How Robots are Becoming Surgeons with David Fischel, CEO at Stereotaxis

Today, we're talking to David Fischel, CEO at Stereotaxis, about the robots they're building that are performing surgeries around the world right now. You're listening to Joel Beasley, Modern CTO.

My first question is, definitely, why is it a robotics company that's doing surgery but it's called Stereotaxis? How does that make sense?

We don't make stereos. We don't make taxis. The original application—so our robots are used for endovascular minimally invasive surgery where you navigate catheters through the blood vessels and treat heart disease or stroke or other things like that. And originally, the concept for our robot was to move little radioactive seeds to brain tumors in the brain. And there's something called stereotactic surgery where you try to reach an area of the brain in a very precise fashion, and it's called stereotactic surgery.

And so Stereotaxis came from that original concept. That's already twenty-five years ago. And we evolved to not pursuing that application. When we get into the actual physics of how our robot works, how the magnetic fields work, there's a reason why that's not a great application and why what we pivoted to actually made a lot more sense. But that's the origin of the name.

So we have robots doing surgery today. Is that correct?

That is actually very true. There's probably something like 10,000-plus robots out there around the world treating nearly 3 million patients a year. So robots are very much real in a broad range of surgeries.

Tell me about some of them.

So robotic surgery kind of came into being—or the company that had the biggest impact on it is a company in the Bay Area called Intuitive Surgical. They make a system called the da Vinci System, which is for laparoscopic surgeries, from the prostate to hysterectomies to thoracic surgery, abdominal surgery. But anytime you do laparoscopic surgery, it's a tool that allows you to do laparoscopic surgery with greater precision and with greater capabilities than what the human hand would otherwise be capable of accomplishing. They started more or less about twenty-five years ago at the turn of the century. They had some difficulties in the early years. But then urologists started to use them extensively for prostate surgery, and it kind of took off from there.

They have about 10,000 systems now installed around the world. They're treating over a couple million patients a year, and they're really the kings of robotic surgery overall. In the subsequent decades, robotics for orthopedic surgery—hip, knee, arthroplasty replacements—spine surgery, kind of became also very much in vogue and very much adopted. And we're kind of the ones carrying the flag at a much smaller scale at this stage, but carrying the flag in endovascular catheter-based surgeries as the ones who want to pioneer robotics in that field.

Okay. So you're focused on those specific types of surgeries?

Yep.

And what's the most common ailment someone has that would need that type of surgery?

So if you think about surgeries broadly, you can categorize them in three big categories. Open surgery, where, you know, what you typically imagine—a physician standing over the patient, an incision, graspers, opening the chest or the other part of the body, physician holding tools in their hands. And there's kind of a whole range of open surgeries. The ones where robotics has had the most impact are things like knee replacements, hip replacements, spine surgery, where you have robots used very, very often in those. Then there's laparoscopic surgery, which is what I mentioned with Intuitive Surgical, the da Vinci system, where you have kind of three, four, five functional sticks.

So you have little incisions, maybe something like that, in the abdomen, and you have a few of these functional sticks, one which has a camera at the end, and a physician's doing the surgery using those tools. And then endovascular surgery is a very broad area of medicine. Endovascular is within the vascular system, the blood vessels. And so you're using the blood vessels as a type of superhighway to get wherever you need in the body. And so typically, what you do is you insert a catheter either in the leg or in the arm where you have relatively larger blood vessels superficial to the tissue.

And you insert a catheter into the blood vessel, and then you navigate that catheter to the heart or to the brain or to wherever else it is in the body. And you can then use, at the tip of this catheter, you can deploy a stent, or you can burn tissue, or you can aspirate a clot, or you can do all these types of things to actually treat the patient. And so that's kind of where we help improve catheter navigation and endovascular surgery. Most of our experience is treating patients that have heart rhythm disorders. So if the heart doesn't beat regularly, you can move a catheter into the heart, burn some of the misbehaving heart muscle cells, and then you get the heart back into a healthy rhythm.

