ORTHOPEDICS With Extremities Hot, Will Strategics Give Wright a

RUN FOR ITS MONEY? Wendy Diller, 10

PERSPECTIVE At EuroPCR, INNOVATION OVERLOAD ...and a Possible Endgame

David Cassak , 4

EXECUTIVE INTERVIEWIn Respiratory Care, Teva Sees Proving Ground for

DIGITAL HEALTH Mary Stuart, 18

MEDTECHSTRATEGIST.COM

MAY 31, 2017Vol. 4, No. 8

MARKET TRACK

Published by Innovation In Medtech, llc

See page 14

US Fusion/Total Ankle

Replacement (TAR)

Market

START-UPS TO WATCH

CARDIAC INSIGHT: Upending the Mobile Cardiac

Monitoring Businesss Mary Thompson, 26

ARTERYS:Smart MRI Software is

Radiologists’ New Best Friend Colin Miller, 30

TANGIBLE SCIENCE: Out to Disrupt the Contact

Lens Market Mary Stuart, 32

Source: Leerink Partners, January 17, 2017 report on Wright Medical Inc.

US Fusion/Total Ankle Replacement (TAR) MarketFigure 3

2014 2015 2016E 2017E 2018E

$155.6M $172.6M $190.5M $209.4M $229.1M

US Fusion Revenue

$85.9M

US TAR Revenue

$92.5M

$80.1M

$99.1M

$91.5M

$112.4M

$116.7M

$105.7M$103.6M

$69.7M

CAGR: 7.0%

CAGR: 13.8%

Totals (Fusion + TAR)

THE MEDTECH STRATEGIST © 2017 Innovation In Medtech, LLC. All rights reserved.

26 START-UPS TO WATCH

When the monitoring period is over, the wearable sensor is removed and a complete diagnostic report is prepared in the doctor’s office in a matter of minutes.

The mobile cardiac rhythm monitoring market is a billion-dollar-plus opportunity in the US alone, but even though significant technology advances have been achieved in this arena in recent years, the current monitoring paradigm remains fairly inefficient. All of the mobile heart monitoring technologies in widespread use today—ranging from traditional, cumbersome Holter monitors, which record event-based data for only 24 to 48 hours, to iRhythm Technologies Inc.’s wearable ZIO patch, which collects continuous ECG data

for up to 14 days—are sent to an outside loca-tion for data analysis and report generation. That means it can take days to weeks before the physi-cian receives the report back and the patient has a diagnosis and a treatment plan.

Start-up Cardiac Insight Inc. has set its sights on changing that paradigm, which the company says is burdensome and unnecessarily costly for provid-ers and patients and delays appropriate treatment.

Cardiac Insight was spun out of the University of Washington about eight years ago by Brad

Harlow, the firm’s current CEO, and UW cardi-ologist David Linker, MD. Linker had developed some algorithms and obtained some patents related to wearable technology, says Harlow, and the company was started around that technol-ogy. However, it wasn’t until about five years ago that the firm was financed. At that time, Harlow brought in a board of directors made up of med-tech CEOs and clinicians. “I collected a group of national and Seattle medtech leaders who I knew,” Harlow recalls, “and they did the first financing with me.”

The company then hired a management team, including Bill Willis, who came on as company president about three years ago. Willis and Har-low had known each other for years, and Willis brought a unique expertise to his new role, hav-ing served previously as president and CEO of iRhythm, and before that, as founder of iCardia Healthcare. Cardiac Insight obtained some early 510(k) clearances for wearable sensors, but the technology wasn’t quite ready for commercial-ization. When Willis came on board, says Harlow, “we put all of our resources towards develop-ing an ultra-low cost, disposable, seven-day ECG sensor.”

