Regulation Meets Collaboration: MDIC Five Year Reflective

Last month, I attended a public meeting in D.C. where FDA/CDRH directors, medical device company leaders and academic researchers came together to design new ways to improve U.S. competitiveness in our industry. Pretty lofty goal. The group is called the Medical Device Innovation Consortium (MDIC) and it’s a novel creation, five years in existence, dedicated to continuous improvement for the benefit of patients, manufacturers, and our overall medical knowledge. I went with skepticism and returned a believer that things are truly improving on all these fronts.

It was an impressive list of speakers during this one-day conference. Scott Gottlieb, Director of the FDA led off with a talk describing the new mindset he and his team have towards improving FDA processes, responsiveness, and openness to working with device manufacturers. The meeting closed with Jeff Shuren, Director of CDRH explaining the accomplishments and next goals of the numerous working groups of MDIC. In between were intriguing round tables, break-out sessions and fireside chat interviews.

Several themes emerged, including the opportunities, challenges, and risks presented by advances in technology and their entry into the device space. We discussed the importance of and strategies for harnessing and policing the massive amounts of data being generated throughout the healthcare chain. Many conversations touched on how to keep the patient’s experience and well-being at the center of our work with so many other factors competing for our attention.

But more than any of these topics, what impressed me was the change I’ve seen in recent years in the relationship dynamic between industry and FDA. For most of my career, interactions between industry members and agency representatives could have been fairly described as cautious, mistrustful, and, too often, adversarial. In the past decade, however, I’ve witnessed a significant and positive paradigm shift in this area.

The mere existence of the MDIC is a sign of this progress. In its own words, “MDIC is the first-ever public-private partnership…with the sole objective of advancing medical device regulatory science.” The organization provides a platform for medical device regulators, industry members and advocates, and even citizens to interact around the most critical issues facing our industry today. If you’re interested in learning more, I’ve added links below to some of the more compelling topics discussed:

FDA Commissioner Scott Gottlieb signified the agency’s commitment to speeding the entry of new, effective, safe devices to market by highlighting of several initiatives that are helping to modernize and streamline the process. These include:

– FDA Payor Programs that facilitate communication between device manufacturers and payors (including Medicare and private insurers) beginning before device approval, speeding coverage and reimbursement decisions, and expediting patient access to new treatments.

– Draft Guidance on Humanitarian Device Exemption (HDE) Program that seeks to update FDA review procedures for devices intended to treat conditions affecting fewer than 8,000 individuals in the United States.

– Brand New Draft Guidance on Dealing with Uncertainty in Benefit-Risk Determinations for PMAs, De Novos and HDEs that seeks to better define these processes and apply a more scientific approach to decision-making under these circumstances.

As a 25+ year veteran of the device industry, I’m actively monitoring these initiatives at FDA with interest and optimism. I believe we are witnessing examples of government performing more efficiently and working to both protect patients and ensure their access to new and more affordable treatments.  

Whether you see things the same way or not, I’d love to hear your take on these initiatives. Strike up a conversation with me and other colleagues by sharing this on LinkedIn or sending me an email at CScholl@Smithwise.com.

Though not yet available as I write this, you’ll be able to replay other 2018 presentations on MDIC’s site soon.

Chris Scholl
Director of Mechanical Engineering
Smithwise

Written by Chris Scholl

SMITHWISE FINDS A NEW HOME ON THE MAINLINE

“Our Philly team has grown dramatically over the past few years and our office downtown was becoming cramped. Now, with a space nearly four times larger, we have room to work collaboratively without bumping elbows with the teammate at the next desk.”

Photo Above: Smithwise Philly’s new home in the Betsy Ross Cottage on Ellis Preserve, Newtown Square, PA.

All photos courtesy of Andrea Menta Photography.

By Daniel Henrich

Smithwise, a medical device engineering firm with offices in Boston and Philadelphia, recently expanded its Philly presence by relocating to a larger office in Newtown Square. Previously in the PLEXUS co-working space next to 30th Street Station, Smithwise has moved to the Ellis Preserve alongside SAP, Sunoco, and other neighbors.

