AxioMed Spine Corp. wants to get rid of your back pain. And some VCs think it’s a great idea. Four Ohio-based firms invested $2.75 million into the company’s first round of venture capital financing. AxioMed, which also hails from Ohio, will use the funding to develop and start testing the spinal implants that could render spinal fusion surgery obsolete.
Charles Birchall and James Kuras founded AxioMed Spine in July 2001 with their own funds. Eight months later, they convinced angel investors to invest about $500,000. They then toured the United States to find firms to invest in their first round. Little did they know they would end up right where they started – in Ohio. The original plan called for a $3.3 million round, but after cutting and outsourcing, they reduced that figure to $2.25 million, says Birchall, who adds that the $2.75 million gives them a comfortable cushion.
Moreover, the startup expects to launch its Series B early next year. “Many firms have already showed interest in a share of the second round,” says Peter Kleinhenz, general partner at CID Equity Partners, the firm that led the deal.
The Series A deal also included participation from Early Stage Partners LP, Primus Venture Partners, and Reservoir Venture Partners. Three of the four firms will take board seats as a result of the round of financing.
Because of his prior experience with two firms in the same sector – ArthroCare Corp. and Sofamor Danek Group Inc.- Kleinhenz quickly saw AxioMed’s potential in March 2002. “AxioMed is the perfect combination of interesting technology and expert management. It’s like having a good jockey on a good horse,” Kleinhenz says.
The Cleveland Clinic Foundation also earned a slice of the equity pie for its involvement, says Christopher Coburn, director of Cleveland Clinic Innovations. Two of the Clinic’s surgeons, Edward Benzel and Isadore Lieberman, provide clinical input for the disks’ development. “It’s a competitive advantage to be associated with the Cleveland Clinic, and with those two fine physicians in particular,” Kleinhenz says.
AxioMed expects Food and Drug Administration approval of its artificial disk in 2006 or 2007 and commercialization in 2009.
AxioMed counts Spine Solutions Inc. and Link Spine Group Inc. among its competitors in the total disc replacement market. Birchall estimates these companies will be on the American market in late 2004 or early 2005. But because these companies build disks conceptually similar to knee and hip implants, these early arrivals do not worry him. “The spine doesn’t work like a hip or a knee. Our technology will replicate its complex movement better,” Birchall says. – A.D.