Israeli Medical Device Firm Art Medical Files for Bankruptcy After FDA Rejection
Translated & summarized from TheMarker by baba
Israeli medical device firm Art Medical has filed for bankruptcy after its innovative feeding management system was rejected by the FDA in October. The company, which raised about $100 million but had minimal sales, cited a lack of funding for further U.S. trials as the reason for its collapse. Art Medical is requesting to cease new patient connections to its system while facilitating transitions for existing users. The company owes approximately $13 million to creditors, including Avanos Medical.
The story in 5 lines · by baba
- Art Medical filed for bankruptcy after the FDA rejected its innovative feeding management system.
- The company raised approximately $100 million but had minimal sales revenue.
- Art Medical cited a lack of funding for further U.S. trials as the reason for its collapse.
- The company is requesting to stop new patient connections to its smART+ system.
- Art Medical owes approximately $13 million to creditors, including Avanos Medical.
Israeli medical device company Art Medical, based in Netanya, has filed for insolvency proceedings with the Central District Court in Lod, requesting the appointment of a temporary trustee. The filing follows the U.S. Food and Drug Administration's (FDA) October rejection of the company's application for its innovative feeding management system, which lacked market equivalents. Continued funding for Art Medical was contingent on entering the U.S. market, a goal it failed to achieve, leading to an inability to secure alternative financing.
Founded in 2008, Art Medical developed the smART+ platform for managing nutrition in intensive care unit (ICU) patients. The system integrates hardware, feeding tubes, sensors, software, and algorithms to prevent complications like malnutrition, overfeeding, and ventilator-associated pneumonia, while also detecting and treating reflux. A study cited in the company's filing, conducted at Beilinson Hospital and published in Clinical Nutrition, indicated that patients connected to the system had an average ICU stay of 10.4 days compared to 13.7 days in a control group, with a reduction of 3.3 days in ventilation duration.
Despite raising approximately $100 million over the years, Art Medical's sales revenues remained minimal, relying heavily on investor capital. The company sought to protect patients, requesting that hospitals and distributors be informed to cease connecting new patients to the system. Existing patients would transition to alternatives with medical team guidance and company support during the changeover. The smART+ system holds Israeli "AMAR" approval, CE marking in Europe, and UK registration, marketed in Israel by Teva and in Italy by MOSS.
Art Medical faces debts of around $13 million, primarily to Avanos Medical, which holds a lien on the company's intellectual property. The company also owes approximately 870,000 shekels in unpaid October salaries to its 53 employees, along with social security contributions, and has debts to Israeli and foreign suppliers. The company's attempts to raise capital from existing and new investors, find a strategic partner, or sell its assets were unsuccessful. Cost-cutting measures included staff reductions, project suspensions, and the sale of assets.
Among Art Medical's shareholders are the late Natan Milikovsky, a cousin of Benjamin Netanyahu's father, and his family, who hold board representation. The company received grants from the Bill & Melinda Gates Foundation's Grand Challenges program and cumulative funding of approximately $2.6 million from the Israel Innovation Authority.