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So that’s why when people say, okay, the missions are not good entrepreneurs or they can’t create businesses, it drives me really mad because we have been trained to run into walls and find ways around it, especially engineering one, we’re kind of more creative and maybe finding solutions.
Jay Clouse: 00:00:18
The startup investment landscape is changing and world class companies are being built outside of Silicon Valley. We find them, talk with them and discuss the upside of investing in them. Welcome to upside.
Eric Hornung: 00:00:46
Hello. Hello. Hello and welcome the upside podcast, the first podcast finding upside outside of Silicon Valley. I’mEric Hornung and I’m accompanied by Mr claymation enthusiasts himself, Jay Clouse. Jay. How’s it going man?
Jay Clouse: 00:01:02
I like. I like claymation. What’s that old claymation movie? Wallace and gromit. Is that kinda the beginning of claymation?
Eric Hornung: 00:01:09
I don’t know if that’s the beginning of claymation, but maybe that’s your first memory of claymation.
Jay Clouse: 00:01:13
Feel like it’s the beginning of claymation in modern, like pop culture. And then what was the. What was the one about chickens?
Eric Hornung: 00:01:20
What about Gumby? Gumby was claymation.
Jay Clouse: 00:01:23
That’s true. Gumby might’ve been earlier.
Eric Hornung: 00:01:24
Gumby definitely came before Wallace and gromit.
Jay Clouse: 00:01:27
Yeah. Gumby’s old. Was gumby on cable though because I didn’t have cable.
Eric Hornung: 00:01:31
I don’t know, but I watched a lot of Gumby growing up and I know that because I don’t remember any of the Gumby like shows. If I saw one I would have no idea, but I do remember that I had these gumby action figures and I had them like everywhere. I had so many of them, especially the blockhead guys.
Jay Clouse: 00:01:47
Today’s nicknamed pot shot comes from a conversation in slack where Eric and I were talking about how our brains work and this was the lash out that I got.
Eric Hornung: 00:01:56
Yeah, I was. I was being a little confrontational, that’s for sure. I was. I was delayed so I was flying back from Puerto Rico and I was supposed to be getting back into Cincinnati around 11, around 10:30 pm. I didn’t end up getting around in until around 2:30 AM, so I was a little confrontational and I know that Jay has a habit of watching weird videos on youtube. Is that a fair way to characterize it? That’s instagram.
Jay Clouse: 00:02:24
It’s not. It’s. Yeah, it’s, it’s kind of all over the place. I mean, here’s, here’s the deal, I really like to see what other creators are creating and I like it to be really far outside of what I’m doing. So I subscribed to a newsletter called motionographer, which is all about motion graphics creations. My instagram feed is probably a lot different than most people’s that has zero memes, but all kinds of weird creation and art and some of that stuff is deeply unsettling and I’ll send it to friends like Eric.
Eric Hornung: 00:02:56
So I in a very derogatory fashion called his little hobby claymation and that’s how we got today’s nickname.
Jay Clouse: 00:03:05
You call it a hobby. I call it what keeps me sharp and what keeps me creative.
Eric Hornung: 00:03:10
It’s funny that you call it sharp because I feel like so much of what you watch is just like people moving in a very fluid fashion. I think you showed me like eight videos in a row once of this guy who just like wiggles around.
Jay Clouse: 00:03:21
I don’t remember that, but I don’t dispute it whatsoever. Oh, well, I mean, what do you, what’s your instagram feed like?
Eric Hornung: 00:03:29
I don’t know. I haven’t been on instagram in like five months.
Jay Clouse: 00:03:34
All right, well that’s the best answer you could have had.
Eric Hornung: 00:03:36
That was pretty good.
Jay Clouse: 00:03:37
Really shuts me up. Well, let’s just dive in. Today’s guest, shall we? Today’s guest is Esra Roan the cofounder and CEO of SOMAVAC Medical Solutions. SOMAVAC was referred to us by our friend Katie Milligan at Starrco. SOMAVAC is a medical device company with a mission to change how patients recover after major surgeries. It’s first FDA cleared product,SOMAVAC 100 sustained vacuum device addresses, seroma and hematoma formation with the first continuous suction device. Basically this device is replacing very old technology that is used to remove fluid buildup, postsurgery and that old technology to remove fluids is really just a plastic bowl that is attached by a hose into the area where fluid is buildup.
Eric Hornung: 00:04:29
I don’t have a problem with seeing blood or seeing surgeries on TV like some people do, but I just have zero exposure to medicine, like medicine, surgery. I don’t get it. I don’t understand how the system works. I don’t understand the processes and procedures. You’re saying a plastic ball with fluids and I have no idea like how this all fits together.
Jay Clouse: 00:04:51
Have you ever seen the small handheld bulbs that removed boogers for babies?
Eric Hornung: 00:04:56
I have no idea what that is.
Jay Clouse: 00:04:58
It’s kinda like a hand pump. You’ve probably seen a pump for something.
Eric Hornung: 00:05:01
With a basketball?
Jay Clouse: 00:05:03
Maybe it’s not like the two handed push down on the thing pump, but if it is just like a plastic or rubber bulb that is similar. Basically these pumps, they push air out and when they recontract they pull air in and that is the suction that you get. So for babies they use that to pull boogers out of their nose because their noses are so small that you can’t use anything else. In this example, these bulbs are attached to a hose which are literally pushed into incisions where surgery had taken place because fluid is building up post surgery and so the person who is post surgery is pumping that bulb whenever they feel like they need to to remove that fluid. And it seems like historically that can be for a period of several weeks for these individuals. So the SOMAVAC device fits in somebody’s belt and is continuously electronically suctioning that area, which they say leads to faster healing, a better experience and a much more discreet way to provide dignity to the person who is removing that fluid.
Eric Hornung: 00:06:08
Interesting. Well, I’ll definitely be interested to hear about that because I had no idea that baby booger bulbs were even a thing, let alone like fluid post op treatment. So I think that this is going to be a interview that I learned a ton in.
Jay Clouse: 00:06:23
Yeah, a little bit more context here. SOMAVAC was founded in 2016 is based in Memphis, Tennessee. I did a little bit of research on the medical device market and found that medical device investment has grown every year since 2013, which is the furthest back I could find on CB insights. And last year actually 2017, over $6,000,000,000 were invested in medical device companies.
Eric Hornung: 00:06:46
Are you ready to jump in, Jay?
Jay Clouse: 00:06:47
Let’s do it.
Eric Hornung: 00:06:50
Hey guys, wanted to cut in here real quick and let you know about something. Jay and I have been getting ready behind the scenes in 2019. When we started this podcast, Jay and I said that you, the listener, will have an opportunity to learn in real time to think like venture investors with us as we meet a wide variety of personalities, examine a wide range of industries. Well, now we’re going to share something new and it’s a little different. This new idea is called the update. It’s a carefully curated quarterly publication of editorials, trends, and stories happening outside of Silicon Valley. Jay and I will be writing stories about what we’re learning about on the podcast, have guests editorials on interesting topics and share news and updates from our podcasts. In some cases, we may even share some exclusive content or first looks. Our goal is to stay at the cutting edge and of course bring you along with us. We’re super excited about it and know you’re going to love it. If you want to be the first to hear about our Q1 launch in subsequent letters, go to upside.FM/update to get on the mailing list.
Jay Clouse: 00:07:56
And before we get into that interview with Esra, we brought inDr. Marc Guay who practices Otolaryngology with university hospitals as an ear, nose, and throat doctor, serving the community of Sheffield village, Ohio. Dr. Guay received his medical degree from Loyola University Chicago and a certified by the American board of Otolaryngology. He completed his internship in general surgery at Loyola University Medical Center and a residency at Cleveland Clinic. So before we jump in with Esra, please enjoy this short interview withDr. Marc Guay. Dr. Guay, welcome to the show.
Dr. Marc Guay: 00:08:29
Thanks for having me.
Jay Clouse: 00:08:31
Can you explain your current role?
Dr. Marc Guay: 00:08:33
I’m a board certified ENT or ear, nose and throat surgeon out of Cleveland.
Jay Clouse: 00:08:38
We have a guest today who has a device that addresses seroma. So for our listeners, could you explain what Seroma is?
Dr. Marc Guay: 00:08:46
So seromas basically a collection of fluid that doesn’t have red blood cells. So if you take blood and you stick yourself with a pen and you prick yourself and you extract blood, blood itself has red blood cells that make it red in color, and the base fluid, which is not the red blood cells, that is the remaining part of blood is actually serous fluid. S-E-R-O-U-S, so serous fluid will collect at the site of a wound, whether it’s surgical or otherwise. If the serous fluid collects in the body, does not reabsorb it, that fluid remains behind and depending on what the cells are doing, they may continue to weep into this collection of fluid. We call that a Seroma, so anytime you have damaged tissue, if I hit my hand hard enough, it won’t bleed, but the cells underneath will break and when the cells break, you’ll collect that fluid within the tissues. If that fluid does not get reabsorbed by the body and then stays behind long enough, it collects into seroma and it can get what we call loculated almost a akin to a balloon. If I put a balloon into your skin underneath and blew it up with fluid, it would be akin to that sort of process, so the key with a Seroma is to the best of the surgeon’s ability is to get it to drain, and if you allow the fluid to drain or keep decompressed, the remaining tissues in the body will heal and close off that void or that space so that fluid doesn’t have a chance to collect again.
