Interface Biologics Inc (IBI) is a company from Toronto, Ontario, Canada that develops medtech and pharmaceutical materials. Their surface modification technology is called Endexo, which involves fluorine-based additives that migrate to a material’s surface during polymerization. This non-stick fluorination prevents platelets and bacteria from sticking, keeping the biomaterial clot-free and clean. The Endexo additive technology has significant advantages over competitive offerings, including heparin coatings. It’s easier to manufacture (no change in the manufacturing, low cost, wide compatibility) and easier to use (permanent surface modification, no impact on function).
Endexo is currently used in two products. The AngioDynamics BioFlo vascular access catheters and Arkis CerebroFlo ventricular drainage catheter are clinically approved and used in practice. Endexo has also been licensed to Fresenius Medical Care for their chronic and acute dialysis systems, which are being prepared for market development.
IBI’s first commercial product, the AngioDynamics’ BioFlo PICC, was FDA cleared in 2012 through the 510(k) pathway. The BioFlo PICC Catheters with Endexo have been shown clinically to reduce deep vein thrombosis by over 50% and infections by 90%.
The innovative material technology came out of the University of Toronto’s Institute of Biomaterials and Biomedical Engineering (IBBME) and the lab of Professor Paul Santerre in the 1990s.
To give you insight into this company, here is a timeline of the development:
1990s: IBI in utero, when Paul Santerre trained in hematology and polymer science.
1995: Patent for surface modifying molecules at University of Toronto.
2001: Interface biologics formed, with seed capital from Genesys Capital.
2002: IBI rated top 10 life science companies as selected by the Ottawa Life Sciences Council. 2004: IBI raised $12M with BDC, Covington, Vengrowth.
2005: IBI moved into MaRS – 10,000 sqft and 5 different labs.
2008: IBI ran out of cash; President/CEO is fired. Tom Reeves joined as new President/CEO.
2009: Commercial deal with Navilyst Medical.
2010: Commercial deal with Fresenius Medical.
2011: First products approved using Endexo by Health Canada.
2012: FDA clears AngioDynamics BioFlo “with Endexo”.
2015: Series B financing including DSM Venturing.
2019: $5 million annual revenue, 600,000 catheters placed, 19 patents.
We caught up with Tom Reeves, the CEO of Interface Biologics, to learn about the challenges of running an early stage biotech company. He told captivating details of the ups and downs of the Toronto business, bringing it back from the edge in 2008, and highlighted tips and tricks to maximize a biotech company’s chances for success.
Ben Ouyang, Medgadget: The BioFlo PICC is clearly better than the competition. Why isn’t it the gold standard?
Tom Reeves: There are a number of reasons. One is that it’s always difficult with a new technology to unseat the biggest player. With PICCs, the biggest player is Bard Medical (now owned by BD). They have 60-65% of the market share and are very good at protecting their business. The second and more important issue with PICCs is that AngioDynamics does not currently have a tip location navigation system which has become increasingly important because the majority of PICCs are now placed by nurses. They hope to address that in the next few quarters.
Medgadget: Why not partner up with Bard and BD?
Reeves: Actually, IBI originally did some work with Bard in 2007/2008. At that point, Bard wasn’t hungry for new technology because they already had dominant market share so we felt like they would just shelve the technology vs. actively try to get it on the market. We’ve had more recent discussions with BD about using Endexo in PIVC products, but now that they have merged with Bard it probably doesn’t make sense for them to have Endexo in only part of their product line.
Medgadget: If the navigation system is the main advantage of Bard over AngioDynamics, what about building your own navigation system?
Reeves: AngioDynamics is exploring that option but there are a lot of patents to negotiate around in order to build a new navigation system. So it’s not as easy as saying “just build your own”.
The thing is you don’t need the Bard PICC to work with the Bard tip location navigation system. You could use the Bard navigation system with the AngioDynamics PICC. but Bard doesn’t sell them separately. AngioDynamics has filed a lawsuit against Bard arguing that this practice is anti-competitive and that doctors and hospitals should be able to buy the Bard navigation systems and use them with other PICCs. That lawsuit is still in the courts.
Medgadget: How are the other BioFlo products doing?
Reeves: AngioDynamics BioFlo ports and dialysis catheters are doing really well – with double digit growth rates over the last few quarters. BioFlo midlines have also done very well. None of these products have the same navigation system constraints so there haven’t been the same barriers to growing market share. I also think that as more and more clinical data is collected on these different product lines it will help them to sell more effectively.
Medgadget: What’s been your goal with OEM (original equipment manufacturer) licensing?
