Orthopedic conference draws small firms, big money

The Commercial Appeal
October 11, 2007
By Daniel Connolly

During the Musculoskeletal New Ventures Conference being held in Memphis this week, Gary Stevenson indicated some names on the schedule: "There's probably a billion dollars or more in just these four," he said.

Stevenson was referring to four venture capitalists who were scheduled to speak at the conference, an event where representatives of small medical companies try to woo investments from people who control big-money funds.

Stevenson is managing partner of MB Venture Partners LLC, a Memphis investment group that organizes the conference. He said the meeting, which focuses on treatments for problems of the muscular and skeletal systems, has grown in size and quality in each of its five years.

This year's conference ran Tuesday and Wednesday at the FedEx Institute of Technology at the University of Memphis. It attracted about 200 people from around the nation and featured 24 young companies.

"They're well-financed with terrific management teams," Stevenson said.

And there were some big guns among the venture capitalists, too.

One of the scheduled speakers was the aptly named Rich Ferrari, a managing partner in De Novo Ventures. The Palo Alto, Calif.-based firm controls $650 million.

The conference also allowed participants to catch up on changes within the medical device industry. Reflecting a broader trend, many of the new companies presenting are involved in the fast-growing spinal surgery area.

And in a panel discussion, people in charge of acquisitions at the three big medical device companies active in Memphis laid out how they see the future of the industry.

They said that as health care costs increase, the federal government and insurers will want better scientific tests that show the effectiveness of medical devices.

"The thresholds of evidence are increasing dramatically," said Shawn McCormick, vice president of corporate technologies & ventures for Medtronic, a Minneapolis firm that has its spinal unit in Memphis.

The government and insurers will also want surgical products that cut costs, speakers said.

Arlington-based Wright Medical Group is trying to design products that get patients out of the hospital faster and save money, said Ted Davis, Wright's vice president of business development.

He cited the firm's Path brand total hip replacement technique as an example.

British medical device maker Smith & Nephew is also looking for products that can cut patient recovery time, said Deepak Basra, head of strategic planning and mergers and acquisition for the firm's Memphis-based orthopedic reconstruction unit.

The panelists said they doubted they would invest in small companies whose strengths are outside their firms' main focus. But they said they would look for ideas that were complementary. For instance, McCormick said Medtronic's spinal unit might consider be interested in diagnostic tools and monitoring technology related to spinal surgery.

Glen Coleman, an Memphis orthopedic industry veteran who plans to join a California-based startup called Sonoma Orthopedics, said he was impressed with the caliber of the conference.

"I really didn't realize that we had this large of a meeting that was here in Memphis," he said.

- Daniel Connolly: 529-5296

MB Venture Partners LLC

An investment firm that specializes in funding life science companies

Managing partner: Gary Stevenson

Address: 17 West Pontotoc, Suite 200

Web site: mbventures.com