Medical Design & Outsourcing - MAY 2017 by WTWH Media LLC

MAY 2017

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The

hottest medtech

STARTUPS of 2017

• 2 Paths to Success on the Fundraising Trail • What Startups Need to Succeed When Selecting Materials • Nanoparticles: An Industry Buzzword Meets Reality

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Why you should feel optimistic about 2017 Uncertainty continues to swirl around the new Trump administration, but there is a lot to be excited about in the medical device industry these days, especially when it comes to cardiology and diabetes treatment. Medtech companies are performing well. More than 80% of the world’s 100 largest medical device companies saw their stock values increase during the first quarter of 2017 – about half enjoyed double-digit percentage increases. The industry also continues to see major M&A deals. Becton Dickinson announced last month that it will acquire C. R. Bard in a $24 billion deal. Medtronic agreed to sell parts of its hospital supply business to Cardinal Health for $6.1 billion. And Abbott closed its $25 billion buyout of St. Jude Medical.

Chris Newmarker Managing Editor Medical Design & Outsourcing c newmark er@wtwhmedia.com

Medical Design & Outsourcing

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Important advances in cardiology Recent months have seen a slew of major advances in treating heart disease: • A customizable robotic heart sleeve demonstrated advantages over other cardiac assist devices such as VADs. The soft robot, developed by Harvard University and Boston Children’s Hospital, never contacts blood, reducing the risk of blood clots. • Prevencio published new data showing that its Hart CAD test can accurately diagnose heart disease in just 2 hours. The test was able to detect coronary obstructions about 90% of the time. • Researchers at the University of Alabama and University of Minnesota turned to 3D printing to grow heart cells

onto a 1-micron-resolution scaffold. The tissue could synchronously beat and improved heart function in an animal model. • Johns Hopkins researchers successfully grew mature heart muscle cells by implanting human stems cells into newborn rats. The race to create an artificial pancreas A stand-alone artificial pancreas appears closer than ever, with Medtronic leading the race. Last fall, its MiniMed 670G hybrid closed-loop system won FDA approval. Although not a standalone artificial pancreas, it marked an important step toward the development of a fully automated closed-loop system. Other companies aren’t far behind: • Bigfoot Biomedical is developing its artificial pancreas with the help of Bryan Mazlish, a former quantitative finance guru who used his knowledge of algorithms to create a homebrew “bionic pancreas” for his wife and son. • Tandem Diabetes is working with TypeZero and Dexcom to integrate an artificial pancreas algorhythm and CGM into its t:slim insulin pump. • Insulet has been touting data from the first feasibility study of its the Omnipod Horizon hybrid closed-loop system. • Beta Bionics is using technology licensed from Boston University to develop its iLet bionic pancreas. • French biotech Defymed’s Mailpan bio-artificial pancreas contains insulinsecreting cells meant to restore normal insulin production. Granted, there are a lot of things that could go wrong for the medical device industry – especially when it comes to a major U.S. government misstep. But there are many things going well. There is hope that two major chronic conditions – heart disease and diabetes – will soon be much more manageable. M

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Medical Design & OUTSOURCING

medicaldesignandoutsourcing.com ∞ May 2017 ∞ Vol3 No3

E D I T O R I A L EDITORIAL Founding Editor Paul Dvorak pdvorak@wtwhmedia.com @paulonmedical Executive Editor Brad Perriello bperriello@wtwhmedia.com Managing Editor Chris Newmarker cnewmarker@wtwhmedia.com @newmarker Senior Editor Heather Thompson hthompson@wtwhmedia.com Associate Editor Fink Densford fdensford@wtwhmedia.com Associate Editor Sarah Faulkner sfaulkner@wtwhmedia.com Assistant Editor Danielle Kirsh dkirsh@wtwhmedia.com

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CONTRIBUTORS

MATTERN

MANN

BOHN

PRAKASH

BRIGHT

WILSON

GRUMET

MATHERS

MARC ALAIN BOHN is counsel in the FCPA and international anti-corruption practice at Miller & Chevalier in Washington, D.C. He regularly advises multinational companies on compliance and enforcement matters and has broad experience conducting internal investigations and representing companies before the Department of Justice and Securities and Exchange Commission. RALPH BRIGHT has served as the Vice President of Marketing with Interpower Corp. in Ames, Iowa for the last 22 years. He holds a bachelor degree in Business Administration from William Penn University, and a Masters of Business Administration from the University of Phoenix. Ralph is active in the Iowa ABI (Association of Business and Industry) and a member of the Foundation Board of Directors. KRISTEN GRUMET is executive director of quality systems at NSF International – Medical Devices (www.nsf.org). As a consultant based in San Jose, Calif., she often helps medical device manufacturers after they’ve received 483s or warning letters. Grumet has over 25 years of experience including 9 years at FDA as a field investigator specializing in the area of medical devices and 16 years working and consulting for medical device companies in quality systems compliance. LINDSAY MANN has been with MTD Micro Molding since 2009. Having started as a Project Manager, she is now responsible for MTD’s marketing strategies, brand vision development and awareness, and digital marketing. She lends her Finance and Operations Management education to MTD Micro Molding, managing marketing campaigns, budgets, sales-driving collateral & support, and tradeshow & event strategy. 6

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DEREK MATHERS is director of advanced development at Worrell, a healthcare innovation firm that designs medical devices, digital health solutions and pharmaceutical products. In this role, he is responsible for strategic development partnerships across life sciences, and works closely with Worrell clients to develop new therapies for the betterment of the human condition. Mathers previously worked for 2 years in business development at Worrell and 2 years in the 3D printing industry. RICHARD F. MATTERN is a member in the Memphis, Tenn., office of Bass, Berry & Sims PLC. He represents both public and private companies in a variety of corporate and securities law matters, with a particular focus in the medical device industry. DEEPAK PRAKASH is global director of marketing at Vancive Medical Technologies, an Avery Dennison business. He has 20 years of healthcare experience spanning marketing and product development. He holds a master’s degree in chemical engineering from the University of Akron and a master’s degree in business administration from Northwestern’s Kellogg School of Management. STEVE WILSON is the director of global business development plastics and rubber for Cold Jet. As a former plastic business owner, he has over 30 years of experience in injection and compression molding, extrusion of blow molding, thermoform, thermoforming and rotational molding.

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CONTENTS

medicaldesignandoutsourcing.com ∞ May 2017 ∞ Vol3 No3

ON THE COVER:

DEPARTMENTS 2

6 CONTRIBUTORS

Hot medtech startups: 10 companies to watch in 2017 Medtech startups face more challenges than they have in the past, but several companies are developing products that take advantage of new technology and are specifically designed to meet healthcare’s evolving needs.

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Two paths to success on the fundraising trail Funding a medical technology company isn’t a simple job: Modern medical devices require cutting-edge innovation, research and design to make it to market. Venture capital, though, isn’t the only way to raise cash. Nanoparticles: An industry buzzword meets reality Young startups backed by nanoparticle tech face a world of hurdles before reaching the clinic. It’s been decades since the first innovations in nanotechnology – and experts are asking, “Where are all the drugs?” 3D printing can give your medtech startup a competitive edge: Here’s how You need to be fast and nimble to compete. A strong maker culture enabled by 3D design and printing could be the way to do it. What startups need to succeed when selecting materials Whether a startup targets an emerging category such as wearables or a more mature device market, a well-planned approach to materials selection can make a significant difference in the product launch cycle, economic model and other variables.

Medical Design & Outsourcing

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LEGAL COMPLIANCE: Five things you can learn from Orthofix’s foreign corruption woes

12 REGULATORY: How to respond to FDA Form 483s and warning letters

FEATURES 46

HERE’S WHAT WE SEE: The case for optimism in 2017

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PATENT PROTECTION: Patent strategies for medtech startups

MANUFACTURING & MACHINING: How dry ice can assist medical device manufacturers

THE CATH LAB: Boston Scientific gets a leg up with its drugeluting stents and balloons

28 CONNECTORS CORNER: How adaptable accessory power systems can open new markets 30

ENGINEERING 911: Solving micro-molding pitfalls in bioabsorbable materials

TUBING TALKS: What you need to know about heat shrink tubing

DEVICE TALKS: Three enduring leadership lessons to boost your medtech success

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LEGAL COMPLIANCE

Orthofix’s foreign corruption woes: 5 things you can learn

Marc Alain Bohn | Miller & Chevalier |

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Orthofix International in January entered into its second Foreign Corrupt Practices Act (FCPA) settlement in less than five years, resolving allegations with the U.S. Securities & Exchange Commission that the company’s Brazilian subsidiary made improper payments to doctors at government-owned hospitals in Brazil to increase sales. Orthofix consented to the entry of two SEC orders instituting cease-and-desist proceedings against the company: A $6.1 million order centered on alleged violations of the FCPA and an $8.25 million order focused on non-bribery-related securities violations. The FCPA prohibits corruptly providing anything of value to a “foreign official,” including doctors at stateowned hospitals, for the purpose of obtaining or retaining business. It also requires U.S. securities issuers to maintain accurate books and records and implement sufficient internal accounting controls. Orthofix (Lewisville, Texas) self-disclosed the FCPA issues at its Brazilian subsidiary per

the terms of its 2012 deferred prosecution agreement (DPA) with the Dept. of Justice (DOJ). DOJ and the SEC followed up with new investigations, and DOJ twice extended the DPA term while the investigation was pending. The DOJ ultimately decided to take no further action and allowed the DPA to expire in August 2016. The SEC came to a different conclusion. The Orthofix case serves as a cautionary tale for companies trying to stay out of trouble and offers five clear lessons:

THE FCPA PROHIBITS CORRUPTLY PROVIDING ANYTHING OF VALUE TO A “FOREIGN OFFICIAL,” INCLUDING DOCTORS AT STATE-OWNED HOSPITALS, FOR THE PURPOSE OF OBTAINING OR RETAINING BUSINESS.

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1. Standardize or centralize approval of third-party commissions and discounts. According to the SEC, Orthofix’s decentralized structure allowed its Brazilian subsidiary to (a) easily evade existing policies and controls to pay high

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commissions and discounts that funded improper payments; and (b) record these expenses as legitimate. Actively monitor payments and discounts provided to third-party intermediaries to ensure they are reasonable and consistent with contract terms. The SEC alleged that Orthofix channeled bribes through its third-party sales representatives and distributors in several ways, including paying inflated commissions, providing excessive discounts and paying for services never rendered. Fully and promptly remediate compliance issues when they arise. According to the SEC, Orthofix failed to remediate the compliance issues identified in its 2012 enforcement action. As a result, gaps in the company’s third-party controls persisted and were not addressed until after the discovery of the Brazil conduct in late 2013. Ensure periodic training to relevant employees and, where appropriate, key third parties to prioritize compliance and keep channels of communication open. The SEC Order asserts that in addition to gaps in controls, Orthofix lacked adequate training and a corporate culture to enable Brazilian employees to raise compliance concerns to the parent level. Conduct periodic compliancefocused audits and assessments, particularly in high-risk markets. The SEC order suggests that Orthofix ultimately identified the Brazil conduct in late 2013 because of efforts the company was making to improve its compliance program following its 2012 enforcement action.

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REGULATORY

How to respond to FDA Form 483s and warning letters FDA issues hundreds of Form 483s and dozens of warning letters annually. What should you do if one shows up on your desk?

Kristen Grumet | NSF International |

There are many reasons medical device manufacturers receive FDA warning letters, but the root cause often boils down to one thing: Manufacturers weren’t prepared to respond to observations cited on the FDA’s Form 483. In 2015, the FDA conducted 1,484 U.S. medical device inspections, with about half resulting in a dreaded 483. Medtech makers have just 15 business days to fully addresses the inspection findings, evaluate the root causes and identify short- and long-term corrective actions with realistic milestones and timelines. It’s a challenging demand and an area in which many manufacturers fall short. The FDA issued 121 quality system warning letters to medical device manufacturers in 2015. The most-often-cited violations included deficiencies in CAPA and production & process controls (P&PC); the letters often find that a 483 response was deficient. Do you know what to do if an FDA inspection of your facility results in a 483? Although every situation is different, the following steps are almost always appropriate when facing FDA scrutiny and potential regulatory action: 1: Minimize the damage The close-out meeting at the end of the inspection can be crucial to minimizing the damage from a poor inspection showing. If the investigator observed objectionable conditions at your facility, he or she will present the findings at the close-out. Take the time to listen. Use the meeting to fully understand the intent and scope of the observations. Ask for clarification when needed, but remember that everything you say is likely to be included in the Establishment Inspection Report (EIR). Correct any misperceptions or inaccuracies

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and be prepared to provide evidence to support your claims. Only observations you can demonstrate as factually incorrect are likely to be modified or removed from the 483. 2: Take the inspection process seriously When the FDA sends an investigator to your facility – sometimes for days, weeks or even months at a time – it’s a significant investment. Be sure to take the inspection process seriously and give it the preparation and attention it deserves. Identify the internal and external resources you’ll need to prepare for and manage the inspection. Make sure you’re ready by assigning front-room roles and responsibilities at your facility, including hosts, runners, subject-matter experts and scribes. Demonstrate professional respect and engagement by including senior leaders in the inspection’s opening and close-out meetings. Set up a back room for quick responses to document requests. Any employee can be called on during an inspection, so train them all on inspection behaviors and protocol. If needed, hire a consultant with experience in medical device quality system improvement and remediation to help prepare for an inspection or respond to a 483. Remember, your organization will have just 15 days to fully address the inspectional observations. 3: Cooperate with FDA investigators Arguing with the FDA is never a good idea – not during the inspection, the close-out meeting or in your written response. Listen carefully and review the 483 observations thoroughly before you try to defend your position. Ask questions if you need more information. FDA investigators often have a broader perspective and it may take some time to fully understand their concerns. After that, if you disagree with the findings, respectfully explain your concerns and provide objective evidence to support your position. If necessary, request a separate meeting with the FDA district office to further discuss the issue. If you’re unsuccessful

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REGULATORY

explaining your position during the inspection or follow-up, don’t use the same rationale in your written response. Correct as much as possible in the first 15 business days and provide realistic completion timelines for longer-term corrective actions. The FDA understands that it’s not always possible to complete corrective actions in just 15 days, but a detailed response with reasonable milestones and completion timeframes will show that you’re cooperating and are committed to addressing the issues. 4: Provide evidence of your actions Failing to provide objective evidence may be the most common inadequacy in unsuccessful 483 responses. You may have revised the appropriate procedures, conducted training and performed retrospective reviews, but the FDA will not take your word for any of it. If you don’t document your actions, the FDA may conclude you didn’t do it.

