Medical device manufacturing is nothing new to the Madison area.
The former Datex-Ohmeda, now GE Healthcare Life Support Systems, has been making anesthesia machines since 1904 and Nicolet Biomedical, now Natus Medical, has produced brain and nerve-related instruments since the mid-1960s.
In the late 1990s, TomoTherapy joined the ranks, with its radiation systems for treating cancer patients.
But a different version of the medical device industry is starting to take shape here, with companies working on compact, specialized products aimed at updating and improving on past medical equipment and procedures.
More than a dozen young companies have emerged in the past five to 10 years that could be the nexus of a new medical device cluster in the Madison area, some say, with products ranging from surgical tools to tongue exercisers, newfangled wheelchairs to prosthetic hands.
“I do think that Madison has the potential to be a specialized medical device cluster. We have a ways to go yet to get to that point, but I think it will happen,” said Terry Sivesind, entrepreneur, investor and co-founder of Merlin Mentors, a group that serves as mentors to local entrepreneurs.
“Where information technology intersects with health care has really been an intriguing spot, and many of those would be considered medical devices,” said Nicholas Mischler, a co-manager at Wisconsin Investment Partners, a Madison angel investment group.
Could there be another TomoTherapy waiting in the wings? TomoTherapy, rooted in UW research, was founded in 1998, launched public trading of its stock on Nasdaq in 2007, and built up the company to 600 employees, including 350 in Madison, when California-based Accuray bought it in 2011 for $277 million in cash and stock.
“I do think there will be,” said Tom Still, president of the Wisconsin Technology Council. “The people who are helping build these companies have backgrounds that combine the technical know-how and management skills.”
At least, if the startups can muster enough money to get past the initial hurdles, their leaders say, and lately, that’s been no easy task for some.
Surgical tools are becoming a popular target, with companies such as NeuWave Medical, Medical Engineering Innovations (MEI), and Eso-Technologies.
NeuWave was one of the first out of the gate and has been quick to push forward.
Founded in 2008 based on UW-Madison research, NeuWave’s minimally invasive Certus 140 thermal ablation system attacks cancerous lung, liver or kidney tumors with microwave energy. It has been available for sale since early 2011; meanwhile, the company has raised an estimated
$27 million from investors. As of September 2012, NeuWave had 40 employees.
Chief executive Laura King, formerly a GE Healthcare manager, won’t disclose revenues or other company details, saying only, “We continue to grow and expand.”
MEI is developing cancer-treating ablation devices, too, specifically for liver tumors treated through open surgery, but its path has been less straightforward. Also derived from UW research, MEI’s SwiftBlade-A features a circle of blade-shaped electrodes that surround a tumor with radio-frequency energy, clotting the blood vessels that carry oxygen to the tumor.
“Tumors require a very large amount of oxygen,” said MEI chief executive Richard Schmidt. “If you shut off the oxygen supply to the tumor, the tumor dies.”
Another MEI tool, the SwiftBlade-R, has linear electrodes that coagulate a wall of tissue in the liver before a tumor is surgically removed. That reduces the amount of blood loss to about “golf ball-size” and cuts the normal four-hour procedure time to two hours, Schmidt said.
MEI was formed in 2005 by a group of UW professors, and its SwiftBlade-R device has been tested on pigs. Schmidt said the design is being refined for use in human patients, hopefully, by the end of the year.
He said he plans to apply for Food and Drug Administration approval in early 2014, but funding has been hard to come by. So far, the company has received about $700,000, mostly from its founders and federal grants.
Schmidt, who handled product development at TomoTherapy and joined MEI in January 2012, said it would take $1 million in investment to get the first product on the market but he has been “beating my head against the wall” trying to raise money.
“Everybody is very excited about the project, but when it comes down to making a deal, their heart is not in it. They’d rather fund iPhone apps,” he said.
It took Eso-Technologies CEO Bonnie Reinke nearly a year but she announced just last week that the company nailed down $600,000 in financing.
Eso-Tech put heart monitoring sensors on a device that already goes in the throat during cardiac surgery, eliminating the need to thread a catheter through blood vessels, a procedure that causes thousands of serious complications every year, Reinke said.
The grand prize winner in the 2009 Governor’s Business Plan Contest, the company, formed in 2008 based on Medical College of Wisconsin research, has raised $2.2 million, so far, and has performed well in tests on 20 patients, Reinke said. After Eso-Tech develops its own patient monitor to go with the probe, the company will hold more clinical trials and seek another round of FDA clearance.
Finding investors is tough, Reinke said, so she has started talking to larger medical device companies, to see if they’ll partner with Eso-Tech or buy the business. “I just believe that is probably the most expeditious manner to get this technology into clinicians’ hands,” said Reinke, a former GE Healthcare manager.
‘PT for the tongue’
Another group of medical devices being developed in the Madison area is probably easier to picture: wheelchairs, tongue strengtheners and robotic hands.
It took a broken leg in 2011 to prompt Rimas Buinevicius to reinvent the wheelchair. The former CEO of Sonic Foundry, whose Mediasite technology streams presentations online, Buinevicius now heads Rowheels, which propels a wheelchair forward by pulling back on the handrim of the wheels instead of pushing forward.
“We’re in very deep testing mode,” Buinevicius said. “Everything’s looking really good.” He said he hopes to register the Rowheels chair with the FDA and start manufacturing later this year.
A former biomedical engineer, Buinevicius said the company has raised $500,000 so far and will need about $500,000 to $1 million more to get the product launched.
“I think there’s a lot of interest from investors — if you find the right type of investors,” he said.
Swallow Solutions has raised more than $1 million from investors and is also bringing in revenues. Its MOST (Madison Oral Strengthening Therapy) device is a mouthpiece with pressure sensors in four areas of the tongue — front, back, right and left — wired to a computer that sends progress reports to physicians and patients. The goal is to strengthen tongue muscles used to swallow for patients with paralysis or other swallowing disorders.
“We’re basically providing physical therapy, or isometrics, for the tongue,” said Ray Heller, executive vice president of sales and marketing.
Swallow Solutions moved into bigger space at 401 Charmany Drive on Aug. 1, where it has room to work on its second product line: thickened beverages.
Re, a fledgling company working on a prosthetic hand, is still in its very early stages. UW-Madison student Eric Ronning developed the first versions of the ReHand at the
Sector67 maker space using 3D printing.
Ronning is still refining the design and plans to send the latest prototype for testing at an Indiana clinic next week. His invention already has won about $30,000 from national and UW competitions.
“I’ve been tinkering my whole life with things, but developing a product is a lot of work,” Ronning said.
Merlin Mentors’ Sivesind likened the blossoming specialized medical device industry in the Madison area to the biotechnology field that took hold in the area a couple of decades ago.
“The idea in both of these business development strategies was to be smaller and adaptable in technology development, to go after lucrative market niches that don’t require extensive sales distribution networks and be the first or second company selling a product,” Sivesind said.
Both sectors also benefit from the UW-Madison’s clinical testing facilities and strong patent and licensing background, said the Tech Council’s Still, as well as local lawyers and accountants “who are accustomed to navigating the regulatory channels.”
Ultimately, the bottom line on the potential
success of any medical device cluster here may lie in the reality of demographics, Rowheels’ Buinevicius said.
“The aging population is going to be driving the ... demand for medical devices. Innovative devices that are faster and cheaper, I think, are always going to be required,” he said.