Cover Story: Transforming Treatment of Sleep Disorders

Originally Published MDDI November 2005

With unusual approaches to design, development, clinical research, and marketing, Restore Medical has turned heads with a superior solution for sleep disorders.

Erik Swain

In less than six years, Restore Medical (St. Paul, MN) went from a company with nothing more than a concept to one with a successful device that transformed the treatment of a condition previously thought untreatable without significant inconvenience. Its Pillar palatal implant treats mild to moderate obstructive sleep apnea (OSA), a sleep disorder linked to heart disease and stroke, as well as a number of other conditions and lifestyle complications. The simplicity of the Pillar Procedure and the effectiveness of the device give hope to patients whose previous options were to have major surgery or wear a cumbersome apparatus to bed for the rest of their lives. Pillar is also approved to treat snoring.

It's not just Restore Medical's ability to find a market niche that has made it noteworthy, however. It's the company's outside-the-box approach to everything, from research to clinical studies to marketing.

Rather than develop a technology and try to find a market for it, Restore Medical's founders identified a market with a need and then set out to devise a product. It is estimated that 12 to 18 million Americans suffer from OSA, and less than 10% are diagnosed.

The company's focus was solely on doing what was best to help patients, and not on proving the merits of any particular technology. This is not the norm for many device start-up companies, where the technology often comes before the application.

“We'd seen so many companies that had a technology in search of a market that it never found. We decided to start with a market need, understand the physiology of the condition, and then look for a technology that would address that need,” says company founder Mark Knudson, PhD. “I think it's crazy not to approach a new market opportunity that way, but most don't. I think that's why Restore has been so successful. When we make improvements [to the device], we're not attacking somebody's baby. We're all trying to figure out how to make it work better.”

Another thing that distinguishes the company is its approach to research. Restore Medical looked far afield, to the aeronautics and textile industries, for ideas about how to develop a technology to treat OSA.

The company's clinical and regulatory protocols displayed doggedness and keen thinking. When U.S. doctors weren't initially sold on the idea, the company went overseas to find physicians who were willing to help prove its worth. The data from the European studies were impressive enough to allow relatively quick regulatory approval, unusual for a technology as novel as the Pillar.

And during the short commercial life of its product, Restore Medical has displayed a strong acumen for marketing. The company has reached out to both doctors and patients in unconventional but cost-effective ways. As a result, the number of physicians performing the procedure has jumped tenfold in one year, despite the fact that the Pillar palatal implant has not yet been approved for reimbursement by Medicare.

For these accomplishments, MD&DI recognizes Restore Medical as one of its 2005 Medical Manufacturers of the Year.

First the Market, Then the Concept

Restore Medical began life in 1999 as an “incubator company” within the St. Paul–based Venturi Group LLC, a venture capital firm that creates or acquires companies with promising technologies. Venturi's principals include Knudson, a physiologist and entrepreneur; Timothy Conrad, an intellectual-property attorney; and Susan Critzer, an executive manager with manufacturing and engineering experience. They were looking for a new market to enter, and they hit upon the sleep disorders field.

“We looked at the whole problem of sleep disorder breathing, and we realized there was a huge unmet need for an effective therapy that did not require wearing a machine every night or having half your throat cut out,” says Knudson, who is currently chairman of the Restore Medical board of directors. “When we analyzed the issue, we wondered whether it could be looked at as an aerodynamic problem rather than a surgical problem.”

The prevalent first-line therapy was, and continues to be, continuous positive airway pressure (CPAP), in which the patient wears a mask that creates enough air pressure to keep the airway open. CPAP has been proven effective, but because of the lifestyle change involved, it carries only a 40–50% compliance rate. The prevalent surgical therapy is uvulopalatopharyngoplasty (UPPP), which involves removing tissue from the palate and uvula. UPPP requires general anesthesia, necessitates a long and often painful recovery, and has only a 30–40% clinical success rate.