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Provide evidence of completed corrections and corrective actions in your response, including updated procedures, training records, CAPA plans and reports. You will need to provide objective evidence that an inspection finding is factually incorrect for the FDA to reconsider an observation.

you to include evidence of training in your response package.

6: Look beyond the details Although it’s important to address specific examples of non-compliance, don’t overlook the larger quality system glitches that allowed the non-compliance in the first place. The “Band-Aid approach” doesn’t work. 5: Focus on the details Look beyond the immediate issue to Your response to a 483 or a warning letter should be comprehensive and anticipate similar non-compliance issues and take systemic corrective action. address all observations or violations. You need to understand the root cause Be sure to address specific examples. to truly understand its impact on all Many manufacturers focus so much on products. Manufacturers commonly addressing the root cause of the issue underestimate the breadth or impact of that specifics are overlooked. When revising or creating procedures, a cited non-compliance. Keep all these steps in mind when the it’s important to fully understand the FDA’s definition of “establish:” To “define, FDA comes calling. They may help in your response to 483s and warning letters. The document (in writing or electronically) FDA will focus on what’s wrong with your and implement.” New procedures are not medical device quality system. It’s up to “implemented” until SOPs are in place you to determine the best way to fix it. M and training is complete. FDA expects

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PATENT PROTECTION

Q&A: Patent strategies for medtech startups

Patenting may be a daunting task, but it’s critical to facilitating a company’s success. Here are some tips on how and when to think about patents.

Heather Thompson | Senior Editor | Medical Design & Outsourcing |

Medical Design & Outsourcing

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David Dykeman has advised numerous startup companies during his more than 20 years practicing patent law. The intellectual property attorney serves as cochair of the global life sciences and medical technology group at international law firm Greenberg Traurig. Dykeman’s overarching advice for startups is to embrace an old adage, with a twist, “You get what you pay for, so spend on patents wisely.” “Investing resources in patents offers medtech companies many rewards. You can cheaply file patent applications, but companies often learn a painful lesson later – when it’s too late – that the protection is not as strong as hoped for.” Dykeman suggests that startups hire a strategic patent attorney who understands the medtech market and has the proper technical background to assess the invention. The right patent attorney can put startups on the path to patent success and staking meaningful claims in the medical technology patent gold rush. Dykeman helped us understand 5 • 2017

some of the nuances of patenting for startups in the following Q&A: MDO: What is the first piece of advice that you would give to a startup about patenting? Dykeman: Patents fuel growth for medtech companies. In today’s innovative economy, a medtech company’s success depends on the strength and value of its patent portfolio. A strategic patent portfolio is crucial for a medtech company’s growth and survival and can help secure funding, which is vital for startups. For early-stage medtech companies, patents are often the only way for investors to place value on the company’s technology and judge the potential success before sales, which often only begin after FDA regulatory approval. As a medtech company grows, patents become the currency to secure financing through venture capital or private equity investment. Strategic patents can also lead to joint ventures, collaborations and licenses with strategic partners.

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MDO: Should startups think about patenting differently from other companies? How so? Dykeman: For early-stage companies, the key is to develop a strategic patent portfolio having comprehensive patent coverage around the company’s innovations. The core technology must have adequate patent protection to provide flexibility and room to operate in a desirable market. Companies should file one or a series of patent applications providing the broadest possible patent protection to cover the core technology. To obtain broad patent protection, a medtech company should consider both current and future business objectives and contemplate ways that competitors may attempt to design around its patents. Where applicable, patent claims should be directed to the entire device, key components, disposables, mobile applications, methods of manufacturing, methods of treatment, therapeutic uses, combination therapies and any other aspects of the invention. Design patents can also provide protection to the ornamental features of medical products. As the core technology evolves, incremental improvements should be patented to form a “picket fence” of patent protection around the core technology. By filing patent applications covering incremental improvements, medtech companies can expand their presence in the market and grow their patent portfolio.

FOR EARLY-STAGE COMPANIES, THE KEY IS TO DEVELOP A STRATEGIC PATENT PORTFOLIO HAVING COMPREHENSIVE PATENT COVERAGE AROUND THE COMPANY’S INNOVATIONS. MDO: Can you provide an example of how patents can lead to success? Dykeman: I’ve worked with a serial entrepreneur for many years, and before founding his latest orthopedic startup we conducted a patent landscape search and reviewed hundreds of patents before deciding to form the company. After finding white space in the patent landscape, we filed strategic patent applications that targeted the open space. Now, a decade later, the company has more than 100 issued patents in 17 countries around the world and has secured significant venture capital funding for its innovative products. MDO: How should startup companies protect themselves when they have limited resources or expertise on patenting? Dykeman: In light of the changing patent environment, earlystage companies should get to know the patent landscape to determine the best return on their patent investment. Companies 5 • 2017

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PATENT PROTECTION

should work with strategic patent counsel who knows their technology well, and conduct a patent audit to assess the strengths and weaknesses of their current patent portfolio and also determine what competitor patents might be lurking in the patent landscape. Early-stage companies should direct their patent filing strategy to areas of white space to receive more valuable patents. The patent audit should also make sure the company’s patent strategy is complete to capture as much white space in the patent landscape as possible and also plug holes that competitors can use to design around the company’s patents. The patent

possibly limits potential patent coverage. For U.S. patent coverage, a patent application must be filed within one year of the first public disclosure. For foreign patent applications, however, the patent application must be filed before any public disclosure. Failure to file a patent application prior to public disclosure will result in the loss of potential international patent rights. To ensure both U.S. and international patent coverage, a patent application should be filed before any public disclosure.

STARTUPS SHOULD FILE PATENT APPLICATIONS AS EARLY AND AS OFTEN AS THEIR BUDGET PERMITS. A KEY THING TO REMEMBER IS TO FILE PATENT APPLICATIONS BEFORE ANY PUBLIC DISCLOSURE. audit should include a freedom-to-operate analysis of third-party patents to assess potential threats. By ensuring that the patent portfolio is strategic and complete, the company enhances its strength and value in the medical technology marketplace. International patent filings are also important. Filing international patent applications further strengthens a patent portfolio and expands a company’s presence in the global marketplace. Although foreign patent applications can be expensive, filing in strategic countries can be crucial to the commercial success of a medical product. A company should consider filing in specific countries with a large target market for the product, countries where competitors’ manufacturing facilities are located and countries that export medical products to other regions through distribution channels. Although the U.S., Europe and Japan have historically been top patent filing countries, China and Brazil are now increasingly important in the global medtech industry. MDO: Where on the timeline does patenting fall within a strategic plan? Dykeman: Startups should file patent applications as early and often as their budget permits. A key thing to remember is to file patent applications before any public disclosure. It’s prudent to file a patent application before the invention is first published, disclosed, used or offered for sale. Public disclosure of an invention impacts and 18

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MDO: How much should be done early in the process and what can wait? Dykeman: A patent portfolio can be a medical technology company’s most valuable asset, but there is a cost to building a strategic patent portfolio. A cost-saving strategy for earlystage companies is to file provisional applications, which provide one year of protection, followed by the fulldeveloped U.S. and PCT international patent applications. Filing a provisional patent application, early-stage companies can defer larger costs for up to one year and file follow-on provisionals to cover incremental improvements as they build their picket fence of patent protection. Foreign patent costs can be delayed for an additional 18 months by filing a PCT international patent application. This gives companies time to further develop their product and potentially enter the market to help defray some of the patent costs. In the dynamic medtech market, a strong patent portfolio is crucial to securing investment and gaining market share. A strategic and business-minded patent attorney can help medtech companies take advantage of the changing landscape to stake their claim in the medtech patent gold rush. M

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MANUFACTURING & MACHINING

How dry ice can assist medical device manufacturers

In-machine mold cleaning is the No. 1 use for dry ice in medical device manufacturing, especially at operating temperature.

Cleaning molds and deburring parts with a jet of dry ice lets manufacturers toss a range of harsh chemical sprays – and completely clean tools in much less time. Dry ice is almost magical. Now you see it, now you don’t, as it sublimates – turns from a solid to a gas. It disappears and leaves no residue. That feature makes it helpful in medical device manufacturing. There are at least 5 good reasons to use dry ice in medical device manufacturing:

Steve Wilson | Cold Jet |

• Improved quality. It allows making a better part and improving part quality by reducing rejects. • Increased productivity. Cleaning a mold in situ at operating temperatures shortens mold cleaning and increases uptime, which extends production runs. • Extended asset life. Molds last longer with this non-abrasive cleaning method, versus cleaning with traditional methods. The dry ice method can save money because it’s much faster. Cleaning 20

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times will be measured in minutes instead of hours. • Reduced costs. Dry ice requires less manpower and uses cheaper cleaning media. • Improved environmental quality. Dry ice eliminates the use of solvents, improving worker safety. Clean molds improve quality Dry ice has a low coefficient of friction, so it’s able to penetrate small and complex surface geometries. Carbon dioxide is FDA- and EPAapproved as a food-grade material and is the same CO2 used to carbonate water. It leaves no residue. Some chemical cleaners use kerosene as a base cleaner. That means the initial cleaning must be followed by a secondary alcohol cleaning or the next handful of molded parts must be scrapped. Dry ice delivers a better clean with no secondary waste

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MANUFACTURING & MACHINING

to cross-contaminate the next run. It will keep all cavities and vents clean. Mold cleaning is often delayed or postponed because it’s just not fun. It’s so tedious and time-consuming that companies occasionally wait until there’s a problem. Then they’re thrust into “firefighting” mode. Dry ice makes cleaning easy and can be scheduled ahead of time – before problems start. People who use dry ice tell us that it results in a superior clean and lets them clean areas that would not otherwise be cleaned, for example areas in corners and complex geometries that are hard to reach even with a Q-tip or pipe cleaner. Increased productivity Cleaning a mold is much faster with a dry ice blaster, returning tools to service sooner than conventional cleaning methods. Every company’s goal is to make highquality parts, but speed is also a factor. Cleaning with dry ice, which can be as much as 6 times faster, lets the mold get back into operation sooner than conventional

cleaning methods. Dry ice cleaning replaces hours of downtime with minutes. Cleaning molds is time-consuming because it is a multi-step process, particularly when molds are heated. Workers often conduct a multi-step pre-clean, then do the clean itself, and then a post-clean that can include reassembling and reheating the tool. The dry ice method needs only one step. It just makes work faster and easier – our customers’ feedback attests to that, affirming extended running times, reduced downtime and thorough cleans. No additional mold wear How you clean your tool can contribute to mold wear, but cleaning with dry ice eliminates this possibility. Traditional cleaning methods can begin to wear the parting lines and the shutoffs – and then you end up with flash. In an episode of the National Geographic TV show Showdown of the Unbeatables, one of our technicians removed the print from a business card without putting a hole in it.

These before and after photos show how dry ice cleaning was able to remove residual burrs and debris from a machined part. Images courtesy of Cold Jet

A customer did their own independent study on wear and on thermal shock on stainless steel, a common material in medical device molding. Results showed that the dry-ice jet did not alter carbon particles at the core or surface. The dry ice generated no damage during cleaning. It did not destroy the tool metal, it didn't change the metal, it didn't roll the parting line and it didn't roll the shutoffs. Image courtesy of Cold Jet

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www.medicaldesignandoutsourcing.com

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ISO 9001

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AS 9100

perfection in stainless steel

The stent in the accompanying image is made of nitinol. It is deburred using microparticles of dry ice. The 3-mm pellets would quickly damage that type of device. It provides a good example of where microparticles work well. Image courtesy of Cold Jet

Improved environmental quality Dry ice improves environmental quality because it doesn’t use chemicals or volatile organic compounds (VOCs) – not to mention the attendant disposal and regulation requirements. Dry ice is a clean, sustainable process with no secondary waste. When it phases from a solid to a gas, it’s gone. Common applications in medical device manufacturing cleaning In-machine mold cleaning is the No. 1 use for dry ice in medical device manufacturing, especially at operating temperature. Cleaning rubber molds, which must be cooled before cleaning with conventional methods, takes 6 to 8 hours. The mold must then be re-heated to operational temperatures before production can commence. The entire process can eat up most of a shift, but is cut to a mere 30 minutes with dry ice cleaning – and the hotter the tool, the better. Dry ice can be used on a variety of surfaces, including classes A1 to A3, highly polished tools, rolls or extrusion lines and textured substrates including aluminum and tool steel. Users can adjust the kinetic energy to adapt to the various substrates. Dry ice processing can improve yield and quality, extend the asset life of your molds, reduce costs and help with environmental issues by taking VOCs out of the process. It’s the most effective way to clean a mold without removing it from the inside of a press. And it’s a good way to deflash and deburr parts for medical devices. M 5 • 2017

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THE CATH LAB

Boston Scientific gets a leg up with its drug-eluting stents and balloons Boston Scientific officials bring their expertise in drug-eluting technologies to bear on peripheral artery disease.

