Medical Design & Outsourcing - MAY 2016

MAY 2016

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Everything You Ever Wanted to Know about Starting a Medical Device Company * * but were too afraid to ask

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HERE’S WHAT WE SEE

So you want to start a medical device company?

Starting a medical device company in this day and age is a far cry from what it was 10 or even 5 years ago, and a world apart from the days before the 1976 Medical Device Amendments to the Federal Food, Drug, & Cosmetic Act. Medtech innovators face a raft of challenges in getting their products to market, ranging from skittish venture capital investors, to designing and running clinical trials, to the formidable burden of winning FDA or CE Mark approval – and then keeping it.

Medical device legend Dr. Tom Fogarty, who 50 years ago spent just $2,000 developing the ubiquitous catheter that bears his name, doubts he could get that device commercialized in today’s environment.

“If you were to submit that today, it was so unheard of by the FDA, they would just make you do animal after animal, bench test after bench test, and then they would make you do this in a human I don’t know how many times,” Forgarty says.

Brad Perriello Executive Editor Medical Design & Outsourcing bperriello@wtwhmedia.com

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Despite the challenges, medtech startups abound. In fact, there are some 1,189 startup medical device enterprises with an average valuation of $4.6 million, according to AngelList, a portal that aims to connect nascent companies with investors, talent and incubators. Maybe that’s because, when you get right down to it, developing a successful medical device is a profoundly gratifying experience.

“It’s wonderful to be able to innovate, particularly in the medical field,” as Fogarty says. “If you develop something that’s adopted by other physicians, you’ve touched many patients. If you just operate on somebody, you’ve touched one patient.”

Young companies are at the vanguard of innovation in our industry, driving the creation of new technologies to address unmet needs across a range of diseases and conditions.

But having a revolutionary idea is a far cry from actually bringing it through to commercialization. In this issue of Medical Design & Outsourcing, we sought to answer some of the key questions facing new medical device firms.

How can I get my device approved? What do I do to make sure it stays in compliance once I do? Where should I look for a reliable outsourcing partner? What about protecting my intellectual property? And how can I raise the cash to fund it all?

You’ll find the answers to these questions and more in the following pages, along with a look at a few of the startups we found most intriguing. M

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CONTRIBUTORS

NEELY

HARTZELL

HARRINGTON

HARRY

DORSCH

THOMPSON

TISSONE

WURDEMAN

MATTHIAS DORSCH is Product Manager for Rechargeable Lithium Ion Coin Cells at VARTA Microbattery. He holds a degree in Electrical Engineering from the University of Applied Science of Würzburg.

TOM HARRINGTON IS Technical Director, at Kent Elastomer Products. He has a bachelor’s degree in chemistry with a minor in geology.

CINDY HARRY, is Executive Director, Sales & Marketing, for Kent Elastomer Products. She has more than 30 years of experience in the tubing industry, including training through the University of Akron in leadership and lean manufacturing.

JULIANNE HARTZELL is a partner at Marshall, Gerstein & Borun in Chicago, where she chairs the firm’s medical devices group. She's litigated patent, trademark, copyright, and trade secret matters in federal courts throughout the U.S. and before the Patent Trial & Appeal Board.

STEVE NEELY, the founder of VSI Parylene, spent several years in the medical device and semiconductor industries before turning his focus to enabling innovative technology solutions. He holds a BS in Mechanical Engineering from the University of Colorado.

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LUIS TISSONE is the Director of Life Sciences at Trelleborg Sealing Solutions.

Luis has worked as a Regional Sales Manager for Helix Medical and prior to that in positions ranging from supply chain operations to marketing and sales. He has a BS in Industrial Engineering from Argentinean Catholic University and a Business Administration & Management degree from Harvard University.

HEATHER THOMPSON is Senior Editor of Medical Design & Outsourcing. She has more than a decade of experience covering technology, regulatory, and business trends in the medical device and diagnostics industry.

SHANE WURDEMAN is a certified prosthetist and research scientist at the Hanger Clinic in Houston. He holds a degree in physics, a Masters in prosthetics and orthotics, and a PhD in biomechanics and has published multiple manuscripts and book chapters in the prosthetics rehabilitation space.

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Medical Design & Outsourcing 5

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CONTENTS

medicaldesignandoutsourcing.com ∞ May 2016 ∞ Vol2 No3

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02

HERE’S WHAT WE SEE: So you want to start a

We ask the experts in a variety of key areas what every medical device startup needs to know, from rain-making to regulatory to reimbursement.

medical device company?

04 CONTRIBUTORS

08

SUPPLY CHAIN: Conquering the complex implant supply chain

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ELECTRICAL CORNER: Tiny lithium cells power ever-shrinking wearable medical devices

FEATURES 43

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Understanding nitinol implant design and manufacturing

complete, pinhole-free

The nickel-and-titanium alloy known as nitinol is a super-elastic shape-memory metal responsible for major advances

COATINGS LAB: Think parylene for thin, coatings

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PATENT PROTECTION: Four things the medical

in medical technology over the last 15

device industry must know

years. Here’s what you need to know

about U.S. patent law

when pursuing a manufacturer for a new nitinol-based implant or device.

48

Microneedle technology and transdermal drug delivery: Market growth with advanced materials

Annual sales for the transdermal drug delivery market are expected to meet 485 million units by 2030. That’s because it’s the perfect

20

TUBING TALKS: Ideas for a 21st-century tubing supply chain

24 MATERIALS: Encapsulated ePTFE 62

DEVICE TALKS: The leadership lessons of

blend of medicine and technology for drug delivery.

John Brown, the man who built Stryker

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Advances in lower limb prosthetics

Thanks to advances in microelectronics, hydraulics and motors,

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TOP 10 STARTUPS

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AD INDEX

modern medicine can help nearly every amputee achieve goals and accomplish feats not possible at the turn of the century.

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SUPPLY CHAIN

Conquering the complex implant supply chain

Heather Thompson | Senior Editor | Medical Design & Outsourcing |

The supply chain for medical devices, particularly implantables, is very complex. Although a distributor often manages the inventory, manufacturers hold it in title, there are multiple parties involved at any given stage, and inventory changes hands quickly. The result is a high-value inventory battling competing interests, and high risks to the manufacturer – not to mention adherence to FDA regulations.

That’s why it’s hard to believe that many medtech companies still rely on antiquated logistics and inventory tracking. Some have decentralized systems that rely on a combination of ERP and spreadsheets. Others use manual entry systems into the ERP, shipping to either sales reps or hospitals.

Both introduce risk to the process, by requiring recipients to confirm orders, or find missing information.

Seiyonne Suriyakumar, business development representative for Mobitor Corp., describes two orthopedic clients that were experiencing challenges: Orthopedic Device Company 1 A small company began experiencing rapid growth. As they grew, they struggled to continue using manual methods (calls, emails, faxes, whiteboards) to manage inventory. The manual nature of those requests meant the customer service team would often need to call reps back to confirm orders that they couldn’t understand or that were missing information. Orders were then manually entered into their ERP system and, if necessary, inventory was then shipped out to either the rep or hospital. Once a case finished, the rep would again send over consumption information, triggering another cycle of manual data entry, clarifications and questions. They had briefly looked at some cloud-based systems, but were dissuaded because they were so much more than the company required and weren’t flexible enough to fit (and were also far too expensive).

Orthopedic Device Company 2 An established operation relied on a combination of their ERP and spreadsheets to track inventory. Without a centralized field inventory system, they had sub-par inventory planning, gaps in service, duplicative data entry and numerous discrepancies. The company made the decision to move away from that system to cut costs. It needed to ensure employees had the right systems in place to be sustainable, and positioned for growth. The companies looked at several systems in-depth, but outdated UX/UI, a challenging integration process, and the lack of some key features kept them from partnering with anyone.

Does any of this sound familiar? If it does, there is an outcropping of firms that are creating a better system to help medical device companies manage this complex process.

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COMPANIES NEED A LOGISTICS TOOL THAT IS SPECIFIC TO THEIR INDUSTRY AND WORKFLOWS, NOT ONE THAT IS GENERIC AND REBRANDED AS ‘MEDICAL’ One such company, of course, is Mobitor, which created the TurnsLift system. TurnsLift is a cloud-based platform designed to give both reps and operations teams full visibility into field inventory operations. Suriyakumar says TurnsLift is made up of several software modules.

Users access them either through a web interface or via mobile applications.

“Apple calls this approach a constellation, because each module can stand independently, but when required, they deep-link with each other to create a seamless experience,” he explains.

What’s interesting about the modules is that they allow the user to perform specific functions (e.g., case scheduling, inventory management, consumption, billing, etc.) in a standardized way.

“We built TurnsLift to provide a streamlined UX to encourage adoption and to specifically to address concerns that software was too complex and wasn’t configurable enough,” says Suriyakumar.

The software includes a workflow configuration engine, so device makers can change how statuses and notifications are triggered, and a software development kit so companies’ own IT teams can build proprietary modules on top of TurnsLift.

“We built it mobile-first, to ensure that the UX on a smartphone/tablet looked like it was meant for a smartphone/tablet, not like a shrunken-down version of a desktop application,” he says.

“It’s meant to handle unique situations like a mix of consignment and loaner inventory, expired parts in a kit,

inventory overloads [multiple destinations for the same inventory] in the field, and robust integrations to ERPs like SAP or CRMs like Salesforce,” Suriyakumar says.

It’s also meant to be a useful tool for both reps and distributors, while providing increased visibility and uniformity in inventory management for manufacturers.

As for the two orthopedic companies Mobitor has been working with, Suriyakumar says they’re confident that the system will help them master their inventories as they grow. He’s planning a demonstration with one firm later this month.

“Because the stakes are so high in medical devices, companies need a logistics tool that is specific to their industry and workflows, not one that is generic and rebranded as ‘medical,’” says Suriyakumar. M

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ELECTRICAL CORNER

Tiny lithium cells power ever-shrinking wearable medical devices The CoinPower series of cells from VARTA Microbattery comes in three sizes.

Designers of portable medical devices and electronic products are familiar with the challenges of space and weight reduction. There seems to be no limit to consumers’ requirement for making devices thinner, lighter, and sleeker. Consider an in-ear speaker or earbud as a stand-in for a medical device, with a form factor constrained by the size of the human ear.

In electronics, the constant reduction in a circuit’s size predicted by Moore’s Law has helped designers do more using less space. But in the domain of energy storage, chemistry, not electronics, determines the pace of size reduction, and unfortunately chemistry has no equivalent to Moore’s Law to drive reductions in battery cell sizes.

Still, innovation in battery technology still provides answers to OEMs’ demand for more energy in less volume. This article describes how improvements to a new type of coin cell are helping some of the industry’s smallest electronics run longer between charges than previously possible.

Matthias Dorsch | Product Manager | VA R TA M i c r o b a t t e r y |

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The drawbacks of lithium technology In medical and consumer electronics, various types of lithium-ion technology have been widely adopted: Lithium-ion chemistries for rechargeable batteries provide better ratios of energy-capacity-to-volume and energy-capacity-to-weight than any other battery chemistry in mass production. That’s why most portable products with small size and weight requirements most often contain lithium-ion rechargeable cells.

In the past, OEMs faced extreme difficulties in scaling down lithium-ion batteries for use in devices much smaller than a mobile phone. The wireless headset using Bluetooth technology illustrates the problem.

In previous years, wireless headsets would use a custom lithium-ion battery assembly in which the cell was enclosed in an aluminium foil pouch. Flying leads made the connection to a host device.

This complex assembly was relatively bulky. Worse, pouch-style batteries are difficult to handle on a production line. They require manual assembly, making them inherently prone to inconsistent quality and damage. In addition, the pouch enclosure is prone to premature failure when subjected to shock and vibration. This is undesirable in earphones, which might be frequently dropped during fitness activities. www.medicaldesignandoutsourcing.com

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ELECTRICAL CORNER

Some early batteries were contained in an aluminium pouch.

Lastly, a custom part that is unique to one customer carries a higher supply-chain risk for the customer than a standard part, which is produced and stocked in high volume for multiple customers.

These drawbacks led to the development of an alternative for tiny devices, such as wireless headsets: The VARTA CoinPower, the industry’s first rechargeable lithium-ion battery in a coincell form factor to offer the energy capacity required by small wireless consumer devices.

The first generation of these coin cells was available in 12mm and 16mm diameters and provided an average 3.7V output.

Behind the introduction of the CoinPower cells lay technologies patented by the company, which allow for the automated production of coin cells with coiled electrodes. This method for coiling electrodes makes better use of the cylindrical space inside the case. In addition, VARTA Microbattery developed a patented design for closing the case.

These technologies provide a higher energy density than previous li-ion coin cells with conventional stacked or layered electrodes.

Automated production at the company’s factory in Germany is highly repeatable and ensures that each manufactured unit operates according to its specification.

The higher capacity of the CoinPower product provids a crucial advantage for small electronic devices, and a strong, rigid stainless steel case offers easy assembly into end equipment, with almost

The Bragi miniature earphone, in the lady’s ear, is also a complete music storage device powered by a rechargable VARTA Microbattery. The unit provides inspiration for small medical devices.

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no risk of damage, and a high level of precision in the mechanical design of the battery assembly. The case also has a high tolerance for shock and vibration.

It’s important to note that the supporting electronic circuit is also small. A CoinPower cell requires only a standard circuit protection device, available at low cost from suppliers such as Seiko and Mitsumi, plus two passive components. A wide range of ICs for standard battery chargers can control the cell’s charging process. The footprint of this circuitry is considerably smaller than the complex PCB generally implemented in custom battery packs. What’s more, the supporting circuitry need not be close to the battery, giving system designers freedom to optimize their board layout and mechanical design.

