Calypso Medical Technologies, on the surface, looked like it was on the brink of breakout success in September 2009. The Seattle-based company raised $50 million in venture capital—the biggest investment that year in Washington state—to beef up R&D, hire more people, and take its system for precision-guided cancer radiation treatment beyond the U.S. market and onto the world stage.
But Calypso was actually struggling. Hospitals, stung by the stock market plunge of 2008, didn’t see enough of a recovery in their endowments over the next year to replenish capital budgets they use to purchase new medical equipment. Medicare proposed a 40 percent reimbursement cut for radiation therapy providers, making some hospitals wonder if they ought to quit that work altogether. Many healthcare providers remained in wait-and-see mode on federal healthcare reform until it became law in March 2010.
“We were hit by a trifecta in the ’08 and ’09 time frame,” says Calypso CEO Ed Vertatschitsch. “It all became apparent that our growth plans probably weren’t aligned with the macroeconomic, and in some cases, specific microeconomic things that were going on. We had to make some adjustments.”
Calypso is now looking to put its struggles into the past. Founding CEO Eric Meier left the company in August. One of Vertatschitsch’s first tasks that month as his interim replacement was to carry out a 15 percent cut to the workforce, and to reorganize the company’s sales force. Calypso has remained stable since then with a staff of about 125 employees, Vertatschitsch says.
The company is privately held and doesn’t disclose detailed financials, so it’s impossible to say for sure how much things have changed since then. While Calypso isn’t yet profitable, and doesn’t expect to operate in the black until another product line comes out for lung cancer in 2012, the company did set a quarterly sales record in the fourth quarter, Vertatschitsch says.
Enough progress was made that Vertatschitsch had his “interim” tag removed, and was named the permanent CEO in January.
The timing is certainly good for Vertatschitsch to take the helm. The stock market is up, so hospitals should feel a little more confident they can spend again. Medicare didn’t carry out its threat to make a 40 percent cut in radiation therapy reimbursement. Healthcare reform has been the law for a year, and providers are figuring out how to live under the new system. And people who once thought of Calypso as a cool nice-to-have technology actually are considering buying it, Vertatschitsch says.
At a recent cancer radiation trade show, the American Society for Radiation Oncology, “We had people say to us ‘we have room for Calypso now in our budget, we’d like to talk to you.’ That kind of thing didn’t happen at the end of 2009,” Vertatschitsch says.
For those new to the story, here’s a little bit of the background. Calypso was founded in 1999 by Seattle-based Frazier Healthcare Ventures to develop an idea for what it now markets as “GPS for the Body.” The system is designed to make sure that beams of radiation are aimed exclusively at cancerous prostate glands, without harming healthy tissue nearby. The machine monitors movement of the prostate in real-time, meaning if a patient burps, twitches, or even has
