Medical Device Link.

Originally Published MX November/December 2004

COVER STORY

Interview by Steve Halasey

No one likes to be caught trying to predict the future, but sometimes the signs are just too strong to resist. That's certainly the case for Proxima Therapeutics Inc. (Alpharetta, GA), a privately held medical device company that develops, manufactures, and distributes products for postsurgical radiation treatment of cancer.

In less than 10 years, Proxima has grown from one good idea and one full-time employee to a company with attractive products poised to change the standard of care in two surgical fields. The company's two current products are already considered technological and clinical leaders. The GliaSite radiation therapy system is designed to treat newly diagnosed, metastatic, and recurrent brain tumors by delivering radiation from within the cavity created by the surgical removal of the tumor. The MammoSite radiation therapy system delivers partial-breast irradiation in conjunction with breast conservation therapy.

Proxima Therapeutics president and CEO Timothy J. Patrick on starting small and getting noticed.

Earlier this year, the Centers for Medicare and Medicaid Services (CMS) assigned new healthcare common procedure coding system (HCPCS) codes for placement of the MammoSite balloon catheter, making it easier for clinicians to receive reimbursement for the procedure. Most recently, the company has received FDA clearance for the next generation of its MammoSite device, which incorporates features to make the system easier to use and even less invasive.

With such successes in hand, it's no wonder that Proxima officials have high hopes for 2005—and beyond. In this excerpted interview with MX editor-in-chief Steve Halasey, Proxima president and CEO Timothy J. Patrick discusses the trajectory of Proxima Therapeutics from a one-employee start-up to a prepared market entrant that is poised to redefine its market.

MX: You were the first employee of the company, hired in 1996. Who hired you? Who actually owns the company and its intellectual property (IP)?

Timothy J. Patrick: That's a good question, because the start of Proxima was somewhat unique.

The idea came from a tripleboard-certified physician, Jeff Williams, MD, who at the time was at Johns Hopkins (Baltimore). Tragically, he has since died of a heart attack. Williams was the only physician in the world to have three board certifications—in neurosurgery, radiation oncology, and nuclear medicine. He submitted his patent application for a balloon radiation-delivery system privately in 1990, and that first patent was issued in 1995. In the interim, he tried to find partners in other companies to commercialize his idea. Ultimately, he was introduced to John Nehra, a successful medical device venture partner, and Chris Porter, PhD, a medical device development executive.

Where did Proxima's seed funding came from?

It came from Catalyst Ventures, and from a company in Minneapolis that has since been acquired a few times, called Wessels, Arnold & Henderson. Boston Scientific in-vested in us at the time, as did Chris Porter. All told, there was an $800,000 investment to get the company started before we ever had a CEO or an employee. It was really just based upon Williams's idea, with John Nehra and Chris Porter moving the idea forward.

What were your milestones on that first tranche of money?

All we had at the time was a working prototype of our first brain tumor device, a patent, and a business plan. I did not take any salary during my first year with the company, and I was the only employee from 1996 until early 1997.

Then, in 1997, we raised our first real venture round, which was led by Chuck Hadley of Rock Hill Ventures. At that time Rock Hill was known as Hillman Medical Ventures, and was funded by the Hillman family of Pittsburgh. By 1997 we had moved the prototype along, moved the business model along, and also moved along the most difficult part of the project to that point, which was the development of a proprietary isotope compound that would work within the brain tumor catheter.

One for the Road

Were you able, then, in 1997 to start taking this on the road? Even without a salary, you must have spent a lot of time on the road.

I did. I'm sure that the company was willing and certainly would have paid me a salary, even with only $800,000 in the bank. But it was important to me that the company get as far along as it could with that limited funding.

Our model was a little unique at the time. I was the only full-time employee when we got our next $4-million funding round. Though we did not have a management team in place, the investors were confident that I would be able to put one together.

Were you not only meeting with potential investors but also perhaps seeing clinicians in the field to get their testimony that the idea was good, so that when you met with the investors you could cite the support of those clinicians?

Those were the two major balls being juggled: spending time with physicians, validating that they thought the concept was interesting and would have some utility, and trying to get people to agree to be involved in preclinical studies.

In addition, the company had started with a focus on being a brain tumor company, but one of the early investors, Chuck Hadley, indicated that the Hillman fund was really interested in investing only if we could find a breast cancer company that would validate our concept for use in breast cancer as well. So, in addition to working with the clinicians and with the other venture capital sources, I was also spending time in the breast cancer world trying to get another company—Biopsys Medical, which was subsequently acquired by Johnson & Johnson—to validate the idea and agree to contribute some funding in that Series B round. Only in that way was Chuck going to be comfortable that we had an idea that could potentially be two products in development, not just one.

How much has Proxima raised in venture capital at this point?

About $50 million.

