My conversation with Taiwanese-born Dr. Lin – who emigrated to America on his own at age 16 with his own money, sold a keypad patent to Philips in the early 90s, and now embarks on his latest innovation at HealO Medical – was nothing short of fascinating.
I’m really glad I recorded it for you. Sit back and enjoy the audio and/or read the transcript below.
P.S. Watch out, all you wound care manufacturers. Ed’s on to something.
Joe Hage: Hi this is Joe Hage and Dr. Edward Lin on Friday, April 6th, 2012. And Ed you were telling me about a new device that you are working on for HealO Medical.
Dr. Lin: Yes, that’s correct Dan [sic]. The system that I’m working on is one for advance healing for complex wounds and it’s called O-ACE-Sys from HealO Medical.
Joe Hage: Now you are an anesthesiologist, right?
Dr. Lin: Right, my professional background is that of anesthesiology and I did not focus any attention on chronic wound care until I had a friend who had a chest wound after coronary artery bypass graft that was non-healing. So one day I went to visit him when he was going to have the state-of-the-art device applied to his wound. And the device was called Vacuum Assistive Closure by a company called KCI in Texas.
And this device essentially became the basis for turning KCI from a relatively small sleepy company that made therapeutic beds to a company that in 2011 sold for $6.3 billion and KCI…
Joe Hage: Yes, I saw that.
Dr. Lin: Right. And KCI has the lion’s share of the Negative Pressure Wound Therapy market in the US. And in essence what it does is it applies focal strong suction to the wound to remove the extra exudate and indirectly improve circulation and provide a number of other benefits. But when this device was turned on and my friend grimaced with pain and blood was being sucked out of the wound because of the rupture of small blood vessels, I realized that there had to be a better solution.
So I looked into wound care and discovered that the current therapies were all fragmentary, relatively ineffective and costly. So what I did was come up with a system that would eliminate, for example, the use of dressings of the wounds. Because the frequent repeated need to change dressing is a very painful and unpleasant experience for patients. And we all have the experience of changing a little bandage and we don’t even like the pain and discomfort associated with tearing a small scab off.
Well in Negative Pressure Wound Therapy every other day you have to change the dressing for a much, much larger wound. And you have to peel a foam or gauze dressing away from the granulation tissue that has been sucked into the crevices and the microscopic spaces between the fibers, and…
Joe Hage: That sounds very painful.
Dr. Lin: Yes, it IS very painful and many patients need premedication—in other words, often times, a narcotic pill or even IV sedation—before the wound dressing can be changed.
So what I did was, I invented this clear-view chamber that sits on a soft cushion. And that cushion is inflatable and can be adjusted to fit over uneven body surfaces. The clear chamber allows you to visualize at any point in time what the condition of the wound is. The interior environment of the chamber is under the direct control of a smart pump which can then deliver various therapies…
The pump would be the size ranging from four times the size of an iPhone to at most the size of a small brick. In other words highly portable and of course it would not have the weight of a small brick. But in its most advanced complex form, this pump would deliver various therapeutics under the direct control of the advanced logic of the pump.
Let’s say you start out with a wound with dead necrotic tissue, you can deliver proteolytic enzymes into the chamber to digest away the dead necrotic tissue. And it can repeat that as often as needed until all the necrotic tissue is gone. It can then provide smart advanced Negative Pressure Wound Therapy that is a superior form than offered by any Negative Pressure Wound Therapy company in existence.
And additionally it can also provide smart, topical, hyperbaric oxygen. As well as various other therapies such as nitric oxide which is a vasodilator and potent antimicrobial, to kill off whatever germs that might be present within.
And lastly, this chamber serves as an ideal optimized incubator for advanced and high value bioengineered material such as healing factors, skin grafts and stem cells. So in essence, then, here is a system that provides absolutely the best, most optimum healing environment possible for advanced healing of complex and chronic wounds. And currently chronic wounds take on average 23 weeks to heal. And there are five major epidemiologic factors that combine to ensure that chronic wound care will continue to grow at a double digit rate.
