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Good morning and happy Tuesday. I am very excited to be sharing research today on Oracle Health. Breaking the mold slightly, Oracle Health is raising its round via a Reg A+ offering rather than a Reg CF one. For the full breakdown of what a Reg A+ offering is, you can find my overview of it here. For now, you can just think of it as an offering type that allows companies to raise more than $5 million (Regulation Crowdfunding limit). Otherwise, it's nearly identical to any other crowdfund offering that you'll find on Republic, Wefunder, StartEngine, etc.

To date, a majority of companies electing to raise from the crowd have been businesses with consumer-facing products. In part because of the capital requirements and the lack of understanding that many potential investors may have when it comes to evaluating a medical company, fewer businesses in the healthcare sector have explored equity crowdfunding. So when a company like Oracle Health comes along, it's worth looking into. Oracle Health is not only targeting a massive market with its innovative technology. It's creating something that has the opportunity to prolong lives and improve the quality of life for so many. 

Let me explain how it's going to do it. Let's get to it. 

 
Deep dive - Oracle Health
Tackling the world's leading cause of hospitalizations
Oracle Health is developing a tiny insertable cardiac device created to monitor heart failure. The device is designed to detect signs of heart failure early enough so that non-hospital treatments can be administered. As a result, hospitalizations that are typically caused by heart failure can be reduced and prevented. Offering an advanced solution to track heart failure, Oracle Health is working toward providing doctors with a product that will enable them to provide, for the first time, widespread proactive heart failure treatment.
What is heart failure?
A healthy heart is responsible for pumping blood continuously throughout the human body. When functioning properly, our bodies are nourished with nutrient and oxygen-rich blood. As a result of heart failure, however, the body does not receive the blood it needs.

Heart failure is a chronic, progressive condition in which the heart muscle is unable to pump enough blood to meet the body’s need for blood and oxygen. In other words, heart failure indicates that the heart is unable to keep up with its workload.
  • The body may not be getting the oxygen it needs, resulting in fluid slowly accumulating in the lungs, which leads to fatigue, sudden and severe breathing problems, and frequent hospitalizations.
As the body attempts to overcome heart failure, the heart will compensate by enlarging, developing more muscle mass, and pumping faster. These changes, which initially mask heart failure, allow the heart to increase its output. Heart failure, however, progressively worsens until these compensating processes prove to be no longer effective.