Chris Newmarker | Managing Editor | Medical Design & Outsourcing |

Boston Scientific has decades of experience with balloons and drugeluting stents used around the heart. Officials at the device giant think this history is serving them well as they bring more drug-eluting technology to the peripheral vasculature. When it comes to treating narrowing arteries in the legs and thighs, Boston Sci has its Eluvia drug-eluting stent, which received a CE Mark in early 2016, and its Ranger drug-coated balloon, which received a CE Mark in 2014. (Until Boston Sci is able to market the Ranger in the U.S., the company is distributing C.R. Bard’s Lutonix drug-coated balloon.) It goes without saying, though, that peripheral arteries are not the same as coronary arteries. Jeff Mirviss, the head of Boston Sci’s peripheral interventions business, recently explained the story behind the Eluvia and Ranger’s development to Medical Design & Outsourcing: Medical Design & Outsourcing: What were some of the technological challenges that Boston Scientific had to overcome to create drug-eluting device technologies such as the Eluvia and the Ranger for use in peripheral vasculature? Jeff Mirviss: Boston Scientific has been working in the drug-device combination in the vasculature space for 2 decades. We’ve had a lot of success in coronary applications. A lot of our technology leverages the science and expertise and

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The Ranger drug-coated balloon Image courtesy of Boston Scientific

capabilities that we built over the years in this area. And while the coronary vessels are very different than the peripheral vessels in many ways, a lot of the base technology and the base science that we have was informative of our ability to make the devices work safely and effectively in the peripheral application. To answer your question specifically with regard to challenges overcome, first is finding the right combination of drug and polymer or excipient [substance stabilizing the active ingredient], depending on which one you’re talking about – between drug-eluting stents and drug-coated balloons – that is safe but also effective. With some drugs, not enough drug, and you don’t get the efficacy. But too much drug might be problematic in terms of manufacturing or clinical safety. Finding the right therapeutic window has been definitely an area where that we’ve spent a lot of resources scientifically looking at the optimal combination of drug dose and polymer or excipient. The second is with regard to having the drug stay on the device effectively within the coating, but also coming off at the right time. With our Eluvia drug-eluting stent, what is unique about it is the drug

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is released over a 1-year period. That was by design, because in the [superficial femoral artery] the restenosis [blood vessel narrowing] occurs over a bit of a longer period than with the coronary arteries. Most restenosis in the coronary happens in about 6 months, but in the peripheral arteries it happens later, 9 or 12 months. Our hypothesis was that our drugs should be working when restenosis is most likely to occur. Getting the drug to release over the time we wanted at the right rate was another technological challenge that took a lot of work to overcome. MDO: How do you achieve that? How do you make that possible? Mirviss: That’s where the polymer does its job. Unlike many other devices in which the drug is quite plainly put on top of the device, whereby the drug can come off during delivery of the device or putting the device through the introducer, the polymer and drug are put on top of the stent together in the manufacturing process. It’s a process to have the combination applied to the stent at the same time. And then when the stent is delivered, the drug can release over a given period of time. We can tune the release of the drug based on the rate the drug comes off as well as the length of time the drug comes off. You can make it come off very quickly in high amounts, or you can make it come off slower over longer periods of time. It’s a tunable technology we have. That’s what we believe is our secret sauce. MDO: What is the difference when you go to peripheral? What do you have to keep in mind? Mirviss: The first main difference is the underlying stent platform. In the coronary arteries, we use a balloon-expandable stent that’s very small and very short. In the peripheral arteries, we use a nitinol self-expanding stent that typically is much larger and much longer. So just the underlying medical device itself is very different. The size, the shape, the material, the length is very different. For example, a coronary might be 3mm in diameter, while an artery in the [superficial femoral artery] might be twice that size. 5 • 2017

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THE CATH LAB

The underlying technology is still a stent, but the way the stent is deployed is different. The size and length is different. You just think of the human anatomy. The arteries in the heart are very small; they’re not super long. But just think about the length of your entire thigh, and the size of the artery in the thigh is much bigger. The thigh has a lot more bending. The anatomy is a lot different. MDO: So what do you have to make sure doesn’t go wrong when you deploy something like that? Mirviss: Stent technology has advanced quite a bit over the years. And one of the fundamental aspects of the Eluvia drugeluting stent is that it builds off of our proven nitinol stent that we call Innova. It was studied in a trial of almost 300 patients. One of the hallmarks of it, other than its ease of use and deliverability for the physician, is that it is a very durable platform. The device itself is The Eluvia drughigh-performing. eluting stent That was important Image courtesy of because if the Boston Scientific underlying stent platform isn’t very good, then it’s more difficult to have positive long-term clinical results. One of the important aspects of Eluvia is it’s starting with a really good base platform of nitinol self-expanding stent. The other big difference between coronaries and peripheral is the drug that’s used in the drug-eluting stent. In coronaries, the main drug that we use is called everolimus. It is in a class of drugs called olimus. In the periphery, 26

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at least in the SFA anyway, the primary drug that’s shown the best results is paclitaxel. The main technology for drugeluting therapies between coronary and peripheral use totally different drugs. MDO: Did that mean more rejiggering of the polymer drug mix because you had different chemicals you were working with? Mirviss: Certainly, we have to do all of the required testing for a different drug. What we chose to do with the Eluvia was take the polymer from the coronary drugeluting stent but then put it together with paclitaxel, because that’s the drug that’s been shown to be most effective and safe in the peripheral arteries. That did require a significant amount of work to validate that the drug comes off in the timeframe and quantities that we wanted to and a lot of preclinical tests and assay works and bench tests and manufacturing work. It was an easier project than starting from scratch, because we had really good understanding of the drug by itself and the polymer by itself. But then the combination of the two together required a whole new set of tests we hadn’t done before because it was new. MDO: With the Ranger, Boston Scientific has a paper online that describes how you went from coatings that were hydrophilic and moved to a coating called TransPax that is hydrophobic. So you’re turning to something new for controlled release? Mirviss: In contrast to the Eluvia drugeluting stent, the Ranger doesn’t have a polymer. The polymer allows you to control the amount of drug and the rate of the release, but you don’t have that with the balloon. So you have to figure out a way to make the drug stick to the balloon so that it stays on it long enough to get where you want it to go and work in the artery. If it comes off, the drug can’t do its job if it’s not in the right location or right amount. So in partnership with an [undisclosed] external company that had some really good capabilities in coatings, we came up with a really good proprietary coating called TransPax that allows the drug to adhere to the balloon very effectively with extremely low particulates, which is a really important design aspect. You don’t want the coating

to come off during the delivery and flow downstream. When you inflate the balloon, you want the drug and the coating to adhere to the side of the vessel wall so that the drug can do its job where you want it to be. So that was the biggest hurdle with the drug-coated balloon. MDO: So it was a partnership with a supplier to make the Ranger balloon possible? Mirviss: We call this a co-development project, because what we bring to the table is that we have really good balloon expertise going back 35 years, and then we bring the drug expertise because we’ve been doing drug-device combinations for 20 years and have a market-leading position in coronary drug-eluting stents. We had these great capabilities with balloons and drugs, but we didn’t have the technology we needed with coatings. So we entered into this arrangement to bring an expert to the table who really understood coatings. So it was a really good partnership and really good project. MDO: Any lessons from the partnership that would be useful for others entering into a partnership with suppliers? Mirviss: Begin with the end in mind – to the extent that both parties can have clarity on what the future holds and the different scenarios for the future, so that nobody is surprised or has different expectations. I think we were very aligned from the beginning in what our capabilities were and what both of us wanted. That worked extremely well. We also had very clear milestones, so both companies could work together and achieve those milestones in a way that has quality but also speed. We laid those out in advance so that everybody could agree to it. It was a key success factor. And then just like with anything else, it was the relationships within the team. Getting the right people with the right knowledge and building the right relationships helped us have a constructive partnership, because there was trust. MDO: So what’s next? Where would you like to see drug-eluting technology go in the future? Mirviss: As we look at different disease states, we ask ourselves, “Where does

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it make sense to leverage a technology like we have in drug-eluting stents and drug-coated balloons to other disease states beyond the typical peripheraltype vessels?” The second area could be the disease states we already sell products into, and you look at the range of complexity of the disease. We’re starting to ask, “Are there more complex patients and lesions whereby we could modify the drug or the device or the combination to treat more complex patients and lesions?” It’s not dissimilar to how in the pharma world they might have a product and then a higher dose of a product or a sustained release or some other slight modification that might be more effective for a different patient within that same disease state. MDO: When does it make sense to build off existing technology, and when does it make sense to do something that’s truly novel? Mirviss: We definitely have some investments in new-to-the-world technologies and exploratory research and areas where we think we could bring medical device innovation to advance the care of patients in ways we don’t know about today. Right along with that, we look at, “Where do we have capabilities? Where do we have technologies? How could we leverage what we know into new uses or with new users to help advance the care of patients and bring a cost-effective solution to healthcare?” I really believe medical technology can be a solution to lowering the cost of healthcare. Being able to take our core technology in our coronary drug-eluting stents and applying it to peripheral was faster and less expensive and allows us to get to the market faster than a company that would have to start from scratch. If we’re successful in this endeavor, we will allow patients to be treated with this state-of-the-art technology that will lower the incidence of a repeat procedure. That’s not only good for the patient, because they don’t have to have a second surgery, but that’s good for the healthcare system because it’s lower cost. M 5 • 2017

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CONNECTORS CORNER

How adaptable accessory power systems can open new markets An accessory power system provides a way to avoid stocking different electrical cords for the country to which the device will be exported.

Ralph Bright | Interpower |

Although most companies would like to market their products in more countries, adapting the products to local codes requires different power cords, circuit protection and electromagnetic compatibility. It’s no secret that electrical plugs and sockets vary by country in size, shape and type of connectors. Each country determines the connector types it prefers and describes them in national standards legislation. With several different standard plug patterns used around the world, the problem of providing country-specific plugs and cords can be daunting and expensive. In addition, many manufacturers would like to avoid stocking different cords for each different country to which their product will be exported. An accessory power system provides a solution. Good reasons to use it include: • The IEC 60320 component family makes it possible to control power to accessories through the main appliance. (The IEC refers to any device requiring a power connection as an appliance.) • The IEC 60320 component system is generally accepted for use throughout the world. • The use of country-specific plugs and outlets are not needed for accessory power connections. For example, it is no longer necessary to use North American plugs and outlets on peripheral equipment destined for sale in the U.S. and Canada, or British plugs and outlets on equipment destined for sale in the United Kingdom. The mains connection (main power) to the primary equipment or the accessory power strip need not use a country-specific plug.

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An example of peripheral medical equipment would be on medical carts with several pieces of equipment, such as a computer with a printer, or an ultrasound machine. An accessory power strip would be used to bring power to the cart by a single country-specific mains cord and then distribute it to the other devices by IEC outlets and jumper cords. In the IEC 60320 standard, individual configurations are divided and listed by sheet styles, per the standard’s own nomenclature. Sheet style are segregated by an overall pattern (shape and pin layout) – and by how they are used, such as panel mount inlet or outlet or cable mount connectors. The basic components of an accessory power distribution system are one or more outlets (Accessory Power Module or Strip), a power cord with a plug-connector or a cord set with a molded plug-connector on one end and a connector on the other. The most commonly used accessory power system is rated for 10A internationally and 15A in North America. However, a second system is provided in the IEC standards with current ratings of 16A internationally and 20A in North America. The accompanying illustration provides outline drawings with the proper IEC references (see the IEC 60320 Coupler Sheet here: http://tinyurl.com/couplersheet for more details). A few components in the system Accessory power systems can also include power strips, 19-in rack-mounted power distribution units, universal jumper cords, and connector locks.

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These couplers are for ac only with a rated voltage not exceeding 250 Vac and not exceeding the rated currents listed above for 50 or 60-Hz power.

