This group is convicted, like we are
as a company, that we can change the world, that
(34:04):
we can literally change healthcare in the future. It will
be using histotripsy throughout the body, not invasively when you
need unwanted tissue removed. And so the thesis here is
that by keeping the company private longer and by accessing
this network and their ability to invest, continue to and
desire to continue to invest in this company and then
(34:25):
their global connections and access worldwide that we can significantly
accelerate the enterprise, growing the enterprise value of this company,
d risk some of these future clinical indications, and then
accelerate our work into these other clinical indications. There are
(34:46):
other projects that we don't have funded today that are
incredibly significant unmet clinical needs that we know we can address.
We just need the financing to be able to put
resources to the projects and so use of proceeds we'll
go to increased globalization and scale as well as putting
(35:09):
teams together to form projects to accelerate other clinical applications.
You can think future opportunities, and we talk about it
all the time. Is my role is to create options
for the company, for our shareholders, for our employees, and
the more indications that we access and turn on, the
larger the markets get, where the larger the enterprise value
(35:31):
of our company gets. And you also begin to de
risk some of those clinical indications. So that gives us
options to appropriately time an IPO or another financing. But
the goal is to just continue to provide other opportunities
for the company.
Speaker 1 (35:48):
Yeah, and I think at the end of the day,
if your comparables are Da Vinci and the Maco Robotics
systems in their early days. It sounds like a very
promising opportunity for history.
Speaker 2 (35:59):
They're pretty good.
Speaker 1 (36:00):
Agree, it's very very good compsent deed, and definitely once
has me looking forward to an update a year from
now to see how the business continues to grow and expand.
But Mike, thanks so much for joining us today. I
appreciate you coming in.
Speaker 2 (36:13):
Oh, thank you, Matt. I really appreciate your interest. This
was fun.
Speaker 1 (36:16):
Yes, and thank you to our listeners for tuning in today,
and we hope you join us for future episodes. If
you'd like to stay up to date, you could click
the subscribe button on Spotify or your favorite streaming platform.
Take care,
Welcome to another episode of the Vanguards of Healthcare series.
My name is Matt Hendrickson, the medical technology analyst at
Bloomberg Intelligence, which is the in house equity research platform
of Bloomberg LP. We're pleased to have with us today
Mike Blue, CEO of Histosonics, a privately held medical device
company that is applying histotripsy to destroy liver tumors. Mike,
(00:38):
thank you for joining us today.
Speaker 2 (00:40):
Thanks Matt, great to be here.
Speaker 1 (00:42):
Likewise, and Mike, I'm just going to start with what
is histotripsy?
Speaker 2 (00:47):
Yeah, So, the technical way to describe it is we
use the mechanical properties of therapeutic focused ultrasound to mechanically fractionate,
ultimately liquefying targeted tissue. I would say, more broadly, think
of it as its external beam therapy. So we use
ultrasound energy outside of the body, very high power ultrasound energy,
(01:11):
so different than what you use to image into the body.
And we deliver these sound waves into the body and
when they collide at a focal point, they create pressures
that mechanically destroy and liquefy the targeted tissue. And then
the elegance of that is that the body then generally
knows how to naturally process that liquefied area. So unlike
(01:33):
radiation therapy that's got toxicity to it as it enters
the body and exits the body and leaves large areas
of necrotic tissue, HISTA trips is very different in that
there's generally no damage going in or going out. You're
liquefying tissue and ultimately the body process.
Speaker 1 (01:49):
Is that okay? Interesting because it also sounds very similar
to another kind of relatively new term in medtech. Are
not in a relatively new but understand term lithotripsy, And
you know, you see that in kind of the intravascular
lithotripsy cases now like shockwave things like that, And you know,
(02:10):
I see, you know, I look at lithotripsy and it
literally means breaking a stone. Is that the same kind
of breaking a tissue type of thing with is the
liver tissue?
