Medical Device Publication

AF Ablation:

Diabetes Device Market:

Finding the Right Mix Innovation Highlights Road to Growth

by Ariana Del Negro and Mary Thompson

For a number of reasons, 2009 was a big year for the atrial fibrillation (AF) ablation market. Early in the year, Biosense Webster Inc. (a division of Johnson & Johnson [J&J]) received US Food & Drug Administration (FDA) approval for its NaviStar ThermoCool radiofrequency (RF) ablation catheter, the first catheter ablation device on the US market with a specific AF indication. That milestone helped usher in several high-profile acquisitions undertaken by competitors jostling for a stake in this highly promising, yet still greatly underserved space. In fact, FDA approval of the NaviStar ThermoCool was much more than just a landmark event for J&J; it changed the landscape of the AF industry, opening doors and reinvigorating interest in the funding and development of new catheter-based technologies—a trend that has extended through to 2010 and will likely continue in the years ahead.

Research on catheter ablation for AF also has entered a new stage. Several important trials have demonstrated the superiority of catheter ablation versus antiarrhythmic drugs (AADs) for the treatment of paroxysmal (intermittent) AF, establishing the procedure as a viable and effective treatment strategy, although it is not yet widely accepted as a first-line therapy.

Now that the first ablation catheter has received FDA approval for AF, clinical trials for new ablation devices will likely shift away from comparisons of devices versus AADs and move toward comparisons between new and approved devices—an important transition that is likely to make it easier to enroll patients in future studies.

But challenges to treatment still persist.

While catheter-based AF ablation (and

See AF Ablation, page 38

by Robert Neil

Despite the slumping economy, the diabetes market continues to be a very active arena, with treatment-changing products recently launched or in the latter stages of development. Although no industry has been able to escape the effects of the US recession, and certain segments of the diabetes market— particularly those that are more consumerdriven, such as test strips—have seen a decline in sales, other areas, such as continuous glucose monitoring (CGM), continue to move forward with fairly strong growth.

Once the economy returns to healthier levels, the overall market is expected to see a renewal of growth. Meanwhile, an expanded emphasis on emerging international markets could help offset some of the sluggish numbers in the US and parts of Europe.

Conventional Glucose Testing Feels the Pinch In some ways, the diabetes market is more vulnerable to economic changes than other major medical concerns because a good deal of product purchases in this space are made directly by consumers, who must take charge of a significant portion of their own diabetes care. It is therefore not surprising to see that the portion of this market that has been hit the hardest during the recession is conventional glucose meters and testing strips, used by diabetics to monitor their glucose levels. With unemployment and under-employment figures high, a large number of people have been looking for ways to cut back on costs, and sluggish sales suggest diabetics have been reducing their purchases of meters and test strips.

See Diabetes, page 58

SEPTEMBER 2010 Vol. 12, No. 8

The Re-Emergence of Device Reprocessing Cost containment pressures have sparked new interest in reprocessing single-use devices. . . . . 1

Cosmetic Dermatology Thrives in Spite of Economy Less invasive facial rejuvenation products and procedures continue their upswing.. . . . . . . . . 12

European Cost Concerns May Impact Device Sales Economic woes spell trouble for companies with Europe-first strategies.. . . . . . . . . . . . . . . . . . . 18

WASHINGTON ROUNDUP The latest medical device regulatory and reimbursement news from “The Gray Sheet” . . . . . . . . . . . . . 20

DEALS UPDATE Recent device financings, alliances and M&A activity... . . . . . . . . . . . . 24

clinical edge New Technique for In Vivo Joint Regeneration Shows Promise. . . . . . 28 Alzheimer’s-Related Plaque Also Collects in the Eyes. . . . . . . . . . . . 29

START-UP NEWS HistoSonics: In-office Ultrasound Therapy for BPH. . . . . . . . . . . . . . 30 Neuravi: Clot Removal for Acute Ischemic Stroke. . . . . . . . . . . . . . . . 32 EndoControl: Offering Endoscopic Surgeons a Robotic Helping Hand. . . . . . . . . 34 Virtual Incision: Mini Robots Go Where Man Can’t . . . . . . . . . . . . . . 35

Device Reprocessing

September 2010

The Re-Emergence of Device Reprocessing

by Curt Werner

Up until the early 1990s, seemingly a lifetime ago, it wasn’t unusual to see nurses and doctors casually throw away items labeled for single-use after using that product to treat a patient. Opened, but unused devices met the same fate, scrapped with little or no regard for the price the facility paid for it or whether it might retain any further use. And it didn’t seem to matter much whether a $30 pulse oximetry device or an $800 coronary catheter in near mint condition ended up in a landfill.

After all, things were going pretty well for hospitals. The dollars were flowing in and the nation’s economy was perched on the edge of what became unprecedented boom times. The environment was another story, however, and articles about needles washing up on the shores of New Jersey, dangerous medical waste filling landfills, and smokestacks choking the air with medical waste not only disturbed the citizenry, but prompted legislative action.

That landscape, along with clinicians’ attitudes toward these unwanted devices, began to change when money became scarcer and saving it began to count. What the combined scenario added up to was the perfect storm for a nascent medical device reprocessing industry to take hold. All that was needed was the blessing of regulators to move private reprocessing operations aboveground. Some hospitals had already begun (quietly) reprocessing a limited number of items in their central sterile operation, usually located in their basement.

In June 2000, a report from the then Government Accounting Office (GAO) helped move single-use device (SUD) reprocessing up from the basement when it announced there was “little evidence of harm from reuse” of single-use devices or SUDs. An even bigger moment came later that summer in August when the US Food & Drug Administration (FDA), in a landmark ruling, decreed that hospitals and third parties that reprocess SUDs were to be regulated in the same way as original equipment manufacturers (OEMs).

©

This had a twofold impact: hospitals reprocessing SUDs in-house would be subject to the requirements of the Food, Drug, and Cosmetic Act, a verdict that effectively stymied in-house reprocessing, while clearing the way for third-party entities to capture the lion’s share of this fast-growing market. The FDA said, in essence, that anyone who reprocessed SUDs was producing what amounted to new devices, a safety and labeling standard few hospitals could reach. A September 2001 letter from the FDA warning hospitals that inspections were on the way further shuttered even more in-house operations.

Since that time, both the FDA and the GAO have issued a number of declarations and reports that generally lend credence to SUD reprocessing, particularly in terms of patient safety. In all cases, medical device reprocessing today is limited to noncritical and semicritical devices belonging to Class I and Class II FDA device classifications. No Class III devices have been cleared for reprocessing. (See Exhibit I.)

Today, the SUD reprocessing and remanufacturing market is an estimated $200+ million business basking in the glow of rapid growth.

Sensing cost-savings in the air, US hospitals began warming to the possibilities offered by reprocessing, although a vocal opposition was, and still is in some cases, fiercely against the practice. An FDA survey published in 2002, just two years after its seminal ruling, produced surprising results: Nearly a quarter (24.2%) of the roughly 5,000 US hospitals in operation at the time were reusing at least some SUDs. Most commonly, these were noninvasive items such as sequential compression device sleeves, which were reused by 15.8% of all hospitals. Next up for reuse were drill bits, saws, blades, or burrs (7.3%); biopsy forceps and snares (6.2%); and endoscopic/laparoscopic scissors, graspers, dissectors, or clamps (6.1%). Another 3.9% were using reprocessed electrophysiology catheters. The agency’s survey, which was never duplicated, did not take into account reprocessing opened-but-unused SUDs, ie, devices whose packaging may have been opened, but had not been used on a patient.

The FDA survey, conducted from late 2001 to early 2002, also found that large hospitals

2010 Windhover Information, an Elsevier company. All rights reserved.

1

Device Reprocessing

were substantially more apt to reuse reprocessed SUDs, not surprising because larger facilities often lead the way in innovative cost-saving ideas. Nearly half (45.2%) of the hospitals that used reprocessed items had more than 250 beds, compared to only 12.3% of hospitals with fewer than 50 beds. The vast majority (84%) used third-party reprocessors to reprocess these devices while the remainder reprocessed at least some SUDs internally.

Today, the SUD reprocessing and remanufacturing market is an estimated $200+ million business basking in the glow of rapid growth. Especially in recent years, controversy surrounding the practice has waned considerably, at least in the US (in Europe, Exhibit 1

Primer: FDA Medical Device Classifications Class I: Minimal potential for harm Class I devices present minimal potential for harm to the user and are often simpler in design than Class II or Class III devices. Most Class I devices are exempt from the good manufacturing practices and/or the FDA notification regulations.

These controls are deemed sufficient to provide reasonable assurance of the safety and effectiveness of the device; or the device is not life-supporting or life-sustaining and does not present a reasonable source of injury through normal usage.

Devices in this category include tongue depressors, bedpans, elastic bandages, most hand-held dental instruments, examination gloves, and hand-held surgical instruments and other similar types of common equipment.

Class II: Noninvasive, but higher level of assurance Class II devices are those for which general controls alone are insufficient to assure safety and effectiveness, and additional existing methods are available to provide such assurances. Therefore, Class II devices are also subject to special controls in addition to the general controls of Class I devices. Special controls may include special labeling requirements, mandatory performance standards, and postmarket surveillance. Devices in Class II are held to a higher level of assurance than Class I devices and are designed to perform as indicated without causing injury or harm to patient or user. Devices in this class are typically noninvasive and include x-ray machines, picture archiving and communications systems, powered wheelchairs, infusion pumps, surgical drapes, surgical needles, suture material, and acupuncture needles.

Class III: Life-supporting or life-sustaining products At the agency’s highest standard, a Class III device is one for which insufficient information exists to assure safety and effectiveness solely through the general or special controls sufficient for Class I or Class II devices. Such a device needs premarket approval and a scientific review to ensure the device’s safety and effectiveness in addition to the general controls of Class I. Class III devices are described as those for which “insufficient information exists to determine that general controls are sufficient to provide reasonable assurance of its safety and effectiveness or that application of special controls...would provide such assurance and if, in addition, the device is life-supporting or life-sustaining, or for a use which is of substantial importance in preventing impairment of human health, or if the device presents a potential unreasonable risk of illness or injury.”

Examples of Class III devices include replacement heart valves, silicone gel-filled breast implants, implanted cerebral stimulators, implantable pacemakers and cardioverter defibrillators, pulse generators, and endosseous (intra-bone) implants.

SOURCE: US Food & Drug Administration

2

September 2010

the European Commission recently released a report that questioned the risks involved with SUD reprocessing and recommended that the entire reprocessing cycle be reviewed).

Several estimates say as many as 1,800 US hospitals utilize some form of reprocessed devices; many of those facilities are recognized as the top institutions in the country, with specialties in cardiology and orthopedics. And by nearly any measure—including the number of facilities, number of approved products, and dollars both spent and saved—the SUD reprocessing industry is making a noteworthy impact on health care delivery in the US. To date, the FDA has granted 133 510(k) clearances to the thirdparty reprocessing companies that belong to the Association of Medical Device Reprocessors (AMDR), a trade group whose two members—Ascent Healthcare Solutions Inc. (a division of Stryker Corp.) and SterilMed Inc.—reprocess something on the order of 95% of all SUDs in this country. The FDA grants clearances to reprocessing companies, not to the products, placing the burden on each to demonstrate the ability to safely reprocess specific devices. All told, about eight companies are currently considered SUD reprocessors. (See Exhibit 2.)

Stryker Jumps In Like many other markets, the reprocessing segment has been altered radically by consolidation. But the most recent deal in the space—Stryker Corp.’s cash acquisition of privately held Ascent—highlights an interesting, novel business strategy for a top medical device manufacturer seeking ways to retain its edge in the new era of cost containment.

Ascent, which had 2009 revenues of $130 million, was formed in December 2005 through the merger of Alliance Medical Corp. and Vanguard Medical Concepts Inc. The company was acquired by Stryker in December 2009 for an astonishing $525 million in cash. Stryker is a $22 billion device giant focused on medical equipment and orthopedics devices with 2009 sales above $6 billion. Its products are core staples found in most US operating rooms (ORs) and used by thousands of surgeons nationally and internationally.

Stryker’s expensive foray into reprocessing surprised many observers by transformwww.ElsevierBI.com

Device Reprocessing

September 2010

ing the company nearly overnight from a respected traditional OEM, which like most of its competitors had earlier pushed back against reprocessing as a concept that cut into its core business, into the operator of the largest reprocessing play in the nation; an instant leader in a high-growth market.

But as surprising as the move was, Stryker clearly had a plan. The deal diversifies Stryker’s medical technology portfolio and helps the company address the health care cost containment and environmental sustainability objectives of its customers, says Tim Scannell, Stryker’s group president of medsurg and spine. But it also offers valuable growth opportunities to the firm at a time when its core orthopedic implant business is struggling. Orthopedic implants currently account for about 59% of Stryker’s sales mix, but growth in that segment so far this year has been eclipsed by medsurg, even

after adjusting for the impact of the Ascent acquisition. (See Exhibit 3.)

According to Katherine A. Owen, Stryker’s VP of strategy and investor relations, the Ascent deal offers a new growth platform in an underpenetrated market and a longerterm opportunity to leverage the firm’s hospital presence, enabling it to partner with hospitals “in a very meaningful way to drive significant cost benefits.” A big part of the deal’s appeal, Owen said at the Canaccord Genuity 30th Annual Growth Conference in August, is Ascent’s leading position in the reprocessing market and its large quantity of 510(k) clearances, which number more than two times those of its nearest competitor. In addition, Ascent has an “attractive pipeline of 510(k) filings” and the potential longer term to expand significantly outside the US, according to Owen, who said these attributes should lead to

Exhibit 2

Profiles of Current Reprocessing Companies Company

Description

Ascent Healthcare Solutions/Stryker

Segment leader, formed in December 2005 through merger of Phoenix-based Alliance Medical and Vanguard Medical Concepts, Lakeland, FL. Production facilities in both locales. Company lists customer base of approximately 1,700 US hospitals and surgery centers. Purchased by Stryker in December 2009.

