Spineology Inc. said Monday that it has raised $7.5 million from a private placement.

The St. Paul-based maker of devices used in spine surgeries will use the money to expand distribution, conduct clinical research, and develop new products.

The financing was led by Minneapolis-based Oakridge Financial. The company did not disclose the new investors.

“We’re at a pivotal stage in our growth process,” CEO John Booth said in a statement. “The company has made significant strides in many areas over the last few years with very limited capital resources. With this new capital, we are well positioned to expand on all fronts of the business.”

Do yourself a favor and read the excellent story in the past Sunday New York Times that questioned the medical value of doctors ordering powerful CT scans for the heart. The story argues there is little evidence that proves the benefits of advanced CT scans. Medicare, the story noted, doubted whether such procedures were necessary before ultimately deciding to cover the cost.

In a way, the story goes to the heart of medical innovation in America. We are good at building newer, faster, more power technology. But often times we innovate for innovation’s sake, building the stuff first and then searching for the right application and/or the right patient, a rush to market thinking that’s behind soaring health care costs in the U.S.

“A faith in innovation, often driven by financial incentives encourages American doctors and hospitals to adopt new technologies even without proof that they work better than older techniques,” the Times story says.

Later the reporters write: “The problem is not that newer treatments never work. It is that once they become available, they are often used indiscriminately, in the absence of studies to determine which patients they will benefit.”

I instantly thought of implantable cardioverter defibrillators or ICDs, the stopwatch devices that shock a errantly beating heart back into rhythm. While ICDs are highly effective in thwarting sudden cardiac death — which kills about 300,000 to 400,000 people a year in the United States — knowing which patients should receive the expensive devices has long vexed doctors. According to industry estimates, 30 percent of patients who qualify for an ICD never get the implant. Conversely, a high number of patients who have ICDs don’t need them and sometimes receive painful electric shocks.

Powerful CT scans are the latest rage in the medical world. Demand for advanced scanning technology that can provide detailed multi-dimensional images of hearts and other organs has exploded in recent years, as doctors increasingly rely on CT and MRI machines to diagnose diseases and develop treatments.

The number of imaging procedures is expected to grow at an annual rate of 15 percent. By 2020, the country will be short 15,000 radiologists, according to the American Journal of Roentgenology.

At the Radiological Society of North America’s annual conference in Chicago last November, major manufacturers like General Electric, Siemens, and Philips tried to outdo each other by building the bigger and more powerful CT scanner (Toshiba claimed bragging rights by debuting a 360 slice scanner compared to the 64 slice typically used today.)

Come to think of it, no one really made an effort to explain to me who really needs a 360 slice scanner. Sure, the technology was cool, such powerful scans can produce very detailed 3D or 4D images of organs like the heart. But benefits and costs seemed more of an afterthought- “Who cares? Imagine what you could do with this technology!!!!”

This is not a mere science project. You can bet your booty that Toshiba fully plans to sell the stuff today and not thirty years from now.

The growing use of advanced scanning technology is obviously important to the Twin Cities. Virtual Radiologic Corp. of Minnetonka contracts with radiologists across the United States to interpret and analyze imaging data from CT scans. Vital Images Inc., also of Minnetonka, makes software that analyzes CT scans.

Asked for a reaction to the NYT story, a spokesperson for Vital Images referred me to a letter sent by the Medical Imaging Technology Alliance to the paper’s editor:

While numerous peer-reviewed studies demonstrate that such scans detect heart disease and help patients avoid heart catheterization, your readers were presented only with critical anecdotes. Readers would have gained a fuller understanding of the issue, forexample, had the article cited a 2007 study showing how multi-slice heart scans reduceddiagnostic time and produced cost savings.

Proper utilization of any medical technology is important. To address this matter,
policymakers and medical societies are embracing appropriateness and accreditation criteria so health decisions remain the domain of physicians and patients and not insurance companies. Unfortunately, your story made no mention of this.

Reactions?

A year ago, St. Cloud State University launched a masters degree program in regulatory affairs. The idea was to address a glaring hole in the state’s medical device industry: the lack of people with expertise in guiding companies through the often arduous and complex task of obtaining regulatory approval from the Food and Drug Administration, not to mention securing Medicare reimbursement. As any entrepreneur, executive, or venture capitalist will tell you, regulatory and reimbursement issues are the biggest challenges to getting a promising medical device to market.

Minnesota “is a Mecca for medical devices,” said Mark DuVal, managing director of DuVal & Associates law firm in Minneapolis who also serves on the program’s advisory board. “We get calls from CEOs who tell us there is shortage of good professionals in clinical and regulatory affairs.”

