Medical Device Development – Challenges of an SME

28th January 2019 (Last Updated December 3rd, 2018 16:29)

John Shillingford, Clinical Operations Director, Orsus Medical, describes the inherent challenges facing small- to mid-sized medical device companies

Medical Device Development – Challenges of an SME

The start of any adventure can often come from the most unexpected quarters. A chance meeting at a conference or even the departures lounge in an obscure international airport. My moment was a “call me when you get time” email from an old friend with whom I had worked extensively in the U.S. This entails the invitation to join a foundling medical device company with an innovative technology able to (potentially) blood glucose without taking a blood sample or indeed even breaking the skin with small needles. Potentially, a game-changing technology. Naturally, one can only say yes!

As you can imagine in the early stages of such a venture, problems emerge with these involving, money, people and place! All of these needs are to be solved with limited resources and minimal cash. Fortunately, where there is such innovation there is help from a number of quarters.

The Great Idea – Innovation

The U.K. government does have useful enterprise schemes. The Enterprise Investment Scheme (EIS) is a useful tool enabling small companies to raise 5 million GBP each year to a maximum of 12 million GBP in the company’s lifetime. The scheme rules must be closely followed but these enable the investors to acquire considerable tax reliefs, which therefore is a mitigating factor in a high-risk Investment.

The government, along with the National Health Service (NHS), are also offering awards for innovation that have potential to be able to change processes and innovate for the U.K. Health Service, as well as provide possible export potential to better aid the balance of export-import payments. An example is the SBRI Healthcare, which is an NHS England-funded program that provides funding to innovative companies to solve health care problems.

This team works collaboratively with companies to identify NHS needs as identified as important by NHS England and the 15 Academic Health Science Networks (AHSN). It aims to improve patient care, improve efficiency in the NHS, and support the U.K. economy by helping smaller companies grow.

Creating a Suitable Board Crucial to SMEs

The challenge of finding investors has not been as difficult in the U.K. in 2016 and 2017 with such investment schemes. Angel Investors are also available to support, but conditions around these investments as to share issues and placement of investors onto the company board can vary greatly from situation to situation. Additionally, European innovation awards and investments are also currently available. While the attraction of funds is enormously significant, the creation of a suitable board able to guide a small enterprise in a high-risk development program is of crucial importance.

There are however, changes in working demographics across the U.K. and Europe, which are playing to the SME’s advantage. Currently, an environment exists whereby very experienced individuals are reaching the magical retirement age, and after many years of business success, they discover they don’t fully want to retire. They have often developed and divested themselves of companies, held board positions in large international companies, worked closely with academia and country regulators, and all sit with a wealth of talent and real-world knowledge to be used!

The team I work with have done just that. We have a board member of a large international pharma company, an expert who has started and sold biotech companies, and to top it off, a special adviser to the FDA in medical device study design. Add to this the enthusiastic engineer who has developed the potential innovative technology and you have an unusual, focused and committed board who are willing to be both committed and involved in the development program. The board’s focus is very much on developing the technology while protecting the investor at all levels. The waste of the precious resource of investment money is unthinkable.

Financial Controls are Vital

Next, we needed the development team. In the case of Orsus, we needed development engineers with microwave specialties. These having been identified from the defense and communication industries, the further creation of the team required the addition of clinical development, quality management, data management and analysis team, as well as the standard business support staff.

It was considered from the very outset of the development program that all medical device iterations on the pathway need to be fully documented and in a state of “audit ready.” The cognizance of the new European regulations for medical devices is very much in focus and all work undertaken must comply with these new stringent requirements.

It must again be emphasized that all of this has needed and still needs to be undertaken on a minimalist, almost shoestring budget. Financial controls are vital. One issue surrounding SMEs is often the initiation of a company by an engineer can bring great enthusiasm but little business experience, which can flow onto endangering the business with no or little financial controls. Having had personal experience of this in a previous life whereby while enjoying the science, the “I ran out of money” bitter experience emphasizes the vital role of the ever watchful and ever correct CFO, keeping the business on course without over extending itself.

Avoiding the Onion Layers of Mid and Senior Management

The clinical development program has been and will continue to be a challenge. Budgets in the medical device world have historically been low and most large CROs have avoided these types of contracts and concentrated on the preferred provider relationships that they have developed with mid-sized and large pharmaceutical companies. There has been a service provided for the biotechnology sector, by some large CROs, but mainly the smaller service providers have looked after this sector. The medical device sector has always been regarded as the poor sector by these service providers. Quality has always been an issue and without doubt a small company with small budgets always realistically must face the possibility of poor service from much of the CRO industry.

My preference in these situations is to create a core team of project management with a flexible contract team for study implementation. Fortunately, over the years there is a growing force of contractors with vast experience who have left and gone either solo as contractors or formed themselves into small focused groups. Such people are largely self-employed, and thus have advantages regarding personal tax, flexibility in working hours and also that they live where they wish to live.

Generally, they are very experienced and “self-starters.” Having tapped into this workforce teams can be assembled who are GCP certified and are easily well project trained. Such a team can cost a fraction, maybe 40-50 percent of the costs of a large CRO. Simply put, with a structure like this, you are not paying for the onion layers of mid and senior management.

Patient Involvement Drives Prototype Design

Medical device development necessitates close patient involvement in the development of the prototypes. This patient-centric approach is now a buzzword in the pharma world. A cynic may say that big industry (both pharma and CRO) has largely ignored patient views over recent years in their search for clean data sets that are perfect for regulatory purposes. In our experience of device development, this patient involvement has been an important necessity that drives both prototype derivation and design.

However, here are some words of warning on such a team structure:

  1. Always engage a very experienced project director who is equally fully engaged in the project
  2. Always centralize data and analysis in one data company using smart technology that allows for a centralized monitoring approach using a risk-based monitoring system. Also, for multiple studies use the same data company, the last thing you want is data sitting in multiple different forms with different companies
  3. Always centralize your safety reporting for all studies with the same group. Consistency and correct reporting is, as you all know, vital!

The big hurdle will always be the big question, how much data is needed to attain the CE mark in Europe, or indeed the 510K or PMA in the U.S.? In past discussions with the BSI (the U.K. competent body for CE marking), they had offered a service review of the medical device clinic project plan to collect clinical efficiency and safety data, while indicating whether on completion of this work, a CE mark may be attained (assuming all results were consistent, etc.).

Unfortunately, with the new medical device guidelines coming into play, the Medicines and Healthcare products Regulatory Agency (MHRA) devices division have instructed the notified bodies not to offer this service. However, for complex device and drug-device issues, the MHRA can be approached for scientific advice. Bear in mind, the proviso is always, as ever, that scientific advice given by MHRA is not legally binding for any future application of the product discussed, either on the part of MHRA or the company.

The Industry is Coming of Age

As the pharmaceutical R&D industry move further towards personalized medicine using a patient-centric approach, the changes in the medical device industry are moving into the same realms. There is more regulation, more care of efficiency of the device, and there are improved methods of safety vigilance and reporting.

However, the conclusions can only be that the medical device industry is coming of age and as we move further into the 21st century it will grow in importance in a whole range of ways to benefit patient diagnosis and treatment. It is an industry with a great future.