Medical Acoustics, LLC
March 10, 2014 Issue
The Most Powerful Name In Corporate News and Information
Acoustic Technologies for Diagnostic and Therapeutic Medical Applications
About Medical Acoustics, LLC
Medical Acoustics is a U.S. based company, built on over ten years of research. The company’s mission is to design, develop and market devices employing acoustic technologies for diagnostic and therapeutic medical applications. Medical Acoustics’ first product, the patented Lung Flute®, is a revolutionary medical device that is expected to play a significant role in the treatment, diagnosis of, and drug development for COPD, lung cancer, tuberculosis, chronic bronchitis, asthma and community-acquired pneumonia. The Lung Flute® is FDA and CE cleared for both diagnostic and therapeutic use.
The Lung Flute’s innovative application of low frequency
acoustic waves has been lauded by many leading publications and independent
research organizations. The Lung Flute® was selected by Frost and Sullivan
for a Best in Technology Award, Popular Science named the device a Best
Innovations of 2009 and MD&DI Magazine recognized Medical Acoustics as one
of the Top 50 Companies to Watch.www.lungflute.com
Mr. Codella received a bachelor of science in Economics and
Political Science from the State University of New York, College at
Brockport and MBA from the Rochester Institute of Technology. Mr. Codella
also earned an advanced certificate from The Wharton Business School,
University of Pennsylvania. Frank is also a graduate of the Kaufman Center
for Entrepreneurial Leadership, entrepreneurship education program.
Buffalo, NY 14203
Interview conducted by: Lynn Fosse,
Senior Editor, CEOCFO Magazine, Published – March 10, 2014
Mr. Codella: As our name might indicate, we are focused on acoustical technology, in other words, the use of sound waves in medical applications. Our first product, the Lung Flute® is based on using low frequency sound waves in the sixteen to twenty five hertz range - well below human capacity to hear. The Lung Flute is capable of delivering these low frequency sound waves into the bronchial tree. As the sound waves pass through the lung secretions the sound energy breaks the hydrogen bonds and reduces the viscosity. Once the secretions have been thinned, the body’s natural clearing system can than move the secretions up the bronchial tree and the patient can cough and clear. Because sound is amorphous, the acoustic waves spread throughout all regions of the lungs including the most distal parts. It may sound a little bit trivial when described in this fashion, but patients with respiratory disease, particularly those suffering from COPD, struggle with significant lung congestion. COPD is a catch term for patients that suffer from a combination of chronic bronchitis and emphysema. Over seventy percent of COPD patients are more on the scale towards chronic bronchitis, which results in hyper-secretion, so severe lung congestion is a prominent characteristic of the disease. The CDC estimates there are 30 million COPD patients in the US and the World Health Organization claims over 250 Million people worldwide are afflicted with the disease.
CEOCFO: Would you tell us about using sounds in medical treatment? Is this something new?
Mr. Codella: People have long known that low frequency sound waves do help clear lungs and could help in other areas. There have been many attempts over the years to employ sound waves in medical applications. For example there is a rather expensive product that does use, in the respiratory area, low frequency sound waves. However, it is a powered system and is applied externally to various points on the patient’s body by a technician. What we have come up with is a way for patients to blow on an inexpensive device and introduce low frequency sound waves into their lungs. We can do it with a forty-five dollar device verses a ten thousand dollar device that requires a technician to administer.
CEOCFO: Where are you in the development and commercialization process?