Device manufacturers can avoid the design, production cost, and risk associated with custom battery packs because the battery is a standard part, and the supporting circuitry is easily implemented using standard components.

There’s another important reason for the wide use of the first-generation product: Safety. Most lithium-ion batteries work safely within their rated voltage and current limits. But over-current or overtemperature conditions can cause thermal runaway, leading the device to explode or catch fire. For this reason, a lithium-ion battery requires safety and protection circuitry to electrically disconnect the cell when it exceeds safety thresholds.

The advantage of the VARTA CoinPower cell is that it offers an integrated protection mechanism, independent of external circuitry, which shuts the cell down before it enters an unsafe, over-current condition. This provides an extra level of protection for the user’s safety.

This Current Interruption Device is a mechanical fuse: When the pressure inside the cell rises above a certain level – as happens when the cell is charged at an excessive current or voltage – the upper and lower casings come apart by a small, controlled amount sufficient to break the circuit and permanently disconnect the battery. CoinPower cells are actually rated to withstand extreme

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A few specs for VARTA Microbattery’s CoinPower cells Part number Average Nominal capacity

voltage (V) (mAh) CP 1254 A2 3.7 50 CP 1654 A2 3.7 100 CP 1454 A3 3.7 85

Diameter Height Weight (mm) (mm) (g) 12.1 5.4 1.6 16.1 5.4 3.2 14.1 5.4 2.4

FUTURE TRENDS IN S M A L L F O R M - FA C T O R LITHIUM COIN CELLS The demand from consumer device manufacturers’ for higher capacity in a small space is not easing. One recent device that’s stretching the limits of cell capacity is the so-called ‘true wireless’ headset: Twin wireless ear buds without cable connections. An early example, the Dash from BRAGI demonstrates the possibilities for medical devices.

In this product, each earbud has a radio – rather than the single radio in a conventional wireless headset. That means each earbud requires a battery.

To meet the product requirements, VARTA Microbattery is developing a third-generation of its CoinPower product for launch later in 2016.

The cell will provide 20% more capacity and energy density, thanks to improvements in battery chemistry, electrode design, and production techniques. This new product will also be available in a 14mm diameter cell, adding to the 12mm and 16mm diameter versions available today.

This and other developments will meet the requirement for robust, easy-to-assemble, high-capacity batteries in the coin-cell form factor. The CoinPower cell will ensure that patients and other users can enjoy long run-times between charges and long cycle life.

The Dash wireless earphones are powered by VARTA’s Microbattery and come from manufacturer BRAGI. The units are a lot smaller than these appear.

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12V/3C over-charging conditions, which put a far greater stress on the cell than industry standards specify.

(1C is the current draw that will discharge a fully charged battery in one hour.)

Improvements to the li-ion coin cell The li-ion coin cell has become the preferred battery choice for manufacturers of extremely spaceconstrained, portable devices requiring a high energy capacity of 50 mAh or more. It’s found uses in consumer devices and medical and industrial equipment in which durability, high capacity and long cycle life are important.

The advantages of the original CoinPower product now have been extended with the introduction of the ‘A2’ and ‘A3’ series of cells.

Improvements to chemistry and production techniques cells have increased their capacity, as well as extended their cycle life. The dimensions and energy capacity of these cells provide the best fit for the size and shape of the human ear, and for the requirements of manufacturers of earphones and ‘true wireless’ technology.

Standard cycle life ratings for rechargeable batteries measure the fully charged capacity of the cell, as a percentage of its capacity when new, after 500 charge/discharge cycles at an operating temperature of 20°C (68°F). The formal specifications supplied by VARTA Microbattery show that, when stressed by executing 500 fast charge/fast discharge (1C/1C) cycles in the laboratory, the CoinPower A2 cells still retain more than 80% of their original capacity.

Under gentler operating conditions (0.2C/0.2C), this value for remaining capacity rises to more than 85% after 500 cycles. In real-world applications, users are able to achieve outstanding cycle-life performance: customers typically report cells lasting for more than 1,000 cycles when mounted in an end product. M 5 • 2016

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COATINGS LAB

Think parylene for thin, complete, pin-hole free coatings As modern medical devices push the limits of technology, parylene coatings are finding more places to assist evolving technologies. Parylene, a conformal polymer coating that’s biostable and biocompatible, is suited to multiple industries and applications because it’s implantable; has outstanding barrier protection and electrical insulation properties; and a unique deposition method.

The coating process Parylene is applied using a three-stage, vapor-deposition process. It lets the material deposit molecule by molecule onto parts placed in a vacuum chamber.

This creates an extremely conformal coating that evenly covers grooves, crevices, gaps, and even sharp points. Because the coating is applied molecule by molecule, its thickness can be controlled to the micron.

Steve Neely | Founder | VSI Paryleve |

The pinhole-free coating is applied in three stages.

The process works this way: Stage 1: Parts are fixtured into a vacuum coating chamber. The solid parylene dimer – in powder form – is placed inside the vaporizer, where it turns into a dimer gas.

Stage 2: The dimer gas then flows into the pyrolysis furnace, which heats the dimer gas and turns it into a monomer (single molecule) gas.

Stage 3: Finally, the monomer gas enters a room-temperature deposition chamber, 14

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which contains the fixtured parts, where the parylene deposits itself molecule by molecule onto everything in the chamber to create a thin and highly conformal coating.

Other considerations Although the parylene process has several advantages over dip and spray coatings, there are process considerations. For example, the adhesion of parylene to the substrate is critically important in every application. To get the best adhesion, it’s important that parts are clean and free of oils and debris. With a clean substrate,

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Haydon Kerk Motion Solutions Micro Series lead screw products enable a whole new range of micro-solutions that facilitate big advances in medical technology. The Micro Series provides precise control, reduced power consumption, and weight reduction without sacrificing performance or reliability. Prototype kits are now available in our online store and shipments can be made in 24 hours.

For custom, application-specific needs, Haydon Kerk offers in-house engineering and manufacturing including machining, mold making, and injection molding capabilities, strategically integrated to satisfy your needs for a hundred, a thousand, or a million assemblies.

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COATINGS LAB

For electronics oating thickness Max electrical insulation C

Microns Mils Volts per um

(1mil = 0.001 in.)

1 0.04 220

2.5 0.10 550

5 0.20 1,100

10 0.39 2,220

15 0.59 3,310 Parylene is well-suited for an application that calls for an ultra-thin, pinhole-free coating.

Examples include devices that require a dielectric barrier, a chemical and moisture barrier, or catheters that require dry-film lubricity.

additional measures such as liquid surface activators or plasma treatment can be used to improve the bond between parylene and the substrate.

Because parylene evenly deposits on every surface in the vacuum chamber, areas that must remain free of coating are masked, or the coating is removed afterwards. When coating removal is necessary, it’s typically done with a

laser or via plasma ablation. During the device- and component-design stage, identifying the areas that must remain coating free can greatly improve downstream processing efficiency.

Inspection and testing Quality attributes for parylene typically specify the coating thickness, area of coverage, visual, and adhesion-testing

A few applications for the C and N varieties

Application Parylene C Parylene N

Analytical lab trays Biostability – Blood handling components Biostability –

Catheter mandrels Lubricity Lubricity

Catheter / styluses Lubricity Lubricity

Cochlear implants, Barrier or dielectric –

hearing assist

Feeder tubes – Crevice penetration Laparoscopic devices Dielectric strength –

Stents Biocompatibility –

barrier

requirements. Thin films can be measured nondestructively using spectral reflectance directly on the parts, or by measuring witness coupons that were coated with the parts.

Important properties Parylene typically becomes a material of choice when an ultra-thin, pinhole-free coating is required for implantation, a dielectric barrier, a chemical and moisture barrier, or dry-film lubricity.

The two most commonly used variants of parylene are type “C” and type “N.” Depending on the application, the variant selected can optimize deposition time, crevice penetration, lubricity, dielectric strength, and barrier permeability properties.

Both parylene types are FDA-approved and have a USP XXII, Class VI biocompatibility rating, making them a perfect fit for medical device applications.

Designing with parylene Because each parylene coating application is unique, it’s helpful to develop the coating process along with the medical device to help ensure that it’s scaleable and high-quality. Process design conversations will include discussions about the proper parylene thickness and type, allowable clearances, plus dielectric-protection and barrier protection requirements, and cost expectations.

Working with an experienced, innovative parylene coating provider ensures the best solution. Lead time is also critical when selecting a parylene coating provider, because faster iterations help a design evolve quicker and reduce time to market.

M

Parylene also provides a chemical and moisture barrier for electronic circuitry.

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5/18/16 5:27 PM

PATENT PROTECTION

Four things the medical device industry needs to know about U.S. patent law

Patents offer valuable protection for new products in the medical device industry, but patents laws and trends are changing quickly. Here’s a quick update on recent changes.

Julianne Hartzell | Partner | Marshall, Gerstein & Borun |

Post-grant proceedings In recent years, the U.S. implemented major changes to its patent system when the provisions of the America Invents Act took effect. One of the most gamechanging features of this law was the creation of new post-grant proceedings, including Inter Partes Review (IPR) and Covered Business Method (CBM) reviews. Subject to certain restrictions, IPRs and CBMs offer a forum for entities to challenge the validity of a patent in the patent office using a method that is quicker and less expensive than district court litigation. In these proceedings, invalidity also only needs to be proven by a preponderance, rather than the clear and convincing standard that is required outside the patent office. The administrative law judges who handle these proceedings also frequently have technical backgrounds that help them understand the technology at issue, and what one of ordinary skill in the art would have been likely to know at the time the patent was issued.

For these reasons, those challenging the validity of a patent have had high rates of success. The Patent Trial & Appeal Board (PTAB) has enacted recent rule changes that are expected to offer patents owners additional tools to defend against these invalidity challenges. However, even with the proposed PTAB changes, patent owners need to understand the profound effect these proceedings have had on patent strategy. Before enforcing a patent, a patent owner must now consider the strength of its patents and the potential that an accused infringer now has to use this alternative mechanism to challenge the patent. Similarly, an accused infringer needs to begin thinking early about its strongest invalidity case, because there are time limits on when these post-grant proceedings can be filed.

Patentable subject matter Similarly, recent patent cases have changed the way medical device companies draft patents. Patent law has always included a requirement that a patentable invention be a “new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” 35 U.S.C. § 101.

However, courts have begun interpreting that provision much more narrowly than in the past, now excluding patent protection for wider categories of inventions that could be characterized as an abstract idea, law of nature, or natural phenomenon. In the medical device field, it’s now more difficult to obtain patent protection for software or the computer-implemented features of a medical device or for diagnostic methods that determine a physiological condition. Additionally, because patent examiners are more likely to issue rejections on the basis of section § 101, the price to prosecute patents involving software and diagnostic methods – and the time to obtain issuance of a patent in those areas – have increased. www.medicaldesignandoutsourcing.com

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PATENT PROTECTION

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To avoid these types of rejections by the patent office, patents attorneys must be more strategic in drafting claims. Some strategies to improve the likelihood of patent issuance are to focus the claims on physical transformations accomplished by the invention; synergies or unexpected results of combining elements; or improved functioning of the systems involved. Additionally, it’s helpful for the patent specification to include as much technical detail as possible about the problem the inventors were trying to solve, and about how the features of the invention are new and different.

Entities covered by patent claims Similarly, it’s important for medtech patent owners to be strategic in their understanding of the entity to be covered by its patent claims. Since 1996 and the implementation of 35 U.S.C. § 287(c), medical practitioners of a medical activity or related healthcare entities are not liable for patent infringement. Accordingly, medical device patent owners tend to direct their claims to cover the makers of medical devices, rather than the people who use them. It’s important to consider who will actually be performing the steps of the patent claims and how those entities are instructed to do so.

A recent decision by the Federal Circuit Court of Appeals (which has jurisdiction over all patent appeals), Akamai Technologies v. Limelight Networks, expanded the scope of patent infringement to cover situations in which multiple steps of a patent claim are performed by different entities.

There was never any doubt that, if one entity performed all of the steps of a patent claim, it was liable for patent infringement. Similarly, if that entity performed only some steps, but directed or controlled conduct of the rest, it was still liable. But this definition excluded a company that offered a process to customers, but customers not under its direct control who performed some of the steps of the process.

Under the Akamai decision, patent infringement liability can now also be found when an accused infringer conditions receipt of a benefit to a third party on performance of the additional 18

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5/19/16 11:57 AM

NAS_16

PATENTS ATTORNEYS MUST BE MORE STRATEGIC IN DRAFTING CLAIMS. steps, and establishes the manner of timing of that performance, or when all participants in performing the steps are involved in a joint enterprise. This expanded definition of direct infringement helps patent owners to ensure that the claims issued are actually able to cover an entity that will be found to infringe.

ITC jurisdiction over digitally imported data The International Trade Commission, which has the authority to stop the importation into the U.S. of “articles” that infringe a patent, is a popular alternative to district court litigation. In a recent decision, however, the Federal

Circuit determined that the ITC’s authority is limited to material things and doesn’t cover electronic data transmissions.

In that case, ClearCorrect Operating v. ITC, the patent related to the production of dental aligners. The accused infringer, ClearCorrect, scans physical models of patient’s teeth in the U.S. and creates a digital recreation of the patient’s initial tooth arrangement. The digital recreation is electronically transmitted to a related company overseas, which determines a final alignment for the teeth along with intermediate tooth positions moving toward the final alignment. The overseas entity creates digital models of the intermediate positions and transmits them to the U.S., where ClearCorrect makes 3D

prints of the models and manufactures the aligners.

The appeals court decided that the ITC did not have the authority to stop importation of digital data. This decision is limited only to ITC proceedings. There are no similar restrictions on the jurisdiction of U.S. district courts that would preclude finding patent infringement based upon the acts of importing digital data.

