How NY Angels Find Great Medtech Investments Like Aim Medical Robotics

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Angel investing in medical technology can be tough. The science is complex, the timelines are long, and the risks can be hard to judge. In recent years, the New York Angels have recruited some impressive life science investors to help sharpen our focus on this area, and it now makes up a substantial portion of our investments.

So today, we meet NYA members and medical experts Vijay Agarwal and John Younger and learn how they evaluate investment opportunities. We’ll also talk with Greg Fischer of AIM Medical Robotics, one of the standout companies the New York Angels decided to fund. Welcome back.

I’m David Hemenway. I’m a five-time founder and a member of the New York Angels, where we fund and mentor great young companies. Greg Fischer is the founder and CEO of AIM Medical Robotics, which raised its seed round from the New York Angels and specializes in bringing greater precision to neurosurgery.

Welcome, Greg, Vijay, and John. It’s a pleasure to have you all here today. Thank you very much.

Great to be here. Yeah, thanks. Greg, tell us about AIM.

Sure. So if you think about it, pretty much all advanced surgical procedures, especially those in neurosurgery, are based on really previously acquired, high-quality, high-resolution MRI. Surgeons pore over these images.

They spend significant time identifying optimal targets, optimal and safe surgical approaches. However, when you’re working with soft tissue, like inside the brain, but also other parts of the body, tissues tend to move. Targets tend to shift during these procedures.

And there’s really no good way to determine or how to address and update the plan based on these. So our focus at AIM has been on how can we leverage real-time MRI imaging, the same imaging that’s used for these intraoperative surgical plans, to identify and then account for intraoperative changes. AIM’s bringing to market a unique, compact surgical robot that allows real-time MRI to be used during neurosurgery procedures for Parkinson’s disease, epilepsy, brain cancer, and a host of other disorders.

So John, you see a lot of innovation in the medical space. What made you decide to get involved with AIM? So I think generally, when you look at medical technology companies where the story is so straightforward, it should get a look, right? So I will say that sometimes you’ll hear a pitch that sounds very different than what Greg just said, where you’ll spend a lot of time trying to figure out, no, wait, why does this matter? But I’m old enough now that I remember when stealth navigation technology first came into neurosurgery, and this idea that you could put a frame on someone’s head, get the scan, bring them into the OR, and then suddenly know where everything in the room, including the instruments and the surgeons and the frame and the brain and the tumor or the target, just to know that was just simply profound, right? But the technology that that enabled is such that now you need these very high resolution maps in order to place a probe, an electrode, potentially gene therapy. And so that resolution requires that an assumption that stealth always made be broken, which is the brain is not a rigid structure on a map, a brain is sort of doing this.

And so I think that the idea that you could update stealth with this sort of soft tissue kind of conception of the brain, it’s just, I mean, it’s immediately obvious what that sort of accomplishes. So that’s why it’s easy to get excited. It doesn’t require a lot of imagination.

BJ, you know, I’m curious about your process in evaluating medical technology companies. I mean, angel investing is hard to start with. And then what a lot of angel investors look for in the early stages is some sort of traction.

But that’s really hard to judge in medical technology unless the device is already in use. And we end up investing long before that actually happens. Yeah, there is a bit of a risk there.

I think the other part of medical technology is that the person who benefits from the technology is not the one who buys or specifies the technology and is not the one who pays for the technology. So that sometimes provides, you know, the people, people like us who are, you know, used to a consumer product or other something where you make it, you sell it, and you put the money in the bank. It’s a little bit more complex in the medical field.

And the timeframes are obviously very different as well. But at the end of the day, a lot of the decision making about investing in medtech is the same as any other discipline. Frankly, you’ll look at the founder.

Is the founder a person who understands his space, is going to be smart enough to pivot and react to things when they change? Because they always do change in early stage investing. And is the market big enough to support this device? And to John’s point, is it simple enough that you can understand it and the average person can understand it? And that means that the average physician can understand it. So sometimes the complex solutions are not necessarily great investments for early stage.