The founders' initial study of the physiology of snoring and OSA indicated that the root of these problems did not lie in the presence of excess tissue, but in the fluttering of the soft palate. In addition, they discovered why UPPP isn't always effective. “Our research demonstrated that the undulation is not at the end of the soft palate, but at the juncture of the hard and soft palates,” says Robert Paulson, Restore Medical's president and CEO.

To further discern and understand the physiology of the issue, the company embarked on an unusual research path. It worked with an aeronautical engineer to develop a wind tunnel that simulated a throat and airway. The experiment, first using a leather tongue and a vacuum cleaner, likened the palate to an airplane-wing structure adjusting to wind. “We were able to understand the way the airway behaves when air goes through it,” says Knudson. (For this approach, Restore Medical was named one of MD&DI's Outstanding Design Teams in July 2005.)

“The conclusion was that the palate, in essence, flutters,” says Paulson. “Think of it as a sail. When a breeze blows, the sail flutters. If you clip the top of the sail, it still flutters. But if you batten the sail, you stop the flapping. So the question became, what device can we develop now that we understand that issue?”

The solution would be an implantable device that keeps the palate from fluttering. The company's researchers determined that the most effective way to do that was to insert a small implant at the juncture of the hard and soft palate, and place two additional implants 2 mm on either side of the first one. These implants stiffen the soft palate, thereby extending the hard palate, which reduces or eliminates the flutter.

The next step was to determine which material should be used to make the implant. It needed to be strong enough to stop the palate from fluttering, but flexible enough to adapt to the contours of the mouth and not become dislodged. The implant also needed to be porous, to allow tissue ingrowth and encapsulation to occur, which would further stiffen the soft palate. Finally, researchers wanted to make the implant procedure minimally invasive and to use, if possible, a material that FDA was familiar with, to enable an easier regulatory pathway.

The company worked with textile scientists at Drexel University in Philadelphia and looked to the fabric industry, of all places, for advice. That research pointed to polyethylene terephthalate (PET) braided a certain way as a solution. Specifically, flat PET yarns had to be weaved together with air-jet-textured yarns into a tight spiral less than 1 in. in length. The key lies in how much of each type of yarn is used and how exactly they are spun together. PET had the requisite flexibility, stiffness, and previous use on FDA-approved products.

Conrad then set out to protect the intellectual property behind the Pillar Procedure. “Since this was a completely novel approach, the field was fairly wide open, and we were able to build an extensive patent portfolio,” says Paulson. Restore Medical now has 18 U.S. patents and another 27 pending.

The company also began to hire staff. (By fall 2005, it had grown to 56 employees.) Critzer served as CEO until she retired in early 2005. “She led the efforts to bring in outside investors,” says Paulson. “She was able to meet the challenge of structuring the right deal that was in the best interests of the company, which allowed it to continue to grow without having to go back to the market for additional funding before it got to profitability.”

Building a Company

Serious work on developing the Pillar Procedure began in early 2000. By the time the implant was ready for market, a delivery tool had been tested and proven, and the procedure had been honed to take about 15 minutes. It can be performed as part of an office visit and requires only local anesthetic. Recovery time is swift; many patients can go back to work the same day. Since the therapy has been available, the reported complication rate is approximately 1%, and the majority of those complications involve the relatively minor issue of the implant partially extruding. When partial extrusion occurs, physicians address the issue simply by removing the implant that is partially extruded and inserting a replacement implant.

In 2000, the company began the tough task of convincing ear, nose, and throat (ENT) physicians to enroll patients in clinical trials. At first, because they generally were satisfied and comfortable with existing methods, ENT surgeons in the United States and Europe were not interested. The firm had to go all the way to Hong Kong to find a believer in the Pillar Procedure, and that was where the company's first clinical trial was conducted.

That first trial succeeded, and the published data from it got some European clinicians interested. The positive clinical results from the subsequent European trials then led to interest from U.S. clinicians.

By 2003, the company had enough data to file a 510(k) application with FDA. That year, the Pillar Procedure was cleared to treat snoring. Then in August 2004, the agency cleared Pillar to treat mild to moderate OSA. (The procedure can be used on patients with severe OSA, but it must be done in conjunction with CPAP or another form of surgery.)

