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Final Project

Medical Technology Evaluation and Market Research

MHA 6789

May 13, 2004

Team Members

Thomas Duncan

Ann Kinsella

Shelley Oberlin

TABLE OF CONTENTS

Executive Summary 3

Disease Overview 5

Technology Overview 8

Implementation Into the Body 8

Functionality 8

Setting a Benchmark 10

Scope of Market 12

Estimated Number of Potential Patients 12

National Projections ………… ………………..12

International Projections 13

Likely Revenue Sources 13

Expected Return on Investment 14

Effectiveness Summary 15

Cost of Intervention 15

Costs that Could Be Averted 16

Benefits of Intervention 16

Limitations 16

Regulatory Barriers 17

Conclusion 19

EXECUTIVE SUMMARY

There is a phenomenal need to treat strokes. Strokes are the third leading cause of death in the United States. 700,000 strokes occur annually and approximately 300,000 people will die from stokes this year with the number doubling in the next 20 years.[1] Information from 2002 Medicare claims data for two million beneficiaries indicates that 14,431 patients had inpatient claims submitted with the two DRGs most closely affiliated with stroke. For the entire Medicare population, 288,620 people (0.68%) may have been treated for stroke related illness. Interestingly, only 20 percent of strokes are caught in time for the limited treatments currently available.[2]

The American Stroke Association estimates that the direct costs of stroke in 2004 will be $33 billion, including $13.7 billion in hospital charges, $12.8 billion in nursing home costs and $2.7 billion in physician costs. The indirect costs of stroke, including losses to productivity, are estimated to be $20.6 billion, bringing the total estimated costs of stroke in 2004 to $53.6 billion.[3] The Medicare claims data information referenced above revealed that 2002 Medicare costs for treating stroke related conditions was approximately $11.922 billion (see Effectiveness Summary for further details).

Currently, the only FDA approved treatment for strokes is tPA, a clot-busting drug which must be administered within three hours of the onset of symptoms. The effectiveness of tPA, even when given to selected patients within the short treatment window, has been called into question recently, with some researchers concluding that a single dose of aspirin is 15 times as effective as tPA.[4] No medical device has received FDA approval for the treatment of strokes, but both Concentric Medical and Possis Medical are attempting to enter the market with a catheter that could be used to remove blood clots in the brain. However, both companies failed Phase I of their clinical trials while attempting to obtain approval for their devices in the neural market.[5], [6]

The medical device evaluated in this paper, the Venturix Micro-catheter, would be used to treat strokes by removing blood clots within the brain. Venturix is seeking to fill the lack of suitable treatments for strokes by developing a next-generation micro-catheter that will use Radio Frequency (RF) energy to induce the venturi effect and create an extremely focused extraction force to remove intravascular blockages. A significant benefit of the Venturix Micro-catheter is that it could be used within eight hours of the onset of a stroke, much longer than the short window currently available for administering tPA. Although both Concentric and Possis are ahead of Venturix in their development of a catheter for neural applications, their devices are not yet proven and Venturix believes it has a superior technology.

Considering the costs and benefits of the Venturix Micro-catheter, there is not yet enough information to conclude whether the device would be cost effective. The numbers that are available indicate a definite need for the product, should it be successful in clinical trials. Currently, the total cost per unit is estimated to be $2,174. To translate cost per unit to total costs, using the figure of 700,000 strokes annually, we estimated the average number of treatable patients for Venturix to be 12,320 (see Market Scope section) and the total costs for average treatable patients to be 26.8 million ($2,174*12,320). Venturix will need to finalize the development of its prototype and will likely need to at least begin its clinical trials before it will be able to determine the amount of money that could be saved if its device is successful. Given the significant number of stroke victims in the United States alone, and considering just the Medicare costs, there is obviously a demand for stroke treatment. Indeed, a successful stroke treatment in even some stroke cases would result in lower health care costs, particularly long-term disability costs (including nursing home and home health care costs).

