Brett Johnson: We are with André DiMino, CEO talking about ADM Tronics and some interesting developments at the company. Andre can you tell us about ADM Tronics?
André DiMino: What makes the company special is that it has developed a significant internal capability to bring a high technology, medical device product literally from the conceptual stage, through design and development and into full manufacturing in our FDA-registered medical device facility. We have assembled an internal core staff, skilled in all the engineering disciplines including electrical, mechanical, material sciences, software, FDA and international regulatory. We can develop a medical device through its conceptual stage right up to our FDA-registered production facility. In addition, after decades of experience, we have acquired significant expertise in the medical device regulatory arena. Actually, we had our first medical device in 1975, prior to the US medical device laws coming into effect. When you combine our technical engineering knowledge and capabilities with the strong medical device regulatory background, I believe it’s an extremely powerful combination.
BJ: Terrific. Give us some history of ADMT. When did you start, and how did this operation come about?
AD: My father, grandfather and great-grandfather were all inventors and technologists. However, it was my father who founded the company in 1969, and in the beginning, it was strictly R&D. I joined the company in the early 1970’s while pursuing my engineering degree and then MBA in Finance. Around that time we initiated our own product line, which included our first medical device. Since that time, we’ve developed a great number of technologies and capabilities in the electronic medical device arena. In fact, we have done so well in this area of expertise, other companies in the industry have sought us out to assist them in bringing their technologies forward. We have a great track record in developing IP not only for ourselves, but for other companies as well. So much so, that by default, it became necessary to create our “Concept to Quantity” division which can be seen at concepttoquantity.com where we provide our expertise to client companies to assist them in the development, approval and commercialization of their electronic medical devices.
BJ: How many different medical device projects have you been involved with?
AD: Internally, we have developed our own proprietary products, but when you combine that with external client products, we’ve probably been involved in over a dozen technologies that have been brought to the marketplace. Personally, I have been in front of 19 panels at the FDA.
BJ: Let’s move onto what some of these technologies are, as you have a number of them in development. One I am particularly interested in is called Aurex-3, can you tell us about it?
AD: The Aurex-3 is an electronic therapy device for the treatment and control of Tinnitus. Tinnitus is a hearing condition where there is constant ringing in the ears. According to the American Tinnitus Association it affects over 50 million people in the United States and some 250 million worldwide. And the VA has reported that it is one of the most prevalent problems with many of the veterans returning from combat duty. We have had initial discussions with prominent tinnitus practitioners at the VA.
Our device is a non-invasive therapeutic device which treats Tinnitus. We had an original version, which was FDA-cleared, and we are bringing a re-engineered version to the marketplace, which will have digital capabilities via smart phone, tablet and cloud connectivity, allowing patient’s usage and progress to be delivered wirelessly to the healthcare provider. We are expecting to introduce that within this fiscal year, by bringing the new version to the FDA for clearance. We expect to offer it not only here in the United States, but internationally as well.
On top of that, we have developed a Tinnitus prevention product, which is called Tinnitus Shield. We recently announced an arrangement with a company called Otifleks, which specializes in hearing protection products. We jointly developed a Tinnitus prevention product. Therefore, not only do we have a product that helps to prevent Tinnitus, but for those who have or get Tinnitus, we also have the product that treats it as well.
BJ: The company you have partnered with is called, Otifleks?
AD: Yes. Otifleks. This company specializes in the hearing protection field, and that’s why we sought them out. We are on the verge of introducing the prevention product, Tinnitus Shield. We are taking pre-orders now, and expect to generate revenues with that technology starting next month.
BJ: Where will you introduce the product?
AD: We will be introducing it online initially, and then working with certain distributos of hearing products here in the U.S. to initiate the launch. In addition, the Otifleks company has its own line of hearing protection products. So one of the added bonuses, is that we will have our own proprietary product in Tinnitus Shield, and a series of other hearing protection products that are used by the military, airline travelers, and the entertainment industry that Otifleks has been selling in Europe. We will have the rights to sell this line of products in the United States. It’s a multifaceted agreement we entered into with Otifleks.
BJ: Can you discuss the device itself, in terms of the cost, and how it works?
AD: The technology is a specialized membrane comprising earplug that the person wears. It blocks out those specific frequencies that are known to cause Tinnitus, but allow you to hear normal conversation and sounds. It was specifically developed for those frequencies that are identified to have the most impact on people who have Tinnitus. The product will have four different sizes of inserts, to ensure that it fits the user well, and is customizable. This technology is specifically designed for people who are exposed to these types of noises, such as those in the military, entertainment industry, musicians, etc. It serves an excellent purpose of preventing the onset of Tinnitus. However, if someone does get Tinnitus, we would then have the Aurex-3 for the treatment of the affliction, which we anticipate introducing later this year.