It is helpful to consider these recent changes in patent law when drafting patents to protect your inventions and when you are making decisions about how to enforce them. M DISCLAIMER: The information in this article is for informational purposes only and is not legal advice. The views expressed are those of the authors and are not to be attributed to the firm or clients.

Two heads are better than one.

Your idea. Our design. Both working together from the start to make great things possible. That’s what happens when Nason partners with customers in the medical equipment industry to create cutting-edge, fully custom switches and cylinders — and that’s why we’re proud to be a small part of something big. www.medicaldesignandoutsourcing.com

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TUBING TALK

A few ideas for a 21st century supply chain

To m H a r r i n g t o n | Te c h n i c a l D i r e c t o r | Kent Elastomer Products Inc. |

Cindy Harry Executive Director Sales & Marketing Kent Elastomer Products Inc.

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| | | |

The Internet has certainly shrunk the world by allowing almost instantaneous communication across its farthest reaches. The Internet has also let supply chains stretch around the world. That’s good because it opened doors for U.S. manufacturers. But the downside is that low-cost suppliers have more access to U.S. markets – and working with lower-cost suppliers comes with risk.

For instance, after manufacturers began taking products overseas in the 1980s, some offshored natural-rubber products were insufficiently washed during the manufacturing process. High levels of natural rubber proteins in the material were found to be responsible for allergenic reactions to patients in the U.S. This illustrates how lengthening a supply chain can cause major problems in product reliability. Unsurprisingly, events of this sort affect more than the companies directly involved. That gives domestic supply chains distinct logistic advantages, such as accessibility and access to the FDA, and they’re more easily monitored. Before reconfiguring to an offshore supply chain, consider the following advantages: U.S.-based suppliers – First, these companies will most likely have been audited by the FDA. That means Good Manufacturing Practices are in order as defined by the agency. A U.S.-based supplier can be audited by your internal quality department.

Kent Elastomer Products has many medical device manufacturers performing annual audits.

In addition, U.S. production means shipments do not spend four to six weeks in a shipping container with unknown, nonmedical products that may be subjected to contamination or variability with the elements such as temperature and humidity. www.medicaldesignandoutsourcing.com

5/19/16 5:34 PM

Small in size, big in performance The PITTMAN Difference 12.7 mm (0.5-in) diameter.

Also available: 9.5 mm (0.375-in); 20 mm (0.8-in); 28 mm (1.1-in)

Many of today’s most sophisticated analytical and medical procedures require ultra-compact, high-performance DC motor platforms that deliver responsiveness, maneuverability and extreme precision. Following established stringent design criteria, PITTMAN has developed the micro-motor “BI Series” – slotless, brushless motors for designers, developers and manufacturers looking to achieve high-performance in a confined space.

• • • • • •

12.7 mm (0.5-in) diameter with optional gearbox

No load speeds up to 100,000 RPM Output torque range 0.002 Nm (0.3 oz-in) up to 0.105 Nm (14.9 oz-in) Motor diameters - 9.5mm (0.375-in), 12.7mm (0.5-in), 20mm (0.8-in), and 28mm (1.1-in) Stainless steel motor body construction High energy neodymium iron boron rotor magnets Options include custom gearboxes and autoclavable versions

When evaluating DC motor choices, size matters.

Brushless DC Motors

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TUBING TALK

Inventory assistance – In an effort to keep product flow steady, trusted suppliers have access through customers’ secure portals to manage inventory levels.

When suppliers have good working relationships, they provide access to their inventory to be closely watched by both supplier and customer.

Another example of how suppliers can help manage a smooth inventory flow is to carry inventory at the supplier facility. Customer releases can ship within 24 hours, saving the customer warehouse space and storage costs. Many times the cost is lower for the supplier to hold their customer’s inventory.

Partnerships in supply chains – Our partnerships have been successful by incorporating Lean manufacturing

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for cost-saving projects, improving inventory controls and developing new compounds for new products.

Suppliers have launched themselves on a journey of continuous improvement by incorporating tools such as Kaizen teams. These groups gather regularly to attack and improve areas within the company found to be inefficient. The Kaizen groups are made of an eclectic group of employees, not upper-level managers, so solutions and process changes accomplished by the team associated with that process are often surprising and innovative.

For example, we involved a major customer in a Kaizen event held in our facility. Both companies formed one team and synergistically solved a quality issue.

We’ve also had several projects

that resulted in new product offerings, such as lower-cost silicone alternatives.

We’ve been able to develop TPE compounds with properties that are similar silicone, which reduces costs.

This has proven to be beneficial within the BioPharm market. TPE compounds also have an advantage where clarity, permeability, weldability, and flexibility are important properties.

Other products developed to meet client needs include the inclusion of antimicrobial resistance. There is a cost involved, but when weighed against preventing a hospital-acquired infection, which is even more costly, infection-resistant materials can pay for themselves.

Another example, the R&D team here has been able to give

www.medicaldesignandoutsourcing.com

5/19/16 12:26 PM

medical gloves and drain tubes X-ray-absorbing qualities. These attenuating gloves let surgeons safely perform tasks in an X-ray field to let the surgeon properly locate a drain tube.

A final thought A domestic supply chain and trusted suppliers will lead to several significant benefits, including improved communications, quick reaction times, improved quality, just-in-time deliveries, lower costs, and a long-term partnership. M

A partner in the supply chain may be able to provide unusual components such as radiation attenuating surgical gloves.

WHAT DO YOU THINK?

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Innovative solutions engineered to your specific requirements.

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MATERIALS

Exploring encapsulated ePTFE Expanded polytetrafluoroethylene (ePTFE) is a flexible, biocompatible material, used to cover stents and stent grafts. The lubricity, strength, and durability of the material makes it valuable during stent deployment and in situ. But as the manufacturing processes for it have improved, it is seeing renewed interest in other vascular applications, including transcatheter heart valves.

Heather Thompson | Senior Editor | Medical Design & Outsourcing |

Material benefits in clinical use The material’s ability to collapse and expand repeatedly is critical to its use in vascular applications. ePTFE can cycle millions of times without breaking or coming off the device, which makes it valuable in the stent deployment process and resistant to wear in the body. It can adapt to blood vessels and their natural pulsatile action. Those pressure pulses create flexion that an encapsulated device must withstand. ePTFE also features varying permeability, enabling outgassing while keeping blood cells flowing. It is chemically inert and hydrophobic. And its microporous nature encourages tissue ingrowth. Research has shown that endothelial cells that line all blood vessels can adhere and grow on ePTFE surfaces.

The material is also easy to work with, because of its temperature stability and its achievable thinness. Internal and external layers of coating measure in the micron scale, meaning that while the structure is deployed, it enhances the ability to navigate the vasculature but does not add significant thickness or diameter to the primary device.

THE MATERIAL’S ABILITY TO COLLAPSE AND EXPAND REPEATEDLY IS CRITICAL FOR ITS USE IN VASCULAR APPLICATIONS. 24

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Meeting manufacturing needs One of the traditional challenges of ePTFE is overcoming slippage during application to the stent. Encapsulation, rather than coating, solves the problem for cylindrical devices as well as complex geometries. The biocompatible material is applied via batch encapsulation to enable quick manufacture while maintaining quality and cost and time savings. The encapsulation process is suitable for stent structures and other longterm implantable devices.

One of the benefits of the encapsulation process is that it enables very thin coverage of the stent, down to 0.0005 in. The encapsulation process can also accommodate conical shapes, flared shapes, and double flared shapes.

The ability to encapsulate complex geometries is a critical development in manufacturing. It avoids the need to suture material to the metal: ePTFE sticks to itself around the metal of the stent, without delaminating or tearing.

A key advantage in the process is the time and cost savings it offers over traditional manufacturing methods. These methods include hand sewing bovine or porcine valves to polyester, for example. Such a process is long and labor-intensive, and garners the appropriate premium pricing. Further, as skilled as a hand sewer may be, a person cannot achieve micron level accuracy or achieve micron thicknesses. By contrast, in the time that it takes for 3 hand-sewn devices to be ready, the ePFTE encapsulation might produce hundreds of units that are substantially thinner.

What’s next As minimally invasive vascular procedures advance, the catheter sizes used for valves and stents will get smaller. Encapsulated ePTFE can help innovators improve clinical outcomes, reduce costs, and reduce time to market. M

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5/19/16 12:36 PM

MED TECH STARTUPS

Everything You Ever Wanted to Know about Starting a Medical Device Company * So you want to start a medical device company?

Then listen now to what we say in the following pages, because it’s sure to come in handy.

First, know hope: Venture capital’s withdrawal from the increased risk presented by medtech investments doesn’t mean you can’t raise enough cash to get going. You’ll just need to get creative, as we explain on page 26.

Now that you’ve got some scratch, page 26 also provides some insight on whether to spend it on outsourcing product design & development and prototyping services.

All set? Now you need to think about getting

your device on the market. Yeah, it’s a high bar, but on page 28 you’ll find some key considerations to incorporate into your business plan.

Once you’ve gotten that figured, you should turn to page 27 to learn about keeping that FDA or CE Mark approval with your quality systems.

And you still need to get paid, right?

Page 30 will tell you all about buidling a reimbursement strategy into your plan.

Finally, to protect the intellectual property underlying all of this effort, turn to page 17 for a look at four things the medical device industry needs to know about U.S. patent law.

* but were too afraid to ask www.medicaldesignandoutsourcing.com

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MED TECH STARTUPS

* Fundraising

RAISING CAPITAL IN A VC-LITE ENVIRONMENT

Venture capital hasn’t completely deserted the medical device sector, but most analysts agree that VCs are simply not as interested in medtech as they are in other sectors like biotech. Medtech attracted less than $5 billion in 2014, only 5.9% of all U.S. venture dollars that year, according to the Ernst & Young Pulse of the Industry report.

And it’s startups that are feeling the pressure most deeply. VC backing of earlier-stage medtechs now makes up a smaller share of a smaller pie “due to the retreat of several stalwart medtechfocused VCs at a time when corporate venture investors have yet to fill the gap,” according to the report. Seed, Series A and Series B rounds dropped 8% in 2014-2015 from fiscal 2013-2014 and made up only 29% of medtech venture investments in 2014-15.

Think small Although VC has diminished, other funding sources are out there – the biggest change is that they’re just much smaller:

OUTSOURC

ING

* Outsourcing

Outsourcing your product development doesn’t have to mean losing control of your technology. Although it’s one of the biggest decisions a startup will make, working with a contract supplier can deliver unexpected benefits.

Gary Boseck, VP of technical operations at Vention Medical, says there 26

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• Angel investors – Often individuals with deep pockets and an interest in a specific disease or condition. Get busy networking with as many high-networth people as you can.

• Private placement – Use a private placement – the sale of securities to a relatively small number of select investors – to fund your vision by raising money from individual donors.

• Incubators – Public, private or academic incubators offer subsidized business accommodation, academic support and business mentoring, and connections with resources for prototyping, testing and clinical trials.

• Entrepreneurial competitions – Universities or large companies, hoping to attract technology partners, often offer technology contests with sometimes significant payouts in cash and in-kind services.

• Crowdfunding – Most effective after the early development phase, when the funds are needed for validation or prototyping. The same high risk and high capital needs medical technology

5 • 2016

are ways for startups to prepare for the challenges that come with working with an outsourcing partner.

And partnership, he says, is really the key word. “CMOs want their clients to succeed. They have a vested interest in helping develop a technology that has potential in the market and

that made VCs chary of medical technology make the crowd a less optimal source of cash.

• City, state, & county resources – Local governments often use tax breaks and other incentives to draw entrepreneurs to development zones. And your area likely has technical associations formed to boost the industry, some with their own tech incubators. Trade associations offer access to universities or hospitals for clinical testing and connections to local angel investors and competitions.

They can also provide opportunities for networking and mentorship.

As Aum Cardiovascular CEO Marie Johnson puts it, “They don’t give you money because they’re in love with the story.” (Johnson raised $5 million for Aum via private placement.) The best advice for any medical device startup is that today, no medtech investment pitch, no matter the source receiving it, succeeds without compelling clinical date, a clear unmet and demonstrable cost savings over current treatments. M

ARE YOU READY FOR AN OUTSOURCER? HERE’S HOW TO FIND OUT. their expertise can contribute to the likelihood of success.”

Getting a trusted CMO involved early in the process could even have some unexpected benefits. Boseck says some CMOs will provide funding for their most promising startup clients. Others hold contests to attract the best startup

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MED TECH STARTUPS

technologies and assist in developing those platforms for the market.

•

Readiness is all It’s not an easy road from ideation to production, Boseck notes. “As the saying goes, ‘If it were easy, someone would have already done it.’” That’s precisely the point: Contract manufacturers have done it, and they’re willing and able to help startups do it as well.

There are a few questions medtech startups should ask themselves when considering whether to look outside the company for product development:

•

• •

• Can you provide well-defined and stable product requirements?

Although adjustments are expected and often necessary, keep in mind that mission creep can kill deadlines, Boseck notes.

• Do you have clear priorities?

Another important aspect of engaging with a CMO is the selection process, often a rigorous and challenging one, Boseck says. Some CMOs actively try to entice startups, but just because they claim to be

ED

V

AP

Quality systems might be the last thing on your startup’s mind, as other activities take precedence. But it’s not a good idea to overlook the development of your quality system at the beginning.

“I think it’s a good idea to put process and product planning in place right from the start, simply because once things get going, they get going fast,” notes Timothy Lozier, director of marketing for ETQ. “You might be too worried about R&D, product and supply chain, and then market approval, to think about compliance.

But it will come to you, and you don't want to get caught off-guard.”

