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Category Archives: BioEngineering

Silicon Valley Business of Engineering – A great event and resource for local medical device folks and others…

The Silicon Valley Business of Engineering is a great meet-up group put together by
Elise Engelhardt (LinkedIn profile here ) who, in my opinion is a great power networker and leader. Among many others, I attended the first meeting today and it was a great success!

The event was sponsored by two groups, Ozen Engineering (website here) and STM, aptly named Service To Mankind ( website here ). Instead of using their generous sponsorship as a platform to rave about themselves, both Metin Ozen of Ozen Engineering and Floyd Bertagnolli of STM kept their presentations very brief and informative (I learned something exciting, which I hope to share with you in a separate post).

The group's future events would be a great resource for engineers, not only medical device folks, but others as well. I ran into a host of service providers, consultants and so on. It was inspiring to meet some very entrepreneurial folks as well.

I networked with a bunch of folks, some of whom were kind enough to share in great detail how they charged for consulting, how they came up with the plans and so on. I also spent a good deal of time talking to another former Apple employee on the care they pay in engineering their products. The whole event was very educational for me. I hope to run into some of you at the next event!

I think this is a great beginning and a wonderful resource for engineers in the Silicon Valley, to carry on, as the title says, with the business of engineering.

Local Resources

1. Silicon Valley Business of Engineering

http://www.meetup.com/BusinessofEngineering/

2. Silicon Valley Engineering Council on LinkedIn

http://www.linkedin.com/groups?gid=46760&trk=myg_ugrp_ovr

3. MedDevice Engineers, Bay Area on LinkedIn

http://www.linkedin.com/groups?gid=2126&trk=myg_ugrp_ovr

4. American Society of Mechanical Engineers, Santa Clara Valley on LinkedIn

http://www.linkedin.com/groups?gid=1300&trk=myg_ugrp_ovr

5. "sfmedengineers" on Yahoo! Groups

http://tech.groups.yahoo.com/group/sfmedengineers/

Do you know of other resources? If so, let me know and I will post them here.

Until next time...

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Starting a medical device company? You are better off without some of these "VC"s!

When I first learned about "entrepreneurship" and "venture capital" it didn't make much sense to me. Over time, I thought these "VCs" would be respectable old ladies and gentlemen with graying hair and gold-rimmed spectacles full of worldly knowledge just waiting to share that with young people.

What can I say? I was 23.

A few years of "schlepping" business plans of varying sizes and forms later, I don't think so. Oh wait! Am I losing any future opportunities to beg around for money with quaint little PowerPoint presentations?

Well, let's put it this way. No one who cannot take some criticism is considered grown up and I really don't want to share my future business ideas with over-grown Peter Pans. I am sure there are good VCs and there are bad VCs. Good VCs look for returns from functional business plans...

Surveys gone wild

What got me riled up anyway?

Apparently VCs local to New England responded anonymously to a survey conducted by MassDevice. Their fundamental rant? Healthcare reform is not the problem, the FDA and it's reform is! And I am not singling out this survey, I have seen such "responses" before as well.

Apparently, the FDA is considered so risky that some of these "anonymous" VCs don't even invest in companies that have FDA "exposure".

What the hell kind of a medical device company does not have FDA exposure?

Maybe, the ones that make tongue depressors and bike helmets. I gotta tell you, there's not much margin in tongue depressors - China's got it covered anyway, and I still worry that we don't check Class I devices enough to make sure they don't end up with a fun cornucopia of Lead, Cadmium and Melamine.

If we scare people enough, they will make the FDA back off...

First things first. If any of these glorified pawn brokers look at your business plan and say they are "concerned" because of your "FDA Exposure", step away slowly and gently.

A venture capitalist who does not understand the approval process is not worth anything for you regardless of how many buckets of money they promise will show up on the term-sheet. It is not just the entrepreneur that needs to understand the importance of an FDA approval to your very existence.

FDA approval is not a "risk management" issue or a "price pressure" issue or any of the pretty little CYA-terms they teach you at the MBA-for-real-dummies school.

The entrepreneur who founds the company, brings in angel and VC money should know this. The CEO planted by the VC firm needs to know this. The Board of Director needs to know this. The people you hire need to know this.

The Right Perspective - Interview your VCs before you take their money

I don't want to poach MassDevice, so I want you to read about these VCs yourself. Unlucky for you, you don't know who they are so that you can avoid them like er, we will just move on.

You plan to interview your VP of R&D right? You plan to interview the M.E. interns and the engineers and the clinical folks and the assemblers and such, right?

