After world-first brain implant, Kitea Health raising $20m

• In a world-first, start-up Kitea Health has successfully implanted a chip under an Auckland patient’s skull that will monitor fluid pressure - part of a trial that will expand to 20 patients.
• The startup is now seeking $20m in a Series A raise, which will help fund a wider trial involving 150 patients across NZ and the US, with the goal of gaining FDA approval in around a couple of years.
• Kitea Health - seeking private money for its latest round, now that its human trials are established - has previously secured around $14m in taxpayer funding (plus around $6m from private investors) but co-founder and CEO Simon Malpas says he’s worried about recent cuts to R&D, science and startup-boosting programmes, which could limit the ability of other early-stage companies to follow in his firm’s footsteps.

In a major medical breakthrough, one of Kitea Health’s fluid-pressure monitoring chips has been implanted in a human brain for the first time. The technology has previously been trialled on sheep.

Kitea co-founder and CEO Simon Malpas says, “This is the first time that a fully untethered microcomputer has been implanted into the human brain. We are thrilled to initiate trials for this pioneering brain implant in Auckland.”

“This is the first time that a fully untethered microcomputer has been implanted into the human brain," Malpas says.

The procedure was carried out at Auckland City Hospital by a team led by neurosurgeon Dr Peter Heppner. The patient’s identity has been kept under wraps for privacy reasons.

A close-up of the chip. Design is all done in-house, in Auckland, with several specialist offshore partners used for parts and manufacture.

Kitea’s chip is designed to measure fluid pressure on the heart or brain - which could be the result of a genetic condition, heart failure, or trauma such as a car crash or stroke.

A “wand” is used to take wireless pressure readings from the chip. It only takes 15 seconds, and involves nothing more complicated than holding the wand within a few centimetres of your (or our child’s) head. Readings are diarised in an app to reveal trends. Encrypted data can be shared with a doctor via the cloud. It can all be done daily from home.

“It’s not always going to be pulling milk out of a cow or getting stuff out of a tree," says Kitea Health CEO and co-founder Simon Malpass. He's worried about the Government putting too little emphasis on programmes to assist high-growth high-tech - and with Budget 2024, cutting some programmes. Photo / Alex Burton

The first implant took place around three weeks ago. With all having gone to plan, a wider train till now take place over the next three months, involving 10 children and 10 adults - all suffering a condition called hydrocephalus, which causes a build-up of fluid in ventricles deep within the human brain.

The next step will be a wider trial involving 150 people across New Zealand and the United States, with the aim of gaining full regulatory approval from the US Food and Drug Administration (a key regulator, from which many others take their lead) in around two years.

In serious cases, hydrocephalus can lead to learning disabilities or even death.

Treatment involves placement of a tube, known as a shunt, into a ventricle of the brain to drain the excess fluid.

The "wand" that someone can use to take fluid-pressure reading in seconds. Malpas says it takes seconds and is part of a shift from reactive to proactive medicine, with patients able to take readings from home - providing an early warning of problems.

Patients with hydrocephalus already have a hole drilled into their skull for pressure-relieving pressure Kitea’s chip is inserted into the cortex (the brain’s outermost layer) with a syringe that reaches through same hole - with the implant taking place at the same time the shunt is installed, avoiding the need for a separate major surgery.

The sensor-chip has two major benefits.

Malpas says the first is that shunts frequently fail. Kitea’s chip can detect can detect health or even life-threatening fluid pressure buildup before symptoms like nausea appear.

"This marks a significant milestone in our quest to develop innovative solutions for better management of neurological disorders," says Dr Sarah-Jane Guild, a Kitea Health pre-clinical scientist involved in the trials. "By leveraging advancements in miniaturisation and biocompatible materials, we are poised to usher in a new era of personalised medicine for patients with neurological conditions." Photo / RNZ

The second is it can prevent the many false alarms that occur with hydrocephalus patients at present, chewing up time and resources and causing unnecessary hospital visit trauma, especially for children.

“Doctors see false alarms in 70% of cases, meaning that those expensive tests are unnecessary more often than not. The families simply go home and wait anxiously for the next time that those tell-tale symptoms present,” Heppner says.

“This leads to enormous anxiety among patients and parents while also leading to an unnecessary strain on the already-stretched healthcare system.”

Kitea's chip is just a few millimetres long and weighs just 0.3g. It's completely wireless and has no battery. It draws power from the "wand" used to take wireless readings. Photo / Chris Keall

“The problem is that patients and parents don’t know that a shunt has failed until symptoms start presenting,” says Dr Heppner.

“These symptoms can be as familiar as irritability, a headache or nausea - conditions that parents see in their children almost weekly. With no way to determine whether the shunt has failed, parents often rush to the hospital for expensive tests, including CT or MRI scans, to determine whether the life-saving shunt is still working as it’s meant to.”

A researcher inside a Kitea Health clean room. Photo / Alex Burton

Kitea aims to change this by allowing patients to check the pressure readings within their brains from the comfort of their homes.

There are an estimated 1 million people living with hydrocephalus in the US, Kitea says.

In the UK, 1 in every 750 children have some form of this brain condition and it is the most common reason for children to have a brain operation.

Malpas said this is the first time that a fully untethered microcomputer has been implanted into a human brain.