ClearMedical

Founded in 1997 as a reprocessor of noninvasive items. Handles mostly Ethicon items, but also some from Smith & Nephew Inc. and Stryker. In 2004 refocused to invasive device collector and distributor, becoming distributor of remanufactured SUDs rather than what it calls a “dry cleaning” service provider. Essentially, collects from one hospital, then resells to others. Offers 30% savings on “brand name remanufactured SUDs.”

Hygia Health Services

According to its Web site, Hygia is “the first third-party high-level disinfection (HLD) reprocessor; we invented the industry.” Through its online store, it will buy used instruments from medical facilities as well as reprocess SUDs. In July, the company settled a lawsuit with Masimo Corp. after the latter threatened patent infringement, claiming Hygia, which countersued, was reprocessing its pulse oximetry sensors designed for single-use only.

Judge dismissed the case, permanently enjoining Hygia from reprocessing and selling any Masimo sensor without prominent label saying the device had been reprocessed and that device performance was not validated or warranted by Masimo.

MEDISISS

Founded in 1997. Says its average customer can save between $50,000 and $75,000 annually using its services.

Northeast Scientific

Founded in 2005; won first 510(k) approval in September 2007. Since then, has built a line of reprocessed Class I devices and endoscopic trocars. Says its prices are “as much as 65% less than OEM products.”

ReNu Medical

Founded in 2000 as an HLD reprocessor of noncritical and semicritical medical devices. Says it reprocesses “most major brands” of deep vein thrombosis compression garments, pulse oximeter probes, powered air purifying respirator hoods, stethoscopes, blood pressure and pneumatic tourniquet cuffs, and cervical collars.

SterilMed

Says customers can “save 40% to 50% on medical device purchases and reduce repair and equipment costs.”

Also sells pre-owned equipment such as flexible and rigid endoscopes and video systems.

SureTek Medical

Founded by former clinical executive at Vanguard Medical, SureTek reprocesses items used in hand surgery, arthroscopy, laparoscopy, otolaryngology, gynecology, and general surgery from a variety of OEMs. Items include carpal tunnel blades; orthopedic burs, bits and blades; arthroscopic accessories; electrosurgical electrodes; monopolar and bipolar laparoscopic instruments; foot and leg compression sleeves and tourniquet cuffs. Says clients save “60%-75% per device as compared with purchase of new instruments and 20%-50% as compared with competing reprocessors.”

SOURCE: Medtech Insight

©

2010 Windhover Information, an Elsevier company. All rights reserved.

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Device Reprocessing

September 2010

“solid teens” sales growth for the business going forward.

The Stryker acquisition has propelled the notion of SUD reprocessing clearly into the medical mainstream and put a stamp of legitimacy on reprocessing operations throughout the sector. Although the company was somewhat late to the party, Stryker has most decidedly found religion. During a May analyst call, Scannell described reprocessing as a “widely adopted, rigidly monitored FDA-regulated process through 510(k) s proven to be a safe and effective alternative to single-use devices,” and “a critical component of a responsible medical device strategy today.” All this from an established device company that long opposed reprocessing as a concept and as a business.

please add a row below the Q2 2010 row as follows: YTD 2010 +15.7% +14.0% +6.3% +3.9%

Interestingly, Stryker has several divisions that compete directly with Ascent-remanufactured products. “We’ve watched the [reprocessing and remanufacturing] industry evolve, watched the market sort itself out, and listened to our customers who talk to us constantly about cost as well as sustainability, and we felt it was a wonderful opportunity to enter the marketplace and do it in a meaningful manner,” says Curt Hartman, Stryker’s VP and CFO. He sees growth both

in the US, where reprocessing has already caught on, as well as offshore, where the notion “really has not taken hold.”

Hartman was asked whether he fears other SUD manufacturers will follow Stryker’s lead and bring both the revenue stream and reprocessing in-house. While acknowledging that possibility, along with the likelihood of mounting competition in the reprocessing segment, he pointed out that reprocessing is heavily regulated and that Ascent leads the industry in regulatory approvals, a fact that gives the company, and by extension Stryker, a competitive advantage. (See Exhibit 4.)

He also pointed out that limited physical space in the typical OR would seem to preclude most hospitals from keeping more than one collection unit in the room.

Collection units are used to gather devices for reprocessing during and after surgery, and they are sizeable. For example, Ascent offers hospitals four collection options. The company’s Advantage collection system, for one, utilizes a 17-gallon cart mounted on a wheeled frame with space for an optional sharps container. Says Hartman, “If you have one provider that can cover the waterfront or a broad share of the waterfront, there’s absolutely no logic for giving up

Exhibit 3

Stryker’s Product Mix and Growth Outlook Sales Mix 1H 2010

Medical

Business Growth Comparison: Medsurg vs Ortho Implants

Ascent

Hips

2%

Medsurg

8% Instruments

16%

17% 18% 13% Endoscopy

3%

Knees

8%

Craniomaxillofacial/ Spine other

$

CC*

$

CC*

FY 2009

-5.4%

-4.1%

+3.8%

+5.7%

Q2 2010**

+16.4%

+15.9%

+2.2%

+1.4%

YTD 2010

+15.7%

+14.0%

+6.3%

+3.9%

Percent of Sales YTD 2010

11%

Ortho Implants

Growth

41%

59%

*Constant currency basis Trauma

**Ascent acquisition impact: 6%

Extremities/other

3%

SOURCE: Katherine A. Owen, Stryker VP strategy and investor relations, at Canaccord Genuity 30th Annual Growth Conference, August 2010

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Device Reprocessing

September 2010

Exhibit 4

510(k) Decisions for Reprocessing Companies Company Product AMDR Member Companies Ascent Reprocessed CS Bi-Directional Diagnostic Electrophysiology Catheter Ascent Reprocessed Ultrasonic Curved Sheared w/ Torque Wrench Ascent Reprocessed Trocars, Model B5LT and CB5LT Ascent Reprocessed Ultrasonic Coagulating Shears Ascent Reprocessed 3D Diagnostic Ultrasound Catheters, Model SNDSTR10 Ascent Reprocessed Masimo Pulse Oximeter Sensors Ascent Reprocessed Electrophysiology Catheters Ascent Reprocessed Endoscopic Trocars and Cannulae Ascent Reprocessed Trocars Ascent Reprocessed Medtronic Cardiac Stabilization and Position Device Ascent Reprocessed Ligature Vessel Sealer/Divider Ascent Reprocessed Trocars Ascent Reprocessed Diagnostic Ultrasound Catheter Ascent Reprocessed Phacoemulsification Tips Ascent Vanguard Reprocessed Suture Passer Ascent Reprocessed External Fixation Device Alliance* Reprocessed Phacoemulsification Tips Alliance Reprocessed Electrophysiology Catheters Alliance Vanguard Reprocessed Compression Garments (HILL-ROM) Alliance Reprocessed Compression Sleeves Alliance Alliance Medical Corp. Reprocessed Compression Sleeves Alliance Reprocessed Compression Sleeves Alliance Reprocessed External Fixation Devices Alliance Reprocessed Daig Livewire Electrophysiology Catheter Alliance Reprocessed Electrophysiology Catheter Alliance Reprocessed Phacoemulsification Tips Alliance Reprocessed External Fixation Devices Alliance Reprocessed External Fixation Devices Alliance Reprocessed External Fixation Devices Alliance Reprocessed Ultrasonic Scalpels Alliance Reprocessed External Fixation Device Alliance Reprocessed Diagnostic Ultrasound Catheter Alliance Reprocessed Electrophysiology Catheters Alliance Reprocessed Electrophysiology Technologies Electrophysiology Catheters Alliance Reprocessed Diamond Burs Alliance Reprocessed Electrophysiology Catheter Alliance Reprocessed Electrophysiology Catheter Alliance Electrophysiology Catheter Alliance Modification to Reprocessed Synthes External Fixation Devices Alliance Reprocessed Electrophysiology Catheter Alliance Reprocessed Compression Sleeves Alliance Reprocessed Compression Sleeves Alliance Reprocessed Endoscopic Trocars and Cannulae Alliance Reprocessed Compression Sleeve Alliance Reprocessed External Fixation Device Alliance Electrophysiology Catheter Alliance Reprocessed External Fixation Device

6

Decision Date

Division

510(k) #

05/28/10

Cardiovascular

K100254

05/12/10 03/19/10 03/04/10 10/21/09

General & Plastic Surgery General & Plastic Surgery General & Plastic Surgery Cardiovascular

K100537 K100080 K093702 K092125

07/29/08 07/09/08 10/15/07 10/02/07 08/17/07

Cardiovascular Cardiovascular General & Plastic Surgery General & Plastic Surgery Cardiovascular

K081238 K081329 K063788 K070059 K070036

05/16/07 04/31/07 03/29/07 03/19/07 10/11/06 09/05/06 03/19/07 08/31/06 04/04/06 02/24/06 02/17/06 02/13/06 01/27/06 11/16/05 11/16/05 09/23/05 08/25/05 08/22/05 08/25/05 06/06/05 06/29/05 03/16/05 03/25/05 03/23/05

General & Plastic Surgery General & Plastic Surgery Cardiovascular Ophthalmic General & Plastic Surgery Orthopedic Ophthalmic Cardiovascular Cardiovascular Cardiovascular Cardiovascular Cardiovascular Orthopedic Cardiovascular Cardiovascular Ophthalmic Orthopedic Orthopedic Orthopedic General & Plastic Surgery Orthopedic Cardiovascular Cardiovascular Cardiovascular

K062525 K062497 K063076 K060648 K053585 K061759 K060648 K061045 K051438 K060049 K060091 K053316 K052918 K052603 K052414 K050518 K052062 K052065 K052064 K043358 K051554 K033436 K043392 K043393

11/23/04 10/03/03 09/24/03 08/08/03 07/30/03

General & Plastic Surgery Cardiovascular Cardiovascular Cardiovascular Orthopedic

K041978 K030279 K030187 K030109 K032058

05/02/03 03/11/03 03/07/03 03/04/03 02/05/03 02/03/03 08/13/02 06/24/02

Cardiovascular Cardiovascular Cardiovascular General & Plastic Surgery Cardiovascular Orthopedic Cardiovascular Orthopedic

K030026 K024087 K024074 K024015 K021654 K023714 K012708 K012623

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Device Reprocessing

September 2010

Alliance Alliance Alliance Alliance Alliance Alliance Alliance Alliance Alliance Alliance Alliance Alliance Alliance

Reprocessed EBI External Fixation Devices Reprocessed Howmedica External Fixation Devices Reprocessed External Fixation Device Reprocessed Soft Tissue Ablators Compressible Limb Sleeve Reprocessed Linvatec Arthroscopic Burs Reprocessed Dyonics Arthroscopic Burs Reprocessed Stryker Arthroscopic Shavers Reprocessed Arthroscopic Burs Reprocessed Autosuture, Unipolar, Laparoscopic Reprocessed Linvatec Shavers Reprocessed Dyonics Arthroscopic Shavers Reprocessed Unipolar Laparoscopic/Endoscopic Instruments

06/24/02 06/24/02 06/24/02 12/06/01 11/26/01 11/09/01 11/08/01 11/07/01 11/07/01 11/07/01 11/07/01 11/07/01 10/22/01

Orthopedic Orthopedic Orthopedic General & Plastic Surgery Cardiovascular General & Plastic Surgery General & Plastic Surgery General & Plastic Surgery General & Plastic Surgery General & Plastic Surgery General & Plastic Surgery General & Plastic Surgery General & Plastic Surgery

K012645 K012648 K012634 K012631 K011192 K012630 K012652 K012635 K012605 K012603 K012613 K012611 K012625

SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed

Reprocessed Pins Reprocessed Pulse Oximeter Sensors Reprocessed External Fixation Device Reprocessed Harmonic Scalpels Reprocessed Ear, Nose, and Throat Shavers Reprocessed Scissor Tips Reprocessed Ethicon ETS Endoscopic Linear Cutters Reprocess Heart Stabilizers and Positioners Reprocessed Endoscopic Trocar Reprocessed Balloon Inflation Device Reprocessed External Fixation Device Reprocessed Cold Biopsy Forceps Reprocessed Hot Biopsy Forceps Reprocessed Deflectable Electrophysiology Diagnostic Catheters Reprocessed Endoscopic Trocar Reprocessed Harmonic Scalpels Reprocessed IVUS Imaging Catheter Deflectable Electrophysiology Diagnostic Catheters Modification to: Reprocessed Oximax Pulse Oximeter Sensors Reprocessed Pulse Oximeter Sensors Reprocessed Electrophysiology Diagnostic Catheters Reprocessed Sealed Electrophysiology Diagnostic Catheters Reprocessed Femoral Compression Device Reprocessed Guidewires Reprocessed Stone Retrieval Baskets Reprocessed Endoscopic Electrodes SterilMed Reprocessed Compression Sleeves Reprocessed Electrosurgical Electrode Reprocessed Laser Probe Reprocessed Radiofrequency Arthroscopy Probes Reprocessed Phaco Tips Reprocessed Laparoscopic Electric Instruments Reprocessed Endoscopic Trocar Reprocessed Harmonic Reprocessed Powered Arthroscopic Accessories Intermittent Compression System, Garment Models 400 SE

06/25/10 11/03/09 03/02/09 01/09/09 12/17/08 02/12/08 09/12/07 03/15/07 05/23/06 05/04/06 09/21/05 07/20/05 07/20/05 06/14/05