Jay Clouse: 00:10:27
I see. So what would lead to the body not reabsorbing this?
Dr. Marc Guay: 00:10:33
So sometimes it’s the amount of injury to the tissue itself. The best way to explain it is the body is composed of sheets. So when I talk to patients in the office, we talk about your bed at home. So your bed at home has typically a mattress pad. It’ll have a flat or a fitted sheet that’s the one that goes right on your mattress that’ll have a flat sheet, and then you’ll have a blanket. Then you’ll have a comforter or maybe a bedspread, all those different layers. Imagine if you collected and they were all water insoluble. If you collected a fluid collection between those layers, that’s what occurs, or narrowly the body will reabsorb it, sometimes based on surgery, based on change of those tissue planes. You don’t have the capacity to reabsorb that fluid as easily and so you form a seroma.
Jay Clouse: 00:11:20
And it sounds like the body is actually at a advantage or better able to handle that fluid buildup or prevent a seroma if the sheets are kept close together.
Dr. Marc Guay: 00:11:30
Jay Clouse: 00:11:31
Got It. So what percentage of patients that go through surgery are going to experience something like this or may experience something like this.
Dr. Marc Guay: 00:11:40
So an ENT, if you’re talking specifically about neck surgery, thyroid, parathyroid, salivary gland, neck dissections for cancer, etc. The incidence is actually pretty low. The good news in ENT is that it has a tremendous blood supply and because of that, it has a much greater capacity to heal than a lot of other parts of the body. So for ENT, the incidence of seroma formation is probably less than three percent. If you go to other parts of the body and the abdomen was a much greater cavity. So to speak, a space for fluid to accumulate that instance can be significantly higher. Since I’m not an abdominal or general surgeon, I can tell you that for sure breast surgery, you can have seromas form, plastic surgery when you, again, you separate those sheets and you don’t have a capacity to reabsorb the fluid. You can form a seroma so it’s not a high pot, you know, probability of occurring. The problem becomes when it does occur, it’s a significant issue to get it rectified because now you have fluid accumulated in a literally a dead space and things tend to get infected depending on what that space is and what organisms can get in there to have an impact on producing not just a seroma, but convert that into an abscess.
Jay Clouse: 00:12:53
You mentioned that it’s the surgeon’s role then to try and drain that. How does the surgeon do that? Does it apply to the patient post op when they’re in their home? What’s the drainage process look like?
Dr. Marc Guay: 00:13:06
So a lot depending on how much fluid aggregates or accumulated. Sometimes we actually do nothing at all. If it’s a large fluid collection, a lot of times you’ll take the patients back to surgery and you will make a small incision and drainage drain out that fluid. Then the next key, as you said adequately is how do you get the sheets back together so they re aggregate and shut off that dead space, and so sometimes I do put a suction drain in. Other times we just use compression, literally put a very snug dressing around it. You know, we won’t use a suction drain, but we’ll use what we call a penrose, almost a kin to a rubber band where that will allow the fluid to drain and while you’re applying pressure it allow the layers to fuse back together, obliterate the dead space and get the patient back to their normal state.
Jay Clouse: 00:13:53
What does a suction drain look like?
Dr. Marc Guay: 00:13:56
So there are various types and I use it a lot of times we’ll use what we call a grenade suction drain. It’s a drain that has perforations in it that’s inside the patient and then outside of the patient is completely closed off. Otherwise it would suck air and that hooks to a device that produces basically constant suction, low suction, not very high in terms of a negative pressure, but sufficiently enough that it will reabsorb the fluid and not allow it to aggregate or stick around so the perforations are there, fluid goes in through the perforations and for me, I use what we call a grenade. You literally squeeze the grenade, you put the cap back on and as the grenade is expanding, it’s sucking the fluid out simultaneously and the patients at home will typically empty that two to three times a day and I’ll see them back a couple, three days later, make sure they’re doing well. If they’re doing really well, take to drain out and they’re on their way.
Jay Clouse: 00:14:54
Great. That gives me a lot of context and insight. I appreciate your your time here this morning.
Dr. Marc Guay: 00:15:00
Jay Clouse: 00:15:04
Esra Roan. Welcome to the show.
Esra Roan: 00:15:06
Thank you. Thank you so much for having me and our company. Very nice to meet you.
Eric Hornung: 00:15:10
Very nice to meet you as well. On upside, we like to start with a background on the founders, so can you tell us about the history of Esra?
Esra Roan: 00:15:18
Oh my goodness. I don’t know where to begin, but we will start. Uh, you know, I’m originally from Istanbul, Turkey. I was born and raised there and in ’94 came to US on tennis scholarships. So I was an athlete. I played pro sports and came here to Tennessee Tech. I was supposed to go to Ohio State last minute plans changed and ended up at Tennessee Tech. Long story short, studied mechanical engineering there then did sometime during my Masters at Oakridge National Laboratory. From there I spent some time and doing optical mechanics, optimum mechanics, micro electromechanics during late nineties there was a lot of interest in high tech industry, miniaturizing everything, making switches and so on. From there, life, husband, family takes you to Cincinnati with Toyota. So we moved there, spent some time. I got a job in Cincinnati with a main factoring company there. I very much enjoy some parts of it, but realized cubicle world was not for me. So from there I decided to chase a PHD, so I started with University of Cincinnati. I’m a bearcat as well, so I did my PHD in mechanical engineering there, but I was very much of a mechanical engineer who didn’t want to do cars and airplanes. I wanted to do something. At that point I switched over to medical questions and of all the things I started studying the mechanics of liver tissue and everyone went, why? Why are you doing that? Because it doesn’t move. But in so many environments when liver gets injured, it can really be bad for you. So I spent time and graduated in ’07. And from there came to Memphis for my job. That’s where life work, life balance. My husband followed me to Memphis. I was tenured professor. I got my tenure in 2015. But I realized that was not for me as well. After having gotten the tenure in biomedical engineering, NIH grants and all of that studying basic lung health, I realized I want to do something different. And they’re uh, we launched the company. SOMAVAC Medical Solutions, what we’re doing currently. so long story short, I have a diverse background, multicultural, whatever you name it, just everything is in there.
Eric Hornung: 00:17:35
Take me all the way back. That was an awesome rocket ship kind of giving us the landscape and I know that Jay is going to ask some timeline questions about it. I would assume.
Jay Clouse: 00:17:40
That was the most efficient two and a half minutes through somebody’s career that I’ve ever heard.
Esra Roan: 00:17:45
I told you, where do you want me to start? It goes even farther back. I can go, you know, tennis years.
Eric Hornung: 00:17:51
So I want to, yeah, I want to go back to Istanbul. And are you turkish? Is that correct?
Esra Roan: 00:17:57
Yes, I’m, I’m dual citizen. So I have dual citizenship so I’m US as well as Turkish.
Eric Hornung: 00:18:04
What’s it like growing up in such a kind of center of world’s city because I feel like it’s been called like legos, byzantium, new rome, constantinople, Istanbul, stand bold. Like it has so many names because it’s been under so many different. Like what’s it like today and what’s it like living in that historical city?
Esra Roan: 00:18:23
It was amazing. I mean, I just have to say, first of all, being with that many people together is amazing. My high school was an Italian high school that my first learned Turkish, Italian, English are the three languages, right? So then Latin, so you’re around everyday you wake up and you’re around people just everyday you’re interacting with people. When we used to skip school, we used to go to the Venetian tower. That’s 500 years or something else. Oh, you know, you just, you’re in the midst of that. All that history. It brings two things though. It brings a lot of thought about we are great, we have this great history of having done great things and it stifles your forward looking a little bit. Maybe you need to iterate and start a new on some things and I need to be careful about how I state this, but you know, if you have such a heavy past in the city and you’re just looking everywhere, there’s greatness. Am I living up to this greatness? To some extent as as a person, as a country, you know, but it was fantastic. I came here when I was 18, you know, you can age me that way. I came from Istanbul, which is 10 million plus, right people to cookeville Tennessee. So in early nineties, no cell phone, no a credit card. So I came to US with cash in my pocket about $500 for a whole semester. Just started my years here and it was just an amazing experience. I landed at Nashville Airport and I’m thinking where are the tall buildings that we were supposed to see when we are at US so. But then I think Istanbul is, it makes you get used to just different things. You’re very comfortable with change. You’re very comfortable with meeting people. So that’s what I would say.
Jay Clouse: 00:20:13
I would love to hear a little bit more about your childhood because I imagine your parents had a big impact on you, but as you’re going through your story, you know, you’re talking. I came to America on a tennis scholarship, played some professional tennis, and then you got into mechanical engineering and those two things seem like worlds apart to me. So I’d love to hear how those things coalesced in you.
