October 22, 2012 Issue
The Most Powerful Name In Corporate News and Information
With Hospitals, Doctors and Payers all focused on Improving Patient Outcomes and Reducing Hospital Acquired Infections, TYRX Inc. is in the right market at the right time having Developed their AIGISRx Antibacterial Envelope that Covers Implants such as Pacemakers and Implantable Defibrillators
About TYRX, Inc.
Monmouth Jct, NJ 08852
Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – October 22, 2012
Mr. White: TYRX was focused on solving a rapidly growing problem, infections related to implantable medical devices. The rate of these infections has been accelerating over the past decade as devices have gotten more complicated and as people have gotten sicker with increasing co-morbidities. TYRX was developing a very novel approach to help reduce the risk of these infections.
CEOCFO: What has TYRX developed that others have not?
Mr. White: We have developed the AIGISRx Antibacterial Envelope, which is used to cover implants such as pacemakers and implantable defibrillators. The device is implanted in the patient during the surgery and over the next 7 to 10 days, it elutes a combination of two antibiotics to kill off certain pathogens introduced during surgery. Our device targets the most common pathogens and clinical studies have demonstrated that our technology is able to reduce the rate of infections in high risk patients between 70% and 100%.
CEOCFO: Would the device be implanted at the same time as the pacemaker?
Mr. White: Yes. The device is actually a small mesh envelope and it looks a bit like a small orange sock. The pacemaker is placed inside the envelope during the surgery and the doctor implants both the pacemaker and envelope as a single unit in the patient.
CEOCFO: How does it all fit?
Mr. White: The AIGISRx Envelope is very thin, not much thicker than a piece of paper. It is also somewhat stretchy. It goes around the device and partially re-sorbs into the patient over time. We are working on a next generation of the AIGISRx Envelope that will fully re-sorb once it has been implanted.
CEOCFO: Has a similar concept been tried before?
Mr. White: No, the AIGISRx Envelope is a simple, but original concept. Often the best ideas are the simplest. No other companies have been able to introduce anything similar. Some physicians wash out the incision site with antibacterial solutions to reduce the risk of infections and some companies have pursued directly coating their devices with the drugs. The problem is regulatory clearance. Coating implantable devices such as pacemakers with active drugs is a very difficult bar to get over with the FDA. Gaining FDA clearance requires a great deal of clinical data. As a result, those companies have not been able to introduce anything into the marketplace. The TYRX approach was a bit different in that we were able to leverage a technology that had been on the market for many years as a predicate for the FDA 510(k) submission which allowed us to get FDA clearance. The real obstacle to these technologies is the FDA and the ability to get your product cleared.
CEOCFO: Is it the same antibacterial that is with all devices or is the formulation different?
Mr. White: It depends. The combination that we use involves the combination of two drugs, Minocycline and Rifampin. Minocycline is a tetracycline-class antibiotic and commonly used to treat skin acne among other things. Rifampin is commonly used to treat people with tuberculosis. Both drugs have different modes of action and are very effective. Together these two drugs are able to kill off roughly eighty percent of the germs which can be introduced during surgery. That includes pathogens like MRSA, which has become a real problem for patients and hospitals. Once MRSA establishes itself inside of a person, it is very difficult to stop. The combination of these drugs is very effective against MRSA and a number of other pathogens.
CEOCFO: Where are you today in the process?
Mr. White: We have been on the market for nearly three years and have sold well over 25,000 devices to hospitals across the US. We are still early in that there are many pacemaker and defibrillator procedures annually. If you look at the total number of these procedures in the US, there are over a half-a-million performed per year. Our initial presence focuses on patients who have the highest risk factors, those who are the most susceptible to infections. As a startup, we have to be modest about how rapidly we can expand our sales force. I am pleased that we have been able to sell as many as we have while we wait for our next generation technology to be cleared by the FDA. The new device will be fully resorbable. So far, we have grown nicely and expect to see substantial growth going forward. A key reason for this growth is due to changes in how Medicare and Medicaid reimburse for hospital acquired infections. Medicare just announced in August that they will no longer reimburse hospitals for cardiac device infections which occurred under their watch. About four years ago they started a program called Hospital Acquired Conditions in which they began to stop reimbursing hospitals for problems they caused. The average cost of cardiac device related infections is nearly $75,000. Now that hospitals will no longer be paid to treat these patients, we are hopeful they will do more to prevent them from occurring in the first place. TYRX is in a unique position to benefit from that.
CEOCFO: How are you reaching your potential customers?
Mr. White: Right now, we have a small sales force of about a dozen reps. We have a complimentary team of independent sales reps, probably another dozen or so. We are mostly focused east of the Mississippi. We expect to double or triple the size of the sales force within the next year or so as we increase our presence in the rest of the country.
