Kiger's Notebook

Rochester founder says Tenex is growing quickly

When pro basketball player Pau Gasol of the L.A. Lakers needed damaged tendons in his knee removed this week, his doctor opted for a noninvasive treatment developed by Mayo Clinic instead of the traditional surgery option.

Gasol now is one of about 5,000 patients that have been treated with Tenex Health Inc.'s TX1 instrument, since the firm took its specialty needle system to market at the start of 2012.

Dr. Jagi Gill, of Rochester, founded Tenex in 2009, and it received approval from the Food and Drug Administration in 2011. Since then it has quickly been gaining traction and is now listing "multi-millions" in sales.

"We moved past the 'Will it work?' and 'Can we make it?' stages. Now we are building a sales team and working a marketing message," Gill said.

Tenex now is selling the system to doctors. The firm has 12 sales representatives, and he hopes to grow that number to 40 by the third quarter of 2013.

Gill began his career in Mayo Clinic's Department of Neurology. He has since worked at Boston Scientific as well as a number of biotechnology start-ups.

Tenex's one-time use, disposable handpiece was developed and commercialized in collaboration with Mayo Clinic. Tenex licenses technology from Mayo Clinic and in turn, Mayo owns equity in Tenex.

"The folks at Mayo have been very helpful," he said.

The TX1 system uses ultrasound technology to treat damaged tendons or soft tissue in elbows, knees, ankles, feet and shoulders. Unlike surgery, patients can walk out after what is often a procedure no longer than 20 minutes.

"It is well-tolerated and safe as an injection," says Gill.

That and the quick recovery are making Tenex very popular with athletes, people with work-related injuries and patients who simply "want to have an active lifestyle."

Gasol is not the only celebrity who has discovered Tenex. TV and radio personality Ryan Seacrest has also has his elbow treated with the TX1 system.

At one point, Tenex looked at Rochester, nearby Elk Run and even Willmar, Minn., as possible locations for a manufacturing facility. In the end, the decision was made to acquire the California company that handled the early manufacturing on a contract basis.

So why not do the manufacturing in Rochester?

"The challenge that any company would have in going here is that there isn't a lot of experience in terms of engineering, manufacturing, production, quality systems," says Gill.

He explained that medical device hotspots, not only have a medical system or university for generating ideas, but also "They have an imbedded group of people that know how to turn on an infrastructure."

Private Wealth mag: "Mayo Clinic Targets Ultra-Wealthy"

Here's some from an interesting article headlined "Mayo Clinic Targets Ultra-Wealthy" posted a couple of weeks ago by Private Wealth magazine. The piece was written by Raymond Fazzi.

The Mayo Clinic, one of the nation’s most prominent hospitals, is starting to flex its muscle in the field of medical concierge services for the wealthy.

The Rochester, Minn.-based hospital this year started to ramp up efforts to market its Preferred Response service—a membership program that provides medical transportation and emergency services all over the world—to business travelers, travel clubs for the wealthy and other segments of the ultra-affluent market. The expansion of Preferred Response comes three years after the hospital launched its Medallion program, a concierge medical service that devotes a team of doctors to its subscribers’ primary medical care needs.

The push comes at a time when some of the nation’s top hospitals are looking to the well-heeled to increase revenues and make greater use of their more expensive, high-tech medical capabilities. Johns Hopkins Hospital in Baltimore, for example, has offered a similar concierge transportation service for years.

“Prominent hospitals are looking at any ways they can to leverage expertise to generate revenue streams,” said Dr. Clayton T. Cowl, Preferred Response medical director. “Access [to medical care] is going to be the key.”

The drive to market Mayo Clinic Preferred Response to the wealthy is based heavily on the public’s desire for medical access. The program has been part of the Mayo Clinic for more than a decade, originally as a service for dealing with in-flight medical emergencies. The program has since grown more expansive, with the ability to coordinate care and transportation when members are facing a medical emergency far from home.
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“The idea is, we want to create a relationship—not just a doctor visit or two a year—no matter where you are in the world,” Cowl said.

Cutting The Line
As President Barack Obama’s health reforms start to kick in, bringing millions more people into the health system, increased waiting times for appointments and treatments are expected to become larger issues with patients.
The selling point for Preferred Response and other medical concierge services is that they allow those who can pay a premium to basically cut in line, according to industry experts.