The company's novel approach was evident in its FDA application. Although the Pillar Procedure approach enabled Restore Medical to make all kinds of intellectual property claims, the company found a predicate device that enabled it to file a 510(k) application instead of a premarket approval application.

Although UPPP is the most common kind of major surgery to treat snoring and OSA, there is another surgical approach that uses radio-frequency (RF) ablation to treat the palate by creating scar tissue, which stiffens the palate. “The Pillar implant treats the soft palate using a similar mechanism,” says Paulson. “A key difference is that RF ablation is not permanent. Over time, scar tissue is reabsorbed and the tissue remodels. Because the Pillar implant is designed to induce tissue ingrowth and achieve encapsulation, it is a permanent solution, though it can be explanted.”

“We had a fairly rapid regulatory approval process because we were able to prove safety and efficacy with a relatively small number of patients,” says Paulson. “That was very fortuitous.”

Two-Pronged Marketing

Things began to take off in September 2004, with data presented at the American Academy of Otolaryngology showing extremely strong results after 90 days. That meeting put the Pillar Procedure on the radar screen of some ENTs, and the company was ready to capitalize with a thorough and innovative marketing plan.

The firm aggressively sought out thought leaders and early adopters in the ENT and oral-surgeon communities. It built relationships with key physicians at leading academic institutions around the country as well as at the otolaryngology academies. It also has enlisted support from patient groups such as American Sleep Apnea Association to spread the word to patients about the procedure.

The clinical studies on the use of the Pillar to treat snoring and OSA had validated the clinical effectiveness of the procedure, and the company provided clinicians with extensive information on how much easier and less invasive this procedure is to perform than UPPP or RF ablation. The company also pledged to support in any way possible the physicians who perform Pillar Procedures. As part of its physician support efforts, Restore Medical helps fund physician marketing and advertising programs designed to attract patients interested in the procedure. It also lists each doctor who performs it on its Web site for potential patients to find. In addition, it continuously provides physicians with the latest published data.

Because the procedure is not yet reimbursed by Medicare or most private insurers, while CPAP is, the company developed a patient outreach program. First, the company had to convince ENTs that, because the procedure was elective, they had to market the device in a manner similar to that used for cosmetic surgery. “We had to make the argument to physicians that marketing directly to patients was not unethical, as they were simply making people aware of a therapy used to treat sleep disorders,” Paulson says.

Restore Medical then had to find ways to reach patients directly and deliver a clear and concise message. In most cases, patients have to pay for the procedure out-of-pocket. The average cost is around $1500.

“In the case of snoring, it rarely disturbs the snorer, but it does disturb the bed partner,” says Paulson. “In a high percentage of cases, the bed partner takes the snorer to the ENT doctor, so we focus some of our efforts on educating the bed partner. For people suffering from OSA, we focus on raising awareness of OSA and encouraging people to see their physicians. If they always feel tired, we encourage people to see their ENT and ask about the Pillar Procedure. If a physician is not yet doing the procedure, the company offers to train the physician on the Pillar Procedure and provide clinical support in the treatment of his or her initial patients.”

Another way to reach patients has been through mainstream media coverage. Since its launch, the Pillar Procedure has been featured in more than 400 print stories and 900 broadcast stories. More coverage is expected as new clinical data are published.

“It used to be that doctors didn't like the direct-to-patient marketing approach. But now, with the Internet, they are resigned to the fact that patients want to be informed before coming to the doctor,” says John Foster, senior vice president of commercial operations. “So long as the marketing is done responsibly, it can be a help. We don't want physicians to be blindsided by patients, so we keep them informed by the Web and e-mail with a level of expertise they would expect from a much larger company.”

Sophisticated Operations

Restore Medical's infrastructure is quite sophisticated for a company of its size. The company has embraced lean manufacturing principles. Its recordkeeping system is entirely electronic. It has an extensive intranet that allows easy but secure access to documents relating to all kinds of operations from the quality system to design drawings, to sales and marketing databases, to device history records of suppliers, to CAPA.

“Everyone who needs access to the latest information and latest improvements has it,” says Phil Radichel, director of systems.

