Healthcare
Medical
Equipment & Supply
AMEX: MS
Milestone Scientific Inc.
220 South Orange Avenue
Livingston, NJ 07039
Phone: 973-535-2717
Leonard Osser
Chairman and
Chief Executive Officer
Interview conducted by:
Walter Banks, Co-Publisher
CEOCFOinterviews,com
September 2001
BIO OF CEO
Leonard A. Osser has been Chief
Executive Officer and a director of the Company since July 1991, and the President and
Chief Executive Officer of Spintech, a subsidiary of the Company, since November, 1995.
From July 1991 until July 1997, he also served as President and Chief Financial Officer of
the Company. From 1980 until the consummation of the Company's public offering in November
1995, he had been primarily engaged as the principal owner and Chief Executive of U.S.
Asian Consulting Group, Inc., a New Jersey based provider of consulting services in
"work-out" and "turnaround" situations for publicly and privately
owned companies in financial difficulty.
About
Milestone Scientific Inc.
Milestone Scientific is the
developer, manufacturer and marketer of The WandÒ computer
controlled local anesthetic delivery system. The
Wand system comprises a computer controlled drive unit and features The Wand hand piece, a
single patient use product that is held in a pen like manner for injections. This
proprietary technology forms the basis of their value proposition, which enables
practitioners to consistently administer injections with improved control, greater
comfort, reduced trauma and less stress for both the patient and practitioner.
The Wand system was introduced to the dental market for a wide variety of
procedures, including the Periodontal Ligament Injection (PDL). The Wand Plus, an enhanced version of The Wand,
recently received FDA clearance to market for medical uses.
Milestone Scientific has recently received a broad US patent on CompuFloÔ, an enabling
technology for computer controlled infusion of a wide array of liquid drugs and other
fluids, aspiration of bodily fluids and measurement of in-tissue pressure.
CEOCFOinterviews: Mr.
Osser, can you give us a brief history of Milestone Scientific?
Mr. Osser: Milestone Scientific is an
ten-year-old company whose mission was to become a virtual company. It was to acquire
breakthrough technology in the medical field, a either disposable or have a disposable
component, get broad patents on that technology worldwide, commercialize the technology,
outsource engineering and manufacturing. A marketing plan would be developed to support
global product introductions and then acquire outside distribution for the product. Our
history has been in the take over of a company that had a breakthrough technology. We
acquired a technology that is the first enhancement in our sector in 150 years.
Revolutionarily changing the hypodermic needle syringe through a computerized system,
that’s ergonomically sound, virtually painless to the patient, much less stressful
for the practitioner, much enhanced infection control, and does not kill tissue
(necrosis)., It is a revolutionary device, which will go into many fields over the coming
years and as of August of this year (2001), will be introduced into the medical field.
Milestone Scientific acquired the product in 1995, and introduced it into the dental field in
the United States in early 1998.
CEOCFOinterviews: Currently, where are you in the
development, redevelopment or redefining of your product?
Mr. Osser: The original product which was
called The Wand®, is now in it’s fourth iteration, and it is now called CompuMed and CompuDent. The
product was introduced into the dental market. There are now approximately 15,000 units in use
around the world resulting in over 9 million patient injections. A number of disciplines
have been using the product in their practice and for clinical studies. These include podiatrists,
dermatologists, cosmetic surgeons, plastic surgeons, and colorectal surgeons, as well as
for hair transplants.
With our new product developments, The Wand Plus will now become CompuDentÔ, in the dental arena, and
CompuMedÔ, in the medical market.
CompuMed will be introduced to the podiatry market, the first discipline in medicine, at
the 2001 Annual Meeting of the American Podiatric Medical Association, August 16-18 in
Chicago. In addition, we have a new technology that is in the prototype stage and is now
in clinical studies in various countries, called the CompuFlo™. That product has
additional technology, a very broad patent in the United States, and eventually worldwide.
