Fantastic Voyage

The era of putting machines inside the human body began in the 1960s with the pacemaker. Today, patients can receive implantable defibrillators that jump-start their hearts in mid-attack and cochlear implants that restore hearing. Progress is being made on miniature, microchip-based pharmacies that will be able to dispense drugs internally, as needed. The $60 billion medical-device industry--about 6,000 companies in the United States--is in the throes of an unprecedented wave of innovation, all concentrated on saving lives and improving their quality. In this burgeoning industry, a single person with a product and a vision can still have tremendous impact--and potentially reap tremendous rewards. But as the story of Cyberonics shows, this business also takes tremendous resiliency and determination: Conceiving a medical device, designing it, earning FDA approval, and persuading doctors to use it is one of the hardest--and riskiest--tasks in the world of business.

In Operating Room 22, just before 1 p.m., Dr. Dan Cahill, a surgical resident working under Dr. Madsen's supervision, begins to make the incisions in Jordyn's neck and chest. At the end of the table, Jordyn's feet poke out from beneath the surgical draping; her toes are painted with red polish, about half of the coat worn and chipped away. Soon, her feet and her face are covered, and blond-haired Jordyn becomes just a body on the table, her heart beating 88 times per minute.

Reese Terry was the vice president of technology at Intermedics, a Texas medical-device company, in the mid-1980s, when a neurophysiologist from Temple University showed him a primitive vagus-nerve stimulator that had been implanted in dogs with some success. When the animals went into seizures, the device seemed to halt them.

Terry was intrigued, but when Intermedics funded a study of the device in four monkeys, the outcome was cloudy. "Fifty percent of monkeys it helped," he says with a Kentucky drawl.

His employer didn't seem interested in pursuing the epilepsy project. In 1986, Terry found himself out of a job, the victim of a corporate restructuring. Rather than looking for another job with an established device company, he decided to try to develop a vagus-nerve stimulator on his own. "It was a great idea, and nobody else was picking it up," he says. "There was a lot of risk, but I thought I might as well try it. I knew I could design a product fairly quickly and inexpensively."

Terry bought a book on how to write a business plan. In 1987, he managed to raise $1 million in funding from a brand new venture capital firm in Houston called Ventures Medical, along with Cummins's venture firm, the Vista Group, and Sevin Rosen, the firm that initially funded Compaq Computer. But the money came in stages, contingent on making progress.

Terry felt far from flush. His rented office space was in a strip mall. Personnel matters were discussed in a booth at the Dairy Queen. And while $1 million is a windfall to most start-ups, he knew that it might not be enough to get the first device into a human. To save money, Terry and the medical-device consultants he hired tried to adapt off-the-shelf parts for their purposes instead of designing everything from scratch. Terry found a handful of doctors willing to try the device in their patients, though there was a lot of skepticism about stimulating the vagus nerve. Some thought it would cause heart problems or give patients ulcers, since the nerve sends signals to both the heart and stomach. "Several physicians got involved with the trials, they'll tell you, to prove that it wouldn't work," says Brent Tarver, Cyberonics' third employee and now the senior director of medical affairs. The first implant was done in North Carolina in late 1988. Patient number one was a 25-year-old man from Virginia who'd been having one or two seizures a day.

On a ski trip in Colorado that Christmas, Terry called the doctor who had performed the first implant for a status update. "The patient's seizure rate had dropped down by about 80%," Terry recalls. "That was a nice Christmas gift." The results were similar in patient number two, a young man who'd been having about one seizure every hour. "His seizures went to almost zero," Terry says. Cyberonics was getting neurologists' worst patients--the ones on whom they'd tried every available treatment--and its device seemed to be helping them.

Cyberonics was getting neurologists' worst patients--the ones on whom they'd tried every available treatment--and its device seemed to be helping them.

By June 1989, 10 patients had received the implant. "Not all patients responded as well as the first two," Terry says. "It's not a home run in every patient." And the company had encountered its first big snafu: A wire running from the generator, the small disc that produces the electrical impulses, to the vagus nerve itself was breaking from fatigue. It had to be replaced in many of the first 10 patients, requiring another surgery.