UPDATED: FDA Approval: Nevro Corp. $126M IPO with No FDA Approved Product: Case Study

UPDATED in the middle July 1, 2015 Nevro Appoints Lisa Earnhardt of Intersect ENT to its Board of Directors

UPDATED: May 11, 2015 below

November 10, 2014

Board Whores Edition I

Back pain device maker Nevro jumps after $126M IPO tops targets

Nevro, a startup waiting for approval of a device to treat back pain, had a strong debut on Wall Street Thursday after raising $126 million in an IPO that priced higher than expected.

Shares of the Menlo Park company led by CEO Michael DeMane rose nearly 40 percent on their first day on the NYSE, where they traded with the symbol of NVRO.

That’s a huge raise and risk for a product that’s not yet approved by the FDA. We saw earlier this year Johnson & Johnson’s Mentor abandon Purtox a product they told physicians would be available pending FDA approval since 2009 it never did get approved and they sold it off this year. But we also saw earlier this year that Johnson & Johnson’s Ethicon’s Gynecare  had a company paid physician consultant who also sat in the FDA panel that reviewed Johnson & Johnson Ethicon Gynecare products, oddly  those products have 36,000 cases in state federal court currently (70,000 all device makers).

Nevro Corp. Investors as of 11/6/2014

So maybe Nevro has some inside knowledge the rest of us don’t regarding the approval of their product.  VC’s usually want a quick return on investment so this will be an interesting case study to follow as Nevro’s product approval isn’t expected according to some in the industry until 2016.  Having worked many device startups I’d not recommend working for one that doesn’t have the FDA approval for at least one (if not their main) product.

UPDATED: May 8, 2015   Nevro Receives FDA Approval for Senza® Spinal Cord Stimulation System Delivering HF10™ Therapy PRNews

Nevro Corp. (NYSE: NVRO), a medical device company that is providing innovative evidence-based solutions for the treatment of chronic pain, today announced that it has received approval from the United States Food and Drug Administration (FDA) for its Senza spinal cord stimulation (SCS) system. Nevro also announced that it will now be releasing financial results for the first quarter of 2015 before market open on Monday, May 11, 2015. The Company will be hosting a conference call beginning at 8:30 a.m. Eastern Time to discuss both the FDA approval and first quarter operating results onMonday, May 11, 2015, in place of the conference call previously scheduled in the afternoon of the same day.

The Senza SCS system, which delivers Nevro’s proprietary HF10 therapy, is indicated as an aid in the management of chronic intractable pain of the trunk and/or limbs, including unilateral or bilateral pain associated with failed back surgery syndrome, intractable low back pain and leg pain.

FDA Med Device Approval means the company can legally sell the device

not the same as

CMS Approval Code is what’s necessary for hospitals/doctors to bill for the procedure

A Med Device startup is only successful if providers and facilities can get reimbursed 

Those unfamiliar with the industry the FDA approval means the company is legally able to start selling and promoting the device in the U.S markets; however, that does not mean the startup will immediately start generating revenue. It means that reps can start selling to doctors/hospitals and quickly try and get users as a means to satisfy investors.  Doctors/hospitals however will likely only use a product once they know they’ll be reimbursed for it via CMS code (or Medicare/Medicaid ) which is different than FDA approval; and, what $80 million startup Sonitus founder and CEO Amir Abolfathi arrogantly found out the hard way.

“We were a full-blown commercial company, and at the peak we had 85 employees and a commercial team of 25 people,” he says, with a lingering tone of disbelief. “In our first year of real commercialization we had $4.2 million in revenue and we were on track to do $8 [million] to $10 million this year, but we had to shut the company down.” Sonitus Medical’s founder and CEO, Amir Abolfathi, talked with MD+DI in mid-March describing the turn of events at the company he founded back in 2006 in San Mateo.

“There are really three pillars that I was taught when I started my career, and I thought that if you impact one of these pillars you are going to get rewarded—make the product cheaper, make the product safer, make the product more effective,” says Abolfathi in a phone interview. “We took a prevalent surgical treatment into the office where we reduced the cost by half and we significantly impact patient safety because there was no surgery involved and we made it more effective.”

It’s interesting to note that Sonitus’ VP of Sales and Marketing from 2011 until 2104 was  Patrick (Pat) Fabian who was was recently indicted on 18 counts for federal fraud when he was Johnson & Johnson’s (JNJ) Ethicon’s Acclarent’s VP of Sales and Marketing from, startup in 2007 through the JNJ acquisition in 2010 and beyond until 2011.

