One of the Indianapolis area’s most promising medical-device startups is dead.
Symbios Medical Products LLC filed for Chapter 7 bankruptcy liquidation after a product recall soured its relationship with its main distributor. The company reported $8.1 million in liabilities and assets of just $401,000 in its July bankruptcy filing in federal court in Indianapolis.
Stung by Symbios’ collapse are numerous Indianapolis angel investors that had helped to fund the company, including the Halo Capital Group, StepStone Angels and several prominent Indianapolis business executives.
Symbios made plastic pumps that delivered a steady flow of pain medicine to patients undergoing surgery. The company, founded in 2003, was on pace to be modestly profitable while bringing in about $5 million in revenue this year, according to information provided by the defunct company’s officers and directors.
Early this year, Symbios received two reports of the pumps delivering pain medicine too fast, which could lead to serious problems for patients. So in February, Symbios recalled a small batch of pumps.
But in May, Symbios received three more reports of the “fast flow” problem with its pumps. Those reports prompted the company to recall a larger batch of products.
That larger recall led Germany-based B Braun, Symbios' key distribution partner, to stop ordering products. That decision rendered Symbios “insolvent nearly instantaneously,” wrote Craig Overmyer, the former chairman of Symbios, who relayed responses from the company’s former directors and officers in an email. The company's bankruptcy filings show it had just $289 in cash when it folded.
“The ultimate root cause of the fast flow complaints [five in total] was never fully solved,” according to Overmyer’s email. “It remains unclear if human intervention or other factors played a key part in the events that unfolded.”
Overmyer is a partner at Chicago-based Hopewell Ventures, which owned 81 percent of Symbios Holdings Inc., the parent of Symbios Medical, according to the bankruptcy filing.
The recall was particularly ill-timed for Symbios, which was trying to raise more capital. The company had been well capitalized. Its filings with the U.S. Securities & Exchange Commission show it had raised $9 million to $21 million from 2008 to 2012.
Symbios had about 25 employees working in office space at 7301Georgetown Road. The company owes its workers more than $115,000 in unpaid wages, according to the filing.
Symbios’ largest secured creditor is Indianapolis-based Halo, an angel investor network managed by the TechPoint trade group. Halo holds a secured claim of $828,100, according to Symbios’ bankruptcy filing.
Longtime Indianapolis-area banker Otto Frenzel IV, who was a Symbios board member, is owed $575,416.
And then there are the dozens of unsecured creditors of the holding company, including:
—Stephen Burns, chairman of Wheaton World Wide Moving, is owed $439,134. Burns owned 0.8 percent of Symbios.
—Kingdon Offenbacker, CEO of Indianapolis-based Matri Holdings Inc., is owed $107,537. Matri Holdings owned 1.46 percent.
—Dr. Steven Isenburg, an ear, nose and throat doctor at Community Health Network, is owed $324,501.
—Larry Sablosky, a co-founder of Indianapolis-based The Finish Line Inc., is owed $61,604.
—StepStone Angels, an Indianapolis-based consortium of angel investors, is owed $68,496.
—Fort Wayne-based Mohlmann Asset Management, which invests money for wealthy individuals, is owed $261,896.
—Dr. Eric Beier, CEO of Fort Wayne-based Matrix-Bio Inc., is owed $312,222.