Episode Transcript
Rhiannon Main: Hello and welcome to London Stock Exchange’s CEO series Be Inspired, where we speak to CEOs, founders and senior leaders of our London-listed companies and learn about their journeys. My name is Rhiannon Main and I’m a senior associate in the primary markets business development team for the Americas. Today I’m delighted to be joined by Bob Rauker, CEO of medical devices company Belluscura, which IPO-ed in London in May 2021. Bob, how are you today?
Bob Rauker: Good. How are you?
Rhiannon Main: I’m very well. Thank you. I thought we’d start off by just delving into what is Belluscura. So, could you give us an overview of what Belluscura does?
Bob Rauker: Belluscura is a medical device company that was founded approximately four years ago, and our primary focus is on what we call oxygen enrichment technology, which is a broad range of technologies. But we focus predominantly right now on treatment for people with interstitial lung diseases or COPD and similar type of lung diseases.
Rhiannon Main: Can you tell us how did you get into it? What was your journey to becoming CEO of this company?
Bob Rauker: I got into this about five years ago, when I partnered with a company which is our research arm group, called Separation Design Group, which is in Pennsylvania, and they had developed some early-stage oxygen enrichment technology, which was actually award-winning technology from the US government, and we partnered. We thought, a wonderful opportunity to commercialise it. It had tremendous intellectual property around it. And that’s basically how the formation of Belluscura became as a partnership between the two companies, and we’ve taken it now from there, and we’ve obviously done very well with their technology so far, and we’re excited. So, that’s how it started. My background is in intellectual property, and we saw a neat opportunity to combine their research and my background in IP, and that’s the genesis of the company.
Rhainnon Main: And had you worked for a medical devices company before? Or was this completely new area for you?
Bob Rauker: No, I’ve spent probably too many years to remember, but going all the way back to when I was an attorney. I worked for many of the largest medical device companies in the world, in different roles, as patent attorney and business development and things of that nature, across both in the US and in Swiss companies in the past. So, it’s a long… Probably close to 30 years in the medical device industry.
Rhiannon Main: That’s quite a career. I imagine that being CEO keeps you very busy, but what do you like to do outside of work? Do you have any cool hobbies? What interests you outside of work?
Bob Rauker: I’m a single father of two girls, 20 and 23, and four dogs and cats. I don’t have a whole lot of… Outside of this company, which I love doing part of this. This is something I’ve always wanted to do, and we are rapidly growing. We’re squeezed into this office right now, and we’re expanding. So, there’s just a lot of things going on. So, I enjoy what I do here. I’m an inventor on this technology. You’ll find me here on weekends messing around with the technology, working with our research partner. So, it’s both work and a hobby for me. I really enjoy it. I know it sounds kind of sad, but I actually do enjoy it. It’s fun working on next generation technology.
Rhiannon Main: You’ve spoken about how you had a background in IP, I think. How do you implement that into Belluscura’s drive? And how do you drive innovation and bringing people together in your company?
Bob Rauker: I have an engineering degree. I do have a mechanical engineering degree. I did work for a few years as a project engineer. But most of my experience is in the intellectual property, in the patent field. I’m a person who looks at from a standpoint in this company that there are lots of ways to innovate in the medical device industry. And after 20-some years acquiring a lot of companies, doing a lot of mergers and acquisition, you learn from some… I’ve learnt from some amazingly talented people, who have had very successful businesses, and that was what drove me to take this company and say, there are a lot of companies out there that have wonderful technology, but that doesn’t always do it.
So, this company is really based on lots of innovation. Innovation in sales. Innovation in how we market the product, how we approach the patient. So, we don’t just rely on our intellectual property. It’s how we price it. Just a lot of different things that go on. And a lot of those big contributors are people that don’t have a STEM degree. They have general marketing, liberal arts majors. And I learnt with one of the big companies I worked with before, which was a multi-billion-dollar Swiss company. The chief technology officer actually had a degree in photography, but he had a tremendous ability in mechanical abilities and stuff. So, you learn that, hey, you don’t want to be limited just to people with the degrees, and I think that’s important because there’s a lot of tremendously bright, innovative people, and that’s how this company is built around. We definitely have people with PhDs here in sciences, and we have a lot of liberal arts, but everybody is an innovator in this company.
Rhiannon Main: So, moving on more to how you’ve grown as a company. Obviously, I’m here in London. You’re there in Texas. I think some people will probably be surprised by the number of IPOs we’ve had over the last few years from US companies. So, I guess could you give us a bit of colour on why you chose to list? And then why did you choose to list in London?
Bob Rauker: Sure. And I think that all relates into our wanting to be innovative. I think that the traditional path of a lot of medical devices in the United States is the classic angel investing, and then whatever you want to call it, Series B, Series C funding. But what’s happened in the United States is that there just seems to be a real difficulty, once you get a few million dollars invested, finding that next level of funding. And that’s where we took a step back and said, there’s a better way to do this, and that’s when we started talking with the London Stock Exchange, the AIM folks specifically. And we had a wonderful set of brokers and folks in London. Also that we were working with Dowgate.
And we realised that this was a tremendous, perfect fit for us on raising the funding we needed to get this… The wonderful thing about listing early, too, is it’s also an opportunity to showcase the product, too. So, it’s a wonderful way to you get out there. People learn more about your product. It’s been amazing just, in our investors alone, how many have invested because they knew of a family member that had COPD and other lung diseases. And so it’s been a wonderful marketing opportunity for us, too, for a small company, which when you look at when you’re trying to control budgets, what better way to get on the world stage? And there’s your product out there, and other people… Because we have just as many inquiries from investors about our product as we do just from customers. That’s been a big plus for us, and that’s why we went down that route. We saw we could raise the funding we wanted. It was not prohibitively expensive to do it. There were significant, a lot of interest, as you said. We IPO-ed. It was an oversubscribed IPO round. So, we’ve been very pleased with what happened with the London Stock Exchange and AIM, and I’ve encouraged other people in the United States to look into it, too.
