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Georgia Tech, Partners Plan Med Device Prototyping Center as Step in Broader Effort to Nurture Startups

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This is an updated version of a story first published on May 27

Four of Georgia's top research and healthcare institutions are months away from launching the first initiative in a broader collective effort to spin out medical device companies and keep them growing in the Peachtree State — an effort that aims to address the state's longtime weakness in nurturing new life-sci startups.

Georgia Institute of Technology, Saint Joseph's Translational Research Institute, Piedmont Healthcare, and the public-private Georgia Research Alliance plan later this year to identify potential funding sources for the first of several initiatives to comprise the new Global Center for Medical Innovation.

That initiative would be a $3 million to $4 million center that would allow startups to develop prototypes of medical devices with commercialization potential, especially those focused in cardiology, orthopedics, and pediatrics. The center is anticipated to open as the first component of the GCMI, which hopes to grow long-term in Technology Enterprise Park, an 11-acre Atlanta complex affiliated with Georgia Tech.

"We would like to have it within Technology Enterprise Park. But we're going to have a location sooner than two years, which is what it would take to build a new building," H. Wayne Hodges, vice provost for Georgia Tech's Enterprise Innovation Institute, told BioRegion News last week.

"We need this up and running and a presence for this sooner than two years. We will probably be looking at some other alternatives that are in that park," most likely in existing space, Hodges said.

The tech park now includes a 14,175-square-foot building that houses the applied research arm of Georgia Tech, the Georgia Tech Research Institute; and a five-story, 126,760-square-foot research building that has all but been filled by three tenants — Altea Therapeutics, which occupies 49,400 square feet; CardioMems, which has 40,137 square feet; and the 37,119-square-foot US outpost of Finnish-based worldwide chemical group Kemira.

Another building opened last week — a 32,000-square-foot preclinical research facility refurbished to good laboratory practice standards by SJTRI, at a $20 million cost. That facility is designed to integrate with Saint Joseph's clinical program at its tertiary care hospital in Atlanta. "We'd like to be adjacent to [the pre-clinical facility] because what they're going to be providing there will be something that will be available [to those who] want to design and develop prototypes, but also do preclinical trials and that sort of thing," Hodges said.

"What we think we have is this all-in-one facility for medical devices that really doesn’t exist in the Southeast," Hodges added.

Plans for Technology Enterprise Park also include a five-story, 124,131-square-foot building originally set to open in 2010, but which has been postponed because of the global economic upheaval — as well as a pair of future-development building lots totaling 350,000 square feet. The buildings would all bring the tech park's maximum developable area to 600,000 square feet.

Nicolas Chronos, president of SJTRI, told BRN that his institute is "in negotiation to raise the money needed to build" the five-story building, with the goal of starting construction later this year, in partnership with the private, nonprofit University Financing Foundation. He estimated SJTRI would need $20 million to break ground, toward a $30 million cost of the facility.

"We imagine that we will come out of the ground in the next six months, but we won't have it available to use for 18 months," Chronos said in an interview at BIO 2009. "We will actually build a second facility, which is an imaging facility [with] advanced imaging, molecular imaging, cancer imaging, genomics, CT, MRI both for large and small preclinical models. But in addition, we may have toxicology capabilities, and other capabilities — including of course the prototyping center, which to date haven’t existed here in the Southeast."

SJTRI would occupy the bottom floor in the five-story building, equaling about 25,000 square feet. "We're talking to several of the other big healthcare systems in town to partner with us and take floors themselves," Chronos said. He cited one system that has expressed interest in the project, the pediatric healthcare system Children's Healthcare of Atlanta, with which it is in talks to file a physician-sponsored investigational new drug application with the FDA to use one piece of equipment developed by SJTRI.

"We're hoping it's going to be called the Atlanta heart valve," Chronos said.

He said SJTRI has experience raising money via private philanthropy to develop a translational research institute that enabled pre-clinical services at a sister hospital, Holy Cross Hospital in Fort Lauderdale, Fla. Beyond the Saint Joseph's system, he said, the nation's largest Catholic, nonprofit health system, St. Louis-based Ascension Health, has asked to partner with SJTRI, as has the Camden, NJ-based Lourdes Health System.

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"We're a little bit like the hub, leveraging university and academic partners, and industry partners, and taking that across to areas of clinical expertise that exist in the community. The Holy Cross program will be more oncology focused, so we will be taking more of the cancer activities to them, whereas the Lourdes system is interested more in the cardiovascular capability," as is Mercy Hospital of Portland, Me., Chronos said.

At Technology Enterprise Park in Atlanta, Chronos said, the five-story building would result in SJTRI adding "another 30 or 40 at least" to its current staff of 70, part of between 400 and 500 people expected to work in the building when all floors are occupied.

Many of those professionals, he said, would likely be recruited from outside Georgia — as was the case with the chief scientific officer who joined SJTRI earlier this month, Jai Pal Singh, a former head of vascular therapeutics research and research advisor in the atherosclerosis-metabolic drug team of Eli Lilly.

"There will be certain types of people who don't exist here — some of the regulatory capability, some of the senor management. As far as biomedical engineering, that's fairly well covered. We have a good workforce. We probably need some senior management talent, and that's what we'll recruit," Chronos said.

The prototyping center could emerge in phases in that building, since its heavy equipment would need to be at ground-floor level, though not its GMP clean rooms, Hodges said. That building could also serve as a location for startups that have grown out of the prototype center or a business incubator planned longer-term for the GCMI; Georgia Tech has its own biomedical incubator at its on-campus "Bio Quad," in the basement of its biomedical science and technology building.

