One medical device company says its struggle reflects the industry's complaints about the FDA.
All that remains of Steve Anderson's Acorn Cardiovascular sits in this 15 by 30 foot storage space in Little Canada. After raising $100 million from investors the FDA refused to certify his product which has been in use in Europe for years.
The Northstar Mini Storage complex in Little Canada sits in the dim shadow of Interstate 694, on an icy patch of nowhere. Like most storage units of its ilk, it attracts those in transition.
For Acorn Cardiovascular, a once-promising New Brighton medical device firm, an otherwise-unremarkable 30-foot by 15-foot storage shed represents the transition to insolvency. The last remnants of the company's 13-year history -- meticulously labeled files, framed press clips, a plastic human torso -- sit tidily in wait.
This is what remains of $110 million the company raised from investors who believed in the sock-like device the company developed to treat patients with heart failure.
But a decadelong battle with the Food and Drug Administration (FDA) wore down the firm. When the company could not secure FDA approval to launch its sole product, investors fell away, and the money dried up.
In past years, a spectacular bust like Acorn's would have been unheard of in Minnesota's rich medical-technology economy -- where good ideas attracted ample funding from investors for the studies that would lead to FDA approval.
But controversy has beset the FDA in the past five years, as consumer advocates, members of Congress and some doctors questioned its effectiveness and perceived coziness with industry. Safety recalls of blockbuster devices, such as heart-shocking defibrillators, sullied the device industry's image and, some experts say, paralyzed the agency.
While Acorn's heart device won European approval, the company was met with a shifting cast of reviewers in the United States. Often, according to Acorn President Steve Anderson, officials with the FDA offered conflicting ideas on what it would take to prove the device was safe and effective.
The biggest problem for small companies like Acorn is the FDA's lack of predictability and transparency during the approval process, said Anderson, one of two remaining employees. At its height, the company employed 55.
From Anderson's perspective, "there never was a straight pathway. It was a constantly shifting bar." Personnel changed at the FDA, decisions were made and reversed, and esoteric information continually was requested, then seemingly discarded, he said.
An FDA spokesman did not directly address Acorn's issues. But Dr. William Maisel, the FDA's deputy director for science, said in a statement that the agency recognizes "the need to provide industry with consistent and predictable regulatory pathways."
Acorn's woes may seem extreme, but other local medical device start-ups have experienced a similar narrative. Eden Prairie-based Disc Dynamics, which developed a minimally invasive device to treat low back pain, called it quits earlier this year after the company ran out of money. Despite raising $65 million from investors, Disc Dynamics couldn't reach agreement with the FDA on a pivotal study that would have bolstered its application for approval.
"That was the nail in the coffin that really shut us down," said Dr. John Sherman, an Edina spine surgeon who served as the company's chief medical officer.
Other med-tech start-ups have managed to remain in business and even gain FDA approval of their products, but many express similar complaints about the agency.
Some are fearful of retaliation if they speak out. But a new report -- albeit funded by various industry groups -- indicates that medical device makers nationwide are frustrated with the agency's alleged lack of efficiency.
An FDA spokesman said the report, funded in part by the Medical Device Manufacturers Association, is riddled with "significant flaws."
The fallout results in skittish investors. "If you don't have predictability, it increases your risk profile," said Fin Samson, a partner with Affinity Capital Management, a Minneapolis-based venture capital firm. "It makes it tough for a company to raise money."
Since 2008, total annual venture capital investment in the med-tech field has declined by $1 billion, according to the industry report. While much of that can be attributed to the economic downturn, many of the 200-plus med-tech entrepreneurs who responded to the study's survey said an uncertain U.S. regulatory environment is partly to blame.
The FDA's Maisel noted that a recent FDA report calls for enhanced training of staff to help guide industry. The newly formed Center Science Council -- which Maisel leads -- will help "monitor the consistency in the premarket review programs."
Maisel notes that the agency must balance "two public health goals of promoting innovation and providing the American public with access to safe and effective medical devices."
Once a high-flyer
Acorn's demise seemed inconceivable six years ago, when the company unveiled positive results from a 300-patient pivotal clinical trial at the mammoth American Heart Association medical meeting. CNN's medical guru Dr. Sanjay Gupta heralded the product, as did Time magazine and other national publications.
The technology behind the product, called CorCap, is simple. A meshlike sock supports the heart, which often swells to three times its normal size in heart-failure patients. By relieving stress on the heart's walls, deterioration slows and the muscle presumably heals, improving the patient's quality of life.
The device wasn't intended to cure heart failure, a scourge affecting some 5 million Americans. Rather, CorCap was deployed during open-heart surgery for other procedures, such as valve replacement or bypass operations.
Despite the initial hoopla, Acorn's device was rejected by an FDA advisory panel of doctors, scientists and a statistician in 2005. One of the key issues dogging the company throughout the process was the design of its pivotal study -- which Anderson said was suggested by the FDA in the first place. At one point, the consumer group Public Citizen weighed in and said the design of Acorn's study was "so poor that it is unlikely to provide reliable data."
In 2006, the company lost an appeal of the original decision. But Acorn later received the go-ahead to conduct three studies involving 114 patients to confirm original trial results. The second and third studies of the troika would involve a minimally invasive way of deploying CorCap that wouldn't require open-heart surgery.
After the first two trials involving 64 patients went well, the FDA rejected Acorn's application to begin the third -- and presumably final -- study, Anderson said. Agency officials told the company it needed a new study involving what he believes would have been 500 to 600 patients with a price tag of about $50 million.
Over the past decade, Acorn's application was handled by six different reviewers and four different medical consultants. The company dealt with six different directors of the Office of Device Evaluation and the Division of Cardiovascular Devices. And top leaders at the agency changed with three new device chiefs and five new FDA commissioners.
"You've got a new administration [in Washington], and now there's new leadership at the FDA, which results in new policies, in turnover of people who are dealing with agreements with companies that aren't legally binding," said Ralph Hall, a University of Minnesota law professor who has studied the FDA extensively. "So things change."
Ironically, both CorCap and the Disc Dynamics spine product were approved and subsequently used in Europe.
While it's not unusual in medical technology for U.S. products to be introduced abroad first, several experts say that paradigm may be changing as complaints about the FDA rise. The U.S. market may become a medical device afterthought, Hall said. "Now people are going to say, 'Forget it, I'm going to get in on the European market, and I'll make my money there,''' he said.
Hall and others worry that Minnesota's coveted standing as a med-tech hotbed may be compromised as good jobs in engineering, research and technical support migrate overseas. From a patient perspective, the top products may only be available on foreign shores, they say.
But not all start-ups that have locked horns with the FDA end up insolvent.
Last September, it appeared as though Maple Grove-based NeuroVasx Inc. was seemingly headed for regulatory purgatory. The company was seeking FDA clearance for a device to treat brain aneurysms using a regulatory path that historically hasn't required clinical studies.
Since then, the company is close to securing FDA approval to begin a study involving 115 to 120 patients in the United States. "We fought it as long as we could, and we realized that they weren't going to back off," CEO Eric Timko said. "But ultimately we were able have a good consistent dialogue [with the FDA]. At some point, you have to manage your business and move on."
For his part, Acorn's Anderson found the process of wrangling with the FDA soul-sapping. "You believe in the therapy and believe you are doing the right thing. So you keep plodding on," he said.
But without any certainty on the regulatory front, Acorn is essentially unsellable, he added, noting he's unsure what his professional future holds.
"This is it," Anderson said, as he absently poked at the files ensconced in the frigid mini-storage unit. "This is really sad."
Janet Moore • 612-673-7752