Rhiannon Main: You talked about being that very innovative company that does what it says you’re going to do, which I think is so important. I remember when we were preparing for this, you said something that really surprised me. I think it will probably surprise a lot of people. Belluscura has actually lowered its prices in the current markets.
Bob Rauker: Yes. Unfortunately, what we’ve seen in the industry and across the board is everybody reacts to the inflation and supply chain cost and stuff. But we’re holding our prices, and in fact the next generation product is coming in a little less expensive. And we’re doing that through a host of different ways, by an improved supply chain. But we just feel that this is where we have very strong margins, and we just don’t agree… I’ve never agreed with, in the past, when I’ve seen other companies that just typically keep raising their prices.
I remember years ago, where somebody said, inflation drives innovation. And so that’s what we’re trying to do, is say, listen, you can’t keep raising the price. We’re going to price our customers out of the market. Medicare and NHS funding is X amount, and so you can’t just keep raising prices. So, you have to do things to respond to that, and so we’re doing that ahead of the curve. And right now, the distributors we’re working with, it’s been a tremendous response on that. We’ve also went to direct-to-consumer sales. That’s another way that we aren’t just relying on distributors. So, it’s always innovating and looking ahead. So, that’s a big reason why we can change our pricing, is that we are going direct to consumer on the products. And so there’s a whole host of things going on that, once again, innovation beyond just the technical is a big plus of this company.
Rhiannon Main: So, here at the London Stock Exchange, we like to think that the IPO is more the start of the story rather than the end, and I think that’s very true for Belluscura. I know you came back for a follow-on transaction in May 2022, raising $7 million. How was your experience of coming back to the public market a year after your IPO?
Bob Rauker: It was very good. I think you’re always hesitant when you have a very successful IPO. We weren’t planning on coming back, but we had a tremendous opportunity with a group in China, that was a global leader in manufacturing, and we saw an opportunity to expand with them. We were honoured to have them reach out to us. It’s a joint venture with a… To expand our opportunity in Asia-Pacific, and we needed to raise funding to take on that opportunity. And so we went back to the market, and once again it's all about explaining it. Here’s what the opportunity is. Here’s what it’s going to cost, and here’s what it’s going to do, and this is the billion-dollar market that it opens for us.
Nothing is easy. There were obviously a whole lot of things going on in the world a few months ago, and still are, that made it difficult, but I think we laid it out. We explained it. We had a lot of people want to come in, and we raised it, and that’s allowed us to keep moving forward with a lot of things, and that continues to… The Chinese development operation continues to move forward. So, it was a good response. It was a very efficient way to raise money. The people were very responsive in raising money through a Zoom and stuff like that. So, everything went very, very well. We were quite pleased.
Rhiannon Main: It's great to hear. Looking forward now. Obviously, Belluscura is already awesome, but what are the plans in the next five years? Where do you see this journey continuing?
Bob Rauker: There are lots of things going on. We’re squeezing this off just because we got a whole bunch of manufacturing going on here in Texas and expanding into Asia-Pacific. We’re finishing up what’s known as our ISO audit, which will allow us then to expand into Europe with… We get clearance for the CA and the CE mark. That’s all planned for 2023. So, we have a next generation product that we will be releasing within the next, I guess, next five months here. It’ll be this year. The DISCOV-R. Internally, we’ve called it the DX. And that’s going to be a transformational product for us. The first one is wonderful, the X-PLOR. This one is significantly smaller, lighter. We have significant interest, the expansion overseas. There’s just a lot of things. Quite frankly, I don’t look out five years. We look 12 to 18 months because there’s so much going on. We’re bringing on board a lot of talented people, and we keep devising and developing new generation… We’re the first company that we know of that has released an app, a mobile app, that pulls data from your phone, and your pulse oximeters, and your iPhone data and stuff like that. It all goes onto our Nomad app. Nobody else has done that. So, we continue even within this innovating. So, there’s a lot of things. I can’t even imagine what’s going on in five years. We got a lot going on in the next 18 months.
Rhiannon Main: Final question from me. You’re obviously incredibly busy. You’ve got so much going on as a CEO of a public company. Is there anything that keeps you up at night?
Bob Rauker: No. I never get sleep. No, I don’t. I learnt years and years ago, back in my days as a trial attorney way back when, and we had major cases, billion-dollar, bet-the-farm litigations, and you learn to… Taking myself, it’s kind of silly, but all the way back to… I can remember my basketball coach when I was in high school yelling at me and saying, hey, Rauker, you’ll never get a good shot if you don’t learn to pivot. And so that’s the mantra that we operate here. We learn to pivot. We learn to adjust. And that’s why you don’t end up having sleepless nights. If you’re always prepared to adjust… We had to adjust to a pandemic. Our product company was founded during Brexit. There always seem to be different things, supply chain. And when you build a company around pivoting and adjusting, you don’t… Yes, there are a lot of crazy, and we’re going to be here on Saturday morning doing some things because we have to adjust and do things on Sunday, but that’s what we do, and people… You build a company around a mentality of always being willing to adjust and pivot, you don’t have the sleepless nights.
Rhiannon Main: I love that mantra from your basketball coach. I love the fact that it’s still with you all these years later. Bob, this has been so interesting. Thank you for sharing your story with us today. And thank you for joining us. If you would like to learn more about Be Inspired and hear some more of the stories, please head to our website lsegissuerservices.com/spark.