Toward FDA Clearance

One of the earliest company milestones presumably was getting your preclinical research done and then moving toward FDA approval of one of the products. How did you strategize that early decision of which product to advance and how quickly?

To say that we strategized it at the time would perhaps be giving me too much credit. I woke up every morning thinking that we had better make good progress or we will never get another round of funding. That really does focus you on getting to the next step.

Going back to 1997, there were many companies that had only a concept and maybe some preclinical data, and yet would then go public. Of course, most of those companies ended up failing. Instead, we focused on going through the steps that would be required to get to commercialization.

As you note, there was a period when a lot of money was coming into venture-funded firms. Were you ever tempted to take Proxima public and take advantage of that trend?

While it may have been tempting, we were not quite ready. We were never far enough along to take advantage of the bubble that was created by all of the dot-com enthusiasm and, if you will, the hype that replaced results and enabled some of the companies of that time to go public.

Today, I am very thankful that we were not at the point of going public, because it could have hurt the company. It would have been premature. We would have been trying to manage public investors instead of manage the business. So, in retrospect, I think it was one of the best things that happened that the option was not available to us.

The GliaSite device was approved in 2001. Did using the Iotrex agent present particular complexities for your FDA filing? Was this cleared or approved? Is it a 510(k)?

The MammoSite radiation therapy system delivers partial-breast irradiation by means of a balloon catheter.

Both of our products were 510(k)s with clinical studies. The GliaSite and MammoSite products both required a clinical study prior to a clearance of the 510(k). Having a proprietary liquid isotope that was placed into the GliaSite balloon catheter required a lot of work in order to convince FDA that in fact we had a system that was safe.

For this, we worked with a couple of individuals and firms in particular. For the dosimetry studies we worked with Jeff Williamson, who was at the Mallinckrodt Institute in St. Louis. Prior to the GliaSite no one had ever studied exactly how that dose would be deposited into the tissue, which was absolutely required before we could treat any patients with this system. So Jeff did some wonderful work, spending several years starting in 1996 to get it completed and published in peer-reviewed journal articles.

Concurrently, Jim Simon's group at Dow Chemical in Texas was doing the isotope chemistry for us. We had to prove that the liquid radioisotope would do no harm to the patient if it became available in the body. It required a lot of chemistry development to ensure that if the isotope ever became available, it would be very rapidly excreted through the renal system and would not be attracted to the thyroid, the bones, or other organs. That was the second critical piece of the development project on that isotope. Collectively, the dosimetry and the development of that liquid compound chemistry and testing added a great deal of complexity and expense to the project.

It sounds as though you were developing a fair amount of IP as you went through the process.

We absolutely were. Today, we have licensed patents that relate to the isotope compound and to additional items that were not part of the originally conceived idea. As we moved through the development process, new ideas came to us that were unique and proprietary. While these advances were a lot of work, they also resulted in a higher level of IP protection.

The MammoSite device was approved a year later, in May 2002, again a 510(k) with an IDE and some clinical work behind it. Did FDA raise special issues on that? It had the advantage of not having a completely new agent.

Proxima Therapeutics president and CEO Timothy J. Patrick poses with plaques representing patents for the company's GliaSite and MammoSite radiation therapy systems. (click to enlarge)

That's right, it used iridium-192 delivered from a computer-controlled high-dose-rate afterloader into the middle of the balloon. So we did not have to go through the same process on the isotope that we had with the brain tumor product. That was helpful. But in many ways, there is a very high sensitivity at FDA to breast cancer and breast cancer issues.

One of the issues we faced in breast cancer was that the disease prognosis was different than was the case with the brain tumor product. Unfortunately, for the vast majority of patients, a brain tumor is fatal within a year. It is a very difficult disease, and there is no product today that is curative. What we are trying to accomplish with a brain tumor product is to extend survival for as long as possible at the highest possible quality of life and mental function.

But the standard of care for breast cancer has been whole-breast external-beam radiation therapy, which works quite well. It has delivered a threefold reduction in local recurrences. The medical result was quite good with patients treated that way, and those patients lived a very long time following their surgery. Since a lot of patients tended to do pretty well with the standard care, FDA probably had a different level of sensitivity for the MammoSite, asking more questions and making sure that the agency fully understood the product before allowing it on the market.

Gathering Clinical Support

When you were doing clinical trials—premarket trials and certainly the postmarket trials and studies—the clinicians must have raised the question, "Is this better than what I am using now?"

Certainly, that has been a topic. It is the reason we have placed so much focus on postmarket studies and will continue to do so.

From a clinical perspective, the question is always how much follow-up is enough. Some physicians will consider it sufficient to make a clinical decision if you provide one year's worth of follow-up data. Some want to see two or three years and others want five. We have been in meetings where people have insisted that 15 years' worth of follow-up data be available before any change is made in the way a cancer patient is treated. The volume of data that various individual physicians are comfortable with when they are treating patients covers a fairly wide band.