Mr. Codella: We are at the commercial launch stage. We have gone through the entire clinical evaluation process and have been cleared by the US FDA for the Lung Flute to be sold in the US for two applications. One is, as I described, therapy for patients to use on a daily basis. I often describe it as a toothbrush for your lungs – something that patients use every day to clear the lungs of excess secretions. By regularly clearing their airways, patients breathe better, get better oxygenation and they are less prone to infection because those retained secretions become a breeding ground for spores, viruses and bacteria. That is the therapeutic application. We have also been cleared by the FDA to be used to produce a deep lung sputum sample. Therefore, the patient can build up enough resonant sound energy in their lungs from using the Lung Flute that they will cough up a deep lung sputum sample that can be sent to the pathology lab for examination. We are on the launching pad now to commercialize. In addition to the US, we have regulatory clearance and patents issued in Europe, Japan, Canada and India, The Lung Flute has also been granted a patent in China and we are currently in the midst of getting regulatory approval there. We see it as a global product. The Lung Flute servers a huge addressable world market. When one adds up the worldwide population afflicted with asthma, COPD, pneumonia and other respiratory diseases that result in retained secretions, the number exceeds one billion people.
CEOCFO: Are there any potential side effects?
Mr. Codella: We have not discovered any of significance. Nearly one dozen clinical trials have been conducted in the US, Japan, Australia and the Philippines and none have reported any negative side effects other than transient throat irritation and a few over exuberant patients becoming light-head from blowing to hard.
CEOCFO: Will this be something that needs to be prescribed? Is it something that people would be able to purchase from you or essentially over the counter?
Mr. Codella: In the US the Lung Flute has been designated by the FDA as a Class II device, which means it requires a physician’s prescription. Everywhere else in the world, where regulatory clearance has been granted, and the device has received Class I designation, which allows it to be sold over the counter without prescription.
CEOCFO: What is the plan to reach the medical community? We all know that doctors are bombarded with hundreds of items a week that might be useful. How are you going to get in touch with them?
Mr. Codella: It’s a big challenge in the US because, as you said, there is a great amount of noise in the system and doctors have very limited time, unfortunately, to look at new devices. Right now, we have been somewhat focused on the markets outside of the US. We just signed a licensing deal in the Peoples Republic of China and are currently working in other parts of Asia and pockets of Europe. However, in the US, to answer your question, we have invested heavily in clinical trials to accumulate a body of empirical evidence to support the device’s efficacy and impact on improving patient outcomes. We recently completed, what in the pharmacy world is called, a Phase IV clinical trial. These are clinical trials conducted post-FDA clearance. A six month randomized controlled Lung Flute study with a COPD population was undertaken by the State University of New York at Buffalo and the US Veterans Administration Western NY Medical Center. The research demonstrated that the patients that added the Lung Flute to the current standard-of-care for COPD had a statistically significant improvement in their quality of life scores compared to patients that only followed standard-of-care practices. Most importantly, the study showed that the control group declined in their six minute walk capacity over a six month period and the Lung Flute group actually remained stable. This is a big win in the world of COPD and has substantive implications for cost containment. A paper on this study will be published in an academic journal that is read by pulmonologists. We expect it will create some buzz and raise awareness among physicians. We also plan to execute a direct-to-consumer awareness campaign targeted at the COPD patient and caregiver community which includes organizations like the American Lung Association’s Better Breather Clubs. We did a survey of over 1,500 COPD patients and their caregivers with WebMD last year. Over 75% of the COPD patients and caregivers told us that now that they are aware of the Lung Flute they definitely want to give it a try and feel it is highly likely to help them or their loved one. We certainly don’t have the funds of a Pfizer that can blast ads across the airways, so we need to take more of a gorilla marketing approach.
CEOCFO: Would anyone with COPD be helped?
Mr. Codella: COPD, today, is an incurable disease that progresses in severity throughout the patient’s life. There is the early onset, Stage I, right through to what they call stage IV or very severe COPD. Our clinical research clearly shows the Lung Flute helps anyone from the onset of COPD symptoms on to mid-stage IV. Unfortunately, severe late stage COPD patients generally cannot generate enough exhalation to operate the self powered device. However, out of the fifteen million diagnosed cases in the US, we can help the vast majority. Incidentally, we have a few design ideas on how to reach further out on the tail of the COPD State IV curve in the works.
CEOCFO: Can you go direct to the patients and is that the best way to get doctors to pay attention?