BJ: Can you discuss Aurex-3, and how it works?
AD: Aurex-3 works by putting a vibratory sound against the mastoid bone, the bone behind the ear where the cochlea is located – that’s the chamber of the ear containing the nerves that do the hearing. The Aurex-3 is tuned to a person’s own Tinnitus, and through this, users can treat and control their Tinnitus. It’s non-invasive, using a probe that goes behind the ear. The Aurex-3 therapy is typically applied two or three times per day, and after time, you can start to reduce the amount of usage, where you can have a longer and longer reduction of Tinnitus.
BJ: How long do you use it? How many minutes per use?
AD: Typical treatment is three to five minutes. Initially it is applied about three times per day, and then you can go down to two times per day, then once a day, and then once every other day, and so on.
Actually, my father suffered terribly from Tinnitus. He said it was like having a jet plane engine in his head. He went to specialists, tried every type of treatment. Nothing worked. So, ultimately, to help himself, he researched and developed the original device to use o himself, and after a period of time, he needed only a few treatments per year to control his problem.
BJ: Has there been any clinical trials for this product?
AD: When we introduced the initial technology, there were studies done here and in the UK that showed excellent results in treating Tinnitus. Tinnitus is actually a symptom and there are many different conditions where you can have Tinnitus. The most prevalent form is noise-induced, as a reaction to loud noise. You go to a rock concert, or hear thunder or fireworks, and you have momentary ringing in the ears after experiencing loud noises. Some people experience that ringing constantly, and it’s a very disturbing problem. People have been totally disabled by this condition. By using our technology, which originally was FDA-cleared for the treatment and control of Tinnitus, you have something you can use on a therapeutic basis to treat it.
BJ: When was the Aurex first approved?
AD: It was first approved over ten years ago. The original version, was a bit cumbersome to use and expensive to manufacture. It was also analog. Over the years, we developed significant capabilities for its use and manufacture by digitizing it. This resulted in the re-engineering of the original Aurex-3 to create a new version, which can be controlled by a smartphone and tablet and with cloud communication, making it more user friendly, increasing patient accessibility and compliance. And by “compliance” I am referring to patient compliance. All too often people don’t follow their doctor’s advice. Since Aurex-3 will have the capability of delivering data wirelessly to the physician, the physician can monitor patient usage and progress.
BJ: I assume you got the additional new patents on the new version of the device?
AD: Yes, we are in the process of preparing new patents. We are very strong in the intellectual property field. I personally have been involved in dozens of patents, those I obtained for ADMT, as well as those we developed for ADMT’s clients.
BJ: When do you expect to get the new approval on the Aurex-3 and for it to be on the market?
AD: We are in the midst of finalizing the development of the new version, and planning to submit to the FDA for the revised version hopefully by the end of this calendar year. It will be submitted under a 510 (k), which theoretically could take four to six months. We are therefore anticipating and hopeful that we will have it on the U.S. market by 2018. We do anticipate getting the CE mark as well, meaning we may have it on the European market prior to 2018.
BJ: Let’s move on to the Sonotron. Give us some background on the Sonotron.
AD: The Sonotron is a non-invasive, electro-therapy device for the treatment of painful joint conditions, such as in osteoarthritis, bursitis, epicondylitis and so forth. Initially we performed animal studies, and then conducted double-blind, placebo-controlled human studies for osteoarthritis of the knee, and got great results.
We began distributing the product and marketing it overseas. We have active distribution in Southeast Asia. We are now working on re-engineering the technology, as we have done with the Aurex-3, and plan to submit to the FDA hopefully by the end of this fiscal year, which is March 31, 2018.
BJ: Will you be able to sell the new version in Southeast Asia?
AD: Yes. We would cease supporting the current version being distributed, and start distributing the new version. And for Europe, we would have to get the CE mark, and then introduce the new version, which we anticipate happening before FDA approval. By the way, the results in Southeast Asia have been remarkable. A great number of Orthopedists are currently using Sonotron to treat their patients. in some cases having avoided knee and hip replacement surgery.
BJ: In layman’s terms, how does the Sonotron work?
