Expanding Med Device Distribution Internationally and in China with Andy Levien CEO at ArcScan

Andy Levien, President and CEO of ArcScan talks to Robert about expanding his medical device company internationally and into China.  

ArcScan was founded in February 2007 in Golden, Colorado. Their product, the ArcScan Insight® 100 is the leading, very high frequency ultrasound device that images the entire anterior segment of the eye, including behind the iris; areas that cannot be seen with even the newest models of optical technology

And because the system is not handheld, diagnostic measurements have never been this precise. ArcScan’s many innovations have led to a number of issued and pending ArcScan patents. Due to the success of accommodating intra-ocular lenses and the ever-growing refractive surgery market, intelligent imaging and precise measurements are more necessary than ever before. 

Show notes:

• https://arcscan.com/
• https://www.linkedin.com/in/andrewlevien/ 

About Andy
Andy Levien was appointed President and CEO of ArcScan in April 2012, and currently holds this position today. Before that he served as President and Global VP Operations of Norgren and President of Norgren Fluid Controls, a pneumatics and industrial controls company. Prior to that he held SVP and General Manager roles at Emerson Electric Co., an electrical equipment  and industrial instruments manufacturer.

ArcScan was founded in February 2007 in Golden, Colorado. The original machine, the Artemis 2, was eventually rebranded and became the ArcScan Insight® 100. The ArcScan Insight® 100 is the leading, very high frequency ultrasound (VHFU) device that images the entire anterior segment of the eye, including behind the iris; areas that cannot be seen with even the newest models of optical technology. And because the system is not handheld, diagnostic measurements have never been this precise.

ArcScan’s many innovations have led to a number of issued and pending ArcScan patents. Due to the success of accommodating intraocular lenses and the ever-growing refractive surgery market, intelligent imaging and precise measurements are more necessary than ever before.

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Transcript

Robert Fenton: 0:21

Hi everyone where it led to have you joined us today? As I speak with one of our customers, Andy Levian, president and CEO of ArcScan. ArcScan was founded in February, 2007 in golden Colorado, their product, the arc scan insight 100 is a leading high frequency ultrasound device that images the entire anterior segment of the eye, including behind the Iris, areas that cannot be seen with even the newest models of existing optical technology. I really enjoyed my chat with Andy today, and we really hope you enjoy the conversation. Well, we've got a lot to chat about today and I thought it might be useful Andy, just to kick off with a little bit about ArcScan and what you folks do to help helps, you know, save lives.

Andy Levien: 1:08

Well, we don't save lives, we save people's eyesight. And so, um, just

Robert Fenton: 1:14

I guess to save and improve lives is the broader.

Andy Levien: 1:17

The eyesight, you know, is such an important, sense. They're all important, but eyesight there's just been a real explosion in the technology to improve Lasik procedures, cataract treatment of glaucoma, which is about loss of sight. And so our technology is a very specialized type of ultrasound. If I can go into that now. And, it's, it's really novel because as you know, anyone's familiar with medical imaging, you know, ultrasound is one of the pillars, next to things like cat scan and MRI x-ray, et cetera. But no one else is doing ultrasound like us. So, uh, what excited me about the ArcScan opportunity when I first started 10 years ago with ArcScan is we actually have a little robot that operates under water, uh, in our, in our desktop device and it moves the ultrasound beam, in a very controlled and fairly rapid way. So it gives us best in breed image quality, repeatability of the measurements that are very high precision, which is a necessary when doing eye surgeries, cause we're dealing with very small anatomy. And so it's a really cool combination of computer control robotics and ultrasound that helps doctors better look inside the eye for cataract procedures. Replacing the lenses there for looking carefully at the cornea to better understand are you a candidate for laser procedures? Cause there's some conditions that you want to avoid before doing LASIK. So we have a best in class tool for screening there. And so it's, a really exciting combination of technologies for ArcScan. This motion control, underwater, robotics and ultrasound. And then in the end we call our device the Insight. So we do clinical work to apply AI in our image processing to provide, you know, not just data, but insights to the ophthalmologists.

Robert Fenton: 3:15

So how big is this device?

Andy Levien: 3:18

It's a desktop device. Um, You know, it's probably two feet kind of a cube. Sits on it on a desktop. We have a very high power PC that's under the table that we provide. We sell it for, you know, 70 to$80,000, which sounds like a lot, but that's kind of what these sort of diagnostics devices cost.

