Video: AngelList's Ash Fontana on How to Get Your Medtech Startup Noticed by Investors

Video: AngelList's Ash Fontana on How to Get Your Medtech Startup Noticed by Investors

Get expert advice on topics from product design to obtaining FDA clearance and funding in our new “Startup Elements” video series, produced in partnership with San Francisco-based incubator Rock Health. In the first installment, AngelList’s Ash Fontana discusses how to get your startup noticed by investors. 

How Cook Medical Adopted the GTIN System: Sleepless Nights and Peanut Butter

Dave Reed: "We heard our customers saying, 'we are going here—and you better come with us.'" 

 

In a decade, Cook Medical has gone from a company with a uncoordinated tracking plan to one of the first medical device companies with a truly global unified barcode system that simplifies supply chain operations. As of January 1, 2013, all products coming out of the North America from Cook will carry a GS1 global trade item number (GTIN). The move was part of an industry agreed-on sunrise date, promising the ability to accept, provide, and manage products bar coded with GTINs. That accomplishment is a testament to many years of hard work and dedication of multiple teams in the company, explains Reed.

But it wasn’t easy, Reed says. “When we first started talking about it, everyone had their own needs and their own ideas of what they wanted our product codes to be.”

The GS1 sunrise objective consisted of 6 goals for companies, as follows:

  • Assign GTIN to healthcare products.
  • Use GTINs in business transactions like electronic ordering and invoicing.
  • Mark GTINs on appropriate levels of packaging.
  • Use in returns and recalls GTIN.
  • Register GTINs in the GSI global data synchronization network.
  • Scan GTINs at point of delivery.

 

Choosing a Standard Tracking System

 

MD&M West Workshop to Tackle
GS1 and UDI

MJ Wyllie, Sr. Director Healthcare, GS1 Healthcare US will be speaking at MD&M West on February 13 in Anaheim about GS1 standards and how they comply with Unique Device Identification. The workshop will provide insights to how GS1 standards fit into the UDI rule, the enterprise-wide influence of GTINs, and practical implementation strategies. 

More than 10 years ago, Cook’s CIO started working with FDA and other subsidiaries to develop a system to track products. Gavin Seyler, global brand marketing manager for healthcare business solutions at Cook, says that major industry health systems, such as Kaiser, the Mayo Clinic, and Intermountain Healthcare had chosen GS1 standards, and asked  industry to follow the same plan. FDA, however, has not made following any particular standard a requirement. The most common standards used in industry today are GS1 and the Health Industry Business Communications Council Supplier Labeling Standard (HIBCC SLS). 

For companies who are just beginning to adopt a tracking plan and who might be having trouble deciding which bar code system to use, choosing one and just going with it seems to be the secret.  Both Seyler and Reed agree that companies should make the decision for themselves. They say to choose one that will best represent the broadest number of stakeholders, which can include players up and down the supply chain.

Most importantly, however, they say is “just start.” Because making the decision on which system to go with is not the hardest part.

Moving to Implementation

Gavin Seyler: "GTIN...provides a common language for products.

Reed says there were hundreds of people who were involved in the planning and execution of the project. Cook formed a multidisciplinary team that took just shy of 5 years to complete the heavy lifting for the project.

Cook is a private company, and so doesn’t disclose the costs of implementing such a system. However, Reed admits the cost was significant, “not just in raw dollars, but in time, energy, effort, and sleepless nights.”

“If you had asked me before we started how long it would take, I wouldn’t have predicted 5 years. I would have said 8-10 months,” he says candidly. “Organizations who think they can accomplish the task in a year or two have unrealistic expectations.”

Reed lists some of the project challenges that had to be overcome. “We had to figure out documentation and regulatory details, design acceptable and readable bar codes, and ensure the standardization, among many other tasks that we never would have anticipated.”

Cook’s multidisciplinary team met about once per month, and when necessary, every 2 weeks, and sometimes once a week, “and of course, there were millions of informal meetings,” he says. At different times, the team involved representatives from nearly every aspect of the company, such as IT, regulatory, quality, marketing, operations, customer service, warehouse, and manufacturing. Reed says that most of the team members would say the process went well. “It was clearly an amazing effort, and it was far more daunting than we expected.”