Mr. Codella: When the FDA allowed direct-to-patient advertising it dramatically changed how medical products are marketed in the US. That said, Medical Acoustics doesn’t currently have the financial resources to run a TV ad campaign. However, we certainly can use social media and other such methods to get our message to COPD patients, their caregivers and patient advocacy groups. Furthermore, the Affordable Care Act, AKA “Obamacare”, will place a greater focus on treating chronic diseases – COPD is one of the top 5 healthcare cost drivers and the third leading cause of death – at home through greater patient involvement in the management of their condition. The Lung Flute is a low cost device that patients will use every day at home to improve the management of their chronic condition - we play directly in to this new paradigm.
CEOCFO: Do you have agreements in various parts of the world?
Mr. Codella: Yes. As I mentioned earlier, we have signed a license partner in China. We also have signed distribution partners in Korea, parts of Europe and Australia. Negotiations are underway to expand into other countries as we speak.
CEOCFO: How do you clean the device?
Mr. Codella: It comes apart. We recommend that patients just hand wash it with soap and warm water. As I said before, there is a removable reed inside the device. When activated by the patient exhaling into the device, low frequency sound waves are generated by the reed flapping. Each Lung Flute is packaged with a supply of replacement reeds. Patients are instructed toss-out the reed out, clean the device and insert a new reed every twelve to fourteen days – some patients clean the device after each use. It is reimbursable by Medicare / Medicaid in the US, which means most insurance companies will reimburse for it as well.
CEOCFO: Would you be supplying the reeds on an ongoing basis?
Mr. Codella: Yes. We provide a six month supply of the reeds with the device. The way the CMS reimbursement works is they will reimburse for a new device every six months. Therefore, everything is packaged around the reimbursement cycle. In other regions of the world we package the product a bit differently because insurance policies are different or purchases are entirely out of pocket.
CEOCFO: Therefore, you have all the pieces in place!
Mr. Codella: Correct.
CEOCFO: Are you funded for the steps you would like to take next?
Mr. Codella: Since inception, Angel investors have funded the company. Right now, we are contemplating some form of institutional money. However, with revenue from the China license deal and crafting the right strategic partnerships, we should be able to achieve our growth objectives.
CEOCFO: Are people skeptical about the idea of sound?
Mr. Codella: Surprisingly enough, no! Most people intuitively get that there is power to sound and sound has a role in medicine. Therefore, no. Not at all. In fact, when we explain the physics of how it works to physicians and scientists, we get very little push back. They all understand, almost intuitively, that it makes sense and that it would work.
CEOCFO: Why should people look at Medical Acoustics and pay attention to Lung Flute?
Mr. Codella: Right now, our device addresses a very large, underserved need in terms of managing and treating respiratory diseases characterized by retained secretions. I’m sure you have seen the ads. There are probably a half a dozen drugs out such as Spiriva that deal with bronchial constriction which is big part of the COPD disease state. The Lung Flute is actually a strong compliment to these drugs. Most patients will tell you that along with bronchial constriction, retained secretions are their other primary complaint. Currently there are no drugs that are effective at that. Although there are some mucolytics available, they are not very effective and not recommended for long term use, because they are pretty tough on other organs. We have developed a relatively inexpensive device that has been clinically proven to be highly effective at relieving a major symptomatic complaint of patients with COPD without adding another drug into the mix.
CEOCFO: What might people miss when they look at the product and look at the company that they should understand?
What they’ll may or may not have missed is that it is difficult, I will
admit, to have a single product company in the US medical field because of
the cost of marketing. That’s why we are looking to do alliances or
strategic partnerships so that we could bolt our product on to a larger
product lines. The Lung Flute is a very inexpensive device to manufacture.
Given the US reimbursement, it is a forty-five dollar device at retail,
ninety dollars a year per patient. Therefore, it is a high volume play.
However, the addressable market is of sufficient quantity to allow the
company to do very well.
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