Medtech In Motion: Building A Medical Device Business On Actuation
By Jim Pomager, Executive Editor
When I first met Maureen Mulvihill, Ph.D. — during a tour of her company’s offices and manufacturing facilities earlier this year — I was struck by her down-to-earth yet contagiously positive attitude. No matter what topic I broached about the difficulties facing young medical device companies like hers, the co-founder, president, and CEO of Actuated Medical remained unflappable and upbeat. Medical device tax? Not a major concern. Dwindling sources of venture capital? There’s other funding out there. Rigorous regulatory requirements? They come with the territory.
Several times during the tour Mulvihill repeated her mantra: “Up and onward.” (She also closes all her emails with the phrase.) And positivity is even built into her company’s slogan: Innovative motion + Positive outcomes. In an industry currently besieged by a host of challenges, such optimism feels like a breath of fresh air.
When I recently bumped into Mulvihill again, at the AdvaMed conference in Chicago last month, she had not lost a bit of that enthusiasm — and for good reason. Since we had last met, Mulvihill and co-founder/director of R&D Roger B. Bagwell, Ph.D., had traveled to the White House to accept the U.S. Small Business Administration (SBA) Tibbetts Award, presented to companies who exemplify the best of the SBA’s Small Business Innovation Research (SBIR) program. The company had also launched its second product and formed a partnership with Stanford University. (More on these in a moment.) Up and onward indeed!
In this Q&A, Mulvihill introduces us to Actuated Medical and its technology, talks about the major obstacles the company has faced, explains her strategy for raising funding, and shares some best practices for successfully growing a new medical device company.
Med Device Online (MDO): What factors led you to start Actuated Medical, and what makes the company unique?
Maureen Mulvihill: Actuated Medical was founded in 2006. The inspiration came from a conversation I had with a doctor in a hospital one day. He said, “I have a clinical need I want you to solve. One of my patients has a blood clot in the brain, and I have to get to it within a certain amount of time. I need a device to get in there and break up that blood clot and restore the patient to good health.”
I studied actuation technologies — specifically piezeoelectric materials — at Penn State for a long time. These are materials that expand and contract in a very controlled fashion when you apply a voltage to them.
Roger and I decided that there was a niche we could fill and that we needed to start a company. Initially, we called it Piezo Resonance Innovations, but we changed the name in 2011 to Actuated Medical. Everything we do involves actuation. We focus on medical devices, and our goal and vision is to improve patient outcomes.
What really makes us unique is we talk to clinicians from the very first design stage and throughout the development process. We really have a really solid engineering team, a very diverse team, that interacts with clinicians to make sure that what we're developing is something that will help them. We're also really focused on usability and how the healthcare practitioner interfaces with our device, to make sure it's intuitive.
In addition, we are ISO 13485 and 14971 certified. Not a lot of small businesses can say they have both those certifications. We have all the processes and documentation that make us compliant with the FDA and the international community, but we still have the agility of a small company, and that's how we can innovate.
MDO: Did you ever develop a solution for the doctor who originally approached you?
Mulvihill: Actually, we're still working on it. We decided that the regulatory path for our first product — TubeClear, a device that breaks up clogs in feeding tubes — would be easier than for a device you put into the brain. Our strategy was to determine which products we could get out to market the quickest, so that we could generate revenue to fund other ideas that may take longer.
So the product for that doctor is on the list. It's just not here today. But that interaction with that doctor brought forward the fact that a small company that was innovative, was agile, made quick decisions, and did really cool innovations without getting bogged down in bureaucracies, could solve a lot of clinical needs out there.
MDO: Tell us more about TubeClear.
Mulvihill: Many of the medical tubes that are placed in-body clog over time. So, one of our areas of focus is on technologies that clear those occlusions, or clogs, without having to remove the tube from the patient. The first example of that would be TubeClear, a device that clears clogged feeding tubes.
There are 7 million feeding tubes used in the United States per year, with an average clog rate of approximately 25 percent. That means nurses and other healthcare practitioners have to deal with about 1.7 million clogs per year.
The typical approach to clearing these clogs involves flushing them using a syringe filled with warm water, along with pushing and pulling on the tube. However, these tubes are very narrow and very long, so that approach doesn't always work. You can put other fluids into the tube — like Coca-Cola, meat tenderizer, or different enzymes — but they are not very effective. There weren’t many viable options out there, due to the small size of the tubes and their length.
TubeClear is a mechanical device. It uses a long, thin Clearing Stem that is inserted into the feeding tube. The very tip of the Clearing Stem moves forward and backward, chipping away at the clogged material until it breaks up. Then we often add a little bit of extra water to irrigate it, and then aspirate out those particles. The entire process takes only a few minutes.
I was actually just at a VA [U.S. Department of Veterans Affairs] hospital out west, and the clinician that's been using TubeClear says it works as advertised. He's very excited, and he's getting through clogs in two minutes that previously would have taken him an hour to clear.
MDO: You said occlusion clearing is one area of focus for Actuated Medical. What are the others?
Mulvihill: The second area we focus in is tissue penetration — vibrating needles or scalpels or other cutting devices. Our first product on the market is called GentleSharp, which is a vibrating needle. Its low-frequency micro-vibrations allow it to enter the tissue with much less force, which results in less pain and stress for the patient. The product is designed for preclinical veterinary and laboratory research applications, but the underlying technology holds potential for a lot of difficult access-type medical situations.
