Tim Moran hopes to put himself out of business.
The serial technology entrepreneur started the nonprofit PediaWorks to develop pediatric medical devices because the children’s market has been largely ignored (PDF) by big device makers, which see it as too small and unprofitable. PediaWorks’ model is to spin off for-profit companies that address specific voids in the pediatric device market. If all those voids are filled, there’d be no need for Moran’s group, and that’s what he’s aiming for.
Moran recently announced his group’s first spinoff — a joint venture called PediaCath with a Japanese device maker to produce pediatric cardiac catheters. Moran will serve as the venture’s CEO, but more device projects are in the offing.
Like many healthcare startups, PediaWorks was born from the entrepreneur’s personal experience. A father of four, Moran remembers hearing his prematurely born daughter scream in pain when the only available, excessively large airway mask was strapped to her head.
So far, PediaWorks has received some funding from nonprofits, but Moran admits that fundraising is likely to remain its largest challenge. If that’s the case, he appears the right man for the job, since he has plenty of fundraising experience, including helping two Cleveland Clinic spinoffs secure cash. He also worked in the administration of former Cleveland Mayor Jane Campbell, serving as the “tech czar” with the aim of helping develop technology companies in the region.
Moran spoke with MedCity News about how PediaCath came together, his plans for PediaWorks’ next spinoff, and why it’s so tough to find cash to develop pediatric medial devices.
MedCity News: What’s the back story on how PediaCath was formed? How did you connect with Medikit and convince it to put $500,000 into the venture?
Tim Moran: In speaking with a number of people in the industry, it was clear that creating catheters from scratch as a stand-alone organization wouldn’t be financially feasible. My focus then was to find catheters from another source that could be re-purposed for pediatric cardiac applications. During that process, a cardiologist I contacted mentioned that he’d heard of a company or companies in Japan making smaller catheters than available elsewhere. So I did a Google search and used Google Translate to translate a number of websites from Japanese into English.
I found that Medikit was selling small adult cardiac catheters that were approved for sale only in Japan, so I cold-called the company. Medikit’s interest in PediaCath is primarily humanitarian. But through this joint venture, it also is getting access to some of the top minds in interventional cardiology and gaining experience with the Food & Drug Administration approval process in the United States.
MedCity News: If big device companies like Medtronic Inc. (NYSE:MDT) don’t seem to think the pediatrics market is worth their time and effort, why do you think you can build a profitable pediatrics device business?
TM: This is a humanitarian initiative, so organizational sustainability is the primary financial goal. However, Medikit’s flexibility and sophistication do allow it to develop custom products more profitably than most other firms.
MedCity News: After PediaCath, what do you expect to be PediaWorks’ next venture?
TM: We are working on a new tool for brain surgery that will take a completely different approach to a standard procedure that hasn’t changed in 40 years. This new device will vastly diminish surgical time and minimize the brain trauma caused by the procedure. These benefits are especially important for children, because they’re very sensitive to anesthesia and brain trauma can have serious, lasting effects.
MedCity News: What’s the biggest obstacle you’re facing or have faced as you’ve gotten PediaWorks started?
TM: Getting sufficient funding is the major challenge. There are a few workable channels, but none are easy. One is the foundation route, and that’s difficult because many have seen their endowments fall in recent years as a result of the economy. Plus, most are regionally focused and shy away from medical-related projects. Another option is Small Business Innovation Research funding for individual spin-off companies. We also hope to form more corporate joint ventures like PediaCath. Traditional angel or venture capital investment isn’t even on our radar screen.
MedCity News: Do you foresee a day in which big device firms like Medtronic or Boston Scientific Corp. (NYSE:BSX) come out with their own lines of pediatric products?
TM: They do have some pediatric products, but there are considerable gaps in their portfolios. I’ve met with senior management at eight or nine of the top medical device firms and reminded them of this. Some were more receptive than others. Our mission is to see new products designed specifically for children reach the market, whether we develop them or someone else does. As long as they reach the market, we’re making progress. In fact, my ultimate goal is to dissolve PediaWorks because the large manufacturers have made it redundant.