Medical Devices: Reducing Medical Costs and Competing for Drug Dollars

​Of the sectors in which Domain invests, the value of medical devices is often the least recognized.  While drugs and diagnostics continue to be our focus, significant advances in the capabilities of medical devices are driving “curative” approaches, which make devices poised to actively compete in indications that are today treated with a prescription drug.

Domain believes that medical devices are entering a new era for the following reasons:

• New understandings of disease and improved technology are driving new device-based treatment approaches

• Convergence of technology from many disciplines is driving new approaches and business models

• More efficient regulatory pathways and now sizable markets outside the U.S. are enabling early commercialization and regulatory success

In addition, fundamentally lowering health care costs will have to come through finding curative approaches to chronic disease. From obesity, to diabetes, to hypertension, to emphysema, and to a host of other chronic ailments, we cannot break the upward trend in health care costs unless we develop real cures that take patients off regular and long periods of therapy and replace that therapy with a real and sustainable cure. Devices appear to be particularly well suited to the “curative” concept. 

Domain has invested in a number of exciting companies pioneering new device technologies. These include Fractyl Laboratories, which is advancing an innovative device-based procedure to treat type 2 diabetes, one of the most expensive diseases affecting the U.S. health care system. Recent research in physiology has highlighted the role of intestine hormones in contributing to insulin resistance. Earlier this year, Fractyl announced approval of a multicenter clinical trial designed to evaluate the safety and performance of its Revita™ DMR System, designed to alter the body’s ability to process sugar and improve glycemic control through modification of the intestinal lining.

Kona Medical is commercializing an ultrasound-based platform to address severe high blood pressure (hypertension). According to the CDC, total costs associated with high blood pressure in 2011 in the US were $46 billion in health care services, medications, and missed days of work. Furthermore, many of those affected do not respond to the drugs currently on the market, and recent research indicates that failure to respond is linked to hyperactivity of certain renal nerves. Kona’s device selectively and non-invasively destroys these nerves, and several clinical studies have achieved success in previously untreatable patients.

Although not a life-threatening condition, acne is an expensive one, with annual costs in medications and topicals exceeding $3 billion, according to the American Academy of Dermatology. Sebacia is pioneering a new technology to treat acne that harnesses the power of hair removal lasers, already in routine use by dermatologists, in combination with the proprietary Sebacia Gold Microparticles. Unlike prescriptions for oral medications with significant side effects or daily use of lotions, the Sebacia Treatment is intended to reduce acne with a few, simple treatments performed at a dermatologist’s office. This revolutionary technology has demonstrated efficacy in two published clinical studies in the Journal of Investigative Dermatology. A pivotal U.S. clinical trial is underway, and the Company is preparing for both European and U.S. commercial launches.

ROX Medical is developing a novel device for treatment of hypertension, the ROX coupler. Placed between an artery and vein in the upper thigh, the device is designed to allow a calibrated amount of blood to flow, thereby reducing peripheral vascular resistance and improving vascular compliance. The reversible procedure is performed in a cardiac or radiology catheterization lab, takes about one hour, and does not require sedation. Clinical trials of this promising, life and cost saving device are currently underway in the United States and Europe.

Big Ideas, Early Stage: The core of our focus remains on the big idea and investing in that idea early stage. Two areas remain ripe for new big ideas in devices. One, the continuing evolution of technology will enable new device-based approaches to treating and managing disease. Second, the basis of many chronic diseases is amenable to "curative" device approaches. These fundamentals are driving significantly better clinical outcomes and lowering costs.