CEO Mark Ungs said the company hopes to begin testing its transcatheter aortic valve device in humans this year and submit it for U.S. Food and Drug Administration clearance next year.

According to a U.S. Security and Exchange Commission form D filed earlier this month, the device maker is targeting an $8 million series A and has already raised $4.7 million from 12 investors, including Twin Cities Angels, a “strategic investor” and “prominent local Minneapolis businessmen.”

InterValve’s technology is designed for use in transcatheter aortic valve therapy to replace aortic valves without cracking open a patient’s chest. Currently, surgeons use tiny balloons to open up valves to prepare them for an implant, although these balloons were designed more than 30 years ago and not for this specific purpose.

A new wave of percutaneous heart valves has been developed by companies including Medtronic and Edwards Life Science, and InterValve’s hourglass-shaped device is meant to complement those devices by fitting more securely in the valve and allowing surgeons to measure the size and structure of the valve. It will enhance procedural safety and efficacy for transcatheter aortic valve therapy, a growing market that’s projected to be worth multibillions of dollars in sales, the company says.

InterValve was founded in 2008 by a group of cardiologists and industry executives.

Earlier in August, the health IT firm made the list of Inc. magazine’s 5,000 fastest-growing, privately held companies for the fifth year in a row. This time, MedNet Solutions ranked 4,085 and showed a 30 percent growth in three years with revenue climbing to $11.2 million last year from $8.6 million in 2008.

MedNet was profitable between 2003 and 2008. Then in 2009 and 2010, the macroeconomy dumped it in the red, said Rob Robertson, the firm’s co-founder, president and CEO. Since the fourth quarter of 2010, the company has been profitable again and Robertson projected that 2011 will close in the black.  The company, founded in 2001, has 48 employees. Having launched a new product in March, MedNet is aiming to raise more money in the next year.

Historically, clinical studies were conducted largely on paper, Robertson said.

“Even five years ago … there was maybe 25 to 30 percent of clinical trials that were using electronic data capture,” Robertson said. “Today, most industry experts say it’s probably closer to 60 to 70 percent. So our industry has been growing and that’s one of the reasons for our growth.”

Another reason for success has been customer loyalty where many customers have MedNet Solutions design and manage their clinical studies for one study and continue to keep coming back for additional studies, Robertson said.

Customers of the company include medical device industry heavyweights like Medtronic and St. Jude Medical, pharma giants like AstraZeneca and Eli Lilly, and biotechnology names like Genentech. Robertson said MedNet has worked with 75 companies and is currently working on 175 clinical studies. The company also works with clinical research organizations.

Over its 10-year history, MedNet has raised $1 million. Now, with a second product launch, Robertson said the company is looking to raise additional capital, but hasn’t decided exactly how much.

The product — called iMedNet — is a whole lot cheaper than the company’s single product to date — Enlighten. An average study using the Enlighten fully outsourced model of designing and managing a clinical study costs $200,000 to $250,000. With iMedNet, where customers use MedNet’s software to build their own studies, an average study costs roughly a quarter — between $50,000 and $75,000, Robertson said.

Along with being cheaper for companies, it’s also cheaper for MedNet. That’s because landing a big study necessarily meant hiring more people who are able to service and build the project.

“It opens up the market to us; it gives us the chance to grow without adding a lot of people to the company,” Robertson said.

Companies tend to like it for more than just the price compared with competing web-based solutions.

“What customers have told us that you need a highly technical person to get trained … on how to build the studies with a lot of our competitor tools,” Robertson said. “With our product, if you have some basic computer skills and understand the clinical study market … you don’t need to be a developer.”

The main player in the field is Phase Forward, now part of Oracle. Earlier it raised millions of dollars before going public in 2004. Oracle bought the company for $685 million in April 2010.

The Minnetonka, Minnesota company announced that in the quarter ended March 31, sales jumped 35 percent to $4.01 million from $2.98 million in the same quarter a year ago. Net loss increased to $1.3 million, or 6 cents per diluted share, compared with $576,642 or 4 cents per diluted share in the fourth fiscal quarter of 2010.

Loss widened because the company, which makes products to treat urinary incontinence, hired more sales people and due to higher marketing expense in the U.S. Yet, the loss of 6 cents per share beat analyst expectations by 2 cents. For the year, sales increased to $13.8 million, up from $11.9 million a year ago. Net loss widened to $4.7 million from $3.2 million in fiscal 2010. The company’s cash position jumped to $14.1 million from $5.8 million.

In a conference call to discuss results, CEO David Kaysen said the company will continue to hire more sales people and has already hired four new sales employees and a new regional sales director since the fourth quarter ended March 31. At the end of the quarter, the company had 31 sales employees.

U.S. sales growth was driven by a 43 percent increase in sales of the Urgent PC Neuromodulation System to $1.3 million compared with the same quarter in the prior fiscal year. The boost in U.S. sales came from private insurers like United Healthcare and Excellus BlueCross BlueShield, a regional insurer in upstate New York, that recently decided to cover posterior tibial nerve stimulation (PTNS) treatments. Ten of the 13 regional Medicare carriers cover those treatments and Kaysen said the company continues to communicate with medical directors of the other three that don’t.

