About 50 million Americans pop a pill to control high blood pressure, and medical device companies are vying to design a high-tech drug-free alternative for hypertension.
All three of Minnesota's big medical device firms are working on it, as is established Twin Cities med-tech player CVRx. Now a company called Valencia Technologies is testing a coin-sized neurostimulation device designed by a former Medtronic engineer who drew on the science of electroacupuncture.
As if that approach to the disease state wasn't novel enough, the California company is also turning the device-design process on its head by forgoing the high secrecy that typically attends development of medical technology. Valencia is publicly crowdfunding its new device, including publicizing its sensitive intellectual property and the privately held company's financials though a public equity-sales technique that only became legal in 2012.
"You always hear about insider deals, and this is the opposite of that," said Don Hubbard, an early investor who has bought 50,000 shares for $300,000. "I think it's the world we live in now. Everyone wants transparency. They want to see and know everything."
Devicemakers see huge potential in controlling chronic high blood pressure, which affects 68 million people in the U.S. and puts many of them at risk for heart attack, stroke and kidney damage. Drug therapy doesn't work for everyone, and it has its own drawbacks.
In January, Fridley-based Medtronic stunned the med-tech community when it announced its therapy to sever kidney nerves to control hypertension performed no better than a placebo after six months. Medtronic had paid $800 million in 2010 to acquire Ardian and its flagship renal denervation product. St. Jude Medical in Little Canada and Boston Scientific, which employs thousands in the Twin Cities, are both working on renal denervation therapies.
Valencia has a different idea. Similar to a device being tested by CVRx, Valencia's unbranded subcutaneous neuromodulation system (SNS) is supposed to reset the body's fight-or-flight hypertension response by applying a precise amount of electric stimulation to the median nerve in the arm for just 30 minutes per week.
Dave Peterson, the former Medtronic engineer who led much of the design work on the SNS, said the device is designed to mimic the way electrified acupuncture needles can create long-lasting health effects by stimulating specific nerves. "This is a marriage of Eastern medicine and a more classical Western medicine evidence-based approach," Peterson said.
The company's openness is perhaps even more novel. Crowdfunding means the creator of a product broadcasts their plans to the online world from a very early stage and then hunts for similarly minded investors to put up money and generate buzz among peers. Since fights over intellectual property are particularly intense in the med-tech industry, experts say crowdfunding for advanced medical devices remains rare despite rising popularity in other fields.
"Projects in stealth mode due to patent submissions or other reasons have a harder time raising money," health care crowdfunding consultant and blogger Komal Garewal said in an e-mail. "For extremely early stage companies or ventures, this can be dangerous … especially in the quest to become the first to market."
Rather than going through well-known crowdfunding sites that charge middleman fees like Kickstarter, Indiegogo and Healthfundr, Valencia is putting its crowdfunding documents on its own webpage.
Equity crowdfunding, in which investors buy shares of a company rather than the end products of the venture, only became legal in 2012 after Congress passed the Jumpstart Our Business Startups Act. But the Securities and Exchange Commission still has not published final rules governing equity sales to general investors, which means that only accredited investors can take part now. Accredited investors are those with $1 million in non-real-estate assets or $200,000 in annual income.
Though the project isn't open to every investor, Valencia CEO Jeff Greiner said he was happy to use the Web to "democratize" the fundraising process beyond the investment bankers and professional venture capitalists who typically decide whether a company meets its early capital needs.
Greiner acknowledged that it could be risky to talk so openly about a device that aims to be first to market in a field with high potential demand. But the July 2014 publication of Valencia's patent for an "implantable electroacupuncture device" allows potential competitors to see pretty deeply into the company's plans.
"That is the key to our technology. If people want to find out about it, they're going to anyway," Greiner said. "It is true, we are waving a little bit of a red flag at the bull here, and that is not our purpose. We are not trying to tweak the big guys."
Joe Carlson • 612-673-4779
Twitter: @_JoeCarlson