Yeah. Let's torture that heart into doing what we want it to do. No, that's cool. I actually—

A little shock. It's not a torture. A nice little shock.

It's a torture. Sure. No, I did an interview a couple years ago with a company that they were using maybe even your technology, but a similar deployment method for, for lack of a better term, a Neuralink, basically.

Oh, sure.

Yeah. And the way that they would go in, they would go into the jugular into the—and get up into the blood vessels in the brain and then deploy the whatever the technology was that would then allow you to—it was a thought, brain-computer interface. Right?

Yeah.

BCI. Yeah.

I mean, that's a fascinating part of medicine. Still very—

I forgot the category for a second. I was like, it's not Neuralink. I can't say Neuralink because it wasn't. BCI. Yeah. You're the man.

Okay. So you guys, your technology is out there in the wild doing some of these surgeries?

Yeah, we have about 120 hospitals out there in the world that have treated over 150,000 patients to date. And so we're still a small company in the scheme of things, but it's definitely a technology that's used every day.

Are there any of these surgeries where the robots are autonomous? Meaning, I could just put the patient in the room, observe the technology, and just let it do its thing, or is it all still physician involved?

No. Physicians ultimately still are designing and executing the procedure. A robot gives them capabilities that they otherwise wouldn't be able to execute with human hands. And so it's really kind of allowing a human to be better than what otherwise they could be. If you think about a surgeon, right, they have to have two really big skill sets.

They have to have the cognitive skill to understand what's going on with the patient, diagnose the issue, determine how they want to treat the patient, and do the procedure. And then they have to have a mechanical skill set, which is however they're executing the procedure, they have tools in their hands, at their disposal, and they have to get those tools to do what they want to do. And you have to have kind of both skill sets. If you have the cognitive but no hand skills, that's terrible. If you have perfect hand skills, but you don't know what to do, that's also terrible.

So you need to have both. And obviously, every physician has a different weighting of each. And really, the role of a robot is to reduce as much as possible the mechanical challenges of a procedure so that they can focus more of their energy on the cognitive side of treating the patient. And that's what a robot allows you to do.

That's awesome. Are you a physician as well?

No, I'm not. I studied math.

It's alright. No, I was just curious. So like, my brother and mom are both physicians, and so I'm around it a lot. And then my dad was science and engineering. So just a bunch of nerds, just in different ways.

I'm similar. My parents are physician scientists. So definitely, I'm used to that too.

Yeah. It's either—I could tell. I was like, he either is one or he's just around them a lot. And then at your company, you're thinking—

If I didn't know this world of kind of working where engineering and innovation and medicine collide, I would have probably become a surgeon. So—

Right? Yep. Because—so wait. Question for you. Your company, you're making these little nano-robot things for these surgeries. Do you make software? What type of hardware are you making? Tell me about the different components that you actually produce.

Yep. So just as a little correction, this isn't nanorobots. There are small aspects of the robot that go in the blood vessels, but you have pretty hefty machines in the cath lab operating room that the physician's controlling. You have a cockpit for the physician where they do the procedure through. So it's kind of a real robot that you see in the full extent.

And then you obviously have the thing that goes in the body, which is relatively very tiny and is driven by the robot. Kind of going back to your actual question, the—oh, yeah. Perfect. Whoa. That is—

Alright. If you guys aren't watching on video, go on to YouTube. Check out the video. That is the thing that's actually out there in the wild now?

That is a hospital in Europe, and that is an actual image of their lab. So that's exactly how our robot looks like. Obviously, with a nice photographer doing it kind of—

Alright, guys. We're calling this a robot. It is a robotic room is what it is. There's a lot going on in this room. There's heads-up displays. There's large mechanical robotic-looking things. It's like I, Robot or something. I don't know. It's crazy.

Yeah. It looks cute like I, Robot. Who designed it that way?