DISEASE OVERVIEW

Stroke is a type of cardiovascular disease that affects the arteries leading to and within the brain. A stroke occurs when a blood vessel that carries oxygen and nutrients to the brain is either blocked by a clot or bursts, disrupting blood flow in the brain and damaging the surrounding area, affecting the part of the body which that particular area of the brain controls.[7] Strokes have been shown to cause paralysis, affect language and vision, and cause other problems. Although limited treatments are available, stroke victims do not often recognize their warning signs and do not seek care in time to receive the few treatments that do exist.[8]

Strokes are the third leading cause of death in the United States. 700,000 strokes occur annually and approximately 300,000 people will die from stokes this year with the number doubling in the next 20 years. Only 20 percent of strokes are caught in time for treatment.[9]

Approximately 50% of stroke survivors are left with long-term disabilities, and stroke is the leading cause of serious long-term disability in the United States. For example, among ischemic (see discussion below) stroke survivors who were at least 65 years old, the disabilities observable six months after the stroke included:

• 50% had some one-sided paralysis

• 30% were unable to walk without assistance

• 26% were dependent in activities of daily living

• 26% needed to live in a nursing home[10]

Internationally, as in the United States, stroke is the third leading cause of death as well as a leading cause of adult disability. The World Health Organization estimates that in 2001, high blood pressure contributed to over half of the world’s 20.5 million strokes, 5.5 million of which were fatal. Europe alone averages nearly 650,000 stroke fatalities each year. Of the stroke survivors, five million are left with a disability, and one out of every six stroke victims will suffer a second stroke within the next five years.[11]

There are three basic types of strokes: ischemic, hemorrhagic, and transient ischemic attacks (TIAs). Ischemic strokes are due to an obstruction within a blood vessel that delivers blood to the brain. These types of clots are usually caused by the development of fatty deposits lining the walls of a blood vessel. If the clot forms at the clogged part of the vessel, it is defined as cerebral thrombosis. If it develops in another region of the circulatory system such as the heart and/or large arteries of the upper chest and neck, it is often referred to as cerebral embolism. In the latter case, the blood clot usually breaks loose from its initial site of formation and travels through the bloodstream to the brain until it is trapped by a vessel that is too small to let it pass. Ischemic strokes are the most common type of stroke, accounting for approximately 88% percent of all strokes.[12]

Hemorrhagic strokes occur when a weakened blood vessel ruptures. This type of stroke often results from an aneurysm, which is a ballooning of the weakened region of the blood vessel, or arteriovenous malformations (AVMs), a cluster of abnormally formed blood vessels.[13]

The third form of stroke, transient ischemic attacks (TIAs) occurs when a blood clot forms for a short time yet resolves itself through normal mechanisms. TIAs are often considered minor, or ‘warning strokes.’ It is important to note that although the symptoms disappear after a short time, TIAs are strong indicators of a possible major stroke.

In addition to tPA, stroke patients, if they reach the hospital in time for treatment, may also receive aspirin or treatment with an investigational device. As explained further below (see Benchmark section) there are several other potential treatments for stroke that have not yet received FDA approval, including an anti-clotting drug that could be administered up to nine after the onset of a stroke.[14]

In addition to the few options for treating a stroke, there are also treatments to prevent clots, which may decrease the number of strokes. For example, carotid endarterectomy is a surgery where blockage is surgically removed from the carotid artery.[15] A less invasive procedure is carotid angioplasty and stenting, which involves the use of a catheter to clear and prop open clogged carotid arteries. This procedure is very new, with an advisory committee recently recommending that the FDA approve it for patients who are poor surgical candidates.[16] There is also potential for antiplatelet agents such as aspirin, and anticoagulants such as warfarin, to interfere with the blood’s ability to clot and cause a stroke.[17]

TECHNOLOGY OVERVIEW

Venturix is seeking to fill the lack of suitable treatments for ischemic strokes by developing a next-generation micro-catheter that will use Radio Frequency (RF) energy to induce the venturi effect and create an extremely focused extraction force to remove intravascular blockages.

In creating suction forces at the distal end of the Venturix Micro-catheter, RF energy will be used to heat saline and induce an instantaneous expansion of a saline vapor. If directed properly the saline expansion will induce a vacuum force at the tip (i.e. venturi effect) that will draw the blood clot into the catheter. Venturix plans to develop its micro-catheter such that it could be used to remove blood clots in the brain within two to eight hours of the onset of stroke symptoms.