Accessory power strips (not the power system), are usually specified when: • The main system power will be controlled from the Accessory Power Strip. • The main piece of equipment in the system does not have sufficient panel space for an accessory power module. • The organization configuring the system is buying off-the-shelf equipment, and overall power control must be added. Accessory power strips from our company are enclosed in an 18-gauge steel case intended for use with professional-quality commercial equipment. The strips have VDE approval as well as approvals from the U.S., Russia, Canada and Japan. All stock accessory power strips include a resettable circuit breaker. A few options including different housing sizes, connector locks, Sheet J outlets, switches, guards and more. A 19-in. rack-mount power distribution unit is an accessory power strip in a slim 1U design. One U (Unit) is a panel height, 44.45-mm, per standard EIA-310-D. Power strips conveniently fit

in a standard 19-in. equipment rack. A variety of options allow control of power through the entire rack from the unit. “Universal” jumper cords are power cords that allow connecting to any of the company’s accessory power strips and power-main outlets anywhere worldwide. Standard “universal” jumper cords are available from stock in a variety of lengths. “Universal” suggests the cords are used just about anywhere. However, some countries such as Japan prefer their own nonstandard designs. Generally, there is no need for overseas approval on “universal” jumper cords. We do not recommend country specific options on these cords. When customers try to make these items country-specific, they cannot be approved for use in other countries, and the universal cable will be eliminated. Accessory power modules are fourposition devices. They can be a costeffective solution for applications in which a multiple Sheet F outlet module will be mounted directly into the equipment

• Plastic versus metal. This depends on the end users, what they want or need for durability and their budget. • Area of use. If the item will be used in an area with a lot of movement, such as on a vehicle, it will be vulnerable to vibration, or impact, or both. Hence, a metal APS may work best. When the item will simply be plugged in and “parked,” plastic will suffice. • Country of export. Ensure the socket strips are approved for the country to which it will be used. Interpower’s APS are approved for used in the U.K., U.S., Europe, Russia, and in some cases Japan. Some APS carry

MANY MANUFACTURERS WOULD LIKE TO AVOID STOCKING DIFFERENT CORDS FOR EACH DIFFERENT COUNTRY TO WHICH THEIR PRODUCT WILL BE EXPORTED. that will control accessory power in the system. The module snaps directly into a panel and connects with a combination ¼-in. (6.3mm) quick disconnects or solder terminations. Designers can specify six different panel thicknesses. There is also an alternative that adds a C14 inlet to the four Sheet-F outlets. The inlet and outlets are not electrically connected so designers can specify exactly how the outlets will be controlled and protected. Connector locks secure a cord set

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to an IEC 60320 power inlet to prevent accidental power interruption. Cord sets are easily removed with a tool and without disrupting the connector lock. The connector lock for each cord set is designed for molding a specific cord set connector style. When selecting accessory power strips consider:

only U.S. or European approvals. Regardless of the accessory power strip requirements, there are many options to simplify things, clean up your rack systems and power multiple equipment units. The selection may also open opportunities in new countries. Eliminating differences in equipment saves time and trims shipping costs to different countries. You’ll spread the cost over more volume. Yes, you’ll have more jumper cord sets, but fewer countryspecific cord sets. M 5 • 2017

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ENGINEERING 911

Solving micro-molding pitfalls in bioabsorbable materials Bioabsorbable material can be a nightmare to mold into tiny parts. But the process is manageable when the tool is properly designed.

Lindsay Mann | MTD Micro Molding |

Micromolding small parts involves more than just makeing conventional equipment smaller. There are no small details.

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Bioabsorbable materials could be one of the great medical developments of the early 21st century. The material is moldable, and while it’s doing its job inside the human body, it’s slowly absorbed so as to leave no trace after some required period. Its downside is that it can be a dickens to properly micromold. Because many bioabsorbable fixation components are intended to stay in the body for six to nine months, it’s crucial that during the molding process the parts experience minimal and consistent inherent viscosity (IV) loss. This can be difficult to accomplish because the critical molding parameters such as temperature and pressure involved in processing these resins can severely degrade the material, which can directly affect the absorption rate of the product in the body. Even a micromolder with the equipment to work with a particular material may have trouble delivering a consistent product with controlled IV loss for each molding run when they are unfamiliar with the material’s complexities. On-site testing capabilities for IV and Differential Scanning Calorimetry

(DSC) allow determining the impact of process variables on the outputs so they can be adjusted immediately. This further allows for a minimal and consistent IV loss and to optimize the molding process. Consider an OEM that developed the concept for a bioabsorbable fixation suture that generated excitement and positive comments from reviewing surgeons. Although the company worked with a reputable molder, after five years of labor, the molder had limited success and could not produce the part represented in its drawing with sufficient quality. The molder was seeing about 30% IV loss with inconsistent results. To assess the part’s function, a secondary operation was required to heat and bend the part to a final orientation. However, this secondary process sacrificed further IV loss and introduced stresses into the product, causing more inconsistency which unfortunately leads to unreliable test results, preventing a successful proof of concept. When the OEM tallied its losses − one year delayed market entry, loss of potential sales, time unnecessarily spent developing and validating secondary operations, the cost of restarting with new molder – the sum came to about $1.5 million. Enough was enough. After about five years, the OEM decided to try another molder and came to our company. One of the first steps taken here was to create a custom tool. With a design so complex, it took

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For success with a bioabsorbable part, we suggest these tips for working with molders:

about two months to design the mold – much longer than the usual one week. In many micromolds, and even in macromolds, side action movement is required to provide part-ejection clearance, about 0.125 in., between the steel and molded part. But for this mold to work, tooling designers were only left with 0.001 in. per side of clearance due to the part’s extremely complex geometry. Limitations included the cross section thickness of the part and an area that limited the side movement. Creative side-action techniques were used to accomplish proper part ejection from the tool.

We’re more than Valves...

• Involve the micro molder as early in the project as possible. • Involve the molder when selecting the material. • Lean on your expert molder and their knowledge of materials, processing, strategy, techniques, and development requirements to get the best outcome possible in the least amount of time. • Understand the requirements of your part in terms of consistency and control. The two characteristics most

About 30% of new projects come to MTD as “rescues”, failed attempts by others. The company’s success rate at these types of projects has been 100%.

We’re Solutions Another change was to guide the OEM through material characterization. While bioabsorbable materials are relatively new, there is some allowable latitude in their composition. For example, it can be reinforced with fillers and made to flow easier with other additives. Even the time it takes for absorption is adjustable. Having developed the unique concept mold to reduce secondary operations, the parts achieved minimal and consistent IV loss, and are much more consistent shot to shot. This confidence in the repeatability of the design’s function allows for reliable testing and a successful proof of concept. www.medicaldesignandoutsourcing.com

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important to OEMs with bioresorbable products are consistency and control. Consistency refers to the achieving the same percentage of IV loss from shot to shot. The actual percent figure is slightly less important. Control refers to a molder’s capability. Ideally, one should have in-house processes and equipment to support the development and measurements of the molded bioabsorbable part. If the part is to be optimized and improved, it is imperative for a molder to have a means for establishing a baseline on bioabsorbable-part quality and the equipment for internal testing, such as IV and DSC. M

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TUBING TALKS

Heat shrink tubing comes in a range of materials for many medical applications. Custom materials are also available.

What you need to know about heat shrink tubing There is a lot more to medical tubing than extruded polymers. Heat shrink tubing, for instance, provides a range of materials intended to improve designs and solve engineering and manufacturing problems. For instance, the variety of medical grade heat shrink tubing provides a versatile set of products useful as process aids, in joint bonding, for chemical resistance, and electro-mechanical protection for critical medical components. Each area deserves more discussion: Justin Fry | TE Connectivity Medical |

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• Medical shaft lamination/reflow and bonding: As a process aid, heat shrink tubing facilitates the reflow and bonding of medical shaft materials. The heat shrink tubing ensures a uniform compression during this process and is removed once the bond and reflow process is complete. The primary material used for this application is FEP (Fluorinated 5 • 2017

Ethylene Propylene) due to its temperature and compression profile. • Welding applications: Many medical device manufacturing processes require bonding dissimilar materials, such as medical balloons to shaft substrates. Heat shrink tubing can be used to temporarily secure a balloon to a substrate during laser welding. The exceptional clarity of the tube lets a laser pass through and complete the weld, while the dimensional consistency is compatible with highspeed automated manufacturing. Once the weld is complete the heat shrink is removed and discarded. • Joints and strain relief: Heat shrink tubing can permanently bond, secure or encapsulate joints between dissimilar materials and irregular shapes. With shrink ratios as high as 4:1, heat shrink tubing can be used in a wide range of joining applications where geometry

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maxon product range

The solution is always a matter of the right combination.

If versatility and intelligent drive solutions are called for, the maxon product range provides the answer: A wide range of brushed and brushless DC motors up to 500 watts complemented by gearheads, sensors, brakes, positioning controllers and accessories offer a consistent modular system to realize whatever you have in mind.

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The illustration shows a general delivered and shrunk (recovered) diameter for most heat shrink tubes. The table provides dimensions and data for the material MT1000.

TUBING TALKS

A few dimensions for one HST material is otherwise difficult to manage. Strain reliefs near wire terminations and product transitions are common applications. Heat shrink can also be lined with adhesives to ensure a more robust bonding of materials. • Chemical resistance: Many heatshrink materials are resistant to the chemicals common to hospital environments such as cleaning and sterilizing solutions. • Electro-mechanical protection: When a device or component needs protection from abrasion, dielectric insulation, or encapsulation of critical elements, heat shrink tubing often delivers a cost effective solution. As with much of the medical device industry, heat shrink tubing is trending toward smaller diameters and thinner wall sections. For example, with

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PEBA (polyether block amide), TE can manufacture heat shrink tubing with wall thicknesses down to 0.001 in., and recovered diameters as low as 0.006 in., small enough to insulate guidewires and other small instruments within the interventional market space. An advantage of the material is that it is durable, chemically resistant and can be made in both rigid and flexible durometers, making it a versatile thin wall. The TE application experience lies in material formulation, extrusion, irradiation and expansion of highperformance heat shrink tubing. Several formulations are available for broad range of medical applications. The accompanying table, A few general properties, lists the several product families, each of which works best in a particular area. The tubing is shipped, of course, in expanded sizes. The recovery temperature refers to

the temperature which results in full reduction in diameter. The materials are durable, chemically resistant and stable so they maintain integrity at high temperatures, some up to 200°C. Furthermore, the materials are compliant to RoHS and most are compliant to USP class VI biocompatibility. Select products are registered with FDA through the master file system and the tubing is manufactured to ISO 10993 standards accompanied by an ISO 13485 registered quality system. The company’s proprietary technology is an element in the design and manufacture of ISO 10993 and USP Class VI certified, medical-grade heat shrink tubing. M

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MEDTECH STARTUPS

HOT MEDTECH STARTUPS:

10 companies to watch in 2017 Medtech startups face more challenges than they have in the past, but several companies are developing products that take advantage of new technology and are specifically designed to meet healthcare’s evolving needs.

H E AT H E R T H O M P SO N S E N IO R ED ITO R

n the last few years, medtech innovation has seemed to be “graying” – a term coined by AdvaMed chairman and CVRx president & CEO Nadim Yared. He noted that more than 30% of firms were at least 25 years old, and more than half 16 years old or more, based on a report released by the lobbying group in 2016. The number of medtech startups has declined. Thirty years ago, the medtech field averaged 1,500 startups; it slid to about 600 by 2012. This decline makes nurturing startups and entrepreneurship in the medtech field all the more critical. Incubator groups, accelerators and

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other strategies have popped up in the past few years. Some of those efforts are working to shift the expectations of the medtech industry to meet the changing environment of healthcare. And it is by no means business as usual. “It used to be that medical device startups would develop a product by focusing on design, they’d get some IP with the product and it would be gobbled up by a

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MEDTECH STARTUPS

big player,” explained Brett Naglreiter, who has started a consultancy firm to help develop and incubate medical device technologies. That technology-first model doesn’t work anymore, said Naglreiter. That's because the risks are higher; the chance of getting a potentially groundbreaking idea to market seems more remote. “You have greater emphasis on manufacturability, reimbursement, how the technology fits in the healthcare environment – all of these things need to be considered much earlier in the process than before, and startups need more breadth of expertise.” Naglreiter notes that startups might feel pressure to “do it all” up front, something that will scare away those with limited budgets and limited experience. But he said it doesn’t need to be daunting. “You are still going to spend about 80% of resources on your core technology, but you also have to allocate 20% of resources to those other factors. You just have to get a sampling.” Startups that will succeed will spend

BASIL LEAF TECHNOLOGIES

significant energy considering the costs of the device, and how the products will make healthcare better. Bryce Rutter, president and founder of Metaphase Design Group, put it like this: “We are past the days when a product does nothing more than feature a new color.” Paul Grand, president of MedTech Innovator, agreed that innovative products need to have something extra. “It is not enough for new products to do just one thing.” Grand said the most promising technology looks at healthcare as an environment, employs smart data capture, increases sharing of knowledge, and contains costs, both in the short term and long term (e.g., through better patient outcomes). MedTech Innovator has partnered with AdvaMed to run a Shark Tank/ American Idol style competition for startups in the medical technology field. Grand, who runs the accelerator and venture competition, says it helps to get promising technologies in front of AdvaMed members, who then can provide

Technology: DxtER mobile health assessment platform Founders: Basil Harris and George Harris Website: www.basilleaftech.com DxtER (pronounced Dexter) is the 2017 winner of the Qualcomm Tricorder XPrize, which seeks a device that will allow a user to assess health conditions anywhere and determine if they need further professional help. DxtER, developed by Basil Leaf Technologies under the Final Frontier Medical Devices team name, is a “tricorder” prototype that uses an artificial intelligence–based engine that learns to diagnose medical conditions by integrating learnings from clinical emergency medicine with data analysis from actual patients. It features non-invasive sensors that collect vital signs, body chemistry and biological functions. Algorithms diagnose 34 health conditions, including diabetes, atrial fibrillation, chronic obstructive pulmonary disease, urinary tract infection, sleep

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mentorship, funding and partnership for some of the compelling entrepreneurs. Rutter spoke about “Cinderella” startups: Well-funded, intriguing technologies that everyone wants to back – after they’ve proven that they’ve been able to mitigate the risks. As healthcare needs shift, it becomes clear that the startups that get noticed today are much more sophisticated, need to be much more well-funded, and – to be frank – a lot more mature than they used to be. As such, some of Medical Design & Outsourcing’s choices for the hottest startup medical technologies have been around for a few years, and many have experienced entrepreneurs at the helm. Others feature new faces and are aiming to make a difference in new ways. We also tried to look for companies that may only have a prototype for a technology, those we hope to see more from in the coming years. Here are Medical Design & Outsourcing’s most interesting startups for this year:

apnea, leukocytosis, pertussis, stroke, tuberculosis and pneumonia. DxtER is the result of 4 years of development efforts within the Qualcomm Tricorder XPrize group. As the winner of the prize, the Final Frontier Medical Devices team will get support from FDA and other regulatory bodies to develop the product and continue with R&D and testing. The initiatives of the prize committee include fast-tracking international retail distribution.