Esra Roan: 00:20:34
So when I was really, really young, I was really interested in curious in space like planets. I was just a curious kid and I remember looking at notebooks of space and stars and so and my parents used to get more of those. But really as a female, as a Turkish female, you really did not have a big path of science and technology and careers and you know, there was no thought of, oh I’m going to go and be an engineer or none of that. But my mother somehow started me when I was six in playing tennis and I’m just really competitive person. Very competitive. and it caught by 11. I was practicing for five hours a day. I played fed cup, which is equivalent of Davis cup for my country, you know, been in environments that are really kind of competitive and so on. But opportunities are different. This is early, mid eighties and so on. Opportunities between Turkey and Europe are different and this sort of thing. If you’re going to be a tennis player, you have to get some level of investment for you to start traveling when you’re 15 around the world and we didn’t do that, so I made the decision. I’m coming to US, so I was actually signed up to do political science, not mechanical engineering. I didn’t know that I really wanted to go into science and technology in my career until I came to Tennessee tech and met another Turkish person and said, this school is really great in engineering, so maybe you should consider. It’s that simple. Sometimes life takes you in very simple ways, in directions you don’t understand, but anyone who knows me, I love politics. I read all the time. So that’s the topic, you know, I thought I would be studying.
Eric Hornung: 00:22:18
Jay, have you ever played tennis?
Jay Clouse: 00:22:20
I played more tennis than I’ve played hockey.
Eric Hornung: 00:22:22
Okay. We’re trying to expand Jay’s athletic skill set.
Esra Roan: 00:22:25
Eric Hornung: 00:22:27
So I always got to check in to make sure because if we have an opportunity, we got. We already got him going to alpine skiing. We got him to play golf. We’ll alpine skiing in Prague, golf In Minnesota. I was hoping Tennis in Turkey, but Memphis.
Esra Roan: 00:22:42
Tennessee to Memphis. I mean we visited Columbus. I was there recently in Cincinnati, so we can, you know, the long story short is I was signed up to go to Ohio State and last minute there’s no email, there’s no cell phones. Last minute it didn’t work out the night I went to Tennessee Tech, you know when we’re faxing and sending beta tapes. You know what beta tapes are? Video. Nope. They are shaking beta tapes or you know, these VHS or Beta even before the smaller.
Eric Hornung: 00:23:14
The precursor to VHS. Yeah,
Esra Roan: 00:23:16
Yeah. Precursor to VHS. We will tape those and send to US our talent right. That we would send and they would watch you and if you played well enough they would sign you on. So
Eric Hornung: 00:23:27
Is there a large Turkish community at Tennessee Tech or did you just happen to run into someone who is Turkish?
Esra Roan: 00:23:33
I happened to run. In engineering, there was. In engineering, there was one professor who presumably we need to double check this that design some of the star wars, the smaller robot, a budget and his students who was, you know. But really we were three or four or something, you know, there’s not much. We we call less around big cities, Turkish people like big cities. So Columbus has a very strong Turkish community because of Ohio state.
Jay Clouse: 00:24:02
So, and Eric and I are both buckeyes and we could probably talk about that for 20 minutes, but we won’t for, for the listeners’ sake. So tell me about the change into mechanical engineering. How did you become aware of it and say like, yep, that’s what I want to do.
Esra Roan: 00:24:15
When you make the trip from a small country like Turkey to US and when you make the decision, okay, I’m not going to be a tennis player for life, you know, you think about your career, your life and things like that and you want to insure it. And you know, someone who I met, respected much older than me, said mechanical engineering, you know, it’s pretty strong at this university. I knew engineering was strong, just jumped into it. And what I found out that it was really about science. So I really enjoy science and I really liked doing things. So I think engineering people sometimes don’t realize how engineering is about, it’s an art form where you have tools like you have chemistry, you have biology, you have physics, and you cook them into a dish, which is the products that we use today. So I thought many years, you know, we forget engineering’s an art form. So that caught onto me very quickly that oh, I can make things, you know, so that, that’s the piece that got me. Otherwise I was not a very good student. Even during PHD years, I tell my adviser, I mean I’m just not that great in theory, I just like to put things together. I see hoW different elements come together and I think that’s what engineers are supposed to do.
Eric Hornung: 00:25:31
First off, I love the idea of engineering as an art form. I think that’s a great phrase. But then phd like equals theory in my head. And you are saying, I’m not a theorist, I don’t do theory, but you went phd route. So help me understand why that was the natural progression.
Esra Roan: 00:25:49
Do you want the honest answer or the calculated answer?
Jay Clouse: 00:25:54
Definitely the honest answer.
Esra Roan: 00:25:55
Yeah. I, I sensed that, so I was working full time and in Cincinnati, the company I worked for where I started 1500 people was going down in numbers, I survived two layoffs and I would think cubicles with a master’s degree. I was doing really fun things, but I could see the writing in the wall plus the cubicle, like not having decision making. That’s what that one indication to me more than anything. So what happened was my husband and I were talking about having family as well. The perfect storm came together and said why don’t and I wasn’t getting fulfilled with day to day activities as an engineer. What I was doing, I was wanting to have an impact. So couple of things coming together. I said, why don’t I start, go for phd, you know, because after that I could teach, I could be an academic, I could be at the university. Maybe that’s puts me more in touch with people and I can have an impact in their, you know, so that’s why I went back to phd. I struggled because I was pregnant. I had my son. Do you know about the fundamentals exam, like the big exam you take in phd, like at the end of first year
Jay Clouse: 00:27:04
Esra Roan: 00:27:04
like yeah, it’s a do or die. You have to go through this gate to stay in. So mine was a couple of days before my due date so I ended up having my son during that night, so it was all like I was the pregnant lady walking in the mechanical engineering, you know, hallways, but everyone was extremely kind. My adviser was a really, really good mathematician came from UT Austin, a couple of years before I arrived there. He was looking, I think for an applied person, so we kind of matched really perfectly. I said he gave me his papers right as an introduction to his work. I said, no, these are so theoretical. I can’t, I can’t do that because I like finite element analysis, a tool that really helps you to analyze things. And he said, okay, what can you do? So I went around and I looked and I said, why can’t I apply what you got here into something in the medical sciences? And he’s like, fine. So we work that way, so I creativity, so phd is about doing something that’s not been done before and running into a wall and solving like my definition when I had students. The way I described phd, you run into a wall, you feel like there’s no answer to the question you’re after and you find a way to get through that. So that’s mY definition of phd who don’t have that helplessness, it is not a phd. So that’s what you can get to that in different ways is doctor of philosophy.
Jay Clouse: 00:28:33
That also sounds like the definition of entrepreneurship to me.
Esra Roan: 00:28:35
Exactly. so that’s why when people say, okay, the emissions are not good entrepreneurs or they can’t create businesses, it drives me really mad because we have been trained to run into walls and find ways around it. Especially engineering one, we’re kind of more creative and maybe finding solutions. I wouldn’t want to claim generically, but that’s what definition of phd is. You got to do something that’s never been done before and you, you to get through a gate where you really say, I can’t do this and you do it.
Jay Clouse: 00:29:08
I hear a thread in your history of curiosity and creativity. Was entrepreneurship a part of that all the way through or when did. When did entrepreneurship take hold for you?
Esra Roan: 00:29:19
It was when I decided to leave academia, which was the year I got my tenure. I had thought about this is not for me. Brent writing, doing things in this big grand scheme. It was not a good fit for me and I didn’t think that I would be a good worker for my university at that point for 30 more years. Right, because you have a job now, you made it, you have grants, so at that time I realized there were lots of changes in me and right around 40 midlife adjustment, not crisis, I call it. It’s just an adjustment that I think we get to look back and say, here’s what I did, here’s what 30 more years of work is gonna look like me, do I want it? So I had the flexibility. My husband said, do what you want. Like really? He was very much at that point. The thing that came into view is Josh, my co founder was an excellent student of mine and we have these accelerators in town and I normally send them to my students and then somehow months later we say, let’s apply on this together because we work well together. I still didn’t know that I would be a business owner, entrepreneur building them. It came to my view that I’m a be decent at it or I may want to do it is 2017 I would say. I came to own that. Wow. And if I look back as a Turkish, as someone who’s traveled alone, as someone who’s just been always tennis player, competitive, all these things, if you put the story together, in hindsight it makes sense, but me owning it is 2017.
Eric Hornung: 00:31:00
What was so captivating about Josh as a student and his idea, I’m guessing that this idea that he had that went to the accelerator is what became SOMAVAC or am I projecting.
Esra Roan: 00:31:10
So you are a little bit, but it’s somewhat, you know. So josh, I recruited him for my. So my husband is from Tennessee tech, mechanical engineering. I am from Tennessee tech, mechanical engineering and Josh is and I recruited him about four years ago or so from there to come and work in my lab to do some of the things we had NIH funding for because I needed someone who was really solid and making things. So we worked for two years very well together. So we had that track record of knowing how to do things and when time came that we should. I mean this is this, this is really crazy. But when time came to apply to the accelerator, we said, what’s a big problem in the healthcare field that we can, the two of us could solve. That’s the way it started. So we both created. He’s really more of the engineer hands on and he tinkers and gets things put together beautifully and you know, but I’m maybe more the clinical science side of the team, but the two of us just kind of went there. And then we met with surgeons and went back and forth very quickly. Really. The idea came out of 10 hours of back and forth once we received that first investment through the zero, zero, five, 10 accelerator here in town, which was $50,000. I can share that with you. That’s the way we realized, okay, now we have a company to do this. So that’s how it evolved. Basically.
Jay Clouse: 00:32:37
Is the zero five, 10 accelerator part of Startco?
Esra Roan: 00:32:40
No, it’s bioworks. Bioworks foundation runs zero 5:10, but it takes place on Startco’s physical space and we shared them equally. I mean we share our ecosystem here. That’s Memphis. I mean we have Startco, we have bioworks, we have zero, five, 10. We have epicenter. We share them equally. We don’t, you know, they help us in all ways.