The CompuFlo has many far-reaching applications in medicine. This product actually
measures the force, pressure and flow rate of an injection. What that means is that for
the first time, the practitioner will have biofeedback in an injection. The practitioner
should know where in the body they are with the needle, which is very important for a
biopsy in locating a tumor. It is also a product, which will interface to a hospital
computer system, and will have a major impact in the medical community where approximately
100,000 people per year die because of medical mistakes in the United States. When a
doctor writes a prescription in a hospital environment, they can’t write it, they
must type it into a computer because of medical mistakes. At that point, a number of
other mistakes can happen. The pharmacist can fill it with the wrong dosage, the wrong
medicament, there is also the possibility that it could be given to the wrong patient, or
they may fail to check drug interaction, or for allergic reaction. If any of the things
that can go wrong does happen, this unit will not allow the injection to be delivered. In
addition, it will give information back to the main computer, such as, confirming the
injection was given, whom it was given by, and when it was given. Therefore, it is a major
event in safety for the medical community, along with all of the other issues that the
core technology deals with.
We also have an additional patent
pending technology, which we believe will revolutionize the safety engineered sharps
devices that have become prevalent in the last few years. Given the new rules passed by
Congress and rules introduced by the Clinton administration, the safety devices on sharps,
including hypodermic syringes, will become commonplace in healthcare. We believe that in that area our design is very
advanced. We plan to introduce that technology by the end of next year.
CEOCFOinterviews: Are there any other companies trying
to produce, or which have a similar product?
Mr. Osser: We have very broad patents. A
product came out in the dental field a few months ago by DentSply International, Inc. When you introduce a product into a market where a pattern product
already exists, one has to attempt to design around that product. This often creates inferior product. We believe that is the case with the DentSply
product.
CEOCFOinterviews: How are you currently generating
revenues?
Mr. Osser: Currently we are generating
revenues in the dental arena, through the sales of The Wand Plus along with the disposable
component, the Wand handpiece. .
CEOCFOinterviews: Do you view any of your new products
as having greater revenue potential than The Wand Plus?
Mr. Osser: Yes! There is a significant
difference in the revenue potential of our products, but not because of the difference in
the technology between the CompuMed and the CompuDent, but because of the difference of
the target market. Dentistry in the United States is a very conservative and slow moving
industry. You have individuals that have trained very long and hard to use the hypodermic
syringe, which was invented in 1853, and hence has been
here for a very long time. We are attempting to change that with a much, advance technology.
Thus far, the technology has been accepted in the top level of the dental arena,
which is the top 3 to 3½% in the United States. The opinion leaders in dental are
recommending it, using it and lecturing on our technology, because our technology is the state of the art and the standard
of care. However, dentists receive no further remuneration for using our product,
but the dentist who is using it practices better medicine. This
level of care is very much appreciated by the patient. Our
device offers a virtually pain free injection, compared to the effect of the hypodermic
syringe, which keeps many people from the dentists office. These practitioners look at the CompuDent as a cost of
providing good medicine. It is actually under a dollar for each patient. It’s not an
expensive device, but to some dentists, the dollar per patient is a number to be reckoned
with.
CEOCFOinterviews: What is the practitioner spending to
use the hypodermic syringe, and what advantage does your product afford the practitioner?
Mr. Osser: The dentist who doesn’t have
The Wand is spending between 40 and 60 dollars for a hypodermic syringe. They also have to
buy an autoclave, because they have to sterilize it each time it is used, they have to put
in a needle which has two sides and is a danger in infection control because you can cut
or prick yourself with that. They then have to use a carpule of anesthetic solution.
Therefore, it is very time consuming to set that up and the dentist will usually have an
assistant do that. With our device, we use a carpule, and we use a needle as well, but
they would have to spend an additional 98 cents to 1 dollar for the hand piece. However,
the ergonomically designed hand piece gives them the flexibility to give injections that
they cannot give with the hypodermic syringe. Therefore, the dentist can give injections
that are far more comfortably for the patient, and with less stress to the practitioner.
This system also allows the dentist to do other injections, which are far better for the
patient, the practitioner and the practice, but the dentist has to be educated that these
things can happen. For example, when an injection is given with our device, there is no
collateral anesthesia. When an injection is given with a hypodermic syringe, and you leave
your dentist office, usually you are drooling for two hours, your cheek and half of your
tongue and lips are numb. This is because they will give a certain injection, which is
less painful than others. We don’t have to do that with our device, because all of
our injections are virtually painless. Therefore, we can give different injections without
any collateral anesthesia, which is in enormous advantage. In addition, since our device
is held in a pen-like grasp, it can be rotated during insertion, which defeats the
deflection of the needle.