Robert Fenton: 3:42

That might sound pretty large, but it's smaller than lots of the pieces of equipment I've seen in those practices.

Andy Levien: 3:48

Yeah. And so our vision is to bring, we believe the way we do ultrasound, so not a handheld, but a scan ultrasound. We also see applications out of ophthalmology. I don't have, uh, time to work on a very much right now, but we're looking forward to doing some other things potentially in mammography urology, et cetera. Where the quality and depth of imaging that we, enable through our, novel combination of technologies will provide, also high value, diagnostics, because so much we hear about in medicine is about diagnostics. I mean, what gets differences is the pharmacologicals the therapeutic implants. But as an engineer, everything first starts with making a good and precise measurement. that's where stuff starts so.

Robert Fenton: 4:36

Nicely stated. And you folks kicked off this in 2007. Was, was this always the use case, or did you arrive at this application over time?

Andy Levien: 4:46

It was always the use case. There was a predicate device that our original inventors, had worked on. This is out of Cornell, the Weill Medical College in Manhattan. And so this was the use case, but as we developed the technology, we've actually expanded to be thinking about not only expanding the use cases in ophthalmology, because of course like many of the ologies there, there is a handful of subspecialties in ophthalmology and we've expanded there, but we've also expanded thinking about the other ologies and medicine as well.

Robert Fenton: 5:21

Yeah. So I'm curious, you know, 14 years later, you know, where's the company today, any kind of stats. I'm curious to see how, you know, that sounds like a really important use case where you folks are.

Andy Levien: 5:32

I know when you talk about 14 years, it's like, you know, Rob, where's it gone? so we are a mid growth stage. So we have currently about 50 devices installed. And by the end of the year, we hope that to be over a hundred. Well, you know, it's, it's not like, thousands, cause that's probably our in cases we'll have several thousand of these devices deployed around the world, but we're, you know, despite COVID, we've actually had a pretty good year. And uh, we're getting to a tipping point with brand and technology awareness in ophthalmology. We're seeing our sales growth accelerate. We've just transferred to a larger manufacturer because we subcontract the manufacturing and they'll easily be able to handle of the capacity we need to grow. We're right on the door of a major investment from a strategic player in China and China is just an absolutely huge opportunity for us. And so I've got my, you know, learn Chinese app on my phone now and everyone else here. So yeah, we're kind of mid growth stage still startup. Um, of only 10 people. We hope to expand with the strategic investment coming in. We hope to double the size of the employees in the next six to nine months. So it's a very, very exciting time for us.

Robert Fenton: 6:50

That's a good time. Well, like lots of things take time to really start compounding. So it's and it's great you had a good year and during COVID I know that looking at our customer base we saw some hiccups with elective type procedures or products and services around that. But we have seen a rebound in demand there. So it's really nice to see that it was more of a blip there, right. Rather than like a bigger trough. So that's, that's exciting to hear it now I was looking at your background before we got together today. And I've seen like an interesting kind of path even in, in private equity and a range of different things here. I was hoping you could maybe walk me through the path to your current role. How did you get to doing what you're doing?

Andy Levien: 7:36

Yeah, let me, I'm going to focus on keeping the short. Yeah, well, we got, I graduated from so I'm a Bay area, boy from Cal-Berkeley. Um, did my graduate work in biomechanics, right at the time. And this really beats me and, you know, the first four, uh, four bit microprocessor and Dell had just introduced. And so even though I really wanted to be in medical devices, uh, Silicon Valley back end. And so I went down to Silicon Valley and worked in a number of startups there, uh, for awhile but really not a medical device it's really kind of instrumentation, some of it was processing. Then I wound up in industrial controls, um, and wound up a few other startups here in Colorado. Then with a major corporation called Emerson Electric and kind of moved up the corporate ladder there from VP of Engineering into general management, being a general manager of a large division of Emerson in Boulder, just North of Denver. And then from there over to Europe and again, kind of corporate roles, uh, in instrumentation, industrial controls, always wanting to get back to medical devices. And in that, uh, corporate role, we launched a strategy to do some acquisitions around medical devices, and it kind of led me back to, uh, medical devices after many years. And eventually to ArcScan about 10 or 11 years ago here in Colorado. So a real secure circuitous path. but pretty exciting because I bring as a CEO startup, I bring some pretty deep experience in business development. Strategic development, good process design, leading us back to why we invested in Qualio you know, cause I'm a very process oriented guy and you have to make compromises as a startup person. Cause sometimes you just gotta run like your pants are on fire because, and process kind of takes sometimes or all the time. Yeah, well, sometimes more than you'd like. And so I'm really enjoying getting back to being a mid growth stage startup and focusing now getting some good foundations in place because as a medical device company, you can only run that way for so long or pretty soon. The commitments, you've got to make in your, in your quality objectives and to your customers you've got to get back to the process and we're right in the middle of a migration from anyone who knows Europe. The news is, you know, they're moving from the medical device directives, the medical device regulation, and we're just going through wrapping up that migration. And commitment to process in good, procedure, audit trail of documentation. Um, it's, uh, the burden's pretty heady for us now.

