Mayo Clinic Spin-off Sonex Health Lands 2nd City Loan, Eyes Expansion in Rochester
Mayo Clinic spin-off company Sonex Health LLC, which makes a medical device to improve the treatment of carpel tunnel syndrome, continues to attract startup financing, this time from the city of Rochester’s economic development fund.
Sonex landed a $150,000 loan convertible into equity from the fund in February after Rochester City Council members voted to approve the deal. It was the second such investment made by city leaders into Sonex. In 2015 they also chipped in $100,000 as part of the start-up’s seed financing round.
The city’s $5 million publicly-funded loan program was created six years ago as a way to assist companies showing promise for creating high-paying jobs in Rochester. It is administered by Rochester Area Economic Development Inc. (RAEDI), a local nonprofit business development agency.
Sonex was founded by Mayo Clinic physicians Dr. Darryl Barnes and Dr. Jay Smith and by chief financial officer Aaron Keenan. The company is attempting to commercialize the SX-One MicroKnife, described as an “ultra-low profile” surgical device that allows physicians to perform carpal tunnel release surgery through a single micro-incision using ultrasound guidance.
Carpal tunnel syndrome is a common condition that produces pain, numbness and tingling in the hand and arm, caused when one of the major nerves to the hand is squeezed or compressed as it travels through the wrist. It is frequently brought on by repetitive hand motions, such as working long hours on a keyboard.
Sonex began as a tenant in the Mayo Clinic Business Accelerator and in October “graduated” to its own space in the Kahler Hotel Building, according to documents submitted by RAEDI.
Last month Sonex was named as one of the first beneficiaries of the newly-established Southeast Minnesota Capital Fund, an angel investor network established by RAEDI and the Journey to Growth Partnership, a five-year economic development plan aimed at diversifying Rochester’s economic growth into the surrounding counties of southeastern Minnesota.
RAEDI said Sonex has so far raised a total of $3.3 million, which has been used to produce a final version of the SX-One MicroKnife and to secure marketing clearance from the U.S. Food and Drug Administration. The company thus far has sold 350 units (worth $300,000) under a “limited release” model in which a selected group of doctors have been identified and trained and are now using the device.
Sonex currently has five employees (four of them in Rochester). RAEDI reported company officials are looking into growing its Rochester operations; hiring key employees, including sales personnel; building a training center for physicians in the city; and developing additional uses for the Microknife.
The agency said Sonex has made “remarkable progress” since the initial 2015 investment, “from a prototype to a commercial product and the all the relevant government clearances to sell it.” It noted that CEO Darryl Barnes is currently on an entrepreneurial leave of absence from Mayo, while Jay Smith, its chief medical officer, has reduced his clinical work at Mayo to dedicate more time to the company.
In assessing Sonex Health’s commercial potential, RAEDI asserted that the MicroKnife device has the potential of expanding the number of carpel tunnel syndrome cases treatable by surgery from current annual levels of between 300,000 and 500,000 to 12 million, while at the same time boosting the number of professionals capable of performing such surgeries by four times.