When you put a needle into tissue, the needle will deflect away from the bevel
Although you are aiming for the site, as the practitioner that you know is the right site,
the needle that you can no longer see because it’s embedded in tissue, is going in a
different direction. That’s why dentists miss 25 to 30% of mandibular block
injections, which is 48% of all dental injections given in the United States. With The
Wand, they don’t miss any of those injections because they rotate the hand piece as
they are moving to the target site. Therefore, it doesn’t deflect. In addition, they
can do a different injection on a single tooth, which is a far better injection that they
cannot give with a hypodermic syringe as a primary injection, because it is very painful.
It can be done with The Wand because the computer controls the medicament going into the
tissue. Whereas, with the hypodermic syringe, in order to get the pressure to go into a
small area, the only way that you can have pressure, is to push harder on the plunger,
because there is no torque in a hypodermic syringe. Therefore, you would be able to
express more medicament at the needle point. We don’t need to do that with our
device. We have a linear activated step motor, a microprocessor and a plunger, that
regardless of the density of the tissue the exact same medicament can be delivered over
the same period of time. Therefore, our device does no tissue damage, does not cause pain
and can do addition injections. The pain of an injection is not caused by the needle when
it pricks the skin, but when it goes through the skin and the dentist is pressing on the
plunger and the hypodermic syringe. This creates a tremendous force of 640 PSI. You
wouldn’t put more than 30 in your car tire, and here you are putting about 20 times
that amount into the human body. It’s a dangerous instrument.
CEOCFOinterviews: What is the cost of The Wand, and
does it affect the decision of the dentist to purchase the device?
Mr. Osser: CompuMed, the medical product, will
have a list price below $2,000.00, while the medical hand piece is $2.00. We believe that
in the medical market, there is a reimbursement available from Medicare and private
insurance for the injection as well as for the use of the unit. Therefore, the only reason
for a practitioner not to use it is if they are not aware of it, or educated about the
major benefits. Hence, it is our job to increase awareness, and that is why we have more
clinical studies on our product in dental than any other product in that market. Now we
have had our first clinical study published in the medical market, and also have another
clinical that has been finished and hopefully will soon be published in podiatry. With
CompuMed, the practitioner can perform more procedures, like bunionectomies, right in
their office without the need for IV sedation. This
results in a great savings of money, but more importantly, because the patient does not
perceive the pain, they do not have to stay in the hospital for one to four hours waiting
for the IV sedation to wear off. Therefore,
it’s a win-win for everybody. If the microprocessor was $100,000.00 and it was
$100.00 for each use, then people would have to think about it, but at the cost that it
is, I don’t think that the price would dissuade many medical practitioners, and for
the dentist it is a major practice buildup. It would encourage compliance of patients
coming in every 6 months. People should visit their dentist every 6 months, but they are
afraid to do so because their memories of the dentist are memories of pain. Therefore,
none of us wants to do it unless we have to. At Milestone Scientific, we feel oral health
and oral hygiene is very important, but I too was afraid to go to the dentist before the
advent of the CompuDent.
CEOCFOinterviews: Do you ever see the revenue for the
disposables surpassing the revenue from the sale of the device?
Mr. Osser: Oh yes! In the United States, we
are selling approximately 180,000 hand pieces per month in the dental market.
CEOCFOinterviews: What is your current market share?
Mr. Osser: In the United States we currently
have about 4% of the market of the dental market.
CEOCFOinterviews: What do you need to do to increase
your market share?
Mr. Osser: It’s really education. We have
to remember that when the hypodermic syringe came out, the medicament of choice was
cocaine, and that’s how old this instrument is, but it took 30 years for the dentists
to embrace to hypodermic syringe, though it was quite obvious that it would lessen the
pain of an injection. It was the development of delivering an anesthetic solution into the
body. Therefore, as was mentioned previously, dentists are not the fastest moving people
when it comes to new technology. The main thing for dentists is that they look to the
opinion leaders in their field to see what they are doing and the opinion leaders, almost
exclusively are using The Wand. Therefore, my feeling is that as this permeates down
through the industry, I believe that more dentists will take a look at computerization and
say that maybe, Stanley Malamed, John Ugaser, the top people in their field see something
that the other dentists don’t see. As a matter of fact, in a study that was just
published in May of this year (2001), at the University of Southern California, one of the
top surgeons in the colorectal area did a study on The Wand. In the study, a number of
very good things were discovered, but one of the things that came out of the study was
that the study was stopped early. This was because the professor in charge of the study
said that it was so obvious that The Wand is so much better for the patient that he finds
if unethical to use the hypodermic syringe again. In other words, he would not continue
the clinical trials, because he wouldn’t continue to use the hypodermic syringe on
the patients, to do the comparison, because of the standard of care. The clinical was
finished and published, but we all look at what is “the standard of care”, and
one of the problems in our litigious society is that if the doctor uses something that is
not “the standard of care”, they are liable. This is an important factor, but
the main factor is that if something is better for the patient, that is what should be
used. Fortunately, our product is a very low price to does a great deal for the patient.