Robert Fenton: 10:24

You folks are selling in like several geographies you're in the United States, you're in, in Europe, where else are you?

Andy Levien: 10:30

Yes. And yes. So my background was always international, so, um, probably the country we have the least sales right now anyway is in the U.S. And that's changing. Uh, we were, we were lucky to make some here in the us early in roads with some military bases because of our value proposition on not only doing applications to support soldiers who were looking to get the best eyesight they can for obvious reasons, but also more in the VA space. But we're expanding with distributors in Europe. So we also have our CE Mark, obviously. Yeah. Uh, we've got devices in Asia, a few in China, Singapore, South Korea. And now looking to expand in Australia, we've just hired a sales guy there. nothing in Latin America. So, you know, with 50 devices, you can only put them so many places, but we really are international business. We see our opportunity as an international one.

Robert Fenton: 11:25

I'd love to kind of circle back on that in, in a minute. Um, Andy, but maybe going back to you here, because I feel like there, there was a question I wanted to ask you that I skipped over. You mentioned wanting to get back to medical devices. From the more industrial, um, business you were in. Why, what was it about medical devices that, that pulled you?

Andy Levien: 11:44

Well as a young engineer the strength of of your ideals as an individual are still front and center, and unfortunately, In my career, I kind of got pulled by opportunity, you know, Silicon Valley than corporate roles. But I got to tell you, you know, as later in my career, I'm lucky that I'm having a chance to get back to those ideals because as a CEO of a little business, you know, I think it's incredibly important. I get back to my customers and I recently did a training at an army medical hospital in Augusta. And, and before that, actually having sat through doctor consults with patients based on the insights that our device provided. Uh, there was one case, um, this was, uh, at Walter Reed where we have a device and it was a patient who was having a problem with cataracts and it was whether we had to go and do surgery or not. And the insights from our images and I, I didn't participate, but I observed that consult our image had direct impact on the concerns of that patient and what was going on with her eyesight, uh, that said, yeah, you don't need surgery. We just need to monitor it on and watch. Being able to know that your, your hard work on doing the best You can with your technology, how you support the clinical insights for the doctors. I mean there couldn't be a richer professional experience for me. So it's wonderful lead on my career to get back down. Cause it's just a, it's an awesome.

Robert Fenton: 13:21

How did it feel to kind of go back in and actually, you know, start building products to directly impact that and I'm wonder how does on a daily, weekly, monthly basis, do you get those opportunities to see that impact?

Andy Levien: 13:34

Not, not often enough, but it's a few times a quarters I'll get out to see customers. Cause it's that seeing, the relief in that customer understanding based on our images, what was going on, uh, with her eyes. I'm hoping as I build my staff and I'm wearing instead of 20 hats, maybe only six or seven, I'll have more time to do that. It's but it's not enough for me. I wish I could do it more often, but a few times a quarter now. Um, and, and more hopefully going forward.

Robert Fenton: 14:06

Kind of moving back then to the distribution. So thanks for sharing your story. You said you went to international very early and you, you spoke about, you know, you've distributors in Europe across various priority on Asia and South Korea. And you're about to get your first sales person in Australia. That sounds like a pretty huge undertaking in terms of achieving that as a small 10 person company. I know we speak to people who are trying to figure this out and it takes a long time. I mean, can, can you talk to me about that journey, uh, how, how you were able to do that?

