Potrero Medical, the company seeking to digitize one of the last remaining undigitized vital signs by actively measuring renal output and predicting acute kidney injuries, has filed for Chapter 11 bankruptcy.
The former Fierce Medtech Fierce 15 winner announced it has begun to voluntarily restructure its equity through pre-negotiated terms filed in Delaware bankruptcy court. The California-based developer said it expects the process to be completed under an expedited schedule that will wrap up before February of next year.
Those proposed bankruptcy terms also provide for Portero to emerge from Chapter 11 with up to $10 million in new financing to help support its plans to continue operations, pending the final determination by the court, according to filings.
Potrero’s Accuryn device tracks a patient’s kidney health within the hospital by gathering data from an automated urine collection system—which not only measures fluid output, but also logs core body temperature and intra-abdominal pressure using a sensor-equipped Foley catheter—and connects it all directly with the patient’s electronic medical record. The platform first obtained a clearance from the FDA in 2016 and a CE mark in Europe in 2019.
Potrero also received a breakthrough designation from the FDA in September 2022 for the development of machine learning algorithms. These would take the data collected by Accuryn and use them to predict the onset of an acute kidney injury, specifically after a patient undergoes heart surgery. The company estimates that about 300,000 patients in the U.S. die each year from acute kidney injuries and that nearly half of hospitalized patients with sepsis develop the condition.
According to CEO Joe Urban, the restructuring comes at an odd time: The company’s commercial business is beginning to take off, but funding across the sector is drying up.
“Medtech goes through cycles, and this is one of the most brutal cycles I've seen in over 20 years of working on medical devices,” Urban said in an interview. “The timing of this is not ideal.”
“And it's not just our industry, it's capital in general,” he said. “Growth capital has just evaporated; it's been very, very difficult to come by.”
So far Accuryn has been used to help monitor more than 64,000 patients, with more than 1,100 installations in at least 60 hospitals, Urban said—adding that the company has also logged record revenues in back-to-back quarters this year, following favorable reimbursement structures related to kidney injuries and avoiding hospital readmissions.
“It's one of the stickiest businesses I've ever been a part of,” he said. “With near 95% reorder rates on a weekly basis … the machines are being almost fully utilized.”
Still, in the months leading up to the late November bankruptcy filing, the company has had to streamline its finances and let go of staff. After starting the year with nearly 45 employees, Potrero’s current headcount is now down to about 30.
“As a result of the environment, we had to make some hard decisions. And when you're in a startup, it's like a family,” Urban said. “It’s the weirdest thing—we're a revenue-producing company that has a great technology, and customers love it. But even in that environment, it was just very difficult, if not impossible, for us to raise money.”
“I didn't want an outcome with Chapter 11, but it was the only outcome that we saw, as a board, to keep the company alive and the technology moving,” he added.