Orthopedic Anesthesiology Orthopedic General & Plastic Surgery General & Plastic Surgery General & Plastic Surgery Cardiovascular Gastroenterology General & Plastic Surgery Orthopedic Gastroenterology Gastroenterology Cardiovascular

K100707 K092368 K083636 K083060 K081814 K073613 K070859 K063844 K052299 K053188 K051957 K042648 K050136 K051220

05/23/05 04/12/05 03/01/05 03/01/05 09/23/04 03/28/03 08/14/02 08/14/02 07/18/02 04/29/02 02/14/02 02/14/02 02/11/02 01/18/02 11/08/01 11/08/01 11/08/01 11/07/01 11/07/01 11/07/01 11/02/01 10/18/01

Gastroenterology General & Plastic Surgery Cardiovascular Cardiovascular Anesthesiology Anesthesiology Cardiovascular Cardiovascular Cardiovascular Gastroenterology Gastroenterology Gastroenterology Cardiovascular General & Plastic Surgery General & Plastic Surgery General & Plastic Surgery Ophthalmic General & Plastic Surgery General & Plastic Surgery General & Plastic Surgery General & Plastic Surgery Cardiovascular

K043592 K050343 K043453 K043513 K041127 K012677 K012523 K012678 K012574 K012556 K012581 K012685 K012597 K012684 K012682 K012679 K012579 K012598 K012578 K012571 K012536 K003857

Vanguard Reprocessed External Fixation Devices Vanguard Reprocessed External Fixation Devices Vanguard Reprocessed External Fixation Devices Vanguard Reprocessed Diagnostic Electrophysiology Catheters

12/22/05 09/06/05 07/22/05 06/01/05

Orthopedic Orthopedic Orthopedic Cardiovascular

K053051 K051616 K051180 K050763

SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed SterilMed Vanguard* Vanguard Vanguard Vanguard

Š

2010 Windhover Information, an Elsevier company. All rights reserved.

7

Device Reprocessing

September 2010

Exhibit 4 continued Company Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Vanguard Medical Instruments Technology* Medical Instruments Technology Medical Instruments Technology Medical Instruments Technology

Product

Decision Date

Division

510(k) #

Vanguard Reprocessed Diagnostic Electrophysiology Catheters Vanguard Reprocessed Arthroscopic Wands Vanguard Reprocessed Dilating Tip and Blunt Trocars Vanguard Reprocessed Diagnostic Electrophysiology Catheters Vanguard Reprocessed Diagnostic Electrophysiology Catheters Vanguard Reprocessed Ultrasonic Scalpel Vanguard Reprocessed Hand-Activated Ultrasonic Scalpel Vanguard Reprocessed Bladed Trocar, Non-Bladed Trocar, Trocar AC

06/06/05

Cardiovascular

K051043

05/27/05 04/08/05 03/10/05

General & Plastic Surgery General & Plastic Surgery Cardiovascular

K043198 K043253 K040751

03/09/05

Cardiovascular

K042074

03/22/05 03/22/05 03/31/05

General & Plastic Surgery General & Plastic Surgery General & Plastic Surgery

K043225 K043315 K043594

Vanguard Reprocessed Pulse Oximeter Sensors Vanguard Reprocessed Non-Electric Biopsy Forceps Vanguard Reprocessed External Fixation Devices Reprocessed Used, Disposable Cutters, Staplers, and Appliers AMI Reprocessed Multiple Clip Appliers Vanguard Reprocessed Diagnostic Electrophysiology Catheters Vanguard Reprocessed Electrophysiology Catheter Accessory Cable Vanguard Reprocessed Diagnostic Electrophysiology Catheters Vanguard Reprocessed Diagnostic Electrophysiology Catheters Vanguard Reprocessed Pulse Oximeter Sensors Vanguard Reprocessed Diagnostic Electrophysiology Catheters Vanguard Reprocessed Diagnostic Electrophysiology Catheters Vanguard Reprocessed Inflation Devices Vanguard Reprocessed Femoral Compression Device Vanguard Reprocessed Phacoemulsification Needles/Tips Vanguard Reprocessed Endoscopic Instruments Reprocessed Arthroscopic Wands Reprocessed Compression Garment Reprocessed Arthroscopic Blades Reprocessed Electric Biopsy Forceps Custom Procedure Tray

01/06/05 01/25/05 04/30/04 12/18/03 12/18/03 03/21/03

Anesthesiology Gastroenterology General & Plastic Surgery General & Plastic Surgery General & Plastic Surgery Cardiovascular

K042316 K042594 K031687 K032973 K032980 K030114

03/18/03

Cardiovascular

K030005

12/12/02

Cardiovascular

K023180

10/10/02

Cardiovascular

K022316

10/04/02 08/01/02

Anesthesiology Cardiovascular

K012344 K012687

07/31/02

Cardiovascular

K012688

01/22/02 12/21/01 11/09/01 11/07/01 10/30/01 10/17/01 10/16/01 09/27/01 08/09/91

Cardiovascular Cardiovascular Ophthalmic General & Plastic Surgery General & Plastic Surgery Cardiovascular Neurology Gastroenterology General & Plastic Surgery

K012480 K011832 K012698 K012700 K012695 K012403 K012346 K011800 K911565

Kendall Sequential Compression Device

05/01/02

Cardiovascular

K012614

Electrosurgical Cutting and Coagulation Accessories

02/28/02

General & Plastic Surgery

K012640

Tourniquet, Pneumatic

11/26/01

General & Plastic Surgery

K012632

Reprocessed Arthroscopic Blades

11/08/01

General & Plastic Surgery

K012624

*Alliance, Vanguard, and Medical Instruments Technology are all now part of Ascent.

Notes: Total AMDR 510(k) cleared to date: 133—Ascent (and precursor companies Alliance, Vanguard, and Medical Instruments Technology) 97 and SterilMed: 36 SOURCE: Association of Medical Device Reprocessors, August 2010

8

www.ElsevierBI.com

Device Reprocessing

September 2010

more real estate in the OR for other collection devices. And given the regulatory lead that Ascent has established over time, and the fact that the firm competes in multiple segments, not just orthopedics and not just cardiovascular, we think that Ascent has a unique market position.”

The Ascent Web site now calls the company “A Stryker Sustainability Solution,” which Owen views as giving it a chance “to be on the right side of the cost pressures facing hospitals and be able to partner with those hospitals and tell them, ‘Look at your products. You’re using XYZ product that we reprocess. Could you switch over and enjoy a 50% savings? We can save you X dollars starting tomorrow.’” She said reprocessing and the money it saves hospitals is “very real, very tangible, and very in sync with what hospital administrators are looking to achieve, and it’s an industry [reprocessing] that has proven from a quality perspective that these products are validated and have very good practices in place.”

AMDR President and CEO Daniel Vukelich says the Stryker deal surprised him at first.

“We didn’t expect a strong OEM with a history of opposing reprocessing to come in and buy Ascent,” he said. Now he calls the merger, “a legitimizing moment for our industry that should bring a drop in OEM opposition.” He expects the momentum to continue and anticipates more of what he called “cooperation” from OEMs in the coming months.

The latter expectation could still be a long time from fulfillment however. “Manufacturers,” says Vukelich, “are realizing that they have to provide environmentally responsible low-cost items to their customers.” Despite a poor economy, or possibly because of it, reprocessing companies seem to be enjoying record business. Vukelich says that the two AMDR companies are in the middle of an 18% to 24% year-over-year growth spurt.

Strong GPO Ties Along with a solid foothold in a fast-growing reprocessing segment, Stryker acquired a number of significant agreements that Ascent holds with practically all key group purchasing organizations (GPOs), among them AmeriNet Inc., Broadlane Inc., HealthTrust Purchasing Group, MedAssets, Premier ©

Inc. and VHA Inc., as well as a contract with the US Department of Defense. Chris Sands, a portfolio executive with VHA whose unit covers services that include reprocessing, says 40% of VHA members utilize SUD reprocessing services, although not all of them with Ascent as a partner. Sands says VHA’s five-year Ascent agreement, which doesn’t expire until 2012, has resonated with members.

While declining to discuss precise contract compliance figures, Sands does say that the use of reprocessing services by VHA members has increased 20% year-over-year for the past three to four years, and the value of those services is expected to exceed $40 million annually in “savings and other value,” such as supply chain and waste savings, a number Sands says is validated by VHA members. “This type of growth is very much on the high side compared with other agreements,” he asserts.

Despite a poor economy, or possibly because of it, reprocessing companies seem to be enjoying record business.

That growth, says Sands, is fueled by hospital-driven concern over cost and growing confidence among clinicians about safety issues. “Over the last few years reprocessing has become much more acceptable in a growing population of VHA membership,” he says.

Ironically, the Ascent GPO contracts compete directly with Stryker agreements with many of those same GPOs. VHA, for instance, has deals in place with Stryker for 18 separate products, mostly in core areas of orthopedic devices and capital equipment.

Some of those agreements now compete head-to-head with Ascent services, which in one form or another have been part of VHA’s Novation portfolio since 2000.

The Resistance Stands Firm It could easily be surmised that given what appears to be a series of seemingly compelling financial, safety, and environmental arguments favoring SUD reprocessing, nearly all hospitals, their physicians, and clinicians would march in lockstep to the front door of operations like Ascent and SterilMed. In fact, an informal Medtech Insight survey of a few major scientific trade groups revealed no real opposition to reprocessing from important groups like the American College of Cardiology, the American College of Surgeons, and the American Academy of Or-

2010 Windhover Information, an Elsevier company. All rights reserved.

9

Device Reprocessing

thopaedic Surgeons (none of which takes a position for or against), or the Association of periOperative Registered Nurses (AORN), which supports reprocessing and makes the practice part of a certification course for staff and administrators of ambulatory surgery centers. Under a heading of Environmental Responsibility, the influential AORN has issued a formal position statement recommending SUD reprocessing, according to FDA guidelines, as one of a number of conservation practices.

On top of that, “Medical Waste: The Issue,” a 2005 report from Health Care Without Harm, showed that US health care facilities generate in excess of two million tons, or four billion pounds, of general waste annually. As much as 85% of this waste is noninfectious, said the report, with a large portion generated in the OR, placing the nation’s ORs at the center of what would seem to be a solid environmental case favoring reprocessing. Moreover, prices for reprocessed devices generally fall 40% to 60% below prices for corresponding single-use OEM items, creating a sizeable financial windfall for hospitals. And in January 2008, a 42-page GAO Report to the Committee on Oversight and Government Reform for the House of Representatives that is viewed positively by reprocessors further substantiated the financial and safety claims of the reprocessing industry.

Some Old Hurdles Remain Yet despite growing support for reprocessing at the hospital level, the opposition, while somewhat dwindling in numbers, remains fairly strong, stubborn, and steadfast. As a perioperative expert, Gloria VanMilligan, RN, and a director for Sg2, a health care consulting concern in Skokie, IL, visits a large number hospitals each year to assess clinical and operational effectiveness. She says she has detected what she calls “an overwhelming pattern that includes a blind spot in terms of the opportunity that organizations leave on the table related to single-use device reprocessing.”

VanMilligan cites hospital chains such as Tenet Healthcare Corp. and others she calls “truly serious about environmental sustainability” for achieving the best results

10

September 2010

in reprocessing SUDs. She also singles out a SUD program at Bronson Healthcare Group, an integrated delivery network in Kalamazoo, MI. VanMilligan says these programs have “implemented a full-time commitment to reprocessing as much as possible and have partnered with their reprocessing company to monitor ongoing data and share ideas for new opportunities as they arise.”

Once organizations get beyond what VanMilligan calls “the barriers of fear and distrust,” they are on their way to a successful outcome in reprocessing. “Manufacturing vendors have done a good job of working with the physicians they see on a regular basis to instill fear that a reprocessed product is inherently inferior, although it’s been interesting to see the gradual transformation that we have noticed in orthopedics now that Stryker has entered the reprocessing market. But for the most part, orthopedic surgeons that worked closely with Stryker in the past have gradually become acclimated to the clinical standards for quality reprocessing now provided by a trusted vendor.”

But the old hurdles, she adds, remain an issue for hospitals that lack a track record of transparency related to financial data. Says VanMilligan, “We usually advise a series of frank discussions using actual costing and reimbursement information for the top three procedures by volume by surgeon to get the discussion going, and we often see organizations sharing the cost savings with surgical programs, sometimes reinvesting into capital funds for future purchasing needs.”

At VHA, the old walls appear to be crumbling, although it is still an ongoing process. “We still hear the same objections to reprocessing from our members that we did in the early to mid 1990s,” says VHA’s Sands. “They worry about liability issues, product failure in the OR, and quality.

But we have been seeing fewer of those objections from our membership in recent years.”

Ethicon Challenges Reprocessors With prices for reprocessed devices far below levels of corresponding OEM items, it’s

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Device Reprocessing

September 2010

no surprise that device manufacturers feel threatened by the increased acceptance of reprocessed products. Many suppliers have raised clinical concerns through sales representatives who seed doubt among clinicians.

But one manufacturer that has steadfastly opposed reprocessing and has taken its claims to a higher level is Ethicon Endo-Surgery (EES), Johnson & Johnson’s big surgical division.

Earlier this year, EES released results from a pair of studies it sponsored that were designed to assess the existence and extent of foreign material on reprocessed SUDs. Bridgett Golden, a company spokeswoman, said the studies, completed between October and November 2009, demonstrate that certain devices are unsuitable for reprocessing, regardless of regulatory compliance.