The Newtown Square business campus was previously home to Ellis College, a school for orphaned girls. Smithwise’s new home, the Betsy Ross Cottage, is an 8,000 square foot stone house that served as a student dormitory until 1977, when the school closed. Built in 1922, the structure is now modernized and adapted into office space, while maintaining its historic beauty and classic Mainline charm.

 
Smithwise teammates Andrew Mazzotta and Joe Jackson discuss a project in the Engineering Room. 

“We’re really excited about our new home here in Ellis Preserve,” said Smithwise President Eric Sugalski. “Our Philly team has grown dramatically over the past few years and our office downtown was becoming cramped. Now, with a space nearly four times larger, we have room to work collaboratively without bumping elbows with the teammate at the next desk.” And things aren’t slowing down, he added. “We plan to keep expanding here and in Boston—we have several new positions posted right now. This office will enable us to keep growing by adding engineering talent to our team.”

The bigger footprint will allow Smithwise engineers and designers to better serve their clients, with the lower level entirely dedicated to workshop and fabrication areas. “We don’t just design medical devices in CAD here,” said Chris Scholl, who’s been part of the recent growth, joining the firm this summer as Director of Mechanical Engineering. “My team is constantly building, testing, and adapting prototypes to find the best design. Having the space and tools to do this in-house is crucial for our ability to deliver excellent service.”

The Smithwise logo find a new home in the lobby downstairs.  

The decision to move from downtown wasn’t an easy one. “We were right in the middle of a lot of other medtech players with our old space near Penn, Drexel, CHOP, and Jefferson” Sugalski said, “so we needed our new spot to remain easily accessible to our clients and employees, while providing a lot more desk, meeting, and workshop space.” They decided that the Mainline struck the perfect balance between those competing needs. “We planted our first flag in PA with a one-man office in Malvern, staffed by yours truly. Then we moved to a larger space in Media, then to our office downtown” he continued, “so this isn’t the first time our location has needed to adapt to our changing needs.” Their new space should be a longer-term home. Though now outside the city limits, Smithwise is maintaining its presence downtown with a co-working space and open office hours at the Pennovation Center in University City.

The firm is planning a ribbon cutting and office-warming celebration for clients and Philly-area friends on October 11.

Written by Daniel Henrich

Written by Daniel Henrich

Director of Marketing at Archimedic

SMITHWISE HELPS STARTUP FIND ITS FOCUS

DxtER includes a group of non-invasive sensors that can communicate with a smart device as they collect data on vital signs, body chemistry and biological functions.

But DxtER had a problem. The platform had too many potential uses to become a single product.

Originally posted on Medical Design & Outsourcing

By Nancy Crotti

After Basil Leaf Technologies won the Qualcomm Tricorder XPrize in 2017, founder Dr. Basil Harris needed help figuring out how to bring this almost-all-in-one diagnostic tool to market.

Basil Leaf’s mobile platform DxtER includes a group of non-invasive sensors that can wirelessly communicate with a smart device as they collect data on vital signs, body chemistry and biological functions. An artificially intelligent engine at the heart of DxtER learned to diagnose by integrating ER practices with data analysis from actual patients with a variety of medical conditions and outcomes.

A Philadelphia-area emergency room doctor with a PhD in engineering, Harris worked with his brother, network engineer George Harris, and their Final Frontier Medical Device team to invent their version of the tricorder of Star Trek fame. Armed with the $2 million XPrize, Harris started shopping DxtER around to device development companies. He chose Smithwise of Newtown Square, Pa. and Newton, Mass. to help with engineering and regulatory issues.

But DxtER had a problem. The platform had too many potential uses to become a single product.

Read full article on Medical Design & Outsourcing

Solving Early Stage Medtech Ventures’ Funding Shortfall

The funding gap that currently exists for early stage medtech is a real threat to continued innovation within the medical device sector. While there is no simple fix to solving this complex funding challenge, there are specific actions that affiliated parties can take to improve the situation.

Originally posted on Med Device Online

Written by Eric Sugalski, founder and president of Smithwise’

At the 2017 Pediatric Device Innovation Symposium established by the Sheik Zayed Institute for Pediatric Surgical Innovation at Children’s National Health System, a diverse group of investors came together to discuss gap funding for pediatric innovation. It is well-known within the industry that early stage medtech financing has been dwindling in the past decade. The critical phase of translational research, which exists between grant-funded academic research and institutional investment, is particularly lacking.