You will talk to Joe and Sarah before you hire Vinny to help you with V&V correct?

Well, do the same thing for the VCs.

Interviewing the VCs - The questions to consider

Tough times can lead to good change. Be part of the change. Until you stare the horse in the mouth, you won't know if she is a gift-horse. To help weed out the unfavorable horses, here are some things to consider:

1. Try to have a frank conversation with your future investors. Be respectful, but assertive. Watch for signs of gentle prodding to "cut corners" on the regulatory side or the ethical side.

2. Snoop around - talk to other organizations that have taken money from these investors. Find out how the board meetings go. Find out what kind of pressure they have been under.

3. Well before you get the term sheet, your VCs will do a background check on you. Don't hesitate to do the same. You really need to know where your money is coming from.

What the hell am I saying? Isn't this 2010 where money is scarce and because of price-pressure and R&D profit ratio blah blah...

Yeah, right. Look, for all the things these guys say about how pharma and biotech are winners and how running around naked "exposing" yourself to the FDA is making you look bad (don't actually expose yourself to the FDA, it won't help), trust me, who are they kidding?

Understand the real game

First off, if you have been paying close enough attention, investing in pharmaceutical and biotechnology plans have moved into a rather complex arrangement. Nowadays no one does the classic angel plus A through F rounds that you learn in MBA schools.

Sometimes, companies get lucky and rather do single large rounds of $100 - $150 million. That is more than what a good, ethical medical device company would ever need to raise on it's way to profitability.

Other times, smaller pharmas enter into "milestone agreements" simply because the clinical trials needed for their success make them so hot, that even the VCs cannot handle them. So, really, ask again, who are they kidding?

I read all these surveys and by gosh, will medical device investment ever return again?

Ever since the healthcare reform looked like it would pass, a whole bunch of folks have taken to this notion that we are all idiots. They keep throwing tea bags and dumb rationale at us to foist their empty threats.

In truth, the economy will recover - the recession ended some time late last summer or thereabouts. Good ideas will get funded. Then the bad ideas will get funded. Everyone will want their hand in the cookie jar(yes, I am all about those cliches). And that is why these VCs want to be "anonymous".

If you have been in the funding scene recently at all, you might have noticed a few changes. Primarily, you might have noticed some very competitive and knowledgeable VC firms from China. Yeah, they hurt us from below and from the top. And remember, it's not just the Chinese. The Venture Capital business is one of egotistical trust in one's own ability to spot the next "Google" or "Provenge" or "tiny plumbing fragments made of metal".

Do you really think our friendly, neighborhood, anonymous VCs will simply sit around with their hands tied?

So to you I say: you should keep writing those patents, keep working in those labs, keep bootstrapping your business (look at my old posts, or talk to me if you want to know more about DIY-bio) - simply, keep at it!

Good investors, and once the bad ones have thrown their money on video game companies, there will be more good ones left than bad ones, will continue to invest in plans. They will not throw childish tantrums about reform. If the 510 (k)process takes longer, they will wait.

Why?

They know that as the entrepreneur, you will do the right things. You will plan for the delays. You will plan for the changing landscape. You will contact the FDA well ahead of time (refer to my post immediately preceding this) and set up a channel of communication. They know you will hire people focused on Bayesian methods to assess clinical trials and have an ethical stance towards the regulatory process.

They know, that the rules of the game may change, but the game remains the same - profitability and public health, not the tea party agenda.

Health Reform - Are the American Public Losers?

Unfortunately, we all tend to get carried away at various points in time. So, there are a lot of people sitting around drinking tea while the Democrats are too busy being chicken and not explaining things in perspective. Of more relevance to us, we have seen regular scenes like this play out:

1. Companies like 3M say they will stop making medical devices due to the "high" cost of reform. You can read my response to such pearls cast upon us here.

2. Companies like Caterpillar and AT&T have taken "charges" blaming health reform for their higher costs. Funny, the "charges" are actually tax benefits...

3. And now, this. Firms making "anonymous" statements about how the FDA went from being a regulatory agency to an anathema.

The magic formula

All it really takes is for entrepreneurs, investors, more importantly the pressure applying politicians (ReGen anyone?) and federal employees to be more responsible, and ethical of course.

Any business person or entity has a choice. Move with the wind, or go into oblivion...

Conclusion

It is all and well to talk about price pressures, time lags in reimbursement and how much the Americans tend to lose by being healthy (huh, you say?).

How will you feel if you went along with this song and dance and later find out that the FDA has yet again bowed to pressures and approved another sub-standard device?

