03 Apr Froedtert invests $1.5M in local medical imaging startup
Milwaukee, Wis. — Wisconsin biotechnology officials hope Froedtert Memorial Lutheran Hospital‘s decision to invest $1.5 million in an entrepreneurial medical imaging company will be the tip of the iceberg of close-to-home venture investing.
In the past, the state’s early-stage biotechs have wined and dined outside investors with the hope of gaining a long-term funding commitment, only to be spurned more often than not. Some believe they are more likely to curry favor with moneyed Wisconsin institutions.
Froedtert announced Monday that it has invested in Kyron, a Wauwatosa software developer working to help doctors better diagnose and treat the estimated 360,000 people in the United States that have been diagnosed with brain cancer. As the technology has developed, clinicians at Froedtert have used it and become familiar with its benefits.
Froedtert’s support of Kyron might just convince other companies and foundations to follow suit, according to Jim Leonhart, executive director of the Wisconsin Biotechnology and Medical Device Association. “I think this is a terrific move where a large end-user supports the technology,” Leonhart said.
Kyron, founded in 2004, is a spin-off of the Medical College of Wisconsin. Three faculty members of the Medical College’s radiology department started the company, and Froedtert provided the proving ground for its technology – the BrainViewRx viewer. “This is a strategic investment that Froedtert is making in a technology that it feels will have significant clinical value to patients,” said Paul Schmelzer, CEO of Kyron. “This is more in the nature of an angel investment to assist Kyron in launching its commercial activities.”
Kyron’s founders are Edgar A. DeYoe, professor of radiology research; Kathleen M. Schmainda, associate professor of radiology research; and John L. Ulmer, a professor of radiology and neuroradiology who treats patients at Froedtert. In addition to the hospital’s investment, each founder has received small business grants to continue their research.
Schmelzer said the founders are doing pioneering work in applying functional MRI technology to the treatment of soft brain tumor tissues, and the BrainViewRx is a software product that will be applied to treatment planning and post treatment monitoring of soft tissue tumor patients. When used with the latest neurosurgical techniques, it can minimize or avoid the complications experienced by 7 to 23 percent of brain surgery patients. Those complications include paralysis, impeded speech, and encumbered motor skills. According to Schmelzer, it will be marketed to neurosurgeons in the initial implementation, or to radiation oncologists.
The timetable for its commercial launch still is being worked out, but Kyron will use Froedtert’s facilities to demonstrate the product’s market value. “We get not only the capital, but we also get an excellent clinical site for the technology to be deployed and proven in the marketplace,” Schmelzer said.
The hospital’s connection with Kyron was a factor in the investment, noted Blaine O’Connell, senior vice president and chief financial officer for Froedtert. “This is the first time we’ve done anything like this, and we’ve actually looked at a couple of opportunities in the past,” said O’Connell, who will sit on Kyron’s board. “We weren’t able to get comfortable with them because we don’t know the businesses or the individuals like we do here at the Medical College.”
Kyron has received clearance from the United States Food & Drug Administration for the first phase of its brain imaging technology, and the approval process is underway for the remaining two phases. The company expects full FDA clearance this fall, after which the system will be available for use with patients.
More on Froedtert:
• Digitizing hospitals with the right tools
• Rodney Dykehouse of Froedtert and Medical College of Wisconsin warns against tech for its own sake
• Froedtert and Medical College plan $120 million expansion