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AseptiScope CEO Scott Mader discusses the company’s Series A Round, evolution into a Commercial Entity, and their unique Flagship Brand for Infection Control


Scott W. Mader

President & CEO


AseptiScope, Inc.

www.AseptiScope.com


Contact:

Debra McMullen

310.849.1699 (mobile)

dmcmullen@aseptiscope.com


Interview conducted by:

Lynn Fosse, Senior Editor

CEOCFO Magazine


Published – December 21, 2020


CEOCFO: Mr. Mader, according to your site, AseptiScope™ provides infection protection for clinician and patient. What is the overall vision? What is happening right now?

Mr. Mader: We incorporated AseptiScope™ back in 2016, and two of the founders are well renowned clinicians. One is Alan S. Maisel, MD, Professor Emeritus of UCSD and one is Frank Peacock, MD, BCM, Professor of Emergency Medicine at Baylor College of Medicine in Houston. They acknowledged that today’s clinicians themselves are vectors for pathogen transmission. It is challenging to interact with many patients in a high workflow environment while still remaining clean. AseptiScope’s mission is to provide true innovation to ensure that patient care can be maintained without the potential for transmission of pathogens.


As in the case of a stethoscope, the CDC suggests that you clean it for up to sixty seconds between each patient. This is very impractical with today’s clinician, especially in areas that are particularly concerning, like ICUs, emergency departments, CCUs and so on. This past month we introduced The DiskCover™ System; a one second aseptic stethoscope barrier application system that is totally touch free. This means that it is always aseptic at the point of care. We have introduced this flagship product that is prospectively validated, highly effective, and very affordable.


CEOCFO: How does the DiskCover System work?

Mr. Mader: The DiskCover System provides the first single-use, aseptic barrier application for all stethoscopes. A wall mounted dispenser has sensors that detect when a clinician is ready to apply a barrier to the stethoscope. A quick wave of the hand interacts with the DiskCover System and places a single use aseptic barrier in the application window of the unit. The clinician then simply presses their stethoscope in and removes it with a single use aseptic barrier applied to the diaphragm (the part of the stethoscope that touches the patient). Therefore, they can have a clean, robust barrier that protects patients from exposure to contaminants. In addition, the barrier is, acoustically invisible, so they can hear the patient’s heart, lungs, and abdomen as they would if there was no barrier at all.


CEOCFO: What material used to create the barrier?  

Mr. Mader: It is made of a medical grade tape that is developed in by a certified “converter” and becomes our proprietary disk cover. It has all of the primary medical grade components that are needed, like bio-compatibility, aseptic assurance, and seamless acoustic performance. The product is produced and assembled in clean room conditions and validated aseptic in published clinical studies.


CEOCFO: Where does cost come into play? We know it should not when you want to protect people, but it can.

Mr. Mader: Cost is always an issue. It is an important question to ask and it is one that we asked ourselves when we founded AseptiScope. One of the most significant costs in healthcare today are in the prevention of healthcare associated infections (HAI).  In the USA, roughly 1.7 million HAI’s occur annually in hospitals, resulting in total costs (direct, indirect, non-medical) estimated at up to $147 billion. Despite all these efforts, investments, and costs, the stethoscope continues carry the same intensity and diversity of pathogens as the clinician’s hands. Yet the stethoscope is cleaned between patients at an abysmal rate of about 4% compliance. By providing a true solution for this dilemma, a significant gap in infection control is now addressed. Based on the data we anticipate that the introduction of touch-free stethoscope barrier systems will be dramatically cost-favorable.


The only other option that hospitals deploy today is the use of what are called single use patient stethoscopes or disposable stethoscopes. These disposable instruments are dedicated to a patient, but are dramatically inferior to professional grade stethoscopes. They cost three to six dollars and actually, we are cost favorable to them, right off the bat! Those are in common use today. Therefore, even from an acquisition cost standpoint we are favorable.


CEOCFO: What went into figuring out how to come up with a solution? When did you know you nailed it?

