Relievant Medsystems settles into Twin Cities, sees big promise for back treatment

Chronic lower back pain is one of the most common complaints that sends people to the doctor, yet finding effective treatments remains surprisingly complex.

Relievant Medsystems, a California medical device company that is setting up headquarters in the Twin Cities, said millions of chronic pain cases can be traced to an obscure nerve inside the spine bones called the basivertebral nerve. And a decade's worth of medical research by Relievant strongly suggests that using a medical procedure to sever the nerve can turn off the pain in well-selected patients, helping some of them go off opioids for good.

"I've spent my whole career — 16 years at Medtronic and now four [med-tech] startups — introducing novel therapies. And often there is something about them that creates barriers to adoption," said Kevin Hykes, a Minnesotan who joined the company as CEO last fall. "Everything has pluses and minuses. But this had more pluses than anything I have ever done."

The 40-employee company announced this week that it is establishing its corporate headquarters in a Bloomington office tower in space formerly used by the Allen Edmonds shoe brand.

Relievant's announcement came at the same time that it revealed its fifth venture round had raised $58 million to commercialize its lower-back pain therapy, on the heels of new clinical data published in February. Relievant plans to remain an independent company as it commercializes devices in what it estimates to potentially be a $20 billion market.

Relievant is keeping its dozen research-and-development employees where they are in Sunnyvale, Calif., while doubling the company's 10-person executive and administrative staff in Bloomington in short order. The remainder of the company's workforce is spread among field offices throughout the country.

Shaye Mandle, CEO of the Minnesota medical technology trade group the Medical Alley Association, said Relievant is among a growing number of companies that decided to set up corporate offices in Minnesota when the time comes to turn promising medical ideas and into commercial products. Though not a huge trend, it happens "more often than you think," he said.

"This is one of the only places in the country where you can connect with top clinical professionals, top software engineers, top regulatory professionals, and everyone is fairly contained in a tight-knit geographic area," Mandle said. "It makes things faster, cheaper, easier."

The biotech startup Stemonix began life inside a tech incubator near San Diego, but recently opened corporate offices in Maple Grove. Plymouth-based Nuvaira, developer of devices for breathing disorders, moved its headquarters out of Seattle in 2013. Australian mental-health app company Medibio recently set up U.S. headquarters in Savage, while Canadian brain-cancer device maker Monteris Medical put its U.S. HQ in Plymouth.

Relievant's Hykes said a number of the company's executives already lived in Minnesota, including him.

The move brings Relievant physically closer to major medical device companies that operate in the state, like Medtronic (where Hykes used to work), Abbott Laboratories (which bought Visiogen for $400 million while he was CEO there), and Boston Scientific (which acquired heart-device maker Cameron Health while Hykes was CEO in deal that was worth up to $1.3 billion with potential milestone payments.)

Relievant has not sought funding or strategic partnerships from larger medical device companies, believing that its $20 billion market is enough to sustain the company as a stand-alone operation for years to come, if commercialization is successful.

"We're trying to build a company that we could potentially take public, if we chose to do that, or that we could scale significantly," Hykes said. "At least for now, we've signaled that we want to … try to build a lasting business with a strong foundation."

That confidence is built on the premise that Relievant's technology is applicable to more than 5 million Americans who are suffering a specific kind of lower back pain known as discogenic pain, for which Hykes said there are currently no clear surgical options.

Unlike spinal fusion, which is intended to correct for mechanical problems in the spine that lead to back pain, Relievant's Intracept procedure is intended to prevent the nerves inside lumbar vertebrae from transmitting pain signals related to inflammation caused by the degeneration of the adjacent disc.

Nerves near the top and bottom endplates of the vertebrae can be aggravated by fluids that leak into the bone from damaged discs. Although this is often called discogenic pain, Hykes said that an increasing body of medical research shows the pain actually originates in the degenerating bone, not the disc. This degeneration of bone is visible as a modic change on an MRI scan, appearing as an off-color section near where the bone meets the disc.

In July 2016, the U.S. Food and Drug Administration cleared Relievant's devices to be used to ablate the basivertebral nerves in four of the lowermost bones in the spine in cases where modic changes are visible on the MRI and conservative therapy hasn't reduced the pain after six months. The devices are used in a 90-minute, minimally invasive outpatient procedure.

The single-use components of the system cost about $6,000 per procedure, and each procedure would be expected to cost between $10,000 and $14,000 total, depending on hospital charges. The patients' final cost depends largely on their insurance coverage.

Although the system has been legal to sell commercially in the U.S. for two years, so far only about 300 people have been treated worldwide. Hykes aims to increase that number swiftly in coming years, as insurers get the chance to see fresh research from controlled, blinded studies.

"Right now, after 10 years of heads-down research and development, we are focused on bringing this to market responsibly and appropriately and introducing it to the 5 million patients that can benefit," he said.

Joe Carlson • 612-673-4779