Disc Dynamics, a once-promising medical device start-up that raised about $65 million from investors, has shut down and is selling off its assets.

The Eden Prairie company, which developed a minimally invasive technique to treat low back pain, failed to win a go-ahead from the Food and Drug Administration (FDA) to conduct a pivotal clinical trial. The company hoped to use the study to gain FDA approval to market the device in the United States.

"The FDA kept asking us for more data and more data, and more and more time would pass," said Keith Eastman, the company's chief financial officer. "We just ran out of money."

Stung by a series of drug and medical device recalls and criticism that it had grown too close to industry, the FDA has become more cautious about approving new products.

Many small medical device companies now complain that the agency has grown too conservative in approving new medical products. These firms, typically funded by angel investors and venture capitalists, claim FDA approval and clinical trials have often become cost-prohibitive.

"If you don't approve anything, you don't get in trouble," said an exasperated Eastman.

An FDA spokeswoman said she could not comment on specific applications.

The company, which employed as many as 32 people at its peak, laid off most of its remaining employees at the end of 2009. Now, a skeleton crew of three is in the process of selling assets and, perhaps, the company's Dascor Disc Arthroplasty intellectual property, Eastman said. The basic idea behind the Dascor technology was originally developed at SpineTech, an Edina company that pioneered several devices commonly used in back surgery.

Founded in 2000, Disc Dynamics attracted former St. Jude Medical Inc. executive Steven Healy as CEO and became a popular pick among venture capital investors, including firms with local ties -- Split Rock Partners, Affinity Capital Management and St. Paul Venture Capital. Fridley-based medical technology giant Medtronic Inc. was also an investor. Healy left the firm last July to become CEO of Lumen Biomedical in Maple Grove.

The company's Dascor system treated low back pain associated with degenerative disc disease, a condition that afflicts more than 65 million Americans. Using a minimally invasive surgical method as an alternative to spine fusion surgery, about 400 to 500 patients outside the United States have been treated with the system, which was approved for use in Europe in 2005.

Disc Dynamics isn't the only venture-based firm to close in recent months. In December, Arden Hills-based Transoma Medical Inc. closed after raising about $44 million in venture funding. The maker of a cardiac monitoring device had filed to go public, but subsequently withdrew the offer.

Janet Moore • 612-673-7752