Fig. 1 highlights the funding gap that exists for the life sciences industry. While the data used to generate this graph included both biotech and medtech, the trends illustrated here seem to hold true for the medtech sector alone.

Fig. 1 — Funding Summary for Life Science Investments

The symposium’s gap funding panel candidly analyzed the current state of early stage medtech investment, but, more importantly, it concocted a plan of action and discussed a series of recommendations for key contributors to the early stage medtech ecosystem. Below is a recap of the panel’s discussion.

The Role of Clinical Innovators

Unmet clinical needs are most often identified by physicians and nurses; early stage concepts and technologies are often pioneered by these same medical professionals. However, these clinical innovators, due to lack of time and resources, are unable or unwilling to invest in new medtech ventures. That said, clinical innovators are crucial to the flow of new medtech opportunities, and their contributions directly affect the quantity and quality of future medtech deals. Clinical innovators also can play a vital role in bridging the early stage funding gap if they:

  • Understand the Long Game — Often, clinical innovators believe that quick wins can be attained through a patent, a prototype, and a license deal with a large medical device manufacturer. Rarely does an established medical device company license and commercialize nascent medical device concepts that are loaded with risk. Most device innovators need to de-risk their concepts in order to gain traction among larger medical device entities. This de-risking process can involve facilitating clinical studies to prove the efficacy and economic viability of devices, developing new technologies to achieve accuracy levels and acceptable cost structures, and navigating complex regulatory and reimbursement pathways.

This process is a long one, requiring many different skill sets. While clinical innovators rarely drive these processes, it is critical for these individuals to gain insight into the timelines, operations, and budgets required so expectations are aligned at the onset of new ventures.

  • Team Up — Most successful medical device innovations arise from clinicians teaming up with technical and business talent. Deerfield Management’s proprietary analysis suggests that 15-25 percent of novel medical device technologies come from academic institutions, with the remaining coming from commercial incubators or serial entrepreneurs / management teams.

Onboarding the right team members can de-risk a venture from investors’ perspectives. The right team is able to produce a logical and capital-efficient process while providing a credible set of skills that will advance the new venture.

The Role Of Academic Centers

Many research universities and hospitals attempt to fill some of the funding gap through internal innovation efforts. In many ways, academic centers serve as some of the main facilitators and gatekeepers of medical device innovation. Academic centers can take the following steps to overcome the funding gap:

  • Be the Matchmaker — Universities and hospitals have adopted hack-a-thons as ways to connect clinical, technical, and business talent. These connections are essential, but are typically short-lived. Matchmaking between clinicians, entrepreneurs, and technical talent should be a continuous process.
  • Provide Support — While it is ideal to find seasoned serial entrepreneurs to take on and spin out new medical technologies from academic centers, these business leaders usually are in high demand and short supply. Academic centers often need to assist in making device opportunities “investor ready” before seasoned entrepreneurs are willing to take the reins. This assistance typically entails de-risking through building prototypes, thoroughly vetting IP, and mapping out regulatory pathways. Many academic centers have created innovation funds to facilitate such de-risking processes. When internal resources are limited, though, innovation funds can be used to contract industry experts who can efficiently perform these risk reduction processes.
  • Be the Dealmaker – While short-term licensing revenues tend to be the metric by which university tech transfer offices are evaluated, the self-reinforcing entrepreneurial ecosystems — as well as brand and reputation gains through innovative initiatives and future-entrepreneurs-turned-donors — can be far more valuable to academic centers in the long run. Implementing unreasonable terms for licensing new technologies is one of the greatest barriers to growth in the medtech sphere. Recognizing the immense value that entrepreneurs and investors can create post-licensing, and structuring appropriate terms that reflect this future value creation, can directly increase the number of opportunities and the investments that follow.

The Role of Entrepreneurs

Entrepreneurs driving new device ventures have many roles to play in strengthening the U.S. medtech industry.

