MicroVentures Logo MicroVentures Logo MicroVentures Logo MicroVentures Logo, large text MicroVentures Logo mv-icon-reply mv-icon-bubble mv-icon-bin
Previous offering
Next offering

Oracle Health

Insertable cardiac monitors

$232,155

Raised from 603 investors

Min: $25,000

Max: $1,070,000

Security Offered

Convertible Note

Minimum Investment: $100

  • Accepted into JLABS at Texas Medical Center – a Johnson & Johnson life sciences incubator – in November 2019

  • Graduated from Zeroto510 - a Medical Tech Accelerator – in its Summer 2019 cohort

  • Research agreement with the University of Maastricht to study the efficacy of its medical device on Heart Failure patients

  • Provisional patent application filed in July 2019, with a patent assessment completed in October 2019 related to the potential for patentability

Executive Snapshot

Oracle Health is designing an insertable cardiac monitor that aims to help provide a long-term solution for heart failure patients through a minimally invasive device. Even though the company was started in Q2 2019, it has already built out a highly experienced team and accomplished numerous milestones including:

  • Recruited a team of advisors who have experience from Stanford University, Harvard Medical School, Johns Hopkins University, Ohio State University, NASA, Boston Scientific, and many venture-backed health tech startups
  • Accepted in JLABS at Texas Medical Center – a Johnson & Johnson life sciences incubator – in November 2019
  • Graduated from Zeroto510 – a Medical Tech Accelerator – in its Summer 2019 cohort
  • Research agreement with the University of Maastricht to study the efficacy of its medical device on Heart Failure patients
  • Provisional patent application filed in July 2019, with a patent assessment completed in October 2019 related to the potential for patentability

Terms

Investment Terms

Security Type: Crowd Note

Round Size: Min: $25,000 Max: $1,070,000

Discount Rate: 20%

Valuation Cap: $4 million or $5 million

Conversion Provisions: In connection with equity financing of at least $1 million, the Company has the option to convert the Crowd Note into non-voting preferred stock (Conversion Shares) at a price based on the lower of (A) a 20% discount to the price per share for Preferred Stock by investors in the Qualified Equity Financing or (B) the price per share paid on a $5 million valuation cap. Please refer to the Crowd Note for a complete description of the terms of the Crowd Note, including the conversion provisions.

Perks

Perks

Investors who purchase the first 25,000 Crowd Notes, and thereby fund the first $25,000, will receive Crowd Notes with a conversion provision based on a $4 million valuation cap instead of a $5 million valuation cap. That means, in connection with equity financing of at least $1 million, the company has the option to convert the Crowd Note into non-voting preferred shares (Conversion Shares) at a price based on the lower of (A) a 20% discount to the price per share paid for Preferred Shares by investors in the Qualified Equity Financing or (B) the price per share based on a $4 million valuation cap (instead of $5 million).

Overview

Opportunity

Heart failure is one of the most pervasive chronic illnesses in the U.S. Causing 11 million physician visits each year, heart failure is responsible for more hospitalizations than all forms of cancer combined. With nearly 550,000 new cases of heart failure diagnosed in the U.S. each year,i  new technologies are being developed to help better treat patients, including wearable devicesii and implantable cardiac monitors. However, there can be challenges with these approaches. Monitors that are placed in arteries, in particular, require invasive and complex cath procedures to properly insert the device.iii

Founded in May 2019, Oracle Health is a digital health technology company that is developing a minimally invasive cardiac monitor that intended to be more efficient for patients and cardiologists. Not only is this product aimed at reducing invasiveness for patients, but its cloud-based pattern recognition machine learning algorithm will be designed to help cardiologists better monitor their patients through a software platform. The company was founded by Jaeson Bang, who has over a decade of health tech startup experience, as well as an MBA from Northwestern University and a BS in Biology from UCLA.

Press

Product

Oracle Health’s tiny insertable cardiac monitor (ICM) is designed to be a minimally invasive solution that can effectively help cardiologists monitor and treat their heart failure patients. The company intends to pair its medical device with a software dashboard engineered to help cardiologists easily track trends and patient data over time. Oracle Health is positioning its ICM to be a simple and minimally invasive long-term solution that is more effective and diligent than wearable products and less invasive than monitoring devices that go directly in a patient’s pulmonary artery. The company intends to submit the device to the Food and Drug Administration for review under its 510k process in Q1 2020. This review is done to ensure that the device is fit to go-to-market.

How it Works

Oracle Health is developing its ICM so that cardiologists can easily implant the device into patients in approximately two minutes. The device will be implanted just under a patient’s skin, in their chest region.

