Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
Biolyst Inc. was in its early stages when Upsize caught up with CEO Phil Walter in 2012.
Walter was optimistic about the company’s chances of making a real difference in people’s fights against peripheral neuropathy, a condition in which nerves that carry messages to and from the brain and spinal cord are damaged or diseased. The company had raised $2 million from angel investors and there was talk of having 200 franchisees providing locations for the company’s laser treatment within five years.
The company has changed course a bit. The future, Walter says, is in company-owned clinics, not franchising.
But Walter is no less optimistic that Biolyst’s Realief therapy, a cloud-based artificial intelligence system that titrates a laser therapy dosage for each individual patient at each treatment based on their presentation of symptoms, is on the brink of substantial growth.
Over the last seven years, the company has been focusing on two tracks. The first was proving the treatment actually works. The company has built up a massive database filled with information about all the patients who have received treatment, the specific nature of their situation, the parameters of their treatment and the results.
“We gather about 6,000 data points per patient through the initial course of care,” Walter says. “That gives us the largest patient registry in the world that we know of for peripheral neuropathy.”
It’s the only registry structured in such a way that it can be used for titrating photons for the treatment. That’s important, he says, because in order to properly dose phototherapy and get the parameters right you have to be able to go through the titration process.
“A one size fits all treatment is not consistent or particularly effective against peripheral neuropathy symptoms,” Walter says.
The second track was proving the treatment is commercially viable. Biolyst has seven clinics up and running. Each is a bit different. Some are run by medical doctors specializing in pain management. Others have chiropractors in charge and still others are dedicated clinics doing nothing but this therapy.
The company has received significant interest from a few companies in the health care industry and from health care officials in foreign countries looking to add this treatment to their systems.
“Through that process of testing the different clinic models over nine years,” Walter says, “we’ve determined what kind of clinic works best, what gives us the most effective, efficient outcomes for the patient, and what we can grow the easiest.”
The company is closing in on landing a $25 million Series B round of financing that would allow it to expand its base of company-owned specialty clinics. Walter says they’ll start with four centers in the first year and ramp up from there. Growth will pick up speed as the treatment gains provisional insurance coverage, likely by the end of year two, he says.
The funding partner or partners will also likely open some offshore clinics in joint ventures with Biolyst.
The company’s first clinical trial, which Walter says yielded significantly positive results, was conducted and published by the University of Minnesota’s oncology department. The funding will allow the company to complete additional clinical trials. Biolyst will then simultaneously begin opening company clinics and performing the clinical work necessary to achieve approval for its treatment of peripheral neuropathy from the U.S. Food and Drug Administration.
The device has 510(k) clearance from the FDA, which demonstrates that the device it’s marketing is at least safe and effective as a legally marketed device that is not subject to premarket approval.
But Biolyst wants to achieve official FDA approval because “we determined early on we were going to be an evidence-driven company,” he says. “We weren’t going to fall into the trap of a lot of new medical modalities” that go to market without any scientific proof of their efficacy or safety.
Walter says the last seven years have been hugely educational. First, be stingy with your money. “Otherwise you’re going to run out of it too soon,” he says. “You can’t chase down a whole lot of rabbit holes. You have to stay focused.”
He adds that you can’t assume you know everything upfront. Your business plan may have been a good place to start, but that it’s almost definitely going to change along the journey.
“If you are in a new market where it’s all new territory there are a whole lot of lessons that are going to surprise you,” Walter says. “You have to be flexible with your business plans and be able to adjust quickly.”
For instance, Biolyst initially planned to franchise. But the company learned it was costly to be a franchisor and that, with annual filings, audits and rules in some states preventing franchising medical businesses, it was also complex and time consuming.
Additionally, when the company fine-tuned its software to the point where it required physicians to follow a strict data collection protocol before its laser would even power up, Walter says the discipline sought via a franchise system was no longer necessary.
“If they try to run the laser without doing any kind of titration it isn’t going to work,” he says. “The laser is a paper weight unless they gather the information the algorithms need.”
So, after years of testing, tweaking and collecting statistically validated data, Biolyst is “essentially at the starting line,” Walter says. “We’re waiting for the gun to go off. We’ve got a lot of interest by the medical community and others following us and watching what we are doing.”
Contact: Phil Walter is CEO of Biolyst Inc., which does business as Realief Neuropathy Centers: 952.484.1983; p.******@************rs.com; www.realiefcenters.com.
