After several years of research and development (R&D), South Australian startup Fusetec is making surgical training safer and more efficient by manufacturing anatomically accurate replicas of body parts.
Serial entrepreneur Mark Roe is on a mission to disrupt the cadaver market. Yes, you read that correctly.
For the past several centuries, surgeons have had to perfect their training using dead bodies. Given that in real-life scenarios they’ll be operating on living people, the use of cadavers is problematic.
As well as the inefficiencies of transporting cadavers, the dissection process is unable to replicate situations where a patient may be bleeding out. Typically surgeons are faced with the equally inefficient and ethically unsound method of cutting into anaesthetised sheep or pigs to practise their dissection skills.
There’s also the problem of bacteria and viruses lingering on dead bodies, posing a health threat to surgeons and medical staff. During COVID, donations of corpses to universities plummeted.
Enter Fusetec, the South Australian startup Mark founded. “I spent a year going to conferences, meeting with surgeons and academics, asking their opinions of what they needed,” he tells Kochie’s Business Builders. “All the surgeons were looking for a solution, an alternative to working with cadavers, but didn’t know it was potentially available. So right from day one, we decided that this is what we’re going to do.”
Research and development (R&D) is the heart of this business
After being told by three local universities who he approached for collaboration that his ideas were “impossible” to develop, Mark put together his own research and development team, overseen by local Ear, Nose and Throat (ENT) surgeons.
Around two years later Fusetec debuted its first products in a surgical course at McGill University in Canada which was, says Mark, a “roaring success”, and the company’s models are now being used to train surgeons across the globe.
Fusetec currently has a number of products in the ENT market, along with early-stage products in orthopaedics, neurology, gynaecology, general surgery and abdomen surgery, and is about to go market with its knee model. It has around 27 products in development, commissioned by various medical companies worldwide.
“As an IP-centric company, we’re in perpetual R&D mode for the purpose of commercial activities,” says Mark. “Like all good R&D projects, our first project ran over time and over budget. And I knew we’d struggle to complete it and gain sales without financial assistance.”
R&D tax incentive was a “lifeline”
Mark reached out to auditing firm KPMG to oversee the company’s R&D tax return. Changes announced in the federal budget this year mean that if you prepare an extensive R&D claim, you can get back up to 43 per cent of your expenses.
“KPMG were incredibly thorough with our R&D claim,” says Mark. “We had to quantify every nickel and dime spent. It was quite a task, but once we submitted our claim we knew it would be accepted and honoured in full.”
Getting this R&D rebate was a “lifeline”, admits Mark. “It kept our business alive till we completed the first project and were in a stronger position to undergo a Series A capital raise,” he adds.
Fusetec also secured a $500,000 grant from the State Government, with KPMG’s help. “Typically, an inventor may innovate the best new widget or software, but if you don’t have a solid sales history, or reputation in business, you’ve got little hope of securing a government grant,” says Mark. “Governments don’t like taking risks and only like backing winners. So engaging KPMG in the grant preparation provided us with credibility.”
The company used the grant to develop replicas of the thorax, lungs and heart region and recently received its first orders for the products.
Accurate record-keeping is “critical”
If you’re looking to put in an R&D claim, Mark emphasises the need for accurate record-keeping.
“You have to maintain accurate records that will pass the rigour of an audit, firstly, by KPMG, and secondly, if necessary by the ATO,” he says. “We struggled to have that information on hand in our first year, so we could only put in a relatively small claim. What KPMG taught me is to keep accurate timesheets for the personnel every single day, what the R&D team were doing, how many hours they worked and so on – it’s critical.”
Don’t reinvent the wheel
When deciding whether to invest more into R&D in your existing business, or launch a startup, Mark advises identifying a problem to solve and to be creative.
“You may struggle to justify an R&D tax return if you’re reinventing the wheel,” he says. “To solve a new problem, you may need new thinking. ‘Zig’ when others are ‘zagging’ and look for unique projects.”
As for the future of Fusetec, Mark is taking his own advice by responding to the continual requests from surgeons and developing new, innovative products, including a number of neurology models for the spine and brain.
“We’ll have blood flowing around the brain soon, with aneurysms in it,” he says. “You can’t order a cadaver with blood-flow, so at the moment surgeons have nothing to train on. By Fusetec manufacturing anatomically accurate models, surgeons can rehearse and upskill, which can bring forward their surgical careers and potentially save lives.”
Find out more about Fusetec here.
This article is brought to you by Kochie’s Business Builders in association with KPMG Australia.