In a statement, she said the studies “have shown that certain reprocessed devices carried the presence of blood and tested positive for red and brown protein-based residue.” Moreover, the company said its own SUDs were shown to be free of this type of debris and said these data “demonstrate at least one of the differences between our devices and reprocessed devices.” The study used reprocessed products sold by Ascent.

Echoing longtime clinical opinions from some quarters against reprocessing SUDs, EES says its products “are labeled as singleuse because they have intricate parts that are difficult to clean thoroughly for use on multiple patients and we believe reprocessing single-use devices compromises the quality of our products.”

According to the company, a Fisher’s exact test (used to analyze data of small label sizes) was conducted and showed with a 99% confidence level that the proportion of Ascent devices “is different from the proportion of EES devices with respect to protein and blood.” In a sample of 40 ACE36P harmonic scalpels reprocessed by Ascent, EES said, 70% tested positive for red or brown protein-based residue and 30% tested positive for the presence of blood. In the second study, a sample of 50 ACE36P harmonic scalpels reprocessed by Ascent showed 62% tested positive for red or yellow protein-based residue.

©

Armed with its study results, EES dipped into its marketing budget and fired a shot in the information war, placing ads in at least two trade publications that highlighted the findings. Ethicon sales representatives also fanned out to spread that same word to hospital customers.

Soon after getting wind of the EES activity and ad campaign, the trade group AMDR countered with a nine-page rebuttal, challenging the findings. The rebuttal lambasted EES sales rep efforts as “false and misleading” and dismissed conclusions of the studies as “false and unjustified.” The AMDR charged that Ethicon’s advertisements and marketing materials, “being promoted under the guise of a ‘study,’ are clearly designed to mislead and scare clinicians into believing that FDA-regulated reprocessed devices do not meet cleanliness or sterility standards and/or are not as safe as Ethicon equipment.” The group also insisted that the EES data were inherently biased because the company “conducted its own study and paid for another.” Further, AMDR said, the study results were inconsistent with what it called “the outstanding record of FDA-regulated reprocessed medical devices.”

despite growing support for reprocessing at the hospital level, the opposition, while somewhat dwindling in numbers, remains fairly strong, stubborn, and steadfast.

Finally, the AMDR response cited the January 2008 GAO report, which found that only 65 of the over 320,000 adverse events filed with the FDA between 2000 and 2006 actually involved or were suspected to involve a reprocessed SUD and that in those cases, the reprocessed SUD was one of several possible causal factors in the adverse event. According to AMDR, in reviewing these 65 reports, FDA found that the types of adverse events reported to be associated with the use of reprocessed SUDs were the same types of events that were reported for new devices.

AMDR’s Vukelich dismissed the Ethicon ad campaign as “scare tactics and misinformation, not science.” In fact, he asserts, Ethicon’s response “reinforces the idea that we, and our hospital customers, are doing the right thing.”

[A#2010400070] Curt Werner is a contributing writer for Medtech Insight. (E-Mail the editor at M.Thompson@Elsevier.com)

2010 Windhover Information, an Elsevier company. All rights reserved.

11

Cosmetic Dermatology

September 2010

Cosmetic Dermatology Thrives in Spite of Economy

Almost 2.5 million Americans had cosmetic Botox injections last year, and the market is expected to grow at a solid double-digit rate through 2014.

While other medical device sectors, such as orthopedics and invasive plastic surgery, experienced a downturn in elective procedures in 2009, cosmetic dermatology procedures— including botulinum toxin (Botox) and facial filler injections—continue on their upward trend. This fact was emphasized by the record attendance at the American Academy of Dermatology (AAD) summer meeting held in Chicago in August.

The more than 4,000 dermatologists who attended the AAD—up from 3,000 last year— focused their attention on education, new treatments, and socioeconomic and practice issues. But the true story of the strength of this market was on the exhibit floor, which overflowed with an array of lasers and injectables designed to fulfill the demand for noninvasive anti-aging dermatologic remedies, all of which are cash pay—defying current economic conditions. According to a new online survey of 2,148 adults by Harris Interactive, consumer interest in cosmetic procedures is up—way up, in many cases. More than two-thirds of those surveyed (69%) said they would choose to have cosmetic work done if money wasn’t an issue, up 15 points from November 2009, signaling that interest among consumers continues to climb.

Understanding that this was a dermatology meeting and not plastic surgery, it was still quite evident that surgical facelifts are being replaced to a significant degree by a combination of less invasive facial rejuvenation products, including lasers, Botox, cosmeceuticals, and fillers. These products promise a more natural, youthful appearance while requiring less downtime, and they are easier on the pocketbook than surgery since they are paid for incrementally at each treatment session.

The Expanding World of Botox With Botox, Allergan Inc. has held the lion’s share of the neurotoxin cosmetic injectable market since the early 2000s; however, there are now a number of competitors lining up to gain a piece of this $600 million pie.

12

by Diana Tucker

Almost 2.5 million Americans had cosmetic Botox injections last year, according to the American Society for Aesthetic Plastic Surgery (ASAPS), and the market is expected to grow at a solid double-digit rate through 2014. (See Exhibit 1.)

Although initially cleared in 1991 for medical uses, in 2002 Allergan received US Food & Drug Administration (FDA) clearance to market Botox as a wrinkle smoother. Allergan enjoyed its place as the sole supplier in the US until April 2009, when Medicis Aesthetics Inc.’s Dysport was FDA cleared.

Analysts predict that Dysport eventually could take up to 30% of Allergan’s share, especially if Dysport pricing is 15% lower, as is rumored. Under that scenario, Dysport sales could reach $160 million by 2012.

In addition to Allergan and Medicis, there are a number of other companies working to enter this market. Two—Merz Aesthetics US (a division of Merz GMBH & Co. KGAA) and Mentor Corp. (now part of Johnson & Johnson’s Ethicon Inc. division)—are working on botulinum toxin injectables that have no complexing proteins attached (referred to as naked botox).

Merz Aesthetics, a privately held company based in Frankfurt, Germany, was formed earlier this year when Merz acquired all of the outstanding shares of BioForm Medical Inc., the maker of Radiesse, a leading hyaluronic acid (HA) dermal filler. The transaction had a total equity value of approximately $253 million, based on BioForm Medical’s outstanding shares of common stock, and represented a 55% premium over Bioform’s average stock price. This acquisition advances Merz’s strategy of becoming a leading player in the fast growing, multibillion dollar global aesthetic medicine market. Following completion of the transaction, BioForm Medical became a wholly-owned subsidiary of Merz and was renamed Merz Aesthetics.

Merz is developing Xeomin, a neurotoxin free of complexing protein. Xeomin has been

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Cosmetic Dermatology

September 2010

approved for both medical and cosmetic uses in Europe and recently gained approval in the US for therapeutic use. The company is awaiting FDA clearance of Xeomin for cosmetic use.

Mentor is conducting Phase III trials on its “naked botox” product PurTox and expects the studies to be completed by 2011. Mentor is also awaiting FDA clearance of its second-generation Prevelle HA filler, which is expected to provide durability of over one year.

One advantage that both Xeomin and PurTox will enjoy over Allergan’s Botox is a three-year shelf life at room temperature.

Botox currently offers a shelf life of two years under refrigeration. These so-called “naked botox” products have demonstrated similar outcomes as Botox, as assessed by both patients and independent raters, with Xeomin appearing to be slightly more robust than the PurTox product in early clinical trials.

Another company targeting the botulinum toxin cosmetic market is privately held Revance Therapeutics Inc., which is developing a novel botulinum type A delivered via a proprietary gel-based platform that enables transcutaneous, targeted transport of macromolecules across the skin without the need for patches, needles, or other invasive procedures. Reportedly, the Revance gel is placed on the skin for 30 minutes and then wiped off. Application must occur in a physician’s office, but a study demonstrated that the topical gel is as effective as Botox and lasts 80 days. Revance, whose lead investor is Essex Woodlands Health Ventures, entered into a license agreement granting Medicis worldwide aesthetic and dermatological rights to the botulinum gel, which is currently in Phase II clinical trials. The companies expect to begin Phase III trials in the first quarter of 2011.

Medicis agreed to pay Revance $10 million at signing plus additional milestone payments totaling approximately $94 million upon successful completion of certain clinical, regulatory, and commercial milestones, and a royalty based on sales and supply price, the total of which is equiva-

©

lent to a double-digit percentage of net sales. Revance will retain certain therapeutic rights to the product.

According to the ASAPS, injections of botulinum toxin type A were the number one nonsurgical cosmetic procedure in 2009. The category is projected to grow by 15% to over $1.4 billion in sales by 2013.

Revance’s goal is to expand the Exhibit 1 market beyond the current Aesthetic Industry Anticipated Growth Rates, injectable neuby Product Type 2009-2014E rotoxins (which despite their Product Growth Rate popularity, have Neurotoxins 17.2% only captured Skin tightening/body contouring 15.5% about 10% of the potential patient Dermal fillers 9.3% population), by Phototherapy systems 8.5% appealing to the SOURCE: Medtech Insight nine out of 10 consumers who have considered treatment but are uncomfortable with the pain and bruising associated with injections.

Meanwhile, MyoScience Inc. is developing an innovative, handheld cryolysis device that freezes the nerve that causes deep furrows between the eyebrows, forehead lines, and crow’s feet. The company is currently operating in stealth mode, but early work suggests the treatment lasts for up to 18 months and may eventually offer another alternative to neurotoxin injections.

Dermal Filler Update: Growth in Combination Procedures Injections of dermal fillers were the second most popular nonsurgical cosmetic procedure performed in the US in 2009, after botulinum toxin injections. (See Exhibit 2.)

The latest trend in this area, according to presentations at AAD, is to use a combination treatment of neurotoxin and filler products plus laser rejuvenation to maximize the effect. A neurotoxin is applied first to relax the muscles, then a filler is added to smooth wrinkles and add volume. Finally, texture and coloration of the skin is smoothed with laser resurfacing.

2010 Windhover Information, an Elsevier company. All rights reserved.

13

Cosmetic Dermatology

September 2010

The various filler formulations available today have expanded the repertoire of options and the patient pool, as certain products are better suited for different anatomical regions. However, fillers made from hyaluronic acid dominate the market. (See Exhibit 3.)

Additionally, the majority of fillers now offer an option of having lidocaine already mixed into the filler for a less painful injection.

Initially used to fill targeted lines and creases, today’s fillers (such as Sculptra, Radiesse, and Restylane) are thicker so they also can be used in large areas to rebuild lost volume. The added volume, in the cheek for instance, lifts the face and diminishes the prominence of nasolabial folds.

According to Marian Northington, MD, assistant professor of dermatology at the University of Alabama at Birmingham, who spoke during the AAD meeting, “Volumetric enhancement using thicker, deeper fillers is fast becoming the primary cornerstone of our facial rejuvenation approach for those seeking a youthful look without major surgery.”

The latest filler entry on the market is Sculptra, from Dermik Laboratories, a company owned by Sanofi-Aventis. A randomExhibit 2

Top Five Minimally Invasive Cosmetic Procedures in 2009

5 4.8 M Number of procedures

4

3

2 1.7M 1

1.1M 910,000

893,000

Soft Tissue Chemical MicroFillers Peel dermabrasion

Laser Hair Removal

0 Botulinum Toxin Type A

SOURCE: American Society of Plastic Surgeons

14

ized, blinded, multicenter controlled trial comparing Scultpra, a poly-L-lactic acid (PLLA)–based filler, to human collagen injections (Cosmoplast) for the treatment of nasolabial folds was published in March 2010 in the Journal of American Academy of Dermatology. The study demonstrated comparable cosmetic improvement in both groups at three weeks, but from that point on, Sculptra outperformed the collagen and had a lasting effect for up to 25 months, making it the longest lasting nonpermanent injectable filler on the market. Prior to the introduction of Sculptra, Bioform’s Radiesse, composed of calcium hydroxylapatite microspheres suspended in a gel carrier, held the “longest lasting title.”

Another company seeking a larger presence in this market is Merz Aesthetics.

Through its acquisition of Bioform Medical, Merz has expanded its offering of dermal fillers to include Bioform’s calcium hydroxylapatite filler Radiesse, as well as a new HA filler known as Belotero, and an alginate-based product, sold in the European Union (EU) as Novabel. However, the latter has faced some recent problems in the marketplace.

Developed in collaboration with CellMed AG, a Biocompatibles International PLC company, Novabel is made from purified alginates. Merz introduced Novabel to selected EU markets in March; but the company recently temporarily suspended sale and distribution of Novabel in the EU after reports of serious allergic reactions.

According to a recent report in “The Gray Sheet,” in August, UK regulatory authorities warned health care professionals and aesthetic practitioners not to use Merz’ Novabel dermal filler because of a potential association with skin nodules and induration, particularly in the infraorbital (under eye) area. Practitioners were advised to return all unused product to the company.

The announcement follows an EU field safety notice issued by Merz in July urging practitioners to stop using Novabel due to a “dissatisfactory aesthetic outcome.” As of June 21, Merz had received 70 case reports of adverse reactions following Novabel injections, including transient redness, bruising, pain, and swelling. Of those reports, 26 patients had nodules and 10 had indurations, www.ElsevierBI.com

Cosmetic Dermatology

September 2010

primarily in the infraorbital area, and there were three confirmed cases of granulations.

