Boulder Valley hotbed of medical device innovation

The Boulder Valley has a worldwide reputation, and it isn’t for its lure of outdoor enthusiasts who like to hike, bike, climb and run. It’s a reputation for developing devices that can enhance the health and well-being of those enthusiasts along with their less active counterparts.

When John Dunning wanted to launch Clarimedix Inc., a startup developing a new technology to treat pain and other chronic health problems, he conducted a national search and found Boulder had all the ingredients he was looking for. He said Boulder has highly skilled people, low cost of doing business and access to high-quality outsourcing resources.

“I looked at all the major markets you could possibly think of,´ said Dunning, a former venture capitalist with the Santa Fe, N.M. office of Wasatch Venture Fund, who moved to Boulder in May 2006. “In Boulder I found a unique combination of things that were attractive to a startup medical device company.”

Dunning would not describe the device in detail, stating the “very severe” competition is making him “very careful about what we say.”

Dunning is one of four founders, and one of Clarimedix’s two employees, along with Jim Brooks who’s heading up operations.

The device has been cleared by the Food and Drug Administration, and Dunning said it will be manufactured in the Boulder Valley. He expects to hire seven to 10 workers in the next year or so.

Dunning’s decision to open shop in Boulder doesn’t surprise Denise Brown, executive director of the Colorado BioScience Association.

About 200 of Colorado’s 380 bioscience businesses are medical device companies, Brown said, and 90 percent of them are along the Front Range. She said most are “small, innovative companies, which is what is so exciting about what’s happening in Boulder. It’s a hotbed of device innovation.”

Mountainside Medical LLC Managing Member Pete Neidecker located his medical device contract-manufacturing company in Boulder for similar reasons to Dunning’s. It has low lease rates, a “great educational base” and the presence of other medical device companies.

Neidecker and partner Jim Chambers were with Minneapolis-based medical devices manufacturer MedSource Technologies. When the publicly traded company went private, the new owners gave the principals “a nice package” to leave, and the two decided to move west.

They invested about $4 million in equipment and have a $1 million line of credit. “We have a wonderful banking relationship with UMB of Colorado,” Neidecker said. “We couldn’t have done it without them.”

Mountainside opened its doors in November 2005 at its Gunbarrel office and started production in March 2006. It makes devices for clients in the surgical, instrument and orthopedic industries. Neidecker could not name them because of nondisclosure agreements. Most are based in the Boulder Valley, he said.

“Our business plan is to work with local companies to help them develop their product as well as be a partner in their production so they don’t have to build their own manufacturing facilities,” he said.

Medical device companies want to work with local contract manufacturers rather than offshore providers. “The higher tolerance and more precision instruments need quality and process controls,” Neidecker said. “For the most part they utilize very high-tech machinery, which is very expensive and very automated so it still sits well as an American industry.” Jobs that require assembly rather than machining are sent to Mountainside’s sister company in China.

Mountainside’s revenue was $2.5 million during fiscal year 2007, and he expects it to reach $6 million in 2008.

The company won’t remain limited to Boulder, either. “This facility is one of eight we’re doing around the country, and this facility should be around $15 million within the next five years,” Neidecker said.

A new hearing device manufactured in Boulder at Otologics LLC is on the market in Europe and in Phase 2 trials in the United States. The company expects it to be available in the U.S. next year.

The technology for the implantable device was developed in St. Louis as a result of collaboration between the Storz Instrument Co. and Washington University Medical School’s Department of Otolaryngology. When Jose Bedoya, Otologics’ president and chief executive officer, was ready to commercialize the product in 1998 he moved the company to Boulder. His reason for the move echoes Dunning and Neidecker.

“In essence I was seeking an environment in which I could attract top talent. Although St. Louis is a beautiful location, it’s very hard to get experienced medical device people to move there,” he said. “So I moved it to a location that would be an asset instead of a detriment.”

The 60-employee company developed Carina, a middle-ear transducer. It stimulates the middle ear directly and is an alternative to an in-ear hearing aid.

“We connect either directly to the middle ear or directly onto the cochlea, and by stimulating it directly we avoid all the distortion that can occur when you deliver amplified sounds through the ear canal,” Bedoya said.

He said other advantages include comfort, convenience and “cosmetics of having a device that is completely implanted under the skin.”

Carina costs about $12,000 to $15,000 and requires surgery costing $4,000 to $8,000. Bedoya believes it will be worth it to many of the 9 percent of the global population who has some form of hearing impairment. The average high-end hearing aid costs $3,000 to $6,000 and is replaced every three to four years. Carina has a five-year warranty, but “it has a design life of next to 20,” according to Bedoya.

Bedoya expects Otologics to turn cash-flow positive in 2008 and go public the next year.

In Louisville, Jerry Rifkin is developing a prosthetic foot with the help of a Small Business Innovation Research, or SBIR, grant from the National Center for Medical Rehabilitation Research, part of the National Institutes of Health. The grant has given him $100,000 per year for the past two years to design and test the foot.

Unlike Dunning, Neidecker and Bedoya, Rifkin didn’t move to the area to launch a company – it just has turned out that way. The former business consultant had been constantly on the road and moved to the area for a healthier, more outdoor-oriented lifestyle. He was recovering from a bicycle accident and learning to walk again gave him insight into prosthetics. He began tinkering in his home shop with a prosthetic foot that closely mimicked a human foot and launched Tensegrity Prosthetics.

Since forming the company, Rifkin has returned to school and is working on his master’s degree in mechanical engineering at the University of Colorado at Boulder. That’s where a lot of the testing of his device has taken place as well.

Rifkin is using part of the research grant to pay for his research assistant’s doctorate at CU’s Department of Integrative Physiology, where four amputees have been testing the foot at the department’s Locomotion Laboratory.

The data shows all four subjects have shown “noticeable oxygen consumption efficiency gains,” Rifkin said. That means they are using less oxygen to walk with the new foot than with their old prosthetic.

“When you have an amputation you burn 20 percent more oxygen to get from here to there at a given speed. It’s a handicapping of the entire system – people are more tired at the end of the day,” he said.

One subject is walking so much better that his fiancÇ, a physical therapist, noted that he has a “normal human gait,” Rifkin said.

The rest of the grant has paid for contract manufacturing – done in the Boulder/Denver area – and Rifkin’s small salary.

Rifkin is the process of applying for an SBIR Phase 2 grant worth $400,000 per year for three years to continue research and complete a six-month beta test of 100 subjects nationwide “to show that it can be as good as the maintenance-free ones available today.”

That test is scheduled to start in the fall.

Contact Caron Schwartz Ellis at 303-440-4950 or csellis@bcbr.com.

on Facebook on LinkedIn