Why is the company called the Butterfly Network?
The name was inspired by the concept of a “Butterfly Network” – a technique to link multiple computers into a high-speed network. Butterfly’s Founder, Dr. Jonathan Rothberg attended a presentation from Max Tegmark, an MIT professor of physics who was working on connecting images from thousands of radio telescopes to measure energy from distant stars. The trick was developing a system — called a butterfly network — that split the data-processing between all antennae efficiently to capture quality images. Dr. Rothberg had the idea to combine Tegmark’s ideas on imaging, and combine them with his own success with semiconductors, to put an ultrasound machine on a chip. From this, Butterfly succeeded in creating a chip with over 9,000 transducer channels that, combined with electronics, could send out and receive sound waves and turn those waves into 3D ultrasound images.
What was the founding vision behind Butterfly Network, and why should medical specialists prefer your products to what is currently on the market?
Butterfly Network was founded on the mission to democratize healthcare by making medical imaging accessible to all patients worldwide. Achieving this required an approach to make ultrasound affordable, portable and easy to use.
Butterfly leveraged MEMS-CMOS integration to create a novel Ultrasound-on-Chip technology that powers our single-probe, whole-body handheld ultrasound device. Unlike traditional cart-based ultrasounds and incumbent handheld ultrasound devices, Butterfly’s probe is fully-digital in the way it generates and processes sound waves for imaging. This digital technology offers significant advantages over traditional, analog piezoelectric crystal-based ultrasound devices, including being more affordable to produce, more durable, and more programmable – with the ability to automatically steer the beam for easier image capture modes. Another benefit is that Butterfly chip-based devices are compliant with the EU’s Restriction of Hazardous Substances (RoHS) directive, whereas most competitive devices rely on an exemption to RoHS due to containing a level of lead in the piezoelectric crystals that’s deemed hazardous to humans and the environment.
Butterfly’s innovation enables a single, handheld device to perform scans of the whole-body, simply by toggling between over 20 anatomical presets from an intuitive mobile phone app. Whereas, competitive devices require 2-4 probes for a comparable whole-body scanning range – each of which is at a higher price point. Butterfly device’s offer versatility and portability for immediate diagnostic support at the point-of-care, which brings several clinical benefits and care efficiencies. To give a personal example, my son recently had an ailment and we brought him to the emergency room. The traditional diagnostic process we went through was lengthy and cumbersome, involving several hours of waiting for an ultrasound and again waiting for its interpretation. In contrast, the Butterfly iQ3 would have supported an immediate diagnosis right in the emergency room or even at triage, showcasing its ability to facilitate quicker patient care and potentially reduce hospital congestion by significantly reducing the wait times associated with conventional ultrasound procedures.
Butterfly also offers significant benefit globally, bringing affordable imaging to developing nations and to aid in humanitarian crises. As an example, we currently have nearly a thousand of our devices in Ukraine; almost every medic there has one - because not only are they easy to learn and use, but with whole-body scanning on one portable probe, they are easily carried on the frontlines. Butterfly devices are also military-grade and very hard to damage.
What makes your new Butterfly iQ3 ultrasound device special?
The Butterfly iQ3 is paradigm-shifting moment for Butterfly and for the ultrasound industry at large because it demonstrates that digital, semiconductor-powered ultrasound can do it all and do it best-in-class. This device is powered by our most advanced P4.3 chip with a data transfer rate that is double that of our previous generation device, resulting in crisp image quality and faster micro-beamforming for advanced 3D capabilities. Across industries, technologies based on semiconductor chips benefit from a principle known as Moore’s Law – the observation that the number of transistors on an integrated circuit will double every two years with minimal rise in cost. A great example where we saw this play out is in the photography industry. When digital cameras first came to market, they did not immediately overtake analog film camera sales. People were not impressed by the image quality – which was the primary benefit they were looking for in cameras. But digital cameras continued to benefit from Moore’s Law, and finally in 2003 the image quality met or exceeded that of film, which is when digital cameras took the market… and digital benefits like automatic capture, digital uploading started to shine.