Implementation Into the Body

The Venturix Micro-catheter is inserted into the femoral artery or carotid artery and guided to the area of treatment. Often procedures through the carotid artery can result in massive scarring; therefore, the femoral procedure is a much more common entry site even for neural applications. In the case of a neural application, such as the removal of a blood clot during an ischemic stroke, the catheter would be fed to the vessels of the brain and directly up to the clot.

The first step involves threading a steerable guidewire through the vessels to the site of treatment. A catheter is then threaded onto the guidewire and follows it up to the site. Due to the size and flexibility of the guidewire, it is easy to maneuver the micro-catheter into smaller vessels. The Venturix Micro-catheter will have a hole through the center axis along the length to track the guidewire. The guide wire can then be pulled out once the microcatheter is in place.

Functionality

The Venturix Micro-catheter functions by creating suction at the tip. This suction is created by differential pressure due to high speed fluid flow. The rapidly moving fluid is created by heating saline with RF energy to create rapidly expanding saline vapor which is directed down the catheter leaving behind an area of low pressure sucking the clot into the working end.

The RF energy is delivered via conducting pathways running down the length of the catheter to electrodes on the inside of the working end. The electrodes are in pairs and the energy is transmitted through the saline fluid between them. There may be a need for multiple pairs of electrodes in the working end and along the length of the catheter to continue moving debris and increase suction. Pulsed energy may be considered to generate resonating forces to jiggle the clot loose.

Liquid saline will continuously be delivered to the electrode by micro-machined micro-channels. In addition to the suction at the working end, extra suction from the proximal end (end outside the body) may be necessary to help keep the clot debris and saline moving out of the catheter. With this idea, venturi forces will create suction at the catheter tip, where it is narrowest and least resistant to collapsing, while the external suction removes debris from the middle section.

At this stage of development Venturix has successfully demonstrated proof of concept and is now focusing on optimizing its design specifications.

SETTING A BENCHMARK

When researching competitors, it is important to consider companies, individuals, or groups that are indirectly related to a product. Anyone who develops products or provides services that can affect a company’s potential customer base, or its ability to sell a product, although not necessarily a competitor can be considered a threat.

Considering competitors to the Venturix Micro-catheter, there are several companies that are developing technologies to prevent the formation of blood clots which could, in turn, potentially decrease strokes and the demand for stroke treatment. These companies, namely AuriCLOSE, APPRIVA (WBL), and AriTECH (Plymouth), are all developing new technologies that prevent blood clots by closing the left atrial appendage of the heart. Since the cause of roughly 15-20% of all strokes originate in the left atrial appendage, these companies could drastically affect the potential market and therefore can be considered competitors.[18]

There are also existing therapies for the prevention of clots which could decrease the demand for stroke treatment. For example, doctors generally recommend that clogged carotid arteries be cleared, although it is not certain that doing so will prevent a stroke.[19] The blockage can be removed through a surgery called carotid endarterectomy. In addition, an advisory committee recently recommended that the FDA approve carotid angioplasty and stenting – a less invasive procedure which involves using a catheter to insert a balloon to break up a clot in the carotid artery and a stent to prop open the artery. The advisory committee recommended the FDA approve the procedure for patients who are poor surgery candidates.[20] Antiplatelet agents such as aspirin, and anticoagulants such as warfarin, can also work to prevent clots by interfering with the blood’s ability to clot.[21]

In addition to prevention therapies, there are several new treatments on the horizon that would be available after the onset of stroke symptoms. Recently, a synthetic version of a substance found in vampire bat saliva, Desmoteplase, has been shown to prevent blood from clotting. The benefit of this substance is that it can be administered intravenously up to nine hours after the onset of stoke, significantly longer than the three hour tPA window.[22]

Although no medical device has received FDA approval for neural applications to treat strokes, Venturix considers two companies to be direct competitors: Concentric Medical and Possis Medical. Both companies are ahead of Venturix in their development process, but both failed Phase I of their clinical trials while attempting to get approval for the neural market. More specifically:

• Possis had an Investigational Device Exemption (IDE) submission for a clinical trial using the AngioJet System to treat ischemic strokes. The company announced that it had tested its AngioJet NV 150 catheter in twenty patients in Phase I of its trial, and found that the device successfully removed a clot in 30% of selected patients. Both Possis and the lead investigators agreed that, although the AngioJet was safe, it was not effective enough to warrant Phase II trials.[23]

