Xiaoyi, an AI-powered robot in China, recently took the national medical licensing examination and passed, making it the first robot to have done so. Not only did the robot pass the exam, it actually got a score of 456 points, which is 96 points above the required marks.
A bill that would create an incentive for investment in high-tech startups stands a chance of passing if it’s attached to one of the tax bills moving through Congress.
That’s the opinion of Justin Klein, MD, a partner at New Enterprise Associates, a large venture capital firm that’s a major investor in medtech.
AdvaMed recently announced its support for H.R. 4175 — the Invest in Innovative Small Businesses Act — which would create a tax credit for investments in high-tech businesses, including pre-revenue medtech and diagnostics startups.
The company must have fewer than 250 employees, be headquartered in the U.S., and have been in existence for less than 12 years. The credit would be equal to 25% of the investment and be temporary and capped. Over the lifetime of the investor, the total amount of credits would be limited to $25 million, and to no more than $5 million in a single year. Reps. Jason Smith (R-Mo.) and Brad Schneider (D-Ill.) introduced the bill in the House of Representatives on Oct. 31.
“I think H.R. 4175 would have a very meaningful impact on the medical device sector,” Klein wrote in an email. “All of our pre-revenue stage medical device companies are spending between $5M and $25M or more annually to fund their programs through clinical development and regulatory approval so that they can eventually generate revenue through product sales in the U.S.
“The capital requirements for our most promising medical technology companies have only increased over time,” Klein added. “A tax credit that provides for up to $5M a year for investment in these companies would provide a meaningful boost to medical technology entrepreneurship, job creation, and investment, and our global competitiveness now and for years to come.”
Funding for early-stage technologies in the medical technology industry has been slim for years, in part because of the time, capital, and uncertainty associated with reaching meaningful milestones, clearing regulatory hurdles, and securing reimbursement.
“The legislation … will help reverse the negative funding trend facing medtech by providing an incentive for investors to return to the sector,” AdvaMed said in a statement.
Several states have successfully pioneered similar tax credits specific to high-technology investors. For example, the $245 million fund Venture Michigan Fund generated more than $1.4 billion in additional investments to 68 bioscience companies, creating more than 1,500 jobs created, according to a report by Crain’s Detroit Business. The fund began in 2003 and has run out of money, the report said.
Median North American seed-stage venture capital deals across industries declined in size from $1.9 million to to $1.6 million in the third quarter of 2017, according to the most recent PWC MoneyTree Report.
In its most recent report, the Angel Resource Institute said that software and healthcare continued to attract the most angel group investments, but the percentage of these deals has dropped. “Angels are going back to basics and making a conscious decision to put a portion of their investments in lower risk categories,” the report concludes.
Most startups lose money in the early stages of generating revenue. Plus, the medical device tax, which is set to return on January 1, 2018, has been disproportionately challenging for smaller device companies, according to Klein. He sees a new tax credit could act as an incentive to invest in smaller, newer companies.
“I think it’s a great opportunity for the medical device industry,” he said.
Medtronic's revenue and earnings per share beat analyst expectations in the fiscal 2018 second quarter, despite getting hit with multiple natural disasters.
The company delivered 3% comparable constant currency revenue growth during the quarter, CEO Omar Ishrak said during the company's earnings call. "These financial results are very encouraging when considered in the context of a quarter in which we faced three hurricanes and the California wildfires," he said.
Ishrak said Hurricane Maria, in particular, took a significant toll on the company's manufacturing operations in Puerto Rico, and thousands of Medtronic employees were affected by these natural disasters.
"Yet the resiliency, dedication, and persistence of our team to overcome these challenges was remarkable," Ishrak said.
CFO Karen Parkhill said the company used alternate manufacturing sites, directed field inventory movement, and "ultimately were able to restore operations more quickly than anticipated," in Puerto Rico.
Still, there were some business areas that would have shown slower growth even if they had not been impacted by storms. Raj Denhoy, an analyst at Jeffries, pointed out that U.S. growth in the company's minimally invasive therapies group (MITG) was down 5% even after correcting for the hurricanes.
Bryan Hanson, president of Medtronic's MITG, said the group experienced pressure in the respiratory, gastrointestinal and renal (RGR) business, and primarily on the respiratory side where the company had some challenging comparable sales from last year. Medtronic relaunched its Puritan Bennett 980 ventilators in the second quarter last year after they had been recalled in September 2015 due to a software glitch that caused the machines to deliver too little oxygen to neonatal patients.
"We had real strength last year as a result of that [relaunch] and that carried through in Q3 and Q4," Hanson said. "And as expected we saw some challenging growth rates in Q2 as a result of that."
He said he is not concerned about procedure volume, which the company leverages to drive revenue.
Globus Medical Inc. said in a lawsuit filed late last week that a former project engineer took trade secrets with her when she recently left Globus for a new job at Stryker.
According to the lawsuit, filed in New Jersey federal court, Madeline Davis agreed that if she ever left her job at Globus, she would not work for a competitor for at least a year and a half. So when she resigned from Audobon, PA-based Globus and took a position at Kalamazoo, MI-based Stryker, Davis broke her non-compete and non-disclosure (NCND) pacts with Globus, according to the complaint.
Globus hired Davis as an associate project engineer in October 2015 and promoted her to project engineer in January 2017. While at Globus, Davis worked on the Forge corticocancellous spacer for cervical fusion. She told Globus on Nov. 1 that she was resigning from Globus and taking a position in Stryker's spine division, according to the complaint. Globus responded with a letter to both Davis and Stryker, dated Nov. 9, that Davis' new position violated her NCND agreement with Globus.