Step 1

Cardiologist numbs the small region where the device will be inserted.

Step 2

Cardiologist then makes ¼ inch incision and inserts the device under the skin.

Step 3

After device is inserted, physician then covers the incision area with a special, sterile bandage.

After the minimally invasive insertion process, the monitor is able to listen to the heart sounds and record electrocardiography (ECG) continuously for up to three years. Cardiologists will then monitor patient data and trends in heart performance using the company’s software dashboard via a web portal or mobile device. The platform will use cloud-based machine learning to analyze the patient’s data and help cardiologists efficiently determine the next steps in patient care.

Acoustic sensor listens to heart sounds to gain patient data.

ECG records heart rhythms and accumulates performance trends.

Machine learning analyzes trending heart performance and provides actionable insights.

Oracle Health is designing its device and data platform to monitor heart sounds and rhythms 24 hours a day, seven days a week for three years for patients and their physicians. By taking data continuously and transmitting through the cloud, physicians will be able to log onto their data portal often to review trending reports, as well as receive any updates from the machine learning algorithm. Patient heart data will be accessible not only from a desktop, but the Oracle Health smartphone app also.

Intellectual Property

In May 2019, Oracle Health filed a provisional patent application that covers the technology related to its implantable cardiac device, software dashboard, smartphone app, and data accumulation techniques.

Use of Proceeds

If the minimum amount is raised ($25,000), Oracle Health intends to allocate the majority of the proceeds (80%) towards research and development, with the remaining funds going towards general working capital (10%) and marketing (10%).

If the maximum amount is raised ($1.07M), Oracle Health intends to allocate about 95% towards research and development. General working capital (~2.3%) and marketing (~2.3%) are the remaining functions the company is projecting to direct the proceeds of the raise toward. Oracle Health has discretion to alter the use of proceeds from this raise.

The company anticipates allocating funds towards the following functions within each category:

  • Research and Development: The company is forecasting to use funds from this raise towards the continued development of its device, as well as any potential expansion for new product features or offerings.
  • Marketing: The company is projecting to use a portion of the capital from this raise towards marketing costs for digital advertisements, trade shows, and other outlets to increase awareness around the company’s technology.
  • General Working Capital: Oracle Health intends to allocate a portion of this raise towards general working capital for running the business.

Product Roadmap

As Oracle Health progresses along its product roadmap, the company hopes to achieve the following milestones in 2020:

Q1 2020

  • Complete human pilot testing
  • Complete animal lab testing
  • Analyze and publish research from these tests in a research journal

Q2 2020

  • Apply for a National Institute of Health (NIH) grant for its insertable medical device. This grant would be non-dilutive funding
  • Build out intellectual property portfolio through additional patent applications
  • Participate in road shows to improve public recognition and knowledge of its product

Q3 2020

  • Begin hardware and software final product design
  • Add a software engineer to the company’s team

Business Model

Oracle Health intends to operate a multi-distribution model for the sales of its device using internal sales managers. These managers will then sign up hospitals and cardiologists, as well as manage independent pacer representatives. Initially, the company will focus on cardiologists in Tennessee, Texas, and Florida, where the company already has pre-existing relationships.

Oracle Health has already partnered with Velentium Engineering to help with the design and manufacturing process. Oracle Health estimates a per unit manufacturing cost of $1,000, which the company anticipates will retail for $5,300. The company hopes to begin generating revenue in 2022.

User Traction

Since its inception in May 2019, Oracle Health has already been accepted and participated in two medical technology incubators. The company was accepted in JLABS at TMC in Houston, TX in November 2019. JLABS is a part of Johnson & Johnson’s Innovation division which provides an infrastructure and resources for more than 300 emerging life science companies.iv   Johnson and Johnson is a multi-national healthcare organization that earned more than $81.5 billion in revenue in 2018.v

Additionally, the company also participated in and graduated from the Zeroto510 Medical Device Accelerator in Memphis, TN in the summer of 2019. This program is a nationally ranked seed accelerator that helps startups navigate the complex FDA 510k approval process for commercial medical devices.vi

To test the efficacy of its product, Oracle Health has entered into a research agreement with the University of Maastricht. This observational proof-of-concept study is planned to occur between January 2020 and February 2020 and will equip heart patients with the Oracle Health medical device, comparing data collected through Oracle Health’s device with other standard diagnostic information.  