The Urgent PC system won U.S. Food and Drug Administration approval for overactive bladder treatment in 2006, but later ran into sales and reimbursement problems. After the company did some new clinical studies, it obtained a unique reimbursement code, which went into effect Jan. 1. The system works by sending an electrical pulse into the spinal nerves that control bladder function. The treatment is billed as an alternative to drugs and requires 12 weekly sessions that last about 30 minutes each.

Kaysen said the company plans to seek FDA approval to use the Urgent PC system for fecal incontinence. The product has European approval to use it for that condition and Kaysen said the company is planning to design U.S. clinical trials to get approval for that indication domestically, too.

Founded in 1995, PenRad’s web products aim to improve work flow, quality and revenue in image and information management in the healthcare sector. The products include a web-based multi-modality reading, workstation, computer-aided visualization and analysis for MRI and CAD  for ultrasound, and information systems.

Before joining PenRad, Bickford was co-founder and executive vice president at Confirma, now Merge Healthcare. Bickford has developed new markets in women’s health, medical imaging and oncology, and received awards for his marketing, communications and sales programs from organizations such as the Rx Society and Biomedical Marketing Association.

“We are pleased to have Dan join our team as we move forward with our total, integrated and affordable solution for image and information management. In 2011, PenRad products [will] grow beyond mammography information management and Dan’s experience will help us capitalize on our opportunities before us,” said Greg Gustafson, president and CEO at PenRad, in a statement announcing this current business news.

Financial terms of the  deal were not disclosed.

The agreement allows the food giant to license a portfolio of ingredients that Medisyn and Kraft have uncovered during a two-year collaboration.  The goal of the partnership was to discover effective bioactive ingredients suitable for use in foods.

“This is a significant milestone for Medisyn and it demonstrates how technology can be a powerful tool in the discovery of new compounds that can provide important health and wellness benefits,” said David Land, president and CEO of Medisyn in a statement.

Medisyn uses molecular topology to expedite the discovery of bioactive compound and make the process  more predictable and less expensive. That’s because molecular topology uses elaborate computer models to identify compounds that have the desired chemical features that companies, for instance, pharmaceutical companies, are looking for when they are developing a drug or other bioactive compound.

According to a regulatory filing with the U.S. Securities & Exchange Commission, the company raised $1.5 million by issuing debt in late 2008.

President and General Manager Tim Miller declined to say how many people were let go but acknowledged that such letters were “extremely disruptive to business. ”

The Minnetonka, Minnesota-based medical device company develops products for soft tissue repair.

The FDA had granted Anulex a 510(k) approval for the Xclose soft tissue repair system to be used for general and orthopaedic surgery. But after the company did a post-market study to see how Xclose performed when used to repair the annulus, the FDA took offense because the company had not applied for an investigational device exemption prior to doing so.

The annulus fibrosus is a strong, protective covering that shields the soft material located at the center of an intervertebral disc.

In an interview, Miller contended that the company had consulted with institutional review boards at 34 centers and none had advised getting an IDE from the FDA. Further, the company obtained informed consent from patients involved in the post-market study. He believes that the FDA has mistakenly exaggerated the risk of using Xclose in spine procedures.

“Repairing the annulus is an adjunctive procedure to a discectomy,” he said. “The risk of approximating the tissue of the annulus fibrosus, following a discectomy procedure, is incremental. …”

Although, Miller feels the warning letter is unfair, he knows such admonitions are not to be trifled with. As a result, all marketing of Xclose related to spine procedures have halted, leading to jobs and revenue loss; Miller would discuss neither. Currently there are 46 employees at the firm, he said. The website, including the company’s logo, has also been modified to remove any links between Xclose and annular repair. However, a Google search managed to yield an old web page with the previous logo touting the company’s ability to repair the annulus.

Regulatory filings show that the company has raised $66.4 million since  late 2003. In a 2010 filing with the U.S. Securities and Exchange Commission, the company indicated it had revenue between $5 million and $25 million.

Miller said he hopes  to meet with agency officials in May to impress upon them that using Xclose in annular repair is not highly risky and that an IDE, followed by a  PMA application (pre-market approval) is not required. Aside from the time and money PMAs take, “it is not an appropriate pathway for the product,” Miller said.

Meanwhile, Anulex’s previous CEO Rich Lunsford has left the company. Board member Buzz Benson, managing director at Minneapolis-based venture capital firm SightLine Partners, said via e-mail that Lunsford’s departure is unrelated to the FDA’s February warning letter. He declined all other comments other than to say the company is working with the FDA to resolve the issue.

Miller said that Lunsford left for personal reasons because he wanted to be in Colorado where he has a home. Lunsford is now a vice president and general manager, cardiac surgery systems at Edwards Lifesciences, the Irvine, California medical device company where he has been since February.