You want something that’s got a pretty immediate application, easy to understand, easy to deploy, easy to train with a leader who understands some of the complexities of getting something from the idea to the bench side. Greg, what got you interested in this topic? It seems like just a huge space to undertake. Yeah, that’s a good question.

So I’ve actually been working in this space now for probably close to 20 years. My PhD dissertation was at Johns Hopkins University, and the title was Enabling Technologies for MRI Guide Interventions. And this all really came about for prostate cancer, actually, where we were trying to do biopsies.

And men would keep coming in over and over and over again. You’re getting 10 to 20 biopsies. The sensitivities are very low.

PSAs can keep going up and up and up. And you get to a point where you’re taking these biopsies and you’re not actually finding it. So we came up with an MRI compatible robot to allow you to find one or two or three very specific foci that you wanted to take biopsies from, and then inside the MRI scanner, take those biopsies.

And then soon after that, I became a faculty member at Worcester Polytechnic Institute, and I met my co-founder, Dr. Julie Pulitsis, who was a neurosurgeon. And immediately, she saw the application in neurosurgery. In particular, we started looking at Parkinson’s disease, where we need to put these electrodes, essentially brain pacemakers, to alleviate the symptoms for patients with Parkinson’s.

These need submillimeter accuracy inside the brain. And during the course of surgery, these targets can move. And these targets are about the size of a grain of rice, and you’re trying to hit a little spot on it.

They can move millimeters to centimeters during a surgery. So if you’re trying to do accuracy relative to, let’s say, the skull, which is how the stealth station that John mentioned, that’s how it originally began and why it’s very successful in orthopedic surgery. If you’re trying to do this for neurosurgery, those targets move.

So that concept still works, but you need to update the imaging based on where those targets went during the surgery. So we’ve been working on this now for quite a while. And the real secret sauce, if you will, is how can we put robotic alignment devices, so robot-assisted stereotactic frames, inside an MRI scanner, so we can really leverage the advantages of accuracy, precision, efficiency of robotics with the capabilities of real-time MRI updates.

Greg, it must be hard to find seed investors who can properly evaluate what you’re doing. So I’m assuming that meeting John and Vijay was a breath of fresh air, along with some of the other medical experts at the New York Angels. No, it’s true.

I mean, medtech is really, really unique, and you need investors that truly understand the industry, the associated timelines, the regulatory expectations, the clinical data collections, the market adoptions. We, as far as medtech goes, have a very straightforward and relatively expedient path through the FDA. It’s a 510K.

But like any medical device company, we can’t go out and go and get revenue and show we’re getting revenue. In fact, it’s not legal to go out and market a medical device until you’ve gotten FDA clearance. So it’s a very different spin on this.

And when you start talking with the more traditional hard tech investors or AI investors or robotics investors, they get really excited and interested until they realize, wait a second, you’re not going to get revenue for two plus years. So having people that really understand the timelines and how this goes about it was really important. And NYA was really, really great to work with.

I mean, they were incredibly professional, incredibly diligent in their reviews of the companies. They interviewed a number of surgeons. And in fact, the information that they gathered really helped to catalyze other investors, both Angel investors and ultimately some VCs to join in with us.

So it’s been a real pleasure working with folks that really get this industry and that helped us a lot. VJ, what does the future look like for MedTech investing? It seems like with AI now, it’s just going to broaden the universe and the possibilities and expand it beyond what it already was. Well, I think MedTech is not immune from the advances and benefits of AI.

It’s certainly, as John says, it’s a come along tool as opposed to a replacement, but it won’t be long before it’s a replacement. You know, what we look for in MedTech and I think in medicine in general is recognizing that there’s a growing physician shortage, a growing nurse shortage. So tools like AIMS and others that fit seamlessly into the workflow, make the workflow more efficient for physicians and nurses and patients.

