OrthoHelix Surgical Designs Inc. topped off a recent $14 million investor fundraise late Wednesday afternoon with a $1 million Ohio Third Frontier grant.
Third Frontier is Ohio’s $2 billion project to develop the state’s economy by investing in technologies in five industry clusters, including biomedical. In May, voters approved issuing $700 million in bonds to extend the project — set to end in mid-2012 — by four years.
On Wednesday, Third Frontier commissioners approved nearly $14 million in grants for biomedical and medical imaging projects. And OrthoHelix — a Medina, Ohio company that develops orthopedic implant and instrument sets used by surgeons to fix bones during foot, ankle, hand and wrist surgeries — is just the kind of company commissioners like to see.
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Its product is high tech and in a cluster and industry targeted for development — biomedical and orthopedic, respectively. OrthoHelix also plans to put its grant money to work by finishing development of a technology called OrthoLock, which promises to create more sales and jobs for the company (and the Ohio economy), and could eventually enable the company to bring its manufacturing — now done in states outside Ohio — in-house.
“We were thrilled for a lot of different reasons, including the fact that we refused to use a grant writer,” laughed Dennis Stripe, OrthoHelix Surgical’s chief executive. His company’s executives wrote their own Third Frontier grant application after getting a quote from a professional grant writer — for $80,000.
The company also was thrilled to be ranked No. 1 among five recommended projects (ppt) in the Taratec Corp. analysis of 28 proposals submitted for $5 million in Ohio Third Frontier Biomedical Program grants. For Stripe, the highest ranking for his company’s proposal — and the Third Frontier Commission’s vote to approve funding it — means, “we have the faith of the State of Ohio behind us.”
For good reason.
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“We’re a design-make-and-sell-it kind of company,” Stripe said. “It’s not rocket science. It’s not stem cell research. It’s not technology yet-to-be proved. It’s differentiated technology that’s better than the competition and that’s exclusive to us.”
Stripe said his company committed in its grant proposal to add 42 jobs over three years to its current 45. “We have a strategic plan to double our workforce,” he said. “We just needed the funding.”
OrthoHelix recently discovered and was able to prove its OrthoLock variable-locking screw technology, which the Food and Drug Administration approved for sale in April, according to the company’s grant proposal. The company will use its grant “for the manpower to complete the technology … and expand the usage of the technology into additional product lines, which will allow us to get into more severe trauma cases,” Stripe said.
The company said in its grant proposal that it generates 90 cents in revenue for every $1 invested in surgical trays. Its products, which fall into five technology groups, generated more than $10 million in revenue last year. With the Third Frontier grant and recent investments, the company expects annual revenue of $50 million by 2013, Stripe said.
In addition, the grant money will help OrthoHelix build more instrument and implant sets to be deployed at U.S. hospitals, said Cameron Rubino, the company’s vice president of finance. “Our industry is a highly capital intensive industry. We have a lot of money going into inventory as we continue to grow our business.”
Stripe expects the main OrthoLock product will begin to be used in surgeries in July. “We roll them out slowly, to make sure everything goes well.” The company also plans to adapt OrthoLock for use on the small bones in the hand and foot.
OrthoHelix already has benefited from Third Frontier. In 2002, OrthoHelix received a $1.2 million loan through the Innovation Ohio Loan Fund, which has been repaid.
In April, the company added $4.6 million to its $14 million Series C fundraise, which started in 2008. Since 2005, OrthoHelix has raised more than $21 million in investor funds.
Dr. David Kay, an orthopedic surgeon who specializes in foot and ankle surgery, and is a managing director of the Crystal Clinic in Bath Township, Ohio, started OrthoHelix in 2004.