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Why compromise your medical device with an “industrial-grade” foot switch ...

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when you can offer your customers the benefits of a “medical-grade” design? As an OEM, you know that a product designed for the medical market is fundamentally different for one intended for industrial-commercial use. This is also true for the foot switch. Critical design factors, typically not considered for non-medical applications, include: • Weight

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MEDTECH STARTUPS

Technology: Continuous epilepsy monitoring, detection and notification app CEO: Debasish “Ron” Nag Website: bio-lert.com

BIOLERT

BioLert is a software as a service (SaaS) product that monitors epileptic patients, detects epilepsy episodes and notifies caregivers or family members when an event occurs. Via the user’s personal smart watch or smartphone, the product records all tracked data (including video and audio, if available). BioLert’s actionable seizure alert system monitors and detects vital information, automatically notifying caregivers when neurological events occur so that help, if needed, can arrive. What's more, the BioLert system automatically saves all tracked vital signs and event data in the cloud. Cloud-based data gives healthcare providers and medical research teams easy, permission-based access to patient information, with the goal of developing better treatments for the individual as well as the community at large.

CATALIA HEALTH

Technology: Mabu personal healthcare companion CEO: Cory Kidd Website: www.cataliahealth.com

Catalia Health’s approach is to focus primarily on creating patient engagement because the effectiveness of any solution requires its long-term use by the patient. Their solution is to combine human psychology (which prefers and trusts content more when it is delivered “in person”) and artificial intelligence. The AI creates unique conversations that are personalized to that patient’s persona and based on the psychology of behavior change. 40

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Current solutions leave too many gaps and fail to engage patients for more than a few weeks. It is presently not cost effective for health providers to call or visit patients daily. Catalia Health engages relationships with each patient using the Mabu personal healthcare companion. On top of this relationship, Catalia develops conversations around each of its patient’s treatments based on the best medical practices around each treatment www.medicaldesignandoutsourcing.com

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MEDTECH STARTUPS

condition. Mabu will check in on a patient’s adherence to their treatment program. This might include medication dosing and scheduling, use of diagnostic equipment and adherence to a nutritional and/or physical fitness programs. Catalia Health also collects data about

each patient’s side-effects, their health and satisfaction, and each patient’s outcomes. This data provides insights into which treatments work and under what circumstances. Catalia will launch pilots with pharmaceutical companies and integrated health systems later this year.

FREQUENCY THERAPEUTICS

Technology: Progenitor cell activation to treat hearing loss CEO: David Lucchino Website: www.frequencytx.com

Frequency Therapeutics is developing a pipeline of new drugs that activate progenitor cells within the body. The therapy has promise for a range of therapeutic indications for skin disorders, muscle regeneration and gastrointestinal diseases. Its lead product candidate stimulates regrowth of sensory hair cells in the inner ear to treat chronic noise–induced hearing loss. Chronic noise–induced hearing loss is a significant disease effecting 48 million people in the United States and roughly 1.1 billion globally. Frequency’s progenitor cell activation (PCA) is a precise and controlled approach that transiently causes Lgr5+ progenitor cells

GREEN SUN MEDICAL Adolescent idiopathic scoliosis affects up to 3% of the population. For decades, the only treatment has been a rigid plastic brace meant to prevent the progression of the curve, not to correct it. Green Sun Medical is developing a tech-enabled spinal brace that applies reduction forces dynamically, both allowing the patient to move and generate the constant corrective forces necessary

Technology: Spinal brace for adolescent idiopathic scoliosis CEO: Jamie Haggard Website: www.greensunmedical.com

to reverse deformity. This is accomplished through tissue remodeling the same way orthodontic braces work on teeth. The Green Sun Medical iPad application will give physicians real-time feedback of the pressure placed on a patient, while also gathering long-term outcome information. Green Sun was the 2016 winner of the MedTech Innovator awards. www.medicaldesignandoutsourcing.com

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to divide and differentiate, as with naturally regenerating tissues such as the skin and intestine. It essentially mimics “stemness” in the body, potentially yielding an entirely new category of disease-modifying therapeutics for a wide range of degenerative conditions. The small molecules could have similar effects as gene therapy and CRISPR, with easier delivery. The hearing loss indication is moving to clinical trials within the next 12 to 18 months. Company officials believe there is a broad potential for the PCA platform and announced the closing of a $32 million Series A financing in April to help expand its research.

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MEDTECH STARTUPS

Technology: Infusion system CEO: Stuart Randle Website: www.ivenix.com

IVENIX

Ivenix is aiming to redesign infusion therapy from the ground up. The company has developed a fully integrated technology to support interoperability and improve safety and performance. Technology within the infusion pump category has been slow to evolve despite an increase in the complexity of drug dosing regimens, demand for hospital EMR integration and persistent patient safety issues. The company believes every care setting needs to transform infusion therapy.

MADORRA

Ivenix is first looking to bring its technology to hospitals. In March, the company secured $50 million in equity financing. This funding will allow the company to pursue FDA clearance and quickly expand its team for commercial launch, as well as some other regulatory milestones. The Ivenix infusion system is an entirely new pump technology that emphasizes accuracy and efficiency for large volume infusion delivery and management. The platform provides

immediate, secure access to patientspecific infusion and pump management information. It features intuitive user interface guides similar to a smartphone.

Technology: Ultrasound treatment for vaginal dryness CEO: Holly Rockweiler Website: www.madorra.com

Madorra is creating the first hormone-free medical device to treat vaginal dryness for postmenopausal women. The device is simple and easy to use, so women can comfortably treat themselves at home. After only a few weeks of therapy, women will be empowered and enabled to reclaim their sexual wellness. The Madorra treatment paradigm provides a device solution for vaginal dryness, which is a problem that to date has only been adequately addressed by pharmaceuticals. Vaginal dryness results from a decrease in estrogen levels, like the natural decrease that occurs during menopause. Today’s best treatment options are drugs or creams that replace the lost estrogen to relieve symptoms. However, hormone replacement therapy is not an option for large market segments because of the associated health risks (stroke, breast cancer, etc.). There are no effective, non-hormonal treatment options; thus, many women are barely getting by with lubricants, or worse, are living without intimacy. Madorra’s patient-powered healthcare is meant to give women a safe alternative and an improved quality of life.

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www.medicaldesignandoutsourcing.com

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RED Danish Hospital-Grade Cord Sets CUSTOMIZATION JUST GOT EASIER Interpower® is your source for customizable international power cords and cord sets. New to this product line are red Danish hospital-grade cord sets, now being manufactured by Interpower at its Iowa, U.S.A. facilities. Red is the preferred color for select medical facilities in Denmark for hospital-grade cord sets. The standard assembly consists of a Danish hospital-grade plug with a straight IEC 60320 C13 connector on H05VV-F 1.00mm2 cable—all in red. Additional options include power cords, cable sizes in 0.75mm2 and 1.50mm2, plus straight and angled IEC 60320 C13 and C19 connectors. • No minimum order or dollar requirements • 1-week U.S. manufacturing lead-time on non-stock Interpower products • Same day shipping on in-stock products • Value-added and custom services available • Interpower cords are 100% electrically tested for safety • Free technical support Contact our Customer Service Representatives who can answer questions about pricing availability and technical aspects, such as application and/or approvals, help in obtaining required documentation, and assist you in designing specialty products.

Order Online! www.interpower.com ORDER A FREE CATALOG TODAY! E-mail catalog@interpower.com or call toll-free. Business Hours: 7 a.m.–6 p.m. Central Time

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MEDTECH STARTUPS

NEUSPERA MEDICAL NeuSpera leverages exclusively licensed mid-field powering techniques to engineer miniaturized injectable neuromodulation technologies (aka electroceuticals). NeuSperaâ&#x20AC;&#x2122;s implantable module is more than 100 times smaller than other neuromodulation devices and may substantially reduce implant procedure complexity, time, patient complication and post-surgical pain. The idea is that miniature devices can modulate the electrical impulses

ONKOS SURGICAL

Technology: Electroceutical neuromodulation therapy CEO: Milton M. Morris Website: www.neuspera.com

in the body, triggering biochemical processes more typically manipulated via biopharmaceuticals. The end game is to replace drug therapies by inducing the body to heal itself of major illnesses that could include diabetes, asthma, hypertension, arthritis, pain and even cancer. NeuSpera Medical is committed to bringing forward implantable medical device technology that will improve lives of patients battling with chronic illness. The company raised $8 million in 2016.

Technology: uDesign for musculoskeletal oncology CEO: Patrick Treacy Website: onkossurgical.com

Onkos Surgical is a specialty medtech company focused on surgical oncology. It has a technology portfolio aimed at utilizing 3D printing capabilities, limb restoration tools, biologic solutions and more to help cancer patients. The suite of technologies is enabled by a service and surgical planning platform called uDesign Patient Solutions. UDesign is a consultative, concierge level service for surgeons enabling personalized planning for each patient. Additional technologies include the Eleos limb salvage system for procedures where radical resection and replacement of the distal femur, proximal femur, proximal tibia or total femur is required. My3D technology develops personalized implant, instrument and anatomic model designs to

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aid surgeons when performing operative procedures. Highly qualified image processors segment CT scans to create 3D computer models of the hard and soft (tumor) tissue. The models are then reviewed by the surgeon in partnership with technical experts to generate essential pre-operative and intra-operative surgical solutions, allowing the surgeon to better manage individual patient outcomes. Health practitioners can use Onkosâ&#x20AC;&#x2122;s GenVie for patients with complications such as wound closure, bone regeneration, and nerve and soft tissue challenges that require biologic adjuvant to improve healing. In April, the company announced that it closed a $17.6 million round of Series B funding.

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MS1048

MEDTECH STARTUPS

RENOVACARE RenovaCare’s flagship CellMist system has 2 components: The CellMist solution, a water-based solution with the patient’s own stem cells; and the SkinGun, an ultragentle spray device which deposits the CellMist solution. The technology offers an alternative to conventional skin graft surgery, which can be painful, prone to complications and slow to heal. A small sample of the patient’s healthy skin is processed to liberate the stem cells from surrounding tissue. The cells are suspended in a water-based solution, placed into a syringe which is attached

Technology: CellMist systems with SkinGun CEO: Thomas Bold Website: renovacareinc.com

to the SkinGun. Within 90 minutes of a patient arriving in an emergency room, stem cells are isolated, processed and sprayed onto the wound site. A wound heals from the edges to the middle, and the longer that takes, the higher is the risk for inflammation and finally scarring. CellMist creates thousands of little regenerative islands all over the wound. These islands connect to each other to heal the wound, resulting in skin that looks and functions as it did before. CellMist is under investigational use in Europe and the United States. M

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FUNDRAISING

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5 â&#x20AC;¢ 2017

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FINK DENSFORD A S S O C I AT E E D ITO R

o T s h T A P CCESs

l i a e r h t On t draising fun

FUNDING A MEDICAL TECHNOLOGY COMPANY ISN’T A SIMPLE JOB: MODERN MEDICAL DEVICES REQUIRE-CUTTING EDGE INNOVATION, RESEARCH AND DESIGN TO MAKE IT TO THE MARKET. AND DON’T EVEN GET STARTED ON REGULATORY AND REIMBURSEMENT CHALLENGES.

he recession of the late 2000s, Affordable Care Act and changes to regulatory bodies and reimbursement requirements have changed the game for medical device startups seeking funding. More than ever, young companies need clear paths to avoid running out of money. In this new and shifting environment, more new medical device companies end up working around the traditional routes of venture capital funding to find alternative avenues to commercialization, looking to corporate partnerships, government grants, angel investors and foreign exchanges – focused all the while on keeping expenses as slim as possible. www.medicaldesignandoutsourcing.com

