There might be a mutiny among radiation technicians at Swedish Medical Center if someone took away their Calypso machine. “Put it this way, you’d have some very unhappy people here,” says Timothy Mate, a radiation oncologist at the Seattle hospital who uses the system.
It’s been almost two years since Seattle-based Calypso Medical Technologies won FDA approval to start selling its product, billed as “GPS for the Body.” The system is designed to make sure that beams of radiation are aimed exclusively at cancerous prostate glands, without harming healthy tissue nearby. The machine is designed to monitor movement of the prostate in real-time, meaning if a patient burps or twitches on the table, technicians can see if the radiation beams are falling off track. If it’s hitting the bladder, the technicians know. That means they will likely turn off the machine or adjust the table, which could save the patient from impotence or having to wear adult diapers.
The machine has proven easy to use, fast, accurate, and reliable in the real world, Mate says. One patient wanted it so badly he drove more than an hour from Bellingham to Seattle, daily for 40 days, to get the confidence that his radiation therapy was being done properly. It has become the standard of care at Swedish. “Patients get the concept immediately. They have more confidence now that the beam is really on target,” says Mate, a member of Calypso’s scientific advisory board.
Calypso is privately held, and doesn’t disclose sales or net income, but it is showing some signs of getting legs as a business. The company has grown from 90 to about 200 employees since winning FDA approval in July 2006, says CEO Eric Meier. Some marquee U.S. hospitals—Cleveland Clinic, M.D. Anderson Cancer Center-Orlando, the University of Michigan, and Seattle Cancer Care Alliance—have agreed to plunk down $400,000 to $500,000 out of their capital budgets to purchase the Calypso machine, plus $1,200 per patient for implantable transponders. (Those transponders, about the size of a grain of rice, are embedded in the prostate to provide its precise location.)
Some more validation came last week. Meier, a former executive director at a unit of Johnson & Johnson, took home a regional Entrepreneur of the Year award from Ernst & Young in the life sciences category.
“This has been a huge undertaking on our part,” Meier says. “The people at Ernst & Young looked at our determination, how you overcome challenges, how you face adversity.”
The adversity part is obvious. If Calypso were to attempt to go public—and it hasn’t said it will—the risk statement would be lengthy. Medicare, the U.S. health insurer for the elderly, hasn’t yet assigned specific Calypso codes to reimburse hospitals for using the system. Some private insurers have agreed to pay for it, and Calypso is working to sign up more, Meier says. The company has won regulatory approval in Europe and Canada, although it hasn’t started marketing there yet, much less proven it can sell an expensive machine in even more cost-sensitive healthcare markets. The FDA could always stall the company’s future growth plans to move into breast and lung cancer patients.
Calypso’s investors will need to see even more progress to get much of a payoff. They have sunk more than $125 million into the company since it was founded in 1999 at Frazier Healthcare Ventures in Seattle. The company plans to raise more cash to finance its growth, which may or may not include an IPO that would give investors a chance to cash out, Meier says.
Next up for the company is introducing an upgraded version of its machine later this year, which will allow technicians to automatically adjust the table for patients if the beams go off track—saving them the trouble of re-aligning the patient by hand. More data from clinical trials will be presented at medical meetings in September to show that the system is working for prostate cancer and can be applied to other tumors.
“The goal here is really to make sure we can bring this technology to the majority of patients that get radiation treatment,” Meier says.
An estimated 100,000 prostate cancer patients in the U.S. get radiation therapy each year, so even capturing one-third of that would push Calypso’s sales into the hundreds of millions for transponders alone. If they get to that point, you can bet the sales will be a matter of public record.
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