If you watch the movie, I don't think you can say I, Robot is cute. We have a—

We have a little, we have a little marketing fun image, borrowed from Pixar of the robot, you know, jumping and then over the Genesis, over the I, kind of doing the Pixar move. So we think our robots are cute.

You gotta—you gotta take that perspective. You have to make them cute because they are cutting into you. And so, right? Or they're—maybe they're putting something into you.

Yep. Yeah. They're doing a procedure. And—

They're performing. That's the right way to say it. Yeah.

They're—going back, the beauty actually of endovascular surgery is really you have a tiny incision. I mean, literally, you know, less than a centimeter, less than a centimeter. You're talking about things that are two millimeters in diameter that go into your blood vessels. You're talking about really, really tiny incisions, and that's what allows you to—if you look at a trend in medicine over the last forty, fifty years, has been how do you move from more invasive to less and less invasive surgeries.

And so endovascular is this really minimally invasive form of surgery that allows you to do amazing things, where previously you would do open brain surgery or open chest surgery, and now you can do essentially, you know, the same procedure with very tiny incisions in the leg. So it's actually—it's amazing what's been possible.

That's what the BCI people were saying. They said it's actually a procedure where you can go home, like, same day. Yep. And I was like, that's crazy. Get a brain computer and go home the same day. Yep. I'm—it's going to take me a while to adopt that stuff. It's going to have to get so good it doesn't have to be surgically implanted in me, unless something dramatic happened and I needed it. But yeah. Yeah. It's going to be—I'm going to be a little bit of a slow adopter to that one.

I agree. I'm not rushing to do a brain-computer interface either. But what's nice, look, is unfortunately, medicine still with all of the innovation, all the progress, it still sucks to be a patient. It still is difficult and painful. All of us are patients. Ultimately, all of us, all our loved ones are patients in some way of some therapy. And so, yeah, there's a lot of room for improvement. And it's nice, though. That's the beauty of working in medicine. It goes to your question about the beauty of working in engineering and particularly robotics, is that you can't—it's not kind of, you know, just mechanical engineering or just chemical engineering.

You really, to make a robot work, you have to have macro hardware, micro instruments, all the electronics and firmware, all the control software, UI software, networking software. It is a complex engineering effort, and it requires a lot of interdisciplinary engineering. And that makes it kind of fun when you have engineering challenges. How do you solve things? How do you create things that otherwise you think aren't buildable and kind of working through all of the different aspects? That makes it actually a very exciting puzzle game.

How did you come across the company?

So I worked in a venture capital fund and then an investment firm focused on medical devices after university. Did that, by now already twenty or so years. And came across Stereotaxis about eight years ago. The company had this kind of super cool futuristic technology that was actually treating patients in the real world and had very good clinical data, but it was struggling and struggling financially and operationally. As an investor, kind of a professional investor from the healthcare fund, my job is to find interesting good companies that can change medicine in a positive way. And while we were doing due diligence, it really kind of became a—it—I got more and more interested in this dichotomy between the cool technology and the good clinical value versus the company that was going out of business and kind of why is that taking place.

And so, ultimately, did a kind of Harvard business case study on it, decided to invest, to pay off the debt, to give it operating capital, and then to step in to actually try to rebuild the company. And so that was about eight years ago. And we've been doing a lot of work over these years to rebuild it and to advance the technology significantly since then.

Yeah. Well, that's called opportunity. Right? You see that. You're like, okay. Everything should be going well. There's some deficiency in maybe operational excellence or cash flow management, you know, which gets us all. Look, I've had it. It—you always kind of struggle with that until you get to a point where you're like, I'm just not going to get in that position. And that usually takes twenty years of experience. Yeah.

Yep. Yep. And there was a lot of room. The technology was, on the one hand, fascinating and very differentiated from anything out there and allowed you to treat patients that otherwise couldn't get treated at all. So it was kind of special in those ways, but it was also really the first generation of technology.

