Company News
Phygen on Mission for Army
Reprinted with permission from MINNEAPOLIS STAR TRIBUNE. Written by Janet Moore
The northeast Minneapolis company is developing a novel sterilization technology for medical devices.
Somehow, it seems fitting that medical technology firm Phygen Inc. is housed in a former sausage factory.
After all, making sausage involves a pinch of this, a fistful of that, exacting processes, and a smidgen of faith -- really no different than building a company.
Since its founding in 1994, Phygen has generated operating cash and profits though its high-performance, thin-film coatings business, which counts major automakers and manufacturers as customers.
The core business helped fuel another technology that can be used in a new way — an alternative method for sterilizing medical and surgical instruments that is cleaner and faster than conventional processes, not to mention environment-friendly.
Phygen's unassuming headquarters, a former bakery, sausage factory and steel fabrication operation more than a century old in northeast Minneapolis, is a bit different from other Twin Cities med-tech start-ups, which tend to congregate in anonymous office parks along Interstate Hwy. 694.
"We try to run a lean operation here," said David Bell, Phygen's president and CEO, noting that the company purchased a giant vacuum chamber on eBay. As he negotiated a warren of cubicles on the building's ground level this week, he pointed to a white metal shell, roughly the size of a gas barbecue — the prototype of the medical-device sterilization chamber the company is developing for the U.S. military.
Phygen has received about $3.5 million from the Department of Defense-U.S. Army to develop new ways to sterilize surgical and medical instruments in combat-support hospitals — pre-fab, highly mobile pods that are delivered to war zones in cargo containers.
The idea behind the grants is simple: If more devices are sterilized in an efficient manner, lives will be saved.
Two years from a prototype
The Army currently sterilizes instruments in its combat hospitals using steam, a technique that dates back to the Vietnam War. But in desert areas such as Iraq, the method can be problematic because it requires a large amount of water and energy. And the autoclave, known as Big Bertha, weighs 250 to 400 pounds, which can be difficult to mobilize in a war zone.
Phygen hopes to develop a portable computer-operated gas-plasma sterilization process, which leaves no toxic residue and is easier to mobilize. The method uses a chamber with a vacuum pump that receives a small injection of vaporized hydrogen peroxide. The chamber electrode is energized with high voltage, and ionized gas in the chamber generates the sterilizing plasma.
The technology initially was developed in the former Soviet Union. Over the years, Phygen has consulted with and funded dozens of Ukrainian scientists to perfect the process.
The company is at least two years away from completing a prototype for purchase by the Army, Bell said.
A U.S. Navy/Marines Small Business Innovation Grant (SBIR) grant for $130,000 will explore similar sterilization technology. Company officials have met recently with military personnel at Camp Lejeune in North Carolina and Fort Sam Houston in Texas to glean ideas and suggestions for improvements. (The Navy also gave $250,000 to the Army to support the Phygen project.)
Additional SBIR grants for about $1.83 million from the National Institutes of Health will help Phygen develop a sterilization unit for commercial use in hospitals and clinics.
Because Phygen's cold process sterilizes at 55 degrees Celsius rather than 130 degrees Celsius, medical devices made of plastic or fiber-optics that would be destroyed in Big Bertha can be used again. In general, reprocessed medical devices have saved hospitals millions nationwide, but most of the work currently is done by a third party. Phygen's sterilizer could be located in the hospital or health care facility, Bell said.
Government grants have provided crucial capital for countless young companies in the Twin Cities such as Phygen. "SBIR funding should be a critical financial tool for young med-tech companies in funding their high-risk projects from concept to commercialization," said Betsy Lulfs, program director of the SBIR Assistance Program at the Minnesota Department of Employment and Economic Development.
Support from angels
Bell said Phygen was fortunate because it has been able to generate cash from its coatings business to support efforts on the medical side. The privately held company does not release financial data, but Bell notes the firm has been supported by angel investors from the very beginning.
One investor is Bud Hayden, who initially ponied up $16,500 about 15 years ago.
Hayden, who has invested in roughly 10 companies, said he knew Bell's father Dwain through the Minneapolis Kiwanis Club. He said he has long been impressed by the younger Bell, who was the recipient of a Kiwanis Club scholarship in high school. "He was the only kid who ever paid it back," he said.
Hayden has yet to see a payoff on his Phygen investment but nonetheless keeps the faith. The government grants only reinforce his confidence in the company's potential. "It really validates the work Dave is doing," he said.
Reprinted with permission from Minneapolis Star Tribune, written by Janet Moore
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