Historical Financials

Oracle Health is currently pre-revenue, as it focuses on continuing to develop its product, conduct research testing, and build out an intellectual property portfolio. The company intends to generate revenue from the sale of its insertable cardiac monitor to cardiologists and hospitals after it has passed the 510k FDA process. The company hopes to begin generating revenue in 2022.

Through December 2019, Oracle Health has incurred about $44,000 in total expenses. In May, expenses were relatively high, as the company was incurring operation and legal expenses related to getting the business started. Since May, Oracle Health has dramatically reduced its expenses per month as it has primarily been focused on maintaining a lean operation and developing its product.

Through December, general and administrative expenses have represented about 57% of all expenses. Salaries and wages and professional fees both totaled about 17% of total expenses. Research and development (5%) and contractors (4%) were the two remaining expense categories.

Oracle Health has sustained a net operating loss of about $44,000 through December. As of January 2020, the company had nearly $16,000 in cash on hand. In 2019, the company has averaged a gross monthly burn rate of about $5,500. Since its initial organization costs, the company has kept burn rate lower than this average and intends to minimize operating costs throughout the duration of this raise. With the proceeds from this raise, the company anticipates having at least 12 months of runway.

Industry

The U.S. is the largest medical device market in the world, with Select USA reporting that the market reached $156 billion in size in 2017. By 2023, industry experts project the U.S. market to grow to $208 billion. The market is comprised of articles, instruments, apparatuses, or machines that are used for preventative, diagnostic, or treatment purposes. This industry includes nearly two million direct and indirect jobs in the U.S., with over 80% of medical devices companies operating at under 50 employees.vii

The U.S. Center for Disease Control and Prevention (CDC) estimates that roughly 5.7 million adults in the U.S. have heart failure, which is defined as when the heart cannot pump enough blood and oxygen to support other organs in the body. The CDC also reported that heart failure costs the U.S. ~$30.7 billion each year in health care services, medications, and missed days of work from the ill patients.viii  Heart failure is so pervasive throughout the country that Emory University found that there are nearly 550,000 new cases of heart failure diagnosed in the U.S. each year. This condition is responsible for 11 million physician visits each year, and even more hospitalizations than all forms of cancer combined.ix

One such way to monitor heart health is through implantable cardiac monitors. Research and Markets reports that the global implantable cardiac monitors market is projected to reach $682 million by 2023, growing at a 7.6% compound annual growth rate (CAGR) from 2017 to 2023. Growth is expected to be driven by the miniaturization of these devices, as well as the growing demand for cardiac monitors that can continuously monitor heart health and detect any abnormalities.x

Another such way for physicians and patients to monitor heart health are wearable medical devices. Wearable medical devices have grown in both popularity among consumers and acceptance among physicians for their ability to simply monitor patients’ health. Transparency Market Research valued the global wearable medical devices market at $6.8 billion in 2017. The market is forecast to grow at a compound annual growth rate (CAGR) of 17% from 2018 to 2026, in part due to the expansion of the health care industry, government initiatives that promote wearables, additional health care expenditure, and increased product approvals.xi However, the reimbursement structure from insurance providers for these wearable monitors has been ill defined so far.xii

Consumers have grown increasingly comfortable with digital health services and technologies. Not only are consumers going digital out of curiosity or for general fitness and well-being, but with the intention to address and treat real, concrete health needs. These consumers are using digital health solutions to manage diagnoses, connect with providers, and make critical healthcare decisions.xiii 

88% of respondents to a Rock Health survey reported using a digital health tool in 2018, up from 80% in 2015. The most widely used digital health tools – online health information, online provider reviews, mobile tracking, wearables, and live video telemedicine – also saw increased adoption year-over-year in 2018. In particular, live video telemedicine surged in 2018, increasing more than 100% year-over-year from 2017 to 2018.xiv

In the past, much of the growth for medical technology companies has depended on product innovations that make devices easier for doctors to use and improve outcomes for patients. Government regulations can also stimulate or slow growth based on how governmental agencies evaluate products. These regulations are so comprehensive that they govern medical device design and development, clinical testing, premarket clearance and approval, listing, manufacturing, labeling, advertising, storage, promotions, sales and distribution, and post-market surveillance.xv

In the U.S., the Food and Drug Administration typically oversees many of these regulations. One such evaluation process for medical devices is called the 510k. This process requires the manufacturer to demonstrate that a device is “substantially equivalent” to an existing device that is already legally marketed. The FDA occasionally requires clinical data, and often takes between ninety days to one year for completion.xvi Oracle Health plans to submit its insertable cardiac device for FDA review under the 510k framework in Q1 2020 and hopes to receive approval in approximately two years.

