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Smart Start-Up
GraftWorx Sets Stage for Local Med-Tech Entrepreneurs

April 2015
GraftWorx founders David Kuraguntla, left, and Robert Rusenberg (not pictured founder Samit Gupta).

GraftWorx founders David Kuraguntla, left, and Robert Rusenberg (not pictured founder Samit Gupta).

David Kuraguntla talks about his start-up company’s idea germinating literally “from a drawing on a napkin.” That was in late 2012, and in the past three years, Kuraguntla and his partners, Robert Rushenberg and Samit Gupta, have developed the idea and the company known in the medical device market as GraftWorx.

The company’s innovative product marries “smart” technology with the life-saving medical treatment of a peripheral bypass graft or stent. “The product is the first foray into the internet of the body,” Kuraguntla says. The implantable device has a sensor that will provide data for clinicians about when the graft or stent may need to be replaced. “We’ve solved the sampling error problem by finding a way to transmit data from inside the body and sending it out to the smartphone,” Kuraguntla says.

The GraftWorx device uses proprietary technology to measure the occlusion level in the graft or stent, and then sends the data to a smartphone or data box. If the level is too high, a warning is sent to the clinician, who can then bring the patient in for an examination. “The application can prevent a bad outcome,” Kuraguntla explains. “It takes the burden off the care givers and allows them to understand what’s happening in the stent.”

Currently, Kuraguntla notes, patients with vascular grafts get a screening, called a duplex ultrasound, two to three times each year after the graft is implanted. If the doctor sees something concerning, he or she can perform an angioplasty. But in reality, because of the timing of these tests, 40 percent of patients will have a graft that fails between screening examinations, requiring a more complicated and severe operation like an amputation or a graft replacement. “Timing is critical,” Kuraguntla says. “The doctor has to know when to perform the procedure based on the screening.”

With the GraftWorx device, the doctor has access to data that can pinpoint the appropriate timing and change outcomes for the better. “We felt that there had to be a better way to define when a procedure is done,” Kuraguntla explains. “The device will help streamline the lives of both doctors and patients.”

In addition, the intervention procedure would more likely be an outpatient angioplasty, which is the best for the patient’s health and much less costly than other procedures – $2,500 vs. $14,000 for graft replacement and $40,000 for amputation. GraftWorx estimates its technology will save the U.S. health care system $1.6 billion each year after costs.

As his idea evolved, so did his career goals, Kuraguntla says. After receiving his bachelor’s degree from Grove City College, and attending the West Virginia School of Osteopathic Medicine, Kuraguntla had planned to be a vascular surgeon. When he and his partners decided the GraftWorx concept was viable, he changed his direction. “The opportunity for a potentially huge impact on the medical field was only going to cost me a year or two, and the benefits far outweighed the risks,” he explains about his decision to focus on the medical technology side.

He joined forces with Rushenberg and Gupta, two other strong market influencers who had been the start-up team behind O2 Insights, a wound care medical device company. The entrepreneurs successfully sold O2 Insights to the third-largest wound care company in the world. “They had a great network, and they had the experience of the start-up process,” Kuraguntla says.

Rushenberg is the strategist of the GraftWorx team and an engineer who worked at the Department of Defense for five years prior to becoming a high-tech entrepreneur. Gupta, the relationship builder on the team, received his computer science degree from the University of Maryland and his Ph.D. in biomedical engineering from Ohio State University. “No one is a silo. We see everyone’s point of view and we all learn from each other,” Kuraguntla explains. He also admits, “We are young for a medical device start-up business. Usually people are in their late 40s or early 50s.” The GraftWorx team members are all under 35. GraftWorx opted for experience on their advisory board, which includes Dr. Richard Neville, chief of vascular surgery at George Washington University, and Dr. David Whittaker, a vascular surgeon in Bethesda and a venture consultant with Elm Street Ventures.

The team has had no trouble moving the company forward. They have developed the necessary pieces of intellectual property, a business plan and a regulatory pathway in order to secure funding. GraftWorx will begin actively testing in animals within the next two months and humans later this year. It normally takes five to 10 years to get to the point of testing an implantable medical device on humans, Kuraguntla says, but GraftWorx could potentially have its product on the market within another two years. “We are on the cusp of smart medical devices and by luck and good fortune, we’ve come up with something that puts together the technology and the medical parts. There is pressure to get it to market,” he notes. That market, including graft and peripheral stents, is approximately $3 billion worldwide.