Speaker 2 (02:20):
They're very similar, and I would differentiate them by lithotripsy
is is it's it's not as eloquent or elegant, So
it's shock scattering. It's exactly what you said, you're you're
blowing up, whether it's plaque in a in a blood
vessel or a kidney stone. Using lithotripsy to do that,
(02:41):
our precision is is significantly greater than that. That allows
us to fractionate tissue at a at a sub cellular level.
So instead of hitting a stone and and blowing it
in the chunks, as an example, we've got intellectual property
around how to use histotripsy in a kidney stone or
a gall bladderstone where we can erode it into a
(03:03):
fine dust. So the level of precision with histotripsy is
just far greater than anything that exists today, including lethotripsy,
which is a great technology. They're just similar but very different.
Speaker 1 (03:14):
Okay, And so basically we just have to have histotripsy
in our dictionaries as much as we have lithotripsy.
Speaker 2 (03:21):
As years from now, I promise you everyone will know
the word histo tripsy.
Speaker 1 (03:26):
Yeah, and years from now everyone will know. But today
and many years ago, that wasn't the case. So what
about the founding of histosonics and how did that come
about with finding this technology as a potential treatment option
or a way to destroy liver tumors. And then for
(03:47):
your path itself, what was your career trajectory that lended
you as the CEO role at Histosnics currently.
Speaker 2 (03:56):
So I'll start with the origins or genesis of to tripsy.
So invented by a group of ultrasound researchers at the
University of Michigan back in two thousand and one, So
this is twenty five years almost of development both at
the university and the company which was founded eight years later,
and it's a really cool story. They were asked. So
(04:18):
they were a group of ultrasound researchers in a hi
FU lab high intensity focused ultrasound using thermal properties of
therapeutic focused ultrasound to ultimately burn and a cross tissue
similar to radio frequency oblation of microwave. You just used
sound waves to do that. And they were approached by
a group of pediatric cardiologists to do a pretty invasive
(04:41):
procedure and children that's got high morbidity where they create
a pin sized hole in the pediatric symptom to create
a flow channel. And knowing that this group was doing
high FU, they asked if there was a way to
do this procedure not invasively, and really you need to
with incredible precision. You need to create this pin sized
to well, hiyfoo doesn't allow you to do that like
(05:02):
radiation therapy. It's got a number effector a gradient effect,
so you've got varying degrees as it spreads. And so
they knew they had to do something different, so theyverted
the way that Haifu was being done and they began
to use incredibly high amplitude. It started as industrial strength
power to deliver both bursts of energy at a focal point,
(05:22):
thousands of ultrasound pulses colliding at a single point, and
you're talking about millimeters in scale. And they created the
pin sized hole in a pediatric septum, and that began
the discovery of what else could this be used for.
And it was a couple of years after that they
literally coined the phrase histo tripsy histo meaning tissue tripsy
(05:45):
being the breakdown of and then the company was founded
years later. My background is now twenty five years in
the medical device sector, exclusively in interventional oncology. Worked for
the biggest company he's in the world. Started my career
at Boston Scientific, have worked for Metronic and Johnson and Johnson,
(06:05):
but my passion as early stage startup companies was fortunate
to be in two prior to this, super Dimension and
New Wave, which I was the commercial leader for sales
and marketing, ultimately got acquired by Metronic and Johnson and Johnson.
And then in twenty sixteen when New Wave was acquired
by Johnson and Johnson, there was an investor in new
(06:27):
Wave that a series a lead investor in Histo Sonics
and they were looking for a CEO with oncology and
device background, and it was just perfect timing for me
in my career. And honestly, I felt I've always represented
best in class evolutionary products and companies. And when I
(06:47):
first saw my first bubble cloud and we can talk
about that in a product demonstration, I thought, we have
the opportunity here if we do this the right way,
to literally revolutionize not only cancer care but human health.
Years from now, histor tripsy will be used everywhere in
the body, from the brain through the body for both
benign and malignant tissue. Which is why I say years
(07:08):
from now, everyone's going to know the word histotripsy.
