Promotional Bank of Austrian Federal government Austria Wirtschaftsservice Gesellschaft mbH (AWS) conducted an interview with Dr. Richard Ljuhar, founder and CEO of ImageBiopsy Lab
With the FDA approval as a medical device and the recent financing round, ImageBiopsy Lab has now also started its roll-out in the USA. With the AI-supported software for early detection and diagnosis of bone diseases, the start-up is expanding in Europe and oversea. The challenges and opportunities that will result from this expansion were discussed with Richard Ljuhar, the managing director of ImageBiopsy Lab GmbH.
Your growth course of the past months is quite impressive. You’re making great progress and you can’t be stopped anymore!
Richard: Yes, our growth is really very gratifying! Two years ago our customers mainly consisted of radiologists and orthopedic surgeons from our personal networks. Since then, we have greatly professionalized the customer acquisition process by building up our own sales team and are now addressing potential customers in a targeted manner. This enabled us to expand our sales market to Germany, Switzerland and the USA.
With your growth, you have increased your team from 14 to 23 employees in the past two years and have now also moved to a new office in Vienna.
Richard: Our old office in the 13th district of Vienna was a typical startup cliché . Six of us worked in a three-room apartment – we used the kitchen for meals and meetings. In the beginning, this worked out quite well because many of our employees were still studying and were not always in the office. However as the number of employees grew, we reached the point where we had to wear noise-reducing headphones to be able to work undisturbed. Soon the kitchen turned out to be an unsuitable meeting room as well [laughs]. At this point, at the latest, we realized that we needed a bigger office!
To what extent did the Covid-19 crisis influence the relocation?
Richard: Before we could move to a new office, we had to evaluate to what extent we were affected. However, it soon became clear that our industry – Medical AI or medical software – was only affected by the lockdown to a limited extent. Therefore we decided not to wait any longer and move to a new office with improved infrastructure and more space, close to our old office. We already had moved all our information to the cloud in January. That‘s the reason why we were able to move quickly and also implement an efficient home office concept and continue working without any significant restrictions.
What is the plan for the coming years?
Richard: We will focus on our expansion in the USA. We are already looking for a suitable home base on the East Coast and we also have a local partner who will support us. In addition, we would like to complete a Series A financing round in early 2021. The first talks with European and American investors are already ongoing.
The next step was entering the market of the USA. How did you prepare for this?
Richard: Through our current existing investors we have gained access to partners which are specialized in supporting US market access projects. Usually, it is not trivial to find such partners, because it is too easy to lose a lot of money and time on this project.
At first, we conducted market research and gathered feedback from local radiologists and orthopedic surgeons. We wanted to know what their thoughts about our AI solution were and whether there was a need for it or not. Simultaneously we also tested all future products to obtain their market potential and our target group. This is important because the U.S. is the most attractive market for medical AI in the world but also the most expensive. Approval for a medical device can cost over 100,000 euros. So you have to know in advance which product exactly offers the greatest return on investments.
How can one currently envision the establishment of a new location in the USA? In times of a pandemic! How does it work anyway?
Richard: Fortunately, this is relatively easy to implement in the software sector – you don’t need a local production facility or a large branch. All you need is a good lawyer who is well versed in local law and EU law. At this point, one of our investors helped us to find an excellent lawyer in Boston. From then on, the establishment of our new office was really just a formality, which was implemented quite quickly by means of emails and FedEx.
And how does the cooperation with the US teamwork?
Richard: We make daily calls with our team in the USA but this is certainly not a permanent solution. The current travel restrictions make the usual way of working difficult. In my opinion, personal contact can only moderately be replaced by emails or zoom calls. Therefore, we hope that the situation will relax at the beginning of 2021 and that we will be able to be on-site again in person.
Where exactly is the new location?
Richard: We decided to have an office in New Jersey provided by one of our partners – this works very much like the WeWork concept. Our location is close to Newark International Airport, which is served directly from Vienna. This location also has the great advantage that we only need thirty minutes to get to the office, which is very short by US standards.
Why did you choose this location?
Richard: For us, it was important to have a direct flight connection from Vienna so we could enter and leave the country easily. At the same time, we wanted to limit the time difference to a maximum of seven hours, as many doctors start work very early in the morning. Therefore, the East Coast of the USA is ideal.
In addition, it is important for us to be as close as possible to the end customer, i.e. close to large research and university clusters. In addition to the well-known hubs such as Boston, there is the so-called “Research Triangle” on the east coast of the USA around the universities Duke, UNC (note: University of North Carolina), and Wake Forrest. There we have good chances to recruit new employees directly from the universities. Since almost every university in the U.S. is committed to attracting study-related companies, we were almost spoilt for choice as to which location we should ultimately choose.
In other words, you had the “hard task” to decide between the attractive offers of several research clusters?
Richard: Exactly – in addition to Boston, we also had the opportunity to establish a location on a university campus in New York or North Carolina.
What happens after the USA entry? What are your next steps?
Richard: Our focus is mainly on the US market launch. We did the first step and the potential there is enormous. We are in the process of setting up the appropriate Sales & Customer Support structures.
What counts the most for US customers is meaningful clinical data – preferably from local key opinion leaders. Since we have already approved our first product in the USA, we now have to win our first customers for this product. Parallel to this, the next submissions for medical device approval are currently underway. In the medium to long term, we are planning to have 1,000+ users in the U.S. – of course, we cannot cope with this on our own and are deliberately focusing on commercial partnerships with partners from the radiology and orthopedics sectors. In this way, we are focusing more on key account management and less on direct sales.
What other advantages does the expansion into the USA bring?
Richard: The USA is characterized by a high degree of mechanization and the willingness – or openness – to implement new technologies quickly and easily. This helps companies like us in particular, as we offer a technology that in many respects represents a paradigm shift in the diagnosis of medical image data. Europe tends to be rather conservative and in a wait-and-see position. However, when a new technology is finally accepted by the market, this also means that it will not take long for other companies to follow and launch comparable products. In the end, the winner is the one who has the most venture capital in her or his pocket.
Interview partner: Richard Ljuhar founded ImageBiopsy Lab GmbH in 2016 and is the managing director. He leads research projects, product development, and is responsible for investor relations. He will be a guest at the World IP Day in Vienna on September 10th, 2020, and will hold a presentation about the application of artificial intelligence in medical imaging. Further details about this event can be found on the NCP-IP website.
ImageBiopsy Lab has been in the portfolio of the AWS Gründerfonds since 2018 and recently closed another round of financing. The company is currently in the fundraising process for the Series A financing round planned for early 2021. An international consortium will be set up for this purpose. Initial talks are already being held with European and American specialist investors.