CEOCFO: What is the biggest hurdle in getting attention?
Mr. White: There is roughly a two to three percent infection rate associated with cardiac device implants. When those infections occur, patients typically stay in the hospital for at least two weeks. All implanted hardware including the pacemaker or defibrillator must be removed. The patients must undergo long-term antibiotic therapy. And because many of these patients are elderly and have other complicating conditions, the patients are often in the hospital for much longer. The cost to care is very significant. They average nearly $75,000 with some patients costing upwards to a million dollars. But the biggest impact is the loss of life. Many of these patients do not survive. Normally, the mortality rate associated with a pacemaker or defibrillator implant is approximately half a percent, but patients suffering from CIED surgical site infections experience a significant increase in their mortality rate to between 5% and 12%, depending on the type of device implanted. And that continues to grow. After 1-year the mortality rate is up to 30% to 35%. In summary, cardiac device infections have a major impact on the quality of life, it is very expensive and many of them do not survive long term. With all of that background, our greatest challenge is trying to increase awareness about the risk and prevalence of these infections because infections are not something that hospitals or doctors are eager to talk about. In fact, going into a hospital and saying that we are here to talk about your infection problem is not a very successful sales strategy. We try to bring awareness by acknowledging that perhaps hospitals have had great success in the past but we would like to discuss the fact that patients are getting more complicated and the overall infection rate continues to grow. Our challenge is to try to bring awareness so hospitals are prepared and are driving down their infection rates, especially now that Medicare, and perhaps other payers, are starting to cut back on reimbursement.
CEOCFO: Development and commercialization are always expensive, are you financed through the next steps?
Mr. White: We have three very strong venture capital investors that have been with us for a number of years, Clarus Partners, Pappas Ventures and HLM, and we expect to become profitable next year. We have also leveraged some additional bank debt to further support our investment needs. It is possible that we may seek some additional capital in early 2013.
CEOCFO: Are you able to ramp up production of the devices if everybody discovers them tomorrow?
Mr. White: We are focusing on that now. We are in good shape with regards to the AIGISRx device presently on the market. With respect to our next generation product, the hardest thing is to predict the timing of the FDA. We are set to turn on the switch but it takes time because the production of these devices involves a relative time consuming polymer manufacturing process. Once we receive FDA clearance, we plan to commercialize quickly. It will take us a month or two to get ourselves in position so we have sufficient inventory available. Other than that, we are in good shape.
CEOCFO: How does one use the device; is there much training?
Mr. White: Using our device is almost as straightforward as putting on a sock. There are a few minor tips and tricks, we suggest to doctors, but it really is just a matter of dropping the pacemaker or defibrillator into the AIGISRx Envelope. That makes it convenient since doctors are always concerned about adding additional time to any procedure.
CEOCFO: Why should people in the business and investment communities pay attention to TYRX?
Mr. White: We are in the right place at the right time. Hospitals, doctors, and payers are all focused on improving patient outcomes and reducing hospital acquired infections. Medicare is aggressively trying to reduce adverse events and associated costs. We do not have any foreseeable competition due to our patent portfolio and regulatory approvals. We are hopeful that we will be able to ride this wave for a while and anticipate taking this technology into new markets. We already have a device cleared for the hernia market and we anticipate pursuing applications in markets where infections are a major problem such as the orthopedic implant market or the breast reconstruction market, where you have cancer patients are at serious risk for infection. Unfortunately, infection rates continue to rise and the pathogens causing these infections are becoming more aggressive. We believe we are uniquely suited to help tackle this problem and save a lot of lives and money in the process.
CEOCFO: Is there anything you would like to mention that we did not talk about?
Yes. We are excited about the clinical studies which have been produced
demonstrating the efficacy of our technology. Just recently Vanderbilt
University presented the results of trial consisting of approximately 850
patients. When they compared the infection rate in patients who had our
AIGISRx Envelope to those who did not, there was a 3% infection rate in the
non-AIGISRx patient group, and zero infections in the AIGISRx group. All of
these patients had multiple complicating conditions making them high risk.
They averaged nearly three risk factors per patient, including heart
failure, diabetes and device replacement procedures. We have other studies
that support the AIGISRx technology as well. We know the device works well.
We just need to get the word out.
We are in the right place at the right time. Hospitals, doctors, and payers are all focused on improving patient outcomes and reducing hospital acquired infections. Medicare is aggressively trying to reduce adverse events and associated costs. We do not have any foreseeable competition due to our patent portfolio and regulatory approvals. We are hopeful that we will be able to ride this wave for a while and anticipate taking this technology into new markets. - Robert White
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