Deal Details
Startup: Oracle Health
Security type: Stock Purchase Agreement
Price per security: $2.00
Valuation: $20 million
Minimum investment: $250
Where to invest: Republic
Deadline: July 16, 2021
Medical technology is going through an amazing outlier period. There’s been dozens and dozens of medical technology breakthroughs — from the Covid-19 vaccines that use new mRNA technology to earlier and earlier detection of devastating diseases like cancer and autism.
They just keep coming. I know it can’t last forever. But in the meantime, I’m taking advantage of the embarrassing riches. Many of these companies meet the criteria that define great startup opportunities. The health problems they address are historically resistant to easy solutions. The problems are huge, affecting millions of patients. The technology is real and heavily researched. And testing for many has already begun — a vital step for any medical advancement.
I’m happy to report on yet another medtech startup that checks all these boxes. It’s called Oracle Health. Oracle targets heart failure. It’s an intriguing choice — not just because it affects nearly 6 million Americans, making it one of the biggest and costliest healthcare problems in the country. It’s because treatment and better outcomes are all about early detection.
You see, heart failure is not an acute event. The change in pressure in one’s chest signals the onset of heart failure three weeks in advance. If doctors can identify those signals, they can simply prescribe pressure pills that cost just $5 and avoid disaster. But for the vast majority of cases this doesn’t happen. The early signs are never detected. And more than a million heart failure patients end up in the hospital every year.
Oracle Health has developed an implant that would significantly reduce the number of hospitalizations.
Most startup investment opportunities begin with a great solution meeting a big and stubborn problem. Here we have a problem that’s huge, needed and real. And we have technology that can improve patient outcomes by detecting heart failure before heart complications set in and hospitalization is required. So, let’s fill in some of the remaining missing pieces.
A historically hard-to-solve problem? No company has been able to overcome the twin obstacles of cost and complexity when it comes to the early detection of heart failure. For a while, wearables — which are cheap and easy to attach — seemed like a plausible solution. But at least for now, they don’t work very well. The heart-related signals they catch are too noisy to detect heart failure… and therefore inaccurate.
The gold standard for heart failure monitoring is currently CardioMEMS. The CardioMEMS implant is accurate — but it’s also expensive, complex and not a good fit for everyone. The device requires a surgical procedure to implant a sensor inside the heart. And that sensor can’t work without an external device that measures the internal pressure changes — resulting in cumbersome and complex home care for the patient.
Oracle’s devices — as I’ll talk more about later — solve both the accurate signal problem and the costly surgical procedure problem.
A superior technology? We don’t don’t for sure if Oracle Health’s product will be a major advancement — nor would we be expected to. If we did, Oracle Health would probably be worth five to ten times its current valuation of $20 million!
What we do know, however, is extremely promising. Oracle’s device takes just two minutes to implant. You’re in and out of the doctor’s office in a flash. That’s because the implant is placed just under the skin, where the signals are much sharper than what wearables provide. The raw signals/data go to the cloud where Oracle’s proprietary AI performs the analysis and alerts the doctor if there’s any problem.
Most implants only monitor heart rhythms called ECG (electrocardiogram) signals. They’re one-trick ponies. And that’s not about to change. Recent iterations focus on picking up more ECG signals. Medtronic — the dominant company in the arrhythmia monitoring market — has a below-the-skin implant and just announced it’s now monitoring R waves. That’s just another type of ECG signal.
Medtronic’s device doesn’t do nearly as much as what Oracle Health’s device does either.
Oracle’s device collects billions of data points from three different types of signals. Of course, ECG is one of them. But it’s not the most important one for heart failure detection. A second one picks up activity, posture and body orientation. But it’s the third type of signal that is Oracle’s secret weapon. This is its acoustic sensor, which listens to heart and lung sounds. We’ve recently learned that heart sound, in particular, is a key biomarker for heart failure.
Better patient outcomes? The jury is still out on Oracle’s technology here because the company’s devices haven’t made it to human trials yet. But it won’t be Oracle’s fault if its implants don’t lead to better outcomes.
It’s also not enough that Oracle Health’s technology works. The crux of the problem is adoption. Its technology needs to be widely adopted to impact outcomes. This is where current pulmonary artery pressure monitoring technology fails. It’s expensive and complex. And it’s not covered by insurance in many regions — meaning many patients can’t access it even if they want it. It’s a mess.
