By Neil P. Ray, Founder & CEO, Raydiant Oximetry
In In the wake of the Covid-19 pandemic, medical innovation took center stage as new vaccines were created and telemedicine users grew. Fast forward two years and medical innovation remains critical. Health and medical innovation is costly — often requiring many millions of dollars, if not more, to bring a product to market — and while some parts of the industry have received significant levels of investment, many rely on initial government funding and support.
One critical stream of that funding is the Small Business Innovation Research (SBIR) program. Though the Senate passed legislation to reauthorize the program for three years this week and the House is expected to take up the bill next week, lawmakers waited until dangerously close to the September 30 deadline to reauthorize the program. They must not make this mistake again. SBIR is a large source of funding for startups in every field, and failing to achieve a timely reauthorization left startups unsure if future funding would be available — funding that keeps the flow of innovation open, and in the case of my startup, helps to save lives.
As the CEO and Founder of Raydiant Oximetry, Inc., a medical device company in the women’s health care space, our work is complex. We are developing a novel fetal oxygen monitor to more accurately detect babies in distress during childbirth. Our technology has the potential to improve outcomes for both mother and baby by reducing emergency C-section rates, newborn birth injury, and healthcare costs. But none of this would have been possible without the initial support SBIR gave us.
Like many startup founders, I invested personal savings to build a prototype, filed a provisional patent, and obtained preclinical feasibility data to try and bring the concept to life. Then in 2017 and 2018, we were awarded a Phase I SBIR grant from the National Institutes of Health (NIH) and the National Science Foundation (NSF) to further de-risk the concept and develop the opportunity. As of 2022 we have been awarded $2 million in SBIR funding, and raised $12 million from private investments to develop this technology. We also have breakthrough status from the FDA for expedited market clearance, nine full-time employees, and are completing a clinical trial on laboring mothers at UTMB in Galveston, Texas.
We know our work is evergreen and important. The U.S. remains the country with the highest maternal mortality rates in the developed world. Infant mortality rates are also comparatively high. But less than 5 percent of federal research dollars are allocated towards women’s healthcare, and just 2.3 percent of venture capital funds are invested in women’s healthcare innovation. Even when entrepreneurs attempt to address women’s health care, development costs can stop innovation in its tracks. The costs of a low-risk medical device from concept to commercialization is ~$31 million over 7 years. For a high-risk medical device, the costs escalate to ~$94 million over 10 years, and for a pharmaceutical, it is over $1 billion. Without the SBIR program to seed ideas, how do innovators, like myself, solve unmet clinical needs that plague our healthcare system?
Instead of risking expiration of the program in the future, lawmakers should be focused on ensuring timely reauthorization, or better still, permanent reauthorization. And when it comes time to have those discussions again, policymakers should also consider ways to improve the program to make it more accessible to startups — such as improved timelines that match the startup lifecycle and steps to ensure equitable access that reflects the diversity of our startup ecosystem. But in the short term, Congress must reauthorize it. Failing to do so risks our competitive edge on the global stage. Other countries are going out of their way to attract cutting edge innovation to their ecosystems by offering attractive funding opportunities and skilled talent pools for companies willing to relocate. Our company has been courted by government officials from Israel, Switzerland, and Singapore to relocate our business in exchange for a lucrative start-up package.
Technological innovation in healthcare is a crucial pillar that undergirds the wellbeing of our nation, lets us reach communities otherwise unreachable, and bolsters our economic development and prowess, and has for generations. If the U.S. wants to remain a world leader and a force for equity, the time is now for Congress to be on the side of entrepreneurship. Congress must not put startups in this position again.
Neil P. Ray, MD is a board-certified pediatric anesthesiologist, and the Founder and CEO of Raydiant Oximetry, a San Ramon-based startup that uses biomedical devices to help improve maternal and newborn health in the U.S.
Engine is a non-profit technology policy, research, and advocacy organization that bridges the gap between policymakers and startups. Engine works with government and a community of thousands of high-technology, growth-oriented startups across the nation to support the development of technology entrepreneurship through economic research, policy analysis, and advocacy on local and national issues.