In 2018, venture capital in health tech companies reached $8.9 billion across 1,299 total deals. Health tech companies received record highs in investment amount ($9.64 billion) and deal count (1,718) in 2017. From 2016 to 2017, there was a 52% year-over-year increase in capital invested. Between 2008 and 2018, over $43 billion was invested across 9,840 venture capital deals in health tech companies.xvii

Source: PitchBook Data, Inc.

Source: PitchBook Data, Inc.

Competitors

Abbott Laboratories (NYSE: ABT)

Abbott Laboratories is an Illinois-based healthcare company that sells medical devices, diagnostics, medicines, and nutritional products to treat a wide range of health problems, including cardiovascular diseases. The cardiovascular disease division at Abbott has many internal divisions that are designed to solve specific heart problems. Organizations within the cardiovascular disease division include structural heart, heart failure, cardiac rhythm management, electrophysiology, peripheral intervention, vessel closure, carotid intervention, and coronary intervention. The heart failure organization has over five products that are designed to help physicians and patients more effectively monitor and manage heart failure.xviii The CardioMEMS HF System is a monitoring device that is implanted directly into a patient’s pulmonary artery that then sends information wirelessly to the patient’s doctor. Abbott reports that this device has been clinically proven to reduce hospital admission by 58% over an average of 12 months.xix In 2018, Abbott Laboratories reported that its Heart Failure division earned $646 million in total revenue, of which about 72% came from sales made in the U.S.xx

Medtronic (NYSE: MDT):

Founded in 1949, Medtronic is a medical device company that designs and sells devices for a range of medical uses. Heart failure and cardiac rhythm is one such medical issue that Medtronic sells devices to treat, with the company offering implantable cardiac pacemakers, implantable cardioverter defibrillators, implantable cardiac resynchronization therapy devices, AF ablation product, insertable cardiac monitoring systems, and mechanical circulatory support products. The Reval LINQ is the company’s flagship cardiac monitoring system product, which is designed to record the heart’s electrical activity before, during, and after transient symptoms, as well as assist in diagnosis.xxi In the 2019 fiscal year (which ended on April 26, 2019), Medtronic reported $5.84 billion in revenue from its cardiac rhythm and heart failure group, down from $5.94 billion in 2018.xxii

Sensible Medical Innovations

Sensible Medical Innovations is an Israeli company that aims to lead a new standard of care in heart failure. Initially used in the military, the company’s medical radar (ReDS) monitoring technology has been adapted for medical use to help physicians deliver a non-invasive solution to heart failure patients. By implementing this product, Sensible Medical claims that healthcare professionals are able to measure a patient’s lung fluid, which is a key data point for heart failure patients. Additionally, Sensible Medical’s solution can be used both at home and in a clinic.xxiii In May 2019, Sensible Medical entered into an agreement with Bayer for the use of Sensible’s ReDS technology.xxiv  Sensible Medical raised a $20 million financing round led by Boston Scientific in November 2013, which was the company’s last disclosed funding.xxv

ReThink Medical

San Francisco-based ReThink Medical is a health tech startup that has designed medical devices to help monitor heart failure. The company’s wrist-worn monitoring device is equipped with technology that is designed to predict and prevent heart failure hospitalizations. The device uses machine learning, artificial intelligence, and continuous physiologic monitoring to detect worsening symptoms.xxvi In May 2017, ReThink Medical raised a $3 million Series A round led by Emergent Medical Partners.xxvii

Team

Jaeson Bang

Founder and CEO

Jaeson founded Oracle Health in May 2019, after nearly four years at EBR Systems, a Silicon Valley-based medical technology startup. While at EMR, Jae worked cross functionally with the CTO and R&D engineers on device development, as well as leading a national team of therapy development managers and field clinician engineers. Prior to that, he spent time consulting the business and clinical operations team at Keystone Heart, a venture-backed Israeli medical technology company. Throughout his career, Jae has worked at startups that operate at the intersection of medicine, technology, and business. These companies have been funded by investors like Johnson & Johnson and New Enterprise Associates (NEA). Jae graduated from the Northwestern University – Kellogg School of Management with his Executive MBA in 2015 and from UCLA in 2004 with a degree in Biology.