Previously, all brain implants such as brain computer interfaces and stimulators have had electrodes and wires passing from the brain to another box with batteries and electronics.

Elon Musk’s Nuralink, designed to assist with physical disabilities, also features a wireless element but is much larger - about the size of a $2 coin, excluding its threads - while Kitea’s sensor measures the size of a few grains of rice.

And, unfortunately, Nuralink’s first human trial last month was ultimately not successful, with the device shifting in the subject’s brain and most data capture lost.

Kitea was formed in May 2022 by Malpas - a professor at Auckland University’s Bioengineering Institute; his long-time collaborator Natalia Lopez, who serves as chief operations officer (Lopez was previously with another of the Bioengineering Institute’s clutch of successful startups, Alimetry, which recently raised $16m) and CTO Bryon Wright, who earlier co-founded BWMG, a spinout from Auckland University sperm motility research.

Malpas with co-founders Bryon Wright and Natalia Lopez.

Last year it raised $6m in a seed round led by Auckland-based venture capital firm Pacific Channel (whose investors include the Crown-backed NZ Growth Capital Partners, via its Aspire Fund) and supported by Icehouse Ventures, the venture arm of Cure Kids, and various local angel investors (Auckland University’s commercialisation arm, Uniservices, is also an investor.)

For a Series A funding round about to kick off - which will seek up to $20m - Malpas says he’s willing to talk to North American venture capital firms and others offshore. But given the US VC market remains tight, and a desire keep things NZ-centred, Malpas hopes the bulk of the money will come from local sources - notwithstanding his concern that NZ’s VC players can sometimes be overly focussed on SaaS (cloud software) and the monthly revenue it can generate. While there are a couple of “deep tech” funds, with more of an R&D focus, Malpas says we need them to be 10 times the size.

Kitea Health will decamp for larger digs after its $20m raise but is currently housed in Auckland University's Bioengineering Institute - which has spawned a host of medtech startups including Alimetry, Formus Labs, Toku Eyes and HeartLab. Photo / Alex Burton

Malpas says Kitea needs patient investors. There will be zero revenue, let alone profit, over the next two or three years. The payoff for VCs will come with FDA approval, which will open the door to commercial sales - and possibly an exit via a trade sale.

The payoff is potentially huge. Lopez told an Icehouse Showcase audience that the total addressable market for micro-implants is “north of $30 billion”.

“It’s not always going to be pulling milk out of a cow”

The research that formed the basis for the startup was funded by $14m grants - $12m in 2017 from the Government’s Endeavour fund and the balance from Cure Kids, the Neurological Foundation, the Health Research Council, the Auckland Medical Research Foundation, and individual philanthropists.

Budget 2024 saw public funding for science, research and development and startups under pressure, with the loss of the National Science Challenge (introduced in a Steven Joyce Budget a decade ago as a 10-year, $680m programme), the cancellation of the previous Government’s $450m plan to make Wellington a “science city” with four new R&D hubs under Callaghan Innovation (and Callaghan has in fact been subject to the 7.5% budget cuts applied to many Government departments and agencies); the non-renewal of the now-exhausted $300m Elevate fund for co-investment in venture capital with startups (the previously Government formed the fund in 2020 but had outlined no plans to refresh it; Elevate is the older brother to Crown agency NZ Growth Capital Partners smaller Aspire fund.).

“We needed every cent of that big-scale funding from Endeavour. We would not have got to where we are today if that funding hadn’t occurred,” Malpas says. Budget 2024 included plans to save $34m by scaling back Endeavour and other grants. Photo / Alex Burton.

The Budget also outlines an estimated $35m to be saved from 2027 with cuts to the Marsden Fund, the Health Research Fund, the Strategic Science and Innovation Fund and the Endeavour Fund.

As someone who’s onto their third startup (he earlier founded two university spinouts, Telemetry Research - also based around wireless implants - sold to US medtech Millar in 2012 and Kaha Sciences, a maker of wireless health sensors for animals bought by the multinational AD Instruments in 2020), what does Malpas make of the trend?

“It is worrying,” he says. “We needed every cent of that big-scale funding from Endeavour. We would not have got to where we are today if that funding hadn’t occurred.”

Kitea Health currently has 15 staff. A hiring drive is planned after its $20m raise. Image / Herald Focus still

Despite his qualms about Budget 2023, Malpas notes Science, Innovation and Technology Minister Judith Collins has recently appointed Sir Peter Gluckman to review science and university funding. There’s at least the possibility that new programmes will be added to replace those that have been cut, or reduced (and Malpas himself has been a critic of the current setup. Last year he ripped into MBIE’s Endeavour fund for, in his view, failing to back health tech startups and other sectors with immediate potential to boost exports).

And although Collins has ruled out an Elevate top-up or tax breaks for venture capital investments any time soon, she does favour eliminating a tax on unrealised gains that currently makes employee stock ownership schemes uneconomic - meaning cash-strapped startups could keep or lure talent with shares - and has promised action on that front shortly.

But as things stand, Malpas is concerned. And he saw NZ’s startup and R&D schemes as already underfunded.

“For every Kitea, there’s another four or five [startups] could have had a similar thing if there was more investment in innovation,” he says.

“Like a lot of people concerned about the level of innovation. We need to have a conversation about what we want as a country.

“Because it’s not always going to be pulling milk out of a cow or getting stuff out of a tree.”

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.