Replication Medical is a small company aiming to do big things. The Cranbury-based firm develops hydrogel-based products for back pain treatment. According to CEO Ann Prewett, right, Replication’s products are designed to make such treatment less invasive and less complicated for patients with degenerative disc disease, an ailment that usually affects people in their 40s and beyond.

“We aim to treat these people using a very minimal, non-surgical or minor surgical, approach so that we can basically relieve pain and not cause other complications that are traditionally associated with spine surgery,” Prewett says.

Standard surgeries can involve materials, and sometimes plates and screws, that can lead to complications. “All of these things are really invasive procedures that have fairly significant morbidities associated with them,” she says. “There are all kinds of infections, there can be a lack of pain relief, every time you go the airport you have these metal rods in your body.”

Replication Medical, which has received critical nurturing from the state’s business tax transfer program (see sidebar, page 39), wants to help achieve relief without surgery with a “hydrogel material” that Prewett says is similar to body tissue and is composed largely of water. The material can be inserted in a “diminished, collapsed” state, then expands, using the body’s natural fluids to assume a shape that relieves back ailments.

The company’s products are sold in parts of Europe and Latin America, but not domestically. Prewett says that while the U.S. is a desirable market, the approval process here is lengthy and “somewhat torturous,” making it prohibitive for Replication Medical at this point.

Prewett grew up in Indiana, the daughter of Bill Daniels, an attorney, and Margie Daniels, a homemaker. She graduated from the University of Wyoming in 1979 with a bachelor’s degree in science and biochemistry. She studied for her Ph.D., at Tulane in New Orleans and Washington State University and got her Ph.D in chemistry in 1985.

When she started her career, she wasn’t aiming to become a CEO. “I worked in the medical device industry for a fair amount of time after getting my Ph.D,” she says, adding that much of her early work involved bone morphogenetic proteins. “That’s when my research in orthopedics and the spine began, in isolating and purifying these proteins that make bone grow and allow a patient to harvest their own bone to cause spinal fusion.”

Her background includes working for a New Jersey-based firm called Osteotech from 1989 to 1995. From there she went to Osiris Therapeutics, which was studying stem cells in the 1990s. “That was sort of before its time,” she says. “Now stem cell products are found in all areas of medicine, on the forefront of new technology and treatment.”

Osiris relocated to Baltimore. Not wanting to move, Prewett took a job with a company called Datascope in Montville. She left the company when it was purchased. She then got a call from colleagues about a startup, which became Replication Medical.

“We started with a concept that is very different from the one that we are currently pursuing,” she says. “The initial concept was to develop an implant for back pain.” Things changed directions in 2007. “We recognized that the approach we’re taking now is a superior one,” Prewett says.

Prewett started out as Replication Medical’s president and was given the CEO title in 2004, after Abbott Pharmaceuticals made a $15 million investment in the company.

The transition from research and development to the business end of things seemed like a natural for her. Even when she was in R&D, she made presentations to doctors, investors, and board members.

“I do think there’s a sales bent, a marketing bent, to my mentality,” she says. “Perhaps what’s led me more to management is the coupling of my interest and love for science and the creativity of product development with the other end, which is marketing.”

Another factor, she says, is that she’s “a relatively impatient person,” and didn’t like the long process involved with experiments. “I like to dream them up but I rarely had the patience to see them conceptualized,” she says.

Being a female CEO in the biotech field is a rarity. Prewett says she doesn’t have firm numbers on the percentage of female chiefs in the field but she estimates it’s about 1 in 10. It’s something she is used to, and at this point she doesn’t feel she has a perspective on the field that’s much different from her male counterparts.

“I think we’re all dealing with the same things right now, and that’s trying to keep our companies in business,” she says. “That’s been very trying over the course of the past two years. At one point we were extremely well capitalized based on the Abbott financing, but we effectively did a restart in terms of product development. And we did that on not much capital in the worst sort of venture capital investment period in history. At least in the medical field.” Since 2008, she says, the company has been developing new products with little money and that cash has been hard to come by in that time.

“My major focus is on product development, giving the shareholders the equity and value that they deserve,” she says. “I don’t think that’s different for a man or woman. I think we’re all collectively struggling right now and hopefully we’re seeing the light of day.” Revenues for the company are still miniscule — about $80,000 last year but beginning to grow this year. While avoiding specifics Prewett does say that “based upon the existing burn rate and the projected growth, Replication Medical should become profitable in 2012.”

Something that has been hugely important for her company is New Jersey’s Technology Business Tax Certificate Transfer Program. According to the state Economic Development Authority, the program allows approved, unprofitable technology and biotechnology businesses to sell unused net operating loss carryover and unused research and development tax credits to unaffiliated, profitable corporate taxpayers in the state for at least 80 percent of the value of the tax benefits. This allows unprofitable tech and biotech firms to turn their tax losses and credits in cash to buy equipment, facilities, and other allowed expenditures.

Prewett says Replication Medical “had the ideas but money was tight” in 2009 and nearly ran out of cash. Without the program, she says, the company would likely have had to leave New Jersey.

And New Jersey is where she wants to be for several reasons, its talented and educated workforce, the concentration of the medical device and pharmaceutical industries, and proximity to New York City, which is valuable because of the investment capital opportunities that exist there.

“I think the state is, for the most part, pro-business,” she says. “They don’t have punitive taxes levied at businesses and they have this tax credit program, which is very favorable for life sciences. I think they have an appreciation for life science businesses and they want to grow the industry.”

The Cranbury offices are Replication Medical’s only location, though Prewett says it is bringing on European distributors and consulting experts to help with its distribution. But most of the work is done at the firm on Clarke Drive.

“We work very hard,” she says. “I was working all day Sunday on a presentation and I wasn’t alone. The people who work for the company love working for the company. No one pays any attention to the hours. I can be working at 7 or 8 p.m. and look around and there’s somebody else’s car parked out front. It’s a great group of people. The general mentality is that it’s `my’ company, not `the’ company.’”

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