Andy Levien: 14:40

you know, I'm not sure in retrospect, should we have just focused in the U S perhaps, because, you know, we started early on, it was back in actually in 2016, we had our FDA clearance, granted as well as we had our, our CE Mark which of course called covered a lot of Europe, but as we began to understand the, the market opportunities, you know, we started looking in Asia and there, there are some unique things about genetic predisposition, disposition of Asian eyes that make it a very. fertile in large market for us. so we have focused there and the, and the cost of pretty extraordinary. So we're currently going through what's in China, it's called NMPA is their version. I don't ask me what that acronym stands for. is the equivalent of their FDA. We're pretty deep into that process is quite expensive for us. you know, as you look as a CEO, where are the growth opportunities and talking with my competitors, you know, China is just an unbelievably huge opportunity. for us, it's, it's, it's a lot, you know, it's, it's four times the size of the U S and again, they have genetic predisposition, in terms of their they're have very high myopes, which, which speaks to laser and other refractive procedures at a very high percentage. Some other things, on the glaucoma space, which is where we have a very high value proposition. So it's, it's been a lot of work and a big investment, but it sets us up, for the growth we're seeing now in post COVID, you know, I've been needing to get to China and I'm fully vaccinated. Now. I hope to get there as soon as political things pass real as relief travel. It said, you know, I always questioned our investment in places like China, but, um, with COVID passing with a big investment coming from China, uh, it's gonna set us up just beautifully for pretty phenomenal growth there. So it's been a lot of hard work, a big investment, but, the table is set for us now to enjoy, the growth.

Robert Fenton: 16:46

Yeah. Well, it sounds like you've done a lots of the workup upfront, so hopefully, yeah. You get to get to reap that now. Any, any key lessons learned along that path of building out the international motion, because it seems the path less traveled for indigenous U.S. Companies to look outside the U S for early growth. I don't think it's right or wrong thing, but interesting to see that. I grew up in Ireland, you know, I'm Irish. Everything is all about exports because our local market is, you know, 4 million people. So you have to look externally immediately to grow. But a lot of companies in the us are hundreds of millions in revenue before they think about the rest of the world. How, how did that inform your thinking inform to do that?

Andy Levien: 17:30

Well, in my other coroprate roles, this is where I had the advantage of, you know, these were global businesses and, uh, it was, you know, we, they were always global opportunities and it's hard when you're in the U.S. Because, uh, you know, medical device technology in the U S is still seen as a premium around the world. I mean, and, and the investment I hope to see from, from China is it reflects the strength of the, of the regulatory environment. We all curse it here. Um, but you know, when you look at the migration of technologies out of the U S, medical devices is still very strong in this country, but you've just gotta be, you gotta, you've got to look at the global opportunity. you know, the U S has maybe 30% of, a world and where you look where money is being spent to build out healthcare systems. You know, we're relatively mature here, Europe as well. You've got to look at, where the growth opportunities are from an economic standpoint and, you know,the US it's important to develop the technology here, but the growth opportunities are in Latin America. Brazil, which we're, we're now going down the path of a regulatory approval in Brazil, very arduous, very expensive, but that's where the growth is, right? Because of that, whether it's India, which has got its unique challenges or China, which is right on our doorstep, uh, you've got, you've got to look to those as a CEO, if you want to maximize, your investors capital investments in your company.

Robert Fenton: 19:00

Any other lessons learned, if you could speak to yourself, um, to Andy 14 years ago and give him one or two or three pieces of advice, what would it be?

Andy Levien: 19:10

You gotta be persistent, never give up. After all these years, I still have to remind myself, I go really. I mean, the work we're doing in Europe right now, it's really been a major resource pull on us and you just have to be patient, um, fundraising, particularly. Again, the focus is on, on the therapeutics, but the opportunity is there for better measurements. You know, it's like the physicist, they, they measure something first like, Oh my God, what is that? And then they figure it out. Well, medicine's kind of the same way. diagnostics are a critical part, whether they're, biogenetics, genetic, diagnostics or measurements like ours. I still think they have a huge part to play. and there are other places in the world who get it even though it's kind of hard here in the U S for fundraising to, you know, stay the path. There's this linkage of therapeutics and diagnostics, I think is just going to get stronger. Um, the more we come up with tailored medicine, right? That's what it's all about. Used to be for a cataract procedure. You put one kind of lens in to replace your cataract. Well, now there's a plethora of lenses and what works best for you will be all about the diagnostics and the shape of your eye and what kind of a correction that you need. Yeah, just be patient, hang in there.

Robert Fenton: 20:27

Thank you andy for sharing and really enjoyed having you on the show and even more to be able to support you as a customer of Qualio. forward to keeping in touch and, anything we can do to help out. Just, just let us know. Thank you for joining.