The third area is MRI [magnetic resonance imaging] compatible devices. As I mentioned, my background is in piezoelectric materials, which are non-magnetic. You can use these materials to make motors and tools that won’t interfere with an MRI machine. It gives clinicians the ability to perform procedures within an MRI.
Finally, we have a focus on pediatric devices. The FDA and National Institutes of Health (NIH) are really putting a strong effort on pediatric devices, because the development of pediatric devices is very expensive and the market is small. We are working with the Children's Hospital of Philadelphia, trying to get a study right now of one of our devices. The idea of us improving the lives of children is incredible. We want to make that impact.
MDO: What is the biggest hurdle you faced in bringing these technologies to market? How did you overcome it?
Mulvihill: I'd say regulations and laws. I once went to an AdvaMed conference and walked out with a list of nine different categories of laws that we, as a small medical device company, needed to follow. They were: corporate, human resources (HR), intellectual property (IP), safety, compliance, regulatory, international commerce, the medical device tax, and the Sunshine Act. For a person trying to run a company, that's a huge burden. You need to have structures and tracking in place.
Big companies have internal employees dedicated to managing HR, regulatory, compliance person, etc. If we at Actuated Medical had only one person for each one of these types of law that we're dealing with, that’s nine employees. We could never afford to have nine dedicated people on staff, and consultants aren’t cheap either. That's the hard part. I don't know if they realize the costs that they're putting on small business.
In any case, we hired a full-time regulatory affairs employee. And we have an external accountant and an attorney we use for IP, corporate, and HR. And for the other areas, we have formed internal committees of employees to share the responsibility. For example, we have a safety committee to ensure we are in compliance with OSHA (Occupational Safety And Health Administration). That committee is headed by our director of manufacturing.
MDO: You mentioned the medical device tax. Much has been made about its impact on startups and small companies. What effect has it had on your business?
Mulvihill: For us, it hasn't had a big effect, because we're just launching a product — we can take the device tax into account when we set our pricing. But for companies that have contracts with hospitals where the pricing has been set for years, the tax has been a much bigger issue than it has been for us.
Yes, we have paid the tax on products that we put out for evaluation. We have paid the tax on revenue that we don't have, but I guess I just look at it as part of what I have to do, just like everything else. I mean, intellectual property costs are expensive, too. These are all just prices we have to pay to do business in this space.
MDO: Speaking of costs, where did you obtain the capital to run and expand Actuated Medical?
Mulvihill: When we first started the company, we received some seed funding from Ben Franklin Technology Partners, which is an initiative of the Pennsylvania Department of Community & Economic Development (DCED). We wouldn't be here without Ben Franklin's initial investment in us.
We also applied for and were granted SBIR [Small Business Innovation Research] awards from the National Science Foundation (NSF) and the NIH, both of which went from Phase I to Phase II. After that, we obtained a little bit of investor money, strategic partner money, and other funds to support the final commercialization of TubeClear. But most of our early funding has come from SBIRs. Right now, we have five Phase II SBIRs in progress, each focused on a specific area of either occlusion clearing or tissue penetration — bone biopsy, epidural insertion, spinal insertion, and other areas. The SBIR has been a wonderful vehicle to grow a company, since it is non-dilutive.
In addition, we recently licensed technology from Stanford University in the area of atrial fibrillation. The market for that technology is much bigger, but the clinical regulatory path is also much more expensive. So we spun out another entity with Stanford as a part owner, because it will require a venture capital investment to get through clinical studies.
We also started offering contract services, where we develop medical device prototypes that can be used for in-human testing, because we have the ISO certification. We can build those components and bring in additional revenue.
MDO: What advice would you offer to leaders at other emerging medical device companies?
Mulvihill: First, you need help. You need a good attorney, and you need somebody on-staff to manage activities related to the nine laws. The president or CEO doesn't have to time to jump into all that stuff. They need to have a good person as their right hand.
Also, you have to be focused on the endgame. Many companies that get SBIRs don't realize that if they fail to think about commercialization from day one, they're not going to make it. It's talking to clinicians early on, talking about regulatory affairs early on, talking about the IP early on, talking about reimbursement early on. You need to be focused on the entire package, not just the science, not just the technology.
Finally, understand that it will take a very long time. We didn’t anticipate being at the FDA for 10 months. We didn’t think it would take 16 months for us to get our first sale. It’s easy to think, “My product is perfect. My testing is perfect. I'm going to be out of the FDA in 90 days.” If you don’t realize how long it will take, you won’t have enough money to burn that long. I’ve heard of many small companies that had to let employees go because the regulatory process took longer than expected — then they get FDA clearance, and the people that knew how to put the product together aren’t around anymore.
MDO: What will the future hold for Actuated Medical and other small medical device companies?
Mulvihill: For Actuated, we're going up and onward. We have a lot of products in the pipeline, and a lot of interest in those products. We have someone interested in licensing technologies. We have CORPAK MedSystems out there, selling with us. [Editor’s note: CORPAK is a reseller of TubeClear.] We're growing.
As for other medical device entrepreneurs, I wish them a lot of success. The payoff, if that’s the right word, is that we’re improving patient outcomes. The first patient we helped was a soldier at Walter Reed National Military Medical Center. It was a really emotional day. I think small companies that are just getting started have to remember why they're doing it — to make the world a better place.