  • Fundraise to Specific Milestones — Early stage entrepreneurs facing funding challenges will often accept any funding that might help start their development process. Unfortunately, many of these entrepreneurs will face a downstream funding gap if sufficient progress has not been made through the prior financing round. When entrepreneurs are raising funds, they should do so with particular milestones in-mind.

These milestones should be identified to reduce specific risk(s), which in turn might attract future investors to enter a round at pricing levels that will satisfy prior investors and board members. Entrepreneurs also need to be realistic about the milestones they are able to achieve with early funding levels. Andrew Elbaridissi of Deerfield Management confirms, “In the current funding environment, aligning cash uses with the most significant drivers of value is crucial. Failure to do so places future financings and company viability at risk.”

  • “Don’t be Wimps” – As suggested by CDRH Director Dr. Jeff Shuren, many entrepreneurs are excessively gun-shy about approaching regulatory bodies early in the process. The FDA and CMS offices are actively streamlining processes and creating new programs, such as Parallel Review for Regulatory & Reimbursement, which are not being pursued by entrepreneurs.

These programs are intended to help medtech entrepreneurs de-risk regulatory and reimbursement issues early in the process, and it’s in the best interest of entrepreneurs and the medtech ecosystem to participate in these reviews such that they remain in effect and continue to be optimized and expanded.

  • Do your Homework — Epidarex’s Kyp Sirinakis emphasizes the importance of researching your investors. “You want ‘smart money,’ not just money, so make sure that you have knowledgeable investors,” she says. Additionally, the relationship matters. Srinakis compares it to getting married: “You will likely be working with these people for a long time through ups and downs. There needs to be mutual respect and the ability to communicate on both sides.”
  • Plan, Plan, Plan — As John Parker of Springhood Impact Adventures explains, “Getting an innovative solution to the bedside is a long and difficult journey. It needs to be mapped out from start to finish, with the understanding that there will be traffic jams, detours, and roadblocks along the way. Sometimes, even the destination itself will change.”

Sirinakis backs up Parker’s claim, stating, “device ventures always cost more and take longer [than expected], so plan accordingly.” Developing the roadmap and trying to understand the timing and cost of all potential steps are keys to risk management. Since entrepreneurs typically need to get to market on a shoestring budget and timeline, it is difficult to bounce back from mistakes. “It’s important to do your homework on investors,” adds Sirinakis.

  • Get Help / Bring Talent to the Process — Getting help from mentors, advisors, board members, and industry experts can add value and challenge your assumptions. Parker asserts, “[knowledgeable] people want to help. Tap the wealth of the free or low-cost resources out there for device developers, such as the National Capital Consortium for Pediatric Device Innovation (NCC-PDI) — it won’t cost you a lot.”

The Role of Investors

Early stage investors take on considerable risk due to clinical, regulatory, payer, and technical challenges. Consequently, these early stage investors are susceptible to “getting squashed,” or substantially diluted, during later-stage financing rounds. When considering these dynamics, it makes sense why few early stage investors for medical devices exist.

Some investors are taking a different approach to filling this gap. Impact investors, particularly foundations and other charitable organizations, primarily measure their investments by the number of lives saved or improvements in quality of life for specific patient populations. Consequently, these types of investors tend to lean towards ventures that are making a significant impact, rather than those that serve as an incremental solution.

“Just as no return-driven venture capitalist hopes to make only a little bit of money, no early-stage impact investor strives to only make a little bit of difference,” Parker states. “Mission-focused investors are still looking for an outsized reward for the risk they are taking – they are just looking for that reward to manifest as massively improved outcomes for patients and healthcare stakeholders.”

In addition to providing this vital gap funding, the early stage investment community can bolster the medtech industry in the following ways:

  • Get your Hands Dirty — Some of the most successful medtech investors are actively involved in contributing to the ongoing operations of portfolio companies. They provide valuable business connections, optimize go-to-market strategies, and ensure that milestones are being cleared in the most efficient means possible. A large part of an early stage investor’s role is to ensure that their portfolio companies do not fall into funding gaps down the road. This means structuring early stage financing to achieve specific milestones that will allow subsequent financing rounds to be achieved.
  • Utilize Investor Networks — Investors bring their valuable networks and industry contacts to the table. “This can not only help you as run into pitfalls,” Sirinakis suggests, “but it can help introduce potential acquires and partners… ultimately helping structure the right deal.”

