What’s Up at Innovative Spinal Technologies? Everything Seems Down
When nobody answers a company’s phones and its website turns into a big fat 404 error, it can’t be a good sign. That seems to be the situation at Innovative Spinal Technologies, a Mansfield, MA, medical device company that, according to our calculations, had raised some $63 million in venture and private equity funding to develop minimally invasive treatments for spinal problems.
Acting on a tip that the company may have closed down, we’ve been trying to raise someone at IST all afternoon, with no success. Calls to the company receptionist go unanswered; the voicemail inbox of a media relations staffer is full and no longer accepting new messages; and a message left in the personal voicemail inbox of IST CEO Scott Schorer had not been returned at the time of this writing. Nor have calls to some of the venture firms who invested in the company.
IST, founded in 2002, is a spinout of the Texas Back Institute, an academic spinal care center in Plano, TX. The company originally operated as a research consortium, with $6 million in initial funding from corporate partners such as GE, Orthofix, Orthovita, and Synthes. It relocated to the Boston area in 2005, the same year it raised a $39 million Series B funding round from Boston-based MPM Capital, New York-based OrbiMed Advisors, and JP Morgan.
In 2006, the company leased 38,000 square feet of laboratory and office space in the Cabot Business Park in Mansfield. And just four months ago, it topped off its venture coffers with an $18 million Series C round, according to VentureDeal. (The names of the Series C investors were not disclosed.) According to IST’s profile on the business networking site LinkedIn, it has (or had) somewhere between 51 and 200 employees.
The company markets a “dynamic fixation” device called Axient that’s designed to stabilize the spine in patients with spinal injuries or disease while still allowing some degree of motion. The devices use so-called pedicle screws that are inserted into individual spine segments, then connected to external rods. (IST received a United States patent for a system of lumbar pedicle screws and connecting rods in 2002 and for a way of locking these screws in place in 2004.) IST also sells (or sold) an instrumentation system called Paramount VBR (for vertebral body replacement) for delivering its implants into the spinal column.
The sailing for IST hasn’t been entirely smooth: the U.S. Food and Drug Administration warned the company in July 2007 that it was keeping inadequate records regarding pedicle screws intended for surgical implementation and that it wasn’t getting a grip on quality-control problems with suppliers. The company did, however, get FDA approval to market the Paramount VBR system in 2007.
Luke Evnin, a partner at MPM Capital who is on the board at IST, told the Boston Globe in 2005 that his firm saw devices for spinal surgery as an attractive investment opportunity. “Reimbursement rates in the U.S. have been really lucrative,” Evnin said then. “The demographics are great. And spine surgeons are really aggressive adopters of new technology. For all those reasons, this is a very exciting area to be an investor.”
But it’s unclear now whether MPM will recover any of its money. I’ve left messages with partners at MPM and fellow investor Orbimed Advisors and at the Texas Back Institute seeking information about IST’s fate. As of this writing, nobody has returned my calls.
Update, January 28, 2009: We’ve gathered more information about IST’s shutdown and have published an updated story here.