BB&T Contributing Writer

ANN ARBOR – The med-tech community in Ann Arbor, Michigan is built around the University of Michigan (UM) and an array of organizations that support a proliferation of emerging growth companies. This infrastructure provides services that aid in the creation, acceleration, staffing, housing and financing of innovative medical technologies.

Innovations in medical technology derive from leading research programs at UM in the physical and biological sciences and from medical and engineering schools. It is noteworthy that Mary Sue Coleman, PhD, President of UM, has been a member of the Board of Directors of Johnson & Johnson (New Brunswick, New Jersey) since 2003 and serves on its Science & Advisory and Audit Committees.

Venture Funding from many sources

According LeAnn Auer, Executive Director of the Michigan Venture Capital Association (Ann Arbor), there are 16 Michigan-based bio-focused venture capital firms and 5 additional venture firms with offices in Michigan. Of the $2.1 billion under management by the venture capital industry in Michigan in 2009, half of it is in biotechnology, medical technology and healthcare services. UM received federal research funding totaling $1.14 billion in 2010.

Arboretum (Ann Arbor) is one of the largest venture funds in Michigan and only invests in healthcare companies. Its portfolio consists of 21 companies, with one-third in health services and two-thirds in medical devices and diagnostics Seven are based in Michigan of which most originated at UM. Arboretum targets 3 to 4 investments per year and has $125 million to invest. Jan Garfinkle, founder and managing director, told BB&T that Arboretum's “focus is on companies that drive down the cost of healthcare, and we believe innovation can help do that. Medicare is going to go bankrupt if we don't fix it. The big questions is what's going to happen to healthcare on the reimbursement front.“

Spinoff successes from UM Office of Technology

The UM Office of Technology Transfer maintains a 32-member staff and is housed on the 174-acre site that the university acquired from Pfizer in January 2009 for $108 million. This laboratory and administration campus includes 30 buildings, although many are still unoccupied. The Office of Technology Transfer (UM Tech Transfer) has averaged 8 to 12 startups per year over the past ten years. Nearly one-half of its office space is allocated as an accelerator facility for university startups. The initial companies in the facility, which already has five tenants, are software, technology, cleantech and life science companies. UM Tech Transfer's principal services are the licensing of technology and products, providing a business formation group for faculty members, and mentoring a residency program. Several Ann Arbor-based companies that have been spun out from research conducted within UM laboratories were acquired in recent years; see Table 1.

Med-tech programs supported by business accelerators

Ann Arbor SPARK was created five years ago as an economic development organization with the mission of “igniting innovation“ in high growth companies and speeding up the development of startups with a variety of services. It functions as a business accelerator and provides entrepreneurs and emerging companies in Ann Arbor with assistance in developing a business plan and strategy, marketing, training programs, and securing consulting services. SPARK administers the Michigan Pre-Seed Capital Fund and provides financing up to $0.25 million. Accelerator services are provided to about 60 companies each year. SPARK's 16-member staff have business backgrounds. Most of the companies reviewed in this report received early-stage funding from SPARK and initiated operations within the SPARK regional incubator network, a collaborative effort supported by funds from public and private organizations, local governments and universities. SPARK's portfolio companies include 40% in life sciences. One-third of its companies came out of the University of Michigan.

UM's Medical Innovation Center was formed three years ago to assist in the development of technologies having an impact on human health. It utilizes two approaches, through educational offerings which include an industry-sponsored innovation fellowship program, and through a Concept-to-Commercialization program. Its service is provided at an early stage and prior to raising seed capital. The objective is to take ideas and prototypes and accelerate their transition to proof of concept. The Medical Innovation Center is participating in UM's Pediatric Device Consortium (M-PED) that focuses on unmet needs in pediatric surgery which are being addressed by its collaboration with the Pediatric Medical Device Institute (Roanoke, Virginia).

In a related initiative, the UM Tech Transfer's Michigan Venture Center was created to serve as a central connection point of venture opportunity creation resulting from UM's intellectual property. It takes technology and faculty with potential to form a startup company, and connects them with both external entrepreneurs and investors. About 40% of the startups are in the lifescience field.

