Why Your Product Should Generate Revenue Versus Reduce Costs: Interview with Cognetivity CEO Sina Habibi

Cognetivity Neurosciences Co-founder and CEO Sina Habibi met his business partner Seyed-Mahdi Khaligh-Razavi while obtaining his Ph.D. at the University of Cambridge.

Sina and Seyed-Mahdi bonded when realizing both had loved ones diagnosed with dementia in the later stages of the disease, when it was too late to reduce its effects. Sina, an engineer, and Seyed-Mahdi, a neuroscientist, set out to fix the process for diagnosing dementia, resulting in the launch of Cognetivity in 2013.

Cognetivity is on the cutting edge of neuroscience and uses artificial intelligence (AI) for early detection of cognitive impairment, dementia, and Alzheimer’s disease.

When it first launched, the company was on the front lines of the digital health space, which required blazing new trails with regulators. The Cognetivity team had to learn the ins and outs of digital health product development and regulation on their own.

“There was not much that we could look at in terms of peers or examples that had gone down the pathway, both from a regulatory point of view [and in] product development. So we had to do a lot of the work ourselves,” Sina says.

Since then, the company has launched two products: Cognetivity’s Integrated Cognitive Assessment (CognICA) and OptiMind.

CognICA is a five-minute, computerized test that measures cognitive function. Considered a medical product, it has marketing authorization in the European Union and the United States. OptiMind is a wellness app that measures users’ everyday cognitive performance.

In this episode of Medsider, Sina discusses the importance of getting input from both end users and regulators throughout the development process, why companies should focus on how their product can generate revenue versus reducing costs, and the importance of teaming up with an expert fundraiser.

Guest

Sina Habibi

CEO of Cognetivity

Sina Habibi has a Ph.D. in engineering from the University of Cambridge, where he met his business partner Seyed-Mahdi Khaligh-Razavi. The two co-founded Cognetivity Neurosciences, which develops cognitive assessment tests for clinicians and patients to detect cognitive impairment, including dementia. Sina is an active member of Cambridge University Entrepreneurs.

Key Lessons from Sina’s Experiences

  • Get input from experts at every step of the development process, starting with regulators and working back to your end users. Regulators let you know what’s needed to get your device or technology to the finish line, while end users will help you drive toward a compelling product offering.
  • Think about the value and benefits of your products first; cost savings should come second. Cognetivity, for example, is focused on showing clinicians that CognICA can generate revenue for their practice. Making sure users get a return on their investment is key to seeing early adoption of your technology.
  • Team up with fundraisers who have experience raising money in your field. Worry less about dilution and focus more on raising smart capital. A small piece of a large cake is worth more than a big piece of a smaller pie.

Reverse Engineer Your Development Process

When Cognetivity was just starting out, Sina and his team made sure to regularly interact with regulators to help them understand the nuances of the technology. Regulators at that point were used to reviewing and approving medical products shown to be safe and effective for a specific function and with clear parameters around how to use the device.

CognICA is not a traditional medical device; it’s a computer program developed for an iPad, featuring AI that changes and gets better the more the program is used.

The Cognetivity team had to educate regulators about the product and the nuance behind the technology. Regulators are now using Cognetivity’s platform as an example for other companies developing similar technology, according to Sina.

Sina encourages other medtech developers to speak with regulators throughout the product development process.

“[Regulators] never tell you ‘do this or do that,’ but they will make you aware of the risks and things that you might have overlooked,” Sina says.

Once you have input from regulators, focus on getting feedback from your intended end users, whether clinicians or patients. Those conversations can help ensure your product vision aligns with what users truly need and want. In Cognetivity’s case, the company talked to clinicians who would eventually be administering the CognICA test to patients.

“It’s easy to sit down and imagine a product that is ideal for your customers. You can do all the hard work, and then face a brutal reality that that’s not the case. One of the good things that we’ve done …from the very early days is [being] in direct communication with end users, which are clinicians, and have taken a lot of input,” Sina says.

Make it a priority to obtain input from multiple experts along the way, including the planning for your clinical trials. Product area experts can help identify overlooked issues that might affect the design, length, and cost of your clinical trial.

“[Spending] tens of thousands of dollars at the very beginning can save you literally millions of dollars down the line,” Sina says.

Team Up With Fundraising Superstars

Team up with a “fundraising superstar” in your sector — someone who knows how the system works, has a good track record of raising capital, and is hands-on with companies, Sina says.

“I’m not talking about placement agencies and brokers. Even investment bankers have that ‘throw the spaghetti at the wall and see what sticks’ approach … [look for] someone who gets involved, has strategic value-add, and has done this with other companies before.”

There are plenty of people with those qualifications, especially at universities.

Sina recalls that as he was building Cognetivity, he had the opportunity to raise seed capital with a superstar fundraiser. He decided, however, to take another offer with a different group that had more favorable dilution — that is, when the company offers new shares by decreasing equity ownership for existing shareholders.

If he could go back in time, Sina says he would be less concerned with dilution and work with the investor that was more familiar with the space and had a better track record of raising capital.

“The more you raise, the more you’re known in the space, the more you are connected,” Sina says.

He also reminds developers that fundraising is a complicated science in and of itself. That’s why you need to work with people who have experience, starting at the earliest stages of development.

“Bring in someone who has done it before. That will help you a lot down the line. Don’t worry about the dilution. A small piece of a huge cake is a lot more valuable than a big piece of a smaller one,” he says.

Final Thoughts: Listen and Learn

Sina and his team have made a point of listening to experts at every step of the development process, from the regulators to the end users. Being humble and ready to learn are key to success, he says.

“Always be open to different ideas,” he says. “Encourage questions from your team, encourage pushback from your team, and give everyone a voice because it's important that collectively you get to the right answer as a team, before it goes out.”

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