Worth the Pain

Despite the trouble, Seyler and Reed say the project was unequivocally worth it. “Using GTIN helps customers get their arms around their own supply chains; it provides a common language for products,” Seyler says.

GTINs and other similar programs provide the best way for companies to understand what products are on the market and where they are. “We heard our customers saying, we are going here—and you better come with us,” says Reed. In addition to responding to customer needs, FDA has been pushing industry to adopt a standardized system as soon as possible.

Unique device identification will be mandatory for medical devices. Reed explains that the GTIN provides UDI data as well as other types of tracking data that are good for business. “The unique identifier takes the GTIN and adds specific data elements required by FDA. It is a greater extension of a data repository,” says Reed.

“We had to continually remind ourselves and the organization why we doing what we were doing,” says Reed. Reed describes a meeting in which someone compared medical devices to peanut butter. “I can’t remember who said it, but we often talked about the fact that a patient is better off if there is a recall on peanut butter, than if there is a recall on the device,” he says. “If that doesn’t drive you to do the right thing, I don’t know what will.”

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UMass Hosts 'March Madness' Competition for Medical Device Companies

The Massachusetts Medical Device Development Center (M2D2), a joint initiative between University of Massachusetts Lowell and University of Massachusetts Medical School in Worchester, MA, has announced a competition targeted at Massachusetts-based medical device startups. The 2nd annual Venture Competition will award $20'000 worth of product development services to a device maker, including engineering services (such as prototyping), business services, and legal services.

All new medical-device ventures and entrepreneurs are encouraged to apply. In a press statement, UMass Lowell cites last year’s winner, MedicaMetrix Inc., which used the award to further the development of its ProstaGlove prostate-measuring system. The startup has since raised $4.5 million to $3.5 million in private equity and $1 million from the Massachusetts Life Sciences Center Accelerator Loan fund.
 
M2D2 provides fee-based services in the areas of business planning, product prototype development and clinical pathway assistance to medical device companies, in addition to offering incubator space.
 
The deadline for entry is Friday, Feb. 1, judging will take place through March, and a winners' ceremony will be held in Boston in April. Visit the UML Web site for more information.
 
-Chris Wiltz is the Associate Editor of MD+DI

Digital Health Startup Orca Health Teams Up with Harvard

The book titled “Moonwalking with Einstein” recounts the story of a man with a truly remarkable memory. Referred to simply as “S,” could easily remember strings of numbers 70 digits long—and recite them forwards and backwards. Also impressive was that S could recall such memories for years afterwards. The book ascribes S’s memory prowess to the fact that he was a synaesthete; his five senses were intricately intertwined. “Words set S’s mind ablaze with mental imagery,” the book explains, later adding that “[a]ll of our memories are, like S’s, bound together in a web of associations.”
 
Orca Health's heart health app features interactive animation, audio information, as well as text descriptions.  
While learning long strings of numbers is no easy feat for most people, there is perhaps a lesson in S's example: multisensory learning can be a surprisingly powerful. Research performed at the University of California, Los Angeles and Riverside, respectively, indicates that learning in an environment that stimulates multiple senses at once dramatically helps with the retention of information. The researchers report that people normally retain 10% of what they read, 20% of what they hear, and 30% of what they see—but retain 50% of what they see and hear.
 
In the healthcare realm, multisensory learning principles could used to improve the education of medical professionals as well as improve patients’ understanding of their health and diseases afflicting them. Doing the latter could help address poor health literacy, which accounts for 7 to 17% of personal healthcare costs according to a 2007 report titled “Low Health Literacy” from John Vernon, PhD of the University of Connecticut. 
 
The startup Orca Health is working to leverage the power of multisensory learning with a suite of health education apps that feature 3-D animations, audio explanations, and text descriptions of common diseases."We've worked hard to incorporate multisensory education into our apps. We sought out the best academic research on the subject and applied those principles to the apps," says Matt Berry, founder and CEO of Orca Health. "The apps aren't just 'fun to play with' or 'cool 3D and graphics;' they're based on the latest research in multisensory learning," he adds. 
 