Another filler product with a somewhat checkered history is the permanent filler Artefill, developed by Artes Medical Inc. Artefill is composed of polymethyl methacrylate (PMMA) in a collagen carrier, and was FDA approved in 2006. However, it never really caught on with physicians and poor sales eventually led the company to file for bankruptcy protection. Earlier this year, Cowen Healthcare Royalty Partners snatched the assets of Artes Medical out of bankruptcy for an undisclosed price and gave the company a new name, Suneva Medical Inc., which is based in San Diego, CA. One of the conditions of the original Artefill FDA approval was that the company conduct a five-year postmarketing study to assess longterm outcomes. Currently in the second year of that study, Suneva Medical announced the publication of 18-month interim safety results in the May 2010 issue of Dermatologic Surgery. Of 1,008 patients who received Artefill to treat nasolabial folds, 19% experienced adverse events, the majority of which were mild, and 6% experienced devicerelated adverse events. There were 14 serious adverse events, but none was device related. Moreover, satisfaction with the treatment remained high (80% were very satisfied or satisfied) throughout the follow-up period, the researchers reported.

Trending Now: Noninvasive Body Contouring With just under 300,000 procedures performed annually in the US, liposuction enjoyed top billing as the most popular cosmetic surgical procedure until 2009, when it took second place to breast augmentation. Liposuction has been in the domain of the plastic surgeon until recently when noninvasive body contouring devices were introduced for clinical study, fueled by patient demand.

However, many physicians have questioned the efficacy of noninvasive technologies. At

Exhibit 3

Dermal Fillers by Chemical Composition Type, 2009 1% 3% 2%

5% 8% 11%

Hyaluronic acid Hydroxylapatite Human collagen

70%

PLLA* Autologus fat Procine/bovine collagen PMMA**

*PLLA = Poly-L-lactic acid **PMMA = Polymethyl methacrylate SOURCES: American Society of Plastic Surgeons; Medtech Insight

Despite these promising data, many physicians shy away from recommending a permanent filler because the face changes over time and no one can predict for certain what filler results will look like in a decade or more. An earlier survey conducted among potential users of Artefill in 2007 asked whether patients and doctors would prefer a permanent product. At that time, it appeared to be a 50-50 proposition; but Suneva is banking on the fact that as the population ages and continues to look for anti-aging solutions, more patients will get “needle fatigue” and look for something more permanent.

The problem is that while everyone waits ©

to see what filler looks like in 10 years, Suneva may not sell enough Artefill to stay in business—making permanence a moot point.

AAD, Mathew Avram, MD, of Massachusetts General Hospital in Boston, who presented a session on body contouring, told the audience that many of these noninvasive devices “are more like snake oil and do nothing.”

According to Avram, body contouring is an area in flux right now. While subcutaneous fat treatment falls under the purview of dermatology, liposuction has traditionally been a mainstay procedure of plastic surgeons. Noninvasive fat removal can now be put in the hands of dermatologists; but it is important to note that while patients are

2010 Windhover Information, an Elsevier company. All rights reserved.

15

Cosmetic Dermatology

demanding it, the efficacy data is limited, Avram says, although various types of energies are being studied to determine efficacy.

(See Exhibit 4.)

inch). Erchonia also has FDA clearances for low-level laser devices for breast augmentation (2008), acne (2005), liposuction (2004), and chronic pain (2001).

In August, Erchonia Medical Inc. became the first company to receive FDA clearance for a noninvasive fat reduction device. Its Zerona body contouring device was cleared for circumferential reduction of the waist, hips, and thighs. The Zerona uses a nonthermal, low-level cool laser energy that is “clinically proven,” the firm says, to target and collapse

Although the data generated by Erchonia was sufficient for FDA clearance, and the trial, although small, was designed to be statistically rigorous, Dr. Avram cautioned the audience at AAD that relying on a measuring tape may not be a scientifically sound method to assess the efficacy of these types of systems. The major hurdle with all of these technologies, he pointed out, is not getting them through the FDA, but whether or not patients recognize a significant difference in their appearance after treatment.

Exhibit 4

Selected Noninvasive Fat Removal/Cellulite Devices Company

Device/Energy Technology

BTL Industries

Exilis; combines ultrasound with RF

Elemé Medical

SmoothShapes; combines laser and light energy with mechanical manipulation

Erchonia Medical

Zerona; cool laser

Medicis

LipoSonix; transdermal ultrasound

Solta Medical*

Thermage; monopolar RF, approved for skin tightening

Syneron

VelaSmooth; combines IPL** with bipolar RF

UltraShape

Contour; transdermal ultrasound

Zeltiq

CoolSculpting; Cryolipolysis

*Formed through the merger of Thermage Inc. and Reliant Technologies Inc. in December 2008 **Intense pulsed light SOURCE: Mathew Avram, MD, Misbah Kahn, MD, from American Academy of Dermatology 2010 summer meeting

fat cells, which are then broken down and removed by the body, offering fat reduction without side effects or downtime.

The FDA clearance was based on results from a placebo-controlled, randomized, double-blind, multisite clinical trial that enrolled 67 patients. The study demonstrated an average loss of 3.65 inches across the waist, hips, and thighs in as little as two weeks, according to the company, absent of diet restrictions, exercise requirements, or any other adjunctive components (in comparison, the placebo group lost only about a half

16

September 2010

Erchonia will have a first-to-market advantage in this space that could be significant, depending on how quickly its competitors can get their products on the market. Dr. Avram’s comment not withstanding, it took Erchonia nearly two years to get its fat reduction technology through the FDA and others apparently are finding the process a bit difficult as well. This summer, Medicis said health regulators indicated in a letter that data in its current FDA filing for marketing approval of its body sculpting device, LipoSonix, was not sufficient.

LipoSonix utilizes transdermal focused ultrasound, which penetrates deep into the hypodermal layer, producing a mechanical, rather than a thermal, effect.

UltraShape Ltd. of Yoqneam, Israel, is also developing a transdermal focused ultrasound product, the Contour1 System, which is marketed in 57 countries outside the US and has been used in more than 175,000 patient treatments worldwide to date. In June, the company announced that FDA had agreed to allow it to take the 510(k) pathway to US clearance, rather than the PMA pathway as the firm was previously advised.

At the International Master Course on Aging Skin meeting, held in Paris in January, UltraShape launched a new multi-application platform—the Contour1 Ver3—that combines focused ultrasound and radiofrequency (RF) energies, along with an integrated vacuum

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September 2010

system for noninvasive selective fat reduction and body contouring.

Other companies developing noninvasive, energy-based fat reduction and/or cellulite treatment products include BTL Industries Inc. of Prague, Czech Republic, and Clark, NJ, with the Exilis device, which combines ultrasound with RF and is FDA cleared for the noninvasive treatment of wrinkles and rhytids; Solta Medical Inc., which has experienced success with its Thermage monopolar RF device for tightening skin and is now studying the technology for fat reduction (Solta’s Thermage CPT System is FDA cleared for the treatment of wrinkles and rhytids and for temporary improvement in the appearance of cellulite when combined with vibration); Elemé Medical Inc., whose SmoothShapes System combines laser and light energy with mechanical manipulation to reduce the appearance of cellulite; and Syneron Medical Ltd., with the VelaSmooth system.

VelaSmooth was the first FDA-cleared noninvasive medical solution for the reduction of cellulite, and it is now being studied for fat reduction as well. The device combines IPL (intense pulsed light) technology with bipolar RF to create electro-optical synergy, or elos as the company calls it. Studies have demonstrated a statistically significant reduction in the amount of cellulite after the third treatment, the firm says.

Another technique that shows promise for fat reduction, according to Dr. Avram, is fat cell cryolysis, which is under development by Zeltiq, a privately held company founded in 2005. Zeltiq’s CoolSculpting system utilizes a patented method of precisely controlled cooling called Cryolipolysis that targets only fat cells and does not affect surrounding normal tissue, the company says.

This nonsurgical approach may be most suitable for patients who only need minimal fat reduction, especially those areas that are exercise-resistant.

Theoretically, this is a one time, permanent procedure much like liposuction, but no life testing has been performed yet to substantiate that claim. (Other technologies in this space require maintenance treatments to maintain their effect, Dr. Avram says.) Once

©

the fat cells have been frozen, the inflammation, apoptosis, and elimination process takes about two to six months to see the results. Rather than use subjective measurements, Zeltiq has chosen to measure fat reduction by both ultrasound and histology on abdominoplasty patients. Using this method, the company submitted data to the FDA demonstrating a 22% reduction in the fat layer following treatment.

Each CoolSculpting machine will have an “Easy Card” that enables the device and counts the treatment cycles so that physicians will pre-pay per use. Although fees have not yet been determined, the firm says extensive consumer surveys suggest an acceptable fee may be in the range of $1,500-$2,000—taking into account that there is no downtime at all, no anesthetic, and no pain involved during or after the procedure.

Zeltiq currently employs 12 sales reps in the US who sell the device for pain reduction during dermatologic procedures, an indication for which it received FDA clearance in 2004. CoolSculpting is also available in Canada and certain EU markets, where it is cleared for noninvasive fat layer reduction. An application is pending at the FDA for the fat reduction indication. A distinctive line-up of venture capitalists is backing the company, including Advanced Technology Ventures, Frazier Healthcare, Venrock, and Aisling Capital. Zeltiq has raised a total of about $50 million to date, including a $25 million series D round that closed in June, the proceeds of which are earmarked to help fund product launch and commercialization.

Zeltiq’s CoolSculpting system utilizes a patented method of precisely controlled cooling called Cryolipolysis that targets only fat cells and does not affect surrounding normal tissue.

[A#2010400071] Diana Tucker is a Contributing Writer for Medtech Insight (E-Mail the Editor at M.Thompson@Elsevier.com)

related reading Aesthetics Market: Fillers May Offer Bright Spot in Tough Times, Medtech Insight, May 2009 [A#2009400043] Energizing the Aesthetics Market, Medtech Insight, June/July 2008 [A#2008400048] Dermal Filler Market: More Than Skin Deep, Medtech Insight, March 2008 [A#2008400023] Access these articles at OUR online store: www.windhover.com/article

2010 Windhover Information, an Elsevier company. All rights reserved.

17

International Markets

September 2010

European Cost Concerns May Impact Device Sales

As reimbursement agencies cut reimbursements, hospitals will look for price concessions from medical suppliers.

Following the lucrative payouts for Ablation Frontiers Inc. (now Medtronic Ablation Frontiers LLC), CoreValve Inc. (now Medtronic CoreValve LLC), and Ventor Technologies Ltd. last year and the success of St. Francis Medical Technologies Inc. a few years earlier, many device venture capitalists shifted gears—again—reviving their strategy of a decade ago, of pushing medical device portfolio companies to launch first in Europe prior to any commercial attempts in the US. The goal was clear: amp up sales in markets where the regulating authorities were much faster in order to help companies defray the increasing costs of dealing with the one regulatory body that was increasingly slower, the US Food and Drug Administration (FDA). While no one underestimated the difficulties of building sales in multiple European markets, the relative ease of regulatory approval and the rate of adoption of new technologies made the continent an enticing target.

But the ongoing economic calamity gripping Europe—and much of the world—is being felt by large cap medical device companies, who count on Europe for nearly one-third of their medical device sales. Investment bank Wells Fargo Securities, which commissioned a study of European reimbursement and sales practices, is predicting that device companies will have a more difficult time selling in Europe over the next two or three years as new technologies are forced to clear higher hurdles to get to market. At the same time, existing technologies face higher than normal price erosion. Larger companies including Medtronic Inc. and Johnson & Johnson are also preparing for rougher seas as they try to stabilize and grow their European businesses. “I think longer-term, we clearly see there being increased pricing pressure,” Alex Gorsky, Worldwide Chairman, Medical Devices and Diagnostics Group for Johnson & Johnson told investors during a recent Investors’ Day. “And I think as you see their economy being challenged that will flow down into the health care systems.”

18

by Tom Salemi

Wells Fargo suggests that the most vulnerable products will be high-end implantable devices used in orthopedic and cardiac surgeries: hip replacements, knee replacements, defibrillators. European governments and payors looking to cut health care costs see an attractive target in medical devices used the most in clinical practice and surgeries. As reimbursement agencies cut reimbursements, hospitals will look for price concessions from medical suppliers. “These products have the most potential to result in meaningful cost savings to hospitals through lower negotiated prices,” Wells Fargo warns, “although there is no evidence that this has happened yet. The risk remains that hospitals will adopt increasingly sophisticated purchasing practices and will try to squeeze cardio and ortho device manufacturers on price.”

Medical device companies do have some protection, albeit temporary, against price cuts. The first is institutional. The Diagnosis-Related Groups (DRGs) system adopted in Europe in recent years provides some level of insulation for the device industry, at least in the short-term.

DRGs pay providers a set fee based upon diagnosis, so the rates already are set.

Device companies should continue to receive those payments over the next couple of years. But those rates are reevaluated regularly, so medical device companies likely will see some cuts going forward.

The second line of defense is the device itself. Innovative devices, those that are relatively new to the market and thus not commonly used likely will avoid being targeted as drains on the system, at least for now. Martin Jordan, a consultant hired

by Wells Fargo, suggested devices such as transcatheter valves and left ventricular assist devices will be safe because the technology is new, critical, and still not broadly used. However, as products are adopted more broadly there could be “restrictions placed on reimbursement or procedures” in the future.

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International Markets

September 2010

Just a few years ago, Europe was seen as a secondary outpost for US medical device companies who had the currency and confidence to first push for US approval. But companies started running short on both as the economic calamity hit the US venture markets and the FDA raised the bar higher and higher for approval of innovative medical devices. Versant Ventures backed several start-ups that were among the first to successfully deploy Europe-first sales strategies. St. Francis Medical Technologies and Ablation Frontiers were among the most successful, both culminating in powerful exits for Versant and other investors. Kevin Wasserstein, general partner of Versant Ventures, says Versant always “leaned toward outside the US commercialization opportunities” when reviewing medical device investments.

“It’s not an auto reflex that you should go to Europe with every company. But there are a unique set of criteria that we look at to determine whether a company is able to successfully execute outside the US or not.”