These five factors include the fact that the number of diabetics has more than doubled worldwide to 366 million – a number that was exceeded in September of 2011. There is enormous ageing population in advanced nations. In the US we have 78 million aging baby boomers; in China there are 300 million over the age of 65. We’re also very much aware of a supersize obesity epidemic that will only fuel additional vascular diseases such as diabetes.
Further complicating this situation is that we have rising incidence of drug-resistant microbes such as MRSA, vancomycin-resistant enterococci, fluoroquinolone-resistant proteus and so on. This, at a time when we have a virtually dry antibiotic pipeline. In the early ’80s we used to have as many as 16 new antibiotics in a 3 year period. By the time we reach year 2000, there was only one new antibiotic over a 3 year period.
So these are the complex challenges that we face as we spend a fortune taking care of chronic wounds in the United States. Every year we spend about $35 billion to treat a mere 5.7 million chronic wounds. And some predicted that by the year 2020, $200 billion will be spent just to treat diabetic foot ulcers alone. And now my… [Joe interjects].
Joe Hage: So how did you, an anesthesiologist, seize on this opportunity? It doesn’t sound like it’s your area of study.
Dr. Lin: I grew up very poor and as a child I had absolutely no toys. As a result I simply used my creative imagination to have—virtually—anything that I wanted. I attribute my exceptional ability to look at things from a totally different perspective to my childhood. When all I could have in the way of a toy might be a broken wheel or a stick that I’d found in the ditch, but with which I can have endless imagined fun.
Joe Hage: Where did you grow up?
Dr. Lin: I was born in Taiwan and I left there at age 8 and went to Malaysia. And near age 16 I ran into a Peace Corps member who told me, “Ed, if you wanted to go to America just write to my Mayor.” Now this guy, name Michael O’Shea, was from New York City he said, “Just write to Mayor John Lindsay and he would help you.” So that’s exactly what I did.
Joe Hage: And that’s what happened?
Dr. Lin: Yes.
Joe Hage: And John Lindsay responded?
Dr. Lin: Well he did not respond to me personally but what he did was to forward my letter to Albany, New York. And it landed on the desk of a Department of Education official, a John McGuire, who then took it home that night and went to his neighbor, Henderson Riggs, who was Assistant Attorney General of New York state. And the Riggs family then set off a number of initiatives which then led to my coming to America.
Mr. Riggs has a Japanese son who was living with him and his son was studying in Japan. He had two daughters studying in South America; so you can see he’s a very internationally minded man. And his wife was an elementary school teacher and she then took the letter to school the next day and asked her colleague, Jean Bode, who is the wife of a dentist whether they would like to be American parents to a Chinese boy and they readily agreed.
So they told me that if I could get myself to Hong Kong I could take the ship that belonged to a Japanese shipping magnate, owned by the father of the Japanese son, I could get free passage to come to the US.
Joe Hage: What a fantastic story!
Dr. Lin: Yeah, well there were lots of twists and turns. It ultimately involved the Secretary of State, William P. Rogers and so on and that’s how my American odyssey began. The US embassy actually initially refused to grant me a student visa because my family was too poor. So Mr. Riggs, who went to Cornell Law School, wrote to his law school classmate, William P. Rogers, then Secretary of State, and a visa was issued.
But by the time I got it—because back in those days writing a letter by first class mail even then took more than two weeks—by the time I arrived in Hong Kong the ship had left. So I cabled Mr. Riggs and he said, “Well fly on to Tokyo and you can catch the ship.” So that’s what I did and when I arrived in Tokyo…
Joe Hage: You had no money… how did you fly to Tokyo?
Dr. Lin: Well I had all the money that my family could pull together and it was barely a couple thousand dollars. That was all the money I had and it was basically a one-way trip. I really didn’t know whether I would ever see my family again.