The Role of Regulators

U.S. regulators play an important role in keeping the population safe and striving for economic efficiency in our healthcare system. Indirectly, they also are pivotal in bridging the medtech funding gap. The constraints, processes, and ambiguity imposed by our regulating bodies constrict investment interest. Below are some actions that regulating bodies can take to improve the funding gap:

  • Provide Reimbursement Clarity & Guidance — The FDA has created extensive guidance documentation to address questions and confusion within the medtech community, often providing requirements and suggestions for particular devices. Although payment for new therapies and diagnostics represents the most significant risk for early stage medtech companies, CMS has yet to provide this same level of clarity and guidance.

If a similar level of guidance documentation published by the FDA were to be published by CMS, it would provide the clarity for venture capital firms to invest more heavily in the medtech sector. Elbardissi explains, “The failure to couple reimbursement and regulatory pathways has long been a headwind in the medtech sector. This is emphasized to an even greater extent in pediatric devices, where small patient populations and an inability to gain orphan-like pricing and reimbursement represent a monumental impediment to investor appetite — which is critical to drive innovation.”

  • Incentivize Investment in Unmet Needs — Many patient populations with unmet needs could be addressed through medtech innovation. Pediatrics, for example, is one of the most underserved patient populations. The lack of research and resources available for pediatric populations often leaves physicians with few options besides using adult devices on this population. The FDA is well aware of these issues, and they have created pathways to streamline the regulatory process.

The Humanitarian Device Exemption (HDE) pathway is one initiative the FDA has implemented to stimulate device innovation for small patient populations. While some medtech companies have benefitted from this pathway, it has not created adequate incentives to stimulate investment in these small patient populations. Conversely, the Orphan Drug Act, a seven-year patent extension and a substantial tax credit for companies developing and commercializing drugs for rare diseases, has done a remarkable job in stimulating investment for ventures focused on underserved populations.

Fig. 2 illustrates the number of orphan drug designations since 1982. If a comparable program was enacted to create tax incentives and patent term extensions for medtech, a significant stream of investment would likely open. Removing the profit caps that currently exist for these small patient populations would also greatly incentivize activity in these sectors.

Fig. 2 — Orphan Drug Designations

The funding gap that currently exists for early stage medtech is a real threat to continued innovation within the medical device sector. While there is no simple fix to solving this complex funding challenge, there are specific actions that affiliated parties can take to improve the situation. Through discussions like those that occurred at the 2017 Pediatric Device Innovation Symposium, clinicians, entrepreneurs, academic institutions, investors, and regulators can connect, learn from one another, and plan for progress that will ultimately improve the U.S. medtech industry.   

The original article can be found here

 Written by Eric Sugalski

Written by Eric Sugalski

Eric Sugalski is the founder and president of Archimedic, a contract medical device development firm with offices in Boston and Philadelphia. Sugalski has led the development of a novel pediatric life support system, cardiovascular implants, laparoscopic surgical devices, and an array of wearable diagnostics. In addition to his technical background, Eric provides companies with product development strategy that encompasses regulatory, reimbursement, and fundraising requirements. Eric obtained a B.S. in mechanical engineering from the University of Colorado Boulder and an MBA from the MIT Sloan School of Management.

GOVERNOR WOLF VISITS SMITHWISE

Governor Wolf and his team from Harrisburg visited Smithwise at our Philadelphia location.  There is strong interest from the State in building innovative companies that will drive job growth for local communities. Governor Wolf recognized the work taking place at Smithwise and our local clients as being a vital part of the innovation ecosystem in Pennsylvania.

During Governor Wolf’s visit, we discussed Towerview Health’s medication management platform, ZSX Medical’s laparoscopic surgical device, and Active Protective’s wearable airbag hip protection system.

We look forward to continued support from Governor Wolf in expanding health technology in PA.

