Boston-based medtech startup Myomo has cut its staff by 66 percent and adopted a more virtual business model over the past year, due to slower-than-expected initial sales of its highly acclaimed robotic elbow brace for stroke victims, company co-founder and interim CEO Steve Kelly tells Xconomy.
Kelly says that the angel-funded startup “hit a wall” financially toward the middle of last year, prompting the company to trim its ranks from a dozen to four full-time employees last spring and summer. Also, past company CEO Thomas Glover—a former executive at medical products giant Johnson & Johnson (NYSE:[[ticker:JNJ]])—resigned from his post at Myomo last summer, at which time Kelly took over as interim chief executive. Nearly two years since the FDA cleared Myomo’s robotic elbow brace for use in hospitals, only three medical centers have purchased the devices, Kelly says. He adds that the devices are in use at clinics in the Boston and New York markets, and the firm plans to add Hartford to that list in the near future.
“I’m a little disappointed—I thought we would be in more metropolitan areas right now and we’re not,” Kelly says. “That’s partly a function of the economy and the fact that [healthcare] is a conservative industry where things don’t get adopted quickly.”
Myomo‘s technology, initially developed at MIT, is indeed new to healthcare practitioners. The firm’s first and highly acclaimed product, called the “e100 NeuroRobotic System,” is an elbow brace equipped with electrodes that pick up electrical signals on the skin when a patient is trying to move a partially paralyzed limb. The system translates the signals into movements. And even though the technology has brought the startup awards from MIT and Popular Science magazine, rehab clinics that the company has initially targeted for sales have been slow to adopt the device. The $7,500 cost of the system has not yet garnered U.S. insurance reimbursement, and clinics that purchase the FDA-approved device don’t necessarily get reimbursed more for providing therapy with the product than they would without using it.
Still, Kelly says he is pleased that his company chose to reduce its expenses and adapt to a virtual model with outsourced manufacturing and engineering before the economic meltdown in late 2008, when many companies were forced to abruptly lower costs and adjust to operating with fewer employees. (He says that Myomo has raised less than $5 million from himself and other angel backers, but he declined to provide further financial details.)
Myomo has ambitious plans to
