Following the (Investment) Money in Medical Devices

It will come as no surprise to medical device startups that the funding climate in medical devices is still challenging. We talked recently with two experts who come to this question with two different perspectives.

– Alice McKeon is VP Healthcare Investment Banking at Network 1 Financial, which is based in Red Bank, N.J.

– Dan Clark is a Cofounder and the Chief Marketing Officer at Linear Health Sciences, makers of the Orchid Safety Release Valve.

The power and policies emanating from Washington DC are on the minds of many people these days. How will the Trump Administration affect the investment climate in medical devices?Wall Street Bull image

“The short answer is, no one really knows,” McKeon said. It’s unclear what will happen to the Affordable Care Act (Obamacare). That in turn raises questions in potential investors’ minds.

On the other hand, McKeon said, the loosening of FDA and other regulations, promised by the new president, might make medical device companies more attractive investments, because the approval process could be shorter and returns on investment quicker.

Another factor that might brighten the picture for medical device companies is the continuing effort – by both Republicans and many Democrats – to drop the 2.3% tax on medical devices.

That tax is part of the structure that supports expanded health insurance coverage. While the ACA has benefited some medical device makers by bringing more patients and revenue into the healthcare system, the tax has been understandably unpopular in the medical device world.

Dan Clark sees things from the standpoint of a medical device startup with bright prospects. Linear Health Sciences was the first company to qualify for the new Medtech Accelerator program at the Atlanta-based Global Center for Medical Innovation. GCMI guides the development and commercialization of new medical devices.

“Investors regardless of type want a quicker rate of return, focusing on lower risk startups with an efficient regulatory process,” he said. “Our company’s expedited regulatory pathway can be considered a strength.”

But the investment climate is still soft, he noted. “With a large pool of new medtech in development, the onus is on the young companies to demonstrate immediate and transparent value to healthcare overall.”

Another factor is the relative dearth of initial public offerings. Also, few early-stage companies want to stay independent in the long run.

“This market, more than any other, is positioned as an acquisition-only market,” Clark said. “Being acquired for a high valuation is what identifies startups as successful. Once a company has validated its product acceptance and value, it inherently becomes an acquisition target as a ‘tuck-in’ technology to ancillary market strategics.

“In that sense founders need to prepare to roadmap their fledgling companies in an interesting way: Set your company up in an efficient, long-term-focused manner (i.e. invest your time long term), while including exit portals along the company roadmap in anticipation of a successful exit.”

Among the strengths of Linear Health (a Dowling & Dennis client) have been:

  • A clear, relatively straightforward regulatory pathway to 510(k) FDA clearance;
  • What Clark terms “a relatively easy technology to understand and envision in function” and
  • A substantial need for its technology.

“These factors allowed us achieve early visibility that has helped attract interest from the investment community,” he said.

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When Catheter Stabilization Isn’t Enough for Patient Safety

1462041601658Many drivers have experienced the kind of fender-bender or sudden stop that made them glad they were wearing a seat belt. But a seatbelt can only protect us from so much — which is why airbags and more advanced safety approaches were invented.

To use another auto analogy, think of the breakaway hoses at gas stations pumps. They prevent the full hose from being pulled out of the pump when an absent-minded driver drives away without removing the nozzle from the gas tank.

Similarly in nursing care, there’s only so much that catheter stabilization can do when it comes to protecting IV lines. Given those limitations, a better safety option is now being developed to address a pain point for nurses: accidental dislodgement of IV lines. Continue reading

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Why IV Lines Fail: A Crazy Little Thing Called Dislodgement

With something like 300 million peripheral IV lines sold in U.S. each year – and a failure rate that’s often cited as being 50% – researchers continue to try to understand a problem that’s a daily headache in vascular access and infusion therapy.

4-1Common causes of line failure are dislodgement, infection, thrombosis, phlebitis and occlusion. Peripherally inserted central catheters (PICCs) and central venous catheters (CVCs) tend to be better secured than peripheral IVs, but they are also subject to high failure rates.