Mr. Mader: I think those are questions that have to do three stages, and I will take them in sequence. The first one is that we are an organization that works on market driven science. Therefore, the design of the DiskCover System was not one that we came up with on our own or limited to an isolated analysis. We went out to the marketplace. We spoke to advisors and working group members that included infection control experts to quality nursing, to high acuity clinicians that work in in the high workflow areas of healthcare.


From this experience we entered stage 2, attribute development. We identified the aspects of a product that would resolve the problem. These attributes include things like “must be aseptic.” These are attributes like, “must be fast and easy.” Then, those became the product specifications behind the DiskCover System and we went about that development program. It turns out that it is quite a trick to do this in a way that satisfies all of those things. Upon developing a prototype that achieved these, we knew we had it when our clinical data results were positive and it was rapidly accepted in and published along with a guest editorial commentary in Mayo Clinic Proceedings. Now, just a few weeks into our commercial availability, we are actively being evaluated and installed in US hospitals.


CEOCFO: Is space a consideration in each examining room?

Mr. Mader: You are very perceptive, Lynn. This is one of those attributes that I referred to in the prior response. One of the attributes what that the system needed it to have a small footprint and be wall mounted to preserve space. The first reason is that all hospitals have a lot of technology, a lot of traffic, but there is not a lot of room. Therefore, we use the footprint that is similar to a soap dispenser or an alcohol gel dispensing unit that are very commonly accepted in hospitals around the country and around the world. That was our proxy. Then we wanted to have it be a very easily installed, self-powered wall mount unit. That was the other satisfying factor. That way it can be placed just about anywhere, with a simple wall mount.   


CEOCFO: Is it only one size and one size of filler, whether it is twenty applications, thirty, one hundred or are there variations? Wall mounted?

Mr. Mader: This is a single size and it is a wall mounted dispenser and what you place in it is what we call a “clean cassette.” This is a cassette is manufactured and built and assembled in clean rooms. It is shipped from those clean rooms to hospitals and it holds four hundred of the disk covers. These are the disks that cover the stethoscope. The DiskCover System is designed to fit the most contained clinical areas, and therefore can work wherever healthcare is provided. The system was designed to accommodate the intense and congested space of intensive care and emergency medicine.


CEOCFO: Have doctors or hospitals been looking for a better way or is it something they are going to think, “Why did we not have this before or why was it not invented before,” once they find out about it?

Mr. Mader: Yes, it is the big question that was a very important foot note for us when we did our original business case analysis on stethoscope contamination. For two hundred years doctors and nurses have been, and continue to be, reliant on the stethoscope as a foundation tool. For decades now the data has been consistently reporting the stethoscope as a significant vector with pathogens nearly identical to a clinician’s hands.


Yet while we wash our hands as the foundation of infection control process in healthcare, the stethoscope has eluded strong regulatory oversight. Therefore, doctors have increasingly become aware of this to the point where last year, in 2019, in the New England Journal of Medicine Journal Watch, had a specific focus on the need to elevate stethoscope hygiene standards to that of the hands. It has become a uniform chant in the literature since that time.   


CEOCFO: How is your product launch going? What is your strategy to go to market and let the world know?

Mr. Mader: Yes, it is great! In November we announced the commercial introduction of the DiskCover System to the United States. Towards the back end of 2021, we will be introducing it to international audiences as well. The system right now is being evaluated in several renowned institutions and community hospitals around the country. We have our first hospital contract and our first purchase orders from clinics already in hand. Therefore, considering that this is a very unusual time in the world and certainly in healthcare, it is a difficult time for care providers to focus on anything else other than the care of patients in their purview.


Ironically, the pandemic has overwhelmed caregivers, making it difficult to engage healthcare providers at this time. However, we are getting a really good response and right now there is on the order of twenty hospital systems that are evaluating and considering our product with many more in the queue.       


CEOCFO: The fact that it is simple, basic and easy to understand for anybody should make a difference. Is it a no brainer once you get to the right person?  

Mr. Mader: To that point, we conducted an end user acceptance assessment at our first hospital system and, although that is non-published data and very recent, the acceptance of end users’ interest was better than I had seen in 30 years of clinical introductions. Over ninety five percent of users believe that this was a superior system to their previous standard, which in that case were single use stethoscopes. Importantly, this product protects patients from exposure to contaminants of all kinds. In time of pandemic, this type of efficacy is king.