That sensor system—called the CARDEA SOLO—received FDA clearance just last month and is now in a “soft” launch in the US. It is designed for the diagnosis of patients with tran-sient cardiac symptoms and events—such as pre-syncope, syncope, and “everything up to atrial fibrillation,” explains Harlow. All going well, the

Cardiac INSIGHT: Upending the Mobile Cardiac Monitoring Business

KIRKLAND WASHINGTON

contact

Brad Harlow, Co-Founder and CEObharlow@cardiacinsightinc.com

year founded2008

who’s behind itBrad Harlow, CEO and Co-Founder, Chairman of CBC Partners, a private commercial lender, former SVP of Data Critical (sold to GE Medical) and Managing Director of B.Harlow & Associates, LLC, a firm that has helped raise over $250 million for cardiology and medtech companies

unmet clinical needPatients with transient symptoms of potentially dangerous cardiac arrhythmias must currently wait days or weeks for a definitive diagnosis while a third-party service center analyzes the data from mobile devices and prepares a diagnostic report

solutionThe CARDEA SOLO wearable ECG sensor device collects continous ECG data over a seven-day period, after which time, the data is analyzed and a diagnostic report is prepared in a matter of minutes on the physician’s computer during the follow-up visit. This enables patients to get diagnosed and begin treatment much faster, gives physicians more control over the diagnostic process, and greatly simplifies billing

medical advisors Robert Hauser, MD, past president HRS, senior consulting cardiologist (retired), Minneapolis Heart Institute; Victor Froelicher, director Sports Cardiology Clinic, Stanford University

Mobile cardiac monitoring is a relatively inefficient process—the data is analyzed and interpreted by an outside service provider, and patients sometimes wait for weeks to get a definitive diagnosis. Start-up Cardiac Insight is aiming to change that paradigm with a seven-day disposable, wearable ECG sensor system and software algorithm that enables physicians to analyze the data on their own computers and obtain a diagnosis within minutes at the point-of-care.

by MARY THOMPSON

MAY 31, 2017 | Vol. 4, No. 8

MAY 31, 2017

27START-UPS TO WATCH

firm plans to begin a broader com-mercial launch of the device in June.

The CARDEA SOLO builds on technol-ogy the company obtained in October 2015 when it acquired Cardea Associ-ates, which had an FDA-cleared, hand-held, Bluetooth-enabled 12-lead ECG system for screening athletes for heart rhythm abnormalities that Cardiac Insight sells in the US as the CARDEA 20/20 ECG. That device, says Harlow, has a “tremendous following.” Accord-ing to the company, it is the “only sys-tem automated with Refined Seattle Criteria”—a method of data interpre-tation the firm says is more accurate, enabling the device to offer the indus-try’s lowest rate of false positives (3%), which limits unnecessary follow-up testing.

When the company purchased Car-dea Associates, one of that firm’s co-founders, David Hadley, PhD, also came on board with Cardiac Insight and began leading the firm’s develop-ment efforts on the wearable sensor. That led to the current CARDEA SOLO device, which uses the Cardea Asso-ciates technology as a baseline algo-rithm.

Harlow says the CARDEA SOLO sen-sor is a “game-changer” for this field. First and foremost, he points out, it’s a product, not a service, so a clinician can just take it off the shelf and use it. And that is what most profoundly differentiates the device from other products on the market. CARDEA SOLO is a wearable sensor that contin-uously records up to seven full days of ECG data (see Figure 1). Importantly, it records heartbeat-to-heartbeat data, which Harlow says “we know is the right type of data that physicians want for diagnostic purposes, the most thor-ough in that [seven-day] time period, and seems to be the most efficient in terms of diagnostic yield.”

The device is largely differentiated on the back-end of the diagnostic process. When the monitoring period is over, the patient goes back to their doctor’s office, where the patch is removed. An electronic data-record-ing pod housed inside the patch is then taken out and placed into a “smart cable,” which is tethered to the physician’s laptop or desktop computer, into which the Cardiac Insight data analysis software has been installed (see Figure 2).

All of the data collected is then processed locally, and a complete diagnostic report is prepared and formatted by the software on the physician’s computer—all in a mat-ter of three to four minutes. In addi-tion, the physician, if so desired, has instant access to all of the raw data used to generate that report, so “if they want to see a particular element of raw data on day three, for example, that contributed to a finding of AF,” says Harlow, “they can go right into the full-disclosure report and look at that raw data almost immediately. That’s very proprietary to our product. And that enables physicians to participate in the diagnostic process to a greater degree, which is something they really value.”

Not only does CARDEA SOLO give physicians more control over the diagnostic process, but, notes the company, it also alleviates several of the substantial operating expenses providers experience with service-oriented heart monitoring mod-els. “Cardiac Insight is not a cardiac diagnostic service company, as are all other companies in this space,” Harlow points out. “Rather, Cardiac Insight is the provider of a diagnos-tic device that healthcare providers acquire and then use in the diagnos-tic process.” Therefore, providers can

benefit from a greatly simplified bill-ing process, and most importantly, they are able to produce a high-qual-ity diagnostic report with the patient right there with them in their office in a matter of minutes.

