Interview with Dan Pitulia President & CEO, Entific Medical Systems

AO/Beck: Hi Dan. Thanks for your time this morning. I know you're pressed for time, but if we can, I'd like to review a little bit of your professional history before we get to Entific.

Pitulia: That's fine. I was born and raised in Sweden. I have a Bachelor of Business Administration from the Stockholm School of Economics which I earned in 1980. After that, I went to work with a company in Helsinki, Finland, for four years and then I moved to that company's headquarters, which was then in Gothenburg in 1984. After that, I went to live in Switzerland for 10 years where I worked for a company called Swedish Match. I ran one of their large product divisions globally for some seven years. It was a turbulent period in my life. I was with them for 10 years and I saw ten owners come and go. Then I worked for a short period in London handling Asian business for a tobacco company when somebody called me out of the blue and asked if I would go back to Gothenburg and head up Entific. Since I have four children and three of them were born and raised outside Sweden, I thought it would be a good idea to actually live there, so they'll know what it's all about!

AO/Beck: What year did you join Entific?

Pitulia: 1999.

AO/Beck: Would you please give me an overview and an introduction to Entific?

Pitulia: Entific was created in 1999. Our business, which consists mainly of the BAHA system, was a small division within Nobel Biocare. Nobel Biocare is the world's largest dental implant company. Nobel Biocare realized it wasn't a good fit. They were not going after the same customers/patients, and they had very different reimbursement issues. So they sold two-thirds of the company in equal parts to two venture capital companies in Sweden. The purpose was to fund the company and allow it to build it's own structure and give it an opportunity, to see if it could actually fly or not. Since, then we've had a nice growth curve.

AO/Beck: How long has the product been available across the world?

Pitulia: It's been available in various forms for roughly 20 years, although the newest version looks very much like the original! The first patient was operated on in 1977 as part of a clinical trial in Gothenburg, but then it took almost eight years before anything came of it commercially.

AO/Beck: So the original design was strictly for people with conductive hearing loss?

Pitulia: Yes, that's the way the whole thing commenced. And that's where the business stayed for quite some time. For the first 15 years of the product's life 5,000 patients were fitted. Between 1999 and 2002 another 5,000 were fitted and this is largely because of extended indications.

AO/Beck: In the last year or two, the definition of appropriate candidates changed, and now the BAHA system can be used for Single Sided Deafness and conductive losses.

Pitulia: Yes, and we have become much more attentive to what the doctors, operating nurses, audiologists, and most importantly -- what the patients need.

In 1999, one of our subsidiaries in France wanted to run a trial with a couple of patients for Single Sided Deafness. However, back in Sweden, as the company was going through changes at that time, they didn't want to hear about it. The doctors in France went ahead and operated anyway. I joined the company in August 1999, and by the end of November 1999, the French fellows convinced me to meet personally with their two patients and the doctor who did the surgeries in France. I spent an afternoon with these patients; two gentlemen, and their spouses each around 50 years old. As soon as we said goodbye, I decided this is going to work. These patents were absolutely ecstatic about what the product did for them.

I asked the French surgeon, What do you want to do? He said, I want to run a clinical series with another 10 patients, and I said, Okay. He said, Do you want to go home and ask the experts? And I said, Aren't they the ones that told you 'no' before? And that's how it started.

AO/Beck: That is a fabulous story, thanks for sharing that. What have you heard about Single Sided Deafness from around the world? I know some entities have not considered it to be a true disability. I can tell you after 20 years of clinical practice, and having had ear problems of my own - it is a real and significant problem!

Pitulia: I agree. I once had a German professor tell me that if you can hear on one side you're not handicapped. Then I asked him if he'd be willing to wear a noise reduction plug in one ear all day to see what it was like. I urge anyone thinking about Single Sided Deafness in this way to experience it with a safe and effective noise reduction ear plug. Then decide! It is indeed a significant disability!

AO/Beck: If it's not too rude, may I ask how many units have been sold across the world?

Pitulia: I would estimate that we have fit some 15,000 patients, essentially since about the mid-1980s, as we were only in clinical trials before that time. We received pediatric clearance by the FDA in 1999 for children age five years and above, and then in 2000 we were approved for bilateral fittings for bilateral conductive loss. I think that was 2000. And then in 2002 we got clearance for Single Sided Deafness.

AO/Beck: How many different BAHA system models are being produced?

Pitulia: We have three sound processor models. We have the Classic, which is analog. The reason that one is analog is that it was designed for pure conductive losses. We also have the Compact, which has output compression in addition to an analog processing unit, and then we have a body worn unit with a K-Amp.

AO/Beck: Which one do you think patients prefer most often?

Pitulia: I believe they prefer the Compact, not always because of its better sound quality, but because of its smaller size.

AO/Beck: That's a major issue with hearing aids too, cosmetics are a significant factor, and despite the benefit, nobody really wants their hearing aids to show! How many centers in the USA are implanting the device?

Pitulia: That's a tough question. If I had to guess, I'd say it's over 100.

AO/Beck: I understand you are developing a digital system too?

Pitulia: You're right. With the new applications, we are looking at a variety of digital sound processing opportunities. With the single sided deaf population, patients might benefit more from a higher frequency response in the BAHA system, so we're investigating that too.

AO/Beck: What sort of time frame are you on for the digital product?

Pitulia: I think it'll be ready to go soon, probably in 2004

AO/Beck: Please tell me the website address for people who'd like to get more information?

Pitulia: www.entific.com, or they can call 1-888-825-8484.

AO/Beck: Thanks so much for your time! I wish you continued success and we'll look forward to following up with you whenever you have the time!

Pitulia: Thank you too Doug. It's been fun for me too.

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