Kuraguntla explains that GraftWorx was initially a self-funded start-up. While he could have pursued investors and venture capitalists in technology-oriented areas like Silicon Valley, he chose Bel Air for several reasons. Not only is it his hometown, but it is also in close proximity to good hospitals and the National Institutes of Health. In addition, Maryland is one of the top states in the nation for entrepreneurism, and Kuraguntla says the focus is even greater on early stage start-ups. “Maryland has great resources. They need to find smart entrepreneurs who will be able to give back. There is no stigma to being a start-up in Maryland.”

GraftWorx has found the necessary talent throughout the state, as well. The team includes experts in regulatory issues, legal, R&D, chip design and app developers, to name a few. He credits frequent technology breakfasts with helping to find the right resources. “The ecosystem for start-ups has changed, and we were able to find people who could help us in the marketplace,” Kuraguntla says. “We felt Bel Air had a lot to offer,” he says.

Office of Economic Development Director Karen Holt points out that start-up companies like GraftWorx are successful in Harford County partly because of location and also because of the ability to leverage local resources. “Not only do we have some world-renowned medical facilities and universities within the Baltimore region, but our proximity to Pharma along the I-95 corridor and having the headquarters of U.S. Army Public Health Command at Aberdeen Proving Ground offers Harford County start-ups expanding opportunities in medical technologies,” she says.

In addition, Holt says the county makes it a point to create an entrepreneur-friendly environment. “We give entrepreneurs the ability to leverage local resources through personalized service,” Holt says. “We also provide access to these resources right in the entrepreneurs’ backyard, where traditionally, they may have migrated to more urban centers to meet their needs.” (Continued on page 42)

From the Harford Business Incubation Center (HBIC) now located in Havre de Grace, where technology start-ups can blossom, and GroundFloor, a collaborative workspace for start-ups and entrepreneurs, to a variety of funding resources, the county welcomes and supports these fledgling companies. Holt explains that like other successful high-tech communities, Harford County’s success in building a similar community will center on the collaboration of government, industry and higher education. “We need the full spectrum of participation to ensure success in moving forward technologically. With all of these entities working together, we can attract and retain the entrepreneurial culture that seeks these aspects in their work-live-play environment,” Holt says.

Holt also notes that start-up companies can seek funding from a variety of resources including the Maryland Technology Development Corporation’s (TEDCO) Technology Commercialization Fund, the Rural Business Innovation Initiative (RBI2) supporting tech-based start-ups in rural communities with mentoring and targeted projects, the VOLT Fund and START UP MARYLAND. Holt says that GraftWorx was able to fully utilize the opportunities, receiving the Army Research Laboratory (ARL) Incubator Award, the Epidarex Capital Investor Pitch Award and a BioHealth Innovation Commercial Relevance Program Award.

“This is a smart medical technology that originated in Maryland and, on behalf of a unified statewide economic development endeavor, we envision it stays in Maryland,” Holt says.

Kuraguntla recalls when GraftWorx received its first funding, a TEDCO grant. “It was like an injection of confidence for us,” Kuraguntla recalls. The company also received $200,000 from BioMD to help complete animal testing.

He admits, though, that the heated debate over the medical device tax and Medicare reimbursement can have far-reaching implications and can change the market landscape for start-up companies. The 2.3 percent medical device sales tax is paid by the manufacturers or importers of the devices. Tax advocates say it would raise $29 billion over the next 10 years, ensuring that health reform would not increase the deficit. Opponents of the tax counter that it has caused job loss and reduced spending on research by the manufacturers. If not repealed, they say the tax will stifle innovation and affect the funding for new research. In fact, in a survey taken by AdvaMed, the Advanced Medical Technology Association, more than half of the respondents said they had reduced their R&D activities because of the tax. Others had deferred or cancelled capital investments and/or plans to open new facilities, reduced investments in start-up companies and reduced increases in employee compensation. The survey revealed that 85 percent of respondents would reinstate cancelled R&D projects, and 71 percent would reinstate long-term plans that included job growth if the tax was repealed.

Amidst all of the challenges, the GraftWorx team forges ahead. Kuraguntla continues to put in an estimated 70 hours per week on his brainchild, saying, “The project is like your baby – you think about it every waking hour.”

When he’s not physically working, he enjoys watching Liverpool soccer and hiking in national parks, which he says gives him time to think about all the things he can create. “When you’re a self-funded start-up, you have to do free things for hobbies,” he quips.

Already, he and the GraftWorx team are formulating the next new idea. “It’s in the back of our heads, and we’re just trying to figure out how to make it a reality.” I95