A growing number of heart failure cases and the inability to effectively manage patients
As the human body ages, it naturally loses some of its blood-pumping ability. Heart failure, however, is often a result of lifestyle choices leading to added stress and deteriorated health conditions that ultimately cause damage to the heart.
  • All of the lifestyle factors that increase a patient’s risk of heart attack and stroke – smoking, being overweight, eating foods high in fat and cholesterol, physical inactivity, etc. – can also contribute to heart failure.
Patients experiencing heart failure often first suffer from at least one of a number of preexisting conditions. Typically, these conditions cause “wear and tear”. Having more than one of these conditions significantly increases a patient’s risk for heart failure. Conditions include:
  • Coronary artery disease
  • Previous heart attack
  • High blood pressure
  • Abnormal heart valves
  • Heart muscle disease
  • Heart defects present at birth
  • Severe lung disease
  • Diabetes
  • Obesity
  • Sleep apnea
Due to an aging population, a rise in cardiovascular risk factors (listed above) and improved survival of heart attacks, heart failure is growing more prevalent globally with each year. According to the American Heart Association, one in five persons in the U.S. will develop heart failure in their lifetime and 50% of those who develop heart failure will die within five years.
  • More than 550,000 cases of heart failure are diagnosed in the United States each year.
  • Heart failure has become the world’s leading cause of hospitalization and is responsible for 1.1 million hospitalizations in the United States. Affecting more than 6 million patients, 1 in 9 U.S deaths are attributable to heart failure.
Hospital visits for heart failure patients usually last, on average, between 5 and 10 days. Approximately 25% of patients are readmitted within 30 days and 50% are readmitted within six months of discharge.
  • Patients suffering from heart failure are frequently readmitted into the hospital due to worsening of symptoms. Hospital care may improve symptoms in the short term, but ultimately fails to provide the long-term treatment that is needed.
  • Heart failure is responsible for 11 million physician visits each year and more hospitalizations than all forms of cancer combined.
Resulting in an annual cost of approximately $30 billion, the notable mismanagement of heart failure to date has placed a substantial burden on the U.S. health care system.
  • At today’s rate, the total costs of heart failure (cost of health care services, treatments, missed days of work, etc.) are expected to reach $70B by 2030. The burden of heart failure-related hospitalizations represents 80% of costs attributed to heart failure care.
Heart failure is a leading cause of hospitalization, but it doesn’t have to be. The severe mismanagement of heart failure has resulted in countless unnecessary hospitalizations that may have otherwise been avoided with preventive monitoring and treatment. These unwarranted hospitalizations have greatly contributed to the sizable burden placed on the healthcare system, resulting in countless dollars wasted each year.
  • Accurate monitoring and timely detection of worsening heart failure will play a critical role in reducing heart failure hospitalizations.
It is crucial that patients with heart failure receive diagnosis and treatment as early as possible. Because heart failure is a progressive condition, early detection paired with live tracking allows doctors to best monitor and manage the patient in real-time as their condition worsens.
  • With the tools available to doctors today, or lack thereof, this need has gone unmet for many, resulting in a deteriorated quality of life, hospital readmissions, and in many cases, a shortened lifespan.
Doctors lack an efficient and widely adopted device allowing them to better manage their patients and ultimately provide a higher level of care. Without live monitoring, hospital readmissions are often used as a time for the doctor to reevaluate the patient’s worsened condition and determine how to improve care going forward. Rather than optimally treating patients with predictive care, heart failure management has largely been constrained to reactive care – or waiting for the problem to arise before implementing or adjusting treatment.
  • There is a clear and distinct relationship between the patient’s condition and hospital readmissions. This is due to the doctor having the ability to reassess the patient’s condition and alter the course of treatment.
Where there remains a gap, however, is when the patient is discharged from the hospital and is no longer being monitored by the doctor. The interactions between the doctor and patient during hospital admissions are not enough to effectively manage heart failure.

Remote management limitations
Early heart failure treatment is critical to the patient’s long-term health and wellbeing. As heart failure progresses, it’s important to be able to monitor when attention needs to shift from treatment for prevention of disease progression to one that improves quality of life.
  • A lack of remote monitoring solutions has made it difficult for patients and doctors to address heart failure progression and worsening symptoms. What doctors are missing is a comprehensive heart failure surveillance system. Though progress has been made toward the development of an all-encompassing tool, a widely adopted device has yet to be created.
Wearables
Wearable monitors suffer from low accuracy, non-compliance, and limited data. Wearables are preferred for short-term monitoring and are particularly useful in identifying cardiac arrhythmias (irregular beating of the heart). However, they are simply not an option for monitoring patient data over weeks or even months.
  • The limiting factor with wearables is the patient, not the technology. Because patients cannot wear a vest throughout the day for months at a time as external patches begin to rip the skin after 2-3 weeks, compliance drops to near 0%.
Surgical Implants
Invasive devices implanted inside the heart are currently the most effective tool used to monitor heart failure. Without needing to visit the doctor, an implant can indicate worsening heart failure even before symptoms arise. Doctors can monitor this information remotely and adjust the patient’s medications and treatment plan, if necessary. However, invasive implant procedures offer limited reimbursement and require additional equipment at home. Although accurate, invasive heart implants that are surgically placed inside or around the heart are expensive, complex, and suffer from low adoption.


CardioMEMS - The leading heart failure management system

The CardioMEMS pulmonary artery pressure sensor is the first and only clinically proven heart failure monitor proven to significantly reduce heart failure hospital admissions and improve quality of life. It has been clinically proven to reduce hospital admissions by 58% over an average of 12 months.
  • A study found the Center for Medicare and Medicaid Services paid an average $17,750 for each device, $1,129 for the procedure, and $27 per month for the monitoring of the remotely transmitted data.
The device is implanted inside the heart in a cath lab procedure. During the implant procedure, a catheter is inserted into the patient’s thigh where it is then threaded through the body to the heart and into the patient’s pulmonary artery. The sensor works with a bedside electronics unit that sends information to the patient’s doctor through a secure website.

