Minnesota startup targets hemodialysis patients, seeks $5 million

Fledgling Minnesota medical device startup Phraxis is trying to develop an alternative to how hemodialysis treatment is provided to patients who have kidney failure.

Traditionally, most new patients who require hemodialysis end up getting a central venous catheter through which dialysis occurs. But because the catheter has an external opening, the chance of infection is high among patients, as is the risk of death from those infections.

“What the Phraxis device allows is a percutaneous insertion of a permanent dialysis device that will allow you to withdraw blood from a patient and dialyze it,” said CEO Michael Kallok. “The fact that it is under the skin minimizes the chance for infection.”

The implanted device has a novel connector design that allows one end to be attached to the artery. Then a synthetic graft material is attached to this connector and is tunneled under the skin, and the other end is connected to a vein in the patient.

“The graft material is synthetic but doesn’t require any sutures to implant,” Kallok said.

The technology comes from the company’s chief scientific officer Alexander Yevzlin, a professor at the University of Wisconsin-Madison and a director of Interventional Nephrology and the university’s chronic kidney disease clinic. Yevzlin founded the company in 2009 and currently serves as a part-time chief scientific officer.

Phraxis will compete with a product called HeRo, a surgically implanted device developed by another Minnesota company to provide ” long-term vascular access for chronic dialysis patients who have exhausted other access options.” HeRo, a product of Eden Prairie-based Hemosphere Inc., is already approved by the U.S. Food and Drug Administration.

Kallok said that HeRo is a much more invasive device that requires a surgical procedure, unlike the one being developed by Phraxis.

Although Phraxis was founded in 2009, it was not until last year that Phraxis succeeded in raising $1.2 million in a seed round and began on product development, Kallok said.

The company is planning to raise another $5 million and the goal is to use that money to fund a clinical trial for a 510(k) submission. Phraxis expects to begin that trial in the second quarter.

The market opportunity could be as large as $160 million, assuming an average selling price of $2,000 for the device. That’s because out of the 100,000 patients that require hemodialysis every year, Phraxis aims to capture 80 percent who would rather choose the implanted Phraxis device and its potential for reduced infection and morbidity.

Success of course depends on how successful the company will be in raising the $5 million that will help fund the trial and gain 510(k) clearance. Kallok admitted that the funding environment is challenging, but said that the company has tried to keep costs low by outsourcing many functions.

“We have a part-CFO, part-time chief scientific officer, outsource our R&D and regulatory functions, and we will most likely retain a clinical research organization to manage our clinical trial,” Kallok said. “So we are purposefully keeping the company lean right now. …” Kallok said.