Bioscience & Health IT Division Winner

OrthoCor Medical
Bioscience & Health IT Division Winner

Every year, nearly 20 million U.S. citizens visit their doctor complaining of knee pain. Many try treatments ranging from medication to physical therapy in an attempt to avoid invasive knee surgery. Recently, doctors have been suggesting a new option: an OrthoCor Medical-made brace that eases knee pain with pulsed electromagnetic field therapy.

Founded in 2007, OrthoCor has made it to the finish line in its mission to win over patients, doctors, the U.S. Food and Drug Administration (FDA), investors, and insurers with its brace. Since late summer, sales reps have been pounding the pavement across the country, which is thrilling to co-founder, President, and CEO John Dinusson.

“Commercialization is always a challenge, and we’re introducing an old technology for wound care to a new market for pain and arthritis,” says Dinusson. “But . . . we’re selling all over the country.”

The company’s first product is its Active Knee System, which wraps around the knee and provides two hours of heat and radio-frequency pulse therapy. The pulse therapy sends a non-heating energy into the body on the cellular level, which increases blood flow and, in turn, reduces swelling and inflammation associated with knee pain by speeding up the body’s natural healing processes. The pulse therapy comes from a rechargeable microchip while two disposable pods emit the heat. Customers can use the brace even when they are mobile or physically active.

The brace is prescribed by orthopedic surgeons and other doctors in an effort to help patients avoid cortisone injections, pain medication, and costly and invasive knee surgeries. Studies are showing that it works. The Orthopaedic Research Society found in a 2010 study that people using the Active Knee System experienced a 45 percent reduction in osteoarthritis pain, while the Plastic and Reconstructive Surgery journal reported a 55 percent reduction in post-operative pain.

OrthoCor is operating in a huge market, as more than 50 million people in the United States have arthritis. But the company plans to expand the use of its system to treat other areas of the body as well, including the neck, lower back, ankle, and elbow. “The market is huge, and there is no product quite like ours,” says Dinusson. “There is no reason this can’t be a $250 [million] to $500 million product. We’re expecting a banner year for 2013,” when sales will climb into the millions.

It hasn’t been an easy road. Dinusson, who worked for years in venture capital and investment banking, wanted to commercialize an innovative product from the ground up. He found a partner in Kin-Joe Sham, a Massachusetts Institute of Technology-educated electrical engineer with deep experience in medical devices, who developed the core technology. Together, they incubated the company at University Enterprise Laboratories, a St. Paul-based office and lab complex for bioscience start-ups. To date, OrthoCor has raised $5 million from about 50 investors, almost all of whom are from Minnesota—and many of whom took advantage of the state’s angel investor tax credit.

Meanwhile, the company has had to navigate the U.S. Food and Drug Administration approval process. In 2009, the Active Knee System was approved as a Class III device, which requires a prescription. But OrthoCor faced another hurdle in convincing Medicare and Medicaid to cover the $695 device. It persevered by staying lean, having just grown to 10 employees at its Minneapolis headquarters.

Last year, OrthoCor secured that necessary reimbursement code from the Centers for Medicare and Medicaid Services; insurers Blue Cross and Blue Shield of Illinois and Blue Cross and Blue Shield of North Carolina both started paying for patients to use the knee brace in summer 2012.

While waiting for its reimbursement code, patients were paying $120 out of pocket for more heat pods when they ran out of their 15-piece starter set.

“We have been hearing the patients’ stories about how the device has helped their knees and joints so much they can be more active or they’ve lost weight,” Dinusson says. “That’s what really motivates us every day.”