Though the CardioMEMS device has been heralded as a tool capable of reducing costly hospitalizations for heart failure, which ultimately lessens the substantial clinical and economic burden associated, the high device cost raises concern regarding its value.
  • A review from the Institute for Clinical and Economic Review, a nonprofit organization that evaluates evidence on the value of medical treatments, suggested a substantially lower “value-based price benchmark” as more appropriate based on its cost-effectiveness and budget impact.
  • Other concerns about the device’s price primarily address the reimbursement, upfront cost required to implement the system, and lifetime durability of the system.
Oracle Health Opportunity
Oracle Health is developing a tiny, more affordable device to monitor heart failure and reduce unnecessary hospitalizations. The device utilizes multi-sensor, remote monitoring technology, and cloud-based artificial intelligence for long-term comprehensive cardiac monitoring. Rather than requiring a surgical implant in or around the heart, Oracle Health’s device will be inserted under the skin in a two-minute office procedure.


The product relies on three main features, an acoustic sensor, an electrocardiogram (ECG), and 3-Axis Accelerometer. The acoustic sensor listens to heart and lung sounds, while the (ECG) records heart rhythms and the 3-Axis Accelerometer records activity, posture, and body orientations.
  • By removing the responsibility from the patient and not requiring them to follow a complex process to monitor their condition, it will allow patients to remain compliant over the long-term.
Once administered, each device yields billions of data points, allowing healthcare providers to compare trending changes over a 3-year lifespan. Recorded cardiac data is securely transmitted to a cloud-based AI algorithm for the patient’s cardiologists to comprehensively review and act upon.
  • By analyzing electrical and physiological trends of the heart, the device detects early signs of cardiac decline before any symptoms appear, allowing clinicians to prioritize at-risk patients, implement therapeutic interventions, and prevent hospitalization. 
  • In simpler terms, as fluid backs up in the heart chamber causing pressure to build, the heart sound will subtly change. Monitoring heart sound is the key biomarker for heart failure, and the Oracle Health device will track and monitor these micro-changes over long-term periods.
Bringing simplicity, accuracy, and compliance at a fully reimbursable lower price, Oracle Health is developing a heart failure monitor unlike any that has ever been seen before. By tracking the patient’s condition and compiling actionable data, physicians can detect worsening heart failure before the onset of symptoms and steer the patient away from further complication.

Pricing and reimbursement
At $5,300, the device is priced at a fraction of the current industry-leading CardioMEMS. With an already existing reimbursement of $7,400, Oracle Health is creating a much more cost-effective way to manage heart failure. Taking advantage of existing and affordable battery solutions and multisensor components, the company expects each device to cost $1,000 to manufacture.

Addressable market
Oracle Health plans to focus its attention on the 1 million U.S. patients who are in immediate need of remote monitoring solutions. As described by the company, this group of patients is specifically battling diastolic heart failure with arrhythmia indications.
  • Diastolic heart failure – The heart moves oxygen-rich blood as it travels from the lungs to the left atrium, then on to the left ventricle, which pumps it to the rest of the body. The left ventricle supplies most of the heart’s pumping power, so it’s larger than the other chambers and essential for normal function. With diastolic failure, the left ventricle loses its ability to relax normally and it can no longer properly fill with blood during the resting period between each beat.
Upon receiving regulatory approval, Oracle Health intends to focus on the highest volume markets: Texas and Florida. The company expects the two states to generate $5.5 million in revenue within two years of launch. Within the first four years, Oracle Health expects its first 5,000 implants to generate $26 million in revenue. Targeting an initial 1 million patients, Oracle Health believes its immediate total addressable market to be $5.3 billion.

As Oracle Health grows its patient group and progressively receives increased adoption, it will be able to obtain and analyze the most comprehensive, long-term heart failure data to date. Using this information, the company will increasingly be able to improve its preventive care abilities by using patient data to better forecast cardiac events.