Speaker 1 (07:11):
Yeah, and I think we'll definitely dive into the histotripsy
and the Edison system itself in a couple of minutes.
But you know, with your experience in the interventional oncology side,
how have you seen the treatment of liver cancer changed
throughout your twenty five years.
Speaker 2 (07:31):
Unfortunately, it hasn't changed much five year survivals so and
we need to distinguish a couple of things. First, liver
cancer is generally acc primary liver cancer, so when someone
says liver cancer, it's they're generally referring to hepatocellular car carcinoma,
which is primary liver cancer. Unfortunately, five year survival rates
(07:52):
are seventeen or eighteen percent. That has not changed. There
are new treatments for those patients, but none of them
are incredibly effective, otherwise we'd be changing the five year
survival rate. The reason for that is many are discovered
late at more advanced stages. So only twenty percent of
patients who have HCC are surgical candidates, so it means
(08:15):
eighty percent of them unfortunately or not. There's other things
that you can treat them with, but generally they just
continue to recur. There's a much more there's a much
larger patient population, however, who have tumors in their liver,
and it's important to distinguish from another primary origin. There's
a far greater number of those patients. So women with
(08:36):
breast cancer when it's metastatic, it'll oftentimes end up with
liver tumors, pancreatic cancer. Most times patients end up when
it's advanced, ends up with liver tumors, neuroendicome cancer, klangiocarcinoma.
We've treated well over thirty different types of pathologies cancer
of an origin that ends up in the liver. The
(08:57):
reason for that is that the liver is the largest
org that processes the most blood, and so you're processing blood,
you're processing nutrients, you're also processing cancer cells, and so
they deposit there, tumors develop there, and a lot of
these patients ultimately end of unfortunately pass away of liver failure.
That is a significant number of the patient population that
(09:18):
is totally underserved today where we're making a dramatic impact.
Speaker 1 (09:22):
That's actually interesting because yeah, because I always think, you know,
when you think of metastatic cancer, you know, and we're
talking about liver cancer, we're talking about how the cancer
is spread from the liver, but you make it sound
like it's the case where actually it's the cancer is
going elsewhere in the body and has been now in
the liver, and so now there's tumors in the liver.
Speaker 2 (09:40):
There are more women with metastatic breast cancer so breast
cancer is their primary and who have tumors in their
liver from the breast cancer than there are in the
US primary HCC liver cancer. So more women are actually
affected from their breast cancer than there are patients with
HCC in the US and Europe. So it's significant and
(10:02):
generally there's there's no option for them if they're advancing
to the liver. It generally means whatever chemotherapy, systemic therapy,
even immune therapy on is not effective. Otherwise it wouldn't
wouldn't be in the liver now, and you have liver
tumors and we provide a solution for those for those patients,
which is incredibly meaningful and the same is true for
pancreatic cancer and many others.
Speaker 1 (10:23):
Yeah, and so when I'm thinking then of like you know,
the first pharmaceutical option that comes to mind is usually
get true to that is that for also metastatic liver
cancer as well, or is that just for primary liver cancer.
Speaker 2 (10:37):
Cotrud To is for both primary and metastatic.
Speaker 1 (10:42):
Okay, Okay, so it is a treatment.
Speaker 2 (10:44):
Yeah, there's a lot of nuances and levels to our
to our story and what we do when we physio
mechanically break down these cells at a subcellular level and
then ultimately large volumes at a subcellular level, we also
significantly reduce pressures in those areas where the tumors are.
(11:07):
That reduction of pressure allows for better blood flow, and
our hope is we'll prove this out long term that
there's great synergies between what we do not invasively and
breaking down tissue and large tumors and then giving the
ability for a systemic therapy, whether it's chemotherapy or something
like the true to get to its target more effectively,
(11:28):
and then specifically with immunotherapy. We believe and have seen
this in the animal models. We do great synergies mechanistically,
they work slightly differently and they complement each other. So
long term, our hope is, of course we'd like we'd
love for patients to not have to take as much
systemic therapy, no matter what it is, because that often
has pretty significant side effects. But we also believe we
(11:51):
can do that through enabling just more effective treatments.
