Medical devices generally require $31 million and up to five years to bring to market, according to studies conducted by the Medical Device Manufacturers Association and the National Venture Capital Association. But a New York-based medical device maker, PAVmed—using innovative technologies and a unique business model—has found a way to do this for $3.5 million in only 18 months.
PAVmed’s pipeline of products were created by medical professionals to address unmet clinical needs using methods that are less invasive and at lower costs. The company was founded by Dr. Lishan Aklog, Dr. Brian deGuzman and medical device veteran Michael Glennon. The three previously founded Pavilion Holdings in 2008 with the goal of building a portfolio of medical device companies. One of the early companies came up with a novel way of removing blood clots and its development illustrates how their innovation model works. Instead of a surgeon opening someone’s chest, putting them on a heart-lung machine, cutting their artery open and plucking it out, Aklog—a former associate professor of surgery and chief of cardiovascular surgery at St. Joseph’s Hospital’s Heart and Lung institute in Phoenix—employed an AngioVac, a small miniaturized blood pump that sucks the blood, capturing the clot with a filter. It was the first time such a device was used to trap a clot, and then immediately pump the blood back into the patient. There are other devices that try to break up clots, but this was the first time that a large clot the size of a thumb could be vacuumed out in one piece.
“We knew we made the big time when it was featured on Grey’s Anatomy,” Aklog remembers. The TV show’s fictional character Dr. Meredith Grey has a patient with a sizeable blood clot and is told by another doctor that they are recommending an AngioVac, to which she responds, “I’ve never heard of that.”
Their innovation model is deceptively simple. Instead of hiring an engineer and saying, “Okay, can you go tinker with this for a few months and get back to us when you have a prototype,” they decided to go right to a contract manufacturer, bring in 15 engineers and others who had expertise in a variety of areas, and brainstorm what was needed, how to make it and how to sterilize it. “We needed a tube that’s of a certain caliber that has a deployable funnel at the end that is flexible enough to be maneuvered,” recalls Aklog. By the end of the day, the group had a sketch written on a cocktail napkin that was fairly close to the final product.
“PAVmed has a model that resists pigeonholing and instead uses multiple paths for commercialization.”
AngioVac was FDA cleared in 90 days and the team performed the first-in-man procedure at Brigham and Woman’s hospital 18 months after they raised the money. Vortex Medical, the company they created around the product was eventually sold to AngioDynamics on 2012 for $55 million.
Two years later PAVmed was created to adapt the Pavilion model to a long-term, multi-product company with access to public markets. In April of 2016, PAVmed completed an IPO on Nasdaq (PAVM), generating gross proceeds of $5.3 million. Today the company has a pipeline of six medical device products.
One notable product is CarpX, an innovative approach to treating carpal tunnel syndrome, which represents half of all occupational injuries in the U.S. resulting in more than $20 billion in annual workers’ compensation costs. Typically, surgery is done to cut the transverse carpal ligament and relieve compression onn the hand’s median nerve. Instead of surgery, however, CarpX uses a percutaneous device with a balloon catheter and bipolar radio-frequency cutting electrodes. The balloon basically pushes everything aside and cuts the tendon from the inside-out as opposed to surgery, which cuts from the outside-in. This reduces postoperative pain while accelerating a patient’s return to full activity. The PAVmed team believes CarpX has a market opportunity of at least $1 billion.
A second product of note is DisappEAR, an antibiotic-eluting resorbable ear tube made from a new proprietary bioabsorbable silk material. Kids with ear infections get a little tube put in their eardrum, which creates a pathway for fluid to drain out of the ear. Such tubes are generally made of plastic, and are inserted under a general anesthetic. They have certain challenges: one is that they may fall out early or they may not fall out at all, in which case physicians have to go back and retrieve it when it’s no longer needed. Using silk material impregnated with an antibiotic or an antimicrobial drug substance to potentially eliminate the need for the ear drops, DisappEAR eliminates the need for a second general anesthesia to remove dislodged tubes, which about half of pediatric patients usually require. The company reckons DisappEAR has an annual market opportunity of $200 million to $300 million.
Also on the horizon is PortIO, a vascular access device that delivers medication directly to the bone marrow for patients where access to main veins is not practical owing the use of pacemaker leads or a defibrillator. This route is called “intraoseous,” or into the bone. PortIO provides access to bone marrow not just for 24 hours but eventually for as long as you need it. This opens up the opportunity for patients who have poor veins to have access “without having to have crazy things like having your chest opened to have a catheter stuck in your heart,” Aklog says.
A heart surgeon who was born in Ethiopia and came to the U.S. as a refugee at the age of 11, Aklog was educated at Harvard with a view of becoming a particle physicist. He switched in his senior year and went to Harvard Medical. Attracted to his adopted country’s entrepreneurial spirit, Aklog never looked back and as an inventor holds 11 patents with an additional 30 patents pending. As innovative as each of these products are, he points to the true innovativeness residing in the hybrid nature of PAVmed’s portfolio platform.
Most medical device companies are built around a call point. A vascular surgery company, would build a vascular surgery sales force that has relationships over the nation and ultimately internationally. An orthopedic or a spine specialist might build its distribution around orthopedics or ophthalmology. PAVmed has a model that resists pigeonholing and instead uses multiple paths for commercialization.
This last concept is one that could be transferrable to almost any business model.