This is not necessarily an indictment of any wrongdoing though but risky! This is definitely one to watch along with the players as some may seem familiar:

Johnson & Johnson Development Corporation (JJDC) and New Enterprise Associates (NEA) are familiar names from Gods of Frauds: Board Whores Edition  or from Startup funding: NEA ExploraMed Acclarent Johnson& Johnson/JJDC Ethicon 

Nevro Corp. Board of Directors as of 11/6/2014

UPDATED: July 1, 2015

Nevro Corp. Board of Directors as of 7/1/2015

Peter T. Bisgaard a Partner at Novo Venture (the company is an investor in Nevro Corp) appears to have been replaced on the Board by Lisa Earnhardt of Intersect ENT.  Except according to PRNewswire 

In connection with Ms. Earnhardt’s appointment, Nathan B. Pliam, MD, PhD, Venture Partner at Bay City Capital, stepped off the Board of Directors at Nevro. “Nick has been an integral part of Nevro since its early days,” said Michael DeMane, Chairman and Chief Executive Officer. “We are thankful for his contributions as a veteran in the venture space and medical device investment leader.”

A lot of movement on a young Board.  March 2, 2015 Brad H. Vale PhD, DVM of Johnson & Johnson Development Corporation (apparently now Innovation)-Retired Head and took the place of Peter T. Bisgaard a Partner at Novo Venture & Nathan Pliam of Bay City Capital (two investors in the company) stepped off the board less than a year of the company going public.  Some will say that’s normal after the IPO and it can but-but it’s much more interesting who they added and why.

According to Who Got Funded John Nehra of NEA was also at one point on the Board of Directors of Nevro Corp., Neotract Inc., Moximed Inc. as well as a Director of the Incubator Exploarmed IV LLC and Exploramed Nc6 InC-not to be confused with Exploarmed, Exploramed II or Explormed III the incubator that gave rise to Acclarent, Neotract Inc., and Moximed Inc:

Confused yet? Tough to think that might not be by design, right? Remember the trigger for a case study for The Sociopathic Business Model™  is inconsistent & contradictory language to action and name changes to distance from possible unethical and or illegal activity.

It’s not uncommon to have a VC on the Board of a startup to watch over their investment; but, does it become a conflict of interest when one person is part of all three: the Incubator/the Startups/ and Venture Capital?  It’s been stated on this site before that the startup industry does not feel they are as regulated by the goverment (SEC, CMS, FDA, USDOJ) and are therefore willing to take greater risks at bending the law for personal gain.

We’ve also seen it with large regulated industries such as automotive GM and Toyota specifically that supports the startup industries assertion-it took the feds long enough to catch on in a regulated industry-how long will it take for them to catch on in an under-regulated industry?

GM CEO Mary Barra: 15 Employees Terminated: PR Spin Unspun | KILLING MY CAREER

Those who execute the unethical and illegal plans (employees) devised by executives at a company employing tactics from The Sociopathic Business Model™ are initially accomplices who always end up victims. The problem is that the worker bees (accomplices turned victims) take the fall for fraud while the executives are free to encourage, replicate and reward unethical and illegal behavior.

John Nehra

Nehra is no longer on the Nevro Corp. Board according to their website.

Nehra is back on the Neotract Board according to their website.

Nehra is still on the Moximed Inc. Board according to their website.

UPDATED: Neotract updated their Board of Directors (as of 11/7/2014) William M. (Bill) Facteau is back on with a cut and paste from his Earlense bio and another name that’s familiar is added back to the Board, John Nehra who was previously missing.

Wonder why all the changes in the Board?

RELEASED TODAY November 10, 2014:

Medical device company NeoTract gets a bureaucratic lift

When a device is given a code from CMS as  Neotract has it means they can now bill Medicare & Medicaid and the private insurance companies follow the CMS lead but at higher payment rates.  This is what makes or breaks a startup.  Unlike Nevro who is still awaiting FDA approval (but managed to raise $126 Million IPO), Neotract had FDA approval and now has CMS code approval.

The CMS decision is important for NeoTract, company President and CEODave Amerson said, because roughly seven of every 10 men with BPH are Medicare age. Therefore, he said, the decision allows those men greater access to UroLift. BiotechSF

Phew! Glad they were able to make sure all the “Gods” were back on the Board before the big announcement today.  And from USA Today 6/12/2006 from another William (Bill) Facteau company:

In 2006 he was just good old Bill Facteau and now he’s William M. Facteau. Is this a possible name change to distance from unethical and or illegal activity? 

But in the haste of cut and paste Mr. Facteau’s bio on the Neotract Board,  states redundantly that he’s on the Neotract Board, but so do all the other Board memebers sit on the Neotract Board but it’s missing from their bios on the Neotract Board website. Splitting hairs or splitting shells?