business

For Dr. Mark Melin, time heals all wounds. Or at least instinctive skepticism.

When Melin first encountered the Mist therapy system in 2002, the wound care specialist at Methodist Hospital in St. Louis Park was hardly impressed.

The technology, developed by Celleration Inc. of Eden Prairie, used ultrasound energy delivered through a saline mist to treat hard-to-heal wounds such as ulcers and burns.

"The science made sense, but a [low-pressure] spray mist?" said Melin, a vascular surgeon.

"My first thought was, 'This won't do a thing for the wound.'"

Today, Melin, who has no financial connection to Celleration, is arguably one of the country's strongest proponents of the technology. And he's hardly alone.

Backed by a glowing body of research from Mayo Clinic and other hospitals, Celleration has attracted $60 million in venture financing, including nearly $5 million in the third quarter from investors including Aavin Equity Advisors, Baird Venture Partners and New Science Ventures. The company has tripled its sales force since last year, and is expanding into the home health care market. Regulators in the United States and Europe have already approved Mist.

"There hasn't been a great deal of ... innovation" in the wound care market, said Peter Shagory, a partner with Chicago-based Baird Venture Partners.

"What we saw in Celleration was a cost-effective model that could deliver meaningful clinical benefits to patients."

But for all the venture money and positive clinical data, the company has struggled to win reimbursement from insurance payers. Only three of the 15 Medicare payers in the country cover the procedure, which Medicare priced at $93. HealthPartners, Medica and Blue Cross and Blue Shield of Minnesota do not cover it.

"We haven't been able to cross the goal line in terms of reimbursement," Celleration CEO Kevin Nickels said. "Frankly, it's a huge problem."

Ultrasound, sound waves that have a frequency beyond human hearing, has long been used for medical purposes, such as generating images of a fetus or treating sports-related injuries. But in recent years, the technology has enjoyed a rebirth of sorts. Scientists now are exploring whether sound waves could destroy cancerous tissues, detect dangerous plaque in blood vessels, deliver drugs to specific areas of the body and stop bleeding from catastrophic injuries.

Within wound care, Celleration is not the only game in town: Arobella Medical of Minnetonka is working on similar technology.

Nickels estimates that there are 9 million people in this country -- many elderly or diabetic -- who have wounds that are difficult to heal.

"By moving up the wounds faster to complete health, you are saving the health care system potentially a lot of money," he said.

Celleration's Mist system applies low-intensity, low-frequency ultrasound energy directly to wounds using a saline mist. The device itself never touches the skin. That's a big plus for patients, because doctors traditionally use scalpels to remove dead tissue from wounds, a rather painful experience.

According to company research, ultrasound speeds wound healing by killing bacteria and stimulating cells to repair damaged tissue. The pressure created by ultrasound stretches the outer walls of cells, allowing them to absorb more nutrients and quickly swap chemical signals. In other words, cells can eat more and talk faster.

In a study published last year in Advances in Skin and Wound Care, a peer-reviewed medical journal, researchers at Mayo concluded that patients who had stubborn leg and foot ulcers healed faster with a combination of Mist and standard treatment, compared with a control group of patients getting only standard treatment.

Of the patients who received dual treatment, 63 percent saw more than 50 percent of their wounds heal in 12 weeks, compared with 29 percent in the control group.

"This is a tremendous advancement" in wound care, said Dr. Steven Kavros, an assistant professor of podiatric medicine and a physician at the Mayo Clinic Gonda Vascular Wound Healing Center in Rochester. "Nothing takes the place of standard of care, but Mist works well as long as doctors follow good wound-care procedures."

Kavros wrote the study and has no financial connection to Celleration. He says there are no adverse effects from Mist, but not all patients respond to the treatment, especially people who have poor blood flow.

Nickels said he wanted to secure as much clinical data as he could before marketing Mist to hospitals, clinics and, most recently, home health care providers. The technology and market was so new that Celleration needed a lot of scientific firepower to win over doctors and insurance companies, he said. Today, the company boasts 20 published studies, including seven clinically controlled, peer-reviewed publications.

"There has never been a high degree of interventional technology brought into this space," Nickels said. Wound dressing "was a typical treatment, and [the patient] was going to heal. My sense was to move the business ahead. We needed to be able to differentiate ourselves from all of the other stuff. We needed to legitimize the technology, to show physicians it really works."

Still, Celleration has struggled to convince insurance companies to pay for the procedure, a problem it blames on the payers' "uninformed decisions."

But investors say they are hopeful that the technology will ultimately pay off.

"You're accustomed to take certain risks," Shagory of Baird Venture said. "The reimbursement issue is extremely challenging. It's a huge hurdle, but once you get through that hurdle, it's difficult for people to follow. That adds value to the company."

Thomas Lee • 612-673-7744