As the program enters its second year, DuVal has high hopes. 15 students enrolled in the inaugural class; DuVal expects that number to double to 30 to 40 come September.

The program already boasts some impressive industry heavyweights. Chuck Swanson, the retired regulatory chief at Medtronic, is program director; advisory board members include Steve C de Baca, vice president of quality at Boston Scientific, Suzanne Danielson, director of regulatory affairs and quality at 3M Medical Division, and Debra Kridner, former vice president, clinical research and regulatory affairs at St. Jude Medical Cardiovascular Division.

Classes like “Legal Basis for Medical Device Product Regulation” and “Reimbursement for Medical Technology”are taught by industry veterans.

“Academia needs to get tied in with the business community and this is a practical way to do it,” DuVal said. “St. Cloud State is very attached to reality.”

superDimension Ltd., which is developing GPS-like technology to help diagnose early stage lung cancer, said it raised $22.3 million in private equity financing. The company would not disclose the investors.

That means the Plymouth-based startup is close to breaking the $100 million financing mark. superDimension previously raised $75 million in venture capital from major investors such as pharmaceutical giant Pfizer, CIBC World Markets and OrbiMed Advisors, the world’s largest health care investment firm with more than $6 billion in assets.

Dubbed electromagnetic navigation bronchoscopy, superDimension’s system allows doctors to probe the deepest regions of the lungs, guided by sensors and 3-D mapping software.

Working from CT scans, superDimension’s software creates a 3-D map of a patient’s lungs to mark suspected legions. After a navigational catheter is inserted into the lungs, a sensor guides the tube to the lesion by comparing its real-time location to the map. The catheter can also rotate 360 degrees for better maneuverability.

In a statement, CEO Daniel Sullivan said the company will use the new money to expand sales and marketing.

I’m not used to death. My sister passed away from cancer in 2002 and to this day, it’s hard to believe that such a familiar person is no longer here.

So it was a bit disconcerting that two well respected men in the Twin Cities business community, Eugene Sit and Dennis Anderson,  should die four weeks apart from each other, both from horrible diseases. I didn’t knew either particular well; in fact, aside from a few phone calls, I never met them in person. Nevertheless, I find their deaths quite upsetting.

I  felt a closer connection to Gene, the son of Chinese immigrants who literally went from nothing to one of the most successful investment mangers in the city. I frequently interviewed Gene for our Quarterly Money Managers Report because A) he provided good insight and B)  he always returned my calls. His daughter Debi regularly participates in our annual end of the year Investors Roundtable discussion.

Every conversation with Gene began the same way. Knowing that I’m Chinese, Gene would ask me when I would visit China. He had a big laugh that coming from any other mouth would be annoying but always seemed to crack me up. Ironically, I did go to China last month and looked forward to telling Gene all about it. I guess I’ll never get the chance.

“He was a very caring man,” Roger Sit, his son, told me. “He was a successful person who lived the American Dream.”

I told Roger about my China trip and how Gene always bugged me to go. Roger then peppered me with questions about my background. Despite the death of his father, Roger seemed genuinely interested in my story.

Just like his old man.

Dennis I knew even less. A few months ago, my editor suggested that I get to know Dennis, who built a career of advising startups and match making CEOs to the right companies. He also started a new venture capital firm called Pelegrin Partners, which would invest in life science and technology startups.

I made and then canceled two appointments with Dennis because of scheduling conflicts. When I returned  from China in late May, one of the first things I did was e-mail Dennis to set up another meeting. A day later, a reply popped up in my in-box from his e-mail address. It was his son Ty, who told me that Dennis had passed away.

Everyone who knew Dennis  said the same thing about him:  that he was the person to know, the ultimate networker.

“He knows everything that is going on,” said Mark Kroll, a principal at Pelegrin Partners. “He was a truly kind, receptive, objective, people person.  I miss the guy.”

In case that quote doesn’t quite sum up Dennis, here’s the tribute his colleagues at Andcor Companies posted on their website:

Friends and family will remember Dennis’ zest for life and competitive spirit. He loved to regale his daily push-up and sit-up totals to anyone who would listen. Dennis and his late wife Suzy traveled a great deal, and he continued to travel the world until very recently. He was also an avid skier and boater. And last but not least, Dennis would want everyone to know that he had been named “Best Groomed” and “Athlete of the Year” from various groups and associations.

Rest well gentlemen.

The University of Minnesota is hosting public tours for its new medical device research facility Tuesday from 3:30 to 7 p.m. on the 5th floor of Shepard Labs, 100 Union St. SE.

For map and parking info go to www1.umn.edu/twincities/maps/ShepLab.