After more than 20 years in corporate America, Doris Engibous says she was “big-companied out.”
So the medical technology veteran jumped at the opportunity to move from California to Minnesota six years ago to become a first-time CEO for Hemosphere Inc., which has developed a vein-access device for chronic kidney disease patients who need hemodialysis.
Since then, Engibous has led Hemosphere to several notable victories, including a $9.3 million “Series A1” round of investment funding last month that was led by Kaiser Permanente Ventures and Cleveland’s Mutual Capital Partners.
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The company’s device, called the HeRo, was approved by the Food and Drug Administration in 2008. The device is made of a tube and a graft that are implanted under a patient’s skin to allow arterial access. Hemosphere recently hit a major milestone when the (pdf) 1,000th patient was implanted with the device. The 25-employee company has doubled its employee numbers during the past two years. More importantly to its shareholders, Hemosphere is on track to more than double its sales from last year to $6 million in 2010, Engibous said.
Prior to Hemosphere, Engibous spent 17 years in marketing and operations with Nellcor, an oximeter maker that was eventually acquired by medical supply giant Covidien.
Engibous spoke with MedCity News about why Hemosphere figures to be an attractive acquisition target for device firms in the coming years and its plans for its latest round of funding.
Q: What problem does the HeRo solve? What’s the alternative treatment and why is the HeRo better?
A: The preferred form of long-term vascular access for a typical hemodialysis patient is an autologous fistula, or a synthetic graft. When patients are no longer candidates for those due to vein damage, they’re relegated to central-venous catheters. Catheters are often referred to as a death sentence for patient because they can cause life-threatening infections called catheter-related bacteremia. Catheters exit the chest instead of being completely subcutaneous, so patients who use them have pigtails hanging out of their bodies and may not be able to participate in normal everyday activities like showering or swimming.
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So the HeRo is better because when patients become dependant on catheters, the HeRo allows them to get the benefits of a surgical implant like a graft and [it] dramatically reduces the likelihood of infection.
Q: What will the latest round of funding help Hemosphere accomplish?
A: This financing is all about growing our top line so that we can achieve cash-flow-positive operations on the bottom line. It will primarily fund the expansion of our sales team over the next two years. It will also fund key market-development initiatives to establish HeRo as a new standard of care for patients when they’ve become dependent on catheters for their hemodialysis treatments, including post-market clinical studies to further document the efficacy of HeRo.
Q: How much investment funding has Hemosphere raised since its inception? Any plans to look for more in the next few years?
A: We’ve raised $33 million. The current expectation is that this will be the company’s last required financing before profitability. We probably won’t be looking for more, but you never know. We’re a likely acquisition target by several of the major players in the medical device marketplace so it’s possible that the best alternative for our shareholders will be through a strategic exit. But most importantly, this funding will allow us to control our own destiny by becoming a profitable business that we continue to build around the HeRo technology.
Q: What do you consider the biggest challenge facing the company?
A: Our biggest challenge is just market awareness. We’re a pretty small company early in our market-adoption phase, and we’ve been able to do what we’ve done to date with very limited resources. Up to this latest round, there was only $24 million in the company. After we received the 510(k) clearance in May 2008, we started with only three sales people and have added several distribution partners since then.
Another challenge is that hemodialysis patients aren’t seen by just one specialist. The HeRo implant procedure is done by a surgeon, but when patients have kidney disease, they’re seen by nephrologists who refer them to surgeons for vascular access. Later, when other types of access have failed patients and they are using catheters as their dialysis access, they’re often seen by interventional radiologists instead of surgeons. So our second challenge is dealing with a little more complex sales and marketing model. We need to educate nephrologists and interventional radiologists so they can refer their catheter-dependant patients to a surgeon for HeRo access.
Q: Anything else we should know about Hemosphere?
A: We are absolutely confident that we’ve got something that can make a huge difference in the lives of patients with chronic kidney disease by creating a new standard of care versus long-term catheters. Dealing with hemodialysis is a hard and scary thing. We feel an obligation to make our technology available to all eligible chronic kidney disease patients on hemodialysis.
