Seven years into its campaign to reach profitability, Providence-based medical devices firm Afferent Corp. has revamped its strategy for taking its technology to treat nerve dysfunctions to market.
David M. Hable, Afferent’s new president and CEO, said the board of directors of the nine-employee company met this month and approved a plan to focus resources on developing stroke rehabilitation products.
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Before the board’s decision, the company had generally given equal attention and resources to developing devices to treat three medical conditions: nerve damage in diabetics; balance problems among the elderly; and neurological dysfunction in stroke victims.
Then Afferent hired a consultant to study the market for devices to treat stroke victims, and the encouraging results were reported to the board this month. “We’ve validated the opportunity and put a revised plan around it with achievable milestones,” Hable said.
The study, conducted this summer by New York-based market research firm Easton Associates, found that 460,000 Americans per year would be “likely” users of Afferent’s noninvasive stroke rehabilitation device. And the potential U.S. market for the product would be about $1.8 billion, according to Hable.
The American Stroke Association reports that 700,000 people per year suffer stokes in the United States, which is home to more than 5.5 million stroke survivors.
Afferent’s primary candidate pool for its device – which aims to stimulate damaged areas of the brain, to improve motor function – would be recent stroke victims, who are more likely to have access to new treatments, Hable said.
The company completed its first animal pilot tests of the technology in December 2005.
Now, the CEO said, the board has set a goal of completing one animal and three human pilot tests of Afferent’s stroke rehabilitation technology by April. Also by the April deadline, Afferent plans to have a working prototype of a device that would attach to a garment on a patient’s arm.
Then, Hable said, the company wants to embark on the clinical trials needed to secure approvals from the U.S. Food and Drug Administration.
He said Afferent is aiming to secure the FDA approvals by the fourth quarter of 2008, which would enable the company to bring its new device to market in early 2009.
(The company also has proposed delivering its technology with a pacemaker-like implant, the CEO said, but the FDA’s more rigorous regulatory process for implanted devices would delay its time to market by another three years.)
Meanwhile, Hable wants to launch a series B round of financing, late this year, to raise $15 million to $20 million. (Afferent raised about $4 million in venture capital in a series A round, completed in October 2004, and has received several phase I and phase II grants totaling $2.5 million from the National Institutes of Health.)
Richard G. Horan, senior managing partner of the state-financed Slater Technology Fund, which has invested $325,000 in Afferent, also is a nonvoting observer on the company’s board. He said he supports the company’s revamped strategy of focusing on a noninvasive device to treat stroke victims.
“It’s a huge market opportunity in stroke rehab,” Horan said, mentioning the high number of U.S. stroke victims every year. “It’s a highly underserved market. … Very little therapy is provided or works.”
In terms of attracting series B investors, Horan noted that Afferent has shown promise in gaining phase II grants for all three of the medical conditions it aims to treat with its technology.
He also pointed out that the investment community recently has been supportive of other so-called neurotechnology companies, such as Foxboro, Mass.-based Cyberkinetics Neurotechnology Systems Inc.
Another plus for Afferent is that its proposed device to treat stroke victims is noninvasive, he said, whereas other companies in the sector are developing implants.
Take Northstar Neuroscience Inc. In June, the Seattle-based company finished a feasibility study for its implant to treat a stroke-related speech condition called Broca’s aphasia. Its therapy would involve surgery to put a small electrode on the patient’s brain, connected to a “pulse generator” that would be implanted under the collarbone.
“By comparison,” Horan said, “Afferent’s technology … has a very attractive safety profile.”