DGIMed Ortho, an early stage medical device company, makes the Distalock system consisting of intramedullary nails and drills that assists orthopaedic surgeons. Intramedullary nails or rods are metal rods that are used to help in the repair of broken long bones. Founded in 2008, DGIMed announced last October that its product was used for the first time in the U.S. at North Memorial Medical Center, a Level 1 trauma center in Robbinsdale, Minnesota. The intramedullary nail system won regulatory clearance in May of last year.

The company hopes to raise an additional $375,220; it has raised money before through a mix of options and warrants.

Franck Gougeon, founder and former CEO of AGA Medical sits on the company’s board

A company that began life in the pharmaceutical sector is venturing forth into devices in its quest to become more of a diversified healthcare company.

Chadds Ford, Pennsylvania-based Endo Pharmaceuticals (NASDAQ: ENDP) announced today that the company is buying Minnetonka-based American Medical Systems (NASDAQ:AMMD),  a manufacturer of new innovative medical devices focusing on male and female pelvic health for $30 a share or $2.9 billion in cash. This includes Endo assuming and repaying $312 million of AMS’ debt.

Endo projected that 2011 revenue for the combined company would be $3 billion with $1 billion in earnings before interest, tax, depreciation and amortization (EBITDA). The acquisition would add about 60 cents per share to Endo’s 2012 adjusted diluted earnings per share once it closes, the company estimated. Endo also expects to get at least $50 million in cost synergies by 2013. The combined company would also have a total of 4,000 employees. AMS employs 1,200 people in nine countries, according to its website. Its first product — an artificial urinary sphincter implant — came out in 1972 and the company went public in 2000.

“Through the acquisition of AMS, we will gain scale in devices and services, and will be positioned as a leading provider of healthcare solutions in the field of pelvic health, with a full spectrum of product offerings ranging from pharmaceuticals to medical devices,” said Dave Holveck, president and CEO of Endo, in a statement. In 2010, Endo bought HealthTronics, which among other things makes a full line of urology equipment and products, including lithotripters and surgical lasers for treatment of BPH.

The transaction needs to be approved by AMS shareholders and is expected to close in the third quarter of 2011.

“I believe that the two will be a great strategic fit, with AMS building on Endo’s existing devices & services segment and allowing our management and employees to accelerate the growth of our business to improve the quality of life for a growing number of men and women,” said Anthony Bihl, president and CEO of AMS, in a statement.

NHIC had previously provided some reimbursement for Uroplasty’s posterior tibial nerve stimulation treatments on a case-by-case basis.

This decision follows on the heels of Uroplasty’s recently obtained coverage by national insurance company UnitedHealthcare and regional insurer Excellus BlueCross BlueShield, as well as regional Medicare carrier CIGNA Government Services.

Related articles

• Uroplasty Inc.’s Urgent PC Neuromodulation System reimbursed by UnitedHealthCare, 2 regional carriers (medcitynews.com)
• CEO: Uroplasty’s Q3 performance ‘began to reflect potential’ (medcitynews.com)

Uroplasty (NASDAQ:UPI) further announced that CIGNA Government Services, a Kentucky-based Medicare carrier, will cover PTNS treatments starting on May 1. CIGNA Government Services covers about 750,000 individuals.

Shares rose 15 percent in just one day after the reimbursement decision was announced.

Uroplasty’s 510(k) was approved back in 2007, but the Minnetonka, Minnesota-based medical device company has had an up-and-down reimbursement battle. It won five new regional Medicare carriers in its third quarter, but lost coverage from National Government Services, a regional Medicare carrier serving Connecticut, Indiana, Kentucky and New York, effective January 3, 2011.

Uroplasty’s marketing vice president, Nancy Kolb, did not immediately respond to a phone call.

Related articles

• CEO: Uroplasty’s Q3 performance ‘began to reflect potential’ (medcitynews.com)

Word is out about the identity of the corporate partner NxThera CEO Robert Paulson mentioned last week. It turns out it’s American Medical Systems Inc.

Minnetonka, Minnesota-based AMS (Nasdaq: AMMD) specializes in medical devices related to pelvic health. Shoreview, Minnesota-based NxThera is developing a thermal vapor prostate treatment – technology that involves the same area of the body where American Medical Systems’ expertise lies.

AMS led a recently completed $12.6 million round of Series B equity financing for NxThera, according to a news release.

The funding beats the $6 million in investments NxThera previously raised.

American Medical Systems was joined in the latest round of financing by NxThera’s existing investors:  Arboretum Ventures, Aberdare Ventures and GDN Holdings. Dr. Glen Nelson, chairman of GDN Holdings and retired vice-chairman of Medtronic Inc. (NYSE: MDT), has joined NxThera’s board as part of the funding round.

NxThera’s technology is meant to inject hot vapor into an enlarged prostate in order to shrink it so it stops obstructing the urinary tract. There’s also potential in using the technology to treat prostate, kidney or bladder cancer.

“We believe NxThera’s vapor ablation platform is an exciting technology with the potential to become an efficient and effective outpatient solution that will significantly reduce procedure times with good patient outcomes,” Max Fiore, senior vice president and chief technology officer of AMS, said in the news release.