Joe Hage: What year is this?
Dr. Lin: 1969.
Joe Hage: Wow!
Dr. Lin: When I arrived at the Tokyo airport, Mr. Minamide’s staff came to meet me and they said, “Mr. Lin we have bad news for you. Mr. Minamide has declared bankruptcy and we have no ship for you to take.” I was totally stunned but I remembered my parents telling me “You must never ever benefit from someone worse off than you.” And to me if someone is bankrupt that means they’re penniless and I still had about $2,000 on me. So I turned down their kind offer of a free ticket to fly on to the US. I used my own money and flew on to the US.
I had just turned 16 a few months ago and finished 9th grade in Malaysia. So I pleaded with the high school counselor to let me skip to 12th grade, much against his advice because he felt I was taking on way too much. But after being in 12th grade for 4 months, I took my SATs, scored well and went to college at age 16.
From there I went on to do quite a few things that people said were either too difficult or impossible and I have repeatedly proven them wrong. In 1991 when internet was but a curiosity, I invented an intuitively simple multifunction keypad that unshackled the telephone dial pad from its text input limitations. And of course that’s an area that couldn’t be further away from what I was doing at that time, but I envisioned that someday we would need information on the go and I envisioned that the telephones would become computers. And it was very important to be able to input text quickly and readily using the telephone dial pad.
The solution that I provided was one that even AT&T, IBM, Bell Labs all missed. I mean if you do the prior art search it’s incredibly complicated but what I did was invented the first key in the world that has one function more than the number of contacts. So if you look at the key number 7 you see that it has PQRS – 7 is associated with PQRS – so I simply put PQRS in the periphery of the key; let’s say in the 12, 3, 6 and 9 o’clock positions with the number 7 in the middle. And the key has a siliconized surface so that you can readily control the directional tilt.
So if you tip the key in the 12 o’clock position it would close the contact beneath and it would register P; you tip to the right and it would register Q, you tip downward it would register R, if you tip to the left it would register S and when you push the key straight down, two or more contacts simultaneously close and it would decode as the number 7. So Shift 7 becomes F7, Shift P becomes capital P.
So I had completely disambiguated the telephone dial pad with an intuitively simple method. And you have to remember this was at a time when eTrade was so advanced that it was introducing stock purchases via telephone where you could multi-tap. I mean that…
Joe Hage: Yeah I remember that.
Dr. Lin: …That was the best that we had back in 1991.
Joe Hage: I remember that.
Dr. Lin: Yes. So, it was because my ability to think outside of the box that I could come up with a simple solution like that. And my patent at that time, which took years to apply, was rejected in the US and in Taiwan and I appealed my patent rejection before the Board of Patent Appeals and Interferences and won in both countries. And the Japan Patent Office fought with me for 9 years claiming that I do not deserve even one of my dependent claims, in other words nothing could be allowed.
But I fought on and one day after 9 years, the patent arrived in the mail with everything that I asked for. They had given up.
Joe Hage: Wow!
Dr. Lin: I think that you can see from some of these real stories that I am a person who is capable of out-of-the-box thinking, who is able to envision what the future needs and certainly has perseverance to go against virtually any odds. I’m not someone who gives up easily. I’m very very excited… [Joe interjects].
Joe Hage: I’m amazed by the story and I’m really honored that you shared that with me and I’m really glad we recorded it too because what a fantastic story.
Dr. Lin: Thank you. And I am very…
Joe Hage: This is the immature little boy in me, did you get to get rich on your patent?
Dr. Lin: Oh, well I almost did on my keypad patent. Philips Consumer Communications which was a joint venture between Lucent Technologies and Philips wanted a worldwide exclusive license from me. At that time Nokia was also very interested, but Nokia was bursting at the seams and could not even fill its orders fast enough. So they said to me… [Joe interjects].
Joe Hage: Right, that was around 1994/1995.