Whether a company goes commercial first in Europe or the US, the questions are still the same. Do reimbursement codes exist?

What will it take to get paid? Do clinicians already know how to use the device or is training necessary? What are the referral patterns? In Europe, however, one needs to know the correct answers on a countryby-country basis. To be sure, Versant is watching the economic situation in Europe closely. “I do think we’ve been asking a lot of tough questions about Europe and evaluating Europe for a while,” Wasserstein says. “Now that we’ve had a number of iterations with companies, we feel we’ve built up, I think, a bit of experience in knowing when a company might succeed.

St. Francis Medical Technologies certainly did succeed. Under the leadership of Kevin Sidow, the company’s CEO, St. Francis leveraged strong sales of its X-Stop interspinous spacer device in Europe and a hard-fought FDA approval into an acquisition by Kyphon Inc. (Medtronic acquired Kyphon in 2007 and CoreValve and Ablation Frontiers in 2009.) Sidow, now chief executive of stealthy start-up Moximed Inc., agrees the conditions are tougher than when

©

he was running St. Francis Medical Technologies. However, he says, start-ups by their nature should have an edge in breaking into European markets because their products should make difficult procedures simpler and less expensive. “If you have a product that speaks to an unmet need you’re in a stronger position over the long-term,” Sidow says. But price will be a concern in the short-term, he says. Sidow says higher bars and tighter scrutiny are simply the price of doing business in the medical device industry these days.

“You have to work through those obstacles in Europe, otherwise you don’t have a business,” Sidow says. “The US has become such an expensive place to do business. There’s no other place [than Europe] to show you’re getting traction and to learn about the adoption of your product.”

Smaller companies might have a disadvantage in dealing with the multiple reimbursement agencies, hospitals, and “tender” groups negotiating prices on behalf of one or many hospitals. Gary Ellis, chief financial officer at Medtronic, told attendees during the company’s recent investors’ day, that pricing in Europe is clearly a concern. But he warned against oversimplifying the system.

“We manage thousands of pricing contracts throughout Europe,” Ellis says. “So there is no such a thing as a government tomorrow saying, well, we’re going to cut pricing across all the device products by 20% or 25%.”

Large companies with extensive portfolios will have the opportunity to manage their products as individual portfolios, making arguments against cuts when possible and changing pricing for products when necessary. Smaller venture-backed start-ups, meanwhile, can benefit from the innovative nature of their products. Perhaps, over time, the changing dynamic in Europe will spark a few mergers and acquisitions or partnerships between big companies even hungrier for innovation and smaller ones unwilling to manage the complex contracts of the continent.

“It’s not an auto reflex that you should go to Europe with every company. But there are a unique set of criteria that we look at to determine whether a company is able to successfully execute outside the US or not.”

-Kevin Wasserstein, Versant Ventures

[A#2010400072]

(Reprinted from IN VIVO, July/August 2010) Tom Salemi is a Senior Staff Writer for IN VIVO (E-mail: T. Salemi@Elsevier.com)

2010 Windhover Information, an Elsevier company. All rights reserved.

19

Washington Roundup

September 2010

Washington RoundUp The latest medical device regulatory and reimbursement news from Elsevier Business Intelligence’s “The Gray Sheet.” (http:\\TheGraySheet.ElsevierBI.com)

The agency’s 510(k) working group recommends splitting up the broad category of moderate-risk devices into Class IIa and Class IIb, where the latter would “typically” require clinical information, manufacturing information and, potentially, postmarket mandates.

FDA Maps Out Potential 510(k) Reforms in Long-Awaited Report

quirements could help speed up review times, the 510(k) report suggests.

FDA released its highly anticipated proposals for reforming the 510(k) program last month, and industry reps acknowledged that many of the individual recommendations could benefit companies.

“In general, most instances where concerns were raised by industry and Center staff about problems with the 510(k) program involved the small subset of devices for which staff requested clinical data,” the report notes.

But the eventual net impact of a multitude of system changes is difficult to predict, they warned, and anxiety remains high.

The agency’s 510(k) working group recommends splitting up the broad category of moderate-risk devices into Class IIa and Class IIb, where the latter would “typically” require clinical information, manufacturing information and, potentially, postmarket mandates.

The report, developed by an internal Center for Devices and Radiological Health (CDRH) working group, has been in the works since September 2009. It was unveiled August 4th in conjunctions with a separate report with broad recommendations on how the device center could make better use of science in its regulatory decision-making.

CDRH officials say the documents reflect deep thinking about potential lapses in protecting the public and in treating product sponsors fairly.

The agency may want to require submission of manufacturing information or pre-clearance inspections for Class IIb products, the report says.

“Taken together, these preliminary reports show a smarter FDA - an agency that recognizes both sides of our mission to protect and promote public health,” CDRH Director Jeffrey Shuren said. “The agency is ready to make necessary improvements to support device innovation while assuring patients receive safe and effective devices.”

FDA should seek greater post-market authorities for these riskier 510(k)s, such as the right to require post-market surveillance studies as a “condition of clearance,” similar to post-approval studies for PMA devices, the report recommends.

The 510(k) assessment proposes reasonably substantial changes to the program by which about 90% of medical devices enter the U.S. market, including splitting up the Class II device category into “a” and “b” subsets; reforming the “de novo” classification process for novel, moderaterisk technologies; and solidifying FDA’s authority to rescind 510(k)s or determine when products can no longer be used as predicate devices.

Also, in conjunction with the science report, Shuren announced the appointment of Harvard cardiologist and long-time FDA consultant William Maisel as CDRH’s deputy director for science, a newly created post.

FDA acknowledges that 510(k) review times have gone up in recent years, in part because new technologies stress the system and require reviewers to request additional data from manufacturers. Better defining FDA’s evidence re-

20

Class IIb devices may include some implantable, life-sustaining and/or life-supporting devices, such as infusion pumps, that present greater risks than other Class II device types, FDA explained.

But the Class II split is not hard and fast, CDRH’s Shuren pointed out. “There will always be cases that are kind of in that gray zone,” he said.

Evidence requirements would still be determined on a case-by-case basis; for example, some IIa devices may require clinical data, while some IIb devices may not, he said.

Device trade group AdvaMed supports the Class IIb split because it provides “a targeted approach to making changes rather than making sweeping changes to the whole process,” Janet Trunzo, executive VP for technology and regulatory affairs, said in an interview.

The 510(k) working group also urges FDA to reform its “de novo” classification process for products that cannot be cleared through the 510(k) process for lack of a predicate, but which do not warrant full PMA review.

“Right now, that process is broken,” Shuren acknowledged, echoing a point made by device

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Washington Roundup

September 2010

firms at recent CDRH town hall meetings.

Under the current de novo process, a device must first undergo full 510(k) review and be found not substantially equivalent before it can be considered for de novo review. This “can create a lengthy path to market, making it impractical for many submitters,” the 510(k) report notes.

Instead, FDA should consider issuing a not-substantially-equivalent decision quickly and communicate “clearly and early” with the sponsor about what additional information would be needed for de novo review, the report urges.

In addition, the process of issuing special controls guidances - which explain the risks associated with the de novo device and how to mitigate them - may be unnecessarily timeconsuming, the report states.

FDA should consider developing a generic set of special controls other than guidance, such as performance standards, post-market

surveillance requirements, patient registries and other guidelines, to accompany de novo classification orders, the report states.

The working group also says FDA should take a closer look at predicate devices in 510(k) submissions and consider when certain products should no longer be used as predicates for safety and effectiveness reasons.

FDA should also consider better defining, through regulation, the circumstances under which FDA might rescind a 510(k) or modify the scope of a previous clearance.

Some have questioned whether FDA has the legal authority to rescind a 510(k), but the agency maintains that it has “inherent authority” to reconsider its decisions in certain circumstances, such as when there has been fraud or error, and to rectify its mistakes.

Finally, the working group recommends that FDA disallow use of “split predicates” in 510(k)

The (New) Anatomy Of A 510(k)

A number of the changes proposed in FDA's 510(k) report could substantially change the look of 510(k) submissions and reviews.

Intended use

New safety and effectiveness questions

Data summary

Given uncertainty about the distinction between "indication for use" and "intended use," the report advises consolidating the terms. FDA should develop guidance on intended use and, specifically, what modifications constitute a new intended use. New indications don't necessarily trigger the need for a PMA, while a new intended use does.

FDA should provide criteria for identifying "different questions of safety and effectiveness," and create a core list of technological changes that generally raise new questions (i.e., a change in energy source), the report recommends.

FDA should consider requiring firms to submit a list and brief description of all scientific information regarding the safety and effectiveness of a new device that is known or should be known by the submitter, allowing the agency to better focus its review. Such summaries are currently required only for PMAs.

Assurance cases

Photos and schematics

Standards

Firms may be required to document claims in 510(k) submissions using "assurance case" method, which demonstrates the validity of a claim by providing a convincing argument with supporting evidence, the report says. FDA is already looking to require assurance cases in infusion pump submissions.

FDA could require submitters to provide detailed photographs and schematics of device under review to help staff better understand the product's key features.

CDRH could then post non-proprietary photos and schematics in the 510(k) database (see below).

FDA and companies alike are confused about how to apply standards in 510(k) submissions, so FDA should provide additional guidance and training on standards and consider revising the requirements for "declaration of conformity" to a standard, report says.

Off-label uses

The new 510(k) database

Device modifications

CDRH has some authority to address anticipated off-label uses by requiring a statement about off-label uses in the 510(k) clearance. The report recommends CDRH explore statutory changes allowing it to consider a known off-label use as the device's primary intended use for the purposes of the review.

FDA reviewers and device developers need better information about existing 510(k) devices, the report found. New database should include 510(k) summaries, non-proprietary photos and schematics, and up-to-date labeling.

FDA should revise its guidance on what types of modifications warrant submission of a new 510(k), and explain which changes are eligible for a special 510(k).

FDA should also require firms to provide periodic updates to FDA listing any modifications made to a device for which the firm did not submit a new 510(k).

SOURCE: “The Gray Sheet,” August 9, 2010 ©

2010 Windhover Information, an Elsevier company. All Rights Reserved.

21

Washington Roundup

submissions. This refers to a situation where the sponsor attempts to demonstrate that a device has the same intended use as one predicate and the same technological characteristics as another.

FDA stresses that the recommendations in both reports are preliminary. The agency is accepting comments on the reports through October 4th.

Some have questioned whether FDA has the legal authority to rescind a 510(k), but the agency maintains that it has “inherent authority” to reconsider its decisions in certain circumstances, such as when there has been fraud or error, and to rectify its mistakes.

At first blush, industry organizations agreed that the changes could be viewed as positives for device makers, but the ultimate impact of the proposals will depend on how they are implemented.

“When you look at the broad-based recommendations, on the surface they all have the potential to be beneficial,” Mark Leahey, president and CEO of the Medical Device Manufacturers Association, said in an interview. “But I think it’s too early to tell.”

AdvaMed’s Trunzo added that the long list of specific recommendations may seem fine as standalones, “but if you take them all together, it could change the program significantly,” she told “The Gray Sheet.” (See sidebar, “The (New) Anatomy of a 510(k).”) But others, such as advocacy group Public Citizen, say FDA did not go far enough. After a thorough review of comments, FDA will announce which changes it will implement, “in current or modified form,” with projected timelines, Shuren said. “Some of the recommendations could actually be implemented within a matter of weeks or months,” he noted.

Recommendations with strong support could be put into effect immediately, while more controversial proposals may be referred to the Institute of Medicine committee that is undertaking a simultaneous review of the 510(k) process to consider in their deliberations, Shuren added. The IOM 510(k) committee will begin hashing out its recommendations behind closed doors this fall for a final report due next summer.

- Jessica Bylander (j.bylander@elsevier.com)

(Adapted from “The Gray Sheet,” August 9, 2010)

CMS Proposes Limited LVAD Destination Therapy Coverage Expansion Medicare coverage for left ventricular assist devices as destination therapy would gain a limited expansion under an August 19 CMS proposed national coverage decision. The

22

September 2010

proposal would impact coverage for Thoratec Corp.’s HeartMate II system, approved

by FDA for destination therapy in January.

CMS determined that ventricular assist device (VAD) implantation is reasonable and necessary for New York Heart Association Class IV end-stage ventricular heart failure patients who are not candidates for heart transplants, but only when they meet all of several requirements.

Thoratec had hoped to expand coverage to include NYHA Class IIIB patients as well, but CMS did not propose such changes, citing public comments that the evidence does not yet support the FDA-approved indication.

To qualify for Medicare coverage, Class IV patients must have a left ventricular ejection fraction of less than 25%, a failed response to medication and functional limitation. However, CMS’ proposal would lower the bar for the latter two criteria slightly while also eliminating certain body size requirements to allow use in patients of smaller stature.

Specifically, patients must have failed to respond to optimal medical management for at least 45 of the last 60 days. This reflects a change from the current requirement that patients must have failed to respond to drugs for at least 60 of the last 90 days. As an alternative to this requirement under the proposal, however, patients who are balloon pump dependent for seven days or IV inotrope dependent for 14 days are also eligible.

Patients must also have functional limitation with a peak oxygen consumption of less than or equal to 14 ml/kg/min, instead of the previous requirement for less than 12 ml/kg/min.

The expanded coverage would be limited to procedures using a VAD that has received FDA approval for a destination therapy indication.

In February, CMS agreed to consider whether to expand Medicare coverage to match the updated FDA label for HeartMate II as a destination therapy for certain heart failure patients who are not candidates for heart transplants; the device is also used as a bridge to transplant. (See “Market and Industry Briefs: Thoratec Receives DT Indication for HeartMate II; Beefs Up Sales Force and Presence in Percutaneous Support Market,” Medtech Insight, February 2010.) The agency plans to issue a final rule by November 17.

