FDA Regulation · Fundraising

Capital plan to clear FDA with medical device

Vinit Modi Co-Founder Campusly | Mobile Web & User Research Consultant | Strategic Leadership

April 17th, 2014

We have a patented medical device but our capital plan calls for $40K funding for clearing the FDA.

Do investors invest in companies that are pre-FDA in medical devices? 

Michael Barnathan

April 17th, 2014

Or market the device for a secondary application that doesn't classify it as a medical device, and use that to demonstrate market fit and bootstrap the medical application. 510(k) filings represent a regulatory risk, and you'll need to overcome that when you pitch to most angels or VCs.

Also, speaking generally, doctors are skeptical as all heck, and you'll want to make sure you get a lot of feedback from them before you think about marketing anything that needs their buy-in. Chances are you'll need to do a lot of peer-reviewed studies with multiple institutions before you'll be taken seriously by that group.

It's a really good idea to get people who are well versed in medical devices onboard, as this is honestly a very hard field to break into. Healthcare-focused accelerators (e.g. Rock Health) may be worth reaching out to - if they incubate you, they'll probably give you enough seed to get past the regulations, and even if they don't, they might have good intros to people who can help you through the process.

Dennis Franczak President and CEO, Fuseideas

April 17th, 2014

Eric Rogness Technical Product Manager

April 17th, 2014

Vinit, the short answer is YES. However, I only know that second hand. If you tell me a little more about what you are doing, I can introduce you directly to my friend, the CFO of Spartan Bioscience, who received funding pre-FDA, received approval, and are now in-market. I can be reached at eric@mobd.co.

Michael Barnathan

April 17th, 2014

Certain investors do, but not all.

Eric Rogness Technical Product Manager

April 17th, 2014

Perhaps a solution is to drum up initial sales in an unregulated (international) market to prove demand? Just speaking off the cuff.

Vinit Modi Co-Founder Campusly | Mobile Web & User Research Consultant | Strategic Leadership

April 17th, 2014

Thanks Eric. Will reach out over email.

The CEO of our company is a Respiratory Therapist  from Kaiser and we are looking to bring to market a patented (granted) inhaler/spacer to market. We have the design and first rev of the prototype. 

510(k) is what we want to go after. We already have ad-hoc feedback from several doctors about the device as well as some early interest from distribution partners.

We need the funding for 510(k) and ramping production. 

Candice Hughes, PhD, MBA

April 18th, 2014

To get FDA clearance you will need VC investors willing to invest very substantial amounts. I have not done a 510K, but full scale FDA clearance costs $1billion. The 510K being less, I would still expect you are going to need in the $100M range. But you should be able to research and network with other people who have succeeded with device approvals.

You may be able to obtain grant funding via NIH to begin work on the product.

This is not the type of company that can be self-funded so you need an extremely convincing story to get investors to buy-in without a marketable product, which is not easy.

Michael Barnathan

April 18th, 2014

510(k) filings don't cost $100m; it's closer to the $50k budget that was originally specified. The risk aversion of VCs does apply, though - which is why you'll need to find some that are experienced at making medical device investments and comfortable with the field's risks.

Candice Hughes, PhD, MBA

April 18th, 2014

I just noticed your comment about $40,000. I can't imagine that being close to enough to run clinical trials needed for approval. I've worked on regulatory submissions for over 10 years at major pharma and biotechs including overseeing regulatory documents for approximately 1,000 clinical trials including working first hand on several hundreds of trials and on submissions.

My suggestion is to begin talking to device industry people to get their input on costs.

Regulations are very strict and you need extensive documentation, investigators, clinical trial monitors, statisticians and numerous other staff.

Candice Hughes, PhD, MBA

April 18th, 2014

Here's an article that states the average 510K is $24M. http://www.mddionline.com/blog/devicetalk/how-much-does-510k-device-cost-about-24-million

It really depends on what other devices are already approved similar to yours because you can sort of piggyback on their work. That is what makes the 510K cheaper than a full scale approval.