But Oracle Health’s multi-sensor approach and super minimal insertions strike at the heart of the problem. The implant procedure for Oracle’s device is quick and far less expensive than a surgery. And because of that simplified procedure (and the fact that Oracle is building on top of existing technology), it faces a much easier road to FDA clearance. As for insurance? The reimbursement code it’ll be using exists RIGHT NOW for everybody to see. It’s CPT 33285.
Is marketing a big risk? Unfortunately, our healthcare system doesn’t always gravitate to what makes the most sense. But Oracle Health founder Jae Bang’s strategy of targeting Florida and Texas first goes a long way in reducing the initial risk. They’re the two highest volume states for implantable cardiac devices. The company is already in discussions with several leading heart failure implant surgeons in both states.
A pathway to regulatory clearance? Founder Jae Bang thinks the evidence that the technology works and improves outcomes is pretty compelling. And he’s ready to prove it. Tests on animals will begin soon and finish by this fall. The results will provide useful feedback to improve the device. Pre-clinical testing of human patients starts soon after. Oracle Health has already enrolled 25 patients in pre-clinical testing to prove efficacy. Because its implant device is a class II designation — and a monitoring device built on existing technology — it’s eligible for a 510K FDA clearance, which takes about 12 months. For devices that go inside the heart, FDA clearance takes 7-to-15 years! If all goes as expected, Oracle Health will get clearance by mid-next year. It’s an aggressive schedule — but entirely doable. Oracle will actually begin limited selling before then to arrhythmia patients. So revenue generation is right around the corner.
What’s Next
This is when it gets exciting for Oracle and its investors. With FDA clearance, the startup goes from a medtech development company to a heart failure implanting company.
This is a huge deal! These implant companies are highly prized, revenue or no revenue. Jude Medical bought CardioMEMS for $500 million (Abbott then bought Jude Medical). Cameron Health was bought by Boston Scientific for $1.3 billion. And Medtronic bought HeartWare for a cool $1.1 billion.
All of these companies have heart implant or transplant devices. None have revenue. Some didn’t even have FDA approval. Their implants/transplants basically worked as advertised. And so, they were bought out for large sums of money. The early investors of these companies were rewarded with huge profits. And the marketing risk was a non-factor. It went away with the buyouts. Marketing and expansion became the responsibility of the takeover companies.
While there is no guarantee here, this is a very possible scenario for Oracle Health. Legacy companies already have the marketing muscle. What they lack are the implants that have superior functionality.
If those devices are also FDA cleared, compliant, reimbursable, provide comprehensive data and make money (Oracle plans to generate around $1 million in revenue over the next 12 months), that’s an irresistible package. If recent history is any indicator, Oracle will be highly sought after as a takeover candidate sooner rather than later.
Not everybody could have pulled it off. But Jae Bang isn’t just anybody. He spent several years at Medtronic, followed by a wide variety of responsibilities at several Silicon Valley medtech startups that gave him both the business and technical expertise he needed to bring the company to where it is today. And he’s had help. Jae put together a deeply experienced team. There’s a reason why they know the competition and their products so well. At some point in their careers, they worked for them!
From the team to the technology to the business plan to regulatory compliance, the investment case for Oracle Health is extremely exciting. It’s already raised more than $600,000 on Republic. We’re clearly not the only ones excited over Oracle.
How to Invest
Oracle Health is raising up to $8 million on Republic. If you don’t already have a Republic account, you can sign up for one here.
Once you verify your account and are logged in to Republic, visit the Oracle Health deal page. Then click the blue “Invest in Oracle Health” button. Enter the amount you want to invest, starting as low as $250, and proceed through the required steps. Be sure your investment is confirmed, then you’re good to go.
Risks
This opportunity, like all early-stage investments, is risky. Early-stage investments often fail. Oracle Health might need to raise another round of funding in a year or two, if not sooner.
If it executes well, this shouldn’t be a problem. But that’s a risk worth considering when investing in early-stage companies. The investment you’re making is NOT liquid. Expect to hold your position for five to 10 years. An earlier exit is always possible but should not be expected.
All that said, I believe Oracle Health offers an attractive risk-reward ratio.