WisBusiness: TomoTherapy at forefront of ‘next big thing’ in cancer treatment

At $3 million a pop, TomoTherapy’s Hi-Art image-guided radiotherapy cancer treatment machines aren’t inexpensive. But the cost is apparently worth it. According to TomoTherapy officials, at least 23 major U.S. oncology centers have placed orders for the devices, including Johns Hopkins University in Baltimore and MD Anderson Cancer Center in Orlando, Fla.

Dr. Chester Ramsey, a medical physicist at the Thompson Cancer Survival Center in Knoxville, Tenn. has been using one of the machines for a year.

“I absolutely love it,” he said. “It really allows us to treat many types of cancer – including prostate, head, neck, lung – the way we’ve always wanted to.

“People were speculating about this type of machine 20 to 30 years ago,” he said. “But the reality has just now caught up with imagination.”

Ramsey described image-guided radiotherapy, the system used by TomoTherapy as the “next big thing” in cancer treatment.

“Every manufacture that makes linear accelerators has one in the works,” he said. “But TomoTherapy was the first to market and they have a six-month to three-year lead on competitors.”

Upstart TomoTherapy’s competition includes major corporations such as Varian Medical Systems, Siemens Medical Solutions and Elekta. According to John Barni, who has been CEO of TomoTherapy for four years, the machine first images cancerous tumors and then directs precise beams of radiation on the tumors to destroy them. The company’s Hi-Art machine features a computed tomography scanner that finds a tumor and facilitates improved positioning of patients. That eliminates the old practice of moving patients from one machine to another where they are scanned and then treated.

Barni said the key to the TomoTherapy system is a device – protected by numerous patents – that opens and closes tungsten flaps and pinpoints the radiation to the tumor while the beam is rotating around the patient and the patient is moving through the beam.

“With the old systems, it was like shining a flashlight on the tumor,” he said. “With TomoTherapy, it’s like a laser and there are few problems with surrounding healthy tissue being damaged.”

And because the tungsten flaps slide over each other in a tongue-and groove manner instead of butting, there is no leakage, so physicists can accurately measure how much radiation is hitting the tumor.

Barni said the Middleton-based company, which has its headquarters in a 70,000-square-foot building at 1240 Deming Way, should turn a profit this year and sell 25 of its advanced machines. He expects the company to double its sales in 2005. The company now has a backlog of $55 million in orders. It has grown from a staff of 22 in 2000 to 140 today. He said TomoTherapy will hire another 40 employees by the end of the year.

Barni, who calls himself a medical device-aholic, said the “sun and the moon and the stars” have long been aligned for TomoTherapy, which is a spin-off from the University of Wisconsin-Madison. Nor did it hurt, he said, that founders Thomas “Rock” Mackie – whose specialty is medical imaging and radiation therapy – and mathematician/software developer Paul Reckwerdt are “brilliant.”

TomoTherapy has its roots in a decade-old UW research project that company scientists continue to collaborate with today.

GE initially backed the effort, but the corporation pulled its support in 1996 when it decided to get out of oncology treatment, Barni said.

That same year, Reckwerdt and Mackie – already budding entrepreneurs – sold a small company they had started that was developing the world’s first three-dimensional cancer treatment planning system.

“Paul and Rock used some UW resources, their own money and backing from Madison’s Venture Investors,” he said.

Barni, an engineer with a long career in CT scanners and the holder of five patents, was then a manager with Marconi Medical Systems in Cleveland. Reckwerdt first conceived the idea to combine imaging and treatment into one device.

Barni said he initially thought the idea was “goofy.”

“But they persisted and were able to package all the components and work out the details so that the technology is very sound for both imaging and treatment.”

The pair worked with the Wisconsin Alumni Research Foundation to patent their discoveries and launch TomoTherapy. By 2000, they had developed a prototype machine and brought in Barni. In 2002, they got approval from the U.S. Food and Drug Administration to sell their device. The 7,000-pound machines weigh about half of what old linear accelerators do. They are assembled and tested over nine months at the Deming Way site.

Barni said TomoTherapy uses about 30 major suppliers for the machines, which look a like jet engines as they are being assembled in work areas.

Nearly all of the suppliers are based in Wisconsin, with only a few on the East and West coasts.

“It’s great that most of them are close by,” Barni said. “We must collaborate closely with our suppliers, who use the latest technology there is so they can provide for requirements we have here.

“But it isn’t enough to just have another whiz-bang machine to be successful,” Barni said. “We are showing that we have a device that treats cancer more precisely and is more cost effective. That’s why we’re getting market acceptance.

“Centers are saying they should be able to treat with fewer (visits) for patients,” he
said. Instead of 25 to 30, it might be 10 to 15.”

Though he is quick to praise TomoTherapy’s scientists, Barni has also done his share to grow the company. He helped raise more than $25 million in venture capital during a recession. The most recent injection of funding came in February, when TomoTherapy obtained $7 million to expand manufacturing and customer support. Ascension Health Ventures of St. Louis provided $3 million. Prior TomoTherapy investors such as Venture Investors in Madison and the State of Wisconsin Investment Board provided another $4 million in the company’s latest round of equity financing.

John Neis, a senior partner with Venture Investors in Madison, said his group has put in $5.5 million of the $28 million that TomoTherapy has raised. Neis, who is a member of the TomoTherapy Board, said the company is successful because it is lead by an “exceptional” group of people who are “absolutely” driven to provide better cancer treatment. Still, he said, raising the money to get TomoTherapy off the ground was not easy – especially during a recession.

“This was not a neat fit for many in the venture capital community,” he said. “That’s because most are not interested in large capital equipment because sales are lumpy and they are afraid sales will taper off.”

But Neis said TomoTherapy’s product is so compelling that Venture Investors was able to attract a group of Midwestern investors who were enthusiastic about the concept and comfortable with the size of the device.

Cancer treatment centers are themselves in a competitive situation. Neis said there is a great demand by the centers to upgrade their equipment to deliver more precise, cost-effective treatment with better outcomes and less damage to tissue surrounding tumors.

“TomoTherapy has the best product out there,” he said. “The company is doing fabulous and revenues are growing well.”

Barni said he expects TomoTherapy to break ground on another 70,000-square-foot building within several years.

The current structure, which recently added two manufacturing bays, has the capacity to build 100 machines a year.

He said he thinks the company could eventually produce 200 machines a year and have sales of more than $600 million annually. He said the market in the U.S. might could be as large as 400 machines a year, with another 150 that could be sold abroad.

“If we get a windfall of orders, we’d have to expand rapidly,” he said. “That’s part of the fun of running this business is figuring out how the order rate will grow.

Barni, who was lured out of an earlier retirement to work for TomoTherapy, said the company has been a “wonderful” place to work.

He will begin a slow-motion retirement at the end of this year, serving as CEO until a replacement is found and remaining on the company board in coming years. He will return to Cleveland, where he and his wife raised 10 children.

“I think I’ve been blessed in my career, working with CT scanners, MRIs and now, especially, something revolutionary like TomoTherapy,” he said. “But I’m not unique. Many of the people who work here feel the same way and are devoted to what we do because we are helping cure cancer.”

Barni said his advice to others who are running start-up companies is to choose their employees carefully.

“Get people who are very competent in areas you need. In a business like this, there are a lot of things that aren’t part of a normal job. You need special, intelligent people who can figure out things on the fly.

“And, be prepared to work hard. There will be some long hours when you are trying to meet milestones. But meeting those milestones is critical and really creates value as you go forward.”