In ultrasound, Butterfly is driving that same digital revolution. Butterfly iQ3 is the moment that digital ultrasound image quality matches that of the analog incumbents. Now, the myriad of digital benefits – more affordable, more durable, cloud storage, automated 3D tools, will come to the forefront for buyers.
How has this technology advanced, and can it now replace traditional ultrasound machines in hospitals?
The Butterfly iQ3 represents a significant advancement in our technology, doubling the processing power to 9.6 gigabytes per second. This improvement has elevated the image quality to meet or exceed that of many handheld probes from competitors, while maintaining the device's hallmark versatility and efficiency. The iQ3's design, which is physically smaller and more ergonomic for user control, and also includes a wider range of ultrasonic frequencies, consolidates the functionalities of multiple specialized probes into one comprehensive tool. This not only simplifies the diagnostic process but also positions the iQ3 as a viable alternative to traditional ultrasound systems in various clinical settings.
The Butterfly iQ3 has made significant strides towards matching and in some cases surpassing the image quality of traditional ultrasound systems, particularly handheld models from other companies. While it now competes effectively with certain cart-based systems in hospitals, it is worth noting that there remains a spectrum of ultrasound equipment, with some high-end cart models still out of reach for the current generation of our device. However, the trajectory of our technology suggests a future where continuous advancements could challenge even these more advanced systems, driven by the relentless improvement in semiconductor technology and digital imaging capabilities.
What is your perspective on telemedicine and its relation to Butterfly Network's products? Can individuals purchase your products for personal use?
Butterfly Network's products are currently designed for professional use, requiring a medical license to operate under their designated regulatory class. Despite this, we are actively exploring telemedicine applications within our software to enhance patient care. Our devices, when connected to a smartphone, enable a comprehensive telemedicine experience by allowing remote guidance during scans. This capability not only facilitates accurate image capture between care providers of differing skill level, but also significantly broadens the scope of telemedicine, laying the groundwork for future patient-operated home diagnostic tools.
Telemedicine is integral to our vision of healthcare's future, where patients can perform scans at home with professional oversight from afar. Our clinical studies have shown promising results in self-scanning by patients under telemedical guidance, moving us closer to a world where healthcare is more accessible and immediate. This approach aligns with our broader strategy of making advanced medical imaging available everywhere, democratizing healthcare through technology.
Why has Butterfly Network's stock been affected by the difficult investment climate for biotechs in the last few years?
The economic challenges faced by the life sciences sector post-COVID have indeed impacted Butterfly Network, reflecting a broader trend across the industry. Our market is still emerging, and while the potential is vast, estimated at around $300 billion, change and adoption of innovation in healthcare takes time. The primary hurdle has been the steep learning curve associated with ultrasound technology, which requires significant training for widespread use among healthcare professionals. Our stock's performance has mirrored these challenges, compounded by initial growth strategies that outpaced market readiness.
In response, we have undertaken strategic restructuring to align our operations more closely with current market conditions, focusing on efficiency and long-term sustainability. We are also leveraging AI to bridge the gap in ultrasound proficiency, making it easier for a broader range of healthcare providers to integrate our technology into their practice. This, combined with the increasing incorporation of ultrasound training in medical education (about 60% of medical schools use our products for training), signals a turning point towards broader adoption and acceptance of our technology.
Looking ahead, where do you see Butterfly Network in the next three to five years, and when can we expect the fourth generation of your technology?
Butterfly Network is entering a new phase of growth, having conclusively demonstrated the viability of semiconductor-based imaging for ultrasound. The next step is to redefine how ultrasound is used, integrating advanced AI tools and opening our platform to third-party developers through our Butterfly Garden software development kit offering and partner marketplace. This will not only enhance the capabilities of our devices for our users, but also change the ultrasound landscape by offering functionalities that traditional analog systems cannot match.
Our ultimate goal is to achieve miniaturization and localization of our technology, enabling diagnostic imaging anytime, anywhere, irrespective of the patient's location. This vision includes expanding our global footprint, improving care delivering, and driving value to our shareholders. Despite past fluctuations, we are poised for significant growth and innovation in the coming years, with a clear strategy to make advanced healthcare accessible to all.