“Ultimately, we’re in an era right now where lots more people are going to have insurance and the key I think is going to be access and connectivity,” Cowl said. “In a time of need, you don’t want to be fumbling around asking which of these 14 numbers I need to dial.”

The base membership fee for Preferred Response is $650 per year for individuals and $800 for families. The fee does not include hospital and doctors’ fees, according to a hospital spokesman.

With two around-the-clock medical teams, Preferred Response deals with emergencies throughout the world, ranging from instances where a subscriber fell down a flight of stairs in Turkey to another where a member suffered from a heart attack while vacationing in Cancun, Mexico. In one recent episode, a member suffered a punctured lung while on a bicycle tour in China. Preferred Response arranged for his treatment and transportation a few days later to the Mayo Clinic in Rochester, Cowl said. 

 

I remember when Mayo Clinic launched its relationship with NetJets back in 2003.

Mayo Clinic will now provide in-flight medical advice and assistance to people flying NetJets airlines.

The agreement, announced this week, gives NetJets employees and passengers access to Mayo Clinic support all day, every day. People on a NetJets flight can call a dedicated phone number to speak to a critical-care flight nurse or physician.

Additionally, all NetJets flight crews have received instruction in the use of special, Mayo Clinic-designed emergency medical supplies.

NetJets, based in New Jersey, is the largest provider of fractional aircraft ownership offerings in the world. NetJets currently manages 512 aircraft. This year, NetJets fractional aircraft owners will fly more than 250,000 flights to more than 140 different countries.

Oronoco couple signs for $145 million loan to buy Kahler hotels

Here's some from my piece today that pulls back the cloak of secrecy from the mysterious new ownership of the Kahler portfolio of hotels:
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Loan documents filed with the U.S. Securities and Exchange Commission indicate that Javon Bea, a Wisconsin hospital executive who lives in Oronoco, is the driving force behind the $230 million purchase of four Rochester hotels, anchored by the Kahler Grand Hotel.

Bea, along with his wife Vita Bea, signed as "sponsors" to borrow $145 million from Deutsche Mortgage & Asset Receiving Corp., part of the German banking giant Deutsche Bank, to finance the deal to buy the hotels from Sunstone Hotel Investors, according to the documents, which are public information and available online. The deal, which was announced in February, also included the Textile Care Services laundry business.

The hotels are the Kahler Grand, the Kahler Inn & Suites, the Marriott Rochester at Mayo Clinic and the Residence Inn.

Bea also is listed as sole owner of RochesterBevFlow, which holds the liquor license for the Kahler hotels. The transfer of the liquor license is on the agenda for the Rochester City Council meeting tonight.

Bea, a former vice president of operations for Saint Marys Hospital, has been chief executive officer of Mercy Health System in Janesville, Wis., since 1989. He has not responded to repeated interview requests in recent months.

Bea previously has been identified as an investor in the Kahler purchase as well as a consultant to the ownership group by Merl Groteboer, the Rochester Realtor who represented both sides of the deal.

The financing for the Kahler purchase was outlined in Deutsche Bank's SEC filings:

• Three Deutsche Bank loan components  — $110 million, $10 million and $25 million, totaling $145 million — provided the bulk of the financing, at an interest rate of 7.4 percent.

• "The Borrower" provided $45.8 million in equity. Javon R. Bea and Vita E. Bea are identified as the sponsors of the borrowers and the guarantors.

• Sunstone, a real estate investment firm based in Aliso Viejo, Calif., and owned the Kahler properties for 16 years, retains a $25 million equity investment in the hotels.

SEC documents filed by Sunstone also show that the California company retained $14 million in "liability related to the Portfolio's pension plan." Sunstone also provided "a $3.7 million working cash advance to the Buyer that will repaid from the Portfolio's available cash flow."

According to insiders, one of Bea's plans for the hotels is to offer transitional medical care for people recovering from treatment at Mayo on one or two floors of the 660-room Kahler Grand. The hotel is across Second Avenue Southwest from Mayo's Gonda Building and south of Rochester Methodist Hospital.

Industry experts say such a blending of hotel and hospital has been discussed in other markets, but no one has tried it in Minnesota.