The Advantages of Multisensory Learning
A study found that 84% of participants agreed or strongly agreed that 3D had improved their ability to learn.
Multisensory training also can reduce the duration needed to learn. One study found that it took participants in a unisensory training group five days to reach the test score that multisensory participants reached in two days.
The company's products are intended to facilitate educating patients, healthcare specialists, and students.The software also enables users to find local medical specialists. The company recently announced a partnership with Harvard Medical School, which will result in a series of iBooks. An iBook on the heart will be published this month, which will cover a variety of heart conditions using a variety of media.

"Many things can be explained better with video, interactive animations and spoken voice—not just plain text,” explained Anthony L. Komaroff, MD editor-in-chief Harvard Health Publications in a statement. “Harvard Medical School believes its partnership with Orca Health will enable people to access, understand and retain high quality health information via state-of-the-art technology." 

Brian Buntz is the editor-at-large at UBM Canon's medical group. Follow him on Twitter at @brian_buntz

A Closer Look at Tear-Based Glucose Measurement for Diabetics

Each day, millions of diabetics across the world prick their fingers several times to check their blood glucose levels. Measuring glucose concentrations in tears may provide a noninvasive option for accomplishing the same objective, although it would likely need to be supplemented with some degree of blood measurement. "We are not suggesting that it is a replacement for blood glucose measurements. It could help in the monitoring of blood glucose by decreasing the number of blood finger pricks that a person with type 1 diabetes has to do," says Mark Meyerhoff, PhD, a professor of chemistry at the University of Michigan (Ann Arbor, MI) who coauthored a paper titled "Measurement of Tear Glucose Levels with Amperometric Glucose Biosensor/Capillary Tube Configuration" published in November in 2011 in Analytical Chemistry. "Instead of measuring your blood glucose, say, seven or eight a day, you might do three a day of blood and four of tear." More research, however, needs to be done to determine the feasibility of using of the technology, he says.

Many factors affect the blood glucose levels in tears and the level of glucose found in tears is likely to be individual and variable. Meyerhoff and a number of other researchers reported a correlation of blood and tear glucose in anesthetized rabbits in their research. "The ratio was different from animal to animal, and probably the same is true in humans," he says. Also complicating matters is that the ratio may change as a result of environment conditions or scratches to the eye's surface. "You have to be trained to [obtain tear samples] in a way where you don't scratch the eye. If you have any blood, then the levels are, of course, very different," Meyerhoff says.

Although tear measurement might not replace blood glucose measurement, even substantially reducing the number of finger sticks required to monitor glucose levels would be a significant breakthrough. Meyerhoff and fellow researchers are working to develop a simple electrochemical sensor that can accurately detect glucose in small tear volumes.  Such a system also has to be capable of detecting minute concentrations of glucose, as the concentrations of tear glucose are much lower than they are in the blood. "Whereas blood glucose on normal is 5 millimolar, tear glucose might be only 50 micromolar or maybe even less in some cases," Meyerhoff says. In research on rabbits, he and his colleagues used volumes of tear fluid measuring several microliters. "Since that time, we have improved things and we are now down to measuring in a half a microliter or a [single] microliter of volume," he says. "Those are closer to the volumes that we need for humans and we have done some studies on rabbits that way and we see a correlation and we are getting geared up to potentially do some human testing," he says.

Meyerhoff's research group is partnering with EyeLab Group LLC  (Ann Arbor, MI) to advance the research. "They are moving forward and excited about at least seeing what the correlations are once we get to humans."

Meyerhoff was named on a patent titled "Methods and Systems for Measurement of Tear Glucose Levels" that was approved by the U.S. Patent Office awarded on January 10, 2013.

Brian Buntz is the editor-at-large at UBM Canon's medical group. Follow him on Twitter at @brian_buntz.

Insulet Announces $85 Million Deal with Cannacord Genuity

Insulet, a diabetes management company based in Bedford, Massachusetts, announced that it entered a new deal with Canaccord Genuity. The new deal will give Canaccord Genuity an $85 million stake in Insulet's common stock. According to a press release by the company, funds from the new private placement deal will be used for marketing and development of its Omnipod insulin pump. The company also stated that it may underwrite an option for the sale of an additional 15 percent of offered shares. In December of 2012, Insulet received approval from the U.S. Food and Drug Administration for its next-gen OmniPod insulin pump. The new insulin pump is 25 percent lighter and 38 percent smaller than existing devices on the market. Canaccord Genuity is a global investment bank that focuses on growth-oriented companies. It currently has operations in 12 countries around the world and has the ability to get companies listed on 10 different stock exchanges. References www.canaccordgenuity.com/en/News-Events/News

