On March 23, Auris Health, Inc. announced FDA clearance for the Monarch Platform, Auris’ new system for robotic endoscopy. According to Auris Health, the Monarch Platform “integrates the latest advancements in robotics, micro-instrumentation, endoscope design, sensing, and data science into one platform.”
Josh DeFonzo, Auris’ Chief Strategy Officer, noted some challenges with endoscopy and need of better control for endoscopic systems:
Endoscopy requires a lot of skill, but also you’ve got to be very facile in maneuvering a device – a device that’s anywhere from approximately a meter to, in the case of colonoscopy, three meters long.
According to Bloomberg Businessweek, the Monarch Platform, instead of the traditional, antiquated one-handed interface requiring twist and control maneuvers, features robotic arms that doctors can control using a controller that on the surface resembles a game console controller. DeFonzo further stated that “Auris’ system allows for more direct control through a game-like controller.”
Dr. Fred Moll, CEO of Auris Health, Inc., said in an interview that Auris is currently focused on lung cancer for two reasons: (1) lung cancer is the deadliest cancer in the world; (2) lung provides a perfect “proving ground” because it comprises a complex network of tunnels. According to Dr. Moll, the Monarch not only can navigate nimbly through the lung, but also can improve over time thanks to its navigation software.
Auris Health, Inc. is led by CEO Dr. Fred Moll, also known for his Da Vinci Surgical System, a top-selling surgical robot used in laparoscopic surgeries. According to DeFonzo, the company anticipates a limited launch of the Monarch across the U.S. and commencement of its pilot studies later this year.
Technology has advanced significantly since the development of the earliest robotics platforms used in medicine. The Monarch platform is designed to address the limitations of current technology with the introduction of a new era of flexible robotics. With this FDA clearance, we intend to deliver on the promise of improving patient care, starting with earlier and more accurate diagnosis of pulmonary nodules. We envision additional uses for the technology across future endoscopic clinical indications.
Theranos Charges Provide Perspective for Medical Device Companies, Biotechnology Companies, and Investors
Theranos describes itself as a privately held technology company based in Palo Alto focused on developing lab-on-a-chip technology for blood testing. By 2014, Theranos raised more than $400 million and had an estimated value of $9 billion.
As reported by CNN, Theranos’ investors included high profile individuals such as Larry Ellison (Oracle), current Secretary of Education Betsy DeVos, and Rupert Murdoch. Additionally, Theranos’ Board of Directors has included at one point: Secretary of State Henry Kissinger, Secretary of State George Schultz, Senator Bill Frist, Senator Sam Nunn, and current Secretary of Defense James Mattis.
According to the SEC’s complaint, Elizabeth Holmes and Ramesh Balwani “raised more than $700 million from late 2013 to 2015 while deceiving investors by making it appear as if Theranos had successfully developed a commercially-ready portable blood analyzer that could perform a full range of laboratory tests from a small sample of blood.” The complaint further alleges that Theranos “modif[ied]
commercially-available analyzers and [ran] misleading demonstrations” and made false or misleading statements to the Department of Defense.
Theranos and Holmes have neither admitted nor denied the allegations. According to an SEC press release, Theranos and Holmes have agreed to settle the fraud charges levied against them. Reportedly, the settlement includes Holmes paying a $500,000 penalty and being barred from serving as an officer or director of a public company for the next 10 years.
While Theranos was not a publicly traded company, Steven Peikin, the Co-Director of the SEC’s enforcement division stated the actions make “clear that there is no exemption from the anti-fraud provisions of the federal securities laws simply because a company is non-public, development-stage, or the subject of exuberant media attention.”
As reported by the Silicon Valley Business Journal: “In depositions filed as part of a lawsuit by an investor last year, former Secretary of State George Schultz and retired U.S. Navy Admiral Gary Roughead said they didn’t feel qualified to question the technology. They said they were unaware that Theranos’ equipment could not run all the tests being touted by Holmes — even as news reports started appearing that suggested its capabilities were exaggerated.”
A fundamental principle of corporate law is the role of the Board of Directors. Under Delaware General Corporation Law §141(a), “The business and affairs of every corporation organized under this chapter “shall be managed by or under the direction of a board of directors….” While the Directors do not directly manage the day-to-day responsibilities of running a corporation, they are ultimately responsible for the management of the corporation.