Reeves: The ideal partner for an OEM licensing deal is to have the largest player in a specific field who is hungry for innovation. That’s what we have with Fresenius Medical Care and dialysis systems. If the largest player is not focused on innovation, then the next best option is to have a mid-tier player that is looking for new technologies to differentiate themselves and grow market share. AngioDynamics fits that profile.
Medgadget: Why did you choose to do OEM instead of making your own products?
Reeves: I think the OEM approach is more suited to our surface modification technology than making our own products. The differentiation we provide with our materials is important but there are a number of other features of a medical device which make it competitive. For us, the OEM model is also very capital efficient which is important for an early stage company. When we license our material to an OEM manufacturer, they pay for all of the pre-clinical, clinical, regulatory, operational and sales/marketing costs, which can be significant. We generate some initial income through milestone payments based on regulatory or commercial achievement, but our primary source of income is a percentage of sales on the products that use our material. So we are successful if our partners are successful – we are totally aligned.
Medgadget: IBI was near collapse in 2008. What made you join?
Reeves: There were a number of reasons. First, I really thought the technology had big potential. My early discussions with Professor Santerre and his technology vision were compelling. I also liked the fact that as a platform technology, there were multiple shots on goal which was a contrast to other companies I was considering. Second, I felt that the company was on the cusp of commercial opportunity which is the right stage for my skillset. Third, I really liked the team – including the three investors at the time – and I felt like I could work well with them.
Medgadget: How did you go from having one year to prove commercial value to “okay, we’re signing with Navilyst”?
Reeves: To be fair, there was a lot of legwork that was done before I joined and we thought there were 2-3 opportunities to sign commercial deals. My main role was to focus our efforts on securing an agreement and fortunately we were able to close the Navilyst deal in that timeframe. We were also very conservative with cash, so that the 1 year financing lasted longer than a year.
Medgadget: Do you have advice on financing?
Reeves: Never run out of money! It sounds simple but once you’re out of money, you’ve got very few options. There is also a balance between raising too much or too little. While raising too much increases your dilution, I would always err on the side of raising more than you think you need. In early stage companies, you can’t always control all of the variables and programs inevitably take longer and cost more than you think they will. So having a financial cushion is vital.
Medgadget: If you had advice to give to graduate students and professors with a new technology, what would it be?
Reeves: First and foremost you have to make sure your technology works well and is both solving an unmet clinical need and someone is willing to pay for it. You can’t fall too much in love with your own story. We’ve had problems historically where we thought we had a great solution to a particular clinical problem but partners weren’t interested. In that situation you have to ask yourself – well, if nobody else is interested, then maybe we need to challenge our assumptions.
Second, you need to figure out how you’re going to fund your technology. Ideally in the initial stages you can finance through grants and other non-dilutive funding (friends and family) as much as possible before you have to bring in professional money. That way you’ll retain a greater ownership percentage for longer.
Third, if you’re not commercially minded, consider partnering with someone who has more commercial experience so that you can focus on the technology.
Finally, be patient. Developing and commercializing new technologies is by definition difficult and time-consuming. Be prepared for the ups and downs that are inherent in early stage companies and don’t be discouraged. If your technology is something that can make a difference then persevere and you will be successful.
Medgadget: What do you avoid when joining a company?
Reeves: As a professional manager hired to drive commercialization, I’d want to ensure that the scientific founder was supportive. If the founder is opposed to bringing in a new CEO, then you’re pushing the ball uphill.
I’d also want to make sure that the investors had a similar vision with respect to the amount of capital and time required to be successful. I wouldn’t want a situation where there were unrealistic investor expectations as then you’re doomed for failure.
Medgadget: Why biotech?
Reeves: I fell in love with the complexity and the learning opportunities. At IBI, we combine materials sciences (chemistry and chemical engineering) with device development, clinical evaluation, regulatory approvals, and reimbursement assessments in addition to the normal business issues of sales, marketing, operations, finance, etc. It’s intellectually stimulating and I feel like I learn something every day at work. I also like the fact that in our industry more than any other, if you are successful you really are helping people.
Medgadget: Why Toronto?
Reeves: I was running the English subsidiary of an international computer products distribution company in England in 1994 and was transferred to Toronto to take over the Canadian operation. I thought I’d be here for 2-3 years and then move on but that was almost 25 years ago!
I’m American and my wife is English so when we moved here it was kind of cool that Canada became our country together and we are now both dual citizens. This is a great place to raise kids and our three children all grew up calling Toronto home. I also like the incredible tapestry of cultures, religions and beliefs that is Canada in general and Toronto in particular. Everyone is welcome here and while everyone maintains a connection to their heritage, they are also very loyal Canadians. I guess that describes our family as well!
Link: Interface Biologics Inc…