October 6, 2010 source: PrivateEquityCentral.net (registration required for site access)
This interview with Ted Driscoll was originally published on the private equity Central website.
The Future is Now
Bionic limbs may sound like something out of the future, but it is not. It is here. Now.
Claremont Creek Ventures, a firm with $310 million in capital under management, has been investing in Tibion Bionic Technologies for the last four years. The early-stage venture capital firm is a strong believer in its portfolio company, which just started shipping out its products.
Ted Driscoll, a technology partner at the firm, talked with PrivateEquityCentral.net about Tibion. Science fiction may no longer be fiction.
PrivateEquityCentral.net: Tell me a little bit about your investments in bionics. It sounds a little bit like it is from the future.
Ted Driscoll: That was actually one of our first hesitancies when we were pitched this deal four years ago. The movie iRobot had just come out with a bunch of bleeping robots with green and blue eyes.
These guys said they were targeting people with bad knees, and we were a little bit skeptical at first, but they showed us a demonstration of some technology on a bench. It didn't look like a knee at the time, it looked like a hinge, but it was surprisingly light, surprisingly strong, and it had a feature we had never seen before.
You can generate a lot of strength with a hinge using something like a hydraulic, but if you want the knee to be able to swing freely as you are walking the hydraulic won't let that happen due to resistance.
They showed us the ability to provide 350 pounds of force to lift something, but also a mode that was completely electronically controlled that offered no resistance [i.e. hinge-free]. It could swing back and forth, like a pendulum, and that was something we had never seen before.
That got our attention.
All of the parts for bionics have been developed by other industries in the last few years. For instance, batteries have been developed by the laptop business, actuators have been developed by the disc drive business, the cellular phone business has been driving batteries, small displays and the ability to communicate on a cellular network digitally.
As a result, all of the parts that were necessary for an intelligent medical orthotic, like a knee, are being developed in other industries. You can put them together and actually make something that weighs five pounds and works in a person standing up.
That's why we made the investment: timing. Everything had come together.
PEC: At which stage is the company right now?
TD: They have just begun to commercialize the product earlier this year. They put the first 12 products in the field.
They have sold products to some of the major stroke rehabilitation hospitals, and that is where the first focus is right now. There are between four million and six million stroke survivors in the United States who have lost some kind of muscular strength in their major leg muscles. As a consequence, they cannot walk normally or they are wheelchair bound.
These people need help, and they are underserved. They need help in their physical therapy to retrain their brain to control that movement. The knee is not just a simple hinge; it is a complex joint that supports your entire bodyweight. It is a challenging problem.
PEC: How does this differ from a knee replacement procedure?
TD: That would entail replacing the joint. What we are trying to do is take a joint that is perfectly healthy, but has had nerve and muscular damage around it. This isn't so much a joint problem as it is a nerve problem. What we are really doing is retraining the brain on how to move normally again.
PEC: How old is Tibion?
TD: It is about four years old. We were one of the first investors. We have been supporting the company since the beginning, along with Saratoga Ventures and Tom Fogarty, personally.
PEC: I know your firm is invested in other areas as well. What have you been looking at?
TD: We have a company that does in vitro fertilization, we have companies that are doing single cell testing. We have a company that is doing an early stage diagnostic for hospital-acquired infections. We have a variety of lifescience companies.
We try to find opportunities where there is a limited regulatory barrier and where there is a strong medical need. Our companies typically do not have a long regulatory path.
PEC: What does the future look like for your sector considering all of the regulatory changes with the Obama administration?
TD: The good news is there is going to be 30 million new patients. I think there is a focus on outcomes rather than just incomes, meaning how much a procedure cost. I am trying to be cautiously optimistic.