Those are the ones that really have much more broad appeal. And I think that as early stage investors, we also look at what does it take to get to market? It is, as Greg says, a fairly long process, but there are some investment opportunities where the process is even longer than a medical device. Therapeutics, for example, there’s a huge follow on capital risk, technical failure risk.

There’s a bunch of other things in addition. So I think in general, early stage investors prefer med device diagnostics, healthcare, IT areas where there’s a regulatory path, but it’s fairly well defined and there’s a pretty high degree of success coming through the process, as well as a potential significant market opportunity. I did have an investor say to me once that there are only three things wrong with investing in MedTech devices.

Those were F, D, and A. I don’t know that that’s true. I mean, it’s not exclusively true. So it’s complicated.

Not always true. Not always true. And I think that there are, I think the FDA has done a pretty reasonable job of laying out how the precedents work.

It’s reasonably transparent. Companies that have 510ks or other approvals, you can go online and you can see they’re required to publish where things fell short. You can understand the process quite a bit.

I think that the more complicated part of it is how it’s going to get paid for. I think it’s very difficult to know. And I think it’s changing so quickly in real time that I think that’s the real concern.

It’s like ultimately you have to close the revenue cycle. And it used to be that all the founders say, we’re going to get 510k and everyone would throw a party. Now it’s like, well, who’s going to reimburse this? And that’s a much faster moving target with, I think, a lot less transparency.

And so I think that that’s actually sometimes more, and that makes diligence difficult because you don’t know, if I want to pick up the phone and see if this is going to succeed from a reimbursement perspective, who do I call, right? A surgeon may love it, but who do you call to understand what’s going to happen with reimbursement? Are those problems unique to the healthcare system in the US? I can just make a quick comment. So one of the things that we’ve taken that’s really exciting to me is that if you can take a procedure that you’re currently doing today, and if you can do that procedure faster, less expensively with better outcomes, you’re essentially guaranteed to be doing really well on this, right? So we don’t need, for example, a new reimbursement code. In fact, there’s existing reimbursement codes for these procedures.

And if we can cost less per procedure, if we can reduce the time, so now the hospitals can get bigger throughput, maybe two or three highly reimbursed procedures a day instead of one, right? If the patients at the end of the day are going to have less repeat visits and obviously better quality of life, that’s a win. So I think that’s a universal truth. But the way that you get reimbursement codes, if you’re a device that needs custom codes, then yeah, absolutely.

Then you need to collect significant clinical data, and that adds a lot of complexity. But that was one of the things that makes me really happy, and presumably was one of the reasons why the angel investors were also really happy, is that we don’t need to get reimbursement codes from CMS or the private insurance companies to be successful. John, where else are you investing these days? So I’m interested in tools.

So I’ve got a couple of things that I’m doing diligence on right now, which are not robots, but are tools that robots use, right? A tool for the tool. And they do have a much faster path to first revenue. And so you get to sort of sort some of that out.

They don’t offer the upside, I think, nearly as much. But I think it’s a really great opportunity to learn how the marketplace for smaller disposable items works. And I think there’s a lot of learning to be done there.

And I think you can find products. It’s more straightforward to demonstrate enthusiasm by users, right? So I think that’s one. And then the other one that sort of goes hand in hand with that is tools for someone other than the surgeon in the OR.

And I think that that’s also increasingly the case, is that what we always sort of assumed was the surgeon’s role is now they’re becoming roles of other folks. And so I think tools that engage maybe the first assist as the user, I think those are also very interesting because I think they’re kind of underappreciated, but potentially really valuable. Vijay, what other medical themes should investors be on the lookout for? Well, I think the area of workflow improvement is a clear area.

I mean, the changing workforce, fewer physicians per patient, less time per patient, nursing staff shortages, tools that improve the speed and efficiency of processing patients or improving outcomes are an area of interest. I also think that changing sites of medical intervention, from hospital to freestanding surgery centers, from freestanding surgery centers to the patient’s home. So I think there’s some significant opportunities in telemedicine, remote patient monitoring, self-care is taking over the healthcare field, just like self-investment took over the investment field.