Ceterix Orthopaedics Raises $19.5 Million in Latest Funding Round

Ceterix Orthopaedics, a medical device manufacturer based in Menlo Park, California, announced that it had successfully raised $19.5 million in its latest funding round. According to a filing with the Securities Exchange Commission (SEC), all the funding came from five different investors. The company is currently developing a specialized suturing device to assist surgeons with challenging anatomies. With its suturing device, surgeons can stitch complex anatomies while avoiding adjacent cartilage, tissue and nerves. This has the potential to reduce surgery length and recovery time. In addition, the company's suturing technology has the potential to reduce surgical complications from poor stitching. This includes complications like infections, the need for secondary surgery and more. In a Series A round of financing in 2010, the company raised $8.1 million. Its Series A round was backed by 5AM Ventures and Versant Ventures. The company hopes to raise an additional $1.1 million to support additional initiatives at the company. References www.sec.gov/Archives/edgar/data/1565435/000156543513000001/xslFormDX01/primary_doc.xml

New Troubles for St. Jude Medical

St. Jude Medical, a healthcare products company based in St. Paul, Minnesota, received a warning letter from the United States Food and Drug Administration over issues at its plant in Sylmar, California. The plant manufactures the company's next-gen Durata defibrillator leads. According to information from an SEC regulatory filing, the company decided to ignore the FDA's Form 483 warning letter. The letter detailed 11 quality control and documentation issues at the plant. However, the company stated that the warning letter was expected. In its October 3rd-quarter earnings conference call, management discussed that the official warning was imminent. While the letter from the FDA states that it will not grant the company requests for export certificates or PMA for Class III devices, it did not "identify any specific concerns regarding the performance of, or indicate the need for any field or other action regarding, the Riata ST Optim or Durata leads or any other St. Jude Medical product." The SEC filing continued, "Accordingly, the Company will continue manufacturing and shipping product from the Sylmar facility and customer orders are not expected to be impacted while we work to resolve the FDA's concerns." At the J.P Morgan Healthcare Conference, Daniel Starks, CEO of St. Jude Medical, spent a significant amount of time allaying investor fears over issues at the Sylmar plant. However, the recent Riata lead recall, FDA warnings and issues at the Sylmar plant have lead to a challenging business environment for the company. References www.sec.gov/Archives/edgar/data/203077/000089710113000058/stjude130160_8k.htm

AdvaMed CEO Panel: Medtech Needs 'Leapfrog-Type Improvements'

AdvaMed CEO Panel: Medtech Needs 'Leapfrog-Type Improvements'

What should the medical device industry do now, as it faces a perfect storm of a tight funding climate, price pressures, a tough regulatory environment, as well as the new medical device tax? “It has probably never been harder to bring a device from the bench to the bedside,” reflected Stephen Ubl, AdvaMed president and CEO who served as a moderator for the AdvaMed CEOs Unplugged Panel held last week at OneMedForum in San Francisco.

To succeed, life science companies should rethink innovation, which for many years, has largely focused on incremental product improvements, said panelist David Dvorak, Zimmer CEO and AdvaMed’s chairman. While that type innovation helps device companies remain competitive in the short term, Dvorak said, medtech companies should budget sufficient money to invest in “bigger leapfrog-type improvements.”

The medical device tax has made that a difficult proposition, as it has reduced the amount of money left to invest in R&D. Panelist Virginia Rybski, who is the president and CEO of Regenesis, explained that the tax will cost her firm about $1 million in 2013 alone. “That was money earmarked for innovation,” she said.

Panelist Peer Schatz, president and CEO of diagnostics firm Qiagen was more upbeat. “Luckily we can absorb the device tax as a larger company,” but he added that the tax is “very poorly designed.” To succeed in this tough marketplace, Schatz said Qiagen is prioritizing the cost-effectiveness of its products and striving to compellingly demonstrate those potential savings to payers. “When we go and launch products, we can show significant cost advantages,” he said. “We come out with these amazing cost effectiveness ratios in diagnostics. It makes it very easy for us to go to these decision makers on the payers side—centralized as well as private, and have a very strong argument for our solutions.”