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FUNDRAISING

“I’d characterize the environment by saying that there will be challenges, but also emerging opportunities, on both sides. You have companies still figuring out how the reimbursement world works today – and that is obviously changing. They’re figuring out how to get to market and their value once they’re in the market – which ultimately impacts the returns investors get,” Frank Jaskulke, VP of member services at the Medical Alley Association, told Medical Design & Outsourcing. The Minneapolis-based trade group represents the largest U.S. medtech cluster. From an investor’s point of view, the environment is always full of other possibilities and opportunities, Jaskulke told us. That includes biotech, pharmaceuticals, the tech industry and a wealth of different industries to pursue as they look for a major return on their investments. “There’s a lot of things that investors – who are thinking, ‘Where do I put my capital?’ – are very attracted to,” he explained. “The investors are working to make a return. They’re not scientists, they’re not necessarily involved because medtech will help people – that’s a great benefit of it, but they’re making returns for their partners.” In the past, VCs were a go-to funding source – the most powerful arrow in an early-stage medtech company’s quiver. But times have changed. There has not been a quarter since 2013 in which seed- or early-stage medical device and equipment companies raised more than $100 million in venture capital; it’s been running at about $50 million a quarter recently, according to data from the MoneyTree report by PwC and CB Insights. In response to these lower numbers and a constantly shifting regulatory, reimbursement and general healthcare environment, young companies are diversifying their incomes to stay competitive. “I think it has always been just one arrow in the quiver; it was just the most prominent arrow before. But other sources of capital that also weren’t available some years ago are now also there,” Jaskulke said. “Now, instead of the option being VC or corporate, there’s VC, or corporate, or [angel investing], 48

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HOW TO GROW YOUR MEDICAL DEVICE BUSINESS THROUGH ITS LIFE CYCLE While every medical device company founder daydreams of pre-revenue exits and unicorn valuations, it is imperative to plan for the long and unpredictable haul. By Richard F. Mattern, Bass, Berry & Sims PLC Despite the starting point being nearly universal (founder sees a clinical need, a promising market opportunity and a path to regulatory approval or clearance), a business’ opportunities, challenges and capital can vary significantly. Your corporate focus and related legal needs can shift through your medical device company’s life cycle as it grows. Surviving the burn (early stage) While operating initially on a shoestring budget is possible, the initial funding, whether in the form of a “friends and family” raise or out of the founder’s pocket, will be quickly exhausted. Furthermore, medical device startups regularly find themselves in an extended and ever increasing cash burn position, which often exceeds $500,000 per month. Thus, the company will likely have to raise a significant amount of capital from professional investors. Despite the tendency of the terms and structure of those investments to evolve over time and by investor type, the capital raising tips below are generally applicable. • Be prepared. Professional investors will need a concise presentation and a specific plan for the capital supported by reasonable projections and assumptions. Don’t overstate the opportunities or understate the challenges. They will know. Finally, since raising capital can

be a time-intensive process, start the process as far in advance as possible, and have the deal team and data room ready to go. You can’t afford any time lags. • Assemble the “right” team. The management team is crucial to an investor and the long-term success of the business. Investors want a management team that has industry experience and the skill sets to grow the company. Similarly, the company should engage experienced counsel who understands the industry and current market terms. The initial raise is very important as those terms (especially the unfavorable ones) will find their way into future raises. • Get more than money. Taking on a professional investor is the beginning of a long-term relationship. Don’t be blinded by prestige or the largest checkbook. Instead, find the partner who shares your vision for the company and the industry, has a complementary skill set, is willing to dig in when times get tough and has relationships that will open doors in the future. • Raise more money than you need. If you have access to capital on reasonable terms, (continued)

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Behind the Scenes. Ahead of the Curve. Inside the Corner Office.

INTRODUCING A NEW & IMPROVED DEVICETALKS IN 2017 For the past decade, we’ve been creating media and educational content that supports our industry. That means we create content that is relevant to how our readers effectively do their jobs and we deliver it on the platform they desire. This formula has worked seamlessly with our flagship publications like MassDevice, DesignWorld, and Medical Design and Outsourcing. Now we’re bringing this formula to our live industry events. For five years, we’ve been running successful programming for medtech executives throughout the country. In 2017, we will continue that legacy of bringing the best minds in the industry to our DeviceTalks events. However, many engineers and engineering managers in our community of more than 100,000 readers need relevant live content that helps them effectively do their jobs.

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That’s why this past summer and fall the DeviceTalks team went to work creating a new engineering focused staff development curriculum for engineers, developed with the assistance a core group of leading engineers. The DeviceTalks team has met with R&D teams from medtech companies to learn and understand the kind of panels and workshops engineers require. Our new Engineering Track is focused exclusively on how to help engineers do their jobs better. This includes Engineering Workshops, Panels, and Hot Technology sessions designed around the topics critical for today’s engineers and engineering managers. This is not another conference where you’ll hear a CEO talk about the need to move faster. This is about how to do your job better when everyone around you is telling you to move faster. We’re bringing together the best of the best in the industry, so I hope you’ll join us this year, whether it’s your first time, or joining us once again. We still have a limited number of sponsorships available for this year’s slate, so I invite to learn more by downloading a prospectus, or listening to our recent webinar. There’s much more to come, so keep tuned.

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HOW TO GROW YOUR MEDICAL DEVICE BUSINESS THROUGH ITS LIFE CYCLE (continued from previous) take more money than you need. While no one suffers dilution well, consider that running short on capital, even temporarily, could irreparably harm the business. Also, a down-round financing, which comes with additional transaction costs, demoralizes the employees and existing investors. And when the capital need becomes apparent, the funding window may have closed due to micro or macro factors outside of the company’s control. Expanding the bag (middle stage) Regardless of the innovative or revolutionary nature of your initial product offerings, employees, customers and investors alike will be clamoring for the company to expand its bag. While organic product growth is always available, it can be slower and less predictable. To expedite the process and create more certainty around execution, medical device companies regularly use acquisitions to supplement internal research and development efforts. Here are 2 ways this can happen: • Strategic mergers and acquisitions. Strategic M&A is a calling card of the medical device industry. While recent mega-mergers, including AbbottSt. Jude, Johnson & JohnsonSynthes, Medtronic-Covidien and Zimmer-Biomet have dominated the headlines, the Wright Medical and Tornier merger is an excellent example of utilizing strategic M&A to expand the bag. By combining Wright Medical’s lower extremity

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and Tornier’s upper extremity product lines, the result was the premier extremity-biologics company. While strategic M&A can be a one-stop fix, note that it requires substantial capital, generally in the form of cash or public equity. And if your company has innovative but limited product offerings, you are more likely “prey” than “predator.” • Opportunistic IP or product acquisitions. As an alternative to strategic M&A, companies search out opportunistic IP or product acquisitions from sellers, who are typically trying to monetize non-essential/noncore or older/prior generation assets. Also, strategic M&A can lead to isolated sales to address regulatory concerns or to divest non-core or overlapping IP or products. For example, to obtain FTC approval of the Zimmer-Biomet merger, Zimmer sold a knee product to Smith & Nephew and an elbow implant to DJO Global. Expanding the reach (late stage) With capital available and a fuller bag of products, company focus often sharpens on revenue growth. While revenue growth can take many forms, expanding the company’s sales channel, which can be effectuated by increasing sales personnel and/or leveraging technology, is a common and highlyeffective option. Increasing sales personnel tends to be accomplished by hiring additional employees, expanding the distributor network or acquiring

additional employees or distributors in a strategic M&A. While each approach can further the objective, it is also important to understand the related drawbacks. Hiring additional employees tends to have the lowest upfront cost, but generally takes time; increases selling, general and administrative expenses (SG&A); and taxes your HR department. An expanded distributor network increases the sales channel with the added benefit that you only pay for performance (unlike the relatively fixed cost of an employee), but those relationships often are transitory, and the non-compete implications tend to be thorny. While strategic M&A provides a one-stop solution for both expanding the bag and the reach, it comes with a high upfront cost and requires careful integration as the added personnel may overlap with existing personnel. Leveraging technology is the other option. As with any other industry, technology can be a meaningful differentiator. By using a web-based, customer-direct sales channel, certain medical device companies are offering products, which are typically nearing the end of their life cycle, at a lower price point, especially when coupled with limited or non-existent sales, distribution or clinical support. As a result, the company can service price-sensitive customers, which efficiently and effectively expands sales territory, while maintaining appropriate margins. For example, NayaMed, a Medtronic affiliate, has effectively utilized a web-based approach to service price-sensitive customers in the cardiac space.

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FUNDRAISING

or private equity, or federal funding, or external public markets. So now they’ve got more arrows in that quiver.” Newer companies are adapting by taking a more fluid approach, he added. “If you were a startup and you started before the ACA passed, you had a set of assumptions about where the market would be, and then the ACA changed those – but you’d already started down the [prior] path,” Jaskulke said. “Now I’m seeing companies that started post-ACA, and they’re saying, ‘OK, I don’t know where the world’s going to end up, but I think I have a better idea of the direction it’s going, and I can better plan for that.’” Here’s a pair of funding strategies that have grown especially popular in recent years, as startups adapted to the new fundraising reality: 1. SBIR grants and other federal funding For Dan Leach, CEO of prosthetic startup RxFunction, the retreat of VC funding in medtech proved challenging, but

Leach and Lars Oddsson, RxFunction’s president, began forming the startup in 2007, first incorporating in 2010. The challenging environment and lack of traditional VC funds led them to pursue different opportunities, finding their way forward with angel investors and government grants. “We started in a very challenging time in the economic history of this country. Venture capital had almost completely dried up,” he recalled. RxFunction raised $200,000 from angels and moved on to pursue federal Small Business Innovation Research grants and a contract with the U.S. Department of Veterans Affairs, all while focusing on one operating strategy – controlling expenses. “We didn’t spend any money on offices, we didn’t spend any money on, well, you name it,” Leach told us. “We followed one rule: Don’t commit the cardinal sin. Don’t run out of money. I wish it was more complicated than that, but that’s the God’s honest truth. That’s it.”

I THINK IT HAS ALWAYS BEEN JUST ONE ARROW IN THE QUIVER; IT WAS JUST THE MOST PROMINENT ARROW BEFORE. BUT OTHER SOURCES OF CAPITAL THAT ALSO WEREN’T AVAILABLE SOME YEARS AGO ARE NOW ALSO THERE. not unconquerable. Leach’s company is developing a lower-body prosthetic device designed to aid individuals with peripheral neuropathy. “What I’ve noticed, since I’ve been working with early-stage companies for more than 25 years, is that people aren’t investing like they used to. And even though there seems to be a good deal of wealth out there, it’s wealth that’s only interested in taking on the risk when you’re at the next level – when you’ve verified and validated your product with regulatory authorities, and you’ve verified and validated that you will be reimbursed for your device or product,” Leach said.

The Small Business Administration’s SBIR grants are designed to support and accelerate R&D at small or startup businesses. The grants aim to fund projects that VCs might deem too risky and can sometimes be used to bring companies to the point where they’re more attractive to venture capital. Companies seeking SBIR grants must show they have the potential for commercialization; winning the money can be very competitive.

WE BUILD Rapid Prototyping Custom OEM Manufacturing Cleanroom Manufacturing Automation and Assembly Supply Chain Management

The grants work in 3 phases: 1. The first phase aims to support businesses in establishing “technical

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merit, feasibility and commercial potential,” with cash awards generally not exceeding $150,000. 2. In the second phase, companies can receive significantly more funds – usually not more than $1 million over 2 years. The government bases funding on company performance during Phase I and the commercial potential of the product. 3. Although no funding is provided in Phase III, companies will receive preferential treatment from government organizations and agencies looking to use their offerings. The 3rd phase may also include funding from federal agencies aimed at continuing R&D.

In 2010, bioresorbable stent maker Reva raised $85 million in an initial public offering on the ASX. Last year, breast tissue expansion device maker AirXpanders raised $28.3 million Down Under, and sleep disorder device maker Oventus raised $12 million in its Aussie IPO. And just this year, ophthalmic device maker Visioneering Technologies closed a $26 million flotation on the ASX.

WE FOLLOWED ONE RULE: DON’T COMMIT THE CARDINAL SIN. DON’T RUN OUT OF MONEY. I WISH IT WAS MORE COMPLICATED THAN THAT, BUT THAT’S THE GOD’S HONEST TRUTH. THAT’S IT.

2. Foreign stock exchanges For a number of early-stage medtech companies, foreign exchanges have proven to be a successful funding avenue, particularly the Australian Securities Exchange.