How would you feel if that device was used to operate on you, or worse still left in you? Or someone you love?

How would you feel if you later found out, you have no way to recover any of your losses because of "Federal pre-emption"?

That, my dear friend, is the day you would have lost...

See, I can scare you too. It is only too easy, if you are willing to scare.

To my anonymous VC friends lurking around the dark back alleys of New England and elsewhere, let me tell you, most entrepreneurs are street smart, and in the case of medical device firms, school smart as well. If you think we are dumb enough to join you in leaving "health reform" hatred graffiti across the internet...

Reference

http://www.massdevice.com/news/local-vcs-more-worried-about-fda-moves-healthcare-reform

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Where is medical device approval headed? The horse’s mouth speaks…

Preface I capitalized on a unique opportunity to attend an event conducted by the Stanford Students Biodesign group ( link ) featuring Elias Mallis, the Chief of Cardiac Electrophysiology and Monitoring Branch (CEMB) at the Division of Cardiovascular Devices in the FDA (ah, the layer cake).

I found Elias Mallis to be very forthcoming and honest with sharing facts and thoughts on the FDA, the medical device approval process and answered questions with quite a bit of patience (yours truly asked the most questions).

You can read his profile here .

The event was well attended and consisted of a very brief 32,000 ft. overview of the FDA medical device approval process followed by an extensive question and answer session.

I am going to regurgitate and clean up my copious notes for your benefit here.

Highlights of the Presentation

The objective of the presentation is to break down the barriers on the impressions people may have about the FDA. There are essentially four steps to the medical device approval process:

1. Check if what you have is a medical device. There are many devices that may not necessarily be medical devices as approved and regulated by the FDA.

2. Does the FDA regulate this medical device?

3. Conduct all the tests the FDA asks for.

4. The FDA reviews, evaluates and approves or disapproves the device application.

Some notable points on the approval process:

Once again, the talk was mainly for students, so there may be quite a few things in here that you may already be quite familiar with.

1. Many times, companies call the FDA when they have a new product idea and they don't know how the FDA will regulate the product. The FDA guides them accordingly. It is suggested that companies call the FDA sooner rather than later. With PMA devices, the companies should contact the FDA as early as possible. However, Elias suggests that even with 510(k) devices that require animal trials, the companies should consider calling the FDA before rather than after the trials.

2. The FDA will suggest tests based on the device being brought to approval. For example they might suggest a host of mechanical engineering tests for catheter based products. If you are designing an energy delivery device, they might ask you to do some thermal modeling.

For newer devices, the FDA might decide to test beyond the bench. In all cases they try to limit the use of animal testing. For an ablation catheter meant to treat cardiac conditions the FDA might ask the company to assess models with the beating heart modality with a thermal model. (Srihari's note - I did something like this in the past myself and if you need more information, get in touch with me). They also assess important issues such as - does the ablation catheter create enough of a lesion? Does it present the danger of perforating the heart?

3. Clinical Testing: For devices that may need clinical testing, lots of interaction with the FDA is required. Primarily, the specific purpose of the clinical trial needs to be identified, for example, atrial fibrillation. The FDA specifically looks at the following:

3.1 The safety and effectiveness of the device
3.2 The risks and benefits of treatment
3.3 Acute procedural end-point: What the device treats or causes during the procedure
3.4 The long-term end point of the device.

3.5 The FDA needs the clinical trial to evaluate if the device was able to evaluate and create a conduction path. They would like a one year follow up for the durability of treatment.

3.6. The FDA also looks for known issues such as pulmonary vein stenosis. These commonly occur when ablation is used to treat atrial fibrillation. The FDA needs for the rate to be measured so that it can be ensured the rate is not too high.

4. Application Evaluation: As a final step, the company approaches the FDA with a marketing application. The FDA evaluates this, usually with a team that includes maybe a biomedical engineer, a veterinarian sometimes if animal studies were involved, a cardiac electrophysiologist, a material scientist and other specialists. Often, the FDA also consults with outside experts such as practicing physicians for newer devices.

4.1 The team of scientists in each device group at the FDA may have anywhere between 5 - 20 pending applications typically. The applications may go through faster or slower depending on the class of the application. PMA devices are evaluated at the highest level through an elaborate process and typically need a panel discussion.

5. The 510 (K) process has existed for as long as the FDA has been approving devices. The burden of proof with this process is for the company to show that the device is equivalent to existing devices. This applies to Class I and Class II devices, and the application could be small containing information on engineering tests, animal tests and rarely clinical tests.