Uroplasty

The Minnetonka, Minnesota, device company ramped up its sales force, won over five new regional Medicare carriers, and boosted global sales by 14 percent to $3.5 million during the quarter, which ended Dec. 31.

U.S. sales were up 33 percent compared to last year’s third quarter, a result of a promising relaunch for one of its technologies and the withdraw of a competitor in another category.

“Certainly the most important development during the fiscal beginning efforts of U.S. field sales organization as they geared up for the relaunch of our Urgent PC Neuromodulation system,” Kaysen said.

The Urgent PC system won FDA approval for overactive bladder treatment in 2006 but later ran into sales and reimbursement problems. Uroplasty decided to invest in new clinical studies, and that data helped it win a unique reimbursement code, which went into effect Jan. 1. The system works by sending an electrical pulse into the spinal nerves that control bladder function. The treatment is an alternative to drugs and requires 12 weekly sessions lasting about 30 minutes each.

The product won CMS approval in November, and it’s since earned coverage by nine of the 13 regional Medicare carriers. Two of the remaining carriers have negative rulings that predate the more recent clinical data. One is covering the treatment on a case-by-case basis. National Government Services, a regional carrier for Connecticut, Indiana, Kentucky and New York, said in December that it would not cover the treatment.

Company officials are undeterred by that setback and say they are actively working on converting the remaining four regional holdouts.

“We did not expect to have all 13 sign up immediately. It can often take a year or more for carriers to adopt coverage of a new product or procedure,” Kaysen said. “I would characterize our coverage today of being very sound, very good and very positive for this stage in the launch process.”

As a result of the Medicare approval, the company ramped up its sales force, growing it from 19 reps in September to 31 in December. Most of those were added during October and November, meaning their full-impact won’t be seen until the fourth-quarter, Kaysen said. Still, the company boosted the number of Urgent PC customers from 185 in the second quarter to 236 in the third. The company may look at adding more sales reps gradually beginning in April or May, he said.

Uroplasty’s Macroplastique product line saw U.S. sales increase 64 percent, largely the result of a competitor ending sales of a similar product.

“There’s a lot of opportunity ahead for the company,” said Kaysen. “In the quarters moving forward we will be working hard to ensure successful execution of our plans to drive growth of Urgent PC and Macroplastique in the U.S., while planning for longer term growth drivers. Assuming that we execute our plans, we are optimistic about the future outlook for all of our stakeholders.”

Two years after capturing the Minnesota Cup, the medical device startup based in Minnetonka, Minnesota, grabbed a Tekne Award for the state’s top “small and growing” lifescience company.

CoreSpine designs instruments that remove diseased materials like cartilage and nucleus from patients’ spines before doctors perform surgery to relieve chronic back pain, a condition that plagues a growing number of Americans.

“CoreSpine is dedicated to helping physicians utilize surgical therapies that are both cost-effective, and reduce patient pain and recovery time,” Founder Christine Horton said in a statement. “We believe this award illustrates how advancing technology can be used to not only improve patient outcomes but deliver them at a reduced cost.”

The Minnesota High Tech Association administers the Tekne Awards, an annual competition to honor the most innovative Minnesota companies and organizations.

After winning Medicare reimbursement Wednesday for its urinary incontinence therapy, the company has seen its stock price jump more than 20 percent to around $5.35 per share.

Uroplasty estimates Medicare will pay a base price of $97.49 per procedure, during which a pulse generator shoots low levels of electricity into the spinal nerves that control bladder function.

However, Charles Haff, an analyst with Dougherty & Co., an investment bank in Minneapolis, thinks doctors will ultimately receive $126.47 per procedure.

Haff breaks it down this way: $65 to Uroplasty and $61.50 to the physician. Assuming the patient receives 12 neurostimulation sessions, doctors would generate revenue of $738 per patient. That’s well above the $450 doctors told Haff they would need in order to adopt the technology.

“With this higher-than-expected profitability for physicians to prescribe Urgent PC for their patients, we expect much more rapid adoption of the technology,” Haff wrote in a research note. “We would be strong buyers of the stock here.”

As a result, Haff boosted his fiscal 2012 sales forecast for Uroplasty to $26.1 million from $18.2 million. He also upgraded his fiscal 2013 sales estimate to nearly $40 million from $28.7 million.

UnitedHealth Group Inc. (NYSE:UNH) boosted its end-of-the-year profit forecast, thanks to a strong third quarter that blew through Wall Street estimates.

The nation’s largest private insurer, based in Minnetonka, Minnesota, said it now expects to earn $3.85 to $3.95 per share for the year, compared to its earlier estimate of $3.40 to $3.60 a share.

For the third quarter, UnitedHealth said it earned $1.3 billion, or $1.14 per share, a nearly 19 percent gain from the same quarter a year ago. Wall Street analysts had expected 84 cents a share, according to Yahoo! Finance.

Revenue jumped nine percent to $24 billion from $22 billion during the same period in 2009.

“Fundamental execution, increasing business diversity, and on-going product and service innovation continue to be key elements anchoring the company’s sustained growth,” said CEO Stephen Hemsley.