Jay Clouse: 00:33:05
So what was the problem that you and Josh submitted to the accelerator that you were solving? How did you state it then?
Esra Roan: 00:33:11
It was so these two surgeons that I know really well that I work with in certain topics separate than this, you know, we asked them what is one problem you want? So. So several months. So after these mastectomies hernia repairs, anytime there’s a resection out of the tissue for purposes of oncology or variety of reasons you leave a large space that’s empty in that space will naturally produce fluid. so if this, this fluid then has to be removed, you know, over time, like weeks, timeframe, after the surgery, the surgeons place a drain in the tissue to evacuate and attach, attach what’s called a suction volt to it manual suction bulb. What we learned is that the buildup of fluid, that’s seroma happens very often. Approximately one in five patients of, you know, generic. Everyone, you know, if I were to estimate one in five, people go onto have where seroma builds up. It’s painful. They have to go back to the clinic, they have to get an aspiration like in, you know, another puncture has to happen in fluid, has to draw up maybe re surgery happen. So all of these things. When we look at it and we looked at this thing, the handheld manual pump, it’s not suctioning well, this is not doing anything. You know, it runs out of suction and it’s much hated by patients. So we created some of that sustained vacuum system that’s first and foremost meant to suction fluids out very effectively. It’s battery operated so it’s no more manual so we were not gonna rely on patients charging and emptying. So then it’s wearable, it fits under the clothing pretty discreetly so patients can really not hate these things and maybe go onto with their lives because we met people who were, oh, had hernia repairs that need to go back to work two weeks out and still couldn’t because they had drains on and all of these things. So that’s what we launched. Basically through those conversations we traded multiple times. We started with different versions, you know, one sign, you know, having really close context with renowned surgeons. Plus, you know, I, I had good understanding of the clinical and science side of it and josh being a fantastic engineer and us having worked together before just went very quickly, you know, from there.
Eric Hornung: 00:35:31
So we walk a little bit deeper into the design process. Like how was the first, how did the first design look versus the design that is currently being put forward?
Esra Roan: 00:35:42
Oh, it is very interesting that if I showed you the pictures of our first design, we’re very similar to it, you know, but we deviate it in the middle from it because for example, patients might get four drains at times or six drains. One patient might get six drains if you have a double mastectomy. But this is a very special car bomb for breast cancer patients. If you have a mastectomy with reconstruction and autologous tissue used, you might end up with five or six drains. So we wanted to. We designed a version where it had straight out capacity to accept all of those, but then it got bulky and big and all of those things. And we’re like, well we are now getting away from our goal to make it easy to use. So. And again, this is where MVP, right? The whole conversation about you have to start somewhere. You have to stop the design somewhere. So after iterations, back and forth between patients and surgeons. So we feel very fortunate that we’re bridging that divide, maybe gap between patients and surgeons. So many people have surgeries but then recover at home. Most of the recovery takes home and yet the devices are not designed for them. So that’s where the iterations to place where we would hear one thing from one side and take it back to surgeons and they would say, no, no we can’t have that. Go back to the patients and we just iterated back and forth. So that took some time.
Eric Hornung: 00:37:09
What is incrementally better about the SOMAVAC product as opposed to these traditional suction bulb? Is it just using a little bit better technology and it’s more wearable or like what was the step up here?
Esra Roan: 00:37:25
Number one, robust, reliable suction. Currently the bulb runs out of suction with 20 ml. So patients are getting many, many, I mean hundreds of mls of fluid a day. If I told you that it only suctions for 20 ml. So the container is a hundred ml, it’s suctioning only for about 20 ml. So one fifth, one fifth of that right is active. So if I told you your active ingredient is very, very small amount of something you’re buying, right, you’d be okay. You know, so what we’re making is literally the active part is more sustainable, right? So it’s battery operated and if we go back in history a little bit, history of drains, suction drains, attaching a suction to the end of a drain started in the forties and fifties. They use suction pumps, used wall suction, they actually used good rubber suction things worked out. They saw better outcomes in healing time and things like that at that time. Because of that, they started putting suction bulbs right at the end of the drains that were portable. Around that time it seems like the gains kind of became less obvious, right? So eighties is when patients are especially getting discharged home and these were designed for inpatient use. All of that kind of combines for the situation where we have a device that’s much hated. I hope you take a look at what jp drains jp drains look like by patients, which leads to misuse. It’s very clear that patients are doing all kinds of things and I’m never going to blame patients for our lack of designing better tools for them to recover at home and then it doesn’t meet the needs of the current modern healthcare system. So healthcare system has some of this where in consumer world things that you buy at home depot or walmart, they get upgraded very quickly. If something isn’t selling, if something isn’t working for you, you can speak of it with the dollars you spent, but in this world the patient isn’t spending the dollars directly. It’s there are many decision makers upstream, so this awful device that they have to live with for three weeks or so, stays the same and doesn’t get modernized for 50 years.
Jay Clouse: 00:39:44
Is that the decision of the insurance company or the doctor?
Esra Roan: 00:39:47
I think everyone together. I wouldn’t say one or the other. It’s I think who is going to advocate for the patient who’s at home. Right. So when you have a surgery, when you come back to the clinic, especially if you’re an oncologic patient, right? so if you’re having a surgery, you are making decisions about life saving thing, drains are part of the recovery, they are not maybe top on your list right at that position, but once you get to the point of having the surgery, having drained 10 days out, that’s when you realize these are really bad and I should have, but we’re spending more dollars. I think telemedicine is coming along as You know. But as far as devices go, implants, ortho, like things that surgeon use in their OR, variety of tools are getting a lot of attention. Medical devices. But helping patients really recover after surgeries at home is an area is not as well understood.
Eric Hornung: 00:40:47
So I think it a follow up to Jay’s question is who is SOMAVAC selling to? Are you selling to hospitals, to surgeons, to insurance companies? Like how, who do you target to actually sell your product to?
Esra Roan: 00:40:58
Short answer is going to be everyone. I mean, and I know as a startup I have to dissect this. I’m going to be be careful to not give out our initial niche market where we’ll start everything but the kind of device we have so we can be installed, we can be utilized in any environment by a healthcare professional, by a trained healthcare professional, so it falls under a lot of categories. So we fit trauma, We fit orthopedics. We fit, you know, and they can use us in the OR. They can use us in recovery room. they can use this during discharge. There are so many ways that we can be dispensed depending on the state we’re in state, the geography we’re in, the hospital systems decisions. It’s going to take some as a med tech, early stage med tech, that’s our job to figure out which one of those best fits us. But if you asked me generically, there are numerous ways that this can be paid. Certainly if you think about cosmetic surgery, that’s where we apply as well. That’s where patient decides to buy this. Or the surgeon uses this in the costs, you know, included in the cost of surgery. So I know it’s a broad answer, but I want to just. It’s a ubiquitous. Drains ar ubiquitous in the healthcare system.
Jay Clouse: 00:42:26
Before we get too far away from the talking about the manual bulbs, we spoke with a head of surgery. Who mentioned that he uses what he called a grenade suction.
Esra Roan: 00:42:28
That’s what we are. Yes, competing with. No, I mean not competing, but that’s the grenade is the manual suction bulb. yes.
Jay Clouse: 00:42:35
Got it. okay. And so what is the breakdown now of people who use grenade suction versus the manual bulb?
Esra Roan: 00:42:42
It’s the same thing.
Jay Clouse: 00:42:44
That is the same thing.
Esra Roan: 00:42:45
Grenade is is the same. So in the US we calculate there are 3 million suction drains used. We calculate what you assume two patients, one patient you know one drain per patient to two drains per patient. Three, you know it varies. So that’s the numbers that you know you can think of. But the patients who go home with drains are about 750,000 cases each year in the US. That’s how many people we estimate go home at a minimum with drains. We really wanted to design something that really met the needs of the people. Patients who go home specifically because they have them longer duration. There are issues about communication and we want to address those and yes, most of them are these grenades. There are a couple of other devices that are spring loaded or in orissa orthopedics they might use something slightly different. Again, not as effective in suctioning. They are all manual and they require a strong user interaction for suctioning the bulb.
Eric Hornung: 00:43:47
So you, you mentioned effective suctioning and one other thing that we got some insight into was this idea that suctioning has to be, has to have a certain amount of negative energy so or negative suction or negative pressure. That’s the word. Yes. And it can’t be too much because then it’ll mess with the tissues and it can’t be too little because then you’re not getting all the fluids out. So is there a process within SOMAVAC that kind of does that on a per person basis or is there a universal like here’s how much negative pressure you need.
Esra Roan: 00:44:18
Oh, I appreciate this question because for sure if you think about breast tissue mastectomy versus a hernia, abdominal tissue, right? Those are different problems basically for negative pressure suction. So What we did is we have a wide range of suction pressures that we can apply or vacuum that we can instill, you know, apply, generate into the tissue. So our first version is basically equivalent to what’s out there currently with jp grenades, but when they when that top line, when they can apply their best pressure, that’s what we will apply. But in orthopedics they are known to apply higher suction so we can have very quickly launch another product which is the same product, but with another pressure setting or we can even go lower. And the way our device works is it’s, it has technology in it that allows it to turn on and off. So our system comes on and off by itself automatically to adjust the suction level and to maintain it, to maintain the vacuum in the tissue at a given set pressure, which is 100 millimeters of mercury currently. So it’s kind of smart. Does that make sense?