Speaker 1 (11:55):
Yeah, and I think that kind of is a good
segue for us at diving deeper into the Edison system
and what those treatment options look like. So we talk
about histotripsy, we talk about the cloud bubble. Exactly what
can we dive deeper into that cloud bubble because you know,
it's it seems like it just sounds, so you just
(12:19):
pointing it there and it makes a cloud bubble. But
it's got to be a much more complicated pathway for
the surgeons to understand what they're targeting things like that.
So if a patient is diagnosed with lung cancer, whether
it's primary, whether it's metastatic, what does the surgeon do
to get you from that point of diagnostics to the
(12:40):
actual getting to the surgery table and utilizing the Edison system.
Speaker 2 (12:44):
Yeah, So there's two significant parts to what we do.
The foundation of the company, which is histotripsy, and to
elaborate more on the bubbles that you refer to. So
it's a pressure threshold phenomena. So when these all when
I had meant that these ultrasound beams, incredibly high amplitude
ultrasound beams, they all converge and collide at a focal
(13:07):
point that is established through our therapy transducer. It's a
fixed focal length, but when they collide, we at some
point as they're colliding, we cross a pressure threshold. And
when we cross it, the physician who's doing most of
their work just at our console, at the user interface,
they see what looks like a bright light appear under ultrasound,
(13:32):
and that bright light is the bubble cloud. It's literally
a cloud of millions and millions of nanometer sized bubbles
that are instantaneously rapidly expanding and collapsing. And as they
as they expand and collapse, they are crushing. Back to
the word tripsy, they're crushing that tissue at a subcellular level.
(13:55):
That bubble cloud is created and it's static and when
it comes on in the physics sees it on our
user interface, it's instantaneous destruction of that targeted tissue. And
then we move it and we move it around the robot,
the robotic arm, which is the second part of the story,
the Edison robot, so hista tripsy. We create this cloud
of bubbles that's killing tissue at a subsear level, and
(14:17):
then the robot moves it through the prescribed volume that
the physician determines. So we have the foundation of the company,
which is hista tripsy. What we've developed as a company
is the Edison platform, And the goal when we began
development of the Edison system seven eight years ago was
(14:38):
to build a platform that was virtually finished when we
got our first FDA clearance, which is now in the liver,
but it was finished from the perspective of what can
it do next. It's a beam therapy, so conceptually they
theoretically it should be. It should be a beam can
go anywhere in the body, especially if you can get
through bone or obstruction, which we can. So the goal
(15:00):
was to build a system that could be used throughout
all these numbers of broad numbers, significt numbers of clinical
applications over time and do it quickly with the same system.
And so the Edison was designed to be virtually a
specialty agnostic. So today it's liver surgeons, it's interventional radiologist,
it's some radiation oncologist, but it's been designed that any
(15:24):
physician can use it. So urologists are now using it
to treat kidney tumors, pancreatic surgeons, or interventual radiologists for
pancreatic tumors, a urologist again for the pros state, it'll
be neurosurgeons in the brain. So it's been so it
was intentionally designed from the beginning to be used anywhere
in the body. So it's a mobile system. If it's
(15:45):
going to be used by any specialty, it also needs
to integrate into any procedural room. So if you wanted
to do it in the ore, you can do that.
It's mobile, it's on and wheels. It could be moved around,
so it could be moved around from operating room to
operating room, or in an interventional radiology suite, or in
a CT scanner, or in any simple procedural suite. Because
it's not invasive, we don't need a sterile environment. We
(16:05):
don't even need a clean environment because we never go
into the body, and so it can it can literally
be done anywhere, and so so that is what we
have designed to enable once we had our first clearance,
which we have in liver, to go as fast as
we can throughout all the clinical applications, and then it's
just clinical and regulatory consideration. How much data does the
(16:28):
FDA need to get an indication in a new application.