Most of UnitedHealth’s profit gain game from its core insurance business, which includes the former Ovations (retirement) and Americhoice (community and state) units. Earnings from operations jumped 44.4 percent to $1.79 billion from $1.24 billion from the same quarter last year, thanks to solid revenue growth and cost controls, the company said.

UnitedHealth’s faster growing Health Services businesses, including  OptumHealth, Ingenix, and Prescription Solutions, saw revenues increase 14 percent to $6.24 billion from $5.47 billion during the same period a year ago.

But the cost of that growth eroded profitability as earnings from operations fell 19 percent to $352 million; profit margins slumped to 5.6 percent from 7.9 percent due to “higher levels of investment in areas of business expansion and growth,” the company said.

For example, Ingenix made four acquisitions in recent months, snapping up Axolotl, Executive Health Resources, Picis Inc., and A-Life Medical since late July.

The orthopedic startup, based in Minnetonka, Minnesota, has so far raised $550,000 of that amount.

Dgimed is developing a nail and drill system, dubbed Distalock, that allows orthopedic surgeons to quickly and accurately insert locking screws used to stabilize rod-like implants in patients suffering from long bone fractures.

The company says the technology, invented by Dr. Ramon Gustilo of the Excelen Center for Bone and Joint Research and Education in Minneapolis, can ultimately lower costs by speeding surgeries, and reduce or eliminate the need for X-rays.

Dan Gladney, a healthcare operating partner at buyout firm Norwest Equity Partners, founded Dgimed in 2008. Franck Gougeon, founder and former CEO of AGA Medical in Plymouth, Minnesota, sits on the board of directors.

Cardiac Concepts Inc.

The company, based in Minnetonka, Minnesota, is developing a pacemaker-like device that uses electricity to treat sleeping disorders.

Minnesota has become a bit of a hub for startups looking to correct breathing-related sleeping problems. Apnex Inc. in St. Paul is developing an implantable device that uses electricity to open clogged airways when a patient sleeps, a condition known as obstructive sleep apnea.

That device stimulates a nerve that forces the tongue to push forward, allowing the patient to breathe easier. Inspire Medical Systems Inc. in Brooklyn Park, Minnesota, a startup that spun out of Medtronic Inc. (NYSE: MDT), is working on similar technology.

Cardiac Concepts is focusing on central sleep apnea (CSA), a disorder caused by the brain failing to send proper signals to the muscles that control breathing. CSA, which accounts for less than five percent of all sleep apneas, causes patients to constantly start and stop breathing during sleep.

Cardiac Concepts is marketing its device, called the RespiCardia System, for patients suffering from heart failure. The company believes CSA can worsen heart failure and even cause death. RespiCardia consists of a pulse generator implanted beneath the skin near the collar bone that shoots small amounts of electricity into the nerve controlling the diaphragm.

Last month, the company enrolled the first 40 patients in a pilot clinical trial that will be conducted around the world, including Europe and the United States.

Cardiac Concepts’ investors include a host of high -profile venture capital firms: Affinity Capital Management in Minneapolis, Polaris Venture Partners, Three Arch Partners, Versant Ventures, and Accuitive Medical Ventures. Dale Spencer, a prominent local medical device entrepreneur and investor, also serves on the board of directors.

UnitedHealth Group Inc. (NYSE: UNH) Tuesday boosted its annual profit forecast, thanks to a strong revenue growth across all of its businesses in the second quarter.

The Minnetonka, Minnesota-based company, the nation’s largest private health insurer, said it now expects to earn $3.40 to $3.60 a share on revenue of $93 billion compared to its earlier projection of $3.15 to $3.35 per share on revenue of $92 billion.

For the second quarter, UnitedHealth said profits jumped 31 percent to $1.1 billion from $859 million during the same period a year ago. Total revenue grew 7.4 percent to $23.3 billion from $21.7 billion.

Stephen Hemsley, CEO, UnitedHealth Group Inc.

“We’re seeing our businesses getting stronger,” CEO Stephen Hemsley told analysts during a conference call. “We have a positive outlook for 2011. All of this is encouraging and all [of] it is broad based.”

Hemsley credited UnitedHealth’s performance to local market focus, aided by national scale and flexible pricing.

“Our sales and distribution worked more effectively than they ever have before,” he said.

The company’s core benefits business, which includes UnitedHealthcare, Ovations and AmeriChoice, generated $21.64 billion, a nearly 7-percent gain from the second quarter 2009. In that period, UnitedHealth added 1.1 million customers from government and senior citizen markets, but lost 400,000 commercial customers because of growing unemployment.

UnitedHealth’s services businesses, which includes Ingenix, OptumHealth and Prescription Solutions, generated $6.2 in revenue, a 16-percent jump from the same period a year ago.

The company noted particularly strong growth from healthcare technology and services, and drug benefit management programs. For example, its Prescription Solutions unit saw revenue grow 18 percent to $4.21 billion.

Hemsley said UnitedHealth still has a lot of  room to grow in health services, which is why the company will continue to invest most of its expansion capital in these markets.

