Dr. Jun Ma Discusses Biox Monitors and Future of Cardiac Care

Vasomedical (OTC: VASO) President & CEO Jun Ma, Ph.D., was interviewed by OneMedRadio.  Vasomedical is a Westbury, New York device company with a market cap of $42M focusing on cardiac disease. The company is marketing their  proprietary device EECP, and has developed the newly FDA cleared Biox monitor.

Since the development of EECP, an abundance of research has reviewed the mechanisms of action associated with the overwhelming positive benefits in patients who undergo a course of EECP therapy. Only EECP has been proven clinically to produce the acute hemodynamic effects associated with increased diastolic augmentation, systolic unloading, and increased cardiac output, with a decrease in myocardial oxygen requirements.

Ambulatory ECG and blood pressure data provide important information about incidental cardiovascular abnormalities that are often not observable during a visit to the physician’s office, and are therefore extremely valuable for early diagnosis of the ever increasing cardiovascular diseases. Vasomedical’s BIOX  brand ambulatory monitoring products are easy for clinicians to use, comfortable for patients to carry, and are all priced competitively.

Considering the size of the market, and the promising nature of their products, Vasomedical can hope to be one of the major market players in the future. The company has begun the EECP reimbursement initiatives to work with insurance carriers as well as the government–CMS, the managing agent for Medicare and Medicaid. According to Ma, “…we have a good growth strategy in all three directions. It was very clear and I think we have a good plan to execute it. It’s going to take some time, but I believe we’ve done good preparation in the last two years to come up with a strategy and to start to implement it.”

Click to hear audio and see below for a full transcript.

Brett Johnson: Welcome, this is Brett Johnson from New York City and OneMed Radio. Today, we’re with Jun Ma Ph.D,  who is the president and chief executive officer of Vasomedical, a Westbury, New York company and it trades VASO on the pink sheets. Thanks for joining us, Jun.

Dr. Jun Ma: Thank you. Thank you for the opportunity.

Johnson: So, Jun, can you go ahead and just start out by telling us a little about the business of Vasomedical?

Ma: Okay. Vasomedical was set out to design, manufacture, and market a proprietary device called EECP standing for Enhanced External Counterpulsation. It is a device for the non-invasive outpatient treatment of certain cardiac diseases, particularly ischemic cardiac diseases such as angina and heart failure. Vasomedical had been a single device company until 2009. At that time, we decided to diversify. And the newly FDA cleared Biox devices are a part of the strategy to diversify our business. Vasomedical is also an exclusive representative for GE Healthcare for certain imaging devices to a group of exclusive customers in the United States. That business is being conducted through our wholly owned subsidiary called the VasoHealthcare.

Johnson: So, you know, the press release certainly in July indicated that you received FDA clearance on two additional Biox monitors, which now says you have a complete line of ambulatory monitoring products. What is the market for ambulatory monitoring products and where does Vasomedical fit in to that market?

Ma: Well, we started the introduction of the ambulatory monitoring device in 2009 when we received the first FDA clearance on the EGC Holter. And subsequently in 2010, we received the second FDA clearance for a unique two-in-one device, which is a combination device for both ECG Holter and ambulatory blood pressure monitoring. We believe that the market is in the order of hundreds of million dollars, but the application is increasing. In late June of this year, we received two more FDA clearances for four additional products. Together with our previously created products, we have a complete line now.

Johnson: And what’s your sense about where you can fit into this market? I guess what makes your monitors more attractive than the competition?

Ma: We are relatively new so we are still developing the market; however, our product first of all is technologically advanced: it’s more compact, and it’s easier for a patient to wear. Our analysis software is also very efficient. Now, I would like to emphasize our two-in-one device, which we believe is the only one in the world that is FDA cleared and CE mark certified. The two-in-one device is a single ambulatory recorder that can record both the ECG signal, you know, ECG, electrocardiogram, as well as blood pressure signals. Traditionally, patients have to wear two separate boxes in order to record these two different channels of signals; now we combined them into one. That’s not the only advantage. By combining the devices into one recorder, there is also interaction between the two recorded signals. For example, normally the blood pressure signal is recorded pre-scheduled, you know, every 30 minutes during daytime, every 60 minutes during nighttime or as a doctor would like to program. With the two-in-one device, when the ECG recording detects a special cardiac event, for example, ST depression, which is a segment of the ECG signal indicating the ischemic condition of the heart, we will conduct additional blood pressure measurement to provide a more valuable diagnostic information.

Johnson: So the fact that you believe that you have a superior product to anything that’s on the market today and that you believe this is a very large market, what’s the status of the rollout of this product and do you have any sort of reimbursement issues or can you talk about the economic model?

Ma: The use of Holter monitor is already reimbursed by CMS for Medicare as well as by I would say almost all the insurance companies.  It’s a prescribed service and it could be done by independent Holter companies or by hospitals or doctors. I believe the national average of a reimbursement is about $150 per 24 hours of use on the Holter monitor and the reimbursement is I think broken into three pieces. There is a setup fee, there is a reporting fee, and there is a diagnosis fee. All together, I would say $150, $160 national average.

Johnson: So there are no issues in terms of the reimbursement, now the question is just a matter of bringing this product to the market?

Ma: Yeah, correct.

Johnson: Now what is sort of the distribution strategy to sell the monitors?

Ma: We have five direct sales managers covering the country and we have I believe between 12 to 14 independent reps in other regions of the country. We also have an online store that serves not only the United States, but also the rest of the world. We’re also promoting this through our distributors in other parts of the world.

Johnson: Can you talk a little bit about sort of the revenue growth and when has this complete product been in the market and what kind of sales are you experiencing and what kinds of sales do you expect to experience in the coming quarters?

Ma: We do not disclose the sales for the different types of products, but combined together with our EECP sales — in the SEC filing, we report our revenues into segments. One is the sales representation business, one is the equipment business. On the equipment business side, we did $4.2 million in sales for the 9 months ending February 28, 2011.

Latest financials can be found in SEC filing, as well as the press release summarizing the results:


Johnson: Can you offer any sense about once you’re fully ramped up and selling, what you think the business could be doing in revenues per year in the coming years?

Ma: We believe there could be substantial growth in the area not only from the ambulatory monitoring business, but also from our EECP business. I don’t know if you noticed a few months ago, we started an initiative to increase our EECP reimbursement in cooperation with a consulting firm called Edgary Consultants. We are working with  insurance companies and the government in an effort to seek expansion of the coverage of the EECP business, which is again a non-invasive outpatient treatment for heart failure and angina. We are optimistic that there could be some good results coming the second half of this year.

Johnson: The EECP business is what has been Vasomedical’s core business for many, many years, is that true?

Ma: That’s correct.

Johnson: And the monitor is it relatively new?

Ma: We are a new player in the marketplace so we need to establish the brand as well as to establish reference sites. For medical devices, one thing a buyer would say is do you have a large installation base. So right now, we are still establishing that, but we see the opportunity for good growth and good reception in the marketplace now.

Ma: As, you know, the FDA regulation is very stringent for device companies in the United States. Even though we’ve prepared to launch this product, we could not even do any marketing or promotion efforts without FDA clearance.. So you always have some lead time issue for medical devices.

Johnson: Right. So now with the FDA clearance, now it’s just a matter of getting — I guess building the sales organization? I guess what do you see as the major hurdles now to really growing the business?

Ma: Market acceptance, because again we are a new player in the ambulatory monitoring device market. We need to establish ourselves with good references and good track record.

Johnson: I see. So if you had to sort of step back and talk about the strategy for Vasomedical in the coming months or coming years, what would you want people to know about your strategy?

Ma: As I mentioned earlier, we have started the EECP reimbursement initiatives to work with insurance carriers as well as the government, CMS, the managing agent for Medicare and Medicaid. Currently, EECP therapy is reimbursed only for refractory angina, meaning the angina patients that are class 3 and class 4, in layman’s language severe angina, and who are no longer amenable to interventional procedures such as PCI or bypass. This reimbursement language was actually drafted by us more than ten years ago. At the time, the clinical data was very limited, so as a good result, we received reimbursement from CMS, as a bad consequence, it limited us, limited reimbursement only for those particular group of patients.

In the last ten years, particularly the last five years, there are many, many more controlled,  randomized studies showing the good results and the mechanisms of action of EECP therapy. We believe the time has come for both the insurance payers as well as for the medical practice community to accept the EECP as a first line of the treatment option. We are working on  delivering the necessary information to third parties to achieve our growth strategy.

The second strategy is to change not only our image but also our practice as being a single product, single device company. The introduction of Biox product is a step in this direction. We intend to pursue other products as well.

The third element in our strategy is with our sales representation business, which is through our subsidiary called the VasoHealthcare. Currently, VasoHealthcare represents GE Healthcare for a select of imaging, diagnostic imaging products to a group of exclusive customers in all of 48 states in the US.  We believe that we have done a very good job for GE Healthcare and for ourselves. It brought in very nice cash flow as well as revenue and down the road, we expect substantial profitability. We want to grow that business to do more for GE Healthcare. That’s also in our strategy.

Johnson: It sounds like you’ve got some big growth plans. Can you talk a little bit about how you got involved in the company? I understand that your involvement was in concert with a merger with your previous company Living Data Technology, is that correct?

Ma: That’s correct. I was one of the principals in Living Data Technology and I’ve been a long-time business consultant to the owners of Living Data sister company Kerns Manufacturing, which is a shareholder of Vasomedical. In 2007 when Vasomedical was raising money, we were approached and we’ve been in partner with Vasomedical for  many years and then we perceived that as a good opportunity to combine our EECP device, which is mostly in the international market, together with Vasomedical as well as provide  much needed working capital at the time. Upon the closing of the investment deal and the combination of Living Data and Vasomedical business, I became a board member. A little more than a year later, I was asked by the board to take over the management and that’s when I became President and CEO.

Johnson: Terrific. In terms of some investment takeaways, why is now a good time for investors to want to take an interest in the purchase of shares of shares of Vasomedical?

Ma: Well, this is a question probably better for the investment community to answer. We’ve been approached by many IR companies and one thing we made clear to them is that we don’t make recommendations.  We build our business fundamentals concentrating more on successfully running the Company and let our performance speak for itself.

Johnson: Right.

Ma: But particularly at this moment as I mentioned, we have a good growth strategy in all three directions. It was very clear and I think we have a good plan to execute it. It’s going to take some time, but I believe we’ve done good preparation in the last two years to come up with a strategy and to start to implement it.

Johnson: Okay. Well thank you. That’s Dr. Jun Ma who is the president and chief executive of Vasomedical, VASO traded on the pink sheets. We’ve been hearing a little bit today about the new clearance on two additional Biox monitors as to their EECP business.

Johnson: It gives them a diversified product portfolio they’re going to take and grow into that market. Thanks so much for joining us, Dr. Jun.

Ma: Thank you.

Johnson: This is Brett Johnson signing out for OneMed Radio here in New York City. Good day.

End of Audio

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