Mayo Clinic extends deal with drug research lab

Here's some from a release I spotted this morning about Mayo Clinic signing an updated agreement with Sanford-Burnham, a research lab with locations in California and Florida.

By the way, the Sanford in Sanford-Burnham is T. Denny Sanford, who is also a big financial backer of Mayo Clinic.

Sanford-Burnham and Mayo Clinic signed a new collaborative agreement to build a pipeline of therapeutic drugs aimed at a variety of diseases with serious unmet medical needs.

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The agreement combines Mayo Clinic’s clinically relevant targets with Sanford-Burnham’s discovery platform in a translational initiative aimed at advancing a portfolio of projects through the initial stages of drug discovery. The new agreement builds on a yearlong pilot phase and expands the number and scope of drug discovery projects derived from Mayo Clinic researchers that are being conducted at Sanford-Burnham.

 

“We’re looking forward to further engaging with our Mayo Clinic collaborators as we develop innovative screens to identify chemical compounds that modulate the activity of clinically relevant targets,” said Michael Jackson, vice president of drug discovery and development at Sanford-Burnham. “If successful, these compounds will form the basis of completely novel—‘first in class’—therapies for devastating diseases such as cancer, Alzheimer’s, and others.”

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“The Mayo Clinic–Sanford-Burnham collaboration provides an avenue for Mayo scientists to rapidly translate basic science discoveries into screening platforms that will enable new drug discovery, and a new paradigm in drug development,” said Andrew Badley, associate dean of research resources at Mayo Clinic.

Mayo Clinic Biz Accelerator already speeding along

Here's some from my 2nd Mayo Clinic Business Accelerator story of the week. I'll have more in seperate post soon.

The just-opened Mayo Clinic Business Accelerator is already bursting at the seams with companies, including some local start-ups that are ready to aim high.

"We want to be the Amgen (the largest biotechnology company in the world) of Rochester," says Dr. John Burnett Jr., who with Dr. Horng Chen founded Zumbro Discovery just a few weeks ago.

The pair develop peptides to help treat medical conditions and two of their previous creations were licensed by out-of-state companies.

"We really had the desire to set something up here," says Chen. And as the inventors, they believe they will be able to better direct the course of the product as well as do it faster.

Their first patented peptide is designed to treat a condition known as Resistant Hypertension. It is generally defined as high blood pressure that standard treatments can't lower. About 10 to 20 percent of people diagnosed with hypertension are believed to be resistant.
It can lead to heart failure, myocardial infarction, stroke as well as kidney failure.

The Federal Drug Administration has already given the doctors the greenlight to begin testing on patients with Resistant Hypertension and they hope to do that by the end of the year.

"Being in the Accelerator is great for a young, virtual company like us. It gives a chance to interact with venture capitalists and network with other businesses," says Burnett. "And it is just a short walk from our lab."

The Accelerator offices in the Minnesota BioBusiness Center were packed this morning as crowds of Mayo Clinic administrators, city officials and community leaders packed into the just-completed space to christian is open for business.

It's "business" is to speed up local business development and ultimately create new jobs.

“The Accelerator is an example of the strength of a strong partnership between Mayo Clinic and the community to make it easier and more affordable for companies to start and locate in Rochester,” says Mayo Clinic CEO Dr. John Noseworthy.

A collaboration between Mayo Clinic, the City of Rochester and Rochester Area Economic Development Inc., the Accelerator is starting out with a full boat of tenants that include biotech businesses, medical device makers, software start-ups, venture capitalists and health care consultants.

Funded by $100,000 from Mayo Clinic and $100,000 from local sales tax money, the 2,500-square-foot cluster of offices is located on the second floor of the city-owned Minnesota BioBusiness Center. RAEDI is handling the management and leasing of the space.

“We hope to provide a nurturing space for new company formation in Rochester,” says Jim Rogers of Mayo Clinic Ventures.

Mayo Clinic adds DC/NYC PR firm to rachet up 'thought leadership'

Interesting. It looks like Mayo Clinic is contracting a high-powered PR firm, Widmeyer Communications, to promote public appearances on a national stage for CEO Dr. John Noseworthy and other Mayo Clinic leaders.

Actually, Mayo doesn't call it promote. They say 'thought leadership.' I'm not certain exactly what that entails. I don't believe surgery is involved, but I could be wrong. Heh.