A Board of Directors may rely on the Business Judgment Rule, which is a presumption that, in making business decisions, the directors of a corporation acted on an informed basis and in good faith that the actions taken were in the best interest of the company and its shareholders. However, a Board of Directors must operate with a Duty of Care, wherein the Board of Directors should make informed decisions by assuming an active role throughout the entire decision-making process.
While the culpability of the Board of Directors may be debated, news articles have discussed the merits of choosing Board members with expertise in the technology field of interest and utilizing experts with experience in that technology field to conduct due diligence before making investments.
According to a U.S. Food and Drug Administration press release, Viz. AI Contact application was granted De Novo premarket review to Viz.AI’s LVO Stroke Platform. According to PR Newswire, Viz.AI’s LVO Stroke Platform is the “first artificial intelligence triage software” and its approval begins “a new era of intelligent stroke care begins as regulatory approval.” The Viz.AI LVO Stroke Platform, according to the U.S. Food and Drug Administration press release, is a clinical support software designed to analyze Computerized Tomography (CT) scans, identify suspected large vessel blockage, and send a notification to specialist of a potential stroke in patients sooner.
According to the Centers for Disease Control and Prevention, strokes are the fifth leading cause of death in America. A stroke occurs when the blood vessels in the brain are damaged, compromising the necessary blood flow to the brain. There are many types of strokes and can often lead to brain damage, long term disability, and death. A CT scan can show the location and extent of the damage to the brain to diagnose the stroke as well as the type of stroke that has occurred.
Viz.AI is a healthcare company based in San Francisco and Tel Aviv, dedicated to “expand Direct-to Intervention care” which “advances information about treatable patients straight to the interventionalist.” Neurosurgeon and CEO of Viz.Al, Dr. Chris Mansi stated in a press release:
“The Viz.ai LVO Stroke Platform is the first example of applied artificial intelligence software that seeks to augment the diagnostic and treatment pathway of critically unwell stroke patients.”
According to the FDA press release, Viz. AI Contact application was granted De Novo premarket review, which is a “regulatory pathway for new types of medical devices that are low to moderate risk and have no legally marketed predicate device to base a determination of substantial equivalence.” This is a new regulatory classification, “which means that subsequent computer-aided triage software devices with the same medical imaging intended use may go through the FDA’s premarket notification (510 (k)) process, whereby devices can obtain marketing authorization by demonstrating substantial equivalence to a predicate device.”
The Viz.AI Contact application is one example of what the FDA calls “clinical decision support software (CDS). CDS includes technology that aids in diagnosing and identifying treatment plans. CDS includes “technology has the potential to enable providers and patients to fully leverage digital tools to improve decision making.” The FDA is currently creating a regulatory framework for CDS to provide guidance and encourage developers in this field.
According to Robert Ochs, acting deputy director for radiological health, Office of In Vitro Diagnostics and Radiological Health in the FDA’s Center for Devices and Radiological Health, “(This) software device could benefit patients by notifying a specialist earlier thereby decreasing the time to treatment. Faster treatment may lessen the extent or progression of a stroke.”
According to PR Newswire, the Israeli Ministry of Health has granted initial approval to Tel-Aviv-based Kanabo Research for their VapePod vaporizer product as a medical device. PR Newswire notes that with this approval, Israel has become the first country in the world to grant medical device approval for a “vaporizer for the use of medical cannabis extracts and formulations.” High Times, a cannabis-related publication, goes further to say that this is the first certification of marijuana “‘paraphernalia’ as an accepted medical device.”According to Israel21c, Kanabo claims that the approved vaporizer will provide for “more effective, consistent, and accurate dosing and delivery methods than currently accepted medical cannabis treatment methods.” Cannabis administration “has long frustrated doctors due to lack of precise dosage” according to The Jerusalem Post. It reports that Kanabo says the VapePod will solve this problem with its “consistent and accurate gauge.” Moreover, The Jerusalem Post notes that many medical cannabis patients inhale by smoking, and that vaporizers “reduce health risks and make inhalation more effective.”