But the company is still small enough to not need overly complicated systems. “The goal is to keep things simple,” says John Sopp, vice president of operations. “It took a lot of hard work and development to make things simple.”

The company provides extensive training to all employees, and the records of the training are integrated into its systems. That way, operations will not run if an unauthorized person attempts to perform them. “This provides an incentive for everyone to get training on time and by the right person,” says Radichel. “Each individual can see when he or she is due for another training session and what the training will be for.”

As a testament to the effectiveness of its operations, Restore Medical has reduced its cost of goods by 40% since the Pillar Procedure received FDA clearance. Paulson believes additional future improvements could reduce that figure even more. The efficiency of the manufacturing process has been significant. “We are producing at a fivefold increase over last year, but using eight fewer assemblers,” he says.

Yet cutting corners is not part of the equation. “Our culture is focused on quality. Only products that meet our very high and stringent standards can go out the door,” he says.

Turning Points

This has been a watershed year for the company in many ways. Having shepherded Restore Medical though the product development and regulatory approval phases, Critzer decided to step aside to spend more time with family and in teaching at a local university. Changing CEOs at this juncture of a company's life cycle “is a natural evolution of an organization from a development-stage to commercial-stage growth company,” says Paulson. “Different people have different interests and experiences. Through Sue's leadership, the company designed and developed a product, undertook clinical trials to validate the clinical efficacy of the product, got regulatory approval, and began the production and commercialization of the product,” he explains. “It was a very natural turning point. I've never come to a company of this size with the quality of the infrastructure and business processes that this company has.”

Paulson was tapped as her successor because of his extensive experience as a device industry executive, including stints at Medtronic Inc., Advanced Bionics Corp., and Endocardial Solutions Inc. “My roles are to move the company from a development-stage organization to a company with revenues and profits, to create shareholder value for our investors, and to grow the business,” he says. The company is still privately held, though going public could be in its future.

The marketing strategy has evolved, too. “Early adopters tend to be academics and high-volume practitioners with lots of experience,” says Paulson. “Now we have to cross the chasm to the ENTs in private practices. To be successful with these physicians, we must provide them with the data to support the clinical effectiveness of Pillar and provide them with the clinical support they need to build a successful sleep-disorders practice.”

Those efforts should be helped by data presented to the American Academy of Otolaryngology in September. Clinical data from Europe demonstrated that 81% of patients showed improvement in their OSA one year after undergoing the Pillar Procedure—an increase over the results for these same patients when they were studied 90 days after their Pillar Procedure. This is the sort of data that the company will need to continue to produce to get Medicare reimbursement. “I believe Pillar ultimately will be reimbursed. The question is when,” says Paulson. “We will continue to do additional multicenter clinical studies to accumulate the level of data necessary for reimbursement.”

Until that time comes, he says, “we will seek [reimbursement] from private insurers on a payer-by-payer basis. We have brought in some people with reimbursement expertise, and we are committed to work with payers across the country to establish appropriate reimbursement levels for Pillar.”

Another change that came about in 2005 was a new version of the Pillar delivery device. Employing a comprehensive human factors program, the company asked surgeons what they did and didn't like about the first version and to try out different shapes. They used that physician input to redesign the delivery system.

“They liked the way [the choice for the new design] felt in their hands,” says Kurt Krueger, senior development engineer. “It gives them more control over the tip of the needle and a stronger grip. The handle is shorter, which allows them to position it better. We also changed the deployment mechanism from a pull to a push because it was more intuitive. The redesign opened up a lot of opportunities to simplify the device overall. There are 50% fewer components compared with the previous version.”

Model for Success

With resounding research, development, clinical, regulatory, and marketing successes in a span of less than six years, Restore Medical could be a model for start-up companies across the entire device industry.

“The biggest lesson we can offer is that it pays to approach a problem scientifically and to understand the clinical, physiological, and lifestyle issues involved before committing to a technology,” says Paulson. “And then when you do, to figure out how it can be produced in an efficient, low-cost manner.”

Copyright ©2005 Medical Device & Diagnostic Industry