UB Takes Equity In Company Developing Technology That Improves Orthopedic Surgery

BUFFALO, N.Y. -- The University at Buffalo has taken its largest-ever equity position in a start-up company commercializing technology developed by UB researchers.

The university has acquired an interest in MINRAD, Inc., of Orchard Park, which is commercializing the Dual Radiation Targeting System (DRTS).

Developed by Michael K. Landi, M.D., now a UB neurosurgery resident, and Robert M. Lifeso, M.D., UB clinical professor of orthopedic surgery, DRTS dramatically improves the results of orthopedic surgery, biopsies and other procedures, while significantly reducing X-ray exposure.

The subject of three health-care advisories issued in recent years by the Food and Drug Administration, this type of radiation exposure has been considered a significant problem for patients, as well as for their physicians, who may conduct several of these procedures each day.

The FDA accepted the DRTS in September, as did the agency's European counterpart.

"This was an opportunity for the university to invest in a strong start-up company, being led by an excellent entrepreneur with an exceptionally good technology in a promising market," said Daniel Massing, director of UB's Office of Technology Transfer.

MINRAD's founder and chief executive officer, William Burns, formerly was president and chief executive officer of Matrx Medical Inc., North America's largest manufacturer and distributor of emergency medical products, and was named Inc. Magazine's 1993 Entrepreneur of the Year in New York State.

Massing explained that in cases where UB has patent rights on a technology, the university traditionally receives an upfront licensing fee from the company commercializing the technology.

In this instance, in lieu of the licensing fee, the university will receive equity in MINRAD. The UB interest consists of founding shares and subsequent stock purchases equal to 4.7 percent of the fully diluted interest.

"The opportunity to take equity in a start-up company that is commercializing research developed in our own laboratories is consistent with a national trend by universities," said Massing.

Once the stock is sold, the return to the university of an equity position can be significant, he explained, often exceeding what would result from the license income generated by royalties. The university has equity positions in four other companies commercializing technologies developed by UB researchers.

According to Massing, UB's license and patents on DRTS were beneficial to the company as components of the prospectus document for raising funds.

The investment signifies an important commitment to a local company, he added, pointing out that both the company's manufacturing capability and its start-up funding are largely New York-based.

By next spring, MINRAD plans to gear up its production capacity to 400 systems per month.

The company recently signed a 10-year, $84 million contract with Atmos International for European distribution.

Landi, who received a bachelor's degree from UB in electrical and computer engineering and is now a resident in the Department of Neurosurgery in the UB School of Medicine and Biomedical Sciences, began developing the technology as a first-year medical student after learning at a medical conference about a major problem faced by orthopedic surgeons. Lifeso, his advisor, provided financial support for the project.

Landi explained that ordinarily, surgeons use continuous radiation to guide them during surgery to locate where in a fractured bone holes should be drillled for screws to connect the bone with metal rods used to stablize it.

Even then, he noted, it's only an approximation; surgeons traditionally have had no choice but to take a trial-and-error approach.

"That approach increases the exposure of both patient and surgeon to ionizing radiation and increases patient time under anesthesia," said Landi.

Unsuccessful attempts, he noted, weaken the structural integrity of the bone, increasing the risk of postoperative secondary fracture and the need for additional operations.

DRTS uses a laser beam to pinpoint the precise location in a bone where the holes for screws to anchor the metal rods should be drilled.

The surgeon uses the beam as a precise guide to pinpoint both the angle and point of entry.

The system also has been used successfully to precisely target tumors in the brain, and biopsies of the brain, lung and spine.

"Our system gives you highly accurate placement of the needle into deep anatomy without having to do it under continuous radiation," Landi explained.