» Jamie Grooms and the Allograft Industry » The New Business Model at U.F. Tissue Bank » Precision-Tooling Allograft » Negotiating a Distribution Channel » Spinning Off as a Private Company » Building the Company » The Future of RTI

At CryoLife Mr. Grooms started working on tissue sterilization ideas and the machining of bone. It was here that he first came to realize that bone could be machined into very small, precisely sized screws and dowels, complete with threads, notches and slots that allowed them to be used with instrument sets. He realized these new allografts could take the place of metal pins, screws and dowels used in surgical procedures and, if he could commercialize them, patients would be able to regenerate their own natural tissue, instead of having metal in their bodies the rest of their lives. He tried and failed to convince CryoLife of the commercial viability of the technology, so he began looking for an opportunity to put his experience and knowledge to use.

Mr. Grooms knew that to make his ideas a reality, he would have to develop a new business model that would dramatically increase tissue donation, as tissue donation had been flat in the U.S. for many years. He also knew he would need to apply science and technology to tissue processing technologies to make them safer and more efficient. Importantly, he knew that to accomplish these goals he would need to create a successful and self-sustaining business model, and hire people who could effect these goals.

He recruited key people from national tissue and blood banking organizations. Together they developed a novel new hospital service plan that promoted tissue donation at every death, instead of using the traditional model that concentrated primarily on organ donors. They began doubling tissue donation each year, and by 1995 they had raised the level of tissue donation in North Florida to the highest percentage in the U.S. Today it is the most successful model in the country, recovering more than 2,000 tissue donors from a population base of 3.2 million, compared to other top programs which recover only 500 - 600 donors out of population bases three times greater.

In mid-1996 Mr. Grooms was introduced to Richard Allen, a principal in a technology and business consulting firm working in technology development and licensing. Mr. Allen and Mr. Grooms worked together on negotiations with Medtronic and, in July 1996, Medtronic infused $2.5 million into the tissue bank in return for distribution rights to the bone dowel and other spinal grafts. The tissue bank used the funding to build out its production facilities. With production and distribution now in place, the company was poised to explode into high growth.

By 1999, capitalizing on the funding provided, the company had launched a dozen graft products, including new versions of threaded dowels, pins, interbody fusion grafts and the new Osteofil injectible and Opteform molded bone pastes. The company also completed development of its BiocleanseTM tissue sterilization system, a system that allowed sterilization of allograft bone tissue without affecting the biomechanical properties of the bone.

The company expanded its market beyond orthopedic applications, into oral maxillofacial, urinary and cardiovascular surgeries, and its innovations continuously raised the bar of science and safety in the allograft industry.

After the IPO the company went through two years of challenges mounted largely by a consortium of large not-for-profit tax-exempt companies that had dominated the industry before RTI appeared. The attacks slowed the company's growth by attempting to disrupt the tissue supply and by lobbying legislators in an attack on RTI's innovative tissue sterilization systems. RTI emerged successfully, however, with the FDA eventually endorsing the company's safety and sterilization systems, which led to rekindled growth.

In the fourth quarter of 2001 Mr. Grooms, with the Board's approval, brought in a new president and CEO, Brian Hutchison, to take over operations of the company. Mr. Grooms recruited Mr. Hutchison from his position as Executive Vice President of Stryker Corporation (NYSE:SYK), one of the largest and most successful orthopedics manufacturers in the world, and his hiring left RTI in strong hands. Shortly after the hiring of Mr. Hutchison, Mr. Allen stepped down as CFO, allowing Mr. Hutchison to hire for the position. And after a short transition period as Chairman of the Board, Mr. Grooms resigned that position to allow Mr. Hutchison to assume both executive positions.

Both Mr. Grooms and Mr. Allen remain on excellent terms with RTI's leadership, and both are still significant stockholders in the company. Mr. Grooms continues to represent RTI on the Board of Directors of Organ Recovery Systems, Inc., a company in which RTI maintains a substantial ownership interest.