Dvorak joked that the device tax has made his team at Zimmer better business people by making them more efficient. He explained that, when preparing for the medical device tax, Zimmer has “developed some very aggressive programs to drive improvement and efficiencies” companywide. That enables the firm to invest in aggressive higher risk products while continuing to refine its existing product portfolio.

Dvorak also stressed the importance of innovative new business models between life science companies and their customer base. In Zimmer’s case, it is becoming “much more of a partnership.” Zimmer is working with hospitals to help them “reduce the total cost of care, improve the quality of the patient outcomes, greatly reduce the complication rates for readmissions, and help [hospitals] manage their costs,” he said. “Even in the deployment of our implant systems, we are keenly aware of how important it is for them to better manage the inventory that flows through their hospitals, to better manage the instruments that supports those systems, and the reprocessing costs within central sterilization,” he said.

At the close of the panel, Ubl asked the panelists to share the best advice they have ever received. Ubl first shared his favorite piece of advice: “Whatever you do in your career, dive into the substance. Know as much or more about the substance of what you are doing than anyone else in the room. I’ve really taken that to heart and spent a lot of time on the policy side as a result.”

Rybski said that her favorite was similar: “Work hard, understand everything, and if you want to excel, you have to do at least 50% better than your peers.”

“There has been a temptation to look for the outside savior for growth in another sector”
—David Dvorak, CEO of Zimmer

Schatz followed with the following: “The most valuable advice was from our venture capital investor when we started the company a little over twenty years ago. We had tough times and I went to him and he said: ‘don’t worry, the next Amgen is just around the corner and it might be you. Always believe in going big and having high hopes and shooting for the best.’

Dvorak closed the panel discussion by stressing the importance to have a maniacal focus on where your team can create the most value. “There has been a temptation to look for the outside savior for growth in another sector,” he said. “But if you know your space and your business best, that is the most likely place I believe you will have to create value and make a difference for patients ultimately,” he added. “I encourage you to plant that one in your head. And when you are making tough decisions, developing your strategic plan or your operating plans, it ends up being hard choices and focus that can be the single biggest difference maker.”

Brian Buntz is the editor-at-large at UBM Canon's medical group. Follow him on Twitter at @brian_buntz.

FDA Urged to Require Trial MDs Financial Data from Device Makers

It says FDA should ensure that sponsors submit complete financial information for all their clinical investigators. Sponsors must also ensure that reviewers consistently monitor financial information and take action in response to disclosed financial interests by using a review template and providing guidance and training to reviewers. OIG says the recommendations would improve the agency’s ability to identify financial conflicts between clinical investigators and drug sponsors that could create a potential for bias.

The report notes that an earlier OIG investigation found that FDA had approved 42% of marketing applications in FY 2007 that were missing financial information. It also says that in about one-third of marketing applications, FDA reviewers did not document a review of financial interest information, and neither FDA nor sponsors took action on 20% of marketing applications with disclosed financial interests. “When FDA did act, it did not consistently take action in response to disclosed financial interests,” it says.

OIG does say that FDA has made some progress in implementing certain aspects of the recommendations. For example, in 2011 a draft guidance was released on Financial Disclosure by Clinical Investigators. “We continue to recommend that sponsors submit financial information as part of the pretrial application process and will monitor FDA’s progress in implementing this recommendation,” it says.

On medical device safety, the report notes that a 2009 report “revealed that FDA has not documented follow-up on adverse events, nor does it consistently perform its first-time reading of adverse event reports in a timely manner. In addition, FDA rarely acts when manufacturers and user facilities submit reports late. The inability to obtain complete and usable information in adverse event reports hinders analysts’ review of the reports, and FDA makes limited use of annual reports. Overall, FDA received twice as many adverse event reports for medical devices in 2007 as in 2003; however, the number of some types of reports, such as 5-day reports, decreased. Although manufacturers submitted most adverse event reports on time, many 5-day manufacturer reports and 5-day user facility reports were late.”

The report says that a clear protocol is needed to ensure that all responsible parties report and take appropriate action in response to device adverse events. “We recommended that FDA seek legislative authority to eliminate the requirement for user facilities to submit annual reports because, other than a count of total adverse event reports, all the information in the annual reports is redundant to the originally submitted reports,” it says.

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