Israel21c also reports that Kanabo’s next version of the approved VapePod – the VapePod MD, will “monitor patient usage and gather usage data for caregivers, doctors and research applications. PR Newswire reports that Kanabo has initiated pre-clinical trials and is “achieving impressive results in early findings” with their targeted formulations for sleep disorders that are designed to be used with the approved VapePod. Kanabo also has two patents pending which are directed to the formulations according to PR Newsire.
Kanabo Research was founded in 2016 and currently employs 12 people according to The Jerusalem Post. Co-Founder and CEO of Kanabo Research Avihu Tamir had this to say about the future of the company: “We expect that due to the transition of most of the cannabis consumers to the use of vaporizers, our company is projected to reach $10 million in sales within three years in the Israeli market, while the Israeli cannabis market is expected to reach $100 million in sales within three years. The Israeli market is a platform to deliver our technology to global markets in North America and Europe.”
The U.S. Food and Drug Administration (FDA) recently authorized 23andMe to market its Personal Genome Service Genetic Health Risk Report for BRCA1/BRCA2 (Selected Variants). According to an FDA news release, the approved test is the first direct-to-consumer test to report on three specific BRCA1 and BRCA2 breast cancer gene mutations.
According to the news release, BRCA1 and BRCA2 are human genes that produce tumor suppressor proteins. Mutations of these genes may interfere with the production or functioning of the proteins and are linked to an increased risk of female breast and ovarian cancers. About 12% of women in the U.S. population will develop breast cancer sometime during their lives. However, according to the National Cancer Institute, a recent large study estimated that about 72% of women who inherit a harmful BRCA1 mutation will develop breast cancer by the age of 80. Similarly, about 69% of women who inherit a harmful BRCA2 mutation will develop breast cancer by age 80. Because mutations of the BRCA1 and BRCA2 genes may be passed down to future generations, genetic testing for breast cancer risk has become more common.
23andMe offers genetic testing directly to consumers. Traditionally, genetic testing was only available through healthcare providers: an individual would request tests from a healthcare provider, the healthcare provider would order tests from a laboratory, collect and send the samples, and interpret the test results before passing them onto the individual. In contrast, direct-to-consumer genetic testing allows consumers to order and perform genetic tests without needing to interact with a healthcare professional. 23andMe has previously offered direct-to-consumer tests for the purposes of discovering an individual’s ancestry. However, this new FDA approval indicates expansion of genetic testing services to other applications.
Although the FDA approval of 23andMe’s test is positive, the FDA expressly noted certain caveats regarding the test. Specifically, the FDA clarified that the test only detects three out of more than 1,000 known BRCA mutations and that only a small percentage of Americans carry one of the three mutations. A negative result therefore does not rule out the possibility that an individual carries other BRCA mutations that increase cancer risk. Additionally, the FDA is establishing criteria, called special controls, which set forth the agency’s expectations in assuring the test’s accuracy and performance. Though this test may be a precursor for exciting possibilities on the horizon, the FDA warned that this limited test should not completely replace consultations with a health care professional.
Cyberdyne, Inc. recently announced FDA marketing approval for its Medical HAL [Hybrid Assistive Limb] therapeutic device and services. Cyberdyne describes itself as a Japanese company founded by Professor Yoshiyuki Sankai of the University of Tsukub and is traded publicly on the Tokyo Stock Exchange. The press release notes that Medical HAL has received previous marketing approval in Japan and the European Union.
In the press release, Cyberdyne explained that Medical HAL “is considered to be an innovative cybernic treatment device that attends to actually improve and regenerate the function of the patient’s own brain-nerve-physical systems, instead of an orthosis that physically supports the patient to walk or a robot that repeatedly performs specific movements for its patients.” The press release further describes Medical HAL as designed as an exoskeletal aid that attaches to a patient’s limb to assist their movement. Rather than providing movement to the limb through preprogramed algorithms or artificial intelligence, Medical HAL is controlled through nerve signals received with bioelectric sensors attached to the patient’s body. These bioelectric sensors attach at various places on the body, including the lower spine, legs, and arms. The sensors are designed to sense specific nerve signals sent from the patient’s brain to muscles in the limb. These signals can then be translated into specific motions in the exoskeletal aid that assist natural movement of the limb.
