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VOL. 10 | NO. 49 | Saturday, December 2, 2017

Memphis Fusion

Medical device companies rooted in Memphis spawn growing industry

By Michael Waddell

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With more than 40 life science companies operating in the Greater Memphis area and Shelby County ranking second in the U.S. for orthopedic device manufacturing, the Mid-South can stake its claim as one of the top medical device markets in the world.

Robin Clarm, operations engineer at Crossroads Extremity Systems, measures the diameter of devices to ensure they're up to standards. (Memphis News/Houston Cofield)

Startups and smaller companies like Crossroads Extremity Solutions, In2Bones and EMBrace – all formed by veterans from companies here such as Smith & Nephew, Medtronic and Wright Medical Group Inc. – benefit from a strong ecosystem of resources, including accelerator programs like ZeroTo510 at the Memphis Bioworks Foundation.

ZeroTo510 offers young medical device companies access to mentors and capital, along with connections to important resources. The program has assisted 24 companies over the past five years.

EMBrace, makers of a new lower-back device, participated in the ZeroTo510 program this year. Co-founder Stewart Young brought 24 years in research and development at Medtronic to the new business.

“Everyone is looking for more conservative treatments prior to surgery – the payers, the doctors and the patients,” Young said. “Most of the back braces that are available now, the vast majority of them are just simple compression braces.”

EMBrace is a multi-piece device, with one belt designed to go around the waist and another around the lower rib cage. Actuators, or springs, on each side push the two belts apart with the intent to stretch out the lower back.

“The hope is that physical therapists and spine surgeons would couple our device with physical therapy,” said Young, who sees his company’s device as a way for doctors to get away from prescribing opioids for pain. “Our device is another tool in the surgeon’s tool belt to try to get patients back on their feet and back to work earlier.”

EMBrace is shooting for a fall 2018 product rollout, targeting spine surgeons, physiatrists and physical therapists.

Memphis is an ideal home for many medical device companies due to no state income tax, low cost of living, cheap energy, and its logistics/distribution channels, but maintaining a pool of qualified job seekers is a challenge. Memphis medical device industry employment has grown 50 percent since 1999, more than four times the national rate of growth.

“Our mission is help create a pipeline of skilled employees like machinists, metal finishers, inspectors, quality professionals, packaging, people who do the laser makings of the products,” said Greater Memphis Medical Device Council (GMMDC) executive director Roy Smith. “Having a good, solid supply of skilled employees is one of the big constraints that’s preventing the industry from being able to grow here and really have an opportunity to attract new companies to come to the Memphis area.”

GMMDC helped the Tennessee College of Applied Technology get funding to a create a new 50,000-square-foot campus in Bartlett that will include a state-of-the-art medical device training center. Construction could get underway by next spring at the northwest corner of Appling Road and Brother Boulevard.

Memphis-based EMBrace plans to roll out its START brace in fall 2018. Its client targets will include spine surgeons and physical therapists. (Submitted)

“We helped them get the attention of people in Nashville, saying the government needs to do something for West Tennessee to stimulate employment and support an industry that is the largest export for the state of Tennessee,” said Smith, who was previously vice president of operations at Smith & Nephew in Memphis. “If you have a supplier doing work for you and you have a problem, or if you have a design change, the speed of doing business is so much increased if they’re across town. They can be in your conference room in 10 minutes to work out a problem face-to-face.”

Tennessee College of Applied Technology (TCAT) Memphis also recently partnered with Bartlett High School to train juniors and seniors for potential jobs when they have completed high school.

“We’re trying to get parents to understand about getting their kids into vocational training,” Smith said. “While they’re in high school, they can use Tennessee Promise to complete a diploma in a technical vocation. They can go directly into getting a job or an apprenticeship, and they can end up making top money ($75,000 to $80,000 per year) as a machinist by the time they’re in their early 20s with no college debt.”

COMPANIES INEXTRICABLY ATTACHED

GMMDC completed a genealogy of the device industry locally, tracing it back to 1934 when J. Don Richards started his company here and it ended up becoming Smith & Nephew. Frank Wright worked for Richards, and he eventually started Wright Medical Technology. L.D. Beard also worked for Richards and started his own company, which became Danek, which bought Sofamor in 1993 and became Sofamor Danek. Medtronic then bought Sofamor Danek in a $3 billion stock deal in 1998.

A November 2015 GMMDC economic impact study showed the local medical device industry employed 6,500 people directly (and another 10,000 people indirectly) in greater Shelby County, with an overall economic impact of $2.7 billion.

“The ability to attract more companies is going to be dependent on getting this pipeline of skilled employees,” Smith said. “It’s a win-win-win-win situation for Shelby County, the individuals, the companies and the population as whole if we can create these opportunities and attract more companies.”

Known for spinal and orthopedic devices, the Memphis area touts 30 contract manufacturers and original equipment manufacturers (OEMs).

