POWELL, Ohio — The team of Ohio State University MBA students who wrote an award-winning plan for Vertebration Inc. in 2004 now are asking investors for an additional $1.3 million for their growing company.
The team went on to start Vertebration and develop ZYcor, a spinal vertebrae replacement device that received U.S. Food and Drug Administration marketing clearance in 2007.
“It was an entrepreneurship class in the executive MBA program at OSU,” said Rick Karr, Vertebration’s president and chief operating officer, as well as a co-founder, as he explained the genesis of Vertebration and ZYcor. “The class really pulled everything together.”
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The business plan written by Karr, teammate Dr. Henry Fabian, an orthopedic spinal surgeon who sat next to Karr during their entrepreneurship class, and other teammates won the top award in the annual business plan competition sponsored by Ohio State University’s Fisher College of Business and accounting and audit firm Deloitte & Touche. The team won $16,000 in cash and $65,000 in services to bring the product to market, according to a June 2004 story by Business First of Columbus.
“That provided us our initial seed money and some services for the company,” Karr said. “From there, we won the Fortune Small Business magazine competition, which gave us some more cash to invest in the business.
Then we went out and started the private placement piece.”
Vertebration has raised $850,000 by selling common equity and $700,000 by selling convertible securities since 2006, according to Securities and Exchange Commission (SEC) filings. Nearly half of the current filing for $1.3 million — $600,000 — has come from converting some securities to common equity, Karr said. “We are actively raising incremental funds,” he said.
Vertebration is a virtual company. “We leveraged off of a number of (virtual) team members that we brought in to take the implant through the development process for an implantable medical device, from IP filings to all the product testing and development, to the point where we were ready to file” with the FDA, Karr said. “Subsequently, we’ve transitioned manufacturing back here to Ohio. So the implant is manufactured, packaged and sterilized in Ohio.”
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Fabian, who is Vertebration’s chief executive, practices in Steamboat Springs, Colo. “You find a lot of companies, whether medical device or biotech or high tech companies, operating the way we do,” Karr said. “We do have a physical office, but really the people and the resources and the expertise are located in a variety of places.”
Vertebration has annual revenue of less than $1 million, according to its latest SEC filing.