MichBio (Ann Arbor), founded in 1993, is supported by 240 members. It serves a wide range of companies, including industrial, environmental, pharmaceutical, medical device and diagnostic, medical laboratory testing and clinical research. It serves as a one-stop shop for references, provides business-to-business matchmaking and is a link to investors. It structures deals with major vendors so that its member companies can get discounts on purchases. Stephen Rapundalo, PhD, president/CEO of MichBio, said that “we're about driving bio-industry growth. We've been striving to make ourself an indispensable resource to the industry and for the industry. We're the first and only state to have bioscience legislative committees in the House and the Senate which allows us to discuss policy and translate that into legislation in support of the bio-industry.“

MichBio's listing of 550 bio companies in Michigan includes 220 in medical devices and 185 pharmaceutical companies. It sponsors many events including an annual expo and conference. MichBio has ties to UM's Office of Technology Transfer and also interfaces with Michigan State University (East Lansing), Wayne State University (Detroit) and Michigan Technological University (Houghton), as well as many other state universities and community colleges. Funding of MichBio is provided in approximately equal amounts from membership dues, corporate sponsorship, and registration and exhibit fees.

MC3 (Michigan Critical Care Consultants) designs and develops medical devices as well as provides regulatory assistance and management of preclinical testing programs and formation of startups. It focuses on assisting early stage companies in reaching the level needed for pursuit of venture capital funds or securing strategic corporate investors. Many of the companies served by MC3 are spinoffs from UM. Noteworthy products developed by MC3 are the M-Pump, a peristaltic roller pump with advanced safety features for which a corporate licensee is sought, and BioLung, an artificial lung that is capable of full respiratory support. It can replace the gas exchange function of a person's native lungs during recovery from injury or illness, or until donor lungs are available for transplantation. MC3 co-founded Novalung (Heilbronn, Germany) to pursue commercialization of the BioLung.

Emerging companies encompass medical technologies

The following companies located in Ann Arbor and neighboring towns are representative of the scope of technologies under development which are in fields of medical devices, diagnostics, imaging, biomaterials and proprietary software.

Medical devices and equipment

FlexDex (Ann Arbor) is developing a steerable laparoscopic instrument platform for enhanced dexterity. Its co-founders are James Geiger, MD, a pediatric surgeon and executive director at the UM Medical Innovation Center, and Shorya Awtar, PhD, a professor at UM's School of Engineering. The FlexDex system allows for multiple degrees of freedom (3 translations and 3 rotations) with intuitive user control. The instrument is attached to the surgeon's forearm and utilizes a virtual center for steering at the surgeon's wrist. As a result, the end effector on the instrument tip moves in the same direction as the surgeon's hand, enabling one-to-one motion conversion between the surgeon and tool effector inside the patient's body. The design is purely mechanical with a minimum number of components and assembly steps. Funding for FlexDex has been provided by several departments within UM, an indication that awareness of the Medical Innovation Center's Concept-to-Commercialization program and Design and Prototype Lab is increasing among the university's health system, engineering, medical and business schools.

HistoSonics (Ann Arbor) is continuing the development of histotripsy, a technology which employs a non-invasive image guided system to ablate tissue with robotic precision. The technology is covered by two issued patents and five pending patents. It was licensed from UM where it was originally developed by scientists in the department of biomedical engineering and the department of urology. Histotripsy employs controlled cavitation by using focused high intensity ultrasound which produces tiny energetic bubbles that expand and contract in a way that breaks up and destroys the unwanted tissue without heat. It is a versatile platform that has the potential to replace traditional surgical and minimally invasive methods and reduce patient trauma and healthcare costs. The first clinical application will be for the treatment of benign prostatic hyperplasia which affects more than two million men in the U.S. and about 400,000 are treated surgically. In December, the company raised $11 million from several venture capital firms in a Series A financing

AI Medical Devices (Williamston) markets several airway management products for use in hospital emergency and operating rooms. The products employ stylet-based systems for oral and nasal insertions and for use with a laryngoscope blade. Articulating fiber optic tubes containing LED cameras on their tip for video transmission are used to enhance steerability during intubation and thereby allow the devices to conform to all possible anatomies. AI's devices include the AVID videolaryngoscopy airway system, Oral RIFL (Rigid and Flexing Laryngoscope) stylet, Nasal RIFL stylet and FlexBlade video laryngoscope. Future planned products are a pediatric FlexBlade and a tube exchanger. Laryngoscopes are Class I devices and are 510(k) exempt. AI has received funding from government and private investors and is currently seeking to raise an additional $1.5 million for the development of new products.

