PROVIDENCE – The morning after the election, on Nov. 5, SV Life Sciences, a Boston-based venture capital firm, announced that it had purchased the majority stake in Ximedica, one of Rhode Island’s most iconic knowledge economy firms. Terms of the deal were not disclosed.

Founded in 1985 [as the Item Group] by two RISD graduates, Aidan Petrie and Stephen Lane, Ximedica has often served as the poster child for Rhode Island’s emerging knowledge economy cluster, a company focused on the development and commercialization of medical devices.

What has set Ximedica apart is its focus on innovation as a process and not just product creation. The firm emphasized research on what it called human design – the understanding of how medical devices were used by clinicians and patients – before beginning any actual manufacturing.

The focus proved to be a distinct competitive advantage. Today, with headquarters in Providence and offices in Hong Kong and Minneapolis, Ximedica is a full-service ISO 13485 certified and FDA-registered product development firm with clients from around the globe.

The deal with SV Life Sciences marks the departure of co-founder Stephen Lane from the firm but keeps the current leadership team in place, with Randall S. Barko as president and CEO and Petrie as chief innovation officer. Paul LaViolette, managing partner and COO at SV Life Sciences, will now serve as chairman of Ximedica’s board.

What the deal means
Petrie, the chief innovation officer, spoke with ConvergenceRI the morning that the deal with SV Life Sciences was announced, just before he left to speak at the inaugural Industrial Designers of America medical design conference, “The Usability Ecosystem,” held in Tampa, Fla., on Nov. 6-8.

As a result of the deal, Ximedica can achieve its vision of becoming “the top outsourced medical device developer in the country and the world,” Petrie told ConvergenceRI.

Few companies, he continued, do what we do. “We are FDA registered and fully focused on medical devices. With SV Life Sciences behind us, we can really fulfill that opportunity.”

Petrie said that Ximedica had not pursued the transaction with SV Life Sciences, rather than the deal had found them. “We never went out to market,” he said. “We were approached a number of times.” SV Life Sciences, he continued, is one of the best in the business. “They saw the platform we had built, and that we were ready to take it to the next level.”

Staying in Rhode Island
Petrie said that the expectation is that, with SV Life Sciences’ support, Ximedica will be able to double the company’s size in two to three years. “Our intent is to grow the hub here in Rhode Island, to grow the mother ship in Providence as much as we can.” he said, while, at the same time, adding some remote offices. “There is an enormous amount of business out there.” Ximedica, he continued, has a degree of loyalty to Rhode Island.

In the next few months, Petrie said that Ximedica will be ramping up a new platform, called XiLab, an education and information component, positioning the company as a thought leader in the medical device business.

“The concept is relatively straightforward,” Petrie explained. “Because of the complexity of medical device development, not everyone can be a single knowledge source. There’s no one answer.” The new platform, he continued, will share knowledge at the front end of the process, in a collaborative fashion. “It will aggregate knowledge in a way that universities and entrepreneurs can use various aspects as they need,” he said.

The path forward
Barko, the president and CEO of Ximedica, also spoke with ConvergenceRI soon after the deal with SV Life Sciences was announced. He praised the deal, saying that the venture firm had a large portfolio of companies in life sciences and health. “They have a great understanding of the market, the needs of the market, and the changing demands of the market,” he said. “They are very complementary to what we’re doing.”

SV Life Sciences, Barko continued, with its headquarters in Boston, also has branches in San Francisco and London, providing transatlantic and West Coast resources, opening doors to networking and connections.

One element that will not change is Ximedica’s culture as a company. “We want to preserve the dynamic culture of our company, which has been a key element of our success to date, to build upon it and preserve it,” Barko said.

With the advent of health care reform, Ximedica has positioned itself to redefine the concept of innovation, putting the emphasis on reducing costs while at the same time providing better outcomes, Barko continued.

“There are a lot of great ideas, innovation per se, a lot of technology, but unless it’s married to outcomes, it’s wasted. We try and consult and evaluate opportunities,” Barko said. The focus, he continued, needs to be on what’s the path to get there.

Toward that end, Barko joined Petrie in touting XiLab and the importance of sharing intelligence. “What can be known, will be known,” Barko said.

When Ximedica is looking at projects and opportunities, the firm does an assessment of the development cycle, what’s needed for commercialization, milestones, and the regulatory path.

“We’re going into a lot of details, and we don’t have any issues with clients and customers sharing the path we’re outlining, as part of competitive bids, as long as everyone is working from the same requirements,” he said.

In terms of investment, Barko said, people are dotting I’s and crossing T’s up front, a process in which Ximedica is a leader.

“When you’re backing an idea, it’s better to spend $1 million and have a fast failure, rather than spending millions more and then finding out you don’t have anywhere to go,” Barko said. “It enables the $8 million or $9 million to be deployed elsewhere.”