How a Minnesota medtech startup with big backers treats prostate cancer with water

Michael Hoey admits he's terrible at names. He used to call his kids "One, Two and Three."

When naming his startup seeking to treat a common cancer with only a few drops of water, Hoey had his colleagues decide. They avoided techy terms like his last company, NxThera, and chose Francis Medical in honor of the founder's late father.

Hoey said his dad "suffered with all the worst side effects you could imagine" from prostate cancer treatment and died from the disease. "That never left me," he said.

Francis Medical's focused steam therapy technology is "about being able to be as effective — if not more effective — than any other therapy, but to be gentle on the patients," said Hoey, who has become the firm's chief technology officer.

In a Maple Grove industrial strip mall unequipped with the beanbag chairs common to Silicon Valley startups, Francis Medical is creating a device to treat prostate cancer, working with a remote similar to a gaming controller. The device has received support from some of the world's largest medtech companies.

The Minnesota medtech company, which was carved out of a Boston Scientific acquisition in 2018, has raised about $160 million in private funds — and wants to raise roughly another $100 million — as it plans for an initial public offering in 2028.

Before then, Francis Medical will need to make the case to regulators that its device, called Vanquish, deserves approval. The company must do so amid a changing landscape of treatment for prostate cancer, a disease that some academics say is over-diagnosed and overtreated.

Regulators in 2023 awarded Francis Medical a "breakthrough device designation," which expedites the review of new technologies for treatment of life-threatening or debilitating diseases

Prostate removal can disrupt a man's urinary, bowel and sexual functions. Richard Hill, Francis Medical's marketing director, said the company's device seeks to aggressively treat cancer while allowing a patient to maintain quality of life.

CEO Mike Kujak said, "God did not design the prostate to come out of the body."

The idea started about two decades ago, as Hoey wondered how to change treatment for a neoplasm that the American Cancer Society reports affects about 1 in 8 men and kills roughly 1 in 44. The entrepreneur said he realized the power of vapor after placing his hand near the intake runner of a car engine and was shocked by how cold it became.

Back then, imaging technology wasn't precise enough to create the Vanquish system, chief medical officer Dr. Christopher Dixon said.

Instead, Hoey created the company NxThera and the vapor ablation Rezūm system, which treated men with symptoms arising from a noncancerous enlargement of the prostate called benign prostatic hyperplasia.

Boston Scientific bought NxThera in 2018 for an upfront payment of $306 million, with an additional $100 million in potential commercial milestone payments. But the medtech giant with a huge Minnesota presence declined to purchase the segment of NxThera developing cancer treatment.

A Boston Scientific spokesperson said the company generally does not comment on specific investments in its venture capital portfolio.

"The purpose of our [venture capital] program is to feed a pipeline for mergers and acquisitions in high growth adjacencies," the spokesperson said.

Kujak said that generally "big medtech" is "just not good at developing technologies as quickly and as inexpensively" as startups. Hoey said smaller companies are more more nimble.

Francis Medical's technology builds off of Rezūm.

Before the procedure, a biopsy is performed to confirm whether tissue is cancerous. A doctor will then maneuver a wand-shaped device to a target set by a radiologist and shown on a long monitor.

The monitor shows the shaft of the device with a needle ready to deploy at its end. As the doctor moves it near to the cancer target, the needle is extended into the organ through the urethra.

Ultrasound confirms the placement and guiding of the needle in real time. Another button triggers the vapor.

The technology runs small amounts of water through a system to convert it into boiling-temperature vapor that's carefully shot inside the prostate, ablating the cancerous tissue.

It all happens in about 10 seconds, as the machine with lots of wires makes a beeping chime. Over time, the company plans to make its technology simpler.

The company announced in 2021 that six-month data from its first 15-patient "Vapor 1″ study reported no serious adverse events. The data also showed effectiveness results supporting that water vapor technology can eradicate intermediate-risk prostate cancer.

A second study, a prospective single-arm trial, involves 235 patients at 26 locations nationally.

Dr. Christopher Warlick, head of the Department of Urology at the University of Minnesota Medical School, said vapor ablation is one of several focal therapies for the condition; other technologies use energies such as extreme cold to target cancerous tissue.

The class of devices, he said, lives in a "sweet spot" for patients with "a little bit more disease than we're really comfortable just watching, but the disease is not to the extent that we think that maybe we need to take their prostate out or to treat their whole gland."

Water ablation uses convection instead of conduction like other therapies to shift temperature. Heating during conduction dissipates across skin tissue by distance from the source of heating and doesn't respect anatomic borders, while convection is largely constrained to these borders of the prostate.

"If the energy from the water vapor is not getting outside of the prostate, then in theory, it can't injure things outside of the prostate," Warlick said.

Kujak said the company is reaching for U.S. Food and Drug administration approval explicitly indicated for the management of prostate cancer. Other technology only has an indication for the ablation of prostate tissue, he said.

So far, Francis Medical has raised $160 million, most recently closing an $80 million Series C fundraising round in January. Executives said four large medtech companies have invested: Boston Scientific, Coloplast and two others they declined to name.

Large medical device companies tend to invest in companies they go on to acquire. Kujak said he isn't building Francis Medical to sell it. But, he said, "should someone come in and want to acquire the company? Great."

Kujak said the company will need another $75 million to $100 million to start expanding its commercial footprint and become profitable. The market could be worth billions one day.

The approach won't make sense for all patients, Warlick said. Some will still need radiation or prostate removal, he said, while others may be better off with observation.

"For appropriate — and this is the key thing — appropriately selected men, this could be an option that could offer the balance between, you know, cancer control and maintenance of current quality of life," Warlick said.

Hill, the marketing director, said this technology would have been an ideal choice for his father, who had the cancer and received a radical prostatectomy. "He suffered all the side effects," he said.

"I think it gives patients the sweet-spot option," Hill said. "Right now, they have a horrible choice."