Tangent Medical Technologies (Ann Arbor) was formed in July 2009 and the founders completed the fellowship program at the Medical Innovation Center. It has exclusive worldwide rights to Novacath, a patent-pending stabilized catheter system for peripheral intravenous (IV) fluid delivery that utilizes a simple built-in strain relief mechanism for improved stability.

Conventional IV systems lack stability and are prone to frequent painful complications. Novacath is considered a closed IV system because it contains blood during insertion, lowering the risk of exposure to blood-borne pathogens. Elyse Kemmerer, PhD, co-founder and director of market development for Tangent, estimates that more than 300 million IV devices are sold every year in the U.S. According to the Hospital Pharmacy Journal, no major changes have occurred in IV systems in more than 10 years. Tangent is currently performing bench tests in preparation of submitting a 510(k) to the FDA by mid-2011. A competing catheter stabilization device is the Nexiva, a closed IV catheter system sold by BD (Franklin Lakes, New Jersey). Tangent has received private funding by angel investors as well as pre-seed funds from the state of Michigan and a grant from the federal government. Kammerer noted that the company “is looking for distribution partners to work with after receiving 510(k) clearance.“

MEMStim (Ann Arbor) is developing microelectrode leads that can be integrated into neurostimulator devices for the treatment of Parkinson's disease, deafness, epilepsy and chronic pain, with emerging treatments in the areas of paralysis and blindness. The effectiveness of these treatments is related to how precisely the electrodes can stimulate specific nerve groups within a bundle, limiting unwanted side-effects or distortions.

Leads presently used by major medical device companies are made by hand. Manual assembly greatly limits the number of electrodes placed on a single lead, as well as the minimum spacing between those electrodes. Using automated MEMS manufacturing processes, MEMStim will sell electrode leads with a 30X decrease in electrode spacing and a 10X increase in the number of sites. In addition to performance enhancements, MEMStim leads are projected to sell at a cost 30% less than their hand-assembled alternatives. MEMStim recently won the Michigan Business Challenge and Dare to Dream Assessment Grant.

Diagnostic and imaging products

Accord Biosciences (Ann Arbor) has licensed the Nogen nitric oxide (NO) generative technology from UM. This technology is covered by four issued patents and eight pending patents. Nogen NO materials can potentially be used in biomarker assays, diagnostic tools and as a coating on blood-contacting medical devices. Nogen liberates NO from carrier molecules within blood known as nitrosothiol. NO has antiplatelet and antimicrobial properties. NO levels in blood can be used to determine whether an individual has vascular or hypertensive disease. The company's initial focus is on assessing these diseases by developing a disposable test strip for the point-of-care detection of NO levels in a fingerstick blood specimen using a reusable console. This product will initially be targeted in cardiology and pulmonary clinics for the diagnosis and management of pulmonary hypertension. A feasibility trial is being conducted by Raed Dweik, MD, at the Cleveland Clinic Pulmonary Vascular Institute. The company expects to complete a phase 1 pilot trial by October 2011. Another clinical trial is planned for use of the Nogen technology to diagnose preeclampsia. Accord has received funding from several sources including an NIH SBIR grant, financing from venture capital firms and a convertible note from Ann Arbor SPARK. Kris Aalto, president of Accord, plans to secure the Series B venture capital funds needed to complete the company's pivotal clinical trial and first FDA 510(k) clearance for pulmonary hypertension with supporting pilot clinical trial results in hand later this year.

Blaze Medical Devices (Ann Arbor) was formed in 2006 to develop a method for measuring the quality of stored blood. FDA regulations limit the use-life of stored blood to 6 weeks. However, blood loses its effectiveness as it ages and there is no metric to assess how blood cells are changing. Blaze has a patented a means of measuring the fragility of the red blood cell membrane using an optical spectrophotometric measurement which can be used as an indication of the blood's quality and anticipated performance in the patient. The membrane needs to flex to be effective, but during refrigerated storage it loses some flexibility which results in impaired oxygenation. Blaze Medical is about to start a 40-patient clinical trial at the Henry Ford Hospital (Detroit) to determine how the company's test can be used to predict the quality of stored blood. Measurements will be made on blood prior to, and after, transfusion in the patient.

Blaze was a recipient of the best business award in a competition sponsored by the Great Lakes Entrepreneur's Quest.