Current testing and research is being conducted that uses Medical HAL as an aid for retraining patients with severe nerve damage through physical therapy. According to the press release, retrained nerves and limbs can function similarly to the way they functioned before nerve damage. One example of a positive patient outcome relates to a patient who injured his spine and lower back, leaving one leg paralyzed. After treatment and training for several months with the Medical HAL device, he was able to improve control over that leg and eventually walk with the aid of a walker.
According to public USPTO databases, patents and publications listing Cyberdyne as the assignee include the following: “Wearing-Type Movement Assistance Device,” “Electrodes For Biopotential Measurement, Biopotential Measuring Apparatus, And Biopotential Measuring Method,” and “Ambulation Training Device And Ambulation Training System.”
According to Bloomberg, Apple, Inc. is currently developing an electrocardiogram (also known as an EKG or ECG) feature in its smartwatch products. A report from Bloomberg and other sources have stated that the unit in development requires users to squeeze the frame with two fingers to send a weak electrical current to the heart to pick up signals. The electrical current is used to track a user’s electrical heart signals in order to determine if there are any abnormalities such as irregular heart beats. The Verge states that “[s]ensors and data gathered from minor electric currents sent up the arm and across the chest to the user’s heart would measure data typically gathered by electrodes on the skin.” This would let users obtain a constant stream of EKG data that could then better inform doctors with diagnosis and treatment at an early stage. The CDC indicates that abnormal heart beats can increase the risk of strokes and heart failures in individuals.
The article notes that Apple’s current Watch has a basic heart rate monitor, but the company has increasingly trying to use advanced sensors to “predict future afflictions, rather than simply collect historical data about the body. An EKG would make it easier to establish the health of a user’s heart, and potentially spot some cardiac problems early.”
The article further notes that this development is not surprising as Apple has already given up marketing its smartwatch as a luxury watch. When it was first released in 2015, the Apple Watch was largely marketed as a high-end fashion piece. As the “second and third generations went on sale, the focus shifted to health and fitness, with Apple adding alerts for abnormal heart rate spikes.” Apple has now been focusing on using the Watch as a medical device. According to Jeff Williams, Apple’s chief operating officer, “[t]here’s tremendous potential to do on-device computing, to do cloud computing as well and to take that learning, and through machine learning, deep learning and ultimately artificial intelligence, to change the way health care is delivered . . . [w]e can’t think of anything more significant than this.”
Apple has already launched a new study in partnership with Stanford University that will track Apple Watch users’ heart rhythms for irregularity. The Federal Drug Administration also has cleared the Apple Watch’s first medical device accessory, an EKG reader built into a watch strap from medical device company AliveCor.
According to Bloomberg, the “health industry’s size has made it attractive for tech giants seeking new growth markets. U.S. health spending is forecast to grow from almost $3.5 trillion in 2016 to $5.5 trillion by 2025” according to data compiled by Bloomberg. Other corporate giants such as Google parent Alphabet Inc. already have two health-care divisions, while Amazon.com Inc. has for almost two decades been looking at ways to get into the pharmaceutical industry.
One of the largest hurdles for these companies to enter the medical-device market has been the the strict testing requirements imposed by the U.S. Food and Drug Administration. However, in September 2017, the FDA announced that it has chosen nine tech companies to participate in a pilot program (FDA Pre-Cert) to help tech companies bypass some regulations that have hindered health software and products release.
The U.S. Food and Drug Administration has announced approval of Banyan Biomarkers, Inc.’s Banyan BTI (Brain Trauma Indicator) under the FDA’s De Novo premarket review pathway. According to the press release, Banyan BTI is the first in vitro diagnostic blood test for the evaluation of mild traumatic brain injuries (mTBI), commonly referred to as concussions, authorized for marketing by the FDA.
According to Banyan Biomarkers, more than 90 percent of patients presenting to the emergency department with mTBI receive a negative CT scan. Banyan BTI purports to identify two brain-specific protein biomarkers that rapidly appear in the blood after a brain injury, providing information to assess patients with suspected mTBI. According to the FDA, availability of a blood test for concussions will help health care professionals determine the need for a CT scan in patients suspected of having mTBI and help prevent unnecessary neuroimaging and associated radiation exposure to patients.
