NDI Medical's Spin-Off Model for Neurostimulation

Article preview from Start-Up - June, 2010

The neurostimulation market is becoming electric for many large companies looking for major growth opportunities. Worth $1.3 billion in the US in 2009, the neurostimulation market is expected to grow to $2.7 billion by the year 2014. Those robust figures take into account some fourteen different clinical product categories, some of the largest being Alzheimer's disease, chronic pain, depression, epilepsy, obstructive sleep apnea, obesity, and stroke. In fact, that's the beauty of neurostimulation for medical device companies: it offers a single platform technology that can be leveraged over multiple, large product areas. But what model most efficiently helps a company with core expertise in neurostimulation - the knowledge of impulse generators and leads and their interface with nerves, power sources, and controllers - leverage that knowledge over numerous product areas? NDI Medical has its own strategy with a for-profit incubator solely focused on neurostimulation.

NDI Medical's Spin-Off Model for Neurostimulation

By Mary Stuart

The neurostimulation market is becoming electric for many large companies looking for major growth opportunities. Worth $1.3 billion in the US in 2009, the neurostimulation market is expected to enjoy a 16% compound annual growth rate over the next five years, reaching $2.7 billion by the year 2014, according to "US Markets for Neurostimulation Products," a report recently issued by the Medtech Insight division of Elsevier Business Intelligence. (See Exhibit 1.) Those robust figures take into account some 14 different clinical product categories, some of the largest being Alzheimer's disease, chronic pain, depression, epilepsy, obstructive sleep apnea, obesity, and stroke. In fact, that's the beauty of neurostimulation for medical device companies: it offers a single platform technology that can be leveraged over multiple, large product areas. But what model most efficiently helps a company with core expertise in neurostimulation – the knowledge of impulse generators and leads and their interface with nerves, power sources, and controllers – leverage that knowledge over numerous product areas?

NDI Medical LLC, a privately held company founded in 2002 in Cleveland, OH, has its own strategy. NDI Medical is a for-profit incubator solely focused on neurostimulation. It vets and develops new concepts until they are ready for spin-off and independent support with external financing. This idea of shepherding early-stage medical technology from inception to company creation is fairly typical of device incubators. ( See "Device Incubation: Challenges in Making the Model Work," START-UP, March 2010.) But NDI's unique spin is its focus on a single technology platform, neurostimulation.

Geoff Thrope founded NDI Medical in 2002 with $200,000 in private funding from friends and family and some non-dilutive NIH SBIR grants. The company is located in Cleveland, which is somewhat of a "center of excellence" for neurostimulation. Cleveland is home to Case Western Reserve University, the Cleveland Clinic, the Cleveland Functional Electrical Stimulation Center, and perhaps the earliest independent neurostimulation company, NeuroControl Corp. where Thrope was once the national sales manager and director of new business development. NeuroControl (now inactive) operated in functional neurostimulation, the use of electrodes and pulse generators to directly cause muscle contractions, and once offered products for the paralysis that accompanies stroke and quadriplegia, as well as for chronic pain. In fact, Thrope says he has spent his entire career in the neurostimulation field, half of it on the academic side, at Case Western.

NDI Medical's model is to select product areas that meet the following criteria: large markets where there is at least one validated product, but where large clinical needs still exist. What NDI doesn't want to do, says Thrope, is to take on the risk of trying to create a new market where none ever existed before. "I don't want to compare ourselves to Apple, but they have looked at existing markets and said that there are better ways to do the things that people already want to do, and that is our goal." Thrope also notes that the goal of NDI is to serve its shareholders by providing them with good returns, which he hopes they will reinvest in the company and its spin-outs. Thrope says the team at NDI has looked at 87 different opportunities in neurostimulation, "all of which could benefit the human condition," he says, "but when we line up all of our criteria for investment, there is only a small number where we would place our focus."

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Watch for Medtech Insight's market report: U.S. Markets for Neurostimulation Products, dated March 2010. For more information or to place advance orders, contact [email protected] or call +1-714-847-3540

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