Transforming treatment for osteoarthritis and other musculoskeletal conditions
Mike Daley is the CEO of OrthogenRx, a medical device company based in Doylestown, Pennsylvania. Since its incorporation in 2012, OrthogenRx has been working on developing and commercializing new treatments for musculoskeletal conditions such as osteoarthritis. In 2015, the FDA approved GenVisc® 850 (sodium hyaluronate), the company’s first product, which treats osteoarthritic knee pain.
EDWIN WARFIELD: Give us some background about the company.
MIKE DALEY: We were founded back in 2013. We’re a Pennsylvania C Corporation with the concept of identifying products outside of the US that had a history of clinical benefit and safety. The biggest hurdle into the US market has always been the regulatory hurdle. We specifically focused on a class of products in orthopedics that have the highest regulatory hurdle to overcome, which is Class III medical devices. We looked outside the US for opportunities. We identified one back in 2013, signed the agreement. We also then went to look for funding.
Back in 2013, it was just myself. Late in 2013, I had a partner, we got funding, and our first drawdown was in January of 2014, and our FDA filing was in April of 2014, which is like rocket speed when you consider that there was only two of us. Most of it was virtual outsourcing, and then we continued to negotiate with the FDA, we got an approvable letter, which meant that they had looked at all our applications and said that, “Yeah, this is fine.” The difference between “approvable” and “approved” is they had not conducted their final audit of our manufacturing site, which happens to be in Spain. Interestingly, when we got the approvable letter, you would be thinking we are all excited—and we were—and then they sent us a notice of “we’re coming for your audit.” We knew they were going to Spain where they manufactured it, and then there was a sentence at the end: “We’re scheduling the audit of your domestic facility.” I think it was in May of 2015. We were so excited that they finally made the audit scheduled for going to Spain; we never anticipated: What did they mean by domestic facility? We don’t manufacture anything, we don’t hold any inventory, we don’t label anything—what do you mean by domestic facility? And then it occurred to us that they wanted to look at the domestic facility for all our internal quality systems.
When we received that audit, our total space at the Biotech Center in Doylestown was about 80—not square feet, inches. We had a mailbox—that’s all that was there when we were a domestic facility—and they were scheduling the audit. And so after a night of severe drinking, we panicked and got the facility set up in the back of the Biotech Center, stuffed it with a filing cabinet, a desk, and a phone—made it look like we’re real—but then the Biotech Center has a great opportunity for startup companies where you can do this renting of a mailbox and get a physical presence, but it will also allows you access to meeting rooms.
So, we had the whole audit at the Biotech Center in Doylestown. The rest is history: We were approved, we got our own reimbursement code, we launched in 2016. From startup to commercial launch was something in the vicinity of 18–20 months and in December of 2016. We are cash flow positive—that’s kind of unheard of. We finished the year with a run rate of about $12.3 million. We initially launched with our contracted sales force, and then in December of 2016, we negotiated to bring the best of them internal, so now we have 22–23 employees, whereas two years ago it was just three of us. We’ve had exponential growth and we’re on target to do somewhere between $15–20 million this year.
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