5.1 Some subjective stuff: Most devices go through the 510 (k) process. Since the new leadership showed up at the FDA, the process is under re-examination. Elias states "there is a lot of truth to the fact that the 510 (k) process works well". For the fringe, areas are pushed, some of the procedure, and some of the aspects of the PMA process involved in the device application.

5.2 What about the changes? Apparently, the center is trying to be more transparent. If there are any changes to the 510 (k) process, we will know by the end of summer. Things may be more of a "continue on" with some changes and enhancements - some of them smaller, easier changes and some more expansive.

5.3 From Three to Four Classes

One of the things the FDA is apparently contemplating is introducing a 4-class system, as opposed to the 3-class system.

Class I would still be exempt

Class III will still include PMA devices, and

Class II devices will likely split into Class IIa and Class IIb devices. The FDA will decide what level of evidence is needed for each class. Apparently this the kind of stuff that makes people like Elias "lose hair and make what's left to turn grey".

The FDA's goal in all this apparently, is to improve public health.

Apparently, very few 510 (k) devices are rescinded, an example being the hair implant device that was recently rescinded.

5.4 Restructuring Predicate Devices

There is usually a problem when someone comes up with 10 devices for the predicate devices and the resulting device looks nothing like any of the 10 devices referred to in the original. These are some of the areas that the FDA wpuld like to scale back on.

6. What about the FDA not receiving enough feedback on the 510 (k) review process?

This was a question posted by a member of the audience. He had apparently read somewhere the FDA was not receiving enough feedback. There was the usual shout out by companies claiming that everything is well with the 510 (k) process and to leave everything alone.

However, the FDA is looking for specific comments.

Srihari's interjection on feedback

At this point in the lecture, I decided it was worth stepping in and letting my views known about the FDA's meetings and their rather ineffective concentration in the Maryland/Washington D.C. Area. I have mentioned this before in a previous post:

http://chaaraka.blogspot.com/2010/01/challenging-pre-market-approval-process.html

Response from Elias: Elias did respond that the FDA likes to come to the West Coast and usually their absence on the left coast (what he jokingly referred to as the "other country") is a resource constraint. He did mention that it is possible that the FDA "may" come to Stanford University in the Fall.

Promises, promises. Yes, I am not too happy about that. For a Federal agency to receive billions in funding and claim that it is too resource starved to visit folks across the country during a very public review of it's procedures - things don't look good. This sort of high and mighty horse sitting could have been eliminated if the Obama administration had taken some of the good advice rolled out last year and split the agency. You will see a little more of why this is so, as you look further in the notes.

7. Has there been any palpable change from the front end of the FDA after a change in the leadership?

There has been a shift in philosophy from the center. The previous leader Dr. Schultz had certain views on science and these are being given a fresh look. Due to multiple layers at the FDA, there have not been palpable changes to the day-to-day operations.

Srihari's Note: Another excellent reason to have broken down the FDA. Look at the multiple layers and tell me it is a good sign.

8. Specific changes?

8.1 510 (k) devices may be upgraded or downgraded. About 25 devices, including for example AEDs that were traditionally PMAs are now eligible for 510 (k) applications. This is mainly because the FDA has enough knowledge about the functioning of the devices. Apparently, the FDA is not necessarily looking to "up" devices of any sort.

8.2 The FDA would like to make the line between type II and type III devices much more clear rather than the fuzzy line that is the norm now. This may mean that certain devices may need clinical studies or more studies in general.

In general, when looking at the equivalence the FDA asks three questions:

1. Does the device have the same intended use as the equivalent device referred to in the application?

2. Does the device have the same technological aspects as the equivalent device?

3. Is the testing done on the device in application appropriate for the type of uses stated in the application.?

The questions are likely to remain the same, however, the FDA is likely to take a closer look at the questions and the answers to make the equivalence decision.

9. Clinical Trials

Clinical trials are very expensive. Given that how does the FDA account for the protocols and for tests done outside the US?

The FDA looks at safety and effectiveness. The EU looks for safety more rigorously and in Elias' opinion, the Japanese FDA is more rigorous than the US.

A lot of evidence for the devices approved by the FDA comes from outside the US. The FDA looks at some key aspects:

9.1 The clinical trials should be the same as those that would be conducted in the US.

9.2 The diagnosed patients must be similar to the patients in the US. In the past apparently, a heart failure transplant device was clinically tested in Norway. Though the device was very successful there, it was rejected by the FDA. The rejection had to do with the fact that the patience in Norway were generally healthier than the US.