-Monica Hogan (m.hogan@elsevier.com)

(Adapted from “The Gray Sheet,” August 23, 2010)

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Washington Roundup

September 2010

Federal Judge Pushes for More Deference to FDA in Medicare Coverage Case A federal judge overturned Medicare coverage denials for a knee device, stressing that the top HHS body for handling claim rejection appeals should give more weight to FDA clearance decisions.

In a ruling last month, Judge Ronald Leighton, from the Western District of Washington US District Court, found that four 2008 coverage denials by the Medicare Appeals Council for BioniCare Medical Technologies Inc.’s BIO-1000 stimulator for knee osteoarthritis were arbitrary and capricious.

BIO-1000, distributed by RS Medical, which brought the suit, is not addressed in a national or local coverage policy, so claims are handled by regional Medicare contractors.

Contractors began commonly approving claims from Medicare beneficiaries using the device in 2006 after the 510(k)-cleared device received a set of unique billing codes, according to court records.

“While it is true that safety and effectiveness, by themselves, are not enough to mandate a finding that the device is reasonable and medically necessary, the criteria [in the] Medicare Program Integrity Manual make clear the Secretary’s view that they should be some weight in the decision,” his ruling states. “The council’s failure to give FDA approval any weight is arbitrary and capricious.”

- David Filmore (d.filmore@elsevier.com)

(Adapted from “The Gray Sheet,” August 23, 2010) [A#2010400073]

RegulatoRy Know How Helping more medical device and diagnostics businesses meet tHeir regulatory, reimbursement and business objectives since 1975

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But there were some subsequent denials, which RS Medical appealed. The Medicare Appeals Council is the fourth level of appeal for claims rejections; its rulings can only be reversed in federal court.

The firm argued that the appeals council decisions were inconsistent with much more numerous determinations by regional contractors and that the council did not consider all evidence supporting the device as “reasonable and necessary.”

Judge Leighton agreed that the council decisions were too inconsistent to warrant the typical deference provided to HHS on Medicare policy. He observed that the council should have considered more evidence supporting acceptance of the device in the medical community and, in particular, given more weight to FDA’s decision to clear the device.

©

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23

Deals Update

September 2010

Deals Update

by Beth Detuzzi

Mergers & Acquisitions BioImagene Inc. & Roche Diagnostics (a division of Roche) & Ventana Medical Systems Inc. (a division of Roche)

Supporting its personalized medicine efforts, Ventana Medical Systems Inc., a division of Roche Diagnostics, has paid $100mm for private digital pathology company BioImagene Inc.

Exactech Inc. & VertiFlex Inc.

Exactech Inc. (orthopedic devices for bone and joint repair) is acquiring multiple spine product lines from VertiFlex Inc. (minimally invasive spinal surgery devices), including assets related to the Silverbolt percutaneous pedicle screw system. Exactech is paying $2.5mm up front and another $1mm in potential earn-outs.

Helixis Inc. & Illumina Inc.

Life sciences company Illumina Inc. has acquired privately held molecular diagnostics start-up Helixis Inc. for $70mm in cash up front and an additional $35mm in potential earn-outs.

Ion Torrent Systems Inc. & Life Technologies Corp.

Life Technologies Corp. is acquiring private DNA sequencing firm Ion Torrent Systems Inc. for $375mm in cash and stock. Ion could receive an additional $350mm in cash and shares should certain technical and time-based milestones be met through 2012. The breakdown of the cash versus stock was not disclosed.

K2M Inc.

Private equity firm Welsh, Carson, Anderson & Stowe has acquired the outstanding shares of closely held spinal device company K2M Inc., becoming the company’s majority shareholder.

Medtronic Inc. & Osteotech Inc.

To expand its regenerative biologics offerings, Medtronic Inc. is paying $6.50 in cash (a 74% premium) for each outstanding share of fellow public device company Osteotech Inc., valuing the transaction at about $118mm. Osteotech sells a wide range of products for regenerative medicine such as the FDAcleared Grafton demineralized bone matrix, MagniFuse bone grafts, Plexur biocomposites, Xpanse bone inserts, GraftCage PEEK implants, and Graftech structural allografts.

OptiMedica Corp. & Topcon Corp.

Topcon Corp. (optical, optometric, GPS, and positioning control devices) has agreed to buy OptiMedica Corp.’s retina and glaucoma assets for an undisclosed amount of cash. The deal is the largest acquisition for Topcon’s medical division to date.

Opto Circuits Ltd. & Unetixs Vascular Inc.

Opto Circuits Ltd. (monitoring and interventional products) has agreed to acquire closely held Unetixs Vascular Inc. (non-invasive peripheral arterial disease monitoring) for $9.7mm in cash.

Alliances Accentus Medical PLC & Zimmer Holdings Inc.

Accentus Medical PLC (coatings for medical devices) has licensed Zimmer Holdings Inc. exclusive worldwide rights to incorporate its Agluna surface modification technology into products for joint reconstruction and trauma. Zimmer has also been granted an 18-month option for exclusive rights in the areas of spinal devices, dental implants, and sports medicine products.

Adoptics AG & Hoya Surgical Optics (a division of Hoya Corp.)

Hoya Surgical Optics (manufactures precision optics) has agreed to fund Adoptics AG’s (ophthalmic devices) program to develop a shape-changing accommodating intraocular lens (IOL).

Cardica Inc. & Intuitive Surgical Inc.

Cardica Inc. (devices for cardiac and endoscopic surgeries) has licensed minimally invasive device developer Intuitive Surgical Inc. exclusive worldwide rights--including rights to sublicense--to intellectual property covering diagnostic or therapeutic medical procedures for the robotics field, but excluding vascular anastomosis applications. The licensed assets relate to tissue cutting, stapling, and clip applier technologies. Intuitive Surgical paid $9mm up front and will purchase 1.25mm Cardica common shares for $3mm (a 33% premium per share). Cardica is also eligible for sales milestones and single-digit royalties.

CardioMEMS Inc. & St. Jude Medical Inc.

St. Jude Medical Inc. has made a $60mm equity investment in CardioMEMS Inc., a privately held cardiovascular firm that developed a wireless sensing technology for heart failure. In addition to now owning a 19% stake of the company, St. Jude also has the exclusive option to purchase the remainder of CardioMEMs for $375mm, pending the achievement of certain milestones.

Fresenius Medical Care AG (a division of Fresenius SE) & Nikkiso Co. Ltd.

Fresenius Medical Care AG (FMC) has signed an exclusive ten-year distribution agreement with fellow dialysis device company Nikkiso Co. Ltd. for hemodialysis products in Japan.

24

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Deals Update

September 2010

Alliances (cont.)

Novartis Molecular Diagnostics (a division of Novartis AG) & Pathwork Diagnostics Inc.

Pathwork Diagnostics Inc. (molecular diagnostics focused on cancer) and Novartis AG’s Novartis Molecular Diagnostics division will work together on the discovery of biomarkers for oncology tests. Both companies have the right to develop and market the resulting products.

Quick-Med Technologies Inc. & Viridis BioPharma Pvt. Ltd.

Mumbai-based drug and device manufacturer Viridis BioPharma Pvt. Ltd. has licensed exclusive rights in India to Quick-Med Technologies Inc.’s NIMBUS platform, which it will use in new wound care products.

Quick-Med gets an undisclosed up-front fee, a first-sale milestone payment (or a payment on the sixmonth anniversary of the deal signing, whichever comes first), and royalties.

Financings Aptus Endosystems Inc.

Aptus Endosystems Inc. (treatments for aortic aneurysms) has raised $15mm through the closing of its Series AA round. Returning investors US Venture Partners and Longitude Capital led the financing. The funds will be used to finish clinical development and pursue commercialization in the US and Europe for the independent use of its endostapling system and in tandem with its endovascular AAA repair system.

Boston Heart Lab Corp.

Boston Heart Lab Corp. (diagnostics to monitor cardiovascular disease) has raised just over $10mm through its Series B round to 46 undisclosed investors.

Cardiac Concepts Inc.

Cardiac Concepts Inc. (developed a neurostimulator device for congestive heart failure patients with sleep apnea) has raised $27.2mm through its Series C venture round to 13 undisclosed investors.

China Kanghui Holdings

Orthopedic implant developer China Kanghui Holdings has netted $50.9mm through its US initial public offering of 5.34mm American Depositary Shares at $10.25 each. (One ADS represents six ordinary shares.) Selling stockholders offered another 1.3mm shares. The company will trade on the NYSE under the ticker KH.

Complete Genomics Inc.

Just weeks after filing for its IPO, Complete Genomics Inc. (DNA sequencing) has closed a $39mm Series E venture round. New backer Sands Capital led the financing (and contributes a board member) and was joined by current shareholders Essex Woodlands, OVP Venture Partners, Prospect Venture Partners, OrbiMed Advisors, Highland Capital Management, and Enterprise Partners.

Curemark LLC

Three-year-old Curemark LLC (neurology therapeutics and diagnostics) has raised $5.2mm through its Series B venture round to three undisclosed investors. According to the company’s Form D filing, it may bring in another $4.8mm before closing the financing.

D Medical Industries Ltd.

Israeli device company D Medical Industries Ltd. has netted $9.8mm in its US initial public offering of 1.5mm ordinary shares at $7 each. The company, whose stock is already listed on the TASE, will now trade on Nasdaq.

Delcath Systems Inc.

Delcath Systems Inc. (oncology drug delivery device) raised $33.8mm through the follow-on public offering of 5.19mm common shares at $6.51. The company’s technology is a high-dose chemosaturation system in development for various types of cancer.

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Deals Update

September 2010

Financings (cont.)

Devicor Medical Products Inc.

Medical device company Devicor Medical Products Inc. has raised $151.5mm from seven investors in what appears to be its first financing round.

Electromed Inc.

Three months after filing to go public, Electromed Inc. (respiratory devices) has netted $6.29mm through the initial public offering of 1.7mm common shares at $4; just weeks ago the company had hoped to sell 2mm shares between $4-6 apiece.

EndoGastric Solutions Inc.

EndoGastric Solutions Inc. (minimally invasive procedures for gastrointestinal conditions) raised $30mm in its Series F financing round co-led by new investors Canaan Partners and Radius Ventures, which each add a board member. Returning shareholders Advanced Technology Ventures, MPM Capital, Foundation Medical Partners, Chicago Growth Partners, and De Novo Ventures also participated.

IDev Technologies Inc.

Stent developer IDev Technologies Inc. has raised $27.7mm through the sale of Series B-1 preferred stock and other options to 13 undisclosed investors. According to the company’s Form D, it may bring in a total of $44.8mm when the financing is completed.

LensAR Inc.

Ophthalmic laser developer LensAR Inc. (formerly Lasersoft Vision) has raised $7mm through a latestage venture round to two undisclosed investors. According to the Form D filing, it may bring in another $5mm.

MindFrame Inc.

MindFrame Inc. (ischemic stroke device) has raised $3.6mm through its Series B venture round to four undisclosed investors. According to the company’s Form D, it may bring in another $4.5mm.

Pacific Biosciences of California Inc.

Pacific Biosciences of California Inc. (tools for synthesis and regulation of DNA, RNA, and proteins) has filed for its initial public offering, just a month after the company closed its $109mm Series F venture round.

PowerVision Inc.

PowerVision Inc. (implantable lens) has raised $20.5mm through the closing of its Series C venture round to 13 investors.

REVA Medical Inc.

US-based REVA Medical Inc. (bioresorbable stents) has filed for its initial public offering on the Australian Securities Exchange. Investors will receive CHESS Depositary Interests (CDIs); each CDI represents onetenth of a REVA common share.

SI-Bone Inc.

Spinal device developer SI-Bone Inc. raised $10.6mm out of a potential $11mm early-stage funding round led by Skyline Ventures, which adds a board member. According to the Form D filing, a total of 19 investors participated.

SomaLogic Inc.

SomaLogic Inc. has raised $5mm through a late-stage venture round to one undisclosed investor. The company has developed proteomic reagents called SOMAmers that rapidly detect all at one time the rarest proteins associated with cancer and neurology and cardiovascular diseases.

Swift Biosciences Inc.

Swift Biosciences Inc. (genetic analysis technology) has raised $3mm through the closing of its Series A venture round. DFJ Mercury led (and contributes a board member) and was joined by individual investors that participated in the January 2010 seed financing.

Tenaxis Medical Inc.

Surgical sealant developer Tenaxis Medical Inc. has raised $9.55mm of a potential $16.6mm from 54 investors in what appears to be the company’s fifth equity financing.

ViewRay Inc.

Siemens Venture Capital has led the $20mm Series C financing for ViewRay Inc. (MRI-guided devices for radiation treatment). Returning shareholders Aisling Capital, Fidelity Biosciences, Kearny Venture Partners, and OrbiMed Advisors also invested, along with three undisclosed investors. The money will support the initial clinical testing of the company’s Renaissance System 1000, which to date has been used for nonclinical research purposes only.

Visterra Inc.

Three-year-old Visterra Inc. (formerly Parasol Therapeutics; vaccines and diagnostics for infectious diseases) raised $6mm in its Series A financing to Flagship Ventures, Lux Capital, and Polaris Venture Partners.

Wavetec Vision Systems Inc.

WaveTec Vision Systems Inc. (refractive cataract surgery devices) has raised $6mm through the sale of debt and other options to two undisclosed investors.