I should point out that I'm very impressed by Mayo Clinic's in-house communications team in Rochester. Very sharp, efficient and professional people as well as patient with annoying journalists. I'm not sure what Widemeyer can do that they can't. I guess we'll find out.

Here's some from a PRWeek article by Virgil Dickson that quotes Mayo Clinic's Chris Gade. I remember way back when Chris was merely a spokesman.

“We're an organization with a 150-year history in medicine, medical research, and education. As healthcare continues to change, we want to continue to be a resource for healthcare in the nation and around the world,” said Chris Gade, chair of the division of external relations at Mayo Clinic. “One way to do that is identifying the appropriate forums and places for thought leadership.

Mayo hired Widmeyer based on work it did for other clients. The contract is for one year. Gade declined to disclose the firm's budget.

Highlights of Mayo Clinic's 2012 financials

Here are a few random, fun facts from Mayo Clinic's 2012 financials:

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• Spent on charity care: $83.4 million, up from $61.8 million in 2011.

• Spent to support Medicaid: $321.7 million, up from $260.4 million in 2011.

• Revenue from retail pharmacy sales: $149 million, up from $134 million in 2011.

• Revenue from technology commercialization, health information and medical products: $34.1 million, down from $40.4 million in 2011.

• Revenue from cafeteria sales: $28.8 million, down from $30.3 million in 2011.

• Cash and cash equivalents: $59.6 million, down from $141.3 million in 2011

• Earned incentive from federal government for introducing electronic medical records: $44.7 million

More on St. Peter hospital vs Mayo Clinic

A couple weeks ago, the small St. Peter Times published an interesting front page article about the CEO of the community-owned 17-bed River's Edge Hospital accusing Mayo Clinic of questionable practices and taking her case to the Minnesota Secretary of State for investigation.

Robb Murray of the Mankato Free Press recently did his own interview of the CEO Colleen Spike. An extensive story stemming from that interview ran in the Free-Press today. It lead with an 88-year-old woman saying the Mayo Clinic Health System staff told her River's Edge couldn't do an ultrasound on her.

Here are a few interesting excerpts that I clipped from Murray's article, some that probably warrant follow-up. The full Mankato Free Press article can be found here :

Spike says she told her friend the ultrasound could very well have been performed that day and that they do ultrasounds all the time.

“She said, ‘Colleen, did they lie to me?’” Spike said in an interview this week. “And the answer is yes.”

That story, and many more, prompted Spike to write a letter to Minnesota Attorney General Lori Swanson requesting an official investigation into Mayo Clinic Health System. She wants Swanson to look into allegations of MCHS staff falsely telling patients the St. Peter hospital was full, or telling patients that River’s Edge staff couldn’t do certain procedures such as ultrasounds, or weren’t certified to carry out certain tests such as mammograms and echocardiograms.

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 Mayo Clinic Health System denies all allegations. They say they never made false claims about River’s Edge.

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Spike said she understands that health care is a business. And she concedes that each example, on its own, can be chalked up to honest mistakes or sloppiness.

But after collecting example after example of similar “mistakes,” she says, she’s convinced they aren’t mistakes at all but are the manifestation of a concerted effort by Mayo Clinic Health System to crush the competition.

Spike, who has been in St. Peter for 15 years and in health care for 40, said the relationship between St. Peter’s hospital and Mayo had for years been a good one. She says it soured a few years ago when a Mayo executive told her flat out its plans.

“We had refused to become part of Mayo,” Spike said. “And he said ‘We will take you down.’”

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“When I put my signature on that letter, my heart was pounding. We are a 17-bed hospital taking Mayo Clinic Health System to task,” she said. “I knew that organization when it was good. It does good things, it does wonderful things for health care. But that doesn’t mean that it doesn’t go astray. And it has gone astray.”

Oregon hospital says "No" to proton beam therapy, cites studies

This is some from an interesting story in The Oregonian by Nick Budnick. The context is, of course, that Mayo Clinic is building a proton beam center in downtwon Rochester as well as one in Arizona.

Gary Schwitzer, former Mayo Clinic executive, pointed out the article on the Healthnewsreview.org website. Schwitzer characterized the trend of hospitals building proton beam centers with the very evocative and provocative phrase -  a "medical arms race."