Speaker 1 (16:32):
Yeah, and let's let's dive deeper into that clinical data,
because that is the trend we're seeing at medtech, is
needing more clinical data to support an FDA approval, support reimbursement,
support the launch. The trial behind the FDA approval was
the Hope for Liver trial. What what did that trial
help demonstrate for the Edison system.
Speaker 2 (16:54):
So it's a it's a unique study in that all
those different pathologies that I'm mentioned we treated. So generally,
if you're to look at locally directed liver therapies, other therapies,
they're treating either HCC primary liver cancer or colorectal METS,
which is the most common type of metastatic tumor to deliver. Unfortunately,
(17:16):
fifty percent of patients with colorectal cancer have liver mets,
and so generally liver directed local regional therapies or drug
therapy are focused on one of those two. Our pivotal
clinical trial was far beyond that. We treated patients all
the cancers that I had mentioned, breast, prostate, pancreas, brain
(17:38):
cancer that had metastasized to the liver, uval melanoma, which
is oclear of cancer, that has metastasized the liver, so
as a broad spectrum of patients and primary cancers, and
the goal was to demonstrate that we could safely measured
by SAEs serious adverse events, safely target and any of
(18:01):
those different types of tumor types and that they didn't
recur or you didn't have local tumor progression, meaning we controlled,
we killed the tumor, and at least radiographically, a radiologist,
an independent radiologist would look at the films and say
that that tumor is dead and it's no longer there,
and so super excited that we just published our one
(18:22):
year data. So we're following these patients out to five years,
and our one year data shows a local tumor control,
meaning the tumor that we treated and destroyed. Again from
an independent reviewer radiologist, there's no enhancement of that area meeting.
There's no viable tumor that's over ninety percent, which compares
(18:42):
incredibly favorably to any other therapy that exists today, in fact,
including surgery. You can have surgery or even a transplant
and you get recurrences of tumors and so or at
least new metastatic tumors, and so we're incredible excited about
(19:02):
the early data that we have.
Speaker 1 (19:05):
Yeah, and actually, if I've read it correctly too, did
I also see in that journal article that the overall
survival at one year was seventy three percent for patients
with primary lung cancer and almost fifty percent for those
with metastatic cancer.
Speaker 2 (19:22):
Exactly, So, whether it was HCC or whether it was
a metastatic from another origin, that's right. And again that
compares very favorably with any other therapy or device that's
being used in the liver today. And there's a caveat
in that the patients that we were required to treat
for this first study were much more advanced than what
(19:45):
is in the data for other therapies. And the reason
for that the FDA, the agency had asked that we
not treat patients to have established potential treatment a standard
of care, so that they had to have either exhausted
all options or be intolerant to other options, which means
we were treating sicker patients, more advanced patients who couldn't
(20:07):
have other treatments. And the data that they were comparing
it to, and the data that you just compared it to,
is sort of standard of care. So generally those are
our earlier stage patients. So again, the data we think
is incredibly favorable.
Speaker 1 (20:20):
Yeah, and you know, it's you can't compare one year
to five year survival rates, but when you're seeing you know,
seventy three percent getting through the first year, it's that
looks like a positive first step to get to your
five year results, especially when we were talking about earlier
with a five year survival rate for lung cancer in
(20:40):
general is in the high teens only. So, like I said,
it's very exciting to see how that you know, the
two year up to the five year data looks for this.
As you know, we show in promising first year data
so far, and we.
Speaker 2 (20:53):
Know the appetite amongst the clinical community and patients themselves,
they're going to want data, and so we we are committed,
we're convicted on working with our academic partners to collect
that data. We've begun enrolling patients in what we call
our Boombox study. Boombox is designed to collect all the
(21:13):
different ways that our physician collaborators want to use histotripsy
because it's a non invasive beam therapy without toxicity, without
generally without side effects. It allows physicians to use it
in ways they've never been able to treat a patient.