SOURCE: Elsevier’s Strategic Transactions [A#2010400074] Beth Detuzzi is Editor, Deals Update for Medtech Insight. (E-mail: B.Detuzzi@Elsevier.com)

26

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Drug Developmen t Novartis holds lead in oral MS space with fingolimod filing

The December subm ission to FDA and the EMEA is on track with the Swiss pharm a’s predictions, as is the inclusion of only the 0.5 mg dose of fingo limod. It also puts Novartis ahead of Merck Serono, which had its filing for oral cladribine refused

by FDA in November ......... .................................... ...12

OGY

On The Cusp Of Biosimilars: Reform Ushers In Next Generic Drug J M (j.merrill@elsevie Era r.com

by

The new health reform law’s provi sions for follow-on biolo gics and the Medic are Part D coverage gap have taken much of the reform limel ight. But two meas ures should offer more help in the near term to keep biopharma s afloat: the Thera peutic Discovery Proje ct Tax Credit and the Cures Accelerati on Network.......... ............5

– Seen as an overa ll positive for the bioph arma industry, the health reform packa ge includes sever al dozen provisions that revise gove rnment prescription drug programs or expan d drug access by expan ding the market of insured individual s. ........................... ........ 8

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he health care reform legislatio n signed into law March 23 paves

by President Obam the way for the launch of biosimilar a tion that could drugs in the U.S., save the country’s acwhile presenting health care syste both challenges m billions of dolla and opportunities rs, for the drug indus Availability of biosi try. milars – low cost versions of prote – will put additional in-based biologic pressure on biolo drugs gic drug manufactu had to grapple with res, which have the same limited not marketing exclu cliffs for biologics sivity periods and that small mole patent cule drugs have been subject to for two decades. Ultim ately, the legislation establishes a legal framewor k for biosimilar drug s and is a win for the branded drug industry, offering a lengthy 12 year s of marketing exclusivity for innov ator products.

For some drug makers, biosimilar s will be another roadblock on the long-term growth path – though how significant an impa ct biosimilars will ultimately have on brands rema ins to be seen. But for others they repre sent an opportuni ty, a chance to get an early foot in the door in a pote ntially high profit-ma rgin business.

Generics And Biosimila

rs, President Obama signs health Close Relations? Hard care bill ly How the market for biosimilar drug s will eventually shak e out is unclear.

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CLINICAL EDGE

Clinical Edge New Technique for In Vivo Joint Regeneration Shows Promise

TGFβ3 recruited about 130% more cells in the regenerated articular cartilage than did spontaneous cell migration without TGFβ3, and the cartilage had better compressive and shear properties than in the scaffoldonly group.

Researchers working with rabbits successfully regenerated the entire articular surface of the synovial joint in vivo, using only an anatomically correct bioscaffold infused with growth factor, without the need for cell transplantation.

A team of researchers led by Chang H. Lee, of Columbia University’s Tissue Engineering and Regenerative Medicine Laboratory reported in The Lancet recently that they have devised a way to induce the articular surface of the synovial joint to regenerate in vivo, without the need for cell transplants, by creating conditions for the homing and growth of endogenous cells. The study marks the first time an entire cartilage joint has been regenerated. According to the researchers, the work provides a feasible approach for the regeneration of dissimilar tissues, such as avascular cartilage and vascularized bone found in a synovial joint, without cell transplantation, and may offer an alternative to total joint arthroplasty for patients with arthritis, trauma, or osteonecrosis.

Working with rabbits, the researchers excised the entire articular surface of the unilateral proximal humeral (forelimb) condyle and replaced it with an anatomically matched bioscaffold made from a composite of poly-e-caprolactone and hydroxyapatite.

The scaffold was created from a three-dimensional computer model of the joint using layer-by-layer bioprinting and contained interconnecting microchannels.

Ten of the rabbits were fitted with scaffolds infused with transforming growth factor beta-3 (TGFβ3), while a second group of 10 was implanted with scaffolds lacking the growth factor. Three additional animals underwent condyle excision without bioscaffold replacement. Three to five weeks following surgery, all of the rabbits that received the TGFβ3-enriched scaffold had resumed weight bearing and movement, and by five to eight weeks they demonstrated nearnormal movement. In comparison, rabbits in the other two groups continued to show impaired movement.

28

September 2010

by Cheri Thompson

In addition, the TGFβ3-infused scaffolds were fully covered with hyaline cartilage on the articular surface and demonstrated uniformly distributed chondrocytes in a matrix with collagen type II and aggrecan.

In comparison, the bare scaffolds showed only isolated cartilage formation and no cartilage formation occurred in the defectonly rabbits. TGFβ3 recruited about 130% more cells in the regenerated articular cartilage than did spontaneous cell migration without TGFβ3, and the cartilage had better compressive and shear properties than in the scaffold-only group, the researchers said.

Columbia University has patented this technology and is currently working with companies interested in setting up human trials and commercial development. However, an editorial that accompanied The Lancet piece points out that while the work by Lee et al could be a “substantial step” toward the goal of individually customized biological joint replacements, there is still a long way to go before that goal becomes a reality.

In fact, there are some important potential disadvantages to regenerating joints in vivo using current technology, the editorialist, Patrick H. Warnke, MD, of Bond University in Australia, points out. These include the fact that elderly patients, especially those with comorbid conditions such as diabetes, may have an impaired regenerative capacity. In addition, the technique would require patients to remain immobile for an extended time, as several weeks or even months might be required before sufficient tissue ingrowth occurs to allow weight bearing. And once the joint is mature, patients are likely to require a substantial period of physiotherapy. Thus, while the bioscaffold technique might offer important advantages for young patients in need of a replacement joint, for most patients, a standard metal joint replacement is “likely to offer a faster and less demanding option,” Warnke writes.

Still Lee and colleagues offer “a promising insight into what might be on the horizon,” he says, in a field seeking solutions for what has become a “worldwide epidemic” of musculoskeletal and joint disease. Osteoar-

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CLINICAL EDGE

September 2010

thritis affects about 80 million people in the US, and that number is expected to double by 2030 as the population ages. The study and editorial were published online in The Lancet on July 29, 2010.

brain also reduced the plaque load in the retina, suggesting that monitoring the buildup of this plaque in the eyes could be a useful indicator of how well Alzheimer’s therapies are working in a patient.

Alzheimer’s-Related Plaque Also Collects in the Eyes

The in vivo detection of beta amyloid plaques in live mice prompted the researchers to look for the plaques in human retinas from Alzheimer’s patients who had died. They found beta amyloid plaques clearly apparent in all the patients they examined, while no plaques were detected in the retinas of nondiseased controls. They also found amyloid plaques in the retinas of patients with suspected Alzheimer’s disease and some with early-stage Alzheimer’s. In fact, the researchers were able to qualitatively correlate the severities of clinical diagnoses verified by postmortem neuropathology with the retinal amyloid plaque burden. They also were able to detect plaques in the retina of a cognitively normal person who had sparsely diffused plaques in the brain discovered only after autopsy.

According to a recent study, the plaque that collects in the brains of Alzheimer’s patients also builds up in the retina in the eye—and it appears there earlier.

Scientists from Cedars-Sinai Medical Center in Los Angeles, in collaboration with the Weizmann Institute of Science in Israel and the University of Southern California, have discovered that the amyloid plaques found in the brains of patients with Alzheimer’s disease can be detected in the retina of the eye, raising the possibility of an earlier, noninvasive screening and/or monitoring test for the disease. The study results were published online in June in the journal NeuroImage and were presented July 13th at the Alzheimer’s Association International Conference on Alzheimer’s Disease.

Working with mice that were genetically modified to model human Alzheimer’s disease, the scientists used a noninvasive optical imaging technique to detect amyloid plaques in mice retinas and found that the plaques could be detected at a very early, presymptomatic stage of the disease, before any plaques appeared in the brain. They then developed a high-resolution noninvasive optical imaging method to monitor individual beta amyloid plaques in live mice using a fluorescent curcumin label. Curcumin was injected into the bloodstream of the mice and was able to cross the blood-brain barrier and bind to the retinal plaques, enabling them to be viewed in high resolution with a retinalimaging microscope.

Using this technique, the researchers tested multiple genetically engineered mouse models of Alzheimer’s disease and found a correlation between retinal plaques and brain plaques as the disease progressed. Moreover, an immune system-based therapy that reduces the amount of plaque in the mouse

©

Beta-amloyid plaques, known to be a characteristic sign of Alzheimer’s disease, are believed to affect the brain by damaging cells and interfering with cell communication.

Unfortunately, current noninvasive imaging technology cannot provide adequate information about these plaques in the brain, so they typically go undetected until an autopsy is performed after death. The researchers say their work provides the first evidence of Alzheimer’s-specific plaques in the retina of human patients, and it suggests that noninvasive methods of detecting these plaques in living individuals may offer a tool for early Alzheimer’s diagnosis, prognosis, and treatment monitoring. The detection of retinal plaques in suspected Alzheimer’s patients (those with early symptoms) is important, they write, because neuropathological abnormalities associated with Alzheimer’s may occur decades before disease symptoms are fully manifested, and an early detection method would enable early intervention and more efficient response to therapy.

The scientists used a noninvasive optical imaging technique to detect amyloid plaques in mice retinas and found that the plaques could be detected at a very early, presymptomatic stage of the disease, before any plaques appeared in the brain.

[A#2010400075] Cheri Thompson is a contributing writer for Medtech Insight (E-mail the Editor at M.Thompson@Elsevier.com).

2010 Windhover Information, an Elsevier company. All Rights Reserved.

29

START-UP NEWS

September 2010

Start-Up News HistoSonics: In-office Ultrasound Therapy for BPH Unlike the two most popular surgical modalities for treating BPH— transurethral resection of the prostate and green light laser, the Histotripsy System is completely noninvasive and associated with significantly fewer complications.

Older men with an enlarged prostate, also known as benign prostatic hyperplasia (BPH), could soon have a noninvasive, office-based treatment option, if all goes well for HistoSonics Inc. The company is developing the Histotripsy System, an image-guided, robotic manipulated procedure that uses high-intensity ultrasound along with controlled microbubble cavitation to excise and mechanically homogenize tissue without the heat generation that leads to thermal tissue injury. Unlike the two most popular surgical modalities for treating BPH—transurethral resection of the prostate (TURP) and green light laser—which both require general anesthesia and are performed in the operating room (OR), the Histotripsy System is completely noninvasive and associated with significantly fewer complications.

“This is game-changing technology; no longer will men need to undergo invasive surgery,” says HistoSonics chairman and CEO Thomas Davison, PhD. The company anticipates CE mark in late 2012, followed by probable US Premarket Application approval in April 2014. Based on the nearly 400,000 men in the US who are treated surgically each year for BPH, the firm estimates the market potential for consumables alone in the range of $300 million to $400 million.

Headquartered in Ann Arbor, MI, HistoSonics was founded in December 2009 to commercialize technology acquired from the University of Michigan. The principal architect is Charles Cain, PhD, a professor of biomedical engineering at the university, who has researched therapeutic ultrasound for over 20 years. Several years ago, Cain came to the conclusion that the thermal treatment modalities in use at the time, including high-intensity focused ultrasound (HIFU), were ineffective in treating a host of conditions, including BPH, because of the thermal injury sustained and the uncontrolled nature of treatment. “The practitioner is also unable to see what he is doing,” Davison says.

As a result, Cain teamed up with a colleague from the University of Michigan, Brian Fowlkes,

30

PhD, an associate professor in both radiology and biomedical engineering, to create a new type of ultrasound system. “Dr. Fowlkes is one of the world’s experts on cavitation— the formation of bubbles in a flowing liquid—from ultrasound devices, including diagnostic ultrasound,” Davison notes.

Ironically, for every other type of therapeutic ultrasound other than HistoSonics’ technology, “cavitation is to be avoided, even for lithotripsy, which employs highintensity shock waves to fragment kidney stones and gallstones, because cavitation interferes with ultrasound energy transmission.” But Cain felt he could control microbubble cavitation and essentially create a surgical tool that would mechanically fractionate tissues without heat.

The major components of the Histotripsy System are a transrectal imaging transducer (for treatment visualization), a therapy transducer, a drive system for the imaging, a drive system for the therapeutic system, a single-use disposable ultrasound medium interface between the therapy transducer and the patient, a robotic micromanipulator arm that holds the controls for both the therapy transducer and the transrectal imaging transducer, and a monitoring and software package for surgical planning and image guidance. The hardware will cost $150,000 and the disposals $1,000 per procedure.

After the patient lies down on a bed in the lithotomy position, the imaging probe is placed in the rectum. The therapy probe is then positioned to aim at the perineum (between the rectum and the scrotum). Next, both of these instruments are attached to the micromanipulator arm, which controls the positioning of both transducers.

The transrectal probe then images the entire prostate and the images are stored in the console’s computer. “The physician retrieves images serially and literally draws a circle around each of the cross-sectional areas, then the computer reconstructs the surgical volume,” Davison says.

The therapy transducer is then activated and moves through the surgical volume to remove sufficient prostatic material to relieve symptoms. “The focused ultrasound

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START-UP NEWS

September 2010

has very, very high intensity that creates pressure waves at the focal point to cause the dissolved gases in the tissue to become oscillating microbubbles,” Davison explains. The continual pressure waves cause the microbubbles to expand and contract violently, thus essentially homogenizing the tissues. “It’s kind of like placing tissues in a blender,” he says. “We are excising tissue: we are neither ablating nor shrinking tissue.

The tissue is totally removed as it drains directly into the urethra and bladder.”

The final steps are to remove the transducer and probe, followed by irrigation of the urethra. The company expects the entire procedure to take about 30 minutes.

“We are designing the system with userspecifications that should make it very easy for the urologist to employ,” Davison says.

“The entire surgical procedure is softwaredriven.” The first human clinical trial of the Histotripsy System is scheduled to commence next April