Putting in the hard yards

A new medical device which is being developed in Australia to diagnose and treat a range of conditions is poised to compete strongly in a billion dollar worldwide market. Becoming investment ready and a six month roadshow to woo potential investors took a lot of time.

CathRx Pty Ltd (formerly Advanced Metal Coatings) develops cardiac catheters for diagnosis and treatment of abnormal heart rhythms. The catheters measure the electrical performance of the heart and when a problem is detected help the doctor decide the best form of treatment for the patient. One of the forms of treatment is with an ablation catheter that can deliver radio frequency electrical energy to a specific site inside the heart and thus eliminate the source of the electrical problem.

Cardiac catheters are not new and, although designed for single use, are often reused by some hospitals due to the cost of the devices. As a result, there are risks of infection and failure. Consequently, regulatory bodies are taking steps to control reuse and therefore minimise, if not eliminate, these risks. CathRx is developing devices that are more affordable for the Australian health system, as the reuse of current devices becomes less prevalent.

CathRx is also using its improved manufacturing procedure to develop a range of other, more complex multifunctional devices for other medical conditions, such as atrial fibrillation which is suffered by five million people worldwide.

CathRx Managing Director Neil Anderson, says: “If this device is successful the patient will be fully cured and not face a lifetime on drugs or a pacemaker implant.”

The company is a spin off from the CRC for Cardiac Technology and has been incubated for the past four years at the University of Technology, Sydney. The university’s support included cost effective access to office and laboratory space as well as analysis and testing equipment.

“Prior to the completion of fund raising earlier this year, my fellow founder Dr Evan Chong and I did it quite tough by completing research as well as consulting to medical device companies, such as Cochlear. We only paid ourselves token salaries and therefore had plenty of ‘skin in the game’,” Neil says.

The founders spent a lot of time becoming investment ready, including development of a solid business plan, and setting up a data room for investor reference which contains many legal documents and references to the business plan.

“We spent a lot of time examining patent literature and ensuring, at least from our perspective, that we have novel inventions and freedom to operate.

Then there was the time spent on the inventions which are the result of developing a close understanding of the problems clinicians are currently facing.

Neil says the key to success is securing the resources to move from research and development, into the prototype and hence to the product.

“By resources I mean not only funding, but assembling the right team of people,” he says.

Funding was completed in April 2003. Money was raised in a variety of ways: through the venture capital community, business angels, grants from AusIndustry and the Department of State and Regional Development Biofirst program.

“Both these funding programs are excellent and essential for any small startup company to investigate,” Neil says.

Neil says the company has a strong Board headed by Denis Hanley, founder of Memtech (and Warren Centre Innovation Lecturer, 1999), as well as various scientific advisors, particularly clinicians.

The roadshow to potential investors is described as an incredible, but stressful six months.

“As it was self-funded, we also had to consult at the same time to be able to pay ourselves.”
The fledgling enterprise has purposely kept a low profile to date as it moves through the research and development process.

“As we get closer to clinical trial/market release, we will raise our profile through further direct clinician contact, as well as stands at tradeshows and conferences.”

As this process will involve further resources, Neil says the company will consider outsourcing some marketing, such as distributors for its products.

“In addition, we moved to a new facility at the Australian Technology Park where we will be able to carry out small scale manufacturing of clinical trial devices.”

Neil presented CathRx’s story to the ‘Successful Innovation’ course presented by The Warren Centre in conjunction with the Australian Institute for Commercialisation, ATPi and UNSW, and supported by NSW DSRD. The course was rated a great success by the attendees (PhD students from UNSW and Sydney University Engineering faculties) and, subject to funding, will be repeated several times in 2004. The intent of the course is to introduce post-graduate students to some of the questions that they need to ask in relation to their discoveries or inventions that may have commercial significance and to introduce a ‘common language’ of commercialisation. If you are interested in participating in these courses, either as a student or as a presenter, please click here.

Founders of CathRx, Evan Chong and Neil Anderson

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