Jay Clouse: 00:45:34
Yeah. So that’s probably it’s why the this SOMAVAC is called the SOMAVAC 100. the one that you’re going to market now.
Esra Roan: 00:45:39
Yes. The first one, yes. And then we intend to have different versions at different pressure levels.
Jay Clouse: 00:45:45
Why three versions versus having one product that has three settings.
Esra Roan: 00:45:49
Ooh, good question. There are elements where when you have a medical device go home with a patient, you don’t want them to be able to do anything to it, but you want in the OR as easily for that action to happen with gloves and that the adr, right. That’s what we call it. finding the middle ground of that was not something that was straightforward. So we chose to do a skew and we can presumably do that. We had, we had the switches and everything in there where we could do it, but it’s that balance because we don’t want alterations of, you know, you don’t want to have an antibiotic that the patient says, you know, I’m gonna just take a different pill today. You know, something like that.
Eric Hornung: 00:46:33
It seems like simplicity in medical devices is key for patient adherence. And to date these grenade or traditional bulbs have been like the epitome of simplicity. They look, when you see one, it’s like, oh, it does what it does because it does what it does. Your device seems to have some benefits to that and I’m curious. To me, medical device pricing is just such a black box, so to produce your product seems like from an outsider’s perspective, it would cost more than producing one of these grenades. Is it also going to cost more to the end user? Like how does. How does pricing work in this in this setting?
Esra Roan: 00:47:19
Let me back off to the term. You had simple, simple to whom, right? It was simple to the hospital to buy and sell. Simple maybe to nursing stuff in an inpatient setting to use because they have biohazard bags. They’re trained. Patient is not mobile, but it is not at all simple to the patient at home. What that device is just I’m going to walk you through. It is attached to a drain. You might have few at a minimum. Most of the time it’s two. How about not at a minimum, but most of the time. Twice a day you are supposed to open, not take the bulb off the drain, but open one spout, pour your own bodily fluids into a cup measuring cup. Then right how much you collected in a sheet and then you’re supposed to save that sheet and go to the surgeon at the end of the week and report to him how much you are drugged up. You have to do math, you have to deal with your own bodily fluids. Imagine pouring your own bodily fluid out of the spout. I mean, and what happens is you’re supposed to do this twice a day, you’re suctioning only then 40 mls of fluid and you’re. You’re supposed to have these so long as there’s drainage. So what we hear is phone calls to the clinic. I want my drains out. When can I get it out? We hear, oh yeah, I took the drain bulb off the drain and went to the bathroom and just pour fluid out directly and as soon as you take it off, what happens? That column of fluid that’s in the drain goes back into the tissue. I mean, this is so simple, but it’s really big problem at home and all of these things I’m describing are opening the chance for what? Right? The word that we are all concerned about infections. All of these misuses are opening the chances for infections and drain patients are indeed are more likely to have SSIs, surgical site infections that’s been documented in the papers. There’s chicken and egg. Whether that’s actually due to the drains or whether it’s because they are having more complicated surgeries. No, it’s not simple for anyone downstream of someone having paid very little money for it, so yes, bulbs are very cheap because they are very simple, but so all of this things I described to you, we add about a $1,200, a thousand to $1,200 cost associated with done stream effects of these bulbs not working as well. That’s what we calculate. Clinic visits, coming back to our for surgery, readmission, all of these things. When we look at different papers, publications and we lit, look at the incidences and hernia, breast recon and so on and work in that world and then say they came back. Let’s say 21 patients came back to the clinic and how much did that cost? right? We do that math. We get to a thousand to $1,200 per patient, so you know, I’m not gonna sit here and say that we’re going to ask for that for our device. You know, it’s going to be somewhere based on our efficacy. Right. We’ve been FDA approved us or cleared us for having the same efficacy and risk profile as the bulbs, so we will, as we get used, we will see what type of evidence we collect towards reducing seromas incidences, infection rates, time with drains in itself, right. This endpoint that everyone wants to drain to come out as soon as possible. Those will dictate our price point, but if we expect that we new technology costs the same price as what we’re replacing, we don’t get anything done. You know, I think we have to have a mindset of are we solving the problem for the continuum of care, right? With this bundle pays and globals and things like that in healthcare, that’s what we’re at. And that’s, I think, the innovation part of our company. Does that make sense? We’re thinking for that when the patient got diagnosed all the way to there now better.
Jay Clouse: 00:51:30
So you mentioned that the FDA cleared you for having the same efficacy and risk profile as the bulbs. Is that the best outcome you could have hoped for through FDA testing? I’m not familiar.
Esra Roan: 00:51:42
Yes. So let’s make sure that we address this part, you know, as we move forward, you know, where a five, 10 k class too. We follow the regulations, you know, we fit under that. We are under their umbrella of the risk and efficacy profiles that we had to, you know, provide to them. So yes, I mean we are, you know, we’re delivering same pressure level and more reliably. So That’s what we proved. We proved the word delivering the same pressure level more reliably and we take off even some of the risks of, you know, one thing we didn’t discuss is the way we collect in a battery operated way, right? With pumps. But we deposit that fluid into these collection by that one can then just remove and eliminate without having to interact with their bodily fluids. So we take all of that out of the picture and we have multiple means of not allowing fluid to go backwards. So we have two valves and the pumps themselves will not allow fluid.
Jay Clouse: 00:52:41
Everything you’ve described sounds like, to me, hearing it sounds like a superior system to the traditional system. What I don’t know about FDA testing is if there are like levels to say we definitively know you’re more effective than these bulbs because that sounds like a very compelling sales proposition.
Esra Roan: 00:52:59[inaudible] process, I’m certainly not a regulatory expert. So that’s why we have a regulatory expert that we work with from day one. And you were talking about financial failed, you know, that’s why we consult with them. But there are tears of class one devices, class two devices and further out, you know, each one requires a certain level of evidence and scrutiny depending on risk and indication, right? Indication risk, you know, for example, our indication is for all large flat warming surgeries. So you know, we are contrary, indicated right, for going inside of the body or going near the spine and so on. So those are the kinds of things we get to say we need more data for that indication.
Eric Hornung: 00:53:47
I want to go down this path of it because you are the first company that we’ve spoken with that has undertaken the FDA process. What does that look like? Is it an application or an interview? Are you doing clinical trials? Like can you just start at the beginning when you came up with this idea and you said, all right, do we need to worry about the FDA? someone said yes. And then you started. What was that? What did that look like?
Esra Roan: 00:54:13
It’s a regulated space, right? When I make a medical device or I can’t walk anywhere and just start selling it, that’s not ethically correct. You know, as an engineer I have the responsibility to make the safest, best thing I can do. Right? Thankfully, you know, we have FDA that oversees, oversees that I think that you hear many really think that they are, you know, there’s conversations about they’re too difficult or this and that to me, you know, as an engineer, and I had taught engineers, I’ve been around engineers. It’s good, you know that we have this check, right? So we started and we knew. So first thing first is we have to decide which class, right? Zero to five, 10 was an accelerator that only accepted five, 10 k companies, right? So that puts you in a box already. So you work with experts in the field, they provide you their analysis, their thoughts on whether you’re a class one or your class to which category you go in and what kind of validation verification efforts you have to go through, what tests, what standards. We have standards like IC, the global standards, you know, in medical devices for electrical safety, you have other standards for packaging, for everything. So you follow, you follow everything and you, you, you make sure every day you make sure you wake up, you design any follow all of this, that your device is not going to hurt anyone that’s not going to harm someone and that’s going to help them get better. I mean that’s what FDA is after. Right?
Jay Clouse: 00:55:51
How long does that process take or how long did it.
Esra Roan: 00:55:55
We are very proud, you know, we started very early and we cleared. We were under two years for, for our company, which is, you know, I think it speaks to the team Josh and Dawn and you know, the team that we had, how we clearly identified the risks of our device, understood the regulatory side and compliance side of it. But we’ve applied, you know, under two years from founding. And I think your show highlights companies that are not in east or west coast, right? I mean this is the whole thought about, you know, we achieved it under a million dollars.
Eric Hornung: 00:56:32
When you first sat down with your lawyers and regulatory consultants, what time frame and budget they give you. Did they say this is going to be a three to five year process and you’re going to need $5,000,000. Like what? Where was their guidance and how did your actual results differ?
Esra Roan: 00:56:49
So I never did that. I always thought, okay, we’re in, you know, I said I’m a professor, you know, associate professor, I have credibility in science and so on, but I’m a fish out of water here. I’ve not done a company I’ve not done. So I didn’t think that the investors were gonna bankroll millions of dollars, which is really a medical device company from start to launch is five something of those right? Product launch. It’s really. If you went to your big companies and asked them how much does it take you to design and launch a brand new product successfully, they’ll probably give you five something more. Right. So I knew from get go that we were gonna raise as we go. That was clear to me. So at the end of the, you know, we had 50k in our bank and we were running through it with legal counsels and regulatory. Right.
Eric Hornung: 00:57:41
Gotta love those consultants.
