Photo Above: Session speakers (from L to R) Dr. Richard S. Davidson (CHOP), Greg Walters (Essential Medical), Adam Dakin (Dreamit Ventures), Matthew Maltese, Ph.D. (CHOP), and Eric Sugalski (Archimedic)

Runaway Train

Imagine there’s a runaway train barreling down the track toward four innocent people. You sit in the railway control room, your hand on the switch that would divert it down an alternate track where it will kill one person instead. Do you flip that switch? This was the question posed last Friday by Matthew Malteseto his audience. With nodding heads and hands raised slowly off their tables, most audience members seemed to agree reluctantly that sacrificing one person to save four others was the ethical choice in this situation. “Alright,” Maltese said as he looked around the room and saw consensus forming, “but how about now?” On the screen behind him, a photo of a little girl had appeared, replacing the faceless silhouette of the single victim the audience had just agreed to sacrifice for the greater good. Not a single hand remained raised.

Maltese was speaking to FDA representatives meeting for the day at Children’s Hospital of Philadelphia, where he serves as Director of Biomechanics Research. The room full of government regulators and reviewers were in Philadelphia for a course on pediatric orthopedic medical devices, visiting CHOP to learn about the clinical and regulatory factors that contribute to the current standard of care for children.

The skilled hands of orthopedic pediatric surgeon Dr. Susan Nelson (Univ. of Rochester Medical Center) guide those of an FDA representative as he places his first spinal screw on a synthetic model during a session break.

 Adam Dakin, Managing Director of HealthTech at Philly-based Dreamit Ventures, sat on the panel and emphasized the main challenge pediatric devices face in their initial review by investors. The first question, Dakin told the audience, is always “what’s the market size?”

Another industry member on the panel was Eric Sugalski, founder and president of Archimedic, a medical device engineering firm with offices in Philadelphia and Boston. Sugalski, an engineer and entrepreneur, explained that pediatric devices are often successful in obtaining their early seed round funding, perhaps in the neighborhood of $200-$500K. This initial investment helps the device clear early design and intellectual property hurdles, bringing a promising concept to the stage of a working prototype.

Most devices come to the U.S. market through the 510(k) Premarket Notification regulatory pathway, which depends on the ability to demonstrate that the device being reviewed is “substantially equivalent” to an already-approved “predicate” device with regard to safety and efficacy. Pediatric devices, however, often have no established predicates. In this case, a device must go instead through the Premarket Authorization (PMA) channel, requiring extensive clinical data to be generated, compiled, and analyzed.

This stage, Sugalski said, is where pediatric devices often hit a wall. Series A investments, “which can cross the eight-figure threshold,” typically fund the clinical trials needed to demonstrate safety and efficacy. However, investors are unlikely to shell out ten million dollars when market opportunity is limited by a small patient population.

This limited market opportunity puts an even greater-than-usual pressure on the device development timeline. Time to market is a critical component of the viability of any investment so, if regulatory review times and clinical trials can’t be compressed, an otherwise promising pediatric device may get left on the scrap heap.

Progress, But a Long Way to Go

The panel praised FDA for improvements made by the agency in recent years in fostering a more collaborative environment when working with innovators. “The interactive nature of the agency lately has been fantastic,” said Greg Walters, CEO of Essential Medical, a device startup based in Philadelphia. But, he added, FDA representatives should understand that time in regulatory review can quickly cut into and compromise the feasibility of a particular project, so it’s essential to be as efficient as possible in getting over that hurdle.

Dakin agreed with Walters that the relationship dynamic between the agency and innovators has improved. Early in my career, he explained, I would have described the process as “doing battle with FDA.” Now, reviewers are working to bring investors to the table in a spirit of increasing collaboration. Still, he emphasized to his audience, we as entrepreneurs can “live or die by one letter or FDA action,” so it’s important for agency representatives to understand the business constraints that determine whether a device ultimately makes it to market.

In order to better serve pediatric patients and bring them treatments that can improve or even save their lives, the panelists emphasized that regulators must continue to look for ways to reduce barriers to commercialization while safeguarding patient safety. Panelists pointed out that FDA has helped in many instances to shorten the review process by working out critical details through phone calls, rather than a series of official letters and responses.

“In a minute or less,” Maltese asked the panel as time was running out, what do you think can be done to change the pediatric device landscape and make it more appealing to investors? Sugalski seemed to voice the consensus of the group with his quick summary—structure things to make serving small but vulnerable populations more viable from a business standpoint. The traditional device revenue model is difficult due to population size but the government can help through tax incentives, grants, extended patent protections, and other tactics that have seen success through programs such as FDA’s Orphan Drug initiative. The rest of the panelists beside him nodded in agreement.