• An FDA advisory panel recently rejected Concentric Medical’s MERCI Retriever for use to treatment ischemic stroke.[24] An IDE trial in which the MERCI Retriever was tested in 139 procedures failed to prove the safety of the device. Although the device showed some signs of successfully treating stroke, there were twelve device fractures, ten of which were detachments and required intervention. Two fractures may have resulted in the death of the patient within two days of the procedure. In response, Concentric modified its manufacturing process and its operational procedures, but three detachments occurred after the modifications were made.[25]

Given that both Concentric and Possis are still in the early phases of clinical trials, there is a lack of information regarding outcomes and associated costs. This does, however, give Venturix a competitive advantage if it can become the first to market in treating strokes.

SCOPE OF MARKET

Estimated Number of Potential Patients

The worldwide market for blood clot removal is significant and growing; approximately 10 million people suffer from blood clots each year.[26] The market for thrombectomy devices that remove clots, however, is currently underserved due to the abundance of devices that fail to meet customer needs. Market research has confirmed that physicians are eagerly awaiting more effective percutaneous devices, such as the one Venturix plans to provide.

Market need is the key ingredient to a successful product. Venturix has three targeted markets with a need for its product: Neurothrombectomy, Coronary Chronic Total Occlusion (CTO), and Peripheral Vascular Disease. Through physician input and preliminary research, Venturix believes the neural market appears to be the most promising area for its product. Accordingly, the company is focusing its efforts on developing a product for the treatment of ischemic stroke.

National Projections

As referenced above, according to the American Stroke Association there are approximately 700,000 strokes per year in the U.S. Of those, 88% (616,000) are ischemic strokes and only 20% are caught in time for treatment. This leaves Venturix with a potential total patient population of 123,200 (700,000*0.88*.20). However, this is assuming 100% market share which is unrealistic. From a sensitivity analysis perspective, Venturix believes it can achieve between 5-15% market share. This would result in approximately 6,160 to 18,480 treatable patients within the first few years.

Information from a 2002 Medicare claims database of 2 million beneficiaries (five percent of the Medicare population) found 14,431 patients who had inpatient claims submitted with the two DRGs most closely affiliated with stroke (14 Med Specific Cerebrovascular Disorders except TIA and 15 Med Transient Ischemic Attack & Precerebral Occlusions). Multiplying by 20 for 100% of the Medicare beneficiaries, there would be approximately 288,620 stroke patients out of approximately 42.5 million beneficiaries, or 0.68% of the Medicare population.

Information from the same database indicates that total claims related to DRGs 14 and 15 were $596,422,197. Multiplying by 20, the total Medicare costs in 2002 were approximately $11.922 billion. The $596,422,197 amount is broken down among inpatient, outpatient, physician, skilled nursing, home health, hospice and durable medical equipment as follows:

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International Projections

As in the United States, stroke is the third leading cause of death worldwide and a leading cause of adult disability.[27] Although Venturix is not currently pursuing an international market, it is evident there is potential demand for its product overseas.

Likely Revenue Sources

Given that the Venturix Micro-catheter will have a specific treatment window of 2-8 hours, the product is expected to be used at the hospital either in a catheter lab or another inpatient setting. Most hospitals purchase medical equipment through group practice organizations (GPOs). As such, Venturix can expect its revenue stream to come from direct sales to GPOs.

Expected Return on Investment

Venturix is expecting to enter the peripheral market sometime near the end of 2005. It will take two to three months to optimize its current prototype and one year for 510K clinical trials. By the end of 2005, Venturix expects to have sales revenues of $152 million from a 1% market share in the peripheral market. At the same time, Venturix will enter the neural market. However, due to regulatory constraints (i.e. pre-market approval process), Venturix will not be able to enter this market for at least three to four years. Once it does enter the neural market, the company estimates that it will have revenues of nearly $290 million resulting from neural applications of its device by 2007.

EFFECTIVENESS SUMMARY

New technology development has high risks associated with its high rewards. The rewards can be in the form of high returns to investors and/or more effective treatments than the status quo. One concern is that new technology can be more expensive. To determine if a technology adds value to its customers and delivers profits to its investors, it is necessary to understand the benefits associated with an intervention relative to its costs. One way to do this is through a cost effectiveness analysis.