Esra Roan: 00:57:43
Yeah. We have the best, we have the best because they have been essential and we still work with everyone. So I said, what can we achieve with 100 k? I mean those are the numbers we started with. So it built from there, it built from three month outlook. So what can we get, what can we get done? So I usually pressured my team into what milestone as a company, as a product development, we get achieve. One of the things that happens unique to medical devices is when you’re raising money, which is I learned your speculating revenue three years out and the capital you need is really high and you have to convince everyone around you that you are the team that can do that. So that was challenging. But FDA always was, are you FDA cleared? Was always the main question. So I knew we had to get to that point successfully, reliably, you know, in a good way. So we just worked one. We chipped one thing at a time. So you know, when you get a report from a compliance of you know, expert, you know, you get bullet points of you need this done, you need this done for your application. This each one carries x dollars of development de risking and testing and validation. Third parties come in so you just chip away at those. Each one I priced and some of them we kicked off earlier, some of them later and you know, once you finish all of those up and each time you complete something successfully, I think investors see the track record of you having said you going to do something and it gets done. That builds trust and relationship with angels in your, you know, community.
Eric Hornung: 00:59:27
So I have a question about the company. You mentioned earlier this vision that you had and Ross Baird who is a venture capitalist with village capital came on and asked the question of an early stage company that I really, I think it’s kind of applicable here and it’s this idea of are you building a product or are you building a company? I’m curious your thoughts on SOMAVAC. Are you building a product which is great and like is going to solve a lot of issues for people? Or are you building a company that’s bigger than this product?
Esra Roan: 01:00:02
I think we’re also, uh, I would like to add something else. Are we building a thought in healthcare? I just want to throw that out as well, and an avenue to think differently. If you asked me this maybe even eight months ago, I would say we’re building more of a product or a series of products platform, a platform possibly, but now I think we’re more after a company because we really realized that we need to think differently when we think of patients who have surgeries who then go home to recover. So in the world of chronic diseases, there are solutions. You hear insulin pumps and all kinds of things. DME, you hear patients who are they in the hospital to recover? There’s all kinds of medical devices for them always watching out for the patients who just got discharged and have to get home and recover. So we feel like we have an opportunity here. Little did we know we we didn’t understand the scope of everything, but now that we’re here, we’re understanding that process of solving, bridging the two sides of home or outside of hospital, not just home to in hospital. We can do that where we can understand the upstream and downstream problems and be the bridge between in a constructive way versus blaming each sides. Right. So, but the reality, there’s a certain level of reality in medical devices. I started mostly the way the company really launched. One thing didn’t come out yet is we decided to do this, but hernea surgeons told us something, but then when I was telling a couple of like my neighbor, I’m getting out of academia, I’m working on a product that’s going to be about drains. She says I had drains, you know, six drains and when you hear the stories, that’s what made us get, oh gosh, we have to do something. This can’t be it. So both Josh, my co founder and myself, are extremely driven to find ways to reach as many patients as we can. Meaning we all want cancer, not to be here. We all want the best research to take place that we can diagnose and eliminate this big problem that affects so many people, but in the meantime we can do things that really impact patients now right now. Right. And we can do that in two to the three years development processes like we went through. So that’s our whole mindset that what are the things we can do now without 10, 20 or out kind of research and development that’s known to happen in medtech. right? What are things we can kind of launch quickly? We know with our platform we have possibilities to do orthopedic trauma, so many different things with it. We want to grow that out, but I was, I guess touching to your question back, I feel as though still distribution, national distribution, global distribution is best in the hands of established companies who can do that much better than us. So at some point that will come up. We want to grow a company with multiple products and lines, but at some point I think having our device accessible to as many people is best done in the hands of big players in this area.
Jay Clouse: 01:03:21
So for you to go through this whole FDA process, you mentioned you, you’re coming up with projections for revenue three plus years out. What does the opportunity look like for SOMAVAC? How big is the market opportunity and how? What were these numbers you’re telling investors like, well if all goes well and we get the certification, we could get to this level of revenue.
Esra Roan: 01:03:35
Yes. First of all, first year for med tech, you know launches and so on a million dollar, 500 k to a million dollar, those are good numbers, right? The market is, if you think about it, I think the global drain market. Finally someone did look at drain market is last thing I saw was 4.8 billion is what I recall. I may have to double check that and it’s. It’s growing. It’s growing very fast and then in the US it’s a billion dollar plus market depending on that. What we can recover on the way of evidence and building and solve problems. It was a complicated way of describing at the beginning because are we going to price it based on what we’re going to prevent from happening based on sheer numbers of cases. You know as I shared with you, there are 3 million drains used in the US, so 1.5 million of these possibly are needed, right? And there are 750,000 patients who go home with the drains and that’s the market that we’re targeting. So this is again in the startup world, right? When we hear pitches and everything. Now people are talking about revenues in medical devices. You know, I was advised not to give them revenue projections don’t because you’re two, three years out, right? So it’s really very speculative. So I was as an engineer, very uncomfortable speculating three years out and so on. But we know how big the market is and with our additional thoughts on what we’re going to do with this, we know that we can get to multimillion dollar revenue out few years.
Jay Clouse: 01:05:13
It’s an interesting dichotomy to me that revenue is so speculative in medical devices, yet the trend is higher investment in medical devices, so it must be a pretty big hit when it does hit.
Esra Roan: 01:05:25
Yes. So I think that there are multiple types of investors in the world, you know, and the ones who do medtech know it, know it, that how many cases a year, you know, how many patients need this, you know, and who are the payers. The question you asked about comparison of the prices, [inaudible] technology, is there a reimbursement? So most of the med tech investors, revenue projections are almost if you show revenue projections you might realize that they, they know you’re a newbie, you know, so it goes both ways. I think you, you say, you know, with my effort, I know on the first year, but this is now two years ago. This was even challenging because what sales channels we’re going to use, we haven’t decided at that point, but I know this year I can do this with this information, with these assumptions, but in five years I know the potential of the market is this. I think then you kinda marry the two, right, but really that always has been a challenge because as med tech companies we pitch or we were in the same crowd with everyone. Right. And we can’t do AB testing. We can’t do some of these things that people look for, you know, for traction. What is traction for med tech? It’s very complicated.
Jay Clouse: 01:06:48
How did you, as somebody who had been an entrepreneur before, how did you navigate fundraising yourself? It had to be new for you.
Esra Roan: 01:06:54
It was yes and no. Right. As an academic, I don’t know if you know what we do, but as an engineering pro, you know, in, in academia, one of the things I spent most of my time doing is writing grants and I, I show, I used to show my students how many grants I wrote and how many actually got in and it’s one in 10 or one in 10 is actually good odds, you know, they say when funding is, you know, one in 10 is, I’ll take that, but. So that part I understood ho you get funding, you know, the part that was really challenging was being in front of people to ask for that money. But what I very quickly appreciated was if someone didn’t like what you were presenting, you could see it in their face and you moved on with grant writing. It’s a six month process to a year process and you get a piece of paper that says your grant wasn’t good and you know, it’s just the piece of paper. At least I want to see and ask why didn’t you like it? Explain it further. So that part was excellent. But at the same time I struggled with pitch events and three minutes and five minute type things because med tech, I got to explain to you a lot of things. Let’s sit down and talk for a couple of hours and I don’t. We are so speculative. I don’t want to put things on my slides that are really attractive, but very speculative. I was very caught up in that as far as I don’t feel comfortable telling them that this is exactly what’s going to happen two years from now. I didn’t want to lie. I didn’t want to make things up. No.
Jay Clouse: 01:08:42
One more question for me to wrap things up here. You originally had planned to go to Ohio state. You landed at Tennessee tech, now you’re starting this company in Tennessee. What has being in Tennessee or even Memphis specifically meant for your company and does it seem like the right place for a medical device company?
Esra Roan: 01:08:48
The last one is yes. We have [inaudible], medtronic, olympus, right Medical, micro port. You name it? St jude is here. UT medical school is here. We are, I think second highest employment. Again, don’t quote me on this. After the warsaw, Indiana, medtech like this. There’s a lot of talent in this town that knows meditech and devices. Two, there’s FedEx. We are rich and you know, logistics and things like that. you know, my husband is from Tennessee. I arrived here, you know, we met married, so this is a natural place for me to be in, you know, but I’ll tell you the thing that I want to discuss maybe here is that I was probably one of the oldest people In the accelerator, right? I mean, you know what I mean? The accelerators, everything, entrepreneurship, [inaudible] is geared towards younger people like yourself, you know, not for mid career people like me. Maybe rightfully so. I don’t know why, but it’s more geared towards attracting younger people into choosing a career in entrepreneurship. But in Memphis what you have is if you have two incomes and one wants to take risk, you can afford possibly. So if I were in Boston or San Francisco, I doubt my husband would’ve said, okay, you quit your job, go do what you want to do. I doubt that would have been a possibility. So what I’m trying to say is when we have, like what I told some of my colleagues here in Memphis, you may want to target these companies who have people who have worked in them mid forties or so to jump ship and start companies and they can do it in Memphis because they can afford it. Your savings go farther. Things are affordable. If I told you my rent to my office here, you, well Columbus know you’re in Columbus. We, we, we agree on this. But I would say that it allows for risk taking for mid career professionals as well. So that’s why I find very lucky to be here.
