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Articulate Labs

Wearable devices to speed muscle strengthening and training

USA, Texas
Market: Electronics, Another, Artificial Intelligence
Stage of the project: Prototype or product is ready

Date of last change: 15.04.2021
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Idea

AL’s first device, KneeStim, is a light, form-fitting device that uses neuromuscular electrical stimulation (NMES) to dynamically stimulate quadriceps muscles in sync with regular activity, accelerating rehabilitation by strengthening and training muscle with each step. KneeStim’s unique mix of AI, motion-tracking hardware, and patented joint modeling OS enables rapid gait and treatment personalization without massive amounts of pre-programming, processing power, or calibration. Collected physiologic data is used to optimize rehab, track compliance, and enable recurring reimbursement.

Current Status

* Developed working prototypes; refined to pre-submission stage
* Completed proof-of-concept study
* Market interest validated with prescribers, users
* Coverage/CMS codes identified
* Four US utility patents granted
* LOIs signed w/two hospital networks
* FDA 510(k) predicate identified; QMS, DHF buildup in progress

Market

KneeStim will enter the rehabilitation market with a focus on managing knee osteoarthritis and rehabilitating knees following total knee replacement surgery.

Knee osteoarthritis (OA) is a condition wherein cartilage degradation within the knee leads to joint pain and dysfunction. It is one of the most common causes of disability in adults, with over 14M adults in the U.S. symptomatic and seeking treatment, not to mention the ~ 60M people worldwide in similar situations. Prevalence is rising rapidly in the U.S. due to the aging patient population and increasing prevalence of obesity, with estimates of over 40M knee OA sufferers in the U.S. by 2025.

Target patient segments in these markets include:
- TKA Recipients under Bundled Payments: At least 55,000 individuals received knee replacements under a bundled payment scenario. Hospitals and surgical centers performing these replacements have financial incentive to reduce expense without impacting outcomes. One way is to provide remote or virtual physical therapy in place of traditional or home-based physical therapy.

TKA Recipients in Rural Areas: Approximately 9M people are over the age of 65 and living in rural areas. Rural Medicare beneficiaries are 27% more likely to have total knee replacement than their urban counterparts. This same population, though, will have far less access to post-operative physical therapy. 43% of rural residents spent more than 30 minutes traveling to physical therapy versus 25% of urban residents. Other barriers to physical therapy in rural communities include lack of awareness of PT among primary care physicians and insufficient income to cover out-of-pocket expenses for physical therapy.

Problem or Opportunity

There are 14M in the US seeking solutions for knee pain and dysfunction plus another 1M recovering from knee surgery that create a ~$10B knee treatment TAM. For these individuals, poor quadriceps muscle strength stemming from disuse atrophy and pain-based muscle inhibition contributes to more pain, poor mobility, lower quality of life, and $3B in additional healthcare utilization.

Physical therapy is highly effective, but <30% of patients attend all prescribed sessions or remain compliant with their home-based regimens due in large part to lack of time dur to work and family considerations, distance to physical therapy, challenges with payment or reimbursement, and confusion over exercise. These problems have only been intensified by COVID-19, which delayed 10,000 knee procedures per week at peak and increased physical therapy cancellations/no-shows by 20%. We see need and opportunity in to bringing elements of physical therapy to the patient when the patient cannot come to the physical therapy clinic.

Solution (product or service)

If this device performs as expected, it should create a near-doubling in quadriceps recovery within a month of surgery without the patient needing to do anything specifically different during their everyday activity. Steps taken walking a dog, going up and down stairs, or getting in and out of a car would be turned into strengthening and re-education repetitions. In doing so, patients receive faster, more convenient, and more effective physical rehab assistance that blends seamlessly into everyday activity. Prescribers save time and improve outcomes, receive reimbursable data on patient progress and compliance, and save money on rehab in capitated health care models. Therapists receive data and earn reimbursement on otherwise missed sessions through remote monitoring and NMES reimbursement.


Success in this application would also enable development of further applications to other joints and conditions and later to development of a body area network to coordinate multiple muscle stimulation devices to help mitigate the effects of more complex musculoskeletal conditions.

Competitors

There are no devices or treatments on the market that provide the exact combination benefits, nor in the same potential range of efficiency (cost or results) as KneeStim. There are, however, multiple alternatives for knee osteoarthritis treatment with which our device may need to compete for market share despite their respective drawbacks and costs.