(David Fischel at 00:14:55) And what you see in many areas of medicine, but also just broadly in consumer technology, is that the first iterations oftentimes they have issues that haven't been worked out yet that kind of don't make it practical for broader adoption. And so really what we've been working on is how do you take this core differentiated approach to minimally invasive catheter-based procedures and make it something that can be widely adopted and can be much more beneficial than what the initial iterations kind of allowed for.

(Joel Beasley at 00:15:26) Okay, let's talk a little business here. So first question, were you able to turn it around? Are you guys profitable?

(David Fischel at 00:15:33) We are not profitable. My goal is not actually to run the company in a profitable way. My goal is to run it in a financially sustainable way and to reinvest everything that we get back into R&D and into the team. Our mission is not to become a company that has about, let's say, $30, $35 million dollars revenue a year. My goal is not to be profitable at those levels. It's how do you get to a billion dollars of revenue, $2 billion of revenue, $5 billion of revenue, and really transform endovascular surgery where, like in laparoscopic surgery, essentially every fellow who's trained in endovascular procedures is learning how to use a robot, has access to a robot, and that's kind of the de facto way that procedures are done.

(Joel Beasley at 00:16:15) Oh, that's interesting. Do you guys work with like colleges to give them training robots and stuff?

(David Fischel at 00:16:19) We have a couple dozen universities that have our robot for clinical purposes. Right? They treat patients with the university hospitals, and then we have a robotic fellowship program. So the fellows at the hospital can learn robotics while they're doing their medical fellowship. And so we train a couple dozen or so fellows a year. And yeah, that is an important part of the process.

(Joel Beasley at 00:16:42) Yeah, that makes sense. I mean, I always aim to grow at cash flow. You know, I want to be like slightly profitable, like right around there. But I like your answer. It was a very like financial answer. We're going to do it in a financially sustainable way.

(David Fischel at 00:16:57) And that's, look, that's normal. You see many technologies, many companies that go out of business because they're not building financially sustainable business models. But on the other hand, again, our mission is large enough. There's tens of millions of endovascular procedures done every year. Right now we're treating less than 10,000 patients robotically. So when you look at that and you see the type of impact that you can have on medicine, your goal shouldn't be shortsighted if you generate a million, two million, three million profit. That doesn't change anything in the scheme of things. Your goal is how do you go from, you know, point zero something percent market share to 5%, 10%, 20%, 50% market share. That's really the goal. And in that journey, I'm sure that there will be then others that play a role. But right now, this is our flag. We're the only one who's really pushing the boundaries of robotics in this field. That's our flag to carry.

(Joel Beasley at 00:17:50) Yeah. So you're at less than, you're like point zero one, point zero zero one percent market share penetration. What's your next big leap? Where do you, how do you get from 10,000 to 100,000?

(David Fischel at 00:18:02) So the two big things that we've been focused on from a technology innovation point of view is how do you enhance the robot such that it is really easy to use and broadly accessible, that a hospital doesn't have to do construction and architectural planning and contractors in order to get the robot, but they could get it over the weekend kind of relatively easily with a simple installation. So that's been one big area of work. The second big area of work has been how do you build all the right catheters and tools so that the robot is helpful not just in one specific procedure, but in a broad range of procedures. And so thinking about the robot and taking that robot from a first generation version to kind of a more refined version that can be broadly adopted, and then making all the right portfolio of tools so that the robot is helpful for many different types of procedures and is with modern catheters. That's kind of the big efforts. There's a third one, but those two are very practical. So we actually just announced yesterday morning an FDA approval, US FDA approval for a new catheter. That's the first catheter innovation that we've had in almost 20 years. And so it shows you how we're rebuilding the company. We have now in-house catheter development, manufacturing capabilities, which we never had in the past. We have kind of a good team of engineers who build robots. We should get FDA approval, I believe, for a new robot that makes it much more accessible very soon, probably in the next few weeks. And so we're really starting to bring all these innovations to market.

(Joel Beasley at 00:19:48) That picture that we saw, is the robot half the size, about the same size? Was that the most recent picture?

