State enterprise investment lures firm to Howard

EyeTel developed device with Hopkins eye center

relocated from Virginia

Savage

October 28, 2002|By TaNoah Morgan | TaNoah Morgan,SUN STAFF

A medical technology company from Virginia is the latest firm to relocate to Howard County, thanks to a $100,000 investment by the state.

EyeTel Inc., which develops equipment to help detect eye disease, moved its headquarters from Chantilly, Va., to Savage this month after the state Department of Business and Economic Development agreed to invest in the company through the Enterprise Investment Fund, closing its first round of financing in which the company raised $2 million.

The company is hoping to raise an additional $12 million to $15 million by the end of the year because of increased interest in its product - the DigiScope - within the pharmaceutical industry. The money will help expand the company's services beyond the mid-Atlantic region, and support improvements to the DigiScope, enabling it to detect a wider range of eye diseases.

EyeTel, which developed its technology with researchers at the Wilmer Eye Institute at the Johns Hopkins University, has contracts with insurance providers such as CareFirst BlueCross BlueShield of Maryland and has confirmed Medicare reimbursement in the Michigan, western New York and Mid-Atlantic regions. The company had about $66,000 in revenue its first year, and is projecting revenue of $1.4 million this year.

Its proprietary technology - used to detect diabetic retinopathy, the disease that causes blindness in diabetic patients - has been approved by the U.S. Food and Drug Administration.

But there are hurdles to implementation, especially on a national scale, without the support of a national health maintenance organization, said Dr. Richard C. Edlow, chief operating officer of the 14-member Katzen Eye Group in Baltimore. Even if a technology can improve care, it could face resistance from the medical community if the technology adds to or changes a physician's routine.

"Implementing a new technology is a very challenging thing," Edlow said. "In today's climate, we need to see so many patients per hour, per day. If I'm now adding a 10-minute test to each patient, all of a sudden that patient flow becomes challenged. From that perspective, it's a bit of a tough sell."

According to a study done this year by the National Eye Institute and Prevent Blindness America, more than 1 million Americans older than age 40 are blind, and an additional 2.4 million are visually impaired. Those numbers are expected to double over the next 30 years as the baby boomer generation ages.

Diabetic retinopathy is a leading cause of blindness, affecting more than 5.3 million Americans age 18 and older. In Maryland, an estimated 99,000 people suffer from the disease, the report showed.

Although diabetic retinopathy can be treated when detected in the early stages, more than half of the patients at risk do not get annual eye exams, which are advised, but typically require scheduling separate appointments from their primary care physicians, said Kevin Quinn, EyeTel's president. The DigiScope is designed for use in a primary care office to help physicians and health insurance companies reach patients who are not being served.

The DigiScope captures an image of the back of the eye and, using EyeTel's Remote Imaging Service (EyeRIS), the image is transferred over the Internet to a reading center at Wilmer Eye Institute in Baltimore, where a trained technician and retinal specialist review the images. The reading center generates a report with recommendations for referrals within a day, and sends it back to the physician's office.

Although the device could mean change to primary physicians' routines, it won't hurt their bottom line. The $6,000 DigiScope is given to the office at no cost, and physicians pay only for the service, which is reimbursable through several insurance plans. Wilmer is paid royalties and is allowed access to the images captured for study. EyeTel also is reimbursed through the insurance companies for reading the images.

For insurers, Quinn said, the EyeTel service costs between $45 and $65 - about half of the $90 to $130 it can take to be seen at a second appointment. But the benefit of the service is that patients who do not routinely see the eye doctor can have their problems detected early and be sent for treatment.

"We're targeting patients who are not compliant with the ophthalmologist," Quinn said. "Once we identify them, we can't treat them. We say you need to be under the care of an ophthalmologist."

That the device's use is reimbursable through insurance companies and that the company has revenue encouraged the state to invest in the company through the Enterprise Investment Fund, which requires a venture capitalist to triple the state's contribution, according to Elizabeth Good, an analyst with DBED's Investment Financing Group. Although the state's investment was more than the company's revenue last year, Good said many companies the state buys stock in don't have any revenue.

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