“Establish a quality management system that suits the company size and expected growth,” adds Christine Santagate, client solutions advisor with

experts “they may not meet your specific requirements,” he cautions. Boseck advises budding medtech entrepreneurs to evaluate CMOs based on the following criteria: • Their expertise matches the project need. This should encompass design expertise, clinical familiarity, and component and assembly experience.

• The CMO offers the full spectrum of needed services. These should include concept ideation and prototyping, clinical production and scalable commercial production.

• The CMO is accessible and responsible. This is the due diligence portion of the analysis. You’ll need to talk to a variety of clients, and conduct some online research, just to start. A good CMO has a reputation for building good working relationships, with an emphasis on trust and transparency. M

NTROL

QUALITY

CO

* Quality Control

Whatever the challenges, your end goals should be very well defined.

Can you provide timely feedback to the team? Manufacturing can’t take place in a vacuum. Startups, which often have limited staff, should commit to having a dedicated liaison with their CMO partner.

Will you actively engage with the CMO development team? This might be as easy as getting a team member on site frequently.

Do you understand the development process? If not, ask more questions.

What are the terms? Make sure IP and ownership of the work product is well defined.

PRO

QUALITY AND COMPLIANCE FOR STARTUPS: WHAT YOU CAN IGNORE AND WHAT YOU CAN’T

Regulatory Quality & Solutions. “Make sure that it’s something that the current staff can manage and maintain. When a company institutes a [quality management system] that’s too large, they set

compliance. The medical device quality system is primarily concerned with production and post-production.

FDA 21 CFR Part 820 defines the quality regulations for the U.S. market.

WHEN A COMPANY INSTITUTES A [QUALITY MANAGEMENT SYSTEM] THAT’S TOO LARGE, THEY SET THEMSELVES UP FOR FAILURE TO COMPLY WITH THEIR OWN SYSTEM. themselves up for failure to comply with their own system.”

Implementing and maintaining a QMS is a crucial part of regulatory www.medicaldesignandoutsourcing.com

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Otherwise, ISO 13485 can be used to build a quality system for global markets.

Although it’s time-consuming and expensive, establishing a total quality 5 • 2016

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MED TECH STARTUPS

management system need not be as challenging as it sounds. The key is to build the system as you develop, focusing on the relevant aspects of quality and ignoring the others until they’re needed.

“You have to find something you can scale with,” says Lozier. “There are systems out there that let you start off

that you’ve considered the risks and are doing something about them. Document management is the process that helps those pieces of the puzzle stay together.

“The concept of planning and gaining control over the process is that as you grow, you'll always have them to lean on,” Lozier explains. “People can follow a

PEOPLE CAN FOLLOW A PROCESS, BUT IF IT’S NOT DOCUMENTED, THEN YOU RUN INTO ISSUES. small-scale and simple (yet effective), but as you grow you can grow the solution with your business.”

Startups should begin building their quality and compliance programs during the development phase, he advises, by focusing on design controls, risk management, document control and record management, and supplier management.

Design controls, essential for a QMS, can also help with the design process by capturing key aspects of development to prove your product meets user needs and is safe and effective. Likewise, risk management works with design controls to create documents and records throughout product development, to demonstrate

* Regulatory

HOW TO PLAN YOUR REGULATORY STRATEGY

The regulatory burden for startup medical device businesses might be the most rigorous of any industry, and with good reason – making products for implantation or use in the human body requires hurdling a pretty high safety and efficacy bar.

So building a regulatory strategy from the very beginning is crucial, and there 28

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process, but if it’s not documented, then you run into issues.”

Lozier emphasizes centralizing documentation, process and product planning.

“Too often, companies take that first step towards documenting their processes, but it resides in spreadsheets, file systems, and other, more decentralized, often manual methods.

Having a system that’s able to manage and track these things, as well as serve as a central resource, is important to ensuring consistency in the operation.

One source of the truth outweighs the risks associated with errant copies floating around the operation.”

Lozier cites tools that offer free or scalable methods to handle compliance events, issue actions, and launch corrective & preventive actions (CAPAs).

ETQ, for example, offers traqpath, a free download, and VERSE, a cloudbased quality management system that brings in document control/training and CAPA. In addition, both tools have a supplier component to them, which can help startups send actions and CAPAs to suppliers through secure external assignments.

Many vendors have programs that are specifically designed to help companies scale compliance.

“These aren’t expensive tools, but are built with startups in mind,” says Lozier. “The benefit is that if you’re a startup and you're looking to just put the pieces in place, you can do that for a low cost to your business, or even for free. That way, you're not ignoring it, or factoring in major investment on something you may not need now.”

Committing assets to compliance is a “future-proofing” investment, he says. “You’re going to have to meet the compliance standards and regulations as you grow, and, just like documenting your processes and controlling and tracking your quality and compliance operations, you don't want to be caught in growth mode and playing catch-up.” M

5 • 2016

some key considerations every medtech startup should keep in mind, according to Christine Santagate, client solutions advisor at Regulatory Quality & Solutions.

First off, Santagate advises, startups should remember to budget for the testing and related costs associated with regulatory processes.

“The regulatory strategy is really an

extension of the overall business plan and the costs associated should roll up into the overall budget. Unfortunately, testing and registration costs are sometimes overlooked when creating a business plan,” she explains. “The testing times and costs of sterilization validation, environmental testing, aging, biocompatibility and possibly clinical trials

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MED TECH STARTUPS

are sometimes not fully understood, as the initial focus is usually on technology and not on the entire life cycle.”

Another early consideration is where to pursue approval first. The relative ease of obtaining a CE Mark in Europe compared with the FDA’s more stringent requirements has been an attraction in the past, but Santagate says that’s changing.

“It used to be easier to gain approval in Europe, but things are changing quickly. With the updated ISO 13485 and pending IVDR updates, notified bodies [in Europe] are going to have their hands full,” she says.

“Small startups should focus on gaining approval in the country that allows the most opportunity and is manageable and sustainable for their small staff.”

If the U.S. is the first target for commercialization, planning a detailed approach ahead of time helps determine

* Reimbursement

Medical Design & Outsourcing

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FDA’s most-stringent pre-market approval path, establishing a relationship with the agency and keeping the lines open should be your primary considerations.

“Make sure that indications are clear and supported and that any study design is robust and appropriate data points are collected to support the submission,” Santagate advises. “It’s all in the preparation – this is a long process and up-front focus and attention to detail will be well worth the effort.”

Santagate says a sound regulatory strategy can be an unexpected benefit for startups on the funding trail.

“Potential investors are able to see that the company has a planned path forward, based on risk. It provides an additional layer of preparedness and overall understanding of the full funding requirements – and how those funds will be used,” she says. M

REIMBURSEMENT TOPS THE “MUST-DO” LIST

Five years ago, if you asked a medical device executive about their top worry, regulatory – specifically, the cost and uncertainty around winning favor with the FDA – nearly always came first.

Today, those same executives are more likely to cite reimbursement as their top issue. Driven by the declining number of physicians owing their own practices – 70% in 2002, compared with about 25% in 2011, according to the U.S. Medical Group Management Assn. – and the resulting shift to group purchasing organizations, reimbursement has vaulted to the top of the list of must-do items for new medical device concerns.

"Reimbursement comes up in just about every discussion I've ever had with investors," says David Rosa, the former president & CEO of Sunshine Heart in Eden Prairie, Minn. "Today, they're 30

which pathway to pursue, depending on the type of device being developed. It can help to find a trusted partner with the expertise in this area, to develop a regulatory strategy up front and identify potential paths to market – and its associated risks.

“This strategy will assess applicable FDA regulations, device classification options, potential predicate device and product claims, indications and contra-indication options, and potential regulatory risks based on the company’s marketing claims, product requirements, risk analysis, etc.,” Santagate notes. “The advantage in working with a consulting group is that they stay up to date on all regulation changes. A group like R&Q has 80+ full time consultants with experience spanning nearly all FDA device classes and they can provide an experienced, independent review.”

If your device is Class III, requiring the

5 • 2016

all looking to de-risk their investment, and they all want to know, up front, the likelihood of reimbursement."

"The hardest questions you're going to get are on the reimbursement side,"

"It really is all about the money.

The first real money we spent was on an outside analysis on reimbursement strategy. So it was fundamental to everything we've done," Anderson says.

THE HARDEST QUESTIONS YOU’RE GOING TO GET ARE ON THE REIMBURSEMENT SIDE. adds Preceptis Medical president & CEO Steve Anderson. "It goes to the heart of everything we've been doing.

Five years ago, we would've said, 'Oh, reimbursement, I don't need to worry about that.' But this is the big issue today.

It's a big issue, and a big opportunity.

In fact, Minneapolis-based Preceptis chose to develop its therapy to help children with hearing problems in part because of its relatively simple reimbursement path, he adds.

Bob Thompson, president of Gahanna, Ohio-based Comprehensive

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MED TECH STARTUPS

Reimbursement Solutions, says the key is targeting a truly unmet need.

“There's a lot of opportunity out there," Thompson says. "If you direct your products toward unmet medical needs, you'll see the benefits – particularly if you deal with the quality and cost-control issues that hospitals and payers are feeling."

The challenges vary by country, so it’s important to become familiar with the ins and outs of local reimbursement policies in your target markets before you start spending on product development. One challenge common to most markets is the gap between

reimbursement rates and the actual value of the technology. In many countries, rates are set using cost-based formulae by device or procedure type.

Because winning reimbursement hinges on clinical data, startups should plot their reimbursement strategy in parallel with their clinical and regulatory plans. That’s because collecting Class I data from randomly controlled trials and post-approval Class II data is key to a favorable review from a payer.

Startups should also have a strategy for disseminating that data to peerreviewed publications and at medical conferences once it’s collected.

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In the U.S., an increasing number of payers are exploring value-based reimbursement models, not least the Centers for Medicare & Medicaid Services. Last July Medicare announced a program to bundle reimbursement payments for hip and knee replacement procedures, saying it wants to “hold hospitals accountable for the quality of care they deliver to Medicare fee-forservice beneficiaries.”

Startups that can demonstrate that their devices both improve outcomes and can be reimbursed based on that improvement stand a better chance of winning a favorable decision from payers.

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M

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Ones to Watch Ten companies we’re keeping an eye on It’s tough to pick just 10 medtech startups to profile out of the hundreds or thousands dotting the U.S. landscape, but we tried anyway.

In the following pages you’ll find brief looks at our choices, ranging from the radiofrequency ablation device for treating overactive bladder being developed by stealthy Amphora Medical, to Sonex Health’s Stealth Microknife device for treating carpal tunnel syndrome.

It helped that we kept our criteria simple: A relatively new company, with only one or two (or no) financing rounds under their belts. Some are so deeply in stealth mode that they never responded to our enquiries.

And to all those startups who didn’t make the cut: It’s not you, it’s us – we only had 10 slots and there are so many of you! Don’t worry, there’s always next year…

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QUALITY

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More important in our selection process was that the technology being developed sparked our interest.

That made it even tougher to winnow the field, as the array of unmet needs being met by ingenious medical devices is truly inspiring.

PRO

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Amphora Medical

MAPLE GROVE, MINN. AMPHORAMEDICAL.COM

Stealthy Amphora Medical is stingy with details about the technology it’s developing to treat overactive bladder. Founded by serial entrepreneur Danny Sachs and medtech veteran Ed Hlavka, Amphora’s single-page website offers only contact information and a link to a lone patent.

But the company has managed to raise nearly $13 million for the device it’s

developing to treat overactive bladder.

According to the patent cited on its website, Amphora’s device is designed to ablate nerves in the bladder’s trigone, the funnel-shaped portion that leads to the urethra. The tech aims to denervate a portion of the trigone without disturbing the bladder’s outer mucosal layer, according to the patent.

Amphora is running a pair of trials evaluating the device, according to ClinicalTrials.gov. The Caret-I trial, a Phase I/II study of 50 patients with a primary endpoint of device-related complications at 12 weeks, is slated for final data collection in October 2016.

The Caret-II trial, a 2-phase safety and efficacy study, is designed to evaluate device-related serious complications at 4 weeks. It’s final data collection is due in June 2016.

Aum Cardiovascular

NORTHFIELD, MINN. AUMCARDIO.COM

• Aum Cardiovascular is developing the CADence handheald heart disease diagnostics device, designed to identify obstructions in the coronary arteries by detecting the acoustic signals generated by turbulence created as blood flows past an obstruction.

• Founded in 2009 by Marie Johnson • SEC-registered funding - $456,000, $3.3 million in 2011; $1.8 million in 2013; $5,006,150 in 2015 – TOTAL: $10,562,150

device designed to listen to heart sounds as part of her doctoral degree when her seemingly healthy, 41-year-old husband died suddenly from a heart attack.

Johnson’s husband had recently been given a clean bill of health after undergoing a traditional stress test, which made the cause of his death even more shocking. She later found out that he had blockages in his coronary arteries, including ruptured plaque in the left anterior descending artery – the aptly named “widowmaker.” Her husband’s own coronary artery disease had gone undetected by traditional tests.

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Amphora came up with $600,000 in a hoped-for $1.25 million equity round involving 4 investors back in 2013, according to SEC filings. The round was expanded to nearly $12.8 million last year, the filings show.

Amphora did not respond to our attempts to contact them, but we’ll certainly be keeping an eye on this intriguing startup. M

“I had 2 young children,” Johnson says. “I knew right then I was going to work on eradicating this terrible disease.”

So she set to work putting the principles of frequency analysis she’d used in her doctoral program to create an acoustic device to identify obstructive coronary artery disease.

The device, later named CADence, would become the cornerstone of the company Johnson founded, Aum Cardiovascular.

The name is based on a Sanskrit syllable meaning “to make a continuous low humming sound,” akin to the

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information the CADence device is designed to extract from diseased coronary arteries, the company says.

