Monday, August 8, 2005

Med Tech

Leaving Lone Star State takes backbone

By Dyke Hendrickson

A Texas company that just closed on a $39 million Series B round will be moving to the Boston area to begin spending its hard-raised money.

Innovative Spinal Technologies Inc. launched in 2002 out of the Texas Back Institute near Plano, Texas, and has grown with the aid of a $6.2 million investment by investors including General Electric Healthcare Technologies Inc.

The Series B funding was provided by a team of investors led by MPM Capital out of Boston and San Francisco, OrbiMed Advisors and JPMorgan Partners, both of New York.

Innovative Spinal Technologies is focused on minimally invasive spine surgery and motion preservation, and officials say they plan to grow quickly.

"We're looking for space now," said Scott Schorer, chief executive officer of the company. "We plan to hire 40 to 50 by the end of the year.

"We looked at Minneapolis and Silicon Valley but chose Boston because of the people. The universities produce a lot of engineers, and the market also has ancillary businesses that develop professionals that do similar work as we do."

Much of the company's science was developed by doctors Stephen Hochschuler and Barton Sachs, surgeons based in Texas.

They will remain connected with the company, but will not relocate to Massachusetts.

Hochschuler said IST will continue to work with the Texas Back Institute, and that the institute is proud to have founded what he expects will be one of the most advanced spine products companies in the world.

Company officials say their first technology will be a minimally invasive spinal fusion system for posterior screws and rods.

The company will join an environment already populated with medical-device companies, including Boston Scientific Corp., Siemens Medical Solutions, and Smith & Nephew.

Divisions of Johnson & Johnson, Medtronic Inc., Stryker Corp., and Guidant Corp. are among those also located in the Commonwealth.

"Massachusetts is an attractive place for tools companies," said Tom Sommer, chief executive officer of the Massachusetts Medical Device Industry Council.

"One reason is the number of teaching hospitals in the Boston area, and the opportunities to work with surgeons and medical staffs. They can get the devices into the hands of medical professionals who will be using them.

"And there are many people with skill sets, because so many companies are already here."

Industry statistics show that 1.1 million people in the United States require spine surgery to relieve pain every year.

The worldwide spinal products market is growing, and is expected to exceed $4 billion this year.

Schorer declined to say how many employees the company has now but indicated the new funding would enable the company to grow rapidly.

"We are not discussing the granular nature of the company," said Schorer, who earned bachelor and engineering degrees from Dartmouth College in the early '90s.

"But the financing represents a significant step toward our goal of becoming a leading developer of spinal products, and we can now focus our efforts to address real needs of clinicians and patients."