Knee Reconstruction Prosthetics Manufacturers – These companies [Stryker, Zimmer, DePuy, Smith & Nephew, Biomet] produce replacement knee joints and weight-bearing surface implants that cost upwards of $13,000 for use in total and partial knee arthroplasties that constitute a $7.2B market. While knee replacement is effective, surgery cost and potential for outliving the prosthesis drive individuals to delay the procedure for as long as possible. Our device can help people delay the surgery, remain physically active, and improve outcomes from eventual surgery through prehabilitation and rehabilitation.

Electrical Stimulation Unit Manufacturers – These companies [DJO – Empi & Compex]] sell transcutaneous electroneural stimulation (TENS) units in addition to NMES units. TENS and NMES units cost $50-$150 on average, though higher-grade units can cost as much as $500. Global sales of these devices altogether created ~$565M in revenue in 2017 and is estimated to grow at 3.9% CAGR. One reason for this relatively modest revenue is the fact that NMES units, while effective, generally can only be used during simple, isometric exercises while the user is otherwise stationary. Our device provides for rehabilitation and treatment during normal, everyday activity outside of a clinic.

Bracing & Support Manufacturers – These companies [DJO, Ossur, DeRoyal, Breg] compete in a fragmented market encompassing a variety of braces, wraps, and shoe inserts used to non-invasively treat knee dysfunction. Knee braces have low uptake among end users (particularly among women) and low prescription rates from rheumatologists and physiatrists due in large part to low efficacy and bulky construction. Even still, the domestic bracing & support market is estimated at $2.7B with a 3-5% annual growth rate; worldwide, the market is approximately $4.6B with 3-4% annual growth rate. Hard knee braces such as unloader braces or cruciate ligament braces, on average, cost between $500-1,000 per unit.

Advantages or differentiators

Competitors’ NMES devices do not adapt to or leverage movement to create a more effective application of NMES and are restricted to use during basic exercises in controlled settings. Further, competitive devices’ use of wired leads and electrodes with thick, conductive gel is not readily compatible with movement, heat, sweat, or user comfort.

Finance

AL will sell KneeStims to prescribers at physical therapy clinics and ambulatory surgical centers at a fixed price to turn around to rent or resell to their patients. Sales price = $750; margin = 85%. Based on existing reimbursement codes, clinks and surgical centers will be able to offset device cost within six months. Additional revenue available by collecting and selling kinematic data to prescribers and research facilities.

Business model

Articulate Labs projects $45M in revenue five years from launch, with stagewise launch selling to outpatient surgical centers and physical therapy clinics for device rental or resale to patients. Distributors selling our devices to outpatient surgical centers and physical therapy clinics. Al will support distributors with inside sales to manage patient fitting, calibration, and reimbursement assistance.

Metrics for business model advancement include the following KPIs:
- Individual MDs Engaged: We have confirmed two MDs who will work with AL on pilot studies bringing the total number of engaged MDs and potential first customers to four.

- Facilities LOIs: Since applying we have received our first signed LOI from Dell Seton Medical Center in Austin, TX. We are in the process of working out LOIs and engagement agreements with UTHealth Houston / Memorial Hermann Hospital, Houston Methodist Hospital, and the DeBakey VA Medical Center in Houston.

- Abstracts/Papers/Conference Presentations: Researchers at Houston Methodist have been invited to submit layperson PR language on their research into improvements in acoustic myography (AMG) signal processing, developed by Herbie Kirn, at the Acoustical Society of America’s annual conference in December. This brings the number of such peer-reviewed output to three. AMG is not immediately relevant but it is a likely control input mechanism for improved future versions of KneeStims, specifically those intended to address rehab related to neurological conditions/trauma, and future applications of base technology to other joints and conditions. We’re running this effort in parallel to our current development efforts without taking time or money from the company

Money will be spent on

Seeking minimum $500,000 seed raise toward FDA clearance, initial manufacturing, pilot trial launch, and IP portfolio expansion.

Offer for investor

Currently offering investment on convertible notes at 6% int, 20% DOC, and with a $3M valuation cap. Projecting $45M in revenue five years from launch, with stagewise launch selling to outpatient surgical centers and physical therapy clinics for device rental or resale to patients. Also offering growth/expansion potential as underlying technology and IP can be applied to other joints/conditions and in other countries.

Team or Management

Risks

Prospective partners and investors should thoroughly consider all of the risk factors discussed below and should fully understand that all or part of an investment in AL may be lost.

Development Stage Company – AL has a limited history upon which investors can evaluate current business and future prospects. Potential investors should be aware of problems, delays, expenses, and difficulties expected with a new enterprise, especially in view of the competition that new business will encounter. AL cannot assure profit existence, growth, or sustainability.