So it would seem that, in terms of the choice of potential technology adopters, the nature of the trials, and the likely publications and presentations in which results would appear, you now have a long-term rollout strategy that has evolved considerably from the seat-of-the-pants stage.

One of the most important practices we have followed has been always getting the best person possible to do any particular work that we wanted to have done.

Looking back at the things that have influenced the trajectory of the company, I would say that that is one of the best fundamental decisions we have made—to find the best person to do the work and to take the time, and spend the money if required, to get those facilities and those people engaged in studies.

Our publication strategy as we move forward carries this further. Even if individuals are well regarded, they have to be willing to publish, to do it rapidly, and to believe that new information in the field of oncology should be disseminated and should continue to be followed. Those are important parts of our strategy.

We recently attended the American Society for Therapeutic Radiology and Oncology (ASTRO) meeting. A total of 10 abstracts were presented, two on GliaSite and eight on MammoSite. Many of those seeds were planted three or four years ago. The key was working with the right institutions, the right people, having the right focus, so those topics were studied and discussed at the podium.

Regarding long-term follow-up, how important is the strategy of your patient registry?

The MammoSite patient registry is being run by the American Society of Breast Surgeons (ASBS). That study has accrued more than 1600 patients who received treatment with MammoSite for their breast cancer. This patient registry is the largest study of partial-breast irradiation. The company has had to spend time, money, and a large amount of effort to work with a group like ASBS to try to accrue the patient data, which will be followed for a very long time—10 years or so. We understand how important it is to the clinical community to understand how MammoSite patients are doing over a long period of time.

The trajectory of the studies you are doing would seem to lead in the direction of a change in the standard of care. Will the MammoSite treatment be the gold standard for many conditions in many situations?

We are beginning to see that change in certain patient populations, for instance patients who have very small early-stage tumors and are perhaps a little bit older. Data suggest that those patients might well be overtreated with some of the current techniques. So we are certainly at the start of establishing a standard of care in this population.

Data from our original study show that 98% of the patients were happy with their treatment and indicated that they would recommend it to a family member or a friend. If you have equivalent outcomes, most patients are going to want to have the faster course of treatment if they can.

Reimbursement

The opinions of the clinical community, in this case the surgeons and the radiation oncologists, have a lot to do with what third-party payers decide to cover. Brachytherapy has been covered for a long time. Were you able to piggyback onto that existing coverage for the GliaSite product and initially for the MammoSite?

Yes for the GliaSite. The GliaSite essentially piggybacks off existing reimbursement codes for brachytherapy. The MammoSite, because it affects more patients, probably gets more attention from the Centers for Medicare and Medicaid Services (CMS). We received a new-technology pass-through code in April of this year that pays for the catheter for a hospital that uses it. Perhaps even more significant for our company, there will be two new current procedural technology (CPT) codes established on January 1, 2005, that will compensate the surgeon for placing that catheter into the lumpectomy cavity.

It sounds as though you have not really struggled with CMS as some companies in other fields have done.

Well, MammoSite has been on the market for about 2½ years now. In the first year or two, we did have to struggle with it. It just takes CMS a little time.

What about the effects of the coding on your efforts toward private-payer adoption? Has that moved forward more quickly than CMS, or is it following along behind CMS?

In most cases, it is following along. We are getting more and more private payers who are writing policies that pay for MammoSite. But CMS really sets the policy in effect, and some of the private payers lag behind to one degree or another. We continue to see private-payer adoption happening at a higher rate though, and when these new CPT codes hit on January 1, and as our clinical data continue to mature, we expect to continue to be successful with the private payers.

Future Strategies

Will the company turn profitable in 2004 as you once thought?

About mid-2004 we made an adjustment to our marketing team and ended up expanding our sales effort past where we thought we would end up this year. Again, we began to see that there were a lot of good things in sight in 2005. So we spent some additional money in two areas. One was marketing, and the other was additional funding for some of these ongoing clinical studies. We expect to be profitable in 2005.

As the technology is gaining greater acceptance, there is always the possibility that you might decide to take Proxima public. Is that something being considered now?

We have always tried to keep our options open. We raised our last round of venture funding in August of 2002. That was $14 million. Most of that money is still in the bank, and we have a very modest burn rate at this point. So we go into 2005 looking at a year where we do not have to raise additional funding and where we will turn cash flow positive. It has always been important for the company to keep our options open.

So you are really quite well set up to bring in a profit next year?

We are. We've been fortunate to have such supportive investors and have worked hard to build Proxima's value through the hard work of our expanding team. Although our technologies are becoming more widely known and used—MammoSite having treated more than 5000 women and GliaSite having treated more than 1000 brain cancer patients—we've never felt we can sit back and rest on our laurels. It's been a fun adventure, and we feel that the best is yet to come!

Photos courtesy PROXIMA THERAPEUTICS

Copyright ©2004 MX