Device composition
Oracle Health has built its product around the latest pacemaker and implantable loop recorder technology. In terms of cost and time, creating a battery was the largest hurdle to overcome. Instead of spending resources on its own battery, Oracle Health has partnered with a notable medical device company for the use of its batteries.
  • Saving an estimated $2 million and 2 years in development, the medical device company has agreed to sell Oracle Health its battery. Most importantly, Oracle Health will be using a proven battery solution with more than 50,000 successful implants.
  • In May 2019, the company filed a provisional patent application that covers the technology related to its insertable cardiac device, software dashboard, smartphone app, and data accumulation techniques. A non-provisional utility patent application was submitted in May 2020.
According to Oracle Health, the implantable loop recorder business brings in $700 million each year with only two main players – Medtronic and Abbott. An implantable loop recorder is a type of heart-monitoring device that records the patient’s heart rhythm continuously. It records the electrical signals of the patient’s heart and allows for remote monitoring by way of a small device inserted just beneath the skin.
  • However, these loop recorders are for arrhythmia monitoring only. When an arrhythmia is identified, the patient is advanced to a pacemaker or defibrillator. Oracle Health is focusing on a subgroup of arrhythmia patients who are also experiencing heart failure. This group of patients does not yet have a proper monitoring solution.
Combining the implantable loop recorder technology with the latest pacemaker sensors, Oracle Health is creating a first-of-its-kind device. By using various components of already proven technology, it is cutting down on the time and capital required to develop its device and giving itself another notable advantage over its competitors that are attempting to build the entire product in-house.

Regulatory approval process
Before being sold legally in the United States, all medical devices must attain FDA clearance. Seeking 510(k) approval, Oracle Health expects its FDA clearance following a short 12-month approval process. Avoiding the much lengthier 5-7-year premarket approval process, the shortened timespan until Oracle Health can bring its device to market yields a tremendous advantage over the three companies attempting to create a similar solution.

Competition
Using similar technology, three other startups are developing their own device that will be used to monitor heart failure. Similar to CardioMEMS, the three companies (EndoTronix, FIRE 1, and Vectorious) are all developing a product that entails an implant inside the heart that will be delivered through a cath lab procedure. Because the three devices will all be inserted through an invasive process identical to CardioMEMS, Oracle Health expects they will be met with the same challenges that CardioMEMS has faced. Additionally, due to the devices being surgically implanted in the heart, they will each be required to attain FDA clearance through the longer 5–7-year premarket approval process.


Fundraising history & use of funds
In 2019, Oracle Health raised a pre-seed round of $50,000 at a $1.6 million valuation from a top medical technology accelerator. In March 2020, it raised $275,104 at a $5 million valuation through a Reg CF offering on Microventures. The company is now raising a maximum amount of $8 million on Republic at a $20 million pre-money valuation.
  • At $2 per share, Oracle Health is selling shares of common stock on Republic through a Reg A+ offering. With a minimum raise of $250,000 and a maximum raise of $8 million, the company has already surpassed its minimum goal. The campaign will close on July 16, 2021.
  • As of May 1, 2021, Oracle Health has raised just over $975,000. With an additional $2 million committed from outside angel investors, the company expects to raise $4 million this year.
Use of funds from this offering include:
  • Completing the design and engineering of the heart monitoring device.
  • Conducting product testing in animals.
  • Filing the necessary Pre-Sub and 510k submissions with the FDA.
Oracle Health expects it will need $8 million to build a patient-ready device. $3 million will be required for design and manufacturing and the remaining $5 million will be used for clinical operations. Beginning animal implants by Q3 2021, the company expects to start its clinical operations on human patients in Q3 2022. Aiming for commercialization by the end of 2022, Oracle Health expects to reach profitability by 2024 as it ramps up its go-to-market strategy.
  • With a maximum raise of $8 million, the company does not anticipate any further rounds of funding in the future. Should it fail to raise the full round, it plans to raise a final round from venture capital investors.
Team
Led by Jaeson Bang, the Oracle Health team is comprised of four individuals that have spent the entirety of their professional careers around heart health and medical device startups. Since its inception, Oracle Health has attracted world-renowned heart failure physicians, scientists, and engineers. Bringing together heart health expertise and an abundance of experience building startups, the team appears well equipped to tackle the challenge ahead of it.
Want me to take a deep dive look into a particular offering, ask any questions, or just reach out and introduce yourself? Shoot me an email at drew@thecrwd.com. Otherwise, I'll see you next week.
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