And so, yes, what we're talking about right now is
curative intent. You want local tumor control because ase you're
(21:33):
trying to cure this person. And so that's when when
you talk about five year survival rates, that's the importance
of that type of data. So we're collecting that data
in Boombox. So if you register a patient who has
HCC primary liver cancer and you treat them with curative intent,
that gets registered into the Boombox study and we will
follow those patients out. It's obviously multi center. Most of
(21:55):
our users will be enrolling patients in Boombox and we'll
be to combine that data and ultimately look at five
year survival rates. But in addition to that, histachripsy is
being used in incredibly new ways that other technologies just
can't be used. And so even so you take you go,
you go through the disease progression, and you go all
the way down to patients who are UH terminal and
(22:19):
again patients with metastatic breast cancer, with with with pancreatic cancer.
It's very common. We're we're we're helping them live a
better life. Quality of life is really important. Because we
have a non invasive, non toxic therapy with almost no
side effects. We can relieve pain, We reduce pressures which
often build up in these livers and cause a lot
of pain. We can help a patient. The holy one
(22:43):
of the holy grails is we can treat them and
get them to a place where make their liver healthier,
reduced disease burdened, potentially make them resectible, which is still
considered you know, curative or transplantable. We've got some wonderful
case reports where we've shown patients who are unfortunately told
that they were terminal. You can imagine the anxiety. Everyone
(23:03):
knows that that anxiety. We all know someone and we've
literally treated them and gotten in to a point where
they could have a resection or a transplant with curative intent.
All of that data back to Boombox will be collected
in Boombox across all the different pathologies and so that
we'll be able to publish that data and demonstrate across
(23:23):
the use cases, pathologies, all the different ways it's being
used that it either improves quality of life, extends life,
and compares very favorably to all the other modalities.
Speaker 1 (23:33):
Okay, that's interesting. Actually I had a very naive question,
but I believe you answered it for me. When you
talk about cure to intend, my intial thought was like, well,
aren't all these patients a cure to intend patient? But
then you talked about the terminal cases. Are those terminal
cases the ones that are excluded when you say that
you're only including the cure to intend patients in the
(23:53):
Boombox study.
Speaker 2 (23:55):
We will include all patients because we want to measure
a variety of of different outcomes, starting with quality of life?
Do we put this person in a better situation they
were in? And I will tell you know this began
again because it's non invasive and non toxic. Patients awake
from their procedures and generally they just go home and
(24:15):
if you talk to them, we've got we're collecting libraries
of patient testimonials. They'll generally tell you they feel really good.
And if they prior to the procedure, we're having discomfort
or pain and the goal was to eliminate that pain
because of a pressure built up or the location of
the tumor, they'll generally say and we've got to collect
this data in an organized fashion and get it published.
(24:36):
But they'll generally tell you almost immediately post treatment, oh
my god, I feel better. We get text messages from
spouse saying my husband or wife hasn't felt this good
in years. It's incredibly gratifying and it's really important for
a patient who has disease that unfortunately is not curative.
You know, the challenge with the liver, whether it's primary
(24:56):
or not, is that these patients often recur, and they
recur frequently. The benefit of histotripsy long term in the liver,
which is why we started and building our beachhead here.
You have a non invasive, non toxic solution for patients
who are going to continually get unfortunately new liver tumors
(25:16):
and so at some point, and it's a massive paradigm shift.
At some point, these patients are told there's nothing for you.
And the reason for that is everything else is invasive,
toxic or with side effects. Literally anything else you can
think of, from a surgical procedure to a device to
a drug, all of it toxicity, so all of it
has upper limits when you have to stop. That's what
(25:40):
makes histo tripsy so unique and so paradigm shifting, you
can repeat it over and over as long as that
the disease progression isn't too significant. Unfortunately, those patients exist too,
but the repeatability of this is like nothing that exists today.
And we're only talking about the liver, but imagine that
opportunity through out the entire body, which when we get
(26:01):
to the financing, I think is what excites so many
our existing investors as well as the new investors is
the future and we should all listening here as part
of this and the excitement around what the future means
if you have a benign lesion or a malignant lesion,
to be able to treat not invasively, and if you
need it again it's there for you as well. I
(26:24):
genuinely believe there's going to day where we're going to
look back and see I can't believe we used to
open up patients for that, And so that's where we're headed.