Stryker argued that Davis is not working in a competitive capacity as an advanced operations project manner. She is responsible for the design transfer and validation of an orthopedic product that has already been designed by Stryker, the company said in a Nov. 14 letter.
"Stryker has not received and will not request or accept any Globus confidential information from Ms. Davis," wrote Aliyya Rizley, an attorney representing Stryker in the case. "Ms. Davis was hired for her general skills and knowledge rather than any confidential or proprietary information ... and has been specifically instructed by Stryker to return any and all confidential information belonging to Stryker."
But Globus pointed out that every product undergoes design changes as it moves from a prototype to a manufactured device.
"Ms. Davis's role, therefore, would require her to be involved in the design process for new products that would directly compete with Globus," the company said.
Globus also asked the New Jersey court for a temporary restraining order and expedited discovery, according to court documents.
“Simply put, I will not be engineering biologic products nor will I be working in product development at all with Howmedica,” Davis said in an affidavit. Howmedica is a business that Stryker acquired in 1998.
Stryker divides its project engineers between the R&D department and the advanced operations department, Davis explained in the affidavit. She said that in her capacity as an advanced operations engineer, she does not work in the R&D department, and she has no role in product design.
Watching someone who has suffered a stroke try to perform everyday actions such as walking down the sidewalk or even bringing a cup to their lips can serve as a sobering reminder of how fragile full and robust health is, and also serves as an inspiration for those dedicated to improving the lives of those patients.
Steven Plymale, recently named CEO of Toronto-based MyndTec, said his reaction to watching videos of patients using the company's MyndMove functional electrical stimulation (FES) rehabilitation system was one of the reasons he joined MyndTec.
"They are very compelling," Plymale said of the demonstration videos, "and, to be honest with you, were one of the visceral reasons why I took this job. It really is technology we have to get out there."
MyndMove's potential market just increased exponentially with recent 510(k) marketing clearance from the U.S. Food and Drug Administration. Plymale said MyndTec has already sent several units of the MyndMove system—which uses an eight-channel electrode array programmable with more than 30 protocols to specifically target muscles in the arm—to a partner institution in the U.S. for a pilot.
"Meanwhile, we have had lots of facilities reach out once they heard of the FDA clearance actively trying to get us to work with them both in terms of further research and also in the commercial setting," Plymale said.
The MyndMove technology, which received Health Canada approval for clinical use in 2014, is based on repeated stimulation of targeted muscles by the FES system (activated by a therapist who has asked a patient to try a specific movement, such as lifting a cup to the mouth or grasping a pen). The stimulation causes muscles to contract and the movement sends a signal from the muscle to the brain.
Based on the concept of neuroplasticity, this coordinated effort trains a new neural pathway that enables improvement and recovery of voluntary movement. The technology was born nearly a decade ago in the research lab of Milos Popovic at the University of Toronto; it is just one example of cutting-edge technology aiding stroke patients, plus some with spinal cord and traumatic brain injuries, to regain more normal function in everyday movements.
While MyndMove aims to improve arm and hand function, another emerging, early-stage technology, is attempting to help stroke patients regain a more natural walking gait. The technology, a soft "exosuit" from Marlborough, Mass.-based ReWalk Robotics, will be entering pre-clinical trials early in 2018.
The exosuit is the product of a collaborative agreement between ReWalk and Harvard University's Wyss Institute for Biologically Inspired Engineering, and a salient example of how publicly-funded research for one idea can be re-purposed in other areas. The exosuit research began in 2012 as a Defense Advanced Research Projects Agency (DARPA) project intended for the battlefield.
"We started to call it the exosuit because there is no rigid component," Kathleen O’Donnell, the program lead for Wyss Institute's medical exosuit program, said. "It does not restrict movement like an exoskeleton might. The first suits were developed to help able-bodied soldiers carry heavy loads and walk long distances. The purpose was to reduce the metabolic burden on them. They often carry 100 or more pounds of equipment on long marches and the goal was to make them less fatigued when they got to their destination.
"About a year or so into that program, we started looking at where we could find more medical applications of this same technology. We talked to clinicians in the Boston area, and it seemed like stroke was a really good application area that could benefit from this type of technology. The reason for that is that a stroke patient who could benefit from this has some residual walking capacity – it's not somebody who requires total support in order to walk, but they need a little help in learning how to walk better."
The exosuit is powered by a motor unit worn on a waist belt, which activates sheathed Bowden cables anchored in two spots: one in a calf-worn fabric sleeve and one in the insole of the shoe the unit is activating to achieve a more natural gait.
ReWalk already markets a rigid exoskeleton for people who have suffered a spinal cord injury who are unable to walk unassisted, and O'Donnell said the exosuit collaboration is meant for a different market—"with the exosuit we're taking somebody with some underlying ability to walk and we are injecting small levels of assistance at critical times in their gait cycle to improve their walking ability and coordination rather than taking over for them."
ReWalk CEO Larry Jasinski said the upcoming trial is not expected to enroll a large number of patients – comparable trials have consisted of 40 patients or so – and also said the trial is in the middle of IRB approval at four top research institutions nationwide.
Jasinski said the Wyss Institute researchers had shown the device worked, but didn't have a product that would meet commercial requirements.
"It could not have gotten past the FDA, would not have been durable enough for a rehab lab and use by 100 patients, and it wasn't really designed for home use," he said. "And that's why this relationship is so ideal. They are doing a high level of fundamental research that, generally, small companies can not afford to do. They are making it work for that individual situation. We are going to be able to take it through the FDA, through the reimbursement processes, and manufacture it at a price point with the quality control and functional level that can meet a mass audience. That is why it's a good marriage."