 Written by Eric Sugalski

Written by Eric Sugalski

Eric Sugalski is the founder and president of Archimedic, a contract medical device development firm with offices in Boston and Philadelphia. Sugalski has led the development of a novel pediatric life support system, cardiovascular implants, laparoscopic surgical devices, and an array of wearable diagnostics. In addition to his technical background, Eric provides companies with product development strategy that encompasses regulatory, reimbursement, and fundraising requirements. Eric obtained a B.S. in mechanical engineering from the University of Colorado Boulder and an MBA from the MIT Sloan School of Management.

TOWERVIEW HONORED AS FINALIST IN THE 2017 MEDICAL DESIGN EXCELLENCE AWARDS

“Being selected as an MDEA Finalist is a testament to the skill, dedication and innovation of the Smithwise team that developed the Towerview product in a six month period of time.” – Eric Sugalski, Smithwise CEO

Smithwise is pleased to announce that Towerview Health Medication Management System has been selected as a finalist in the Digital Health Products and Mobile Medical Apps Category of the 19th Annual Medical Design Excellence Awards competition. Finalists were officially announced in the May Issue of MD+DI (Medical Device and Diagnostic Industry) magazine. Winners will be announced at the 2017 MDEA Ceremony held Tuesday, June 13, 2017 in conjunction with UBM’s Medical Design & Manufacturing (MD&M) East event at the Jacob K. Javits Convention Center in New York. To learn more about the event, please visit: www.MDMeast.com

As a Supplier to the Finalist, Smithwise provided mechanical engineering, electromechanical integration, optical engineering, industrial design implementation, design for manufacturability and assembly (DFMA) and supply chain development.

The MDEA is the medtech industry’s premier design competition committed to recognizing significant achievements in medical product design and engineering that improve the quality of healthcare delivery and accessibility. The awards program celebrates the accomplishments of the medical device manufacturers, their suppliers, and the many people behind the scenes—engineers, scientists, designers, and clinicians—who are responsible for the cutting-edge products that are saving lives; improving patient healthcare; and transforming medtech—one innovation at a time.

“Being selected as an MDEA Finalist is a testament to the skill, dedication and innovation of engineering team that developed the Towerview product in a six month period of time.” Eric Sugalski, CEO Smithwise.

Unlike other design competitions that are merely styling contests, the MDEA panel is comprised of medtech experts, including a balance of practicing doctors, nurses, and technicians alongside industrial designers, engineers, manufacturers, and human factors experts. MDEA jurors comprehensively review entries based on the following criteria: the ability of the product development team to overcome all challenges so the product meets its clinical objectives; innovative use of materials, components, and processes; user-related functions improving healthcare delivery and changing traditional medical attitudes or practices; features providing enhanced benefits to the patient and end-user in relation to clinical efficacy; manufacturing cost-effectiveness and profitability; and healthcare system benefits such as improved accessibility, efficacy, or safety, in addition to providing attention to a critical unmet clinical need.

The 2017 MDEA Juror Panel selected 45 exceptional finalists in nine medical technology product categories. Products were judged based on design and engineering innovation; function and user-related innovation; patient benefits; business benefits; and overall benefit to the healthcare system.

Winners will be announced on Tuesday, June 13, 2017 at the 2017 Medical Design Excellence Awards ceremony. MD+DI will recognize the finalists and announce the Bronze, Silver, and Gold winners in each of the nine medtech categories, as well as present the Readers’ Choice, Best-In-Show, Lifetime Achievement Awards, and more! RSVP during your MD&M East registration to reserve your ticket. Admission is FREE but donations are encouraged to benefit VentureWell’s BMEidea, a design competition for biomedical engineering university students whose winners will also be announced at the ceremony.

For the latest news, tweets, videos, and info about #MDEA17 finalists and winner follow MD+DI on Facebook, Twitter, YouTube, and www.MDEAwards.com.

 Written by Eric Sugalski

Written by Eric Sugalski

Eric Sugalski is the founder and president of Archimedic, a contract medical device development firm with offices in Boston and Philadelphia. Sugalski has led the development of a novel pediatric life support system, cardiovascular implants, laparoscopic surgical devices, and an array of wearable diagnostics. In addition to his technical background, Eric provides companies with product development strategy that encompasses regulatory, reimbursement, and fundraising requirements. Eric obtained a B.S. in mechanical engineering from the University of Colorado Boulder and an MBA from the MIT Sloan School of Management.