Intersect ENT Grabs $30M for Drug/Device Combo for the Sinuses
If you utter the phrase “drug/device combo” inside the life sciences industry, most people will think you’re talking about products for cardiovascular disease, diabetes, or maybe neurological disorders like Parkinson’s. Intersect ENT is hoping to find a niche of its own with combo products for the sinuses.
The Menlo Park, CA-based company is announcing today it has pulled in a $30 million venture financing to help it commercialize a couple existing products and further develop new ones for ear/nose/throat disorders—hence the ENT part of its name. The company, formerly known as Sinexus, has now pulled in four rounds of venture capital since 2006, totaling $90 million. Norwest Venture Partners led the round as a new investor, and all of Intersect ENT’s existing investors joined in, including Kleiner Perkins Caufield & Byers, U.S. Venture Partners, PTV Sciences, and medical device giant Medtronic (NYSE: MDT).
Intersect ENT won FDA clearance in August 2011 for its first product, which it calls Propel. This widget is a dissolvable polymer scaffold that’s designed to prop open clogged sinus passages after surgery, while slowly releasing a steroid drug called mometasone furoate that’s supposed to tamp down inflammation and help open the airways during recovery time after surgery. The product, along with a follow-on FDA-approved version for people with smaller airways called Propel Mini, is cleared for use in the roughly 500,000 patients who undergo nasal surgery each year.
Although only a small band of 200 or so early-adopting physicians regularly use it, and payers haven’t broadly embraced the $1,400 drug/device combo, Intersect ENT is mounting a marketing campaign based on clinical trials that say it can reduce the number of repeat surgeries, and the chronic usage of oral corticosteroid medications that cause long-term side effects. Armed with the extra cash, which CEO Lisa Earnhardtsays should be the company’s last venture financing, Intersect intends to develop an implantable drug/device that could eventually be used before surgery, which could appeal to a much greater segment of the roughly 30 million people in the U.S. who complain of chronic stuffy nose. Over time, it hopes to branch into other ear/nose/throat disorders like middle ear infections, sleep apnea, and hearing loss.
“One of the reasons we’re so excited is that this area is so ripe for disruption,” Earnhardt says. “There are big unmet needs in sleep apnea, sinusitis, and hearing loss. We’ve seen an uptick in venture investing and strategic corporate interest lately.”
Casper de Clercq, a partner at Norwest Venture Partners, said in a statement that his firm joined the Intersect ENT syndicate because, “we are impressed with Intersect ENT’s rapid pace of innovation and commercialization. The company has garnered an impressive body of clinical data as well as two FDA approvals in just over one year, and its latest product is already in clinical trials. We look forward to having a seat at the table during this exciting next stage of growth for the company.”
Many ear/nose/throat disorders are seen as nuisances to patients, rather than life-threatening situations, so Intersect ENT will have its work cut out getting people to pay a premium price. About 6,000 patients have been treated with the company’s Propel products—one for people with larger sinus cavities and another for smaller folks. That hasn’t generated a lot of revenue to the company just yet, but it has yielded some market insights that encourage the company to keep forging ahead with an expansion plan.
“What’s been most important isn’t the revenue but the reorders, and customer retention we’ve seen,” Earnhardt says. “So far the rates have been very high.”
The company has been growing fast to try to capture the opportunity it sees. Intersect ENT had about 30 employees before its FDA approval, and now has grown to about 100, Earnhardt says. With the new financing in hand, the company will probably grow to 150 people by year’s end, she says.
A big part of Intersect’s growth plan is based on a 100-patient clinical trial that recently began recruiting patients. This trial, to be followed by another 200-patient study, will ask patients to try a modified version of the company’s technology with potentially broader appeal. The newer device, which Intersect tentatively calls the “in-office” product, is one that doesn’t require surgery, and that a physician can insert during an office visit. Since these patients haven’t already had surgery to clear out a blocking piece of anatomy in the sinuses, this new product has to do more of the work to prop open the sinus, and is being designed with more radial strength, Earnhardt says. It will also release the steroid drug over a longer period of time, to keep the chronic inflammation tamped down.
At first, this product will be aimed at patients who have already had a sinus surgery, but have had a recurrence of their symptoms and are considering a repeat procedure. That group adds up to about 2 million people in the U.S., Earnhardt says.
Intersect ENT isn’t the only company developing new approaches for treating sinus disorders. Menlo Park, CA-based Acclarent, which developed what it calls a “balloon sinuplasty” device, was acquired by Johnson & Johnson’s Ethicon division for $785 million in January 2010. Other companies are developing different devices for sinus disorders, but Intersect ENT believes it is differentiated by its belief that devices can’t treat chronic inflammatory disorders alone. “You need to treat the underlying cause of disease, the inflammation, as well,” Earnhardt says.