Speaker 1 (26:33):
Yeah, and let's jump into the business side of things.
Then you've got FDA approval last year. What has been
the commercial strategy for bringing the Edison system to the market.
Speaker 2 (26:45):
So we have a very skilled group of capital sales reps.
These are folks that have been selling high end capital equipment,
mostly robotics, in the industry for the last ten twenty years.
And the importance to that is that, you know, the
economics are never healthy in the US hospital system ecosystem.
(27:09):
It's I've been doing this for twenty five years and
I can't remember a year when someone said, well, the
economic health of hospitals is amazing right now. It's easy
to sell tech, high end technology and capital equipment. It's
really complex and it can be it can be very
time consuming as well. So we've got a group of
very skilled professionals, very first in the industry to help
launch the DaVinci robot with Intuitive Surgical twenty years ago
(27:32):
as one example. And the importance to that is you
really need people who can get to the c suite.
That's where these decisions are made. If you're going to
buy a you know, million dollar or more piece of
capital equipment, it needs it needs to be approved by
someone in the C suite. So you need people who
can operate and present and show value in in that
(27:52):
level of hospital administration to compel them that they're doing
the right thing for the patients that they support and treat.
And so it's it's a very skilled professional team sales
team that we've hired, and then we've got a group
of incredible educators who are there to walk a physician
and staff through training into adoption. Is they do procedures
(28:16):
ultimately want to get them proficient very quickly so that
they can be independent of us. And it's a group
of incredible professionals who a lot of whom have worked
in a hospital setting before. They're a nurse or a
radiology technologist or a sonographer and have now are in industry.
Speaker 1 (28:36):
And then you know the other thing too. This has
been some of the news, and we'll get the big
news is obviously the recent Well acquisition. But the other
news I saw too, which with regards to sales and
the business model is increase reimbursement coverage and I recently
got Blue Cross blue Shield coverage. How has the reimbursement
(28:58):
overall been in kind of expanding this histotripsy technology for
treating lung cancer.
Speaker 2 (29:04):
Everything you just mentioned there are really important. It's like
a puzzle that needs to come together to make a
launch of a new novel, disruptive piece of capital equipment,
especially succeed and a therapy, a therapy that is new
to the world and still has a ways to go
in terms of collecting clinical data. So you need all
(29:26):
of these elements to form the recipe for a very
successful commercial launch. And so, knowing how important reimbursement was
going to be to the hospital economic model, back to
needing capital, sales reps who can get to the c
suite to make the right presentation, we began working on
reimbursement five or six years ago, and the process is
(29:48):
you work with the AMA to get to demonstrate to
them that you've got something new and unique and disruptive
and valuable, which we were able to successfully do. So
the AMA issued us a code specific to histotripsy of
malignant liver tumors, and then you work with cms to
establish a payment and we have been fortunate that they
(30:09):
see the value in the technology. The national Medicare average
has been seventeen dollars that is commensurate with surgery or
radiation therapy, which we think is appropriately valued based on
the procedure. And so the economic model for the hospital
(30:32):
generally works really well, and they generally look for a
payback period. A hospital will in less than three years
and we achieve that hurdle. In addition to and we'll
wait for the final rule this October, but the proposed
rule from CMS is that they will be taking reimbursement
actually up for us a little bit. So we think
that's the right decision clearly, and it just means better
(30:56):
access for patients around the country. And then in addition
to that, we've had some really fortunate positive coverage decisions
from commercial payers and we expect more and more of those,
but the most recent and they should get a shout
out and credit is high marked cross blue shield of
New York, Pennsylvania, Delaware, and West Virginia who have a
(31:18):
positive coverage decision, which is great for the seven million
lives that they cover in those states.