Johnson got the patent for her computerized stethoscope back from the University of Minnesota, where she’d developed it, and set out to start Aum Cardiovascular with a relatively small grant from the federal government.

A mentor – medtech legend and serial entrepreneur Dr. Manny Villafaña – suggested she seek out private placements to get the company running.

That’s helped Aum bring in about $10.3 million. It wasn’t just the story, but also the effectiveness of the device, that wooed investors, Johnson says.

“They don’t give you money because they’re in love with the story,” she explains.

“They funded this because they saw that we could detect obstructive coronary disease with an easy test, and with no pharmaceuticals. It was a no-brainer.”

Normal blood flow through coronary arteries is smooth and even; arterial blockages disrupt that smooth flow and create turbulence. That turbulence creates a particular noise pattern that’s far too faint to be heard with a traditional stethoscope.

Using sound to identify coronary artery disease isn’t a new idea – in 1967, an article in the American Journal of Medicine by William Dock and Samuel Zoneraich detailed a “high-frequency

diastolic murmur” found along the left parasternal area at the 2nd, 3rd or 4th intercostal space. The sound was correlated with arterial stenosis, and would go on to be referred to as “Dock’s Murmur.”

In a similar manner, the CADence system “listens” for the sounds of

Bigfoot Biomedical

MILPITAS, CALIF. BIGFOOTBIOMEDICAL.COM

• Bigfoot Biomedical is developing an artificial pancreas, using a combination of modern technologies such as continuous glucose monitors, insulin pumps and proprietary algorithms.

• Founded in 2014 by former Junior Diabetes Research Foundation CEO

Jeffrey Brewer, home-CGM hacker Bryan Mazlish and ex-Medtronic chief engineer Lane Desborough.

• SEC-registered funding: $3 million, $3.75 million, $6.5 million, 2015; $2,375,000, 2016. TOTAL: $15,625,000

The anecdotal also helps Aum, as one investor actually credits the device with saving his life. At one of Johnson’s investor pitch sessions, the Aum device was used to scan Linn Grove Ventures CFO Steve Kiemele and indicated that he might have a 60% to 70% blockage of the left anterior descending artery.

THEY FUNDED THIS BECAUSE THEY SAW THAT WE COULD DETECT OBSTRUCTIVE CORONARY DISEASE WITH AN EASY TEST, AND WITH NO PHARMACEUTICALS. IT WAS A NO-BRAINER. disrupted blood flow in diseased coronary arteries. A test with the device takes approximately 20 minutes to perform, and requires minimal training to conduct. The CADence system collects data from four thorax wall locations; afterward the collected data is uploaded via Bluetooth to Aum Cardiovascular’s proprietary analytics engine.

A report based on the uploaded is later delivered via email to either the clinician or another account determined by the clinician.

The test is cheap compared to standard nuclear stress tests, which come with a $5,000 tab. Each test with the CADence device costs only $100.

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The blockage was later confirmed by a cardiologist, and although it was not as extensive as indicated by the CADence device, the revelation was enough to “shock” 51-year old Kiemele, who Johnson describes as athletic and not overweight.

Last November, Aum finished enrollment in 1,000-patient non-inferiority study of the device, comparing it against nuclear stress tests in subjects who present with chest pain and two or more cardiac risk factors, and are indicated for nuclear stress testing to determine if they have coronary artery disease.

Aum won CE Mark approval in the European Union in November 2014 and launched in Germany in 2015. M

In 2014 Bryan Mazlish made waves as the stealthy subject of a Wired article that tagged him as the first developer of a home-brewed bionic pancreas.

The article referred to Mazlish as “Bigfoot,” as Mazlish was staying under the radar with his hacked device, 5 • 2016

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designed to automatically manage both glucose testing and insulin delivery to manage the Type I diabetes afflicting both his child and his wife.

Mazlish, at the time a Manhattan stock-trading programmer, had a wealth of experience working with computer algorithms designed to autonomously buy

smartphone, using proprietary algorithms to determine insulin dosage based on glucose readings. Mazlish’s wife later reported that she and their son had been using the closed-loop system for more than 2 years with no issues, touting an impressive 30,000 hours on the system.

Mazlish teamed up with ex-JDRF chief Brewer and ex-Medtronic engineer Lane Desborough to found Bigfoot. The company’s goal is to bring a fully functional, automated insulin delivery system to the market with a sustainable business model. The company, which has kept a low profile since the Wired article, says it’s already assembled a prototype automated insulin delivery system that uses the patient’s basal insulin dose hypoglycemia susceptibility to gauge the timing and size of dosages.

The system is also designed to allow patients to tell it how many carbohydrates they’re eating, to allow it to calculate a bolus dose. Otherwise it’s designed to manage itself, leaving patients free from worry until their next meal or site change.

In May 2015, Bigfoot picked up the

LIKE THE MYTHICAL BIGFOOT, AS MAZLISH WAS STAYING UNDER THE RADAR WITH HIS HACKED DEVICE. and sell stocks. He used his expertise to develop an algorithm to manage Type I diabetes, in a quest to give them more freedom from the chronic condition.

The “Bigfoot” name stuck, later to be used as the moniker for the company Mazlish helped found: Bigfoot Biomedical.

The initial system operated on a hacked-together combination of an insulin pump, a continuous glucose monitor and a

Cardialen

assets of shuttered insulin pump maker Asante Solutions and its FDA-cleared Snap insulin pump, planning to integrate the pump into its smart delivery system.

The buyout also meant a big move for Bigfoot, which swooped in to take over Asante’s headquarters in Milpitas, Calif.

Only a month later, Bigfoot was on the prowl again, inking a deal with continuous glucose monitor industry giant Dexcom to integrate data from its CGM systems into the Bigfoot smart delivery system, as with Mazlish’s original prototype.

Bigfoot Biomedical hopes to have a clinical study under way late this year.

The so-called “hotel study” is designed to allow patients to use the artificial pancreas in a real-world setting, but with staff on hand at all times.

A large, 3-month study of the device is planned for early 2017, looking to enroll a few hundred patients as the company continues its quest for regulatory clearance.

Bigfoot says it’s aiming for an FDA submission by the end of 2016, with a hopeful date for clearance and market entry by the end of 2018.

The company has already raked in over $15 million in funding, starting in June last year, and has set its sights on acquiring another $15 million. M

MINNEAPOLIS & ST. LOUIS CARDIALEN.COM

• Raised a total of $6.8 million, according to regulatory filings, plus grants and loans • Device is based on low-energy cardioversion technology licensed from Washington University in St. Louis and prior Case Western Reserve University research.

Cardialen is developing a low-energy implant for atrial fibrillation designed to control the fibrillation without damaging heart tissue. The technology uses series of lower-energy pulses rather than a single high-energy shock to effect the therapy.

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Pre-clinical testing shows that the Cardialen device significantly reduces the atrial defibrillation threshold compared with a single shock. A clinical feasibility study is under way and slated to be complete this year.

The company said it’s designing the system using existing implantable device “building blocks,” including commercially available cardiac leads, so that “the Cardialen therapy system can be rapidly adopted using existing care pathways, procedures, reimbursement, and managed using existing infrastructure.”

Cardialen is led by chairwoman & CEO Paula Skjefte, a veteran executive from Medtronic, and vice president of development Brent Shelton, also a Medtronic alum. M

Chronically Implanted Lead Positions and Experimental Timeline (A) Fluoroscopic images of the anatomic positions of chronically-implanted transvenous leads and subcutaneous (SC) access ports from left lateral (left panel) and left anterior oblique (right panel) views. (B) Schematic depiction of lead positions. Shocks were delivered from the right atrium (RA) coil to the left pulmonary artery (LPA) coil or the RA coil to the coronary sinus (CS) coil. (C) Experimental timeline showing model development and approximate times of defibrillation (defib) studies. AF = atrial fibrillation; HRP = high rate pacing; LA = left atrium; LV = left ventricle; PT = pulmonary trunk; RV = right ventricle; SVC = superior vena cava; Wk = week.

InterValve Inc.

PLYMOUTH, MINN. INTERVALVEINC.COM

• Founded 2008 by Mark Ungs and William Drasler • Raised $4.7M A round in 2011; Debt round of $3M in 2015

for Boston Scientific's interventional cardiology division during the development of drug-coated stents and cardiac resynchronization therapy for CHF, the two biggest blockbuster devices in the history of the medical device industry. Ungs is also the cofounder of ACTx, a startup developing a therapy for tissue function recovery and regeneration.

InterValve’s key technology is the V8 aortic valvuloplasty balloon catheter, a figure-8-shaped device designed to treat calcification of the aortic valve. For the core patient, often elderly and at

InterValve is developing a nextgeneration aortic valvuloplasty balloon for treatment of calcific aortic stenosis.

Founded in 2008 by an experienced group of cardiologists and industry executives, Intervalve is developing tools for the percutaneous and transapical aortic valve replacement procedures.

CEO Mark Ungs served as the vice president of new business development

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high risk for mortality from traditional open heart surgery, surgical valve replacement surgery is highly invasive and usually requires a long recovery period. An estimated 50% of patients with aortic stenosis are therefore not eligible for or choose not to have this valve replacement surgery.

The shape of the V8 device is important because it’s designed to lock into the atrial valve’s anatomy.

In conventional catheter balloon procedures, it’s difficult to determine the precise amount of dilatation force exerted on the aortic valve annulus 5 • 2016

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that’s needed to restore its conformity.

Given this limitation, the tendency is to undersize the balloon in an attempt to limit complications. But in doing so, the operator potentially accepts some procedural compromises, such as suboptimal valve area gain and a higher rate of balloon slippage.

Limiting movement of the balloon reduces procedure and ischemic time.

The InerValve device solves the problem of balloon slippage when dilating the aortic valve during valvuloplasty, either as its own procedure or in preparation for transcatheter aortic valve replacement (TAVR). The balloon’s center

is positioned at the valve’s opening with the help of a radiopaque marker. Once aligned, the balloon is inflated, taking on its namesake figure-8 shape.

The company won FDA clearance in 2013 for the V8 device. In October 2014, the catheter was successfully used to dilate the aortic valve annulus during a TAVR procedure guided by live 3D transesophageal echocardiography.

In January 2015, the company closed a $3 million senior secured term loan agreement with Oxford Finance LLC to continue commercial and development efforts. It also named Maquet Medical Systems USA as its sole US distributor. M

Mardil Medical

PLYMOUTH, MINN. MARDIL.COM

•

For more than 30 years the standard of care has been a valve repair procedure called annuloplasty, which involves the implantation of a ring or band around the annulus to restore its natural shape.

But that surgical technique, and the annuloplasty ring, have gone nearly unchanged over the last decade.

What's more, annuloplasty is challenging to perform and very invasive (open-heart and on bypass), and because the cause of FMR is not addressed, regurgitation can reoccur in 40% or more of patients. Because the surgical risks are significant and there is a high rate of reoccurrence, only a small fraction of indicated patients undergo surgical procedures for FMR every year.

Mardil Medical’s VenTouch system targets the root cause of FMR by applying light pressure to push the

•

Founded in 2001 by Srirama Rao; Jim Buck is CEO Raised $9.38 million in 2013.

Functional mitral valve regurgitation (FMR) is a bit of a misnomer, because it’s considered a disease of the left ventricle, not of the mitral valve. FMR occurs when the heart’s left ventricle is distorted or dilated, displacing the papillary muscles that support the valve’s two leaflets and stretching its annulus and allowing blood to flow back into the atrium. If left untreated, FMR overloads the heart and can lead to or accelerate heart failure.

valve leaflets closer together, stopping the regurgitation. It’s also designed to provide gentle support to the ventricular wall to prevent further distortion, which can lead to the reccurrence of FMR. The VenTouch device is a sleeve that slips around the heart (pictured) and inflates with saline until the mitral valve annulus has been coaxed into conformity.

Should further changes in the left ventricle occur after implantation, the system can be adjusted using a remote port.

First-in-human implants came in February 2014 at the Institut Jantung Negara National Heart Institute in Kuala Lumpur in two patients as part of a 15-patient Phase I study. The primary safety endpoint is the rate of serious adverse events at 6 months, with final data collection slated for June 2017. M

The VenTouch, a sleeve, surrounds the heart to coax the mitral valve annulus into conformity.

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www.medicaldesignandoutsourcing.com

5/19/16 12:56 PM

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MIVI Neuroscience

EDEN PRAIRE, MINN. MIVINEURO.COM

MIVI Neuroscience is developing a catheter-based treatment for acute ischemic stroke that’s designed to extract the blood clots that cause it from the brain.

Founded in May 2013 by president Matt Ogle, the company won 510(k) clearance from the FDA for a 6Fr version of its Mi-Axus catheter a scant 18 months later. MIVI Neuroscience says it expects to launch the rest of the system’s components over the next two years and anticipates winning CE Mark approval in the European Union in the next year for the Neuronet embolic protection component.

The Mi-Axus catheter tapers from 6Fr to 5Fr and features a flexible shaft that’s designed to minimize arterial trauma during clot retrieval. A braided catheter body offers improved torque and navigation and has a hydrophilic coating designed to reduce friction as the catheter travels through blood vessels.

MIVI Neuroscience reeled in $2 million in August 2015 in a seed financing round, plus $185,000 in debt financing from Minnesota’s Angel Loan Fund, saying it planned to use the cash to optimize its technology and fund initial clinical work. M

Illustration of an ischemic stroke, which occurs when a brain blood vessel gets blocked. The gray area represents brain tissue that is not receiving nutrients as a result of the stroke.

Image courtesy of the National Institute of Neurological Disorders and Stroke

Pursuit Vascular

MAPLE GROVE, MINN. PURSUITVASCULAR.COM

•

venous catheterizations. It’s estimated that as many as 10% of central venous catheterizations lead to CRBSIs, which have a mortality rate of 25% and significantly boost both length of stay and treatment cost. The infections cause about 30,000 deaths in the U.S. each year, adding an estimated $6 billion to healthcare costs.