Average cost effectiveness ratio:

(Cost of intervention – Cost averted by intervention)

Benefits of Intervention

Cost effectiveness ratios often compare a new technology to a reference case -- a technology or treatment (usually the current standard of care). As indicated above, there are no FDA approved medical devices for the removal of blood clots in the brain, so there is no similar intervention to compare with the Venturix Micro-catheter. Indeed, the treatments available after the onset of a stroke are currently limited to tPA, other clot busting drugs or investigational techniques. A published list of cost-utility analysis ratios (converted to 2002 dollars) did list a publication in 2001 that calculated “tPA use versus no tPA use in patients with acute ischemic stroking presenting to hospital within three hours of onset of symptoms” to be cost-saving.[28] Yet, as indicated above, tPA is not the general standard of care among American emergency room doctors and its effectiveness has been called into question.

A rough estimate of the cost of using the Venturix Micro-catheter and the costs that might be averted by using the device is discussed below.

Cost of Intervention

After consulting with potential manufacturers, Venturix estimates that the total cost per unit will be $2,174. Since the device will be used in a hospital setting both hospital and physician costs also need to be included. Assuming 20% of the 2004 estimated hospital and physician costs could be avoided, the estimated cost of intervention for the Venturix Micro-catheter is as follows:

Total number of treatable patients is estimated to be 123,200 and Venturix estimates it could receive 5-10% market share, or 6,160 to 18,480 patients (see Scope of Market section).

Average number of treatable patients = (6,160+18,480)/2 = 12,320.

Costs of device for average treatable patients = $2,174*12,320 = 26.8M

Cost of intervention =

(13,700M*.80) hospital+(2,700M*.80) physician+(26.8M)device=13.1467B

If the Venturix Micro-catheter could save 20% on the estimated 2004 direct costs of a stroke, the costs averted could be:

Cost That Could Be Averted

|ESTIMATED 2004 COSTS |TOTAL STROKE |POTENTIONAL COST AVERTED (minus 20%) |

|($ in Billions) | | |

|Direct Costs | | |

|Hospital |$13.7 |$10.96 |

|Nursing Home |$12.8 |$10.24 |

|Physician/other professionals |$2.7 |$2.16 |

|Drugs/other | | |

| Medical Durables |$1.1 |$.88 |

|Home Health Care |$2.7 |$2.16 |

|Indirect Costs | | |

|Lost Productivity/Morbidity |$6.1 |$4.88 |

|Lost Productivity/Mortality |$14.5 |$11.6 |

|Total Expenditures* |$53.6 |$42.88 |

Source: Heart Disease and Stroke Statistics – 2004 Update, available at

*Totals do not add up due to rounding and overlap

Benefits of Intervention

An estimate of the benefits of intervention would require a calculation of the change in Quality Adjusted Life Years (QALYs) with the Venturix Micro-catheter versus no Venturix treatment. The number of additional QALYs obtained from the treatment would require estimates of life expectancy for stroke victims.

Limitations

Venturix is still at the early stages of development, therefore, minimal information is known with respect to outcomes measures and costs of intervention. These limitations prevent the calculation of a cost effectiveness ratio, but the numbers available do show a market for the Venturix Micro-catheter.

REGULATORY BARRIERS

Regulatory Roadmap

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Using the Venturix catheter to treat ischemic strokes would require FDA approval. The catheter would be categorized a Class III medical device, and using the device to treat strokes would require pre-market approval (PMA), a process than can take three to five years.[29]

Before seeking FDA approval, the Venturix prototype will need to go through pre-clinical (animal) trials and other steps including Institutional Review Board (IRB) approval for its proposed human trials. To gather the requisite information needed to apply for FDA pre-market approval, Venturix will need to conduct Phase I human (safety) trials and Phase II and III human trials (efficacy). When applying for pre-market approval, Venturix will have to provide the FDA will specific information from its clinical trials, such as:

• study protocols

• adverse reactions and complications

• device failures and replacements

• patient information and complaints

• results of statistical analyses[30]

Before approving a Class III device, an FDA advisory committee may review the application at a public meeting and provide the FDA with the committee’s recommendation on whether the FDA should approve the submission. Ultimately, the FDA approves a device for a particular type of treatment if the FDA determines that there is sufficient valid scientific evidence to assure that the device is safe and effective for its intended use or uses.[31]

