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Interview
conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published –
September 3, 2012
CEOCFO:
Mr. Nagel, you have been CEO for a relatively short time, what attracted you
to Vomaris?
Mr. Nagel:
First off, the technology was very unique, exciting, compelling, and within
a very large market space that is obviously in need of innovation. The wound
care market, by most estimates, is between $15 billion and $20 billion. The
second biggest factor was the fact that Paul Foster, who is the Chairman of
the Board and heads up Franklin Mountain Investments, came in as a key
investor at about this time last year to recapitalize and get the company
going in a forward moving direction. These were the two big factors, then
there is the enabling technology.
CEOCFO:
Would you tell us about the technology?
Mr. Nagel:
Simply put, we have batteries in a bandage. It is a very unique and
revolutionary technology. We are the only one in the world now that has
this. We have a proprietary method of producing biocompatible microcell
batteries on a material surface, which, as a wound device, is a woven
polyester fabric. We essentially apply, with our patented and proprietary
process, microcell batteries comprised of silver and zinc. When Procellera
comes in contact with conductive fluid, such as wound exudate, saline or
hydrogel, the batteries are activated. The batteries in our wound device
provide a low-level microcurrent at the surface and provide antimicrobial
(infection prevention) protection. Our bodies are made up of tons of
electrical connections and when we have a wound on the skin, whether it be
an acute wound or something chronic in nature, those microcurrents on our
skin are active. Microcurrents in a healthy, healing wound are ways that the
body sends anti-inflammatory signals and required healing cells to the site.
There are all sorts of things that are going on in a cellular level which
allow the wound to naturally heal. Procellera essentially creates an
environment that helps it heal. What really happens to a lot of wounds that
are infected or are stalled out, as we say in the business, is basically the
microcurrents are interrupted or ceasing to flow in that area of the wound.
We are essentially jumpstarting that wound to begin a natural healing
process. By the nature of our technology, which utilizes silver and zinc, a
strong antimicrobial action is present. Silver is a very well known
antimicrobial, and in the presence of a microcurrent, research has shown
that the antimicrobial effect is augmented. So, in the presence of
microcurrents, it provides even more antimicrobial action than just silver
itself, so you get several benefits in the technology. There is no other
technology in wound care presently that provides this type of option to
manage a wound.
CEOCFO: Has anything similar been tried
in the past?
Mr. Nagel:
Not the way we approach the opportunity. There have been many publications
on electrical simulation in wounds; in fact, it started in the fifties with
an author named Robert Becker, M.D., who studied a substantial amount on the
effects of the microcurrents. Many of his observations, and those of
subsequent others, form the foundation of our technology. Current technology
has cords, wires, plugs, external batteries and everything else. If you
notice with Procellera, when you look at it, it is just a piece of fabric
that is flexible and conformable. You can cut it to size, and you do not
have to worry about cords and wires. Electrical stimulation is a very well
known phenomenon in wounds, but nothing like this has been tried before.
CEOCFO: For skeptics or people
concerned, what are the possible side-effects?
Mr.
Nagel:
The benefit of this technology is there is not much of a
downside. Obviously, if you have an allergic reaction to silver or zinc you
would not want to use the product. The voltage that is present at the device
surface is less than one volt of potential energy, similar to the natural
electrical field at a wounded skin surface. The current produced by the
device is far below the threshold of feeling, so people cannot feel or sense
it. If someone is undergoing an energy-based procedure, the physician should
decide whether Procellera should be removed during the procedure. So, you
can see that there is not much of a downside to Procellera, and that is the
beauty of the product.
CEOCFO: Is the medical community aware
of your approach?
Mr. Nagel:
Somewhat. The company has been around for a while. It got an auspicious
start like many medical device companies that start with great technology.
Jeffry Skiba, who is our Chief Technology Officer and founder, started the
company. He got the passion and came up with the process and invented the
technology. He is a brilliant guy. As he went out to raise money and run a
new company, he ran into the same issues as many other brilliant inventors
have: that inventing and coming up with a technology offers very different
demands than running a company. The technology to the wound care marketplace
has never really been fully utilized up until now because the company had
lacked the resources to be able to market and do the necessary clinical
studies. That is why Mr. Foster’s involvement was so important; he came in
last year and recapitalized the company. Then they subsequently found me
through a search and I joined the company in February. In the wound care
marketplace, there are a growing number of people who are aware of
Procellera and have had very impressive results. There are already about
nineteen or twenty articles that are in various forms of publication
regarding Procellera. We have a recently published study in the Journal of
Burn Care Research. But, I would say that, in general, most of the wound
care community has not had an experience to try the product.
CEOCFO: How will you reach the
appropriate people?
Mr. Nagel:
With Procellera, we have many available avenues to reach our target markets.