“We actually feel like we’re under-weighted in services,” he said.

For 2011, Hemsley said the company faced significant headwinds including weak-economic recovery, low-interest rates that depresses the value of its investment portfolio and state budget shortfalls, specifically with Medicaid programs for the poor.

If that doesn’t sound too impressive, consider this: The doctor can literally see the patient, access medical histories, listen to heartbeats and check the eyes, ears, nose and throat — all from the other side of the country.

“Telemedicine is going to be as common as the telephone,” said Woodburn, the former chief medical officer of MinuteClinic who now oversees UnitedHealth Group Inc.’s (NYSE: UNH) ambitious effort to build the first national telemedicine network.

Long touted by experts as a way to cut costs and expand patient access to doctors, remote medicine is increasingly drawing the interest of medical, software and telecommunications companies alike. The market for health-related mobile services and devices will hit nearly $2 billion by 2013, according to a report by law firm Pike & Fischer.

Datamonitor, a provider of online database and analysis services, forecasts that annual spending on telehealth hardware, software and related services will nearly triple over the next three years, from the current $2.4 billion to $6.1 billion in 2012.

“Mobile technology is proving to be a major cost and time-saver in the medical environment, and as a result, represents a significant evolutionary step in the field of modern medical treatment and preventive care,” Pike & Fischer said. ” This technology allows specialists to triage, diagnose and monitor remote medical cases by viewing data and images conveyed wirelessly to their location.”

WellPoint Inc. recently said it will offer its members access to doctors via the Internet and text messaging. Last year, Verizon Communications said it will launch an online physician video chat service called Telehealth Collaboration.

Earlier this month, Delta Airlines said it will become the first company in the United States to use its UnitedHealth’s NowClinic program. The service, initially available to 10,000 employees in Minnesota, allows workers to access doctors through the Internet 24 hours a day, seven days a week.

Given the falling price of technology and federal stimulus funding for super-fast broadband networks, UnitedHealth decided in 2009 to pay for telemedicine services.

“Last year really accelerated the development of telemedicine,” said Wooburn, vice president of clinical initiatives at UnitedHealth’s OptumHealth unit. “We seized that opportunity.”

UnitedHealth is partnering with Cisco Technologies to develop Connected Care, the first national telemedicine network. Using homemade software and Cisco video conferencing equipment, the company, the nation’s largest private insurer, hopes to use its size and scale to sell doctor groups and employers its telemedicine technology and services.

Doctors, especially in rural areas, can boost revenue by seeing more patients through Connected Care instead of driving miles to hospitals and clinics, Woodburn said. Employers can boost productivity by allowing patients quick access to physicians, thereby “getting ahead of the disease process,” he said.

Among the early takers: Park Nicollet Clinics in Minnesota and Centura Health Systems in Colorado.

Similar to a cable bill, UnitedHealth charges customers a flat monthly fee that can run anywhere from $2,000 to $10,000. So far, the service consists of a nurse and a room where patients interact with doctors through a large, high-definition monitor.

With the push of just one button, the entire system quickly activates. Through a variety of cameras and sensors, the doctors can do everything from listen to a patient’s heartbeat or closely examine skin. (See video).

Eventually, patients won’t need to go to special rooms, Woodburn said. Instead, they can receive all of these services through telephones at home or work equipped with this technology.

Connected Care is not without its challenges. Patients might not feel they are getting the best care if the doctor is not physically in the room. And accessing medical records could still be difficult because of the hodgepodge of systems scattered throughout the country.

The key to building an integrated national telemedicine network is to partner with rivals like WellPoint, Woodburn said.

“We can’t do it alone,” he said. ‘There’s plenty of room for everyone to be successful.”

The startup, based in Minnetonka, Minn., is developing an implantable device to stop severe cramping (dysmenorrhea) and heavy bleeding  (menorrhagia) in women by “deactivating” the endometrium, the inner layer of tissue lining the uterus, which the body sheds during menstruation.

Specifically, the device, created by Minneapolis gynecologist Dr. Jim Presthus, contains a biocompatible material that causes tissue adhesion (the union of two opposing tissue surfaces) in the uterus. The technology can also be used to prevent pregnancies, according to documents filed with the U.S. Patent and Trademark Office.

Impres will use the money to speed commercialization of the technology, which is already two years behind schedule and faces competition already on the market, said Brad Lehrman, a venture attorney who runs Portage Equity Capital Inc., the company’s main investor.

Impres has already raised $1.3 million during its Series A round of financing.

Other investors include Upper Lake Growth Capital, Sunflower Capital, Technology Funding Venture Capital and private individuals.

The company said Thursday that it raised $18 million in a Series E financing round. And Anulex still plans to raise at least $2 million more, said CFO David Noel.

That brings Anulex’s total haul to about $75 million since 2003, including a $3.8 million sale of debt and options in March.

The company will use the latest money to finish the post-market study of its Xclose Tissue Repair System. The technology uses small braided polyester bands to make an X-shaped stitch over openings in the soft tissue around the spine. The device is designed to prevent discs from re-herniating after surgery and to speed healing.