The FDA-cleared ClearGuide HD device is aimed at the hemodialysis market. It’s an anti-microbial end cap for which the federal safety watchdog created a new product code covering its “use in hemodialysis catheters to reduce hub infection.”

The cap works via a rod coated with

•

Raised a $5 million Series B round in March 2015 Won FDA clearance in 2013, after just 4 years, because its device could be tested in the lab rather than in a clinical trial

Pursuit Vascular developed its ClearGuard technology to address a particularly pernicious unmet need: Protecting patients from bloodstream infections stemming from long-term catheter and port use.

It’s a deceivingly prosaic indication, but catheter-related bloodstream infections are one of the most common – and lethal – complications from central 40

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the anti-microbial chlorhexidine that extends into the hemodialysis catheter hub. The coating is activated when the end cap is inserted into a liquid-fileld catheter. The dissolved chlorhexidine is held inside the catheter by the existing catheter clamp; the amount of the agent released is controlled to ensure safety even if the clamp is opened.

Pursuit Vascular cites independent testing showing that ClearGuard HD reduces an array of nasty bugs – including varieties of staphylococcus, enterococcus, e. coli and candida – by more than 99.99 percent.

Largely financed by angel investors in the Twin Cities, Pursuit raised a $5.1

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million Series B round in March 2015. The company was co-founded by R&D vice president Bob Ziebol in 2009 and is led by president & CEO Doug Killion.

Proceeds from the Series B round are slated, in part, for scaling up production of the ClearGuard HD device. M

Sonex Health

ROCHESTER, MINN. SONEXHEALTH.COM

Carpal tunnel syndrome affects more than 12 million Americans and results in 500,000 surgeries each year. The traditional fix has been an invasive surgery that involves cutting the transverse carpal ligament in the wrist, which is not expansible. The ligament forms the roof of the carpal tunnel and can pinch a nerve in the wrist causing the discomfort experienced in carpal tunnel syndrome patients. The conventional solutions expand the space around the nerve.

“That is done by expanding the tunnel – cutting the ligament over the nerve,” says CEO Dr. Darryl Barnes. “In the procedure, you cut the skin, dissect down to the ligament, transect the ligament and then sew up everything you cut, except for the ligament.

It is considerably invasive and not as safe as it should be.”

And while this remedies the condition, it comes with drawbacks, such as large and sometimes painful scars, ongoing palmar pain, and a long road to recovery.

The ultra-low-profile Stealth MicroKnife device uses technology developed at the Mayo Clinic to address carpal tunnel syndrome.

“Our inspiration was to make it less invasive, less expensive, and safer to improve the lives of those who

suffer from it. Dr. Jay Smith and I had developed several products around ultrasonically guided procedures and came up with the idea for the MicroKnife a few years ago,” says Barnes.

The first MicroKnife prototypes were able to reduce the size of the traditional incision from two in. to about ½ in.

(12.7mm). A few prototypes later, the device now requires an incision of 3mm to 5mm.

“The MicroKnife is much smaller than the illustration on our website makes it appear.

For example, it is only 2.8mm high.”

Once properly positioned using ultrasound, the device provides a “safe zone” barrier to protect nerves, blood

with a small adhesive bandage or strip instead of sutures.

Immobilization is unnecessary, so patients can begin rehabilitation and get back to their jobs and lives almost immediately. The result is a low-trauma outpatient procedure associated with a recovery that is shorter than that of conventional surgical methods.

What's more, the procedure formerly took place in an operating room. The innovation will let physicians safely and effectively perform carpal tunnel release in an office or ambulatory surgery center, resulting in the rapid patient recovery, improved cosmesis, and reduced costs.

OUR INSPIRATION WAS TO MAKE IT LESS INVASIVE, LESS EXPENSIVE, AND SAFER TO IMPROVE THE LIVES OF THOSE WHO SUFFER FROM IT. vessels, tendons, and other sensitive anatomic structures during transection.

The instrument will let physicians perform carpal-tunnel-release surgery through a single micro-incision with ultrasound guidance (or with a traditional mini-open incision without ultrasound guidance) while protecting sensitive anatomy during transection of the transverse carpal ligament. In fact, the Sonex says, MicroKnife requires an incision so small it can be closed www.medicaldesignandoutsourcing.com

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The company was founded in 2014 by Barnes and Smith, both physicians at Mayo Clinic, and business operations expert Aaron Keenan. Regarding funding, Barnes and Keenan, who serves as CFO, would only say the private company raised sufficient capital

by July 2015 and is funded to reach key milestones, such as inpatient use.

The Stealth MicroKnife is not for sale yet. Prototypes have been successfully tested on cadavers multiple times and gone 5 • 2016

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MED TECH STARTUPS

through several iterations of testing and redesign. “We recently froze the design and are now in the manufacturing process of creating the device,” says Barnes.

To find its way along the regulatory path, Keenen says the company has taken guidance from a reputable consulting firm. Sonex hopes the MicroKnife will be registered with the FDA as a Class I device under a 510(k) clearance.

“To meet the regulatory requirements, we have done rigorous testing with cadaver studies and will be

performing final instrument test including biocompatibility, sterilization, and more.

Presently, we are setting up manufacturing and will have to meet all regulations for good manufacturing principles, and prove that we designed our instrument with good manufacturing principles. The Stealth MicroKnife has been designed and is fully complaint with ISO 13485 and 14971 standards,” says Keenan.

The first human patient is scheduled to undergo the procedure during the fall of this year. M

The Stealth MicroKnife (the thin grey wedge) is position while sheathed. Other device features protect surrounding nerves and vessels.

TriFusion Devices

COLLEGE STATION, TEXAS TRIFUSION.CO

• Founded in 2014 by Texas A&M grad student Blake Teipel and Brandon Sweeney • Won nearly $400,000 in business competitions

Eastburn, a medical student at Texas A&M’s HSC College of Medicine, serves as the chief medical business officer.

Creating a prosthetic can cost almost $30,000 and take at least a month, for a device that will last only 5 years. TriFusion developed a carbon nanotube-coated printer filament and a patent-pending microwave welding process to fuse 30-pin parts. The unique property of the carbon nanotubes overcomes the difficulty of the weld strength of polymers, enabling stronger 3-D printed prosthetics at a fraction of the cost of currently available devices.

“The microwelding process is a disruptive technology, due to an enormous competitive advantage in both price and production time,” Sweeney explains.

Using this technology, the TriFusion team says it can slash a long and expensive process by going from scan to device in less than 48 hours. Eastburn says they can produce 3D-printed parts with mechanical properties that rival conventional prosthetics and also enable post-printing fit adjustment for the final socket, eliminating

Some of the most exciting start-ups these days are coming out of universities. Take TriFusion Devices, an up-and-coming company that just won the coveted Rice Business Plan Competition. The nascent company’s technology has won nearly $400,000 in business competitions for the proprietary microwelding process behind its 3D-printed prosthetic devices, illustrating its appeal as easy to understand, filling an unmet need and offering time and cost savings.

TriFusion’s leadership comes out of Texas A&M’s Materials Science & Engineering department; CEO Blake Teipel is a Ph.D. candidate with a background in product and business development; CTO Brandon Sweeney is also a Ph.D. candidate with experience in nanotechnology development and 3D printing for robotic vehicles; and Britton 42

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the traditional limb-casting process and the need for test-fit sockets.

And the team sees larger applications in the medical arena.

“We can make prosthetics, orthotics, wearables, sporting equipment and protective devices,” says Eastburn.

But it’s early days yet. TriFusion is looking to raise $1.8 million to take its prosthetics technology to market. M

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MANUFACTURING

Understanding nitinol implant design and manufacturing The nickel-and titanium-alloy known as nitinol is a super-elastic shape-memory alloy responsible for major advances in medical technology over the last 15 years. When pursuing a manufacturer to produce a new Nitinol-based implant or device, it’s important to consider a number of factors.

Norman Noble, Inc.

Nitinol is a highly elastic material that’s processed to maintain a required geometry.

Its properties, combined with high fatigue resistance and an ability to provide constant force over a wide range of displacements, makes it ideal for use in numerous medical implants and devices, including vascular stents (cardio, AAA, peripheral, carotid, venous, neuro), transcatheter heart valves, vascular closure implants, neurovascular clot pullers, flow diverters, vena cava filters, orthopedic anchors, and atrial fibrillation devices.

As well-suited as nitinol is for vascular implant applications, few manufacturers are able to produce finished goods with it. The major barriers to working with nitinol are: Transcatheter heart valves can be fabricated using nitinol.

• Low machinability. As a raw material, nitinol is difficult to machine with conventional technologies. Multiple proprietary manufacturing processes are required to produce even the most basic nitinol-based device.

• Electropolishing and passivation: To protect against the harmful release of nickel into the human body, electropolishing or passivation are required to create a protective titanium oxide layer.

• Process validation: Nitinol implant manufacturing requires strict process controls and validation to meet the finished material specifications.

• Knowledge. Working with the alloy requires extensive knowledge of its mechanical properties and fatigue characteristics. www.medicaldesignandoutsourcing.com

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Consider these factors when pursuing a manufacturer to produce a new nitinol-based implant or device.

Raw material sourcing Before committing to any manufacturer, it’s crucial to know how they’ll source nitinol for a given project. An original equipment manufacturer’s (OEM’s) ability to supply the market with product depends directly on the contract manufacturer’s ability to 5 • 2016

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MANUFACTURING

source the raw material required to maintain continuity of supply.

A sustained disruption in supply is often catastrophic for OEMs. At a minimum, ensure that the contract manufacturer will qualify and validate two sources of nitinol for production. A disruption in the material quality from the primary source can be quickly resolved by increasing supply from the second.

Equally important, the quality, type (sheet or tube) and characteristics of the nitinol supplied by any given raw material producer is variable. The manufacturer who regularly sources material from many suppliers is able to best match the raw material to your design requirements and product application.

SEM image of athermal lasermachining of flat nitinol.

Design for manufacturability and finite element analysis (FEA) It’s also important to evaluate product design specifications during the prototyping stage to identify opportunities to reduce cost without compromising the manufactured part’s intended function. Any costreducing design changes must be implemented prior to design freeze.

For any prospective new device design, extensive design and testing services should be available to help the design engineer perform FEA. This ability to model and simulate mechanical behavior reduces the time needed between design iterations, a critical step in the race to bring products to market.

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MANUFACTURING

Dedicated process engineering Each manufacturing step requires the contract manufacturer to custom-design that operation for any particular product design. This is done by designing, testing and refining the step using the same model and type of equipment and conditions that will be used in production. The capability to design and manufacture all shape-set tooling and fixturing for each process step in-house is essential to ensure the highest level of quality and process control.

Testing should be completed by experienced engineering personnel and using designated equipment and facilities dedicated solely to process development.

Manufacturing parts complete Producing finished nitinol parts is a complex, multi-phase endeavor requiring years of experience and numerous manufacturing and finishing capabilities.

It’s important to understand up front if your supplier can completely manufacture your part in-house using special nitinol processing techniques. Can they handle all manufacturing and finishing required to produce a marketable product without outsourcing any steps?

By handling all steps in the manufacturing process, the supplier can tune each step based on its knowledge of the upstream or downstream capabilities.

This produces the highest level of quality assurance and process control.

TOP: SEM image of nitinol athermal laser machining of nitinol tube.

BOTTOM: For any prospective new device design, validation and design testing services should be available.

Finishing by electropolishing A product’s fatigue and corrosion resistance are major factors in its performance. Finishing polishes, passivates, removes micro-cracks, and deburrs the workpiece. There are various finishing methods. Electropolishing produces the best results for corrosion resistance and biocompatibility.

The electropolishing process can be designed to sharpen or round dimensional features to meet product requirements.

Verify that the supplier will use electropolishing and passivation on the finishing of implants.

100% dimensional inspection One of the last steps in producing a device, dimensional inspection, is also one of the most critical to verifying a

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consistent, high-quality component that meets design specifications. A manufacturer must know if a supplier has the capability to provide validated, 100% dimensional inspection on each implant. Anything less invites risk to the patient and the OEM. Validation and inspection All operational process steps and tooling used to manufacture Nitinol implants must be within established and tested control limits. Validation ensures that the manufacturing process conforms to the control limits.

Inspection ensures the manufacturing output does as well. Insist on 100% automated inspection for peak quality.

Validation must be conducted in accordance to ISO 13485:2012 standards. The contract manufacturer should employ an experienced validation engineering team to provide the strategy and protocols needed to complete all validation activities.

Additionally, the contract manufacturer should have in-house verification technologies to support validation, including: • Metallography expertise and Scanning Electron Microscopy, which is required to verify removal of Heat Affected Zones.

• Corrosion testing capabilities per ASTM F2129.

• Bend and Free Recovery and Differential Scanning Colorimeter, to verify material Austenite Finish, Mf, Ms, and As transformation temperatures.

Athermal laser machining for nextgeneration implants The demand for smaller devices and entirely new neurovascular applications requires even more innovative manufacturing methods. If the ability to test and produce next-generation implants is a priority, determine if a contract manufacturer has an athermal laser machining capability. M

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ADVANCED MATERIALS

MICRONEEDLE Luis Tissone •

Director of Life Sciences • Trelleborg Sealing Solutions •

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ADVANCED MATERIALS

TECHNOLOGY AND TRANSDERMAL DRUG DELIVERY: Market growth with advanced materials Although the figure for the growth of the transdermal drug delivery market is impressive – annual sales are expected to meet 485 million units by 2030 – it’s not necessarily a surprise for those close to the industry. Transdermal drug delivery is the perfect blend of medicine and technology for a preferred alternative to conventional vaccine delivery.