“Intravenous catheter dislodgement is a significant and avoidable problem,” said vascular access consultant Leigh Ann Bowe-Geddes, BSN, RN, CRNI, VA-BC, a well known vascular access clinical consultant and former president of the Association for Vascular Access. Continue reading

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When a ‘Low Profile’ Is a Good Thing

When a company comes up with something better, it typically wants a high profile for the technology. But it’s not always the case with Focal Therapeutics.

That’s because the company recently launched a low-profile version of the BioZorb® implant used in breast conservation treatment (BCT).

laidley2

Breast surgeon Alison Laidley compares the original, spiral version of BioZorb (left) to the new BioZorb Low Profile (right).

Focal’s new BioZorb LP (for “low-profile”) design means more women who need breast cancer surgery could benefit from the implantable device. BioZorb is used in “reconstructive lumpectomy” and other types of BCT. It marks in three dimensions the site from which a breast tumor is removed.

The BioZorb LP device is designed to be implanted in smaller breasts, peripheral areas of the breast, and locations with less tissue coverage.

“Everyone understands the need for delivering more personalized medicine,” said Alison Laidley, M.D., a prominent Dallas breast surgeon with Texas Breast Specialists who was among the first physicians to use BioZorb LP. “The new designs of this device enable us to provide it to many more patients.” Continue reading

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Does the Mammography Debate Miss a Key Point?

Every time the US Preventive Services Task Force issues a recommendation about when women should start getting mammograms – and how often they should have these screenings – it sends shockwaves through the breast-cancer world.

modiglianiThis last time was no different.

But now two influential breast cancer experts assert that – as important as the debate is – it misses an essential point about evaluating a woman’s individual risk of getting breast cancer.

Those experts – Dallas breast surgeon Dr. Peter Beitsch and Nashville breast surgeon Dr. Pat Whitworth – say the key question is how to evaluate “risk.”

The latest recommendations from the task force call for women at “average risk for breast cancer” to begin every-other-year screening at age 50. It casts doubt on the true value of screening beginning at age 40 – citing the high number of false-positive test results in women 40 to 50, plus potential harm from overdiagnosis and unnecessary treatment. Continue reading

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Cost Conundrum: How Accountable Are ACO’s?

Among the many ways the Affordable Care Act tries to drive down healthcare costs is through Accountable Care Organizations.

acoJust what are ACOs? HMOs in drag? And are they working?

Here’s how we see the ACO landscape today:

  • Although their launch has been somewhat troubled, Accountable Care Organizations are here to stay.
  • The Centers for Medicare and Medicaid Services (CMS) is driving the adoption of ACOs, with some private payers joining in.
  • Data collection and analysis hold out the promise of reducing inefficiencies.
  • ACOs don’t take on a lot of risk if they can avoid it. That in turn will affect how much money they can actually save the healthcare system.
  • In a related development, some payers – including a new industry alliance – are looking closely at the role of health insurance third-party administrators (TPAs), to see if further cost can be taken out of the system there.

What Is an ACO?

First, a bit about terminology. While ACOs undertake some responsibility for the cost of delivering care, they are not “all in,” as are HMOs. (For a good video explaining ACOs, see this from Kaiser Health News.)

Here’s how healthcare economist Austin Frakt, writing in the New York Times, explains the differences between ACOs and HMOs: Continue reading

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IORT with Oncoplastic Surgery: A Beautiful Combination?

Julie Reiland SOS 2016 (1)

Julie Reiland, MD, FACS

Breast cancer care continues to see remarkable growth in knowledge of the disease and advances in treatment. That was certainly evident at the recent School of Oncoplastic Surgery (SOS), in Dallas last month.

The school, which was founded by breast surgeon Gail Lebovic, M.D. with a grant from the Mary Kay Ash Foundation, recently had its eighth annual session in Dallas. This year’s session was sponsored by the National Consortium of Breast Centers and the American Society of Breast Disease Clinical Track.

Among the highlights of that three-day training workshop was a talk by Julie Reiland, MD, FACS. An SOS faculty member, Dr. Reiland is a breast surgeon at Avera Medical Group Comprehensive Breast Care, in Sioux Falls, SD. Speaking to a packed room at SOS, Dr. Reiland talked about the convergence of oncoplastic surgery and intraoperative radiation therapy (IORT).

In particular she talked about Continue reading

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