So I think that tools that are enabling that movement, greater efficiency and movement to less intense settings have a lot of interest. I’m a big believer in med devices and diagnostics as opposed to therapeutics. The downside of diagnostics, you’re not going to get a billion diagnostic test, but it also won’t cost you a billion dollars to prove that it does or doesn’t work.

So I think there’s an opportunity for some meaningful singles and doubles that maybe not get the home run, but certainly you can still win a game by doing good doubles and backing those up. Sure. Craig, I’m curious about when you conceived of AIM Medical Robotics, were you answering a call from surgeons or were you creating a new solution that you then had to validate? Talk about that if you would, as well as maybe some of the technical challenges you faced.

So working with the surgeons from day one has been really, really important for us because that makes sure that what we’re doing is really solving a true clinical need. I mean, it’s pretty scary when you’re going into saying somebody is going to do a surgery and all this preoperative planning that they did is no longer relevant because the tissues have moved, things have shifted. So there was such a need for this.

And we worked really, really closely with neurosurgeons for AIM’s product to identify how can we really fit into the workflow in such a way that it’s convenient and familiar to them, help speed up the process without really pushing or forcing something on them. And I’ve had surgeons that just like the idea of simply integrating a surgical navigation platform with an actuated alignment guide that you can press a button and have it move even without all of the additional MR imaging guidance, just because it streamlines the workflow. So it really seemed like it fits a need.

Putting this inside the MRI though, that added significant, significant challenges. And it’s been the fun, but obviously the hard part for the last probably close to 20 years of my research was how can we put sensors, actuators, control system, robotics inside an MRI scanner and really be able to very precisely move devices while still getting really high quality imaging, not affecting the image quality and ensuring safety of the patient and the clinical team. So when you’re designing the robots, we can’t use traditional sensors.

We can’t use traditional actuators. You can’t use the traditional materials, right? So we’re not sticking a big steel industrial robot arm on a cart inside an MRI room, right? So from the ground up, we had to develop really high strength plastics. We are also working within essentially a small tube that has a patient and anesthesia equipment, other equipment.

So even from the mechanical perspective, how do you come up with a form factor that works appropriately? And then the part that a lot of people forget inside the MRI is it’s not just a really strong magnet. It has really strong radio frequency fields that can cause damage and wreak havoc on electronics that are inside of there. And then the other side of that is the MRI is a big antenna and it’s listening essentially for the electrical signals inside the body to create the images.

So actually one of the biggest challenges was to design custom electronics to drive these motors and drive the controllers that do not interfere with the MRI signal, because otherwise it’ll just look like a static old TV signal, right? So we’ve put a lot of time into understanding this. We’ve also built a really substantial IP portfolio. And we got to the point that in my mind, we’d shaken out the technical risks and we had really significant clinical buy-in.

And that’s when I decided to take a leave of absence from the university and go all in and bring this to market. Well, Greg, congratulations on all the progress. You know, I think my favorite kind of angel investing is when you can do something that actually contributes to the world.

And you gentlemen are all certainly doing that. So Greg Fisher, AIM Medical Robotics, Vijay Agarwal and John Younger, my friends and fellow angel investors at the New York Angels, thanks so much for joining us today. Thank you so much.

It’s a pleasure. Thank you. You can learn more about joining the New York Angels or applying for funding for your startup at newyorkangels.com. You can also reach me and hear more episodes at theangelnest.com. A reminder that we don’t make or recommend investments at the Angel Nest.

And this program is for informational purposes only. We produce the Angel Nest in New York City, the home of the New York Angels and the media capital of the world. Thanks to our producer, Rob Higley.

And we get technical support from David Newhoff. I’m David Hemenway. Thanks for tuning in.

So long until next time.