9.3 One of the disadvantages for the FDA as far as studies performed in Asia are concerned, is the fact that there is no way for the FDA to review the protocols.

9.4 The major problems include the fact that the FDA needs a strong dialog with those conducting the clinical trials and needs them to report periodically. The other problem, as previously stated would be that the patient conditions are not translatable.

Elias went back to an earlier point. The FDA would like to do preventive maintenance rather than fix things. If possible the FDA should open the dialog even before animal studies. The FDA, according to him are fans of dialog and communication. Apparently the FDA has had a long standing program of meeting with the sponsors.

10. What will the FDA do to diversify trial participants?

Based on the fact that Elias had stated that the FDA wished to do something about there being far fewer women enrolled in clinical trials, I asked this question.

Elias responded that there is no directive to have race/gender quotas. However, the FDA is conducting public workshops for trial sponsors and the medical community.

Apart from this, a 2007 law mandates the FDA support innovation in pediatrics. A lot of the devices developed for adults are essentially used off-label for children and the FDA lacks a good level of understanding. The FDA would like to change this.

11. Off-label use and the FDA

Someone asked about the FDA's take on off-label use. Elias started with a good example in a field he understands clearly.

Ablation devices have a history of approval that spans 16 years. The first generation of devices were very simple. Such devices have been off-label since about the year 2000 for atrial fibrillation.

The FDA would like to bring all these off-label uses under clinical trials. However, patients would face the dilemma of choices - they are rather interested in being treated rather than being part of a clinical trial.

Apparently the No. 1 problem for Elias as branch chief has been getting off-label devices to be clinically approved. Apparently the first such device, manufactured by Biosense Webster got to go on-label for a previously off-label application about a year ago. (I have no way of confirming this yet.)

The FDA would like to tackle off-label use, however it would not like to tread on how the medical community expands usage. The FDA is happy where the program is currently.

12. Sham studies and such

Someone asked Elias to comment on the tests that the FDA will look into in the future. Elias reminded everyone that devices are not drugs (no pun intended) and as such, using devices you cannot readily do shams. It would be unethical.

The typical test includes a single arm study, comparing the device being tested to existing, approved devices. Elias does not see a change in the direction of the trial design for medical devices. A sham control may be required if needed, but it would be rare. Of the 25 PMAs that the cardiovascular group has been seen, Elias does not remember seeing a sham.

13. How are devices audited?

At the beginning of the talk, Elias brought up a joke about being a federal agency like the IRS and wanted to show how the FDA is different from them. Raking that up, a member of the audience wondered if, like the IRS, the FDA audits device firms and the data submitted.

Elias responded that data is approved mostly as submitted for the approval process. The audit is mainly performed to the integrity of the data. Since over 4,000 510 (k) applications and 50 PMAs are processed each year, and given that the deadlines are tighter.

Data collection and case report forms are available for off-label use. For most studies, a degree of follow-up is required.

14. Comparative Effectiveness

Someone wanted to know if the FDA is looking into needed comparative effectiveness. Elias reminded everyone that the FDA focuses mostly on approvals and for now it does not have any plans other than the fact that it is being discussed internally.

15. Will the FDA outsource the due diligence process?

Elias stated that he hasn't heard of any such moves. A program that uses 3rd party auditors and inspectors started about 10 years ago. For now, Elias stated that he takes pride in the current level of expertise present within the FDA.

16. Does the FDA care about patents?

In response to this rather obvious question, Elias stated that the FDA does not really care about patents. He did say that one could draw certain similarities between the patenting process and the FDA regulatory process. He said that many times people from the patent office come to work at the FDA.

Elias stated that the FDA recognizes that the approval process is quite burdensome for companies. Hence they have partnerships with the FDA equivalents at Canada, Japan, Australia and China.

He did say that they tried other efforts such as global harmonization which have not be quite as successful.

17. The FDA's authority

To test the water's I brought up the recent ReGen knee replacement approval process and given the companies statement that the FDA does not have the authority to rescind it's approval, asked what Elias thought of that.

To my relief, Elias asserted that the FDA does have such authority. He also did say that they do not like to throw their weight around (why, I would never understand).

He gave a good explanation of the ReGen problem and stated just that the results of the panel re-examination were yet to be known.

Conclusion

Phew! Are you still with me? All in all, I think that was a great presentation, with some candid answers. It was quite useful for current students and folks like me as well. Through the notes, I hope you benefit some as well.

Though it did not do much to rejoice about the direction the FDA is taking, there is always hope for the future. I will try to make this post available as a pdf document to make for easy reading...

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