(David Fischel at 00:19:53) So that was a stepping stone robot. That robot is called a Genesis System. We just came out with it about four or five years ago. Before that, our earliest robot is over a decade old. And that Genesis robot was a good stepping stone innovation that helped us in making the Genesis X robot, which is what we expect regulatory approval for very shortly.

(Joel Beasley at 00:20:18) Oh goodness, look at this thing.

(David Fischel at 00:20:20) Yep.

(Joel Beasley at 00:20:21) That's why we did this interview. I saw the visuals and I was like, that's what we want to show. That is so cool. So that's like three big pieces. You can ship that into an operating room without huge structural changes. Is that right?

(David Fischel at 00:20:33) Yep. So what you see in the center is an X-ray, and so that's a typical X-ray and that is used in every catheter-based procedure. But then the two robots on both sides, that's what allows for this kind of very precise, that's what allows for that really precise navigation and control of catheters. What you have inside those covers is little magnets on robotic arms. And the magnets, when a physician says they want to move a catheter in any direction in 3D space, we know how to adjust the magnetic field where the patient is so that the catheter is kind of moving with millimeter precision in the patient's heart.

(Joel Beasley at 00:21:11) Whoa. So it's using magnets to move the catheter.

(David Fischel at 00:21:15) Yep.

(Joel Beasley at 00:21:16) And it's real time? What does that, does it have like real time X-rays? How does it see the veins?

(David Fischel at 00:21:20) So you use the X-ray and sometimes other diagnostic equipment like ultrasound machines, EKG mapping machines, but you use predominantly in endovascular procedures the X-ray as a type of kind of view into the body. And then based off of that view, you can see catheters in the body. You can see other devices. You see the vasculature, and a physician sits at a cockpit, and they from that cockpit, they say I want to move this direction or that direction in 3D space, and we adjust the motion using these magnetic fields.

(Joel Beasley at 00:21:53) Oh wow. We're not far off from like planting a location flag and it just auto-routing, like my Tesla can get me there.

(David Fischel at 00:22:01) We have a few automation software algorithms already in our system. And one of the big efforts over the next five years will be how do you really introduce a lot of intelligence into the robotic system. We announced earlier this year we are part of a special program by NVIDIA focused on introducing AI into surgery and into medicine. And so we're starting that journey, but that is less mature than what I mentioned before, all the regulatory approvals we're in the midst of receiving.

(Joel Beasley at 00:22:33) Hey, how do you do it to where they don't get cancer from like real, you're not doing real time X-rays because that would be like X-rays every second.

(David Fischel at 00:22:41) No. So X-rays are used in every endovascular procedure, not necessarily robotic, just in every endovascular procedure. X-rays are used as a predominant form of imaging. And for the patient, you're right, it's not great to get X-ray exposure. But, you know, if you or me get an X-ray and it's three minutes worth or five minutes worth or ten minutes worth in a procedure, you know, so be it. The therapy that we're going in for is worth much more than the risk of that X-ray exposure. What's worse is think about a physician who gets exposed to ten minutes in one procedure, but they do four procedures a day, and they do procedures four or five days a week, and they do that, you know, 50 weeks a year for 20 years of their career. They're exposed to huge amounts of radiation over their career. And so one of the big benefits of robotics is reducing that X-ray exposure and the risk for the physician. And then also even for the patient, when you look at the data, let's say from all of the publications on our technology, because you're using a catheter that's much softer, much safer, and you can move it with greater precision, the physician in 90 plus percent of the publications that are head to head, they're using much less radiation on the patient and much less X-ray use on the patient because they feel confident in how they're moving the catheter. And so that's also for the patient, you get less. One of the nicest things of working in medical devices is that you get kind of intermittently emails or calls from physicians, and they tell you about patients that they treated and a great case that they had. And so intermittently you get these cases of, you know, pregnant woman, and obviously for a pregnant woman you don't want any X-ray use at all because it could harm the fetus, or young children that get treated with your system where also radiation is much more harmful. And seeing those cases where then they use zero fluoro, zero X-ray exposure during the case, those are obviously very, very nice cases to hear about.

