Louisville engineer and CEO David Phelps has a winning way in medical devices and biotech industry
By Dawn Marie Yankeelov
Published in The Lane Report, Kentucky’s state business magazine.
David Phelps is founder and CEO of Louisville life sciences company CreoSalus Inc. With him, from left, are: Occam's Vas Abramov, director of engineering and manufacturing; Jason Lone, quality manager; and Michael C. Lade, senior engineer.
With 30 years experience as a product development engineer, more than 45 patents issued or pending in his name and multiple profitably launched companies, David Young Phelps is one of Kentucky's biggest successes in the medical device and life sciences sector
"I am a tinkerer. I love building and creating things that are important to research and human lives," Phelps said.
Michael Tague, a friend since childhood and fellow Ballard High School graduate as well as president of Louisville-based Win.net, goes a bit further.
"David is by heart an engineer and so he makes stuff: products and companies. He's very sharp and very hard-working - a creative genius," Tague said. "He will run you ragged if you let him. He is Kentucky's Steve Jobs waiting to be developed. I have long said that it would be a smart move for our state economic development and venture communities to work more closely with David."
Frankfort officials are well aware of Phelps. He has joined commonwealth teams several years at the annual BIO International Convention, where the state markets itself to the global biotechnology community, and helps pitch Kentucky to prospects.
Phelps continues to mentor others as founder and a managing partner in Pollen Ventures, focused on early stage life science technologies, with more than $25 million under management.
As president/CEO of CreoSalus, Phelps, 55, is again guiding a rapidly growing multimillion-dollar life sciences company that specializes in the development and manufacturing of finished drugs, fine chemicals and medical devices.
Privately held CreoSalus Inc., housed in the University of Louisville's MedCenter Two on East Chestnut Street near downtown, includes two pharmaceutical development companies:
• Thorn BioScience focuses primarily on animal drugs and a range of contract clean-room services for pre-clinical and phase I drug companies.
• Advanced ChemTech works with fine chemicals such as amino acids and custom peptides.
Occam Design represents CreoSalus' medical device division.
CreoSalus is an important part of Kentucky's biotechnology sector.
David Phelps is founder and CEO of Louisville life sciences company CreoSalus Inc. With him in a manufacturing services clean room at Occam Design, a human medical devices subsidiary, are (left to right) Occam's Vas Abramov, director of engineering and manufacturing; Jason Lone, quality manager; and Michael C. Lade, senior engineer.
Phelps and his companies have developed more than 50 medical devices in connection with the 45 patents issued or pending under his name. He serves on the board of directors of four medical device firms and on the scientific boards of three medical device firms.
Many in the scientific community remember his launch in 1988 of Louisville Laboratories, which today is Jeffersonville, Ind.-based medical device maker MedVenture Technology Corp. It was recognized by INC magazine in 1999 as the nation's 21st fastest growing inter-city company with a five-year compound growth rate of 750 percent. He sold his MedVentures interest in 2001.
Phelps began growing companies in his hometown after early success as an engineer/MBA on the startup team of Boston Scientific Corp., which today has 25,000 employees. Phelps is a former Ernst & Young Entrepreneur of the Year recipient and was one of its national judges in 2002.
Fertile ground for medical devices?
The medical device and supplies industry is an important economic driver for the state of Kentucky, with 2,300 workers and a payroll in excess of $80 million, according to a report last year by national business location consultants The Boyd Co. of Princeton, N.J. The report ranked both Louisville and Lexington as exceptional locations for medical device companies based on annual operating costs, including labor.
This was not news to Phelps, who has quietly recruited top talent, invested in related companies and worked in these specialty biotech spaces with continuing growth results. He said CreoSalus currently has no debt, one drug under FDA approval and three more in the pipeline.
Thorn Bioscience received FDA approval in 2010 of SucroMate™ Equine, designed to induce ovulation in mares to maximize breeding pregnancy rates, and one of only eight new FDA-approved animal health drugs in 2010. The company hopes to soon release SucroMate™ Porcine for sow reproduction, a larger market and one for which no product currently exists.
Thorn Bioscience also provides a wide range of pharmaceutical development services to others.
His friends and colleagues refer to Phelps as having an understated style and a "let's just build it" attitude. "He's quiet and thoughtful, and, at times, had to cross swords to get things done in the business community," said Louisville angel investor Bob Saunders, director of Saunders Capital Group. "He has been very helpful in attracting good engineering talent to Louisville."
And some were already in town.
Two of the five best engineers he has ever hired came from the University of Louisville, said Phelps, who in his career has worked with "more than 1,000" engineers, including those trained in top-flight programs at MIT and at Georgia Tech, his own engineering alma mater.
Phelps serves on the UofL Speed Scientific School board of industrial advisors and also is a board member for the Downtown Development Corp. of Louisville and Kid-Tech, which provides hands-on computer instruction to underprivileged children. He has two children of his own, Abby, 16, and Dylan, 12, and is a keenly interested judge of science fairs.
Early success with Boston Scientific
Building companies that last and change lives has become Phelps' forte. It's also part of his training as a graduate of the Harvard Business School's Owner/President Management Program.
"I had no real vision to be in the life sciences area coming out (of college in 1981) with a degree in mechanical engineering at Georgia Tech," said Phelps, the son of a Louisville doctor. "I received seven or eight offers and settled on working for Baxter" International Inc., a medical devices, pharmaceuticals and biotech company.
After seven years in product development with Baxter in locations in the United States and Ireland, he was recruited into Medi-Tech, then a 20-person Massachusetts company developing products for less-invasive medical procedures; he got involved in interventional radiology products. Medi-Tech evolved into Boston Scientific, which today has 25,000 employees.
"I had early stock, although, looking back, I wanted more salary and less stock," Phelps said. "I began to hire one or two engineers of my own, and we focused on building good products that filled a good niche. We just figured the liquidity would come. I have always appreciated that in our industry we make people's lives better."
In 1992, Boston Scientific went public. In 1995, his stock worth millions of dollars, Phelps left and came back to his hometown and started Louisville Labs - with his father Dr. Jerry Phelps' blessing and participation. Louisville, he said, had good manufacturing facilities, solid distribution, available engineering talent and overnight shipping. It was still pre-Internet and pre-China manufacturing, but everything he needed was within a 50-mile radius.
"Louisville was truly the best location for a medical-device firm at that time," Phelps said.
Louisville Labs became MedVentures and was sold in 2002 at a five to seven times multiple. It was the largest life science cash payment to investors in the state at the time, eclipsing the Potentia Pharmaceutical deal that had involved Louisvillians.
Phelps' interest in manufacturing grew into development, design and grappling with regulatory issues for drugs, he said.
Medical device and related equipment manufacturer Occam Design is best known for its peptide synthesizer but also does high-performance liquid chromatography materials testing. With nearly 35,000 s.f. of manufacturing space, Occam provides engineering and manufacturing services from concept and design to prototyping and production.
Six months ago the company worked on the Cobra Stylet, designing a safe and rapidly deployed intubation device. Cobra Stylet LLC recently received a $200,000 matching investment from the Kentucky Enterprise Fund. Its goal is to have the product launched in 2013 with FDA approval.