Dr. Lin: Correct, right. And Philips Consumer Communications persuaded me to break off discussions with Nokia. And they said, “Ed you don’t need to fiddle with trying to build a prototype, we have Bell Labs we can get this done in no time at all.” PCC was already at that manufacturing 23 million handsets a year. “We would put your keypad in all our phones.” So I was persuaded to go with them and unfortunately…
Joe Hage: That wasn’t lucrative enough to make you rich?
Dr. Lin: Well, what had happened is the corporate merger did not work and after about a year PCC abruptly dissolved. And this was also at the same time that the tech bubble burst and many companies that were leaders in the mobile handset business went out of business. Some of them came back subsequently, but Philips was not one of them. So that was a very devastating setback and then the technology moved from analog…
Joe Hage: To digital.
Dr. Lin: Right, ways of input changed from analog keys to digital touch screen. And even though I have a novel solution in that regard as well, I sort of turned my attention away from the area to focus on wound care because I am principally drawn to the ability to relieve suffering. And this is a very, very serious problem for which apparently no ideal solution exists. So my technology represents a revolution in at least four major aspects. Usually when you have a product that’s revolutionary in one major aspect, that’s very exciting already but mine is actually revolutionary in four and…
Joe Hage: So educate me, what are those four?
Dr. Lin: Well the four ways in which it is revolutionary is that one, for the first time it enables a total elimination of wound dressings, so you can see at any point in time what the condition of the wound is.
Secondly, it provides a breakthrough from a Negative Pressure Wound Therapy that is different from that of given by any current system.
The third one is that it delivers a smart cyclical topical hyperbaric oxygen.
And the fourth one is that it provides a versatile platform upon which it could support other advanced chemical, physical and biological therapy which I had briefly touched upon earlier ranging from proteolytic enzymes to antibiotic lavages to healing factors, stem cells and so on.
The Director of stem cell research at University of Central Florida, Dr. Kiminobu Sugaya, has a special method; using just very few steps he could regress any stem cell, any bone marrow stem cell into pluripotent stem cells.
He told me that if I could provide my O-ACE-Sys to him, he would be able to demonstrate wound healing in just two days. I was invited by the US Department of Defense to go and make a presentation to them. And even though at that time I told them it exists as a concept, I didn’t even have any prototypes, after I returned to Florida, I got a call from the US Army Materials Command wanting to (chuckles) order the product.
So without any question this is a system that will reduce suffering, accelerate healing and really benefit patients and our nation in reducing our runaway cost of healthcare. And of course because of the low cost of manufacturing the system, it will allow us to provide better healing for less at a very healthy profit margin and accrue to great benefits to my investors.
Joe Hage: Ed, I don’t mind telling you that people much smarter than I will be listening to this recording or perhaps reading the transcripts if I write it up. What would you like to tell them? What’s the opportunity? And as you know I have a wonderful 100,000 person community that I suspect would be interested in what you have to say. So what would you like them to do? How would you like to engage them?
Dr. Lin: Well I am looking for one-million dollars in investment capital which will allow me to complete the prototyping of the first generation of product. My system has actually already won a couple of national awards and the Government of China has also awarded me a 5 million RMB Leading Pioneer Award. This was actually announced just on March 26th of this year. So that’s very recent development.
However, in order to tap into this 5 million RMB award which amounts to just under $800,000, I must bring in investment capital of my own of approximately the same amount. I envision that by the end of the 12th month of funding, I will be able to complete prototyping of the first generation system of O-ACE-Sys which will directly solve the two biggest problems facing chronic wound.
Number one, the lack of adequate oxygen which prevents the wound cells from moving past the survival stage where they are basically locked in chronic inflammation, has very little ability to engage in cell division, collagen synthesis and so on. And break the vicious cycle that they’re in to allow them to move in the right direction.
And then also to provide this special Expansive Negative Pressure Wound Therapy that my system will uniquely deliver which will increase blood flow. And by having more blood flow and more oxygen it will allow the chronic wound to heal much much faster. And then in our second… [Joe interjects].
