The BioFusionary Corporation

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February 17, 2014 Issue

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Magnetic Induction Technologies for Tissue Heating

About TheBioFusionary Corporation
The BioFusionary Corporation (the Company) is a spin-off from Rocky Mountain Biosystems, Inc. (RMBI), a Colorado company formed in 2001 by Kevin Marchitto, Ph.D. and Stephen Flock, Ph.D. entrepreneurs and inventors with thirty-three issued patents including those describing BioFusionary technology. The BioFusionary Corporation was formed as Aesthetic Biosystems, Inc. (ABI), a Delaware corporation, in December, 2011. ABI received a license to develop and market the BioFusionary Bebe product in that same year. In October, 2012, all patents related to BioFusionary technology were assigned to ABI and the name of the corporation changed to The BioFusionary Corporation. The latter event essentially split RMBI into two separate entities, one focused on BioFusionary surgical technologies, the other on pharmaceutical and vaccine delivery.

Kevin Marchitto

Kevin Marchitto, is a founder of BioFusionary and inventor of the technology. Prior to founding BioFusionary in 2011, Dr. Marchitto founded and directed Rocky Mountain Biosystems, Inc. in 2001, and previously co-founded and served from 1998 to 2000 as CEO and Chairman of Spectral Biosystems, Inc., a biomedical device development company that was sold to Norwood Abbey, Ltd. (Melbourne, Australia) in 2000 where he continued until 2001 as an Executive Director and Chief of Technology Development, taking the company public on the ASX and directing technology. Prior to that, Dr. Marchitto held management positions in research, quality control and product development at NeoRx, Inc. (now Dendreon, Inc., Seattle, WA), and Corvas, Inc. (San Diego, CA). He led technology transfer efforts at the University of Arkansas for Medical Sciences (1997-1998) and the University of Texas-Health Science Center (San Antonio) from 1993 to 1997. Dr. Marchitto has 29 issued United States patents and about 25 patents pending. Dr. Marchitto received his Ph.D. in Microbial Biochemistry from Oregon State University and an M.B.A. from the University of Washington.

“We have a near-term strategy with a high profit margin device that is in high demand right now, with a number of follow-on products that could lead to revenues in excess of a billion dollars a year.” - Kevin Marchitto

The BioFusionary Corporation
3930 Youngfield Street
Wheat Ridge, CO 80033




Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published - February 17, 2014


CEOCFO: Mr. Marchitto, what have you developed at BioFusionary?

Mr. Marchitto: We have developed a number of technologies. BioFusionary technology is based on magnetic induction and its heating properties in tissues. In a nutshell, we are able to heat tissue which can shrink or tighten soft tissues or can reshape certain tissues such as cartilage. We have also developed a novel class of polymer adhesives that are cured with the alternating magnetic fields associated with the magnetic induction process and we are able to cause adhesion between tissues.


CEOCFO: What are some of the situations where these products would be used and how have they replaced or improved what has been on the market previously?

Mr. Marchitto: The first product on the market will be an aesthetic product which works basically by using an inductive coupling mechanism which means that the tissue will only heat where there are moist, components. The tissue just beneath the skin, the dermis, is moist whereas the outer layer of skin, the epidermis, is dry. Further, the layer beneath the dermis is relatively non polar and does not heat directly. In just heating the dermis we are able to get collagen realignment because the heat is localized there and that collagen, when it is realigned and reconfigured, will actually pull the skin together to make it tighter and reduce the appearance of wrinkles and lax loose skin. There is an advantage over other technologies. The other existing technologies tend to be lasers or radiofrequency devices and more recently ultrasound devices. None of these give the specificity to the dermis, which is where the collagen resides that you want to tighten. Many devices can cause burns. With radiofrequency for example; the current will go unguided to different parts of the body, essentially following the least path of resistance and can cause burns. Therefore you are forced to turn down the energy to keep it safe. Lasers burns from the outside in and the focal point of the laser is very hot so you can get tissue damage. Similarly with ultrasound you can also get tissue damage. As we move internally with our applications, we can treat muscles, ligaments, tendons and tissues like that to cause tightening. Some of the applications that will result in follow-on products will be used for treatments in incontinence for example, both urinary and fecal. In the case of incontinence, we have loose or lax musculature or support of tissues that result in an inability to control ones urination or defecation. These products address enormous markets; in excess of fifty million people in America are afflicted by some kind of incontinence. It is a big problem without a solution. Many products have failed recently, such as slings and even though radiofrequency devices have been applied somewhat successfully, most of the time there has been problems for the very same reasons I mentioned with the aesthetic application.