Lack of Market Acceptance – AL will not be successful if knee osteoarthritis sufferers do not buy our product, if physical therapists do not recommend this product, or if orthopaedic surgeons do not prescribe this product. Any of the above may happen if
• AL does not demonstrate to patients, physicians, or third-party payors that this device is equivalent or superior to existing therapy options, or that cost or risk associated with Articulate Labs’ device is less than that of competitors;
• Other companies introduce competitive products that are cheaper, safer, or more effective than ours; and
• Satisfactory reimbursement from healthcare payors, including Medicare, does not become available after AL has exhausted the self-pay market

Dependence on Regulatory Approval – AL may be delayed in getting or denied clearance to sell devices in the US through the 510(k) clearance process. Additionally, AL is subject to Medical Device Reporting laws that could result in enforcement action from the FDA. These actions range include, but are not limited to, warning letters, voluntary or mandatory device recall, partial suspension or total shutdown of production, and rescission of a substantial equivalence order.

“Kickbacks” and False/Fraudulent Claims – AL could be held in violation of federal and state anti-kickback and false claims laws should an AL representative improperly structures sales offerings, including discount practices, customer support, education and training programs, and physician consulting and service arrangements. Additionally, these laws are broadly written, which may make it difficult to determine how precisely these laws will be applied in specific circumstances.

Intellectual Property Risks – AL cannot assure investors that its current patent portfolio will prevent duplication of devices, prevent access to proprietary information or technology, or ensure competitive advantage. AL patents can be challenged, invalidated, circumvented, or rendered unenforceable. Foreign intellectual property law may not afford the same protections as US patent law, which may impact AL ability to enter foreign markets. Chances of infringement claims being asserted against AL will increase with continued success.

Dependence on Management – AL operations may be dependent upon current management. Should, for any reason, members of current management terminate association with Articulate Labs, there can be no assurance that qualified replacements can be found or afforded.

Cost Control – While AL believes it has accurately estimated costs and expenses associated with planned products and business, it cannot assure complete accuracy or certainty regarding future operating expenses and costs.

Technical Obsolescence – There can be no assurance that AL technology, trade secrets, patents, and intellectual property may not be rendered less effective or obsolete by technologies developed and exploited by other companies.

Insurance Costs – AL will purchase insurance coverage that is adequate for the planned device and its related risks. However, it cannot be assured that adequate insurance coverage will be available in the future, or that coverage can be obtained at an affordable cost.

Unanticipated Risk Factors – AL may encounter other risks in addition to those listed above.

Incubation/Acceleration programs accomplishment

Health Wildcatters (2017)
TMCx (2018)
Tampa Bay Wave (2018)
MassChallenge (2020)
Capital Factory (ongoing)

Won the competition and other awards

Winner, Astellas Rx+ Healthcare Innovation Challenge (2021)
Winner, OrthoChallenge (2020)
Semi-Finalist, NASA iTech (2020)
Semi-Finalist, Texas A&M New Ventures Competition (2020)

Invention/Patent

ALI.002CH Orthotic Support and Stimulus Systems and Methods 2,622,566 T184700CHEP 11/11/2020 1/6/21

ALI.002DE Orthotic Support and Stimulus Systems and Methods 2,622,566 60 2011 069 288.7 11/20/2020 TBD

ALI.002EP Orthotic Support and Stimulus Systems and Methods PCT/US2011/054100 2,622,566 10/18/2016 n/a

ALI.002GB Orthotic Support and Stimulus Systems and Methods 2,622,566 TBD TBD TBD

ALI.002US Orthotic Support and Stimulus Systems and Methods 13/878,586 9,734,296 9/29/2011 8/15/2017

ALI.002USC2 Orthotic Support and Stimulus Systems and Methods 15/673,749 10,923,235 8/10/2017 2/16/2021

ALI.003US Acoustic Myography System and Methods 12/759,344 12/759,344 4/13/2009 3/17/2015

ALI.008US Prosthetic Socket Stabilization Apparatus and Technique 12/949,421 8,911,505 11/18/2010 12/16/2014

ALI.009WO Joint Rehabilitation Apparatus and Technique PCT/US12/036704 9,289,591 5/6/2012 3/22/2016

ALI.011US Adaptive Muscle Stimulation Technique 13/847,915 8,972,018 3/20/2013 3/3/2015

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Photo 1 - Wearable devices to speed muscle strengthening and training

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Idea
Current Status
Market
Problem or Opportunity
Solution (product or service)
Competitors
Advantages or differentiators
Finance
Invested in previous rounds, $
Business model
Money will be spent on
Offer for investor
Team or Management
Mentors & Advisors
Lead investor
Risks
Incubation/Acceleration programs accomplishment
Won the competition and other awards
Invention/Patent
Photos
Product Video