CEOCFO: What about the manufacturing and maintaining inventory? Might you eventually go through some of the buying groups?

Mr. Mader: I have been responsible for large pharmaceutical launches of major Fortune 50 pharma companies and I have also done startups. AseptiScope is a true startup in every sense of the word. What that means, from the question, is that we have a very streamlined, lean operating process. This allows us to move directly to care providers as our target audience. This is a clinically unique product and for this reason care givers need unfettered access to the information.


Group purchasing organizations, large IND contracting groups, are groups that will come into the fold as we engage their systems. This often times is the case with small companies with highly innovative brands verses more commodity processes. We have been in touch with groups that you may know, like for example Premier Inc., but at this point in time focusing on customer demand is our primary goal. We have an ecommerce platform allowing clinics can go online and order and we have a direct hospital sales force that will engage these key customers directly.   


CEOCFO: Where are you manufacturing?

Mr. Mader: We are manufacturing in California. We are a California company with California commercial manufacturing. We received our commercial manufacturing license just in the early part of Q4 of this year.


CEOCFO: Is it becoming more important for people to have US manufacturing?

Mr. Mader: Given the political climate and the global economy, I think this is a very important time to consider it. However, for us this decision is non-partisan. As a young company we want to be able to have tremendous oversight over our initial offering to the healthcare community, so that we can make sure that we have a proper purview, proper management and proper guidance of this product in every aspect of what we do. Therefore, having it not only be domestic, but local was really important.


CEOCFO: Are you seeking funding, investment or partnerships as you move forward?

Mr. Mader: We are indeed. Like every company that is starting and has yet to get over the commercial line and generate revenue, we have had an investment initiative. Our Series A financing has been initiated. Prior to this we held a convertible note program. In 2020 we have a Series A financing open and we are just about at the back end of it. It is a $6.5 million raise with an established New York brokerage house.


CEOCFO: What surprised you throughout the process?

Mr. Mader: One nice surprise is that the process that we put in place works. No major trip ups in this regard. Another big surprise is that, in a world where infection control it is so important, with dramatic resource and expert oversight, that we still have not been able to halt HAI rates in the country. It turns out that the most obvious challenges are being dealt with, but something as fundamental as the stethoscope been missed. We are very proud to be able to help our customers deal with this gap.


The CDC has such a huge governance over what they have to control that things still do fall through the cracks in terms of overall priority. Their guidelines were done for this in 2008 and updated once. Therefore, although we are doing quite well, there are still real challenges in infection control.  


CEOCFO: What, if anything, both in the healthcare community and the investment community, might people miss that they should understand about AseptiScope?

Mr. Mader: is the obvious item is that AseptiScope has the DiskCover System, a true innovative solution for stethoscope contamination. We are of course a small startup company that has a first foot forward with the DiskCover System. What might have been missed is that our company, our intellectual property, and our processes are positioned for a portfolio of solutions in infection control.  


The DiskCover System was an obvious need in the market space. However, the touch free delivery of aseptic barriers to their target vector; in this case the DiskCover is not limited to the stethoscope. AseptiScope has a portfolio of products built around the very first thing that you said at the front of this interview; “infection protection for both clinician and patient.” Therefore, there is more to come in the portfolio of AseptiScope and that is probably something that is easy to miss today.


CEOCFO: Can you tell us anything about the “more to come” or is that still under wraps?

Mr. Mader: When you talk to clinicians the very first things out of their mouths are usually right on point in terms of what things are currently missed and in Q1 we will be announcing our next product in the portfolio. There is one that we have already announced and that is that the DiskCover System will also introduce a neonatology DiskCover that is ushered through the same dispensers, but with a different clean cassette. The DiskCover System is our first innovation, but not our last.


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“By providing a true solution for this dilemma, a significant gap in infection control is now addressed. Based on the data we anticipate that the introduction of touch-free stethoscope barrier systems will be dramatically cost-favorable.” Scott W. Mader


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“This past month we introduced The DiskCover™ System; a one second aseptic stethoscope barrier application system that is totally touch free. This means that it is always aseptic at the point of care.” Scott W. Mader