For Crossroads Extremity Systems, which formed in April 2014, much of the instrumentation for its Dynaforce bone-fixation system is manufactured right here in Memphis, and a good deal of the packaging is done at Crossroads’ Memphis facility.

“The Dynaforce product line is the first, at least to our knowledge, bone-fixation device or system that combines the traditional stability of a plate with the active compression of a Nitinol clip,” said Crossroads president and CEO Vernon Hartdegen. “The idea was born out of the need to ensure there is always compression across a fusion site, and combining that with the traditional stable construct of the plate.”

The device is used primarily for foot deformity corrections and treatment of arthritis. Crossroads has been rolling the product out since July and is ramping up production.

Jennifer Hartdegen, an employee at Crossroads Extremity Systems, cleans a handful of small medical devices in the company's lab. (Memphis News/Houston Cofield)

“When you’re making something new for the first time, being able to have the engineers on the shop floor with the machinists working through the first round of manufacturing is a huge advantage,” Hartdegen said. “Memphis has a rich history with orthopedics. There’s a lot of support here, from the MERI (Medical Education & Research Institute) where we can do research in cadaver labs, to the machine shops, and some of the testing facilities here in town – the proximity to all that, especially for us as a small company where we don’t have those resources internally, is an advantage. It’s great having them here locally to lean on.”

The region’s strong logistics infrastructure is a key component of having Crossroads Extremity Systems based here.

“We distribute out of this facility, so having FedEx locally we can deliver products late into the night,” said Crossroads co-founder Chad Hollis, who believes opportunities are limitless for using the technology on other parts of the body. “Anywhere you’re trying to get bone to fuse, we feel like this is a better way to do it.”

In2Bones formed about five years ago in France while company president and CEO Alan Taylor was working for Solana Surgical LLC before it was sold to Wright Medical. Some of Solana’s employees who were not hired by Wright after the acquisition began doing some U.S. distribution work for In2Bones. When Taylor left Wright Medical after 19 years – six as head of the company’s extremities group – he joined his former employees and helped merge the French In2Bones with the U.S. distribution arm into In2Bones Global.

“I’m a big proponent of Memphis. The orthopedic industry here is probably one of the least known industries for its size,” said Taylor, who touts In2Bones as one of the few startups that can claim to truly be a global concern. “We do business in China, Australia, Africa and South America. We like to say the sun never sets on In2Bones.

“We’re bullish on Memphis and the orthopedic community,” Taylor said. “I think the Memphis market is the richest in the country for experienced orthopedic businesspeople. Memphis compares to any area in the country as far as expertise you need to run a business for orthopedics.”

The company recently announced that its In2Bones USA LLC subsidiary has received U.S. Food and Drug Administration (FDA) clearance for its new Fracture and Correction System, marketed as the 5MS Fracture Repair System and the CoLag Locking Compression Screw System.

Parts for In2Bones’ products are made primarily in Memphis and in Lyon, France, with 20 In2Bones employees in each city.

The 5MS includes a plate that goes on the planter/floor side of the bone after a fifth metatarsal fracture.

“We’ve seen, from a clinical aspect, good results in high-performance athletes, so we feel that will gain a lot of attention from sports medicine surgeons who treat them as well as the average person,” Taylor said. “Looking at the CoLag screw, it’s hard to get excited in orthopedics about a screw, but this one is different. There probably hasn’t been any major work done in screws in orthopedics in about 25 years.”

A thread under the head of the screw creates a more stable construct, according to Taylor, who touts the CoLag system is a new concept in orthopedic bone fixation.

In2Bones' 5MS Fracture Repair System for extremity fractures has shown good results in high-performance athletes. (In2Bones Global LLC)

Differential, dual-pitch screw threads combined with a low-profile head create a compression lock between the bone fragment and fracture, significantly improving compression compared with competitive headless screws.

While In2Bones is currently focused more heavily on the foot and ankle area, that could shift soon.

“I’m also very bullish on the hand market. I think it might be the new ‘next frontier,’” Taylor said.

Medical device makers in the Greater Memphis area also draw raw materials producers such as metals shops and distributors like Liberto Surgical.

Chris Liberto is an independent distributor who has worked in device sales since the early 2000s and has owned his own business since 2012. The main device line for his company is made by Zimmer-Biomet, a manufacturer of bone plating and screws for facial fractures or neurosurgical procedures like craniotomies, as well as for bone fractures of the chest or ribs.

Liberto Surgical is relocating to the Edge District soon, to a building at 691 Marshall Ave. that Liberto bought back in 2012. He originally intended to renovate it and make it his home or a partial home/work space.

“Strategically, the building is near the hospitals where many of our customers are, so it’s nice to be close to the medical center,” Liberto said. “Over the last five years, as the Edge has started to grow and become a real connector to Downtown and Midtown, I thought it made sense to put the business over here.”

Liberto distributes to hospitals in Mississippi, Arkansas and West Tennessee.

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