Eric Hornung: 01:10:53
I’m curious, sorry, one followup question on that. Age isn’t really something we’ve examined much on the podcast. We’ve heard venture capitalists and community builders say, hey, in our city we have more of an older skewed age or a younger skewed age of who’s starting companies. I’m curious more on the social side of things. I know that if I went and told my network of friends that I’m starting a company and we’re going to an accelerator, the response would be that’s really cool. That’s really awesome. Like that’s something to strive for, like good for you at your age demographic. What was the response like and do you think that maybe that has some sort of hindrance to more people kind of jumping on if that response is more, you’re kind of crazy versus that’s awesome.
Esra Roan: 01:11:41
Yeah. So first of all, my age group probably doesn’t know what an accelerator or an incubator is, right? I mean, no, you know, so most of them when I told them they didn’t get what it is. Right. So, but the other thing is my husband has only been super supportive, but when I told him I’m, I think I’m co founding a company, he’s like, no, don’t do it, you know, that was his first gut reaction to it because of variety of things I think because the, all the unknown that it brings, but my personality that I just love the unknown and I’m always up for a challenge. Yes. I mean, when I told them all summer long I was attending this thing downtown with all the young people, you know, all this, they’re probably looking at me, what’s she doing? And I think now maybe people are coming around to realize, wow, that’s kind of the thing to do, but I also would say maybe I’m different because I’ve really jumped ship and did something different. If you’re in real estate and you choose to do a company real estate, you may not need an accelerator. You may need the funding, the 50 Ks, the small amounts of dollars to get you moving. So we have examples of that in Memphis, right? We have a lot of these very successful medical device companies, mid career managers or VPs or they kind of either decide to leave or let go or whatever and they just start something on their own. Then we have those as well. Actually, we have quite a few small medical deplored successful startups here that have paved the way. I just knew I didn’t know anything about how to do a business. I knew in academia we were not kind of. We didn’t learn some of the things like you have professional careers. Did you know that in academia we get no professional training. Like you know how when you get into a company you get diversity training this training, how to talk to people, how to present this and that. We don’t. There’s not that ancillary things that. So I knew I had a lot of catch up to do if I were. And so and accelerators play networking role, they put you in front of people.
Jay Clouse: 01:13:50
This has been awesome. Esra. We’ve gone a little bit longer than we typically go. So thank you for, uh, thank you for sharing so much with us. If listeners want to learn more about you or SOMAVAC after the show, where should they go?
Esra Roan: 01:14:25
They can go to our website, SOMAVAC Medical Solutions at www.SOMAVAC.com. That’s within A SOMA VAC. They can email me at Esra with an S, E-S-R-A @somavac.com. You know, we really want to make big noise with those who know how awful drains were. Please go to our website, go to our Facebook page, share us, and let everyone know that someone is working on this problem. We really need your help in getting the word out.
Jay Clouse: 01:14:35
Alright, Eric, we just spoke with Esra Roan the co founder and CEO of SOMAVAC. Let’s get into this. Let’s talk about the opportunity. Lets talk about Esra Roan as a founder. Where do you wanna start this week?
Esra Roan: 01:14:45
Yeah, let’s definitely start with the founder side of things. I think that Esra has one of the more interesting diverse backgrounds that you’ve had on the show. For sure. Probably the first person I’ve ever actually met from assemble.
Jay Clouse: 01:14:58
Interesting, because you’re making a big deal about how ancient and historical and center of the world Istanbul is and the first person you’ve met.
Eric Hornung: 01:15:05
First person I met, I love history and that city just always is in the middle of every history. You study for one reason or another. It’s around and it’s old and it’s. It’s, it’s geographically located in a place that’s very important in between Asia and Europe, for trade, for religion, for everything, so the city itself is just always around under a different name, under a different ruler, whatever, but I’ve never met anyone from there.
Jay Clouse: 01:15:36
Istanbul, not Constantinople now. Istanbul, not Constantinople. now.
Esra Roan: 01:15:36
Is that a song?
Jay Clouse: 01:15:37
Yeah. You don’t know that song? Who sings that song? It’s a real silly band.
Eric Hornung: 01:15:42
Jay Clouse: 01:15:43
They might be giants. The song Istanbul in parentheses, not Constantinople. Well, you got to listen to it as well as thinking about when you’re talking about Istanbul and then you would. You even mentioned Constantinople.
Eric Hornung: 01:15:54
Jay Clouse: 01:15:54
Long time. What I liked about this conversation with Esra and her background in particular, this was the best antithetical view to academics as entrepreneurs that I’ve ever gotten.
Eric Hornung: 01:16:09
I would agree. We talked about on the Woobo episode, how I have a general bias against academics as entrepreneurs. Not that I don’t think they can be good entrepreneurs. It’s just my natural inclination is to first say, you’re an academic, going to be hard to be an entrepreneur. What about Esra kind of bucked that trend for you?
Jay Clouse: 01:16:31
She talked about problem solving and she did mentioned a caveat that I think is probably true. Being that her academic background is an engineering specifically, which probably lends itself well to entrepreneurship. I also really appreciated her answer about fundraising because she said, as an academic, you do so much research. You’re constantly applying for grants and in the grant world you don’t get the feedback that she was getting as an entrepreneur. She says, as an entrepreneur when you’re fundraising, if people don’t like what you’re saying, you can see it on their face and you can ask them why. Whereas with a grant you just get a rejection. Really interesting parallel I’ve never drawn before.
Eric Hornung: 01:17:09
Yeah, I’ve never even thought about that to be honest and but it makes a lot of sense. You need funding in both spaces and there’s just a different way to go about it.
Jay Clouse: 01:17:17
One more thing I wanted to touch on that was surprising to me about this interview. As we kept speaking to her curiosity and her creativity and I asked, was entrepreneurship a through line or part of your family and she said no, and normally you see people who have that curiosity or creativity. They’re dabbling in something when they’re younger, whether it’s a lemonade stand, whether it’s buying candy bars and sell them to their peers at school, but that wasn’t her case. She just, this is our first go at it. It just felt familiar in like somebody she could take on.
Eric Hornung: 01:17:49
That could be a cultural thing as well. She kind of hinted at the differences growing up versus being in the United States and the opportunities that are in front of you and the ability to maybe take risks by being in a culture that accepts risk, but also by living in a city where you can mitigate risk by having two incomes and then just living off one of them.
Jay Clouse: 01:18:10
Yeah. When she was talking about her husband and their relationship and his support, but also at times [inaudible]. I thought that was very, very personal and vulnerable for her to share, but probably something that a lot of entrepreneurs who are married experience.
Eric Hornung: 01:18:23
Talk to me about this opportunity. Let’s. Let’s just kind of transition into how big can this thing get because one thing that Esra talked about was the idea that this started as a product and is now becoming a company. What does that mean to you for the opportunity size doesn’t mean anything for the opportunity size. Do you still evaluate the company based on a product or do you think about the company as potentially being more than that?
Jay Clouse: 01:18:49
At this point, it’s definitely a product. I think potentially it could be something more than that. Although the brand, SOMAVAC is pretty specific towards, you know, what feels like suction with vac for vacuum, but they could. They could branch into other products. The really interesting dichotomy that she shared with us was the decision to have multiple products for different strengths of suction. Instead of having one with varying strengths, which I think is very indicative of their go to market strategy or you know, how they’re interacting with users, who their customers are because she mentioned if it was going to be within the medical environment, the medical professionals could handle the setting to setting it to the specific or the particular type of suction they need. Whereas the individual who has it in their home needs something that is kind of dummy proof I think that introduces some complexities or maybe some additional overhead that wouldn’t be there otherwise, but my biggest question in terms of the opportunity outstanding is still kind of who is, who is the core customer and what is the revenue model with that core customer? Is it insurance? Is it the medical offices? Is it the end user? What did you think?
Eric Hornung: 01:20:00
That was my biggest question. Leaving the interview as well. I think I specifically asked the question, who is SOMAVAC selling to, is it healthcare professionals at the hospitals, at the individual? Where am I buying this? Who’s buying it? How are they buying it and I didn’t get the clearest answer there. My gut, after going through the interview tells me that it’s going to be sold to hospital divisions who kind of up sell it to their patients to take home, but I could be completely wrong there. I just don’t have a firm grasp of where I don’t think I’m going to see this device. In CVS for example.
Jay Clouse: 01:20:38
Yeah, it seems like insurance has to be involved here, but this is why I was asking some questions about the FDA level of clearance. She said that it was cleared as having the same efficacy and risk profile as the bulbs. Bulbs are a lot cheaper, so if I’m the insurance company and I’m saying this has the same efficacy as the bulbs, I’m going to keep recommending the bulbs because it’s cheaper, but if they can prove higher efficacy and that’s lower costs of readmittance lower cost of additional surgery is that the insurance has to pay for. They’re probably going to mandate a SOMAVAC, whIch is what they would want, but I’m guessing then that the insurance company or the hospital’s paying for that. I just. I can’t think it’s. I don’t know. I don’t know what the price point is. we didn’t get a decision on price points. I don’t even know if it’s viable for the end customer to be buying this at a CVS. If it did go to retail. From my brief experience in healthcare, I know that more often than you would expect and probably hope the insurance company is making decisions on the type of care that is being administered based on costs. Like if you broke your arm and you went to the emergency room or wherever, it’s entirely likely that the doctor will say, let’s put a hard cast on this, and then your insurance company will say, nope, do a soft cast for basis of cost. So I don’t know. It’s a complex system that I just don’t know a whole lot more than that or what levels of authority doctors have versus insurance versus the customer saying or the user’s saying, nope, I want the hard cast nope. I want the SOMAVAC, but it seems like it’s not really in the customer’s hand if it’s being paid for by the insurance company.