CEOCFO: Have the parts of the medical community that would be using these aware yet?

Mr. Marchitto: A lot of it has been kept quiet for a long time. We are about to release a new product, which is the aesthetic product, and are in the last lap with the FDA. We should have an approval very soon, or a clearance to market that product. It has been very quiet. We have performed clinical trials in a number of sites and we have gotten outstanding results. Where the doctors have been involved, they are generally saying wonderful things.


CEOCFO: Why the decision to start with the aesthetic product?

Mr. Marchitto: It has more to do with the hurdles that one encounters in dealing with the FDA, the longer term process of paying for expensive clinical trials where you have a base of surgical applications, and the difficulties in raising capital that exist for medical devices companies.


CEOCFO: What is the stumbling block in creating this technology that you were able to overcome that others either did not think of or were not able to find a way around?

Mr. Marchitto: It is a unique technology for which we have several issued patents and several still pending. It was a unique concept to apply this type of alternating magnetic field energy to heat tissue in this way. Though people have been heating tissues with magnetic fields for a long time, this is a more intense, localized type of heating that we get based on the configuration of the device and the electronics in the device. The challenge was in being able to develop applicators which contain induction coils that would deliver an even alternating magnetic field, and being able to keep the device cool while delivering energy of a high frequency and high power. I would say the most significant thing e was overcoming the electronic losses due to resistance and so forth that required careful matching of precision components and precision matching of the impedance of the device.


CEOCFO: Do you have a plan in place, that you can share, for going to market with the first product?

Mr. Marchitto: I can tell you a little bit. We have enlisted a number of physicians that are some of the best known doctors in dermatology who are involved in advising the company and in some cases are working on clinical trials. They are the people who the other physicians in the field look up to and get advice from in terms of what is new and hot on the market. We plan to use a number of localized distributors and independent reps that can act in certain communities or regions depending on their strengths. Also taking advantages of trends in social media will certainly help.


CEOCFO: Is aesthetic dermatology an area of increasing demand?

Mr. Marchitto: Our principle is on the simpler side. We are selling directly to the physician but we will certainly be marketing to the end user who is typically a woman age 35-55 who sees some changes in her appearance. That is really the main market; I would say 80% of the consumers fit that category. Men are also coming in to the marketplace in large numbers as they become more concerned about their appearance. There is a lot of talk amongst users and with their friends about what they are doing. There are a lot of new product opportunities. All you have to do is turn on the TV to see all the different types of cosmetics and wrinkle fillers that are available.


CEOCFO: Is there much training that the doctor needs in using the equipment?

Mr. Marchitto: It is pretty simple to use. A training session that lasts about an hour will suffice.


CEOCFO: Is cost a big factor for the device you will be selling?

Mr. Marchitto: There is an initial cost up front. We have not determined exactly what the pricing model will be but generally this type of equipment comes at a premium up front. Given the success we have had in the clinical studies and the need for a new type of technology in the marketplace. I believe that the doctor will be able to recoup most of his investment within 2 or 3 months. It becomes a real factor for the doctor’s bottom line thereafter.


CEOCFO: You have mentioned difficulties in getting funding; do you have what you need in place for the initial rollout or will you be seeking funds or partnerships now?

Mr. Marchitto: We will be seeking funds and also we are continually seeking partnerships for many of the follow-on products. We are looking at a number of sources right now.


CEOCFO: Do you see the fact that your first applications are outside of anything related to the Affordable Care Act as a selling point for potential investors?

Mr. Marchitto: It is for a couple of reasons. The market dynamic is changing dramatically. In the face of the Affordable Care Act you may have noticed that a number of doctors have started to refuse patients with Medicare or Medicaid insurance. This is reflecting their ability to get reimbursed for the costs. It has always been a problem for insurance reimbursement. For medical device manufacturers, assigning the right codes and making sure that the devices are reimbursable is a very significant complication. Our aesthetic technology has the patient as a payer. So the patient pays the doctor directly and there are no reimbursement issues with Medicare and Medicaid because they do not even cover it. Everything is elective and it is high demand so what is happening is that we are seeing a large influx of physicians outside of dermatology and plastic surgery that are now providing aesthetic procedures.


CEOCFO: Why should The BioFusionary Corporation stand out for the business, investment and health communities?

Mr. Marchitto: BioFusionary stands out because we have a unique technology which is addressing some very serious health problems with high probable returns in terms of dollars and cents. In addition, we have a near-term strategy with a high profit margin device that is in high demand right now, with a number of follow-on products that could lead to revenues in excess of a billion dollars a year.


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