Mody is CEO of AFx, a Fremont, Calif.-based medical technology startup that is using conventional microwave technology to deliver therapy. The golf club-like tool, variously called Flex-2 or Flex-4 depending on the length of the silicon tip, can be plugged into a generator that emits microwave energy. This energy helps to heat and kill cells in cardiac tissue that alter the heart’s regular rhythm. Patients with such atrial fibrillation often suffer severe discomfort caused by unexpected palpitations, and are five times more likely to suffer a stroke.
AFx’s Evolution
The company was founded in 1993, but experienced a long gestation period. Mody says original investors in the company, such as noted life sciences investor Alta Partners, were unsatisfied with the way business was being conducted. Significantly, the product had not been developed. As a result, after investors pumped in $8.5 million in August 1998, most of the management team was changed. Mody joined in January 1999 and ever since has worked to revamp AFx’s image. One major hurdle was to win FDA approval, which was achieved in May. Since then, 15 operations in America have used AFx’s tools.
One of a Kind
One positive indicator for AFx is that in the 400-odd cases of irregular heartbeat that have been treated via microwave technology in Europe and America in the past year, none have reported any adverse effects. Globally, AFx is the only company that supplies microwave cardiac ablation tools that are approved both by the FDA and the European Union. Each disposable Flex tool costs $1,800 and the generator $28,000. In America, six hospitals are using AFx’s tools. Mody hopes to increase that by another five or six soon. The FDA approval has provided momentum for expansion and the company is seeking to hire savvy sales and marketing people. However, additional venture capital is needed to fund the endeavor and AFx is approaching venture capitalists for another round. Mody hopes to raise $15 million.
“We are approaching more VCs than before and on both coasts,” he says, indicating the difficulty in the current economic scenario.
AFx has a burn rate of $400,000 a month. After the FDA approval, European revenues, which accounted for 100 percent of sales, have sharply reduced to only 15 percent. Business in United States now makes up the rest.
The Road Ahead
By the middle of next year, AFx will unveil its next generation tool, which will be a step toward minimally invasive surgery. The Flex-10, to be released first in Europe, has a much longer copper wire section that can actually wrap around an entire organ. Due to its length and flexibility, surgeons can make small incisions in the patient’s body, thereby speeding up a patient’s recovery by reducing blood loss.
