Medical-device firm aims to relieve suffering
By Luke Timmerman
Seattle Times business reporter

Alan Levy, chief executive of Vertis Neuroscience, has steered the Seattle company through Food and Drug Administration approval of a device designed to relieve chronic back and neck pain.

Chronic lower-back pain plagues 20 million Americans, and many are willing to pay big bucks for surgery or pain relievers that often fail. It's the kind of market that makes medical-technology companies salivate, but few have developed a better treatment.

Scientists don't completely understand how the central-nervous system goes haywire, but Vertis Neuroscience, a private Seattle company, thinks it has found a way to deal with the problem.

It has created the first medical device of its kind cleared by the Food and Drug Administration for chronic pain in the upper and lower back and neck. The device is for people who don't appear to have injuries but still suffer.

The clinical verdict is still an early one, but tests show Vertis' method of electrical stimulation in deep tissues works for many people. In one trial sponsored by Vertis, 59 patients received treatment once a week for at least a month; three months later, 64 percent said their pain had decreased and they had slept better and had been able to do more.

Dr. Joanne Borg-Stein, a Harvard-affiliated physical medicine and rehabilitation specialist at Spaulding Rehabilitation Hospital in Massachusetts, said pain improvements, although measured subjectively by the patients, were huge.

She's treated about 20 patients, with varied results. One, with a major spinal problem, wasn't helped at all, but a sciatica sufferer scheduled for surgery was fine after a single treatment, Borg-Stein said.

"Patients are very happy with it," said Borg-Stein, who has no financial ties to the company. "Any relief they can get they're very appreciative of."

Vertis Chief Executive Alan Levy is out to prove his company's system works and is trying to persuade health insurers to pay for it.

Investors seem to like the odds. Vertis raised $37 million in one of the richest rounds of venture capital in Seattle in 2002.

Vertis Neuroscience

Status: Privately held
Founded: 1999
Headquarters: Seattle's Belltown neighborhood
Employees: 65

What it does: Sells a federally approved electrical-stimulation system for lower and upper back pain, plus neck pain. Developing a pacemakerlike electrical device for the brain to treat stroke.
Sales: Undisclosed.

Investment: Vertis raised $37 million in venture capital in April. Investors in the recent round included Johnson & Johnson Development, AEA Investors, Channel Medical Partners and New Medical Technologies.
Stated goal: Profitability in 2004.

Source: Vertis Neuroscience Levy won't reveal first-year sales figures but said Vertis' system has been used to treat more than 1,000 patients at about 100 hospitals since it was approved last January. The company wants to be profitable in 2004.

Levy has been in this spot before. He's an entrepreneur who most recently led Heartstream, the Seattle defibrillator company bought by Hewlett Packard for about $140 million in 1998.

After that deal, he pulled together several Heartstream veterans to hunt for new technologies, connected with high-profile neurosurgeons and electrical engineers, and founded Vertis in 1999.

"For us, a successful outcome is a good return for investors and continuing to make a difference for people who are suffering," Levy said.

Like most small medical-device companies, Levy said, Vertis will succeed if it can entice a big company to buy it and deliver its product to the masses.

The central dogma of the technology is that people with back injuries develop pain as a signal to the brain to be careful. Neuroscientists have learned many people continue to feel pain even as they heal; they believe cells can become overly sensitive and continue to send pain signals to the spinal cord.

Vertis' system, built on technology bought from the University of Texas, tries to interrupt the pain signals in cells. It uses an electrical-control box hooked to 10 electrodes on a patient's back. A hair-thin wire is inserted into the back to deliver a current for 30 minutes. Vertis believes the stimulation makes pain neurons less sensitive.

Jim Fitzsimmons, managing director of Scout Medical Technologies in Kirkland, said other young companies are focusing on ways to reconstruct the spine as an alternative to spinal fusion. Fitzsimmons, who has not invested in Vertis, said Levy's track record makes the company worth watching.

The Vertis business model is like that of razor-razor blade. The electrical controller sells for $5,000 and lasts for years. The kit of disposable electrodes costs $79. Doctors charge about $250 to $350 a treatment, Levy said.
Vertis is crunching numbers to try to show doctors and insurers the treatment makes financial sense. Levy said the typical patient gets six treatments, costing $1,500 to $1,800. A course of epidural injections costs about $5,000; surgery, $20,000 to $30,000.

Levy said doctors typically find out if the Vertis treatment is working after four treatments.

Levy also is touting another Vertis device, one that is like a pacemaker for the brain and is used to treat stroke victims.

The device has been shown in animals to stimulate new brain pathways to take over lost functions, such as having the ability to move a limb.

"We all have friends or relatives who have suffered a stroke, and it's terribly debilitating," Levy said. "We think we can return these people to function and change their lives dramatically. As a business opportunity it's enormous, and as a potential to change the world it's enormous."