Wednesday, January 23, 2013
Three young entrepreneurs are working to develop a heart valve for children
Three 20-something Carnegie Mellon University graduates, working in a $500-a-month storefront next door to a tattoo parlor on Etna's main drag, have an idea and a plan for a new kind of pediatric heart valve.
If it works -- and they're convinced it will -- the device could help an estimated 3,200 children born each year with a specific birth defect to avoid undergoing multiple open heart surgeries as they grow up.
Amid bare furnishings, the entrepreneurs often work seven days a week, eating at their desks (one of them occasionally naps on a pullout sofa bed after an all-night work session), while earning what one described as "survival wages."
It may seem an improbable scenario for advancing the complex world of medical devices. But in three short years, the young men -- CEO Doug Bernstein, 23, from Los Angeles; COO Jamie Quinterno, also 23, of New York City; and Arush Kalra, 26, a pediatric urology resident surgeon in New Delhi, India, before enrolling at CMU -- have assembled an impressive army of supporters.
Last month, the tech startup booster Innovation Works committed $250,000 to back their company, Peca Labs, and it has connected them with mentors to help them navigate regulatory and fundraising waters.
Larry Miller, life sciences executive-in-residence at Innovation Works, said the trio's comparative inexperience was of little concern in the organization's decision to invest.
"Their youth is good. We think there's lots of energy and lots of passion," he said.
If there were any hesitation about backing Peca, said Mr. Miller, it was the "relatively small" market the startup was targeting. Developing and marketing a new medical device is usually an expensive proposition, and investors aren't likely to jump in if there's no financial return.
The Peca three -- the name is a shortening of "pediatric cardiovascular" -- have addressed that problem by running a super-lean operation. Their low-rent office space, which amounts to not much more than a couple of work stations and a small conference space in the back, is just one manifestation of that.
"No matter what froufrou titles we have," said Mr. Quinterno, "we still take turns cleaning the bathroom."
Instead of the $70 million typically needed to bring a new medical device to market, they believe they can do it on $1.5 million. They are one-third of the way there, after the Innovation Works investment, and they've only just started to reach out to potential angel investors.
Along the way, the doubters have been plentiful. Among the concerns: There are not enough children who have the birth defect, which requires surgical reconstruction of the right ventricular outflow tract, to make the device profitable. Testing and regulatory hurdles will eat any possibility of profit. The entrepreneurs are too young and inexperienced in business matters to pull this off.
They've made all that work to their favor. None of them is married, or has a mortgage, so Peca is their life's focus. As Babs Carryer, a former instructor for Mr. Bernstein and Mr. Quinterno at CMU, once noted, "They are solving some thorny problems with novel solutions because they don't know that they shouldn't."
Each week, the three present their individual ideas and thoughts to each other. Suggestions get inspected, kicked around, modified and either dismissed or adopted, in part or in whole. Their biggest disagreement so far, they say, was deciding which color to use for a presentation to investors.
The trio met on the Oakland campus where Mr. Bernstein and Mr. Quinterno were roommates, while Dr. Kalra and Mr. Bernstein worked in the same laboratory.
It was Mr. Bernstein who came up with the idea for the new heart valve conduit's design and bringing it to market. While working as a laboratory research associate in CMU lab, he learned about a special valve invented by Children's Hospital surgeon Masahiro Yoshida, who has helped them spin off the company.
Dr. Yoshida designed his valve to treat children needing valve reconstruction because the typical method was to use biologic valves. Those tended to calcify within a few years, necessitating another surgery. Although widely successful for the patients who have received it, the device has never been mass marketed.
Mr. Bernstein, a dual major in biomedical engineering and mechanical engineering, studied the device and its flow patterns, and came up with a modified design that improves flow, using material that he describes as "Teflon with air bubbles," which is flexible and does not need to be replaced as the child ages.
"Just the idea that there is a device that would help people to live, but you could only get it in Pittsburgh because no one would bring it to market ... that was a lot of my interest," he said.
After Mr. Bernstein had the designed valve -- named the Masa valve in honor of Dr. Yoshida -- he became intrigued with the idea of developing and marketing it, "to understand every aspect of a product's life cycle."
Ms. Carryer remembers him coming to her office two years ago. He told her he wanted to form a company; she suggested waiting until there was a clear need to take that step.
"He just argued and argued and argued," she recalled. "It was frustrating, but it was also great because I could see there was a really tenacious entrepreneur in there."
Startups, despite the occasional wild success, "are not the best way to make money," she said. "I think he did it because he realized he could, and if he didn't, then nobody else would."
Peca held its first board meeting last week and the entrepreneurs are in discussions with a major medical device company to set up production.
Because they intend to fill a void no one else is addressing, involving a small number of patients, the approval process should be expedited under the FDA's Humanitarian Device Exemption. They intend to apply next spring, with the Masa valve hitting the market in the fall of 2014.
Mr. Bernstein noted, "This is not just a humanitarian plan. It's a business plan that makes sense."
He said each Masa Valve can be produced for about $1,000 and the retail price is expected to be about $10,000.
They know they can't guarantee success, but they are confident that they're putting everything in place to give it the best chance.
"We're on a mission," said Mr. Quinterno. "This is not something we see as a short-term plan. We're making something that will change people's lives."
Article courtesy of Pittsburgh Post-Gazette