Anulex will also fund further research into its Rimclose bone anchor system to repair damaged spinal discs.

The company’s investors include Affinity Capital, Delphi Ventures, MB Venture Partners, New Enterprise Associates, SightLine Partners, Split Rock Partners and newcomers Hatteras Late Stage VC Fund 1, L.P and an unnamed strategic investor.

The funding comes in the form of debt and options, and was raised from 11 investors.

Last month, Anulex began marketing a new version of its Xclose tissue-repair device, which uses small braided polyester bands to make an X-shaped stitch over openings in the soft tissue around the spine. The device is intended for use with patients who undergo surgery for herniated discs. The company says the device will keep a disc from re-herniating while speeding the recovery process.

The first-generation iteration of the Xclose was cleared for U.S. use in general and orthopedic surgery in 2006. The device has been used in more than 7,300 procedures, according to the company.

The most recent cash infusion brings Anulex’s total funding to around $52 million since 2003. The company closed its fourth round of funding in June, pulling in $10.2 million from a number of investors.  Affinity Capital, Delphi Ventures, MB Venture Partners, New Enterprise Associates, SightLine Partners and Split Rock Partners participated in that round.

The company is also developing a device called the InClose, a mesh implant designed to provide a scaffold that aids in the regrowth of tissue after surgery.

An Anulex representative didn’t immediately return a call.

The company derives its name from the annulus, a term for the soft tissue that surrounds spinal discs.

Mark Knudson, CEO, EnteroMedics Inc.

Someday, in the not-so-distant future, EnteroMedics Inc. officials might look back at late 2009 and laugh. Or cry.

That ultimately depends on whether the Food and Drug Administration ultimately approves or rejects the company’s groundbreaking Maestro device. Approval means enormous financial success, the only implantable neurostimulation device in the United States designed to treat obesity. Rejection means the end of EnteroMedics, not to mention millions of investment dollars and years of painstaking research down the tubes.

But win or lose, October 2009 will certainly be a key date in the company’s history. That’s when EnteroMedics received the results of its key EMPOWER trial. The news was bad: patients receiving the VBLOC therapy lost no more weight than the patients implanted with a dummy device.

“Everyone was completely stunned when the results came out,” CEO Mark Knudson said.

That could have spelled doom for the company as investors dumped the stock. But now armed with fresh capital and encouraging talks with the Food and Drug Administration, EnteroMedics hopes to conduct a follow up study next year, with an eye on FDA approval in 2012.

That, of course, is much later time line the company had originally envisioned. But given its precarious position, 2012 is looking awfully good.

In some ways, EnteroMedics is the perfect case study of how the promise of a breakthrough technology ran smack into the grim financial and regulatory headaches confronting medical device start-ups today.

Several companies have been exploring the idea of using using electricity to control feelings of hunger but EnteroMedics is far ahead of the pack. Its Maestro device shoots currents down the Vagus nerve, interrupting signals between the brain and stomach. Not only could Maestro combat obesity, but the company argued the device could also treat diabetes and hypertension.

But being first in line also has its downsides. First of all, the company must design a randomized, blinded clinical trial that compares the technology being tested to a control group either through an alternative treatment or, if none exists, a placebo. But unlike pharma trials in which patients are given sugar pills, medical device companies must implant something in the patient to act as the placebo. Some experts even argue that implanting a device in a patient with no therapeutic value is unethical.

“It’s very difficult,” Knudson said. “It’s the biggest issue facing medical device companies in Minnesota. With devices, there’s no such thing as a sugar pill.”

Mark Kroll, a medical device engineer and a former top executive at St. Jude Medical Inc., says it’s also tough to enroll the right patients. People who are willing to participate in such a trial are probably “highly motivated” to lose weight and thus more susceptible to believe the dummy device is working, he said, a phenomenon known as the placebo effect. In other words, a patient who is told they have a device to help them lose weight might actually lose the weight.

From 2001 to 2006, the percentage of new pharmaceutical products cut from development after Phase II clinical trials, when drugs are first tested against placebo, rose by 20 percent, according to Wired magazine. The failure rate in more extensive Phase III trials increased by 11 percent, mainly due to surprisingly poor showings against placebo.

There’s also mounting evidence of “an enhanced placebo effect” in medical device trials, especially when “under conditions of heightened expectations,” according to a 2000 article published in the Journal of Clinical Epidemiology. The article noted strong placebo effects involving sham devices have frustrated researchers trying to prove the clinical value of acupuncture and devices that uses electricity to treat pain.

“The evidence for the existence of an enhanced placebo effect for devices and procedures is intriguing but by no means conclusive,” the article concludes. “Most studies on the subject were conducted before the era of obligatory informed consent and suffer from methodological flaws that cast doubt on their validity. Yet, the phenomenon cannot be ignored because its existence has important implications for the interpretation of many influential randomized control trials.”

For EnteroMedics, everything seemed fine until last October when the company dropped the bombshell: Initial results from the EMPOWER studies of more than 400 patients showed people who used the Maestro device just as much weight as patients implanted with the dummy device.