As mentioned, the company has a full launch slated for June, when it will begin by targeting cardiology practices and electrophysiologists across the US. “We believe the product is extremely well-placed [in those two markets] where these patients exist today in large numbers,” notes Harlow, “and where most of the testing for tran-

Online print subscriptions, reprints, and web posting and distribution licenses are available.Contact Kristy Kennedy at 480.985.9512 • k.kennedy@medtechinno.com

Figure 1

The CARDEA SOLO Wearable ECG Sensor

Source: Cardiac Insight

Figure 2

Cardiac Insight’s Smart Cable with Data Recording Pod

Source: Cardiac Insight

THE MEDTECH STRATEGIST © 2017 Innovation In Medtech, LLC. All rights reserved.

28 START-UPS TO WATCH

sient arrhythmia diagnostics occurs.” In addition, he says the product is also well suited to hospital and clinic set-tings, especially emergency rooms, where there’s an “enormous popula-tion” of patients who present with transient cardiac symptoms. “There’s very little that can be done for those patients in today’s healthcare model in the ER,” he asserts, “because most emergency rooms would not allow you to leave with a Holter device. How-

ever, a single-use disposable, low-cost, highly efficient diagnostic-yield device is the perfect solution for an ER.”

The company has a partnership with Welch Allyn (part of Hill-Rom) to bring the product to the market in primary care and family practice settings as well. Welch Allyn, which is a lead stra-tegic investor in Cardiac Insight, will market the device in those settings under its own private-label name, with

a launch possible later this year, Har-low says.

What sets Cardiac Insight apart is its focus on an entirely new business model in a field dominated by service revenues, as well as its progress to date—from development through FDA clearance—which has been achieved in a very cost-efficient manner. Notes Harlow, “We’ve kept very lean—we’ve tried to do very little bricks and mor-

tar. The product is manufactured for us by a contract manufac-turer in the United States, and we contract out other services, including human resources and payroll. So really, all we control is development and engineering, and going forward, distribution and sales.”

The company has about 13 employees right now, although Harlow says that will increase quickly once full-launch gets underway. But, he continues, “it’s highly cost-effective selling through the distribution that we have with the costs we have, so it doesn’t take a large amount of personnel and dollars to move this through, and then it becomes a re-order product.” The company has raised $15.5 million to date to develop and commercialize the CARDEA SOLO device, and Harlow says the firm recently initiated a new, C round of funding to sup-port the commercial launch.

Cardiac Insight is anticipating strong demand for the CARDEA SOLO going forward. “This product is unique,” notes Harlow. “It meets an unmet need for faster access to a diagnostic result and for greater physician ownership of the diag-nostic process. I think physicians view this as a breakthrough and a substantial improvement in effi-ciency. Our comments back from focus groups have been extraordi-narily positive.”

MedTechStrategist.com

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Edge-to-edge Repair19%

Enhanced Coaptation

16%

Indirect Annuloplasty

11%

11%

11%

Mitral ValveRepair (other)

Chordal Repair

Leaflet Repair

Ventricular Remodeling

Sales

Direct Annuloplasty

24%

11%

5%

3%

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SPINE Quandary Medical Gets Trans1

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MARKET TRACK

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Mitral and Tricuspid Regurgitation in the US

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STS Database

MR & TR (Moderate to severe)

Annual New MR

Annual MR Surgeries

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MR - >2,000,000TR - 1,600,000

250,000

60,000

8,000-10,000

4

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Published by Innovation In Medtech, llc

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BIOTRACE MEDICAL: Serving a Growing TAVR Market

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Who is doing well at this?

1

0

5

10

15

20

25

Num

ber

of R

x-D

x -

rela

ted

deal

s

2011-2013 2014-Sep 2016

All companies have increased the intensity of their CDx partnering. From Jan 2014-Sep 2016 almost 1.5 times more deals were closed (164 in total) compared to 112 deals in the preceding 3 years (2011-2013).

Diaceutics forecasts that Dx enablement of therapy will become the norm by 2020. Over 70% of new drug launches will be dependent upon an effective Dx prelaunch and launch strategy.