Joe Hage: If I understand you, you don’t yet have a prototype?
Dr. Lin: Well I have a prototype of the wound chamber and they can see this chamber on my website which is www.HealOMedical.com. And the reason the company is named ‘HealO’ and the ‘O’ is capitalized to signify that we are engaged in healing and that oxygen is a cornerstone of the therapy.
Joe Hage: I see.
Dr. Lin: So I have already prototyped the wound chamber but I have not yet prototyped the smart pump. And there are major medical centers as well as internationally preeminent wound care leaders, for example Dr. Armstrong of University of Arizona, Dr. Peter Lorenz, Stanford and so on. All eager to put my system to clinical trial. They believe in the value and the potential of my system and they have written… they have provided their written support of the system which… and these letters they can also view at www.HealOMedical.com. Then in the second year…
Joe Hage: I’m going to conclude our interview shortly but let me ask you the moment you have a completed prototype or the other question is that, if today you had $1.8 million, how long do you think it would take you for FDA clearance?
Dr. Lin: I have consulted with 3 regulatory consulting agencies. These are companies that help people gain the FDA approval. And I proposed a very unique method for FDA approval to them using a dual 510K pathway. And based on that they felt that I have a good chance of being able to get FDA approval by the end of the second year.
So we would engage the FDA very early on even as we were building our prototypes to get feedback from them. But we believe by the end of the second year of funding when we would be ready, when we would have completed our clinical trials. And we would also have gotten our 510K approval.
Joe Hage: That sounds fantastic. Have you begun to put together revenue projections?
Dr. Lin: Yes, I have. In the first two years we anticipate essentially zero revenue because most of the second year will be taken up conducting clinical trials and getting FDA approval. But we believe that beginning the third year, we would have revenue of approximately $18 million. This is from treating about 3,000 at VA and military hospitals. In the fourth year, by treating 8,000 patients, the revenue will be $48 million and by the 5th year by treating 28,500 patients, the revenue will be $171 million.
Now the revenue projection of 171 million and treating 28,500 patients may appear a rather high sum. But I hasten to point out that 28,500 patients is but 0.5% market share of the chronic wound care market. Okay. so how could such a high revenue projection come about?
Currently, the Medicare reimbursement for Negative Pressure Wound Therapy ranges from about $90-$120 a day plus dressing supplies. But if we use a revenue model wherein we charge only $90 a day, which includes everything, we would achieve a revenue of $630 per week. And the average time to healing for a chronic wound is 23 weeks.
There is every reason to believe that my system will very substantially accelerate wound healing. And let’s for a moment, just be on the liberal side. say that my system could more than half the time to healing, from 23 weeks down to 10.
That would mean 10 weeks of therapy at $600 a week that would mean a revenue of $6,000 per patients. So if we treat 3,000 patients in our very first year on the market, 6,000 times 3,000 patients is how we arrive at $18 million.
Now if for some reason our system is in fact not nearly as good as we believe it would be, then the time needed to heal could be longer than 10 weeks. It could be maybe 15 weeks.
Well if that’s the case, then our revenue would increase by yet another 50%.
So I believe that projections based on capturing half a percent of the chronic wound market share by the third year the product is on the market is not being overly aggressive or optimistic.
And even if my revenue projections are off significantly, you still cannot take away from the very robust revenue stream of $18 million the first year, $48 million the second year, $171 million the third year. And at that point we would have gotten our own unique reimbursement code and the revenue curve will actually rise, really exponentially at that point. Don’t forget that KCI became a multi-billion dollar company from a device that only offers Negative Pressure Wound Therapy and a less effective one at that…
Joe Hage: Speaking of KCI, how insulated will you be from competition? I mean I imagine you’ll have patents but can it be reverse engineered or?