OcuSciences (Ann Arbor) was founded in 2006 by researchers at the UM Kellogg Eye Center to develop OcuMet Beacon, an ocular imaging device for tracking metabolic tissue health of the retina by measuring cellular mitochondria. It utilizes retinal eye analysis for the detection of some eye diseases several years earlier than can be achieved using current clinical methods. Its most significant applications are for the early detection and monitoring of diabetic retinopathy, for following the progression of dry age-related macular degeneration, and to assess macular edema. OcuMet Beacon is being sold to research ophthalmology centers. Large pharma or contract service organizations use the retinal metabolic analysis provided by OcuMet Beacon in their clinical trial evaluation of new drug candidates or therapies to measure the effect of their therapy or to guide a therapy such as photocoagulation for retinal diabtic retinopathy. OcuSciences is targeting optometrists and ophthalmologists for use of OcuMet Beacon for monitoring ophthalmic disorders, at a price point of a standard fundus camera. As a tool for primary care providers, it could become an early screen for diabetic retinopathy and is envisioned to become a new vital sign measurement for patients at risk due of diabetes and/or hypertension.

Life Magnetics (Ann Arbor) is developing an in vitro diagnostic device and disposable card assay to rapidly identify bacterial strains and determine which antibiotics will work against the strain in 6-12 hours, rather than two days. Detection of bacteria and their response to antibiotics are indicated by changes in the rotational speed of a magnetic particle. This allows for rapid antibiotic susceptibility measurements to be made on the time scale of hours. Through the utilization of rapid diagnostics, hospitals can prescribe appropriate antimicrobials for patients which will cut their costs and can save lives.

Hygieia (Ann Arbor) is developing Private-Doc, a glucose meter with software that interprets a patient's blood sugar data. This allows the patient to change insulin dosages right away, rather than waiting to be assessed by a physician, thereby providing optimum diabetic care. The company was founded in 2008 by Israel Hodish, MD, an endocrinologist and faculty member in the division of Metabolism, Endocrinology and Diabetes for the UM Health System, and Eran Bashan, PhD, an electrical engineer.

Epsilon Imaging (Ann Arbor) was formed in December 2008. Its TissueTrack technology measures and visualizes tissue motion using proprietary ultrasound speckle tracking algorithms. It uses the natural acoustic patterns or “speckles“ present in ultrasound images to precisely track tissue motion in multiple dimensions. Epsilon Imaging's software product, EchoInsight, utilizes TissueTrack technology and provides a sensitive measure of cardiac muscle function. It is being developed for detecting cardiovascular disease. EchoInsight is currently in feasibility trials at six locations in the U.S. and Europe. Epsilon Imaging has FDA clearance for its base imaging system and an application for EchoInsight was recently submitted to the FDA. The company plans to launch this software by the end of the year. TissueTrack is also being evaluated for use in vascular imaging to assess the compliance, or stiffness, of the blood vessel wall. The wall stiffness can be correlated with vascular disease. This application is just entering a clinical trial. Epsilon Imaging has been funded by NIH grants and from angel investors. It aims to establish business relationships with diagnostic and imaging companies

Biomaterials

Biotectix (Ann Arbor), founded three years ago, is a portfolio company within Allied Minds (Boston). As principal investor, they have committed more than $3 million in funding to date while providing technical oversight and back office operations. Biotectix is developing a class of conjugated polymers that conduct both ionically and electronically. These polymers have potential for use as coatings on implantable medical devices that use electrical stimulation or sensing. The coatings may be used to address challenges such as power consumption in wireless cardiac pacing and improved signal to noise and transduction in neural microelectrodes. The company has completed several feasibility animal studies and recently participated in a GLP chronic animal safety and efficacy study funded by a co-development partner in the medical device field. According to James Arps, VP and GM, the company's “business model is to work with leading device companies under co-development agreements and to license the technology on an exclusive or nonexclusive basis.“ A key goal is to get materials ready to initiate human trials with strategic partners.

The inventor of Biotectix's polymer technology and the company's Chief Scientific Officer is David Martin, PhD who serves as the chair of the Department of materials Science and Engineering at the University of Delaware (Newark). Two associates, Dr. Jeffrey Hendricks and Dr. Sarah Richardson-Burns also made significant contributions and helped to found the company. Some early applications for Biotectix's technology came out of the laboratory of Daryl Kipke, PhD, a professor in the department of biomedical engineering at UM. Kipke is the founder of NeuroNexus (Ann Arbor), a developer of neural interface products and technologies.