Philadelphia Business Journal | John George | September 14, 2012
The founders of ZSX Medical believe a successful medical-device company needs to “solve big problems in big surgeries.”
The surgical closure device, which uses biomaterials to repair damage, is being developed for use in women undergoing laparoscopic hysterectomies.
“One out of every three women will have a hysterectomy in their lifetime,” said Eric Rugert, who co-founded the company with Dan Mazzucco. “There are 600,000 (hysterectomies) performed each year in the United States.”
To fund the continued development of its Zip-Stitch device, ZSX expects to close its first round of venture capital funding — targeted at $1.5 million — by the end of this quarter. The company has a deal in place with a lead investor, based in Connecticut, that has committed to putting in half that amount. ZSX has raised $1 million in seed capital from its founders, angel investors and Ben Franklin Technology Partners of Southeastern Pennsylvania.
Rugert operates another King of Prussia company, Feta Med Inc., a perinatal products supplier to more than 300 hospitals.
“The genesis for ZSX was us asking OB/GYNs what their challenges were,” said Rugert, chief operations officer. “They kept talking about the damage inflicted by surgical closure in Caesarean sections.”
At the suggestion of several industry colleagues, Rugert recruited Mazzucco to serve as president and chief technical officer of the new company they formed to tackle the problem.
Mazzucco holds a doctorate degree in medical and mechanical engineering that he received through a program offered by Harvard Medical School and the Massachusetts Institute of Technology. He was previously at Aqumen Biopharmaceuticals, where he was director of regulatory affairs and project management at the Wilmington-based North American subsidiary of the Japanese ophthalmic biotechnology company.
As with many other surgeries, hysterectomies are being performed laparoscopically — meaning instead of marking a large incision, surgeons make a small opening and manipulate surgical instruments on long rods that are inserted through hollow tubes. A tiny video camera is inserted through the same small opening and doctors perform surgery looking at a monitor that displays the inside of the patient.
The minimally invasive laparoscopic procedures mean less pain, smaller scars and faster recovery times for patients.
The number of laparoscopic hysterectomies performed each year in this country continues to grow with more than 340,000 such procedures projected to be performed this year — up from less than 110,000 in 2004.
“Doctors are able to do a lot of great things through laparoscopic surgery,” Mazzucco said. “Closing [incisions done to and around organs] internally is the hard part. It’s where they need help.”
In hysterectomies, closing the vaginal cuff (which is created by the surgeon, at the top of the vagina, where the cervix used to be) is typically done with sutures. Mazzucco said the process is both costly and can lead to poor outcomes and costly readmissions if adhesions occur or the closed wound ruptures.
ZSX’s solution is the Zip-Stitch.
The Zip-Stitch-H is a patented device in the testing stage in which a laparoscopic applier is used to place a series of biodegradable clips to close the damage caused to tissue around the uterus during the surgical procedure.
While the company sought to develop the device for use in women undergoing C-sections, Mazzucco said, the company found securing regulatory approval would have required the company to test the device in women who were having their second child by C-section, after having also had their previous child also by C-section.
“We would have had to identify 300 women and then follow them for years because you don’t know when they are going to have their next child,” he said. “It would have been really expensive and time consuming.”
The company shifted its focus to hysterectomies — a surgical operation to remove all or part of a woman’s uterus typically to treat cancer, chronic pain or heavy bleeding — in early 2011.
Mazzucco said ZSX is operating as a virtual company, and is working with a half-dozen collaborators include three local life sciences companies. Definitive Design in Langhorne developed the prototypes for the clip and laparoscopic applier. Kensey Nash in Exton, a biomaterials and medical implant developer, is serving as the contract manufacturer for the clip components. Cargill BioEngineering in West Deptford, N.J., is providing analysis of product designs.
Mazzucco said the advantages of the device is it’s faster and easier than using sutures and the biodegradable clips are applied uniformly without piercing tissue. He said the device will save hospitals an estimated $2,000 per procedure.
“People we talk to say this is so simple and ask why it hasn’t this been around before now,” Rugert said. “The reason is the biomaterials we are making our structure out of haven’t existed before.”
The projected market for the device, five years after its launch, for just hysterectomies, is $320 million in the United States and $870 million worldwide.
Rugert and Mazzucco estimated the overall potential market for their Zip-Stitch surgical closure platform in the United States at more than $2.6 billion, which covers its potential use in 6.6 million procedures ranging from Caesarean deliveries to knee replacements and more than a dozen other surgeries performed laparoscopically.
Raising capital to develop experimental products like the Zip-Stitch continues to be a struggle for life sciences companies.
Last month, according to the PricewaterhouseCooper Moneytree report, venture capital funding for the sector totaled $1.4 billion in the second quarter — a 39 percent drop when compared to the same quarter last year and the fourth straight quarter investment in life sciences companies has dropped.
Another local medical-device startup, Intact Vascular Inc. of Wayne, completed a $15.5 million series A financing last week led by Quaker Partners of Philadelphia and HIG Bioventures in Miami.
Intact Vascular plans to use the proceeds from the stock sale to develop its Tack-It Endovascular Stapler System, a stapling device designed to improve results for patients undergoing angioplasty to treat peripheral artery disease.
Wes Kaupinen, a principal at Quaker, expects the deal will be one of the largest venture capital financings in the nation for a medical-device company this year.