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“Foreign exchanges are becoming a more popular option for startup and early stage companies,” Medical Alley’s Jaskulke said. “For the Australian stock exchange, they have a set of market and regulatory conditions that make it favorable for a medtech company. Among those are a very large capital market. So there’s a pool of money to draw from.” The investment community in Australia is also more comfortable backing higher-risk early-stage ventures, he added, noting that the region has a regulatory environment that’s “very manageable.” “It’s very transparent, investors are protected, but it’s very scalable for small companies. If you were a pre-revenue company and you tried to list on a U.S. exchange, your compliance costs are going to be incredibly expensive. It’s one of the reasons companies don’t list until they’re pretty large. In Australia, those are more manageable,” Jaskulke said. And although traditional VC avenues may be scarce right now, that could change, Jaskulke said. Traditional VC funds follow a cycle of raising cash, investing then exiting, and they seem to be coming back around to the investing portion of the cycle. “It seems like a lot of the venture capital funds that focused on medical devices, or had a large share in devices, started at roughly the same time, and as a result they matured around the same time. A couple of years ago you had this big group of VC funds that were hitting their end of life and exiting the market, and going on to raise new funds,” Jaskulke said. “The flip side of that, especially in the last couple of years, is that VCs have raised funds again. Big investors are getting capital back in. You have improvements in the FDA process, and I think we’re starting to see new ventures that started in today’s reality, post-healthcare reform.” No matter the strategy, medtech startups still face an uphill battle when it comes to raising cash. But despite the rough environment, it’s important for the entrepreneurs and executives leading those companies to stay positive. For his part, Leach said that optimism was always essential for their game plan, both through the easiest and the hardest of times. “You’ve got to stay optimistic. Oh my God, you’ve got to be delusionally optimistic. Make no mistake: It’s not for the faint of heart. Nothing is like this process, and I’ve experienced a lot. It can suck the life out of you, and you’ve got to have the ability to recharge your batteries without being able to recharge your balance sheet,” he counseled. “If you don’t have that, you’re not going to make it. If you don’t stay optimistic, you’re not going to make it.” M

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MEDTECH NANOPARTICLES STARTUPS

Young startups backed by nanoparticle tech face a world of hurdles before reaching the clinic. It’s been decades since the first innovations in nanotechnology – and experts are asking, “Where are all the drugs?”

A N I N D U ST RY BUZZWORD M EETS RE A L ITY SARAH FAULKN ER • ASSOCI AT E EDI TOR IT’S BEEN MORE THAN 20 YEARS since the FDA approved the first nanoparticle drug, Doxil. At the time, nanoparticles were heralded as a way to more efficiently deliver drugs that traditionally come with burdensome side effects, such as chemotherapy. Since then, scientists have published an array of preclinical studies and academic papers evaluating various types of nanoparticles, including liposomes, antibodies and more. But some experts point out that in many instances, nanoparticle technology stalls before it can even get to the clinic.

“Well, they haven't really lived up to their promise,” said Keith Horspool, VP of pharmaceutics at Boehringer Ingelheim. Some industry players are moving away from nanoparticles: Cambridge, Mass.–based Dicerna Pharmaceuticals bailed on its lipid nanoparticle delivery program in September last year. Cerulean Pharma ditched its nanoparticle-drug conjugate technology and was bought by Daré Bioscience in March, with 11 of Cerulean’s 19 employees laid off in the process.

Latona Therapeutics team members Dylan Nichols, Meng-Yang Chen, Antonio Olivo and Jason He (from left to right). Not pictured are Aakanksha Rangnekar and Han Li. www.medicaldesignandoutsourcing.com

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Still, scientists launching nanoparticle startups are optimistic that their preclinical research will lead to treatments that will better the lives of patients. Latona Therapeutics is hoping it can tackle the historical hurdles and get its light-activated nanoparticle cancer therapy to market. The Chicago-based startup launched out of a competition hosted by the Center for Advancing Innovation and the National Institutes of Health’s National Cancer Institute. The challenge tasked university researchers to commercialize an NIH invention, and the team from Latona Therapeutics chose a photodynamic nanoparticle, designed to target cancerous tumors. Biomedical engineers embedded a light-activated molecule within a lipid bilayer and wrapped it around a chemotherapeutic. When the nanoparticle is exposed to infrared light, it releases the chemotherapy in a particular region to target cancer cells. The 6-person company is still in its early stages of development. Right now, they are working on acquiring a license from the NIH and raising capital, according to Illinois Tech biomedical engineering PhD student Jason He. As the group begins its journey to the clinic, experts have some insights about the hurdles they might face. Escaping the preclinical lurch There are thousands of academic papers describing scientists’ preclinical evaluations of nanoparticle technology. This is a symptom of a common trend, especially at universities or institutions that receive government funding for their work, according to Horspool.

“These government institutions really reward people on the number of academic papers. It doesn't incentivize the clinical testing necessarily. It incentivizes doing another bit of science which may not be driving these things forward,” Horspool said. Latona Therapeutics and other young startups could run into another problem garnering funds: There are only a few approved nanoparticle drugs, and investors are wary. Startups need to prove that their nanoparticle-based solution is unique and necessary, noted Cornell Stamoran, Catalent Pharma Solutions’s VP of corporate development & strategy. “What problem, what real market or formulation problem, does it actually solve that's not solvable with something cheaper, off-patent and available already?” Stamoran asked. Stamoran is careful to say that not all dose forms are interchangeable. At Catalent’s Applied Drug Delivery Institute, Stamoran said they’ve seen how impactful any choice about formulation and delivery can be for a patient.

outcome. If you do it wrong, especially, it's higher odds of leading to discontinuation or other things. I'm not trying to suggest that all dose forms are interchangeable,” he said. But investors and business partners are not likely to take on a lot of risks. So far, nanoparticles have not proven to be scalable, Stamoran said. “What would entice a customer to be the first one in an unproven manufacturing process that hasn't necessarily been scaled up properly to real commercial scale and would need to prove a complex release profile in unproven technology?” Stamoran said. “Why would they add a risk if they don't need to?” Solving a delivery problem Used to deliver drug cargo to specific parts of the body, nanoparticles are thought to work largely because of their size. They can’t slip past cells in the blood vessels and escape to surrounding tissues. Instead, they linger around the bloodstream, which gives them the chance to get to a tumor. Last year, Warren Chan at the University of Toronto published a review examining how effective nanoparticles are at reaching their target. Chan’s results were seemingly dismal: Across 117 studies from 2005 to 2015, the median efficiency was 0.7%. In other words, for every 1,000 nanoparticles, only 7 reached tumors in an animal model. Experts in the field questioned the findings of Chan’s study, saying that the 0.7% number is out of context. Chan’s team did not compare delivery efficiencies

WHAT WOULD ENTICE A CUSTOMER TO BE THE FIRST ONE IN AN UNPROVEN MANUFACTURING PROCESS THAT HASN’T NECESSARILY BEEN SCALED UP PROPERLY TO REAL COMMERCIAL SCALE AND WOULD NEED TO PROVE A COMPLEX RELEASE PROFILE IN UNPROVEN TECHNOLOGY? “The research we've done shows that almost every design decision about a drug, whether it's about the molecule, the formulation or the dose or the drug delivery device if you need one, as well as the package of course, can affect the patient

with nanoparticle-free drugs. When other studies compare nanoparticles to free drugs, they have found that the free drugs accumulate with efficiencies that are a 10th or even a 100th of Chan’s 0.7% figure. Chan responded to his critics saying

Polymer particles (gray) encapsulate drugs (red), like docetaxel. Small molecules (blue) bind to proteins on cancer cells, helping to target the drug to tumors. (Image courtesy of Digizyme, Inc.)

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NANOPARTICLES

that regardless, 0.7% is too low of a delivery efficiency, and it could prevent nano-drugs from moving from animal models to the clinic. The review’s authors showed that a dose of particles with a delivery efficiency of 1% would not be feasibly scalable. Too soon to call it quits Despite the challenges, there is still optimism and excitement in the industry. And there’s no shortage of problems to be solved, Stamoran said, noting that success is a matter of figuring out how nanoparticles can be most useful. “There are some interesting injectable formulation technologies using nanoparticles in early stage development that seem to suggest there is some ability to achieve sustained release injectable applications,” he said. “Targeted, localized delivery of gene therapy, cell therapy, RNAi – all of those things are problems that are can be solved.” To position themselves as innovators in the field of drug delivery, startups need to put the work in early, according to Horspool. “[They need] a good business plan where you clearly have a good idea of what you're trying to achieve,” he said. “You've got to have compelling data to convince anyone these days.” He added that attracting help from a bigger company at an early stage can be a critical step in moving a technology along. “What you really want is somebody to help you validate your system. You can do a lot on your own, but some other validation can be really quite effective,” he said. To convince bigger companies to help them, startups need to thoroughly understand their technology and how it can differentiate itself from competitors, Stamoran said. He added that startups should do as much as they can to de-risk their technology, like consulting with people that are familiar with potential regulatory risks. “If you get the model right, a platform technology business can be sustainable. But it's difficult to do it solely on the back of early stage technology because there's so much desire to be 2nd using the new technology platform and not the desire to be first.” Latona Therapeutics is undeterred. The company is still in its infancy and has a long road ahead of them. “The way I see it, there are challenges, but there is also opportunity,” He said. M

Among other applications, iron oxide nanoparticles from Nano Labs can be used as a targeted delivery vehicle for anti-cancer drugs (Image courtesy of Nano Labs)

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3D PRINTING The Ultimaker 3

Image courtesy of Ultimaker

3D printing can give your medtech startup a competitive edge:

HERE’S HOW D E R E K M ATH ER S WO R R E L L

You need to be fast and nimble to compete. A strong maker culture enabled by 3D design and 3D printing could be the way to do it.

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t can be a lonely world for medical and biotechnology startup entrepreneurs during the early days. Despite their deep desire to introduce and scale novel life-extending therapies, it’s rare that these pioneers have experience designing, developing, testing or commercializing medical technologies. But this global community of risk-taking leaders give our world hope for value-based healthcare systems, where devices, drugs and biologics alike are manufactured to each patients’ anatomical and genetic makeup. The bar has been raised for the modern medtech entrepreneur due to ever-litigious incumbent competitors, ever-cyclical regulatory scrutiny and the increasing costs of commercializing a new therapy. How can startups even stand a chance in an industry naturally slated against them? One unique approach to creating a competitive advantage is developing products and winning 5 • 2017

approvals faster than any large company could ever hope to do, since they are structurally risk-averse and slow moving. I believe that small organizations can do this by hiring for and embedding a strong maker culture into the fabric of R&D – promoting agile hardware development, enabled by 3D design and 3D printing. Teach other disciplines CAD, and they will grow parts that evolve your strategy Unlike the SaaS (software-as-a-service) industry, where a handful of developers and a decent user interface can raise millions of dollars, healthcare products typically require more capital and multi-disciplinary skills. Medical devices can only be properly introduced and commercialized when experts (outside of pure mechanical engineering) come together to build something great. You need a team with clinical, electrical, materials, physics, regulatory, sales/marketing, psychology, human factors and computer science backgrounds – to name a few.

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3D PRINTING

Empowering smart people to use 3D CAD and having a capable 3D printer to materialize a design is one of the most authentic ways to communicate an idea. Perry Davidson, CEO of Syqe Medical (an Israeli respiratory health company) describes 3D printing as “hardware CAD” which his team uses “in every corner of the company.” When I toured their facility in a lively Tel Aviv neighborhood last winter, I was taken aback by the CAD literacy of everyone in the organization. From the front desk manager to pharmacokinetic specialists to the quality and testing team, they used 3D printing to improve workflows and add new functionality to critical components. When asked how he had built such a co-creative culture, Perry responded that he “made the desktop printers available to anyone who cared to use them” and “encouraged his team to learn free, readily available CAD software platforms available online.” Don’t let the $4,000 price tag of a Solidworks seat discourage your nonME team members from exploring the world of CAD. Encourage them to try free-to-use platforms such as Fusion360, OnShape and more that also provide educational lessons on the basics of 3D modeling so that they can come to meetings with more than just a napkin sketch, but a model that people can touch, feel, debate, destroy and improve. Biomimicry wins, but the right anatomy is hard to find One of the primary responsibilities of a medical device company is to create a therapy that functions in harmony with human anatomy. Large medtech companies have the funds to purchase droves of anatomical data from research institutions, fly in high-profile key opinion leaders and partner with global hospital chains to acquire the correct 3D files they need to build a device. Smaller organizations are at a distinct disadvantage, because it is an expensive and daunting task to acquire the proper 3D anatomy for reference in the design of a device. The workflow of getting from a surface 3D scan or DICOM file (generated from CT/MRI machines) is unintuitive at best and requires both biomedical and

3D CAD expertise to be done effectively. However, some progressive organizations are utilizing new tools and workflows for getting anatomical geometries into a CAD-friendly environment. Los Angeles–based medical device company Metamason has mastered the 3D scanning of the face to enable its scan-tofit platform. Powered by Intel Realsense 3D scanners and their own customization engine, Metamason uses standard tablets to scan patients’ faces and prints them a customized continuous positive airway pressure (CPAP) mask out of medicalgrade silicone in hours. This method of personalized manufacture is more clinically efficacious and comfortable than existing devices on the market. Metamasons’ CEO Les Karpas believes that 3D scanning technology “will be standard in consumer

Los Angeles–based Metamason has mastered the 3D scanning of the face to enable the printing of customized continuous positive airway pressure (CPAP) masks.

phones within 2 years.” The proliferation of cheap, high resolution 3D scanning technology will enable medtech startups to scan surface anatomy for design reference and makes a future of personalized medical products more tangible. Most medtech startups can acquire CT/MR data of the correct anatomy, but getting data that is pathology-specific can be very hard to find. Moreover, converting the container file (DICOM) into a file that can be manipulated using www.medicaldesignandoutsourcing.com