Here's some from Budnick's article:

In recent years, large medical centers around the country have been building massive proton therapy machines costing $100 million and up, marketing them to men with prostate cancer.

For now, Oregon Health & Science University won't be one of them, with officials saying the treatment's cost and continued debate over its benefit have caused them to scrap a push to build one here.

"All of us were interested in exploring it," said Tomasz Beer, deputy director of OHSU's Knight Cancer Institute. But as conventional radiation therapy has improved, "it's not clear today whether proton therapy offers a meaningful and substantial clinical advantage."

University officials have mulled the idea for some time, even hiring an outside consultant about two years ago. Plans to hire another consultant were dropped earlier this year, with officials instead inviting two experts to university leaders, Beer said. Officials made their final decision in the last month or so.

Though the technology is considered useful in some pediatric cancers, studies continue to question its benefit for adults. "It is a technology that for adult tumors may have some advantages but those advantages have not been proven in head to head studies," Beer said. Things could change as the therapy evolves, but "We felt that we couldn't really justify this sort of investment based on the promise that this technology offers as it stands today."

Proton therapy centers can be as big as a football field, but OHSU had been considering a smaller, more recent version that would have cost about $30 million.

The treatment costs significantly more than conventional radiation therapy. Supporters say the therapy offers fewer side effects, but that claim has been undermined by studies released this year, most recently in the Journal of the National Cancer Institute. Critics call proton therapy an example of profit-driven medicine gone awry.

Proton therapy center operators have received other bad news this year. The federal government recently announced that it will follow through on plans issued this summer to cut Medicare reimbursement for proton therapy by nearly a third. That means centers' per-patient revenue dropped from an estimated $36,000 to $25,000.

Push to find 'Holy Grail' treatment marks historic milestone

A quest for the medical Holy Grail of regenerating a patient's heart tissue to help millions of sufferers and potentially make billions of dollars recently hit a historic milestone, when a Mayo Clinic-developed treatment was given the green light to move into the final stages of testing.

Belgium-based Cardio3 BioSciences licensed Mayo Clinic's research in this area in 2007. That research was led by Mayo Clinic's Dr. Andre Terzic and Dr. Atta Behfar.

The therapy involves taking stem cells from a patient's  bone marrow and through a proprietary process called Cardiopoiesis, re-programs those cells to become heart cells. The cells are then injected back into the patient's heart to repair damaged tissue.

Cardio3 describes the ongoing ties to Mayo Clinic on its web site, "The company's current relationship with Mayo Clinic is essentially based on the technology license agreement, through which the company acquired at arms’ length rights to the majority of its current intellectual property portfolio and which has created a long-term research relationship with Mayo Clinic."

Cardio3 is a  privately owned company that has raised about $57.6 million in financing since it launched. The breakdown of its investors on its website shows Mayo Clinic controls 25 percent of the company's capitalization. In 2011, Cardio3 deepened the already close relationship by establishing its U.S. headquarters in Rochester on the third floor of the Minnesota Biobusiness Center.

It estimated that about 23 million people worldwide are afflicted with congestive heart failure and 2 million new cases are diagnosed each year worldwide. It is a disorder on the increase in the U.S., in particular. Analysts have estimated a successful treatment for congestive heart failure could bring in about $1 billion a year for whatever company that brings it to market.

Many biotechnology firms have been working on their own approaches, but it appears Cardio3 is ahead of others pursuing treatments involving stem cells.

Cardio3 and Mayo Clinic have marked many positive results during Phase I and Phase II clinical trials, while working on this treatment now called C3BS-CQR-1 over the years. Now Cardio3 has been given the green light to follow up its Phase II trial that was conducted between 2009 and 2010 in Belgium, Serbia and Switzerland.

"Heart failure remains a significant unmet clinical need associated with high morbidity, mortality and escalating healthcare costs. We believe C3BS-CQR-1 has a potential to become an alternative to heart transplantation, which is the only curative treatment for heart failure available today," stated Dr Christian Homsy, CEO of Cardio3 BioSciences, in the company's recent announcement. "Our Phase III trial is the first to begin anywhere in the world for a regenerative therapy for this indication. We look forward to confirming the promising results we have already seen in our Phase II study."

The Phase III trial will take place in Belgium. The trial will recruit a minimum of 240 patients with chronic advanced symptomatic heart failure.