The Concentric Story: A Medical Device Odyssey
At our Annual Biodesign Alumni Event, Maria Sainz (CEO), Brett Hale (CFO) and John Miller (VP of R&D) of Concentric Medical shared their story in an engaging panel discussion.
Concentric Medical spun out of the Foundry in 1999 with the goal of becoming a premier company in the neurovascular space. This ambitious plan quickly met reality and the team narrowed their focus to ischemic stroke. This condition represents a huge unmet clinical need. The vast majority of patients do not get to the site of care in the short window in which “clot-busting” drugs are indicated and these drugs have demonstrated limited efficacy.
With a license to intellectual property from UCLA, Concentric developed the Merci Retrieval System, a minimally invasive, catheter-based solution comprised of three devices: the Merci Retriever, the Merci Balloon Guide and the Merci Micro-catheter. The Merci Retrieval System was designed to restore blood flow in ischemic stroke patients by removing blood clots from vessels of the brain, a first-of-its-kind idea that had the potential to revolutionize neurovascular care.
In 2004, Concentric received 510(k) clearance from the U.S. Food and Drug Administration (FDA). At that time the Merci Retrieval System was the only FDA-cleared device for the restoration of blood flow in ischemic stroke patients through clot removal. In 2006, the Merci Retrieval system was approved for reimbursement by CMS.
In April 2008, shortly after the withdrawal of their IPO, Maria Sainz joined Concentric Medical as the new CEO. Prior to Maria’s arrival at Concentric, the first competitor in the space, Penumbra Inc. had received FDA clearance and had begun the launch of their system. With two players in the space, Concentric strengthened their field presence with a very aggressive expansion of the sales team and the creation of a market development group. 2008 and 2009 were busy fighting the competition, strategizing about market development, planning a landmark randomized clinical trial, diversifying the technology offering with the release of the Distal Access Catheter (DAC) and implementing cost saving measures key to reaching profitability. The Company raised additional funds and closed a $15 million round from existing investors in early 2009.
Concentric’s initial sales strategy involved sales reps acting as clinical support, stationed at major stroke centers across the US working closely with interventional neuroradiologists, the early pioneers. The referral pattern in the stroke centers was not optimized for the adoption of endovascular treatment for ischemic stroke. Neurologists who diagnose and triage patients were stronger advocates of drug therapy and skeptical about device options. They all wanted a large randomized clinical trial to change their beliefs about the benefits of mechanical solutions.
By the end of 2008, Concentric had developed and launched three generations of Merci retrievers. Still, case success and ease of use with Merci was highly operator dependent. DAC was a huge success but not large enough in revenue to make up the challenge of growing revenue with Merci as a first generation system in a competitive market. It also became apparent that the large randomized clinical market development trial was going to be difficult and costly to run and would pay-off only in the long term which is always a challenge for a company at this stage. Expansion into Japan was another key initiative undertaken but approval and launch wouldn’t happen till 2010.
By 2010 Concentric was smaller and leaner with a shot at becoming profitable. The decision to re-prioritize and restructure the organization meant letting go several employees. Layoffs are never easy. In addition to the layoffs the Company asked people to do more with less. Maria kept everyone focused on priorities and communicated often with everyone.
At the same time, competition in the space was heating up. Besides Penumbra Inc., other stent-like retrieval devices were being shown, tried and launched in Europe by small and large companies. Concentric was falling behind. At this point Maria decided to refocus on product development. Maria formed a controversial “Tiger Team” who was tasked with rapidly creating a next-generation product focusing on ease of use and adoptability. At first there was limited buy-in to this organization structure as it was hard to work with a smaller team within a small team in the new lean environment.
The gamble to develop an easier-to-use product paid off. The result of the Tiger Team’s efforts was the Trevo. Leveraging familiar stent technology into the design the new “stentriever” concept turned out to be very intuitive and much easier to use clinically. Execution was also key, as not only did the Tiger Team come up with a novel design, but they developed it and received CE Mark by December 2009, less than 12 months after they started development. Trevo was successfully launched in Europe and with that begun the “come back” of Concentric Medical into a leadership position in the space. The next milestone was then to complete an IDE trial to get Trevo cleared by FDA in a very timely manner.
Consolidation took place in the neurovascular space in 2010-2011 with several acquisitions leading most neurovascular players, namely EV3 and JJ/Codman, to offer both hemorrhagic and ischemic stroke platforms. Stryker saw the value in the Trevo system and Concentric team’s ischemic stroke expertise and in October 2011 closed the acquisition of Concentric Medical for ~$135 million dollars in an all-cash deal. As usual, the diligence had begun long before this announcement.
As Maria explained “Deals don’t happen in less than 6 months.” The Due Diligence phase can be a serious challenge for a company as it consumes management time and resources. During this time, management is also expected to keep running the company for long term success while achieving key milestones and minimizing any set-backs. “What if there’s a delay in R&D, clinical milestones? What if there’s a recall? Any possible issue, although manageable in the normal course of business, felt significantly challenging in the midst of due diligence. It could impact the deal.” Maria also emphasized that the deal isn’t done until the money is in the bank: “Scrutiny from the Board, from the strategic partner and from your own employees is at an all-time high during this period.”
In the end, Concentric pivoted when it needed to, asking employees to do more with less, going back to the basics of new product development, taking advantage of the fast path to market in Europe and focusing the entire team on few critical priorities to come out on the other end with a successful exit. Thank you to the Concentric management team: Maria Sainz, Brett Hale, and John Miller for your time and insights with the Biodesign Alumni!
Brandon Felkins has been working in the medical device industry as an engineer and project manager for over 8 years and is currently serving as VP of R&D for Ocular Dynamics LLC, a company that spun out of Stanford Biodesign in 2011 and is focused on treating contact lens induced dry eye disease.