Procellera has an over-the-counter indication as well as a professional
indication; these are two very large markets that we look to serve. Right
now we are launching our own sales and distribution network to sell and
market Procellera, and as we get further into the marketplace, we will
always look at various strategic options for both getting Procellera to
patients who need it, and for serving our shareholders. We will always be
looking at various distribution options because there are all sorts of
avenues of distribution that the wound care market offers, such as the
hospital market, the long-term care market, the over-the-counter market, the
home market. It makes it challenging for small companies because you have so
many different directions to go to fully supply the market.
CEOCFO: Is the cost a major factor or is
it negligible compared to what you can do?
Mr. Nagel:
There are documented articles out that current costs to treat various
conditions like diabetic ulcers range between $8 thousand to $40 thousand.
Wound management is very expensive. Healing is the ultimate goal that
everyone should be after because at the end of the day, if you heal the
wound, the patients can lead active lives and they are no longer in the
healthcare system. For any therapy which can reduce the amount of healing
time needed and can reduce the readmission rate or a potential infection,
the cost of the product is generally negligible when you are looking at the
cost to the healthcare system. The cost for hospitals to acquire Procellera
is very low. They can order various sizes and we are cost competitive with
most advanced wound care products on the market today.
CEOCFO: What is in your background that
makes you the right person to handle all of this?
Mr. Nagel:
I have been in healthcare for 26 years, so roughly half my life has been
dedicated to medical devices. The key thing that you learn is the ability to
focus, pick a few key markets and really drive the execution in that
direction. We also have a great team of dedicated employees at the company,
that is also key. A football coach once told me, any play will work if it is
flawlessly executed. Secondly, I heard a line from the Apple CEO recently
when he said something along the lines of “we are going to say no to a
thousand different things and yes to a very few, and those few things we'll
do very well”. That is our approach. The key starting point with Procellera
has to be what I call the professional market and that is the wound care
professionals who are located in hospitals or clinics. Once it is
established there, and the clinical validity is established there, and
clinical studies are done there, that then drives interest in what I call
the peripheral markets: the over-the-counter markets, maybe the long-term
care market, the home healthcare market, maybe the veterinary market. Those
are all good markets but I think, from my background, that you really have
to start in that professional market to really build the company’s
credibility, and it is also a sizeable opportunity. In the professional
market, you are not lacking in the number of wound care cases or you are not
lacking that the business is not there; there is a substantial business in
the 6,500 hospitals and the 550 or so wound care centers in the United
States, so there is a substantial opportunity there. That is a good target
to begin with.
CEOCFO: What is the plan of action over
the next year or so?
Mr. Nagel:
We are going to continue to build our clinical story with Procellera because
we know that in the marketplace, this is one of the key elements that you
need to have. You need a clinical story and you need an economic story or
you do not have a story. To really penetrate into the hospital system now,
you need those two things. You need to work together with new technology.
The market is no longer compelled just by new technology, I mean you have to
come into a market now and give a compelling reason besides just clinically.
Now you have to do it economically, showing why they should consider your
product. With that, we have to focus on a clinical story. We have some
clinical development programs in progress now to help further our clinical
message with some good retrospective studies. Secondly, those retrospective
studies can be subsequent data that we will collect and will always have an
economic bent to it. If we claim that Procellera works better, we have to
put a number to that. As for what that means, if it means less time in the
hospital, better healing rates, or less dressing changes, then we need to
show what it equates to as far as cost savings. We are totally gearing our
company now toward what is going to be required going forward for medical
device companies to be successful. You have to have a clinical and an
economic argument before you are going to get the widespread adoption of
your technology.
CEOCFO: Is Vomaris Innovations funded to
get through the next year of growth?
Mr. Nagel:
Yes, we are adequately funded right now. Once we get done with our projects
every year, we will look into the horizon and see what we need for
additional funding. Franklin Mountain Investments funded the last round, and
they have been a wonderful partner so far. We also have some angel investors
who helped to fund the company in the beginning, and they are very
important, as well.
CEOCFO: Why should investors pay
attention to Vomaris Innovations?
Mr. Nagel:
First of all, the wound care marketplace is a very substantial marketplace.
If you look at the demographics of obesity and diabetes and just chronic
wound conditions of the ageing population, it is a very large and
substantial business. No one player is going to dominate. There are many
modalities and different ways to treat wounds. Second, the technology is
probably one of the most enabling technologies right now in wound care.
Microbatteries applied on a flexible membrane to provide a low-level
microcurrent is very technologically advanced, but also a very affordable
product for hospitals to acquire. Third, we are going to continue to build a
very good clinical story. We have all the legs of the stool. Potentially, it
will be a very substantial company. We have a nice patent portfolio to which
we have recently added. We have very good profit margins. We have a
validated manufacturing system and a Quality System that is certified to ISO
13485. We have many things already done for us that most small companies
struggle with. We are there.
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