Monday, April 30, 2007

Joslin spinout Veraxa may spin back in

By Ryan McBride

Veraxa Health Inc., which runs a network to transfer diabetic retinal scans, may return to being an operation of Joslin Diabetes Center -- less than a year after the firm became the Boston hospital's first spinout, according to company officials.

The Boston firm was formed last June to commercialize Joslin's web-supported network, in which outside clinics can send diabetic retinal scans to Joslin eye specialists to diagnose eye diseases such as diabetic retinopathy, the leading cause of blindness among U.S. adults.

The company held meetings this week to weigh "various options" for the firm, yet the nature of those talks were confidential, said Marge Dwyer, a spokeswoman for Joslin, who also spoke on behalf of Veraxa.

John Brooks, chairman of Veraxa's board and a Joslin trustee, told Mass High Tech last week the company had been unable to gain enough backing from outside investors to operate without substantial support from the hospital. He also said that board members voted last week to return operations to Joslin. When contacted this week, Brooks declined to provide additional details about the matter.

Veraxa's CEO, Richard Morello, did not return a message left at his office last week. Morello had been the chief operating officer of Joslin's strategic initiatives division, which had marketed the retinal-scan reading services from the hospital before Veraxa took over that role.

It's unclear whether Morello and Veraxa's employees, including many who transferred from Joslin, would continue to market the hospital's reading services as part of the hospital's strategic-initiatives division.

Morello has said that plans were for Veraxa, which employed 10 people at the time, to sell services and equipment to primary care and endocrinology offices -- a new market for such products and services. Topcon Medical Systems Inc., of Paramus, N.J., has provided the retinal cameras for the network.

Topcon also gave Veraxa an unspecified amount of seed money to help launch the company. Morello had said that Veraxa planned to close a Series A round sometime this year.