After FDA approval, Venturix will need to demonstrate to Medicare and other payors that these entities should pay for this treatment. Typically, payors will require that a new treatment be approved by the FDA (thus it is no longer experimental) and that it is reasonable and necessary to treat the condition. Once it is approved as a covered service, Venturix will need to seek a specific reimbursement amount. Given that many stroke victims are over the age of 65, Medicare approval will be critical. Depending on the exact specifications of the final prototype, in initially approaching Medicare, Venturix may be able to seek to have its catheter approved under an existing HCPC code for micro-catheters. If Medicare does approve the use of an existing HCPC code, it may be easier to obtain actual reimbursement. As our class discussions indicated, obtaining a new HCPC code for a medical device is a difficult and lengthy process.

CONCLUSION

Venturix is seeking to treat ischemic stroke, a significant and debilitating condition. At present, tPA is the only FDA approved treatment for stroke, but it must be given within three hours of the onset of symptoms and its efficacy has recently been called into question. As indicated above, there are approximately 700,000 strokes per year in the United States, many of which are fatal. In addition, the long-term healthcare costs for stroke survivors are significant. Information from a 2002 Medicare claims database indicates the total costs for treating stroke related conditions for Medicare beneficiaries could be $11.922 billion per year.

Given the lack of information currently available, calculating an accurate cost effectiveness ratio is not possible. After data is available from Venturix clinical trials, a cost effectiveness ratio could be calculated with tPA being the reference case. If other device manufacturers (such as Possis and Concentric) have brought neural catheters to market, they too could be used as reference cases. Finally, it will be necessary to obtain information on the benefits of the Venturix Micro-catheter in order to measure outcomes and calculate QALYs.

Overall, the available numbers show a clear need for a treatment that can be administered after the onset of a stroke with a longer time window than the three hours for tPA. Such a treatment would negate the damaging effects of a stroke, increase survival rates and lower long-term health care costs.

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[1] American Stroke Association retrieved from .

[2] American Stroke Association retrieved from .

[3] Heart Disease and Stroke Statistics – 2004 Update, available at .

[4] .

[5] .

[6] .

[7] American Stroke Association retrieved from .

[8] American Stroke Association retrieved from .

[9] American Stroke Association retrieved from .

[10] American Stroke Association retrieved from .

[11] DGNews. “Stroke Patients Show Significant Risk Reduction When Given Atacand” ; World Health Report - 2002, from the World Health Organization; International Cardiovascular Disease Statistics, a publication from the American Heart Association.

[12] American Stroke Association retrieved from .

[13] American Stroke Association retrieved from .

[14] Bat saliva shows promise for saving stroke victims, Associated Press. November 29, 2003.

[15] USA Today, Science Clearing the Way for Shift in Fighting Stroke, April 27, 2004.

[16] USA Today, Science Clearing the Way for Shift in Fighting Stroke, April 27, 2004.

[17] American Stroke Association retrieved from .

[18] Ostermayer, S. et al., 2003. Percutaneous Closure of the Left Atrial Appendage. Journal of Interventional Cardiology Volume 16 Issue 6 Page 553.

[19] USA Today, Science Clearing the Way for Shift in Fighting Stroke, April 27, 2004.

[20] USA Today, Science Clearing the Way for Shift in Fighting Stroke, April 27, 2004.

[21] American Stroke Association retrieved from .

[22] Bat saliva shows promise for saving stroke victims, Associated Press. November 29, 2003.

[23] .

[24] .

[25] .

[26] Possis Medical 2002 Annual Report.

[27] DGNews. “Stroke Patients Show Significant Risk Reduction When Given Atacand.” ; World Health Report - 2002, from the World Health Organization; International Cardiovascular Disease Statistics, a publication from the American Heart Association.

[28] hsph.harvard.edu/cearegistry/.

[29] .

[30] .

[31] .

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Longer (3-5 yrs)

Shorter Process Quicker Approval

Phases II, III (Efficacy)

Set Manufacturing

Phase I (Safety)

PMA in Neural

510K in Peripheral

Changes based on Learning

IRB Approval (Feasibility)

Beta Prototype

Pre-Clinical (Animals)

Bench Top Model

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