(Joel Beasley at 00:24:40) So do we have, and just I know I'm kind of stuck on this because I'm just a little bit nerdy, do we have real time X-rays? Is that a thing?

(David Fischel at 00:24:47) There are real time X-rays. That's used in, you know, when I mentioned tens of millions of catheter-based procedures a year, in essentially all of them you're using a real time X-ray machine during the surgery.

(Joel Beasley at 00:25:00) Oh see, I didn't even know. They make me hold still at the dentist. Like hold still, don't move.

(David Fischel at 00:25:03) No, real time. These are sophisticated X-ray machines. Much more expensive, much more sophisticated than the one at the dentist.

(Joel Beasley at 00:25:12) Yeah. That is so cool though. This is really amazing what's going on. And so for you, to the question that I was interested in was, how do you go from 10,000 to 100,000? And your answer is two big areas. We're going to make them smaller and more accessible, and then the other thing we're going to do is we're going to allow it to be able to do more procedures through accessories, for lack of a better term.

(David Fischel at 00:25:34) Exactly. Well said.

(Joel Beasley at 00:25:36) Alright, I'm wrapping my mind around it. I'm getting there. I'm getting there because I'm going to have to go share all this at like the next family dinner when we see my brother's family.

(David Fischel at 00:25:47) You know, you can talk all about it. And if you want your family and you to join, we can remotely, and this goes a little bit into that digital surgery AI kind of concept, but we can do remote procedures. I mean, that's more technologically feasible. That's not something that's actually done regularly in the real world. It's not yet something that's approved by regulators, so it's more done in special settings. But, you know, you want with your family at the dinner table to take out your laptop and to drive our robot in our headquarters, you know, feel free. We're happy to do so.

(Joel Beasley at 00:26:20) That's hilarious. So hey, are there any remote surgeries at all happening right now in the world?

(David Fischel at 00:26:25) So there's probably been a few dozen done with our technology over the years. And predominantly it's from a conference setting. So let's say a physician at a conference from the stage will treat a patient that's at their hospital, and it's more done to demonstrate what's possible. There were a few cases in Europe over the years that were done in actual real clinical use. And one was a case of a younger girl who came to the hospital presented with a very serious arrhythmia that could be deadly. And the chief of the department was a couple hours away from the hospital, and so he helped his local team of physicians perform the procedure to save the girl. And that worked well. And then there were several cases during the time of COVID. You had many examples where physicians were stuck at home for a period, let's say if they got COVID for a week or two weeks, and they would help their colleagues complete cases successfully. And so there were several hospitals in Europe where they were doing that during COVID.

(Joel Beasley at 00:27:29) That's amazing. I love the medical industry. They're always doing crazy advanced things. A lot of passion around saving lives.

(David Fischel at 00:27:38) Yep. Nice.

(Joel Beasley at 00:27:38) Well David, you answered like all my questions. I think we made a podcast. How do you feel?

(David Fischel at 00:27:45) You're the king of podcasts. So if you're happy, I'm happy.

(Joel Beasley at 00:27:50) Dude, I'm happy. You're quick, you're smart, you're fast. You know the subject matter. You understand the finance, the business, and the technology. You're like my type of people.

(David Fischel at 00:27:57) Okay, so delighted. Look, Modern CTO, right? You need to understand the technology and you need to know how it actually works in the real world and what's the purpose of it.

(Joel Beasley at 00:28:07) Absolutely. Thank you so much for listening. And if you found this episode useful, please share it with a friend or colleague who you think would get value from it. And if you have topics that you'd like to hear discussed on the podcast, either add me on LinkedIn or send me an email, [email protected]. Every time I get an email or LinkedIn message, it absolutely makes my day and inspires me to keep going.