AD: It is a non-invasive therapy that applies a special pulsed long-wave radio frequency to painful joints. The long-wave radio frequency, which is 430,000 hertz or 430 kilohertz, is pulsed at an audio rate of 1,000 hertz or 1 Kilo hertz within a corona discharge output. So, in simple terms, you’d say it’s like a radio wave combined with a sound wave. You expose the painful joint to it for about 2-3 minutes, and the person typically can respond to this at the initial treatment, and then come back for an additional three to four treatments. They can then experience pain relief for several months following the treatment. We’ve had a wide range of applications. In SE Asia, thousands and thousands of patients have been treated with this, with excellent results. In our randomized, double blind placebo studies, we’ve also shown excellent results in treating inflammatory joint conditions, like osteoarthritis.
BJ: How about the FloMed? Can you discuss this product?
AD: The FloMed is on the back burner, and we aren’t emphasizing it now. That is a product we patented, and put on the marketplace for uroflowmetry testing. It’s a diagnostic device for analyzing a urinary flow episode, which allows for over 32 different diagnoses for urological tests. Although we will address the Flo-Med in the future, the products we are leading with are the Tinnitus Shield, Aurex-3 and Sonotron.
BJ: Do you want to discuss the digital platform at all?
AD: An underlying theme of why we can bring these products forward, is the capability we developed in digitizing these technologies to work with smartphones, tablets and the cloud. This affords a significant opportunity for physicians and patients to interact directly. This increases compliance and allows for the ability for the patient and physician to have regular communication regarding their therapy. We are taking our capabilities developed in other areas, and applying them to our own proprietary products in this digital platform.
We see opportunities for doing this with many medical technologies that, right now, are still on an analog basis. Utilizing our expertise, we can re-engineer them bringing them into digital functionality.
BJ: Next on my list is intellectual property. In most of these devices you have a proprietary position.
AD: Typically, we have an underlying IP asset, which we consider the base patent. Then, we work on picket-fencing around that with several additional filings, based on developments in new versions and anything that we see as proprietary. We have a robust patent structure. We anticipate filing more. As a matter of fact, I was just on the phone with our patent attorney yesterday, and now that the re-engineered Aurex-3 is coming close to introduction, we are planning to prepare IP filings for that. Not only is it important to develop the IP, but it is also important to develop “know-how” built into the technology. We plan to have both the intellectual property, and significant know-how engineered into these technologies, to give us a competitive advantage.
BJ: In terms of the marketplace, and who ADM competes with, are there any comparable public companies that are similar to your company?
AD: I am asked that question often, and candidly, it is difficult to give an answer, because I don’t know of any other company that has the complete continuum of internal capabilities to bring a medical device technology from the conceptual stage, through all the facets of engineering, development and regulatory and then into production, all in-house. There are companies that develop proprietary products, and then outsource all the work. You have companies that do regulatory, or contract manufacturing. But we have that all rolled up into one. I find it difficult to identify a similar company on that basis. There are probably a dozen different companies we compete with, but only on individual aspects of our company. When you consider the breadth of our expertise, I don’t think there’s anybody out there like us, with such a complete complement of internal capabilities in the medical device field.
BJ: In terms of milestones for the company, coming up, and even recent ones, do you have any key accomplishment that you could identify?
AD: Absolutely. We will have our first general purpose product, the Tinnitus Shield, coming out in June. That will lead us into the next milestone, which will be the new filing of the Aurex-3 with the FDA. Then, the introduction of the Aurex-3 after its expected clearance by the FDA. The next milestone following that will be the filing of the Sonotron with the FDA. We have three important, very large, potential milestones coming up within the next twelve months, which we see each one as a potential gamechanger for the entire company. We do have other projects in the pipeline, but it’s premature to discuss those milestones now.
BJ: In terms of financing, and growing the business. How do you seek to fund the growth? Will you be raising more capital?
AD: Fortunately, if you recall, when I mentioned other companies have sought us out to help develop their products, we achieved significant internal cash flow doing this engineering, design and regulatory work for other companies. We are very pleased at the fact that we are internally funding all the current development work. We have very good cash reserves and no debt, from over fourteen consecutive quarters of growth in revenues. We will be announcing our fiscal year-end results in a few weeks. Our stock is currently trading at $.17 per share and as of the 3rd quarter results we have about $.03 per share in cash reserves. Our financial picture looks extremely good, and based on that, I don’t have any plans of bringing in any external funding, at least until we get these products introduced. After that, we will see, as our business plan moves forward. As of now, everything is internally financed, and we don’t anticipate any financings in the near future.
BJ: Great. Thanks so much for joining us, André. That was André DiMino, CEO of ADM Tronics.