Advisors

Oracle Health has numerous advisors that aid the company in business strategy, research and development, and other important functions. Advisors include:

Dr. Dimitrios Georgakopoulous

  • Chief Science Officer at multiple venture-backed biotechnology companies
  • Research experience at CVRx
  • Post-Doctoral Fellowship in Cardiology at Johns Hopkins Hospital
  • Authored numerous public research papersxxviii
  • PhD in Cardiovascular Physiology, Biomedical Engineering, Johns Hopkins University

Randolph Armstrong

  • Over 30 years of experience in medical device development
  • Executive-level experience at medical technology companies
  • Has worked for companies like NASA, Boston Scientific, and Medtronic

Dr. Toshimasa Okabe

  • Works in the Department of Clinical Cardiac Electrophysiology and Cardiovascular Disease at the Ohio State University medical center
  • MD from the University of Tokyo

Professor Frits Prinzen

  • Professor of Physiology, with a focus on “Electro-mechanics of the heart” at Maastricht University
  • Medical Biology degree from University of Utrecht

Dr. David Kraus

  • Currently works at Stern Cardiovascular in Memphis, TN
  • Associate Director at Cardiac Laboratories at Baptist Memorial Hospital
  • Also worked at The Cardiology Group of Memphis, PC, and Memphis Heart Group
  • MD from the University of Tennessee Center for the Health Sciences

Dr. Kevin Heist

  • Currently works at Massachusetts General Hospital as the Director of Clinical Cardiac Electrophysiology Fellowship Program
  • Associate Professor of Medicine at Harvard Medical School
  • PhD and MD from the Stanford University School of Medicine

Past Financing

To date, Oracle Health has raised $110,000 in funding from the Zeroto510 accelerator program and angel investors. All investors invested in a Simple Agreement for Future Equity (SAFE) with a $1.6 million valuation cap.

Discussion

Risks

The information provided herein is not intended to be, nor should it be construed or used as, investment, tax or legal advice, a recommendation to purchase, or an offer to sell securities of the company. You should rely on the offering statement and documents attached as exhibits to the offering statement when making any investment decision. An investment in the company is not suitable for all investors.

Investment Risk

An investment in the company is speculative, and as such is not suitable for anyone without a high tolerance for risk and a low need for liquidity. You should invest only if you are able to bear the risk of losing your entire investment. There can be no assurance that that investors will receive any return of capital or profit. Investors should have the financial ability and willingness to accept the risks (including, among other things, the risk of loss of their entire investment and the risks of lack of liquidity) that are characteristic of private placement investments. There will be no public market for the securities being offered, applicable securities laws will restrict any transfer of the securities, and the securities will not be transferable without the company’s consent.

Company Risk

The company’s industry is highly competitive, and the company may not be able to compete effectively against the other businesses in its industry. The company is subject to a number of significant risks that could result in a reduction in its value and the value of the company securities, potentially including, but not limited to:

  • Rapidly changing consumer preferences and market trends,
  • Inability to expand and maintain market acceptance for the company’s services and products,
  • Inability to gain access to international markets and comply with all applicable local laws and regulations,
  • Inability to achieve management’s projections for growth, to maintain or increase historical rates of growth, to achieve growth based on past or current trends, or to effectively manage rapid growth,
  • Inability to develop, maintain and expand successful marketing relationships, affiliations, joint ventures and partnerships that may be needed to continue and accelerate the company’s growth and market penetration,
  • Inability to keep pace with rapid industry, technological and market changes that could affect the company’s services, products and business,
  • Technological problems, including potentially widespread outages and disruptions in Internet and mobile commerce,
  • Potential costs and business disruption that may result if the company’s customers complain or assert claims regarding the company’s technology,
  • Failure to adequately address data security and privacy concerns in compliance with U.S. and international laws, rules and policies,
  • Performance issues arising from infrastructure changes, human or software errors, website or third-party hosting disruptions, network disruptions or capacity constraints due to a number of potential causes including technical failures, cyber-attacks, security vulnerabilities, natural disasters or fraud,
  • Inability to adequately secure and protect intellectual property rights,
  • Potential claims and litigation against the company for infringement of intellectual property rights and other alleged violations of law,
  • Difficulties in complying with applicable laws and regulations, and potential costs and business disruption if the company becomes subject to claims and litigation for legal non-compliance,
  • Changes in laws and regulations materially affecting the company’s business,
  • Liability risks and labor costs and requirements that may jeopardize the company’s business,
  • Dependence on and inability to hire or retain key members of management and a qualified workforce,
  • Ongoing need for substantial additional capital to support operations, to finance expansion and/or to maintain competitive position,
  • Issuance of additional company equity securities at prices dilutive to existing equity holders,
  • Potential significant and unexpected declines in the value of company equity securities, including prior to, during, and after an initial public offering, and
  • Inability of the company to complete an initial public offering of its securities, merger, buyout or other liquidity event.

Endnotes