With respect to approval of Banyan BTI, FDA Commissioner Scott Gottlieb, M.D. stated:
“A blood-testing option for the evaluation of mTBI/concussion not only provides health care professionals with a new tool, but also sets the stage for a more modernized standard of care for testing of suspected cases. In addition, availability of a blood test for mTBI/concussion will likely reduce the CT scans performed on patients with concussion each year, potentially saving our health care system the cost of often unnecessary neuroimaging tests.”
On March 5, 2018, Boston Scientific announced its acquisition of EMcision, a privately held company in the United Kingdom and Canada. According to Boston Scientific, this acquisition will expand its range of medical devices in the field of minimally invasive endoluminal procedures as alternatives to conventional surgery. According to Art Butcher, Senior Vice President and President of the Endoscopy Division of Boston Scientific:
As we continue to search for ways to treat pancreaticobiliary cancers, we also seek to improve the quality of life for patients living with a cancer diagnosis today. We are committed to exploring innovative options to help increase the chance of earl diagnosis, improve treatment and advance the ability to remove cancers located in challenging areas of the gastrointestinal tract.
According to EMcision, EMcision was founded by an internationally renowned surgeon and medical device inventor, Professor Nagy Habib, and has developed proprietary medical devices utilizing RF technology for applications such as percutaneous procedures, and open, laparoscopic, vascular, and endoscopic surgeries. EMcision’s devices help patients with advanced cancers located in challenging areas of the gastrointestinal tract for whom surgery is not an option.
EMcision’s website states that EMcision’s flagship product, the Habib™ EndoHPB, is a novel endoscopic bipolar radiofrequency (RF) probe that was the world’s first endoscopic device for tumour ablation via ERCP. The Habib™ EndoHPB has been cleared by the U.S. Food and Drug Administration (FDA) and received CE mark from the EU. EMcision devices are currently being sold in 38 countries around the world and used in most of the top cancer centers in the United States.
With regards to the acquisition, Cherif Habib, EMcision’s outgoing CEO, stated: “By partnering with Boston Scientific, we will continue delivering on our mission of improving the quality of life of cancer patients on much larger scale. Boston Scientific has the resources and the know-how to further improve our technology, expand clinical indications and make it available to may more patients.” According to Yahoo Finance, Boston Scientific’s Endoscopy division revenues rose 14.8% year over year to $436 million in the last reported quarter.
On February 20, 2018, Johnson & Johnson Medical Devices Companies announced the acquisition of Orthotaxy, a privately-held developer of software-enabled surgery technologies, including a differentiated robotic-assisted surgery solution. According to Johnson & Johnson, this technology is currently in early-stage development for total and partial knee replacement, and the Johnson & Johnson Medical Devices Companies plan to broaden its application for a range of orthopaedic surgery procedures.
Orthotaxy was founded in Grenoble, France, in 2009 by robotics entrepreneur Stéphane Lavallée and has focused on surgical planning software that allows surgeons to plan implant placement on preoperative CT or MRI images. Orthotaxy has also developed patient-specific surgical guides that enable surgeons to insert surgical instruments and perform surgery in accordance with a planned strategy.
Orthotaxy currently has 3 pending published patent applications: U.S. Patent App. Nos. 14/667,623, 15/032,223, and 15/032,225. The ’623 application and the ’223 application are directed to methods for constructing a patient-specific surgical guide (e.g., element 1 in FIG. 4 of the ’623 application reproduced below) based on a patient’s 3-D medical image.
The ’225 application is directed to a method for planning a surgical intervention that comprises computing and displaying a pseudo-radiographic images along with the representation of an implant in a patient’s anatomical structure, as illustrated in FIG. 2 of the ’225 application reproduced below.
Regarding the acquisition, Company Group Chairman Ciro Roemer stated: “Our goal is to bring to market a robotic-assisted surgery technology that is an integral part of a comprehensive orthopaedics platform, delivering value to patients, physicians and healthcare providers across the episode of care. The team at Orthotaxy has significant expertise and passion in developing this platform, and we aspire to bring to market a differentiated technology that helps improve clinical outcomes and increases patient satisfaction.”
According to Johnson & Johnson, financial terms of the acquisition will not be disclosed.