Sensor maker comes to Roanoke

Friday, October 29, 2004

By Jeff Sturgeon
981-3251
The Roanoke Times

PhysioAdvantage plans to use Carilion Health System for product refinement and testing

A suburban Richmond technology company will build medical sensors in the Roanoke Valley.

PhysioAdvantage LLC broached the strategy Thursday at the Virginia's Technology Capital Access Forum at the Hotel Roanoke. A company official promised further details in January.

Based in Midlothian, with products selling since last spring, the company said it plans to use Carilion Health System for product refinement and testing. PhysioAdvantage will hire a Roanoke Valley manufacturer to build various items.

The Carilion Biomedical Institute in Roanoke, which courted PhysioAdvantage, sees the arrangement as a "triple opportunity" that creates manufacturing jobs and opportunities for investors while polishing the Roanoke Valley's reputation as a medical technology center, with Carilion as a major component, said chief executive Daniel Barchi.

PhysioAdvantage develops disposable, peel and stick sensors for monitoring body temperature, brain activity and blood-oxygen levels. It has a line of sleep-study sensors. For hygiene and other reasons, hospitals are moving from reusable sensors to disposable ones, said the company's president and chief executive, Steve Burton.

"Everybody who's a patient would like to know, 'Where was that sensor before me?'" Burton said in an interview.

Burton thinks patients will prefer a sensor pulled new from a just-opened package, and that's what PhysioAdvantage is making.

If PhysioAdvantage gets 5 percent of the world's disposable-sensor business, it will be a $50 million-plus company in five years, Burton said. According to company literature, it will post of loss of $300,000 on sales of $200,000 during its fourth quarter of fiscal 2004 and swing to a profit in fiscal 2006.

The Roanoke Valley initiatives mean "hundreds of thousands of dollars and new job opportunities in Roanoke," Burton said.

Burton declined to name the manufacturer, but said its initial fee will be $800,000. The manufacturer is already making tools, will begin shipping in January and will likely need five to eight more employees, Burton said.

Burton introduced himself Thursday to an audience of venture capitalists and others by telling of his first business success. "Twenty years ago, with a fistful of credits cards, I funded my first startup," he said.

Credit card bills rose to $70,000 at the company, which he did not name, but the venture fetched $2 million when sold, Burton said.

He said PhysioAdvantage is his fifth company. He said he is currently shopping for $5 million.

Burton said company leadership looked to the Roanoke Valley for assistance because Carilion Health System was interested in forming a strategic partnership.

"A lot of hospitals don't have an open-door policy on clinical product research," Burton said.

Carilion does, said Burton, who has been meeting with Carilion nurses who are using PhysioAdvantage sensors in the care of patients and describing how well they work.

"Carilion, we hope, will be one of our big customers," he told the audience.

Barchi cautioned that all products used on patients have been approved by the U.S. Food and Drug Administration and are being evaluated with an eye toward making them better. But Barchi said he has urged PhysioAdvantage to consider using Carilion to test products still in development, with the appropriate approvals.

Barchi said he met Burton about a year ago while lining up speakers for a panel discussion on medical devices. After hearing about the services of the Carilion Biomedical Institute, PhysioAdvantage struck its partnership deal with Carilion and a separate manufacturing agreement.

"They are part of a growing number of medical companies that recognize Roanoke and Carilion as leaders and are using CBI and Carilion as a test bed for testing and deploying cutting-edge medical technology," Barchi said.

The institute is a partnership between Carilion, Virginia Tech and the University of Virginia focused on research, technology commercialization and job creation through ventures that improve health care.