"Maybe eventually we move that over into this [building under construction], and have it all together," Hodges said.

Hodges said the GCMI is in the process of interviewing candidates to manage the center. A decision is expected in as little as three weeks from the GCMI's board of directors, which is designed to represent the center's four institutions.

"This may not be the final management. It may be a startup," with a decision to come at a later point on a permanent management, he said.

Mike Cassidy, president of the GRA, told BRN the four institutions will contribute $100,000 each toward a formal business plan: "Over the summer, we're going to be finishing that up."

That plan is expected to call for several million dollars of investment from "several large companies and investors who have interest in being a part of" the GCMI, Hodges said. He would not name the prospective companies and investors.

"We have world-class clinicians in cardiology, orthopedics, and pediatrics, and we need to take advantage of that. We have world-class faculty researchers in devices, from an engineering perspective. Putting all of that together is an awfully powerful argument," Hodges added.

A 'Burgeoning' Industry

Hodges and Cassidy spoke in an interview minutes after Georgia Gov. Sonny Perdue announced the creation of the medical innovation center from his state's pavilion at the Biotechnology International Organization's 2009 International Convention, held May 18-21 in Atlanta at the Georgia World Congress Center.

"We do believe that the Global Center for Medical Innovation at Georgia Tech is going to be the centerpiece of a burgeoning medical device and medical technology industry, not only in this region, but obviously these devices can be used worldwide," Perdue said. "We're excited about the economic opportunities this will bring to our state as well.

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"By bringing together public and private resources, we're providing a strong foundation for real progress in medical devices and the medical technology industry," Perdue added.

Until now, that progress has been hard to spot in Georgia. Hodges held off saying how many med device spinouts Georgia Tech generates annually, pending a return to his office. Using another measure of med device progress — the amount of venture funding collected by companies — Georgia finished the first quarter with no medical device deals, compared with $1.05 million in three deals during the first three months of 2008, according to the quarterly MoneyTree Report produced by PricewaterhouseCoopers and the National Venture Capital Association, based on Thomson Reuters data.

The Southeast's strongest life-sci state, North Carolina, attracted a single $3.4 million medical device deal during Q1 '09, down from the sole $10 million deal recorded in the year-ago quarter. Yet those numbers were no match for those recorded by MoneyTree for the nation's top three med device states during the first quarters of 2009 and 2008:

• California: More than $210 million in 22 deals in Q1 '09, compared with $550 million in 46 deals in Q1 '08.
• Massachusetts: $42.2 million in six deals, down from 13 deals totaling $67.1 million.
• Minnesota: $33.25 million in two deals, just 7 percent below $35.9 million in four deals.

"We don’t have the advantage of longtime, well-established support networks that some of our competitors do, but certainly [GCMI and its] partnerships go a long way in helping to foster the growth of the biotechnology industry, and in particular biomedical device development within the state of Georgia," said GP (Bud) Peterson, who took office last month as president of Georgia Tech, during the announcement of GCMI at BIO 2009.

Hodges said the four institutions have spent the past two years discussing the creation and development of the GCMI. The steepest hurdle has not been money, he said, but "it was a matter of pulling the players together. With some partners we had done things together, and with some we had not. With some, we had natural competitive issues to work out. But everyone's come together, and is headed in the same direction."

"This new venture is an excellent example of Georgia's commitment to investing in innovative research at our universities, and of fostering collaborations that turn laboratory discoveries into applications that will meet global health needs," Cassidy of the GRA said. "The state is investing in ourselves. We're investing in the growth and the development of a promising industry here in Georgia. But perhaps more important, we're bringing innovation to the patient's bedside."

Added Peterson: "We're aiming actually for two kinds of results. The first is a better quality of life, through streamlining processes of bringing new medical technologies into use by bringing together key partners [and] providing a realistic context in which the design and development of new devices can be created, tested, and brought to market. And second, by providing new business opportunities that support the growth of Georgia's rapidly expanding medical device industry."

While the state may not have focused its life sciences efforts on medical devices until recently, it stands to benefit from the current industry trend toward convergence of life-sci technologies.

"We want to deliver drugs just where they are needed. What Georgia's always needed is a place in which we can develop prototypes and get things started. One institution can’t afford to pay for that," said Thomas Callaway, general partner with Georgia Venture Partners, an Atlanta venture capital firm specializing in seed- and early-stage investments of up to $1 million in Georgia life-sci companies.

Callaway spoke in an interview minutes after discussing the life sciences strengths and challenges of Georgia and the rest of the Southeast during a panel discussion on the final day of BIO 2009.

Callaway cited a recent example of such convergence in Georgia: Atlanta-based medical device maker Medtronic has developed glucose insulin pumps capable of not only reading the body's sugar level, but responding to that by pumping the amount of insulin required to control blood sugar.

Another challenge Georgia faces in drawing investment into its life-sci companies, he said, is the effort by some state officials to ban the creation of new human embryonic stem cell lines on moral grounds because of the destruction of embryos involved. A bill to that effect is pending in the state House of Representatives, whose science and technology committee will hold hearings this fall [BRN, May 15].

While declining to say if he'd sign the bill, Perdue expressed hope in a BRN interview earlier this month that the state and its life-sci industry can come to a consensus against destroying human embryos [BRN, May 22].

"It's an embarrassment. It doesn’t really impact us because [the bill] didn't pass. But the fact that it would be considered is of concern to me. Meanwhile, California invests $3 billion into [stem cell research]," Callaway said.

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