Hartford Business Journal

8 Hartford Business Journal • January 19, 2015 www.HartfordBusiness.com Focus Technology Kelyniam taps new markets to fuel medical device growth By Sheena Butler-Young sbutler@HartfordBusiness.com A fter three years of steady revenue growth from supplying neurosurgeons and their patients with cranial and facial implants shaped from plastics, Canton manufacturer Kelyniam Global Inc. is venturing into a new market it hopes will jumpstart future growth. Kelyniam recently acquired Somers-based MED-ALLY LLC, which manufactures neuromodulation technology that can be used to create external and implantable medi- cal devices that treat chronic pain and provide deep brain stimulation to help patients cope with conditions such as Alzheimer's, epilepsy, and Parkinson's disease. "Nueromodulation is the wave of the future," said Tennyson Anthony, Kelyniam's CEO. According to the International Neuromodulation Soci- ety, neuromodulation therapies have been available since the 1960's and neuromodulation devices are the fastest growing segment of the overall medical device industry. The MED-ALLY acquisition will put Kelyniam at the forefront of a $4 billion market that has been growing more than 18 percent annually, said John Mulvihill, who co-founded MED-ALLY along with Raja Hitti. "When MED-ALLY was introduced to me, it was not for the purpose of us working together, but I immediate- ly saw an unbelievable synergy between the two com- panies," said Anthony. "What really enticed me was that John and Raja were not just looking at the market as it is now but looking at where they can take the market and how we can be market leaders." Anthony said neuromodulation is a spin out from the pacemaker and implantable defibrillation market and will offer an alternative that may help alleviate the lev- els of opiate addiction throughout the country. Spinal cord stimulation for chronic pain manage- ment is the most common application of the technol- ogy, according to the International Neuromodulation Society, and the pulse generators are often implanted beneath the skin of a patient's abdomen. "Our implantable pulse generators will provide an alternative to addictive opiates for patients suffering from chronic pain, and provide new hope and the prom- ise of an enhanced quality of life for many patients suf- fering from other ailments who currently have no viable alternative treatment," said Anthony. A growing sector Kelyniam is the type of advanced manufacturer Con- necticut is trying to grow and attract, said Catherine Smith, commissioner of the state's Department of Eco- nomic and Community Development. "Medical device manufacturing is in the sweet spot for Connecticut," said Smith. "The state has made and will continue to make strategic investments to grow Connecticut in this area." The state's nearly $1 billion Bioscience Connecticut initiative and $200 million Bioscience Innovation Fund are part of the efforts to attract medical device compa- nies, Smith said. Oxford Performance Materials (OPM), another cra- nial and facial implant maker based in South Windsor, has benefited from the state's bioscience push several times, said Smith. "OPM is a great example of how our programs work to grow Connecticut — they started with a small busi- ness loan of $300,000 in 2012 and graduated to a $3.2 million loan in late 2013," said Smith. "We have built a support system for these kinds of companies." In exchange for the $3.2 million loan it received to help pay for equipment and upgrades to the additive manufacturing facility it opened adjacent to its head- quarters in September 2013, OPM pledged to retain its 24 existing jobs and create 41 more by 2016. Scott DeFelice, OPM's CEO, said the company has almost doubled its staff to 40 employees and is growing rapidly to expand its offerings in additive manufactur- ing, or 3D printing. The company, which has supplied polymer components to both NASA and defense manu- facturer Northrop Grumman, announced in October a joint research program with Yale University. The program will consist of 10 projects, featuring seven Yale faculty members, exploring additional bio- medical applications for 3D printing and PEKK, which is a type of engineered plastic, said DeFelice. Anthony said he would like to see Connecticut be a leader in medical device manufacturing and views his company's expansion into neuromodulation as a step in the right direction. Kelyniam is no stranger to acquisitions either. In 2011, the company acquired the assets of the New Brit- ain rapid software prototyping firm, Cranston Holdings LLC, around the same time it moved from New Britain to the Collinsville section of Canton. That helped buoy the company's sales; in 2013 Kelyn- iam turned its first profit. "[Last year was] a building year for Kelyniam — with the Affordable Care Act and