Medical-device startup OrthoData Inc. has raised $1.1 million in Series A funding, enough to carry the company through its first phase of clinical trials.
The Louisville company has developed a diagnostic system that allows orthopedic surgeons to monitor the progress of spinal-fusion surgeries.
The funding round was led by a $260,000 investment from the Kentucky Seed Capital Fund, a venture fund formed by Louisville venture capitalist George Emont to invest in local life-sciences and health care companies in the early stages of development.
Several other groups also provided funding for the company during the round. (See item at right.)
OrthoData CEO Tim Prell said the funding is designed to help the company operate for the next 16 months.
In addition to funding the first phase of clinical trials, the money will allow the company to transform the prototype of the system into a marketable design. The first phase of clinical trials is expected to begin in November, he said, and should be complete by February or March 2009.
Device could prevent unnecessary surgeries
Research for the OrthoData system began in 2001, Prell said, when a group of University of Louisville researchers, engineers and physicians received a $348,000 grant from the National Science Foundation.
The purpose of the system the team developed, he said, is to accurately monitor the progress of spinal fusions with an implanted device.
More than 500,000 spinal-fusion surgeries were performed worldwide in 2006, Prell said. But in some cases, a patient's pain might persist, prompting a second exploratory surgery to verify whether the spinal fusion was successful.
Radiological services such as X-rays and CT scans can only approximate the success of the fusion, Prell said, and between 10 percent and 20 percent of spinal fusions performed require the exploratory surgery, at an annual cost topping $1.5 billion.
About half of those follow-up surgeries reveal that the fusion is healing properly, he said.
Spinal-fusion surgeries are performed by using bone grafts, which are held together with metal rods and screws, to stabilize the spine and help support the weight of the patient. With successful surgeries, less body weight is put on the metal rods as the bone graft heals.
The OrthoData device -- a small sensor placed on an implanted metal rod -- can measure the strain being put on the rod, Prell said, and that could help eliminate unnecessary exploratory surgeries.
Second phase of clinical trials could begin next year
The company currently has 12 employees, a group of researchers and engineers who work out of U of L's Belknap Research Building and at the university's downtown Health Sciences Center. The first phase of clinical trials would be held at those facilities, Prell said.
OrthoData has a service agreement with U of L that allows the company to use the space.
In addition to those operations, company officials are considering several locations for downtown office space, and Prell said they hope to make a decision by the end of the second quarter or beginning of the third quarter this year. He said the company will continue its relationship with U of L.
Prell expects the company to raise funds through another investment round that would pay for a second phase of clinical trials. He hopes to begin those trials in the next 12 to 14 months.
He said he wasn't certain how much the second phase of clinical trials would cost, but he expects it to be "a great deal more than $1.1 million."
The company also is working with a consultant to develop a strategy that will help it navigate the application process to obtain approval from the U.S. Food and Drug Administration.
Officials hope to have the system to market within the next two years, Prell said.
The Kentucky Seed Capital Fund has invested in a variety of pharmaceutical and biotechnology companies, but OrthoData marks the first device company in which the fund has invested.
Emont, a managing partner with the fund, called the OrthoData system "cutting-edge technology."
"It's new and it's novel," he said. "It's got a good team behind it, and we think it has some significant opportunities."
Orthodata investors
The Series A funding for OrthoData Inc. was led by Kentucky Seed Capital Fund.
Company founders also are investors.
Other investors in this funding round are:
- Queen City Angels, a Cincinnati-based angel investment group;
- Cardinal Venture Fund, a venture-capital fund available to students and alumni of the University of Louisville's College of Business;
- Kentucky Science & Technology Corp., a Lexington-based nonprofit organization that helps obtain funding and other resources for startup companies, researchers and educators;
- Commonwealth Seed Capital Fund, a state-sponsored venture-capital fund. |
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