Speaker 1 (31:24):
Yeah. I liked how you called it a puzzle piece
of everything, the clinical data, the reimbursement, because it is
so true with medtech, how you need all these things
to work together to get an actual product out and commercialized.
I also don't think you expected me to wait until
the thirty two minute mark to talk about the big
acquisition news. But you know, a two point twenty five
(31:47):
billion dollar acquisition that's a big, big development for histosonics.
So how do you combine all those puzzle pieces together,
all the developments that histo trip so he can do
in the long run with this new acquisition. How did
all those pieces together play out so where you see
(32:09):
histosonics and histotripsy itself in five to ten years.
Speaker 2 (32:14):
Yeah, And I don't know if we hadn't have been
so thoughtful years ago, well before launch, making sure that
we had each piece as much as we could solve
for that would all come together if we'd be having
this conversation right now. And it all starts with the
patient experience. You know, the patient experience has for this
type of deal had to be exceptional. And you know
(32:37):
these investors, we've known a lot of them for well
over a year since launch. They talked to our customers
and sometimes they talked to physicians who were willing to
give their testimonial. I mean, it all starts with utilization,
how it's being used, and what are the patient outcomes,
and so they were very confident in those. And then
(32:58):
clearly the business is really important too. And so I mean,
if you look, if you compare our launch over the
first year or eighteen months, it's historic when you compare
it to companies and we love to use them as
our analog is Intuitive Surgical. I mean, it's incredibly impressive company.
Eight billion in revenue, one hundred and eighty billion dollars
(33:22):
market cap. You know, if you look at the first
couple of years of launch, we compare incredibly favorably, or
the Makeo surgical robot that was acquired by Striker we complete,
we can compare incredibly favorably. It is pretty historic in
terms of what we've been able to achieve in the
first year. So and that happened because we've got all
(33:43):
the other elements in place, and so that's how we
were able to put this consortium together and compel them
to make such an incredible offer to be majority owners
in the company. And this group is global, This group
has deep pockets. This group is convicted, like we are
as a company, that we can change the world, that
(34:04):
we can literally change healthcare in the future. It will
be using histotripsy throughout the body, not invasively when you
need unwanted tissue removed. And so the thesis here is
that by keeping the company private longer and by accessing
this network and their ability to invest, continue to and
desire to continue to invest in this company and then
(34:25):
their global connections and access worldwide that we can significantly
accelerate the enterprise, growing the enterprise value of this company,
d risk some of these future clinical indications, and then
accelerate our work into these other clinical indications. There are
(34:46):
other projects that we don't have funded today that are
incredibly significant unmet clinical needs that we know we can address.
We just need the financing to be able to put
resources to the projects and so use of proceeds we'll
go to increased globalization and scale as well as putting
(35:09):
teams together to form projects to accelerate other clinical applications.
You can think future opportunities, and we talk about it
all the time. Is my role is to create options
for the company, for our shareholders, for our employees, and
the more indications that we access and turn on, the
larger the markets get, where the larger the enterprise value
(35:31):
of our company gets. And you also begin to de
risk some of those clinical indications. So that gives us
options to appropriately time an IPO or another financing. But
the goal is to just continue to provide other opportunities
for the company.
Speaker 1 (35:48):
Yeah, and I think at the end of the day,
if your comparables are Da Vinci and the Maco Robotics
systems in their early days. It sounds like a very
promising opportunity for history.
Speaker 2 (35:59):
They're pretty good.
Speaker 1 (36:00):
Agree, it's very very good compsent deed, and definitely once
has me looking forward to an update a year from
now to see how the business continues to grow and expand.
But Mike, thanks so much for joining us today. I
appreciate you coming in.
Speaker 2 (36:13):
Oh, thank you, Matt. I really appreciate your interest. This
was fun.
Speaker 1 (36:16):
Yes, and thank you to our listeners for tuning in today,
and we hope you join us for future episodes. If
you'd like to stay up to date, you could click
the subscribe button on Spotify or your favorite streaming platform.
Take care,
Host
Jonathan Palmer
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