everything that was taking place in the medical device industry, we really stood back and tried to figure out how we could take advantage of the new markets out there," said Anthony. "We will absolutely continue with our facial and cranial implants, but we have to keep growing, improving and thinking outside the box." n Tennyson Anthony's Canton-based company, Kelyniam Global Inc., is known for making cranial and facial implants, but is now expanding into the $4 billion neuromodulation technology sector to spur future growth opportunities in the medical device industry. P H O T O | C O n T r i b u T e d Q&A With funding in tow, CI gears up for more investment in '15 Q&A talks about venture capi- tal funding in Connecticut with Claire Leonardi, who recently finished her last day as CEO of Connecticut Innovations, the state's quasi-public venture capi- tal investment arm. Q: Connecticut Innova- tions recently received a $25 million infusion from the state Bond Commis- sion. What will those funds allow you to do? A: The $25 million infusion is part of the $125 million in fund- ing Connecticut Inno- vations (CI) received from the 2011 Jobs Bill. This infusion allows CI to continue investing in approxi- mately 100 venture- backed portfolio com- panies, primarily in the technology sector. The funding also allows CI to make new pre-seed and seed venture capital invest- ments during the first half of calen- dar year 2015. Finally, the recent infusion allows CI to continue to support important innovation programs that help the state's companies suc- ceed, such as: loans/guarantees to existing companies looking to innovate or expand; mentor and incubator programs at CT Next (the state's entrepreneurial ecosystem); and Small Business Innovation Research (SBIR) matching funds. Q: What are you anticipat- ing in terms of loan/equity demand from Connecticut com- panies in 2015? Which industry will see the most activity? A: We anticipate that loan and equity demand from Connecticut companies will continue to be strong during 2015. During calendar year 2014, CI received more than 692 inquiries for potential investment/funding/ financial support. We expect the current level of activity will continue in the coming year, with strong inter- est from companies in the areas where Connecticut is strong: biotechnology, medical devic- es, software and information technology. On the loan side, we anticipate continued demand from growth- oriented companies that create high-quality jobs in industries where we've traditionally had a strong presence, such as manufac- turing, wholesale/distribution and various services industries. How is Connecticut doing in terms of attracting private venture capital? How do we attract more of it? A: Attracting private venture capital is a critical element of CI's mission and is certainly a hall- mark of our program. In calendar year 2014 alone, CI's venture team invested over $20 million in Connecticut startup companies, while attracting over $60 million in addi- tional co-investment from private venture capital funds, family offices and high-net- worth individuals (angel investors). Attracting more venture capital into Connecticut requires: funding the remain- ing investment con- templated in the 2011 Jobs Bill, which will enable CI to continue to assist young com- panies at the scale we have achieved in the last several years and has provided exceptional opportunities for co- investment; continuing efforts, in combination with Connecticut col- leges and universities, to reach out to private venture capital firms to showcase advancements in R&D that can become excellent early- stage investment opportunities in the near future; strongly promot- ing our successes, publicly and in the VC community, to ensure that investors think of Connecticut when looking for opportunities; and continuing the Angel Investor Tax Credit program, which pro- vides high-net-worth individuals the opportunity to invest in Con- necticut startups while also receiv- ing a partial Connecticut income tax credit. Q: What's the status of the Bioscience Innovation fund? Do you anticipate a lot of activity in 2015? A: The Connecticut Bioscience Innovation Fund is relatively new — it launched in 2014 — but already it has made tremendous progress. So far, CI's Bio-Innovation team has reviewed 44 projects, and CBIF has awarded more than $4 million total to five Connecticut universities and four Connecticut companies. CI's Bio-Innovation team began extensive outreach in the fourth quarter and is working with Con- necticut's research universities on a number of collaborations. We anticipate a broad range of oppor- tunities from health IT to medical devices to therapeutics and diag- nostics in the near future. n Claire leonardi Former Ceo of Connecticut innovations

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