A subset of transdermal drug delivery, microneedle technology using liquid silicone rubber (LSR), provides stronger, smaller polymers that are more stable and can last longer through multiple uses.

This is helping to drive the growth of the transdermal drug delivery market. We look now at manufacturing and engineering progression as part of this growth.

Microneedle solution for drug delivery Transdermal devices can be found in multiple

versions. There are patches that are placed on the skin to allow medication to be absorbed through the skin into the bloodstream. Implants are also available that create a port for medicine to be delivered.

Essentially, transdermal delivery is any drug administration that involves active ingredients being delivered across the skin for systemic distribution.

Perhaps the most promising devices being introduced today use microneedles, which are divided into four types:

<< A quality inspection of micro parts for use in medical devices. www.medicaldesignandoutsourcing.com

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ADVANCED MATERIALS

• Hollow. These infuse a drug through the bores with adequate flow.

• Solid. These puncture holes in the skin to increase permeability where a drug is then delivered.

• Polymer. These are made from special polymers that offer dissolving, non-dissolving, or hydrogel-forming options.

• Coated. These are coated with a drug-containing dispersion.

Transdermal devices using microneedles solve a long-standing medical problem: The skin’s anatomical peculiarities make it difficult to cross. The skin’s major barrier consists of the stratum corneum, the outermost layer.

However, the layer underneath, the viable epidermis, also plays a protective role. According to research published in Pharmaceutics, only compounds that are able to get through the stratum corneum and diffuse through both layers of the epidermis have the potential to reach circulation and achieve systemic effects.

^^ A close up of the detail of microneedle drug delivery patch.

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The tremendous benefits of microneedle drug delivery One obvious benefit of transdermal microneedle delivery is that it reduces the need for hypodermic injections. Although they’re effective, hypodermic needles can cause discomfort, bruising, and even hypersensitivity at the injection site. For patients receiving an occasional vaccine, this is a minor inconvenience, but the effects are much more serious for patients requiring daily or weekly injections. A transdermal patch is virtually pain-free and can be selfadministered, resulting in improved medication compliance.

In addition, improved drug delivery is often found with transdermal drug delivery, especially over an extended period.

Orally administered drugs must travel through the metabolic system of the liver, which eliminates a substantial amount before widespread distribution. Lesser amounts of a drug are needed when administered through a transdermal device. In addition, a transdermal patch can deliver an even flow of the active ingredient over an extended period, ranging from 24 hours to seven days.

Many oral medicines do not absorb well in the gastrointestinal tract, resulting in low bioavailability. The bioavailability of a patch is also fairly low, but placed correctly, it can avoid first-pass metabolism and partial elimination.

Microneedle patches also permit site-specific dosing. For example, placing the patch on or near an injured appendage to reduce inflammation, rather than having the drug circulate

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throughout the entire body. Studies have shown that changes in the absorption and distribution of drugs administered via patches are quite different from those taken orally.

Patches also provide a new way to control a drug’s pharmacokinetics.

Taking a pill once a day is relatively easy to remember, but sometimes multiple daily doses at set intervals are needed to reduce side effects or offset a metabolism issue. This is inconvenient for patients and especially difficult to manage overnight. Patches allow for exact control of both dose and time.

Twice the size of a patch means twice the dosage. When you need to stop dosing, you remove the patch.

Finally, there’s evidence that transdermal microneedle methods are more effective than hypodermics for immunization. Certain cells in the epidermis and dermis (Langerhans and dermal dendritic, respectively) are part of the skin’s unique immune system.

Because they’re designed to initiate immune responses to protect the body, less vaccine is needed to initiate a defense response when administered via a transdermal patch than intramuscularly.

Manufacturing and material advances Tremendous advances have been made in recent years in the design and manufacturing of microneedles, in part due to materials technology. In particular, silicone has become an excellent option because of its haptic properties.

Silicone doesn’t cause skin irritation, is biocompatible, and is compliant with medical industry regulations.

LSR technology has proven particularly suitable for transdermal drug delivery, providing small, strong polymers that are stable and longwearing. Needle microfabrication requires parts weighed in micrograms or nanograms, and LSR allows complex, high-precision components to be produced in large volumes in these dimensions with relative ease and precise accuracy.

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ADVANCED MATERIALS

Ideal drug properties for transdermal delivery Transdermal administration is not appropriate for all types of drugs. The optimal physicochemical properties of the drug and its biological properties must be considered, along with the pharmacokinetic and pharmacodynamic properties of the drug.

The most important requirement is the need for controlled delivery, such as short half-life, adverse effect associated with another route, or a complex oral or IV dose regime.

The parameters for ideal candidates can be divided into physicochemical properties, biological characteristics, and polymer variables.

Physicochemical properties • The drug should have a molecular weight less than approximately 1000 Daltons.

• The drug should have affinity for both lipophilic and hydrophilic phases. Extreme partitioning characteristics are not conducive to successful drug delivery via the skin.

• The drug should have a low melting point.

• Since the skin has a pH of 4.2 to 5.6, solutions within this pH range are used to avoid damage to the skin. However, for a number of drugs, there may also be significant transdermal absorption at pH values at which the unionized form of the drug is predominant.

Biological characteristics: • The drug should be potent with a daily dose of the order of a few mg/day.

• The half-life of the drug should be short.

• The drug should be non-irritating and nonallergic.

• Drugs that degrade in the GI tract or are inactivated by hepatic first-pass effect are suitable candidates for transdermal delivery.

• The polymer should be chemically nonreactive or an inert drug carrier.

• The polymer must not decompose on storage or during life span.

• Molecular weight, physical characteristic, and chemical functionality of the polymer must allow the diffusion of the drug substance at a desirable rate.

• The polymer and its decomposed product should be nontoxic. It should be biocompatible with skin.

• The polymer must be easy to manufacture and fabricate into desired products. It should allow incorporation of large amounts of active agent.

Silicone elastomer blend networks, sugar siloxanes, amphiphilic resin linear polymers, and silicone-hybrid pressure-sensitive adhesives are showing promise for potential performance advantages and improved drug delivery efficacy.

Early on, transdermal delivery systems were used mainly for delivery of small, lipophilic, lowdose drugs. More recently, delivery

systems began using chemical enhancers, non-cavitational ultrasound, and iontophoresis to enhance the efficacy of transdermal patches. Today, the ability of iontophoresis to control delivery rates in real time is providing added functionality in a number of instances.

At the same time, microneedles combined with thermal ablation are progressing through clinical trials for delivery of macromolecules and vaccines, including insulin, parathyroid hormone, and influenza. With these enhancement strategies, transdermal delivery is poised to significantly impact drug delivery choices.

Both chemical enhancers and the newest physical enhancers (ultrasound, thermal ablation, and microneedles) have begun expanding transdermal delivery of macromolecules and vaccines.

These scientific and technological advances enable targeted disruption of the stratum corneum while protecting deeper tissues, positioning all types of transdermal drug delivery to have a widespread impact on medicine. M

>> LSR technology allows the creation of complex, high precision parts.

Polymer variables: Advances in transdermal drug delivery technology have been rapid because of sophisticated polymer science that allows incorporation of polymers in transdermal systems in adequate quantity. The release rate from transdermal systems can be tailored by varying polymer composition. Selection of a polymeric membrane is important in designing a variety of membrane-permeation controlled transdermal systems: 52

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Medical technology also relies on our drive systems. They are used, for instance, in modern arm prostheses which enables the wearer to make precise movements.

The maxon product range is built on an extensive modular system, encompassing: brushless and brushed DC motors with the ironless maxon winding, iron-cored flat motors, planetary, spur and special gearheads, feedback devices and control electronics.

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5/18/16 4:30 PM 31.08.2015 10:08:19

r e w o l n i s e c n a v d A s c i t e h t s o limb pr

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PROSTHETICS

Thanks to advances in microelectronics, hydraulics, and motors, medical technicians can help nearly amputee achieve goals and accomplish feats that weren’t possible at the turn of the century.

Shane Wurdeman • PhD • CP •

Hanger Clinic Certified Prosthetist and Research Scientist • Hanger Clinic

“We can rebuild him. We have the technology.

We can make him better than he was. Better, stronger, faster.” These words launched the popular 1970s television series The Six Million Dollar Man, giving birth to a generation of innovators and inventors.

In the 70s the words were nothing more than science fiction. Today, advances in prosthetic rehabilitation technologies are transforming this quote into non-fiction. Prosthetists – the healthcare professionals who design and build prostheses – can arguably make some individuals better than they were before their amputation.

And thanks to advances in technology, prosthetists can help nearly every amputee achieve goals and accomplish feats that were not possible at the turn of the century. Here are a few examples.

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Feet The age of microprocessors is upon us. It’s been a decade since the Proprio foot was introduced, using a microprocessor and sensors to detect when to provide powered dorsiflexion of the foot.

That motion is an upward rotation of the ankle that raises the toe – the action that effectively increases the ground clearance of the foot as it swings through the air. However, after Proprio, the use of microprocessors in foot and ankle systems seemed to stall. Meanwhile, an increasing number of studies showed the benefits of using hydraulics to increase the ability of the foot and ankle to adapt to uneven surfaces in real-world environments. Subsequently, microprocessors were added to provide reactive adjustments to the hydraulic resistance to motion of the foot and ankle. This increased the foot-ankle

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PROSTHETICS

LEFT: Pro-Flex XC, developed by Össur, is intended to accommodate a relatively active user, one who enjoys hiking and jogging, as well as level-ground walking.

It comes with an aesthetically pleasing, anatomical footcover and integrated male pyramid.

seems to decrease hysteresis as the foot cycles through a sequence of steps.

With regard to geometry, the new Pro-Flex effectively engages a series of levers as the foot progresses forward from the moment it contacts the ground to later in stance while shifting the ankle’s rotation point. This action increases the power burst from the prosthetic foot far beyond what’s been measured in previous prosthetic feet using only passive elastic-energy return.

Knees Although it’s been more than 15 years since a microprocessor was used to assist with control of a prosthetic knee joint, recent advances in sensor technologies and algorithm improvements have greatly enhanced this technology. The Genium, for example, uses a combination of accelerometers, gyroscopes, and strain gauges to calculate knee angle, the lower-limb position relative to the environment, and the moments at the knee and ankle. The data from these sensors is read at 100 Hz and analyzed in real time by algorithms that translate the readings into output signals. These control servo-motors that open and close valve ports on hydraulic cylinders to reduce or increase the knee’s resistance to flexion and extension. Most impressively, the control algorithms now

The Biom ankle from Bionx Medical Technologies exemplifies improvements in recent prosthetics. The ankle emulates the function of lost muscles and tendons, and energizes every step so the user can walk farther and faster, even up ramps, hills, and stairs.

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unit’s responsiveness to changes in speed and on uneven terrain beyond that provided only through resistance to flow. Microprocessors are also being used to send output signals to motors. For example, a foot prosthetic from BiomX Medical will detect user’s instance within the walking cycle. Then, at the appropriate time, when the user is in the phase of the walking cycle referred to as propulsion, a motor is cycled for a power burst replicating the burst produced by the anatomical ankle-foot.

Prosthetic feet are also experiencing advances in areas such as materials and geometry. Rush feet, a new line of prosthetic feet, use a fiberglass construction originally designed for Apache helicopters. The fiberglass material is an alternative to the near-standardof-care carbon fiber material. The fiberglass material 5 • 2016

Modern socket designs for lower limb prosthesis, such as Hanger’s Comfort Flex, isolate muscle groups and are a more anatomically correct design than previous designs for individuals with an amputation above the knee.

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PROSTHETICS

learn and optimize the activity based on the user’s walking patterns – artificial intelligence at work. By being able to appropriately sense the knee’s position, and being programmed to learn the proper response to maximize users’ function and safety, microprocessor-

A twist of knob on Boa closure system lets user tighten or loosen their prosthetic device.

Europa+, from Orthocare Innovations, is an electroniclimb sensor for advanced prosthetics measurement, analysis, and automatic outcome reporting. The developer says it has “Always On” Bluetooth 4 connectivity for mobile devices, a long battery life, and an instrument-grade pyramid adaptor that senses the forces exerted through the prosthetic socket. Europa+ meets the new outcomes reporting requirements for VA patients.

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controlled knees can effectively increase users’ range of walking speeds, reduce the incidence of falls, and improve the user’s ability to participate in a range of activities. Stairs and ramps no longer create stressful situations for an individual with an amputation above the knee.

In addition, microprocessor-controlled knees are now being manufactured with increased resistance to the elements, including several waterproof models and a few others with weatherproof ratings.

The Genium prosthetic leg with microprocessor assist is the closest technology has come to enabling a natural walking gait, says developer Ottobock.

Socket technologies Perhaps the most critical component of any prosthesis is the socket – the connection between the living biological system and the artificial prosthesis. An amputee will place their residual limb into the socket, which then distributes and transmits forces through the prosthesis to accomplish a task such as walking, www.medicaldesignandoutsourcing.com

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PROSTHETICS

The bionic prosthesis attaches to a socket, such as the Hanger Comfort Flex, by a pylon. Its 2-kg mass approximates the biological foot and partial shank of an 80-kg person. A series-elastic actuator performs negative and positive work. The actuator comprises a 200-W dc brushless motor (Maxon EC-Powermax 30) and ball-screw transmission (Nook 14 × 3 mm) in series with a carbon-composite leaf spring. A 0.22 kg Lithiumpolymer rechargeable battery provides energy to the motor. The prosthesis is 67% efficient. About 30 J of electrical energy produce 20 J of net positive work during the stance period of walking, the typical energy requirement for an 80 kg person walking at 1.75 m/s.

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PROSTHETICS

Rush feet use a fiberglass construction originally designed for Apache helicopters.

