Using Patented Technology to Diagnose Lower Back Pain

Ben Shappley
CEO, SpineMatrix

Could one of the most common physical maladies in America, lower back pain, provide an opportunity for the latest biomedical device growth story in this region?

That was the question on the table for the OVA at its April 11th lunch forum, as SpineMatrix president and CEO Ben Shappley presented an overview of the Akron-based company. Chronic lower back pain is one of the more common physical complaints facing the health system as the giant Baby Boom cohort begins to enter its 60s. It accounts for 31 million hospital visits annually in the U.S. and about $145 billion in health care spending. Approximately 1.5 million spine surgeries are conducted on patients each year, with only about a 60-65% success rate. "That's a very low success rate," said Shappley.

To increase that rate of success, SpineMatrix has developed a proprietary, FDA-approved device that non-invasively scans the patient's neuromuscular system to diagnose underlying problems. First developed in the mid-'90s by a neurosurgeon in Wooster, Ohio, Dr. Mark Finneran, with support from the Edison Biotech incubator, the system has undergone extensive clinical trials, including at the Cleveland Clinic. The technology is protected by 10 U.S. and five foreign patents, with a couple more pending. The machines are leased to spine centers and other facilities.

"We have a 95% success rate in determining if you have a disc pathology. This will save a tremendous amount of money for health systems and insurers, and will save a lot of needless surgery," he said.

The company, which expects to begin manufacturing the systems locally in July, has significant momentum. It raised $9.5 million in series A, and another $8 million in series B funding, and also received a long term loan of $900,000 from the state of Ohio. Its board of advisors includes the lead patent holder of the ultrasound process.

The original business plan called for outsourcing the manufacturing process and selling through manufacturers reps. But Shappley explained that has since changed. An inside sales force will be used instead, and beginning this summer, manufacturing and assembly will take place in Akron, using mostly Ohio-based vendors. Units will be produced and shipped as-needed. Orders that come in early in the week can be built and shipped by mid-week, Shappley explained, noting that adds tremendous value for his investors.

The company experienced modest challenges in recruiting top talent to Ohio, said Shappley, who himself has more than 25 years of experience in medical technology management. "Though nothing you can't overcome. It just takes a little more time and a little more money." It has encountered perhaps more significant challenges in awaiting approval by third-party reimbursement agents. "Lots of insurers refuse to pay for the scan because it's new," he said, and the company has had to work through that with an educational process.

For now, at least, SpineMatrix finds itself in an enviable market position. "Right now," Shappley said, "there's no competition for determining the physiology of low back pain."

See complete PowerPoint presentation.

More information:

• www.spinematrix.com

Webcast and Photos from the Meeting:

Webcast produced by Mike Gesing, The Impact Group.

Joe Zapis, Tim Biro and Brent Pietrafese.

 Gary Schoeniger and David Morgenthaler.

Lloyd Bell, Greg Cowan, and Jim Weisman.

Next Meeting:

May 9, 2008
Gary Johnson
President and CEO, Thin Battery Technologies

The Union Club
1211 Euclid Ave.
Cleveland, Ohio

The Quiet Recovery
Focused on the regional core competencies in bioscience

Beginning in 2002, private investors, led by Early Stage Partners, acquired intellectual property from Eveready Battery Company regarding printable carbon-zinc batteries. The patented IP was the result of over five years of research and development at Eveready. Thin Battery Technologies, Inc. (TBT) was founded in 2003 to commercialize and progress the technology. By 2005, "Thin Battery Technologies" had established robust product from large-scale production and delivered commercial product to satisfied customers. These accomplishments allow "Thin Battery Technologies" to move into the commercial launch of their plan.

Our Vision: Global mega-trends of portability, connectivity, tracking, safety, environmental protection, automation and do-it-yourself healthcare are driving innovations in flat, flexible, functional devices like RFID (radio frequency identification devices), data loggers, drug delivery patches, sensors and displays. These new devices, sometimes referred to as "smart active labels," hold urgent need for safe and form function power sources.

Gary Johnson, President and CEO, has previous experience in leading Sawyer Research Products, Inc., a Cleveland-based international technology company, to a market-leading position. He has also led new opportunities in executive, director and advisory roles with early stage technologies ventures.

Gary holds a BS in Electrical Engineering from Purdue University and a MS in Industrial Administration from the Krannert Graduate School of Management at Purdue University.

See complete details and registration.

StaffKnex Offers Web-Based Staff Management

StaffKnex is an application services provider that offers web-based tools for scheduling and managing staff in medical facilities such as nursing homes, hospices, assisted living centers and hospitals. "It gives them the ability to control their business, and lets them focus more on quality of care," said Gene Groys, president of StaffKnex.

StaffKnex is seeking $500,000 to support growth in its operations over the next 12-18 months.

For more information, contact Gene Groys, at gene@staffknex.com, call 216-926-4244, or go to www.staffknex.com.

See complete presentation (PDF).

The 5-Minute Forum is an opportunity for business owners to make a 5-minute presentation at our monthly luncheon meeting for raising capital, identifying customers, establishing distribution, or recruiting management. See details.