The sham device did contain wires connected to the nerve. Knudson believes the wires released low intensity energy whenever the company performed a safety check on the device. Still, the results were shocking: the Maestro device delivered 10,000 times more electricity to the therapy group but did not perform any better than the control group’s dummy device.

“When you’re the first people to plow the field, you find the boulders,” Knudson said. ‘When you do something new, you always find something unexpected.”

Knudson also noted the study proved Maestro worked. It also took much longer for the control group to achieve the same weight loss as the therapy group.

Investors weren’t comforted. EnteroMedics stock plummeted from $5.40 a share to less than $1 a share in just a few days. The company now trades around 60 cents a share.

“It’s painful when your stock gets hit like that,” Knudson said. “It makes it difficult to move forward.”

But the company had one distinct advantage: timing.

EnteroMedics went public in 2007, well before the economy plunged into the deepest recession since the Great Depression. The idea of investors eagerly buying shares of  a company with nothing yet to sell would be all but impossible in today’s risk averse economy.

In fact, EnteroMedics along with Virtual Radiological Corp. of Minnetonka and AGA Medical Holdings Inc. of Plymouth, are not just the last three local medical device companies to go public but are the last three companies of any kind in Minnesota to go public since the end of 2007.

It’s hard to say what would have happened to EnteroMedics in the fall of 2009 if it was still a private company. Could the company raised more money from wary venture capitalists to conduct another trial? Knudson, for his part, is glad he didn’t have to find out.

“We had enough cash to stay solvent but not for another test because we didn’t think we needed it,” said Paul Klingenstein, a managing partner of Aberdare Ventures and an EnteroMedics board member. “It’s extremely difficult for a young company to gain the financial resources to take to a Phase III study. We didn’t fully understand that but now we do.”

In January, EnteroMedics managed to raise another $4.8 million from selling stock to institutional investors. The company also said the FDA encouraged it to submit an Investigational Device Exemption application to run another clinical trial that would validate the therapy results of the EMPOWER study.

EnteroMedics officials believe they can design the right study. The new trial will still use a dummy device but with no wires connected to the nerve. Patients will also use an updated Maestro device in which the battery pack will be worn around the belt instead of an implant. The company hopes the upgrade will boost patient compliance to 95 percent from just over 50 percent in the original study.

“I’m absolutely confident in the company,” Klingenstein, the board member, said. “But will I predict what the FDA is going to do? No way.”

Uroplasty Inc.’s stock price jumped 4.6 percent Tuesday after the company announced positive results from study of its incontinence treatment, according to the Minneapolis-St. Paul Business Journal. The movement comes after the Minnetonka-based medical device developer reported favorable results from a large study to be published in the April 2010 Journal of Urology.

A Minnetonka startup believes that it may have an answer to Alzheimer’s, according to Finance & Commerce. Medisyn Technologies, in collaboration with the Mount Sinai School of Medicine in New York, has identified eight chemical compounds that may eventually reduce the buildup of an abnormal protein that is found in the brain of all Alzheimer’s patients.

Mayo Clinic said Tuesday that the Michael J. Fox Foundation awarded a $500,000 grant to a neuroscientist at its campus in Florida. The researcher, Matthew Farrer, studies how a gene, known as LRRK2, functions normally within brain nerve cells (neurons), and also how it can go awry when mutated. Dr. Farrer was part of the original team who discovered the link between LRRK2 and Parkinson’s disease in 2004.

Mayo Clinic said Thursday that it returned to profitability in 2009, thanks mostly to large investment gains and expense control.

The organization reported income of $333 million, a 4.4 percent operating margin, after breaking even in 2008. Mayo generated $7.6 billion, a 5 percent gain from 2008. Expenses grew less than one percent to $7.248 billion.

The organization’s investment portfolio earned a 12.4 percent. Mayo, however, cautioned that it “can’t rely on strong stock market performance as a stable source of funding for the long-term.”

UnitedHealth Group Inc. in Minnetonka has purchased a health screener called Wellness Inc., according to the Minneapolis-St. Paul Business Journal. Terms of the deal were not disclosed. Wellness, a 23-year old company based in Aurora, Ill., emphasizes preventative care to manage employee health, offering biometric screenings, flu vaccinations and lifestyle-health assessments in the workplace and has more than 1,000 company clients.

The U.S. Department of Justice filed charges against Boston Scientific Corp.’s Guidant division Thursday, saying it did not fully disclose problems with its devices to regulators, according to Finance & Commerce in Minneapolis. The charges, filed in U.S. District Court in St. Paul, are part of a previously announced agreement for Boston Scientific Corp. to plead guilty to the two misdemeanor charges.

LifeScience Alley, Minnesota’s top biomedical trade organization, said it’s forming a 510(k) Action Committee to lobby against proposed changes to the Food and Drug Administration’s popular medical device approval program. In a letter to the Institute of Medicine committee empowered by Congress to examine the 510(k) program, LifeScience Alley criticized the makeup of the committee, saying it did not include any members of the medical device industry.