WE CAN REBUILD HIM. WE HAVE THE TECHNOLOGY. WE CAN MAKE HIM BETTER THAN HE WAS. BETTER, STRONGER, FASTER.

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running, or moving a prosthetic hand to grasp an object. Modern socket designs, such as the Comfort Flex socket for lower limb prosthesis, isolate muscle groups and are a more anatomically correct design than previous sockets for the individual with an amputation above the knee. But despite being anatomically correct, the socket was a static design, unable to change shape to accommodate the routine daily volume changes in an amputee’s residual limb.

These sockets can now be equipped with the Boa closure system, which lets users tighten and loosen the socket according to the volume of their limb. The Boa closure system has also been added to sockets for individuals with amputations below the knee, marketed as the Revo Limb. The ability of the user to dynamically adjust the fit of the socket at any given instance lessens the need to carry around prosthetic limb socks used to restore fit.

This method, however, does not let users tighten the socket in the regions where the residual limb loses volume. As a result, socks can also create sites of increased pressure and shear force.

In addition to advances to the rigid supportive element of the socket, the protective interface applied between the user’s residual limb and the rigid socket has also evolved. The interface helps improve the lives of prosthesis users who

may have previously been unable to obtain a comfortable fit. The interface or liner is constructed from various silicones, thermoplastic elastomers, or urethanes.

But these liners also insulate the residual limb, creating a hot and uncomfortable environment. New silicone liners are now being embedded with Outlast technology, a material that uses phase changes to capture and retain heat, which ultimately aids in cooling the user’s residual limb.

Increased comfort for individuals using prostheses translates to increased activity.

Instrumentation Finally, the tools and instruments used by prosthetists have also evolved, improving their ability to assist the prosthesis user.

One such development, the Europa+, attaches to a prosthesis to provide moment data at the connection point just below the socket. This information can be read and interpreted by the prosthetist to make changes to the positioning of the parts of the prosthesis attached to the socket, termed the alignment. This lets the prosthetist minimize stresses to the user’s residual limb, as well as mechanical stress to the prosthetic’s parts to decrease mechanical wear. In addition, the sensor can record temporal symmetry in the user’s walking pattern, a valuable tool that helps monitor the user’s progress through rehabilitation. M

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DEVICE TALKS

DeviceTalks: The leadership lessons of John Brown, the man who built Stryker orthopedic division of Pfizer, which Stryker bought for $1.65 billion in 1998. The deal doubled Stryker’s sales and put it in a leadership position in the orthopedic industry. Brown retired in 2009 and still serves as an advisor to the company; he also sits on the board at St. Jude Medical.

In this episode of DeviceTalks, recorded at the AdvaMed 2015 conference, Brown tells Medical Design & Outsourcing publisher Brian Johnson how he built such impressive results during his tenure.

“Most people don’t realize I’m very competitive,” Brown told us. “I can’t stand to lose.”

BRIAN JOHNSON: Is it sometimes a mixed blessing to be called a legend?

JOHN BROWN: Yes. That’s an understatement.

For a man who took a company from $17 million in sales to a $4.5 billion publicly traded juggernaut listed at #307 on Forbes 400 billionaires, John Brown is a remarkably humble man.

He’s also, for all intents and purposes, the man who put Stryker on the map during his 32-year tenure as CEO, which stretched from 1976 to 2009. Today, the Kalamazoo, Mich.-based medical device company nets nearly $10 billion in annual sales and is considered one of the largest and most important orthopedic players in the world, in large part thanks to moves Brown made.

Brown took over at Stryker following the death of company president Lee Stryker, who was killed in a plane crash with his wife while on vacation in Wyoming. Brown was recruited to join the company but initially turned the offer down, worried that he wouldn’t be able to duplicate his predecessor’s style of mingling business and personal relationships. However, after being assured by the Stryker family that he would be able to run it in his own style, Brown accepted the position.

Brown’s initial goals were to take Stryker public, grow earnings per share by 20% and expand via acquisitions.

He achieved all those goals – and then some. Stryker went public in 1979 and entered the orthopedic implant market the same year by purchasing Osteonics, a New Jersey-based company. Brown says his best acquisition was Howmedica, the 62

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BRIAN JOHNSON: You’re a humble guy, and the company is kind of a humble company, so I imagine that you’re not used to or welcome all the attention.

But over the past couple of years, it seems like the industry has done a good job of honoring your contributions. How does that feel for you?

JOHN BROWN: I’m happy about it. I’m, I guess, more happy about the recognition the company gets out of it, because so many people have been involved in the company’s success. It’s nice to see the company get recognition for that.

BRIAN JOHNSON: When you took over Stryker, it was still a relatively small company.

JOHN BROWN: It was private. Revenue the previous year was 17 million dollars.

BRIAN JOHNSON: You took it from $17 million to more than a billion in sales, right?

JOHN BROWN: When I left, it was about four and a half billion.

BRIAN JOHNSON: That’s not a bad run.

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DEVICE TALKS

JOHN BROWN: Today, it’s about almost ten billion.

monitoring of the numbers was frequent.

Pretty tough.

hospitals. It’s driven really by those objectives.

BRIAN JOHNSON: It was primarily still a hospital bed company at the time?

BRIAN JOHNSON: I wonder what it was like to work for a company that had such involvement from the founding family.

BRIAN JOHNSON: Did you know Homer Stryker?

JOHN BROWN: The product line

JOHN BROWN: Yeah. Lee Stryker was

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when I joined the company was primarily stretchers – emergency room stretchers and powered instruments and [a] cast cutter. Pretty mundane products.

BRIAN JOHNSON: And now they’re in everything. Was there a moment that you felt like it was working?

JOHN BROWN: Early on, I was insistent on making all of the decisions on everything, and then it struck me about three or four years down the road that I was the obstacle.

BRIAN JOHNSON: Really?

JOHN BROWN: That’s when we set up the divisions and started forming divisions around markets. We formed a division for patient handling and another division for the powered instrument OR products. Then give those people a lot of flexibility in product development. As long as they met their financial standards, they were free to go.

BRIAN JOHNSON: You went from sort of a top-down, “I make all the decisions” model to more of a silo-ed decision-making process?

JOHN BROWN: Yes, although the 64

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JOHN BROWN: They never interfered with anything that I did. Not once did I ever have the family say, “I need to meet with you and talk to you about what you’re doing wrong,” or anything like that. No confrontation.

No disputes.

the president and CEO when he was killed in 1976, July 25th ‘76, and I joined the company then February 1st the following year. Homer was still alive. His wife was still alive, and his mind was failing a little bit, but his wife then passed away the next year. Then he died three months later.

IT HAD TO TAKE CARE OF PATIENTS, IT HAD TO MEET THE NEEDS OF PHYSICIANS AND CAREGIVERS AND THE HOSPITALS. IT’S DRIVEN REALLY BY THOSE OBJECTIVES. BRIAN JOHNSON: But did you feel some obligation to continue the legacy of the Stryker name?

JOHN BROWN: I wanted to protect it. My focus primarily was on the company being successful financially, and if it were successful financially, it meant that it had to take care of patients, it had to meet the needs of physicians and caregivers and the

BRIAN JOHNSON: So you really were picking up that name and carrying it forward. It must be really interesting to see it now. It’s so prominent and large.

You must feel pretty proud of that.

JOHN BROWN: I am. I’m proud of the fact that Stryker has now gone from this company in a funny, little place called Kalamazoo to being highly respected by competitors and everybody.

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BRIAN JOHNSON: Did you have philosophies that guided you while you were leading the company, or was it more common sense and then afterward you came up with words for what you did?

JOHN BROWN: I guess common sense is probably the correct answer, although most people say there’s not much common sense [in me]. But anyway, that’s what we were trying to do. We were really focusing on trying to come up with innovative products that filled the needs of the patient and the caregivers, and would turn a profit.

BRIAN JOHNSON: What product do you think really was the biggest winner for you?

JOHN BROWN: I would say probably when we entered the implant market. We acquired a company up in New Jersey called Osteonics, which was owned by a couple of engineers. They forged the path for us to go and join in the implant business.

BRIAN JOHNSON: What was that business like before you guys jumped into it? What year was that?

JOHN BROWN: It was dominated by really Zimmer, DePuy, and I guess Howmedica, which was owned by Pfizer at the time. Zimmer was owned by Squibb. I think my sense at the time was that Howmedica might have been the leader, certainly in innovation. All three companies had a good reputation.

BRIAN JOHNSON: How did you attack that business?

JOHN BROWN: Our stylings had a unique hip design called a UHR, and it was innovative. There was nothing quite like it on the market, so that gave us a niche.

BRIAN JOHNSON: When you saw how that implant business was going, that was hip, or was it knee as well?

JOHN BROWN: It was the hip. Just the hip. These engineers then designed the knee three or four years later.

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DEVICE TALKS

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BRIAN JOHNSON: Was that the best acquisition that you made while you were there?

JOHN BROWN: It was one of the best. Probably the best was the acquisition of Howmedica. We doubled our size.

BRIAN JOHNSON: What’s your background?

JOHN BROWN: I’m an engineer. Chemical engineer.

BRIAN JOHNSON: How did you end up at Stryker?

JOHN BROWN: I’ll give you a one-minute history. I started out in the aluminum business, and then went to Vycol, the solid propellant business. Then into Squibb pharmaceutical company, and at Squibb, the last five years there I was president of the division called Edward Weck, which wouldn’t mean anything to you, but Weck made all the shiny stainless steel instruments that you see if you’re watching a TV scene, the scissors, tissue forceps, retractors, and all that stuff. I ran 66

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BRIAN JOHNSON: Were you a Michigan guy then?

JOHN BROWN: No. I was living in New Jersey, but working in Long Island City.

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that for five years. Doubled their sales and tripled their profits during that period. Then I was recruited to come to Stryker.

JOHN BROWN: Yeah. They offered me the job and I turned them down. They thought it was a negotiating strategy, but it was just I was very concerned because Lee Stryker, the owner, deceased owner, had commingled the business in social activities, and I didn’t feel I was capable of doing that. I was very apprehensive that they were looking to replace their friend, Lee. I knew I couldn’t fill that role.

I turned them down, but they kept coming back to me, and finally I agreed to come.

freedom. At my age, it seemed appropriate, so they agreed. We have a very amicable relationship.

BRIAN JOHNSON: In terms of advising, is it just the sort of executive coaching, or are you actually in there saying, “Maybe you want to think about this deal or that deal?”

JOHN BROWN: If they ask me, I’ll come. I try not to impose my will on them. The trick is just your ambition and how much you’re willing to sacrifice and how much you’re willing to give it.

BRIAN JOHNSON: You seem like a guy who doesn’t wear his ambitions on his sleeve, but that’s probably not true.

JOHN BROWN: I am, but I’m deceptive. Most people don’t realize that I’m very competitive. I can’t stand to lose.

BRIAN JOHNSON: Then the orthopedics space is probably a pretty good fit for you – incredibly competitive market.

BRIAN JOHNSON: Smart decision, I guess.

JOHN BROWN: That characteristic served me well.

JOHN BROWN: I moved from New Jersey to Kalamazoo, Michigan. We’re still official residents of Michigan, and still have a home there.

BRIAN JOHNSON: Are you involved in any other medtech ventures at this point?

BRIAN JOHNSON: You’re chairman emeritus, and you still stay in touch with the company.

But you’re there in no official capacity?

JOHN BROWN: I have no official capacity. It was my request that I step down as an advisor, because I wanted to be free to do whatever I wanted to do. I didn’t want to be treated as an insider. Not that I was going to do anything, I just wanted the

JOHN BROWN: I’m on the board of St. Jude, the heart valve pacemaker company out of Minneapolis-St. Paul. I like the way they’re approaching business.

BRIAN JOHNSON: There’s a long history in medtech of people, post-retirement, starting companies. You ever thought of maybe starting another one?

JOHN BROWN: No. Not at my age. I’ve done it all, and I don’t want to do that again.

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YOUR DESIGN · OUR MOTOR

A PERFECT FIT CUSTOM MOTOR MANUFACTURING BRIAN JOHNSON: Do you think it’s harder now to start a medtech company?

JOHN BROWN: Yes. It’s just there’s so many different agencies and organizations and bodies of influential people that impact the industry, so it’s more treacherous today than ever, I think.

BRIAN JOHNSON: It seems like people are having a hard time with CMS now; Medicare reimbursement seems to be the real trick.

JOHN BROWN: Right. I would say, in my day, it was primarily the FDA was the most difficult hurdle that we had to get over, but CMS is becoming equally potent as far as being able to get reimbursements.

The medical devices were put under the FDA on May the 28th, 1976,

by Paul Rogers, a congressman from Florida. And Ted Kennedy.

BRIAN JOHNSON: You guys all remember the exact date.

JOHN BROWN: You do. It was really derived because of a failure of a product the previous year. I think the Dalkon shield had failed, and so that gave the congressmen an incentive to really bring medical devices under the control of FDA. BRIAN JOHNSON: Do you think it’s an over-regulated industry at this point?

JOHN BROWN: It’s hard for me to say. I’m sympathetic to my CEO friends and the difficulties they have in getting through the FDA. On the other hand, I think the FDA feels that they have a holy mission to protect the public, so you have to understand all of it.

BRIAN JOHNSON: Obviously the medical device companies want to protect the public too – you’re not in the business of hurting patients.

JOHN BROWN: Absolutely. Because the trialers are waiting with bated breath to descend upon you if you make one tiny mistake.

BRIAN JOHNSON: Has that changed a lot since you were there?

JOHN BROWN: Yes, they’re much more aggressive. I saw recently that there was a firm that makes beds, or sheeting I guess it was, for hospital beds, and the trialers were going after them. I don’t remember now what the claim was, but if they can do that, they can do anything. M

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