Eric Hornung: 01:22:17
Well that might get into pricing then because Esra mentioned that there is a thousand to $1,200 of cost per user associated with bulbs not working. So if they can find a price point that appeases the insurance company by mitigating their eventual costs for potential complications, then I think that that’s a winning proposition. So our price point is not going to be the full burden of that cost.
Jay Clouse: 01:22:46
And she mentioned that 750,000 patients go home with drains. So if the insurance company or whoever’s making the decision says we’re going SOMAVAC instead of bulbs, that’s a lot of devices annually to patients who would much prefer the experience of a SOMAVAC from what it sounds like. That sounds. It could be a pretty big market. She’s. She mentioned that the drain market is $4.8,000,000,000 in the US. Nope, sorry. That’s globally $1,000,000,000 in the US.
Eric Hornung: 01:23:13
Right. And they’re likely increasing a price point, which is something we actually don’t hear about much here on upside we usually hear, hey, here’s the total addressable market, but we’re coming in at 25 percent of the price. So we always have this question about, okay, is that the actual market then? Is that the total addressable market? But here the market is actually potentially going to grow dependent on how wide SOMAVAC can kind of reach and how much higher their price point is. So that’s a very interesting proposition that I don’t think we’ve seen before.
Jay Clouse: 01:23:48
Yeah, but it’s, it’s you know, it’s, it’s warranted when you have what appears to be in his position as a superior premium product that is more efficacious, which you can’t claim it to be more efficacious, but I’m going to claim that if what she’s saying is true is more efficacious than bulbs because you know, as we heard from Dr. Guay, being able to have continuous suction is valuable. Also not having the user experience of pulling out fluid from yourself is valuable and keeping those layers of tissue together expedites the healing process. So I think it’s warranted to raise the cost in that situation. Especially if the downstream complications cost, as you pointed out, is lower to the, the end payer.
Eric Hornung: 01:24:32
Right. It sounds like there’s still some tests to be run there, so I don’t know if the Jay Clouse stamp of approval is going to get them over the hurdle, but it sounds like there needs to be some more testing done to get some more results. That can be so that claims can be made.
Jay Clouse: 01:24:49
Talking to Esra and her team as founders, they took what is a pretty burdensome from a cost and time and effort standpoint process and cleared this class two certification with the FDA and under two years and for under $1,000,000, which she ball parked could typically be $5,000,000 or more, which, you know, classic, classic midwestern entrepreneur or being capital efficient and finding a way.
Eric Hornung: 01:25:14
You got to love that and doing it likely faster as well.
Jay Clouse: 01:25:18
Yep. Yep. So Eric, I don’t know if there’s a whole lot more to discuss here. Oh, actually, you know what I do want to discuss. I want to touch on Memphis for Esra because as we spoke with Katie Milligan in our previous episode of startco on memphis, she recommended that we speak with Esra, actually. She fits into some of the themes that we talked about with Memphis. She went through one of the accelerators locally that help them get to this level of FDA approval. That was something that Katie mentioned and also she felt like despite her path to Memphis being kind of by chance it was a specifically good place for her to start this company as a medical device company. So now we have a perspective of both a community builder and a, an entrepreneur in Memphis too early to say that Memphis is a burgeoning startup hub, but it’s cool to get that perspective from two viewpoints now.
Eric Hornung: 01:26:11
Absolutely. And just one last thing about SOMAVAC before we dive into our final questions. I think that we started this conversation off with the idea of being an academic and transitioning an entrepreneur and I think we saw kind of a evolution in Esra’s thinking as well that okay, I’m an academic, okay, I can go build this product. It sounds interesting. It sounds engineer like from an engineer’s perspective, she thinks of engineering as an art form, which I think is really cool, but she was essentially solving the small puzzle and then I think we heard as the interview kind of extended a bit and we started talking about the opportunity that big vision kind of start popping up a little bit, not to the point where it was like, well formed or anything and it doesn’t have to be, but she said we want to be a thought avenue for a way to think differently about patients at home and out of the hospital. Which sounds to me more like a vision for our for a company than a product and I think that that trickle is starting to happen. It’s okay. We’re creating a product now, but I’m starting to think a little bit bigger about this and I think back to our interview with Ross Baird when he talked about this idea that has stuck with me. He said, most a lot of companies will start as a product thing can become a company and there’s nothing wrong with being a product. And I feel that way. About this company right now is that they’re kind of, they are a product, but there’s this like vision that’s emerging.
Jay Clouse: 01:27:39
Another thing that Esra mentioned was that she seemed open to the idea of working as a partnership or as a exit strategy with a company that has wider distribution relationships already. I think in the medical device field, and I’m sure it’s true of other industries too, but particularly right now I’m thinking about medical devices. If I’m an investor, I’m less concerned about the company versus product route because if I think this is going to be successful, it seems very clear to me what type of exit opportunity exists in medical devices, which as an investor I’m looking for a liquidation event and an exit opportunity is one of the prime examples. Probably much, much more likely than an IPO, so I’m interested in it, whether it’s a company or a product, what you’re talking about. This mission of changing how we think about out of hospital care for patients. I think that could be the basis of a company, but I don’t know if I’m investing on that vision so much as saying like I can see where this can be acquired pretty quickly.
Eric Hornung: 01:28:34
Fair. So Jay, what are you looking for in the next six to 18 months? From Esra and SOMAVAC?
Jay Clouse: 01:28:41
Classic me. I’m looking to see how they’re doing in terms of traction getting into hospitals and you know, revenue will be great. I don’t recall the timeframe she talked about about going to market, but I think she did say in there, you know, in their fda application they’re projecting 500,000 to a million dollars in the first year. I don’t know if they’re in that first year in the next six to 18 months or not, but I do want to see. I want to know that they know who their customer is, who’s paying for it and what type of reception they’re getting from that market
Eric Hornung: 01:29:15
And on my sIde, I want to hear more about, I wanna get some numbers, I wanna get some trials. I wanna get some testing. I want to get some numbers that we can talk about that say, okay, it’s this much better. Not it’s as good or better like the vague nature of the FDA approval process. I would. I would like to just know a little bit more about, okay, patients use this even if it’s something like patients use this and they liked it 100 times more than bulbs, like patients who’ve used both, like just something that can give me more comparison between the two because if bulbs were created in the forties and fifties and they really peaked in like the one she said the eighties and they really haven’t changed in the last 40 years then I have to believe there’s the potential for a big change by thinking about this differently and that big change needs to be captured in some sort of metric and right now I just don’t have that.
Jay Clouse: 01:30:12
Alright guys, I’d love to hear your thoughts on SOMAVAC. You can tweet at us @upsidefm or email us firstname.lastname@example.org. If you enjoyed this episode, send it to a friend after you send it to a friend, rate this episode in this podcast on itunes, your ratings and your support. Go a long way and bring on high quality guests to the show. Talk to you next week. That’s all for this week. Thanks for listening. We’d love to hear your thoughts on today’s guest, so shoot us an email at email@example.com, or find us on twitter @upsidefm. We’ll be back here next week at the same time talking to another founder and our quest to find upside outside of silicon valley. If you or someone you know would make a good guest for our show, please email us or find us on twitter and let us know and if you love our show, please leave us a review on iTunes. That goes a long way in helping us spread the word and continue to help bring high quality guests to the show. Eric and I decided there were a couple of things we wanted to share with you at the end of the podcast, and so here we go. Eric Hornung and Jay Clouse are the founding parties of the upside podcast. At the time of this recording, we do not own equity or other financial interest in the companies which appear on this show. All opinions expressed by podcasts. Participants are solely their own opinions and do not reflect the opinions of duff and phelps llc and its affiliates unreal collective llc and its affiliates or any entity which employ us. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. We have not considered your specific financial situation nor provided any investment advice on the show. Thanks for listening and we’ll talk to you next week.
Interview begins: 15:00
Debrief begins: 1:14:32
Esra Roan is the co-founder of SOMAVAC® Medical Solutions. Prior to her role with SOMAVAC®, she was an Associate Professor in Biomedical Engineering at the University of Memphis. Esra’s more than 15 years of experience in product development and biomedical research gives her the tools to enhance the lives of patients with products that make a difference. Her education is in Mechanical Engineering (TTU and U of Cincinnati).
SOMAVAC® Medical is a medical device company with a mission to change how patients recover after major surgeries, wherever that may be. Its first FDA cleared product, the SOMAVAC® 100 Sustained Vacuum Device, addresses seroma and hematoma formation with the first continuous suction device.
SOMAVAC® Medical was founded in 2016 and based in Memphis, Tennessee.
Dr. Marc Guay practices Otolaryngology with University Hospitals as an ear, nose, and throat doctor serving the community of Sheffield Village, OH.
Dr. Guay received his medical degree from Loyola University Chicago and is certified by the American Board of Otolaryngology. He completed his internship in general surgery at Loyola University Medical Center and a residency in otolaryngology at Cleveland Clinic.