Ornim Medical, which developed technology for monitoring oxygen levels in the brain, is in a liquidity crisis and has laid off most of its employees. According to the database of the IVC research company, Ornim has raised a total of $70 million to date. The company raised $20 million two years ago with participation from the health division of General Electric, venture capital fund Orbimed Israel, Chinese company Fosun Pharma, and LongTec HongTao China Ventures.
Ornim was founded in 2004 by Dr. Revital Shechter and Dr. Michal Balberg. When the company raised money in 2016, its products had already been approved for marketing and its systems had been installed at 30 hospitals, some of them leading hospitals. Eventually, however, the company was unsuccessful in achieving commercial penetration of its product.
At the time, the company offered the product to hospitals for a number of indications for which monitoring oxygen in the brain had value: preventing brain damage during surgery, testing whether a drug for stroke was effective or caused side effects, and diagnosing damage following head injuries.
Ornim failed to obtain insurance reimbursement for any of the indications and did not mark any of them as a killer app essential for hospitals that could not be replaced by other technologies. Then-CEO Israel Schreiber said at the time that insurance reimbursement for the company's products was unnecessary because the device saved costs for hospitals, which would therefore agree to buy it even if they did not receive special payment for using it. It appears, however, that the company's economic model of showing how the products saves money for hospitals did not succeed in persuading enough buyers in hospital neurology departments and market penetration was not successful enough.
Despite the investment by Chinese companies Fosun Pharma and LongTec, both of which have very good reputations in the sector, the company was unable to achieve significant penetration of the Chinese market.
Ornim decided to reinvent itself by recruiting a US CEO named Bruce Barret, who chose to focus on a narrower field of activity - head injury diagnosis. In order to succeed in this segment, the company had to conduct additional clinical trials and return to an earlier stage in which it was a development company without sales in the leading indication on which it chose to focus. Despite achieving good results in initial research in its new field, Ornim found it difficult to raise money to support activity starting from the beginning, even though the results of its clinical trials were good. Liquidity problems followed, and the company has now been forced to discontinue its activity almost completely.
Published by Globes [online], Israel business news - www.globes-online.com - on September 5, 2018
© Copyright of Globes Publisher Itonut (1983) Ltd. 2018