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traditional 3D tools like Solidworks is often cost-prohibitive for small companies. The dominant market player (Materialise Mimics) can cost up to $100,000 per seat for the 510(k)-cleared version. My recommendation for startups frustrated with this space is three-fold. First, look to potential hospital partners (especially those in the Midwest) whose radiology team can get DICOM files into STL format. As companies like GE and Philips add new functionality to their portals, many hospitals can now get files into a language that printers and CAD can understand. Secondly, consider searching 3D file databases such as the University of Minnesota’s Visible Heart Lab (VHL), the NIH 3D Print Exchange, TurboSquid and Zygote. Finally, if you can’t find what you need but you have

the DICOM data and not enough cash for Mimics, try a straightforward online software called Invesalius – a Brazil-based medical software with similar functionality to Mimics – free of charge. If you don’t have a 3D printer, you’re wasting precious time In the 3D printing industry, we classify printers into 2 broad categories: Industrial machines, which cost more than $120,000, and desktop machines 5 • 2017

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that typically cost less than $10,000. The big players in the 3D printing industry have given up on desktop 3D printing. 3D Systems closed its desktop printer line in 2016 and Stratasys subsumed the best brand in desktop 3D printing, Makerbot. However, new entrants to the 3D printing market are building useful, reliable desktop machines that are used around the world to facilitate medical device innovation. These smaller desktop machines are rapidly catching up to industrial machines at a fraction of the price, with impressive resolution, print speed and new feature sets. This makes it possible for medtech and biotech startups to easily acquire them and build parts beyond prototyping. Think anatomical models, biocompatible surgical guides, office supplies, fixtures, jigs and much more. There are 2 desktop 3D printers I would recommend to startups: The Formlabs Form 2 and the Ultimaker 3. Formlabs has created an easy-to-use and powerful SLA system for desktop manufacturing in the Form 2, which produces parts in a 6-in.-squared build platform

A Formlabs Form 2 with a printed part

Image courtesy of Formlabs

with layers less than .003 in. thick. Formlabs’s team has been on a hot streak of curating new materials for their machine. They’re building out a library that includes a fleet of engineering- and medical-grade resins, ceramics and even casting (for jewelry). For medtech startups, this reliable and useful machine comes in at a reasonable $3,500 to get started. The other 3D printer – the Ultimaker 3 – is a fused filament fabrication (FFF) machine with unique capabilities. The Ultimaker 3 is one of the most progressive desktop machines on the market, able to print water-dissolvable support material and two types of model material simultaneously, and it and uses a fleet of thermoplastics such as nylon, PLA, ABS, PC and soon TPU 95A. The Ultimaker 3 also has sound reliability and an 8 in. x 8 in. x 10 in. print bed. It can print in layers as thin as .002 in. and comes in at a price point of just $3,495. In an industry where time is of the essence, having internal, boundless access to 3D printing technology is extremely important. It is up to R&D leaders to build a maker culture within medtech and biotech startups by educating and encouraging as many people as possible to print their ideas. When team members can materialize device concepts in a shame-free, iterationencouraging environment, they are more likely to succeed in production – and eventually in sales. M 58

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MATERIALS

WHAT

TO STARTUPS NEED WHEN

SUCCEEDSELECTING

MATERIALS D EEPA K P RAKASH VA NC IV E M ED IC A L TEC H NOLOGI ES

Whether a startup targets an emerging category such as wearables or a more mature device market, a well-planned approach to materials selection can make a significant difference in the product launch cycle, economic model and other variables.

Materials selection can be a make-or-break issue for medical device startups. Even minor problems cause major headaches: Consider the migraine that Fitbit dealt with in 2014, when it voluntarily recalled more than 1 million Fitbit Force wristband activity trackers in response to customer skin rashes. Although the issue ultimately only affected 1.7% of users who had an allergic reaction to small levels of methacrylates in an adhesive used to make the wristbands, it caused negative publicity and put a dent in customer trust. Without the benefit of shared expertise from strategic supply partners, new businesses can face troubles such as delayed market launches, flawed pricing assumptions, quality issues and production capacity constraints. Despite all that, startups can steer clear of many issues by engaging with advanced materials experts early on.

Cutting through competing priorities Medical device startup companies, especially in the high-growth wearables category, are dealing with many competing priorities. For example, a digital health startup often must juggle software development, mobile app interfaces, sensor selection, battery life issues and cloud computing concerns. That’s not to mention pressure from investors for return on investment. Amid this whirlwind of activity, entrepreneurs understandably turn to the low-hanging fruit. What product development tasks can they readily tackle and check off the list? In this situation, software and mobile app development can become an early central focal

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MATERIALS

A few of the different materials found in a jacket Article Component

Material as identified by importer

Top layer

100% polyester

Inner layer

100% polyester

Insert

91% polyester, 9% elasthane

Membrane

Polytetraflouroethylene (PTFE)

Zippers

Polyamide

Hook-and-loop fasteners

Polyamide

Buttons

Metallic

Cord

Polyester

Total Weight: 420g A breakdown of the materials and adhesives in a proposed product, such as those in a jacket, can more easily identify substances that might raise biocompatibility issues with users.

point for mHealth (mobile device) startups. After all, functionality around the digital user experience, data collection and analysis is the innovative heart of a wearable. It’s easy to see how something such as material selection – finding an adhesive to attach a device to the body, for example – could fall off the radar for a while. Yet a medical wearable is a device system. If any one part of the system falls short of expectations or behind schedule, it could cause bottlenecks and have other profound effects on other parts of the solution. That’s why it’s important to maintain a holistic view of product development. Smart startups keep multiple aspects of device development, including material selection, moving simultaneously. If this isn’t the case, big problems can crop up. There could be incorrect assumptions about material compatibility, costs and regulatory review timetables. Or the new business may base its economic model and pricing projections on one set of wear-time expectations, such as a 2-week product lifespan. But given the end-use requirements, existing materials on the market may only Weight (g) support a wear time of one week. When this type of discrepancy between the 200 business plan and procurement realities is uncovered late in the game, it can have 50 major consequences, such as impacting the product’s launch timing and overall 100 value proposition.

Medical Design & Outsourcing

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Shop around for expertise One of the best ways to head off such surprises is to look for materials information, product samples and potential partners as early as possible in a product-development process. This can be accomplished by attending trade shows, reaching out to medical materials suppliers and meeting with converters. It also is worthwhile to network with academic research institutions with advanced material programs. Many mHealth startups are led by entrepreneurs from outside the medical device industry. This makes it especially relevant to turn to suppliers and other strategic partners with knowledge of regulatory laws, insurance reimbursement trends and different industry standards. For example, environmental sustainability standards can be complex. Some regulatory bodies update their lists of restricted substances annually (California’s Proposition 65) or bi-annually (the European Union’s REACH). To comply with REACH standards, it is necessary to provide extensive

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MATERIALS

SMART STARTUPS KEEP MULTIPLE ASPECTS OF DEVICE DEVELOPMENT, INCLUDING MATERIAL SELECTION, MOVING SIMULTANEOUSLY. IF THIS ISNT THE CASE, BIG PROBLEMS CAN CROP UP.

technical documentation regarding all chemicals and materials used in a device. Device manufacturers may also have to disclose detailed information directly to consumers if they receive inquiries. Advanced materials partners should have the resources to stay abreast of all restricted substances and global regulations. They can help a startup ensure its materials comply with specific rules by trading bloc, country or individual state. In turn, they also should be able to provide documented proof that their upstream suppliers do not use any restricted substances. Maintaining this level of supply chain transparency is challenging but can be crucial to a successful product launch. In addition, working with a seasoned medical materials supplier can deliver peace of mind when it comes to biocompatibility, a major factor in patient safety and comfort. No device maker wants to repeat the nightmare Fitbit dealt with in its adhesive selection. Sometimes it takes a deep knowledge of material science, including teams led by doctoral-level chemists and researchers, to recognize potentially incompatible adhesive chemistries and biocompatibility risks. Likewise, these same experts can work with startups to help them identify innovative ways to incorporate the latest chemistries and materials into their products. In many cases, there is no need for startups to reinvent the wheel and develop brand new materials. The development of custom materials adds significant time to the product development cycle and can drive up costs. By comparison, when startups adapt materials already on the market to their particular end uses, they benefit from more economical pricing from suppliers, who can efficiently run large volumes of the material. In conclusion, medical device startups, especially in the mHealth space, are inevitably charting new terrain, learning and innovating as they go. But when it comes to materials selection, there is a great opportunity to lean on experienced suppliers to avoid pitfalls that have plagued other pioneers. Early engagement is the key to prosperous partnership and new product success. M

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DEVICE TALKS

3 enduring leadership lessons to boost your medtech success This one is for the caffeine-addled world-changers out there, who consume leadership memes on LinkedIn for breakfast, searching for inspiration with the same passion as a bigfoot truther. For the past 6 years, I’ve interviewed the most successful men and women in the medical device industry at DeviceTalks, the conference we founded in 2011. (It continues as 3 annual events in Boston, Minnesota and Orange County, Calif. DeviceTalks Minnesota is June 26–27 in St. Paul.) Over those years, (which I’ve come to think of as my own personal MBA, albeit with an open bar), I’m often asked if there’s a common thread that connects the CEOs of giant companies like Allergan, Medtronic and Boston Scientific. The easy answer is that, of course, there’s a common thread among these leaders, and I’m not talking about Harvard Business School or the fact that they’re usually male. I’m speaking of something more tangible that you can hang your hat on. With that in mind, I submit the following 3 lessons, straight from the horse’s mouth, which I think link very successful business leaders.

Brian Johnson | Publisher | Medical Design & Outsourcing |

1. Hating to lose

MOST PEOPLE DON’T REALIZE I’M VERY COMPETITIVE… I CAN’T STAND TO LOSE. 62

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“Most people don’t realize I’m very competitive…I can’t stand to lose” –John Brown, former CEO of Stryker Corp. For a man who took a company from $17 million in annual sales to $4.5 billion over a 32-year tenure in the corner office of Kalamazoo-Mich.–based Stryker, John Brown is a remarkably humble billionaire. But don’t let the quiet exterior fool you: He’s a coldblooded competitor who just hates to lose. “Hating to lose,” rather than “loving to win,” is a great predictor for success in

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business, according to Benson Smith, the former CEO of Teleflex and a DeviceTalks alumnus. Smith – an accomplished author whose 2003 book “Discover Your Sales Strength” was published by the Gallup Organization – told me that he looks for this particular personality trait in all of his sales leaders, because, as he put it, “If they’re in a close contest, they’re going to pour on extra gas to get the job done.” 2. Finding a way around obstacles “I’ve always told people throughout my career that, when the door is closed, you’ve got to find a window, and you never give up.” —Bill Hawkins, former CEO of Medtronic Bill Hawkins, who spoke at DeviceTalks in 2015, taught me this lesson when he was describing his bid to attend the Darden School of Business at the University of Virginia, despite being rejected for admission. “I said, ‘I’m not going to let that go,’ so I called the admissions director, and I said to him, ‘I think you’ve made a mistake, and I got the wrong letter, and I’d like to come down and tell you why you made a mistake.’” You can probably guess how the rest of the story plays out, but it’s another of the enduring lessons of leadership that so many leaders I’ve spoken to share. When each of them encounter a wall in their way of a goal, they don’t just continue to ram their head against it, they find a way around, or they build a ladder and climb over it.

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Publisher Brian Johnson, right, interviews Boston Scientific CEO Mike Mahoney, left, at a DeviceTalks event.

3. Taking culture seriously “I spend most of my time focused on the culture.” —Michael Mahoney, CEO of Boston Scientific Mike Mahoney executed one of the most successful turnarounds in recent history, righting the ship at Boston Scientific over the past 6 years as he dragged the company from sagging sales and foundering stock prices to one of the best-performing medtech companies over that period. When we met at DeviceTalks in 2015 at the company’s newly opened HQ, he told me that he didn’t

turn around the company simply by cutting costs and issuing edicts, but by building people up and making them believe in themselves again. “We did some structural things, we enabled the organization to move a little bit faster by expanding the number of reports and the speed of the company. We did a lot of simple things on just reinvigorating what it means to work here,” Mahoney explained. I guess taking culture seriously isn’t a huge revelation, but having the empathy and patience to implement a winning culture is the most difficult thing for a leader to implement, especially when there’s so much pressure on producing results. But what does that really mean? It means that you, as a leader, have the confidence to empower people to make their own decisions.

This was a point that John Brown made to me as well. “Early on, I was insistent on making all of the decisions on everything, and then it struck me about 3 or 4 years down the road that I was the obstacle,” he said. So there you have it: 3 fairly simple lessons from 3 complex and successful leaders. I can’t promise they’ll make you as successful as they are, but, at the least, they may make you a better person to be around. As for DeviceTalks, we’re beginning our 6th year of shows across the U.S. on June 26–27 in MinneapolisSt. Paul, the heart of the medtech industry. This year, we’ve added an engineering track to go along with our incredible leadership program, so I hope you’ll check it out and join us. Take a look at our site www. devicetalks.com for more information. M

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LEADERSHIP TEAM Tom Lazar tlazar@wtwhmedia.com 408.701.7944 @wtwh_Tom Courtney Seel cseel@wtwhmedia.com 440.523.1685 @wtwh_CSeel Neel Gleason ngleason@wtwhmedia.com 312.882.9867 @wtwh_ngleason Jessica East jeast@wtwhmedia.com 330.319.1253 @wtwh_MsMedia

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