CEOCFOinterviews: How do you sell and market your
product?
Mr. Osser: We have a network of independent
sales reps in the United States, supported by an Inside Sales team. This provides a
seamless approach to our customers.
As for marketing, the product got a lot of attention, because it is a major change
in local anesthesia. Moreover, of the medical profession, dentists are the most astute in
local anesthesia. Therefore, they are on the lookout for new things, unfortunately when
new things come along, no one likes change in that profession, so it requires an
education. It also requires learning something different. If you didn’t know how to
use the hypodermic syringe, you would learn how to use either CompuDent or CompuMed much
faster, but the doctors already know how to use the hypodermic syringe, and now have to
learn something else. To learn how to use the system, takes between 8 minutes and 2 hours,
with the vast majority learning within a half hour.
CEOCFOinterviews: Do you also supply a video or
training?
Mr. Osser: We give them a video; instruction
booklet and they can attend seminars and workshops. However, most dentists pick this up,
and after reading, the instructions can use it right away. It’s very simple compared
to what they have been doing. The only difference is that if they want to they can learn
to give different injections, which will make their practice much easier.
CEOCFOinterviews: How do you approach the market
globally?
Mr. Osser: What we are doing with the CompuMed
is first introducing it in the United States, putting together an independent Rep.
Network, and once establishing our market here, we would look to one of the majors to take
over the product as a distributor.
CEOCFOinterviews: Are you still applying a great deal
of you revenue into research and development?
Mr. Osser: Not at this point, because the
CompuMed and the CompuDent are finished and will not need any further R&D spending.
CompuFlo™ and our safety device are both in the prototype stage and are moving into
clinical studies now, which are comparatively inexpensive. They both will require some
more development, but we are speaking about a relatively small amount of money to develop
that product. We’ll need tooling, but for the actual R&D, those major expenses
are behind us. The patent work, which is very expensive, is behind us, so it’s now
time to finalize the development and get into the medical market. We have been waiting for
three years for this introduction in August. Therefore, this is something that we are very
excited about, and the fact that the major university in podiatry in the United States
which did the study on our product will have the professor who did the study lecturing on
our product at the symposium in Chicago in August, is very exciting to us.
CEOCFOinterviews: Do you have the cash and/or credit to
continue to grow you business?
Mr. Osser: The answer is yes, but everything
depends on the speed with which you want to move forward. The company is doing better and
better with each passing month in cash flow, based on seasonality of the business in the
United States. If we want to expedite the development of the CompuFlo, and of our sharps
device, it would require more capital, but if we go slowly we could do it out of our own
earnings. Clearly, being that two of our major investors are U.S. based funds who have
capitalized this company to this point, we feel that given that as we need money in the
future, if came forth in the past, we have no reason to believe that won’t happen in
the future.
CEOCFOinterviews: In closing, what would you like to
say to your current shareholders and potential investors?
Mr. Osser: For our present shareholders, I
very much appreciate their patience. We’ve had our ups and downs, but we believe that
we have a very firm handle on our economic situation and we certainly do on our
technological situation. For investors looking at the company, I suggest that they go on
the Internet and see the colorectal clinical, copy written by the American Society of
Colorectal Surgery.
Our present technology in the field
replacing the hypodermic syringe is a very advanced technology, and now we have the new
technology, replacing that, which is probably as dramatic as our old technology. That
product is for the home care market, the infusion device market and the hospital market.
Therefore, we are covering with the new device, all of the medical markets.
When we think of the first time we ever visited the dentist, if the dentist said,
“I have golden hands”, it wasn’t one of the great truths. We all know that,
and to subject our children to the same fears when there’s something better as a
standard of care is just not right. Therefore, I would suggest going to dentist that have
The Wand. As for the dentist, I would like to remind them of how far the world has come
since the automobile replaced the horse as the major mode of transportation, and I believe
that our products can make a similar impact.
