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Innovation Fund Company Navage's Timing Is On The Nose

Northeast Ohio

In 2015, RhinoSystems Inc., the Brooklyn seller of Navage, a nasal irrigation system, trademarked the phrase, "Nasal Hygiene will be to the 21st Century what Oral Hygiene was to the 20th!"

The catchphrase even is plastered over the entrance to the company's offices and manufacturing facility in Brooklyn. And company president Martin Hoke is seeing signs — unexpectedly including the arrival of the novel coronavirus and COVID-19 — that his trademark might be prophetic, as well as signs that sales of his patented device will continue to grow.

The Navage is a nasal irrigator with powered suction that pulls a saline solution, using a patented salt pod, through the nasal cavity to rinse debris or mucus generated by colds and allergies that can carry viruses and bacteria from nasal cavities.

The traditional nasal irrigator, the neti pot, has been used for centuries to rinse nasal cavities. A number of products on the market update that method of nasal irrigation. Most involve tilting your head to one side to run a saline solution through your top nostril, letting the solution drain through your bottom nostril.

Hoke, of course, came up with the idea for his product long before COVID-19 came along, and he linked the phrase more to the popularization of the neti pot by television celebrities Oprah Winfrey and Dr. Mehmet Oz, which began in 2005, as a way to bring relief of sinus pain and congestion without the use of medications.

Hoke's idea for the Navage, which uses battery-powered suction, was a response to his own case of sinusitis, a condition caused by allergies, the common cold and viral infections. He found the existing products unappealing, since they needed gravity to clear nasal passages.

"The problem with the neti pot is it's messy and you have to do it over the sink," he said. "And it doesn't feel good while you're doing it."

The serial entrepreneur began working on an alternative in 2007. Before this venture, he'd started Red Carpet Airport Car Care in 1981, offering auto care services at Cleveland Hopkins International Airport. In 1985, Hoke launched Red Carpet Cellular, an independent cellular distributor that he sold three years later. He also served in the U.S. Congress, winning elections as a Republican in 1992 and 1994.

Hoke would not disclose sales figures, but said RhinoSystems has sold 1.2 million devices since the summer of 2015, when the company started selling the Navage system on its own website and then added an Amazon sales channel before the end of that year.

The company recently raised $10.4 million privately, in a preferred stock sale, to finance further research and development, purchase new equipment to make salt pods and for marketing.

According to a 2018 market research report by Sheer Analytics & Insights Pvt. Ltd., a Kolkata, India, market research firm, the global nasal irrigation market is expected to grow rapidly, at a 24.6% compound annual growth rate from 2018 to 2025, propelled by continuing industrialization and urbanization coupled with changing lifestyles.

Dr. Paul Little, a physician and professor of medicine at the University of Southampton in Great Britain, researched the market for the Sheer Analytics report.

"I would certainly try nasal irrigation," Little said in the report, when asked about his suggestions for patients with consistent nasal infections. "Most people in our study found it helpful."

The major industry players in the global nasal irrigation market include companies such as Neilmed Pharmaceuticals Inc. of Santa Rosa, Calif., and Health Solutions Medical Products Corp. of Los Angeles.

Selling for about $90 on Amazon and elsewhere, the Navage system is a premium product. Most products in the category sell for under $30.

Still, it's received high marks in a number of reviews of nasal products, with New York magazine calling it the best nasal irrigation system on the market. It gets 4.3 stars out of five on Amazon, with 69% of 2,223 reviewers rating it five stars.

The product is made in China and then warehoused at RhinoSystems' 65,000-square-foot facility in Brooklyn, in a building that formerly printed and warehoused products for American Greetings Corp. The salt pods are filled in Brooklyn and added to the product package. Hoke said the production line is running three shifts a day during the week and one shift each on Saturday and Sunday. The company employs more than 100 people.

Hoke used his own money, as well as nearly $2 million in angel investing, largely from private investors, to develop and refine his product for seven years before it was ready for sale to consumers.

Among RhinoSystems' early investors and supporters was the Innovation Fund of Northeast Ohio, which provided $100,000 in support in 2008, and its business incubator, the Great Lakes Innovation and Development Enterprise (GLIDE) Center at Lorain County Community College. Then, in 2018, the Ohio Tax Credit Authority awarded RhinoSystems an eight-year, 1.527% tax credit for its move into the former American Greetings space from a smaller space in Brooklyn Heights.

Though it is currently sold only in the United States and Canada, the product has patents and trademarks registered around the world.

Hoke's wife, Maria, who serves as company vice president and general counsel, is an intellectual property attorney with experience at the former Squire, Sanders & Dempsey law firm in Cleveland. She also did patent and trademark work at PolyOne Corp. in Avon Lake.

During a tour of the facility with a reporter, a staffer came up to Martin and Maria Hoke to say that the first week in March was the best-ever sales week for Navage at Bed Bath & Beyond. The national housewares firm sold 2,089 units of the system in the week ending March 7.

At first, RhinoSystems began sales in Canada only, because the U.S. Food and Drug Administration was slow to approve sale in the United States.

"The bottom line is that we just ran into a brick wall at the FDA, so we said, 'Well, that's enough of that,' " Hoke recalled. "After paying lawyers and wasting an incredible amount of time, I said, 'We'll start in Canada.' "

The slowness of the FDA process has frustrated device-makers in Northeast Ohio and elsewhere for a long time. Studies have shown it takes from three to seven years to bring a medical device to market in the U.S.

The Navage first made it to drugstores, in the CVS chain, in December 2016. Just after the new year, the Hokes returned to the office to find a rush order from CVS for 40,000 units.

"That was a real problem, but a good problem to have," Martin Hoke said. "We had to ship by air from China, we had to stop selling on Amazon for six weeks, we ran out of salt pods" to fill the order.

Since then, RhinoSystems has sold the product to the other big pharmacy chains, Rite Aid and Walgreens. Hoke said Target will start selling the product in April, and he's hoping a pitch to get the product on Walmart shelves — it's already on Walmart.com — will be successful.

He said waiting to approach brick-and-mortar retailers made sense.

"Starting off online has a lot of the advantages — it's definitely lower-cost than going directly into retail," Maria Hoke said. "You have a more direct relationship with your customer and you learn more about your customer. You get to refine your messaging and learn about the market in a much lower-risk way."

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