Calculated Risks: New Technologies and a Company to Take Public

Medical Device & Diagnostic Industry Magazine
MDDI Article Index

An MD&DI  March 1998 Column

SNAPSHOT

A company that aspires to go public someday needs a person with a strong business background at its helm, and one of the best ways to get one is to look for a candidate with industry-specific knowledge and an MBA.

That's precisely what Hepatix did when it hired Terry M. Ryusaki, who was a consultant at the firm's Houston headquarters before it moved to San Diego. "I identify new opportunities for the company," says Ryusaki. "I'm out there looking for new technologies, new products to acquire or license."

Business development has only been the core of Ryusaki's repertoire for the past five or six years. Before that, he focused on sales and marketing. Earlier still, he worked as a medical technician while getting his MBA from the University of Southern California (Los Angeles).

Growing up in Honolulu, Ryusaki had every intention of becoming a doctor, receiving a BA in microbiology and a BS in medical technology from the University of Hawaii. However, "I saw the life of the interns and residents, and I wanted to do something else," he says, "so I took the board exam to be a med tech." Ryusaki hoped to be an important part of a health-care team. "My bubble was shot when I started working as a med tech in the laboratory at Childrens Hospital in Los Angeles. The machines are all automated. You're more of a factory worker than someone really doing medicine."

Ryusaki eventually decided to pursue an MBA while continuing to work part-time as a med tech. "I was very fortunate because the combination of a medical and a business background was very unusual in the mid-80s. I got a lot of attention from hiring companies." Ryusaki joined American Hospital Supply, which was later acquired by Baxter.

Ryusaki says he "spent about 12 years with the big corporate blue, then ventured off on my own with a start-up company in Houston and did an IPO [initial public offering] with them and took them public." Ryusaki was so challenged and (one can assume) monetarily rewarded by this move that he started looking for another potential company to take through the process.

While working for several companies in the medical device industry, Ryusaki had his eye on Hepatix. "I found the technology intriguing, exciting," he says. " In evaluating their data, the company had progressed very far; they had completed a phase I safety trial, so their technology's risk was a lot lower than others. They just needed a management team to bring the technology to commercialization." Ryusaki joined Hepatix after the company announced the plan to relocate.

The device that created such intense interest is a cartridge with tiny hollow fibers that are inoculated with a cell line that can be immortalized (replicated without losing its properties). For three or four weeks, the cells grow until they reach the limits of the cartridge. At this point, they undergo contact inhibition, changing from growing fetal cells to the adult form that performs liver functions.

The liver is the only organ with the ability to regenerate, but doing so can be difficult while it is performing its functions. Therefore, the device is designed to take over and remove toxins from the blood, metabolizing them and producing essential proteins and clotting factors. The treated blood is reinfused back into the patient. Ryusaki hopes that clinical trials slated to begin this summer show that the device will allow most of the subjects' injured livers to regenerate. "But even if their livers are not regenerating, then at least we have purified their blood and made them better candidates for liver transplantation," he explains. "The device is also designed to assist the new transplanted liver until the new liver is functioning adequately and can fully sustain the patient."

Although the device would initially only be for patients with acute liver failure, reducing this group's need for liver transplants would make a greater number of donor livers available for the patients with chronic conditions.

Ryusaki says that the long-term goal is to assist patients with chronic liver failure as well. "Liver failure is actually a young person's problem," he says. "Fifty-eight percent of all transplant patients are under 50." Other sobering statistics—the average cost is $315,000 for the transplant and $25,000 a year for immunosuppressive drugs and supportive care to prevent rejection. Also, the five-year survival rate after a transplant is only about 69%.

Ryusaki is quite satisfied to be working on the financing for Hepatix with an eye toward doing at IPO sometime this year. "I knew I wanted to stay in medicine," Ryusaki says. "I have no regrets whatsoever. You learn so much about technologies—when I was going to school, no one even envisioned things like what we're doing. I've been lucky to really stay in the forefront of technology."

Jennifer M. Sakurai is managing editor of  MD&DI.

Copyright ©1998 Medical Device & Diagnostic Industry