Startup Ajax Health Extends Medtech Innovation Model to Hologic
Ajax, KKR and Hologic have launched a startup that advances lung-cancer devices and diagnostics
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Startup Ajax Health’s model for spurring corporate innovation is gaining traction with investors and large medical-technology companies.
Menlo Park, Calif.-based Ajax creates turnkey innovation platforms for commercial-stage medtech players, and it has teamed with investment firm KKR and medtech company Hologic to launch Maverix Medical, a startup formed to advance diagnostics and medical devices to treat lung cancer.
Maverix is independent but intends to work with Hologic to bring lung-cancer products to market, said Ali Satvat, a KKR partner and co-head of the firm’s Americas healthcare unit and global head of health care strategic growth.
Large companies often struggle to innovate while startups are better at inventing products than bringing them to market. Ajax aims to pair the agility of startups with the commercial infrastructure of larger businesses.
Maverix is the second such platform Ajax has launched and it intends to develop more, said founder and Chief Executive Duke Rohlen.
Ajax has had success with its first platform, Cordis-X, an accelerator for inventing new products for medical-device company Cordis. But as the Cordis experience shows, the model isn’t easy to execute.
Rohlen, who founded Ajax in 2017, seeks to fill a gap he sees in the medtech industry. Startups develop transformative medical devices that can command top dollar from companies seeking acquisitions. Large companies can acquire transformational products by purchasing startups, but they also need incremental improvements to existing products and new products to pair with existing medical devices.
Venture-backed startups don’t target those types of innovations, said Rohlen, who previously led four medtech companies to mergers with larger players.
Large medtech companies, meanwhile, face pressure to maximize earnings per share, hurting their ability to fund enough research and development to sustain innovation, Rohlen said.
Ajax’s solution is to create units that invent new products. Ajax first applied the model to Cordis, which it, KKR and private-equity firm Hellman & Friedman acquired in 2021 from medical-products distributor Cardinal Health for $1 billion.
They formed Cordis-X to supply Cordis with new products. Cordis-X is creating 14 products for Cordis, which is growing faster than it was before it was acquired, according to Rohlen, a member of the company’s board.
The new owners of Cordis also replaced most of its senior management and implemented new accountability measures, such as placing individuals in charge of specific growth initiatives, to increase productivity, Rohlen said.
The 2021 investor group sought to put Cordis on a trajectory to reach $900 million in annual revenue within 36 months, and it is on track to meet that goal, Rohlen added.
Health systems that buy medical devices are finding that costs are rising but reimbursement isn’t, said Dr. Garheng Kong, founder and managing partner of Ajax investor HealthQuest Capital. Ajax’s model of partnering with commercial-stage companies, which are attuned to what health systems are willing to buy, is particularly appealing considering the current environment, Kong added.
“The pressure is even more significant today because of the headwinds that almost every health system in the country is facing,” Kong said.
Hologic, which sells diagnostics and instruments used in women’s health, is already growing quickly. Over the last five years, its stock price has risen about 60%. It has made a series of acquisitions and has resources to fund more deals and product development, said Andrew Cooper, an analyst with investment bank and financial services firm Raymond James.
But Hologic also faces competition from large companies such as Siemens and GE HealthCare Technologies, said Erik Anderson, Hologic’s division president, breast and skeletal health solutions. When considering avenues for growth, Hologic identified lung cancer, the top cause of cancer death in the U.S., he said.
Hologic and KKR have invested an undisclosed amount in Maverix, which Rohlen leads. The deal enables Hologic to concentrate on its core businesses while expanding methodically into lung cancer, rather than diving in through an acquisition, Anderson said.
“There’s definitely a significant unmet need in the lung cancer space,” he added.