Dr. Lin: As it turns out, every one of the Negative Pressure Wound Therapy companies uses wound dressing of some kind over the wound. So mine is totally unique in having no dressing in contact with the wound. And in fact the numerous litigations that KCI was embroiled in with its competitors, whether it’s ConvaTec, or Blue Sky, Smith & Nephew all relate to how the dressings… what type of dressing is used, how the suction is applied in relation to the dressings and so on. And so I have freedom to practice because the system is so radically different.
Joe Hage: It sounds to me as though, it reminds me that Bill Gates said something like, “If you don’t destroy your own company, someone else will.” And that many people if their whole business is around dressings, that to go ahead and invent or create a non-dressing solution would dramatically hurt their own revenue streams. So it sounds to me as though those in the dressing market will not be rushing to promote their own non-dressing solutions. So that will give you some kind of coverage for a while.
Dr. Lin: Correct, and indeed the wound dressing market which, you know, is the biggest segment of medical devices for treatment of chronic wounds, has been steadily shrinking as a result of Negative Pressure Wound Therapy. The traditional dressing market sector has been shrinking. But the negative pressure or the medical device, what they call physical therapy sector has been growing. And the worldwide markets for that sector was about $2 billion in 2008 and it’s predicted to reach 7 billion by the year 2017.
Joe Hage: I’m so glad you reached out to me. This has really been a fascinating… I don’t know, what have we been on for 45 minutes or so. I didn’t plan on talking to you that long but I couldn’t stop listening to your story.
Dr. Lin: Thank you very much. I am very very excited about this and I am very confident that I can make this project come to fruition. But I do need to have the support of early investors in order to make my dream come true.
Joe Hage: Well to be certain I am eager to share with my membership and if there is a way that I can personally help you, I’m happy to do it. It’s a great story from your imagination to Coming to America, and all that you’ve done. It was really a pleasure to talk with you today, Ed.
Dr. Lin: Well, thank you very much Joe. One of the things I was thinking about, you know, as you know the Jobs Act was just signed into law yesterday which allow for crowd funding. And this enables the little guys to also participate in a promising startup and get a piece of the action without having to be one of the big boys in order to get in on the early offerings of companies like Facebook, for example.
Joe Hage: So somebody who has $5,000 who wants to be part of it, what should they do?
Dr. Lin: Well I have actually just started looking into crowd-funding and crowd-funding allows a small company like mine to raise up to a million dollars, from no more than a thousand investors. So once I look into this plan further, I may consider offering an opportunity such as this to members of the Medical Device Group. And if they have a minimum of a thousand dollars that they are interested in investing in HealO Medical, I would certainly welcome them. And of course they are not limited to investing only a thousand dollars. They can invent more, but that would be the minimum investment amount.
Joe Hage: Okay, well I’m certainly interested in learning more about that. I am aware of SEC regulations about what you can say or can’t say in a social medium because you need to approach accredited investors. So I’m not exactly sure how to manage that dance just yet but I’m sure that this is not the last time you and I will be speaking.
Editor’s Note: If you would like to reach Dr. Lin to consider participating, contact him at elin001 [at] gmail [dot] com.
Dr. Lin: Well I have actually posted a forum in medical device group about that. And in that I provided links to a couple of introductory articles about this. And what’s great about the Crowd Funding, a sub-act of the JOBS Act, is that it frees the startup trying to raise money from the onerous burden that SEC previously imposed in order to raise money. The rules, which are still being drawn up – they will become official latest by January of 2013, will greatly simplify the reporting requirements.
Joe Hage: Well I need to get smart on that too. And it looks to me as though I found a new friend to educate me. Dr. Edward thank you so much for your…
Dr. Lin: Well I don’t know much about it but I am just beginning to look into it. So again, thank you Joe for your interest in this project and giving me the opportunity to speak with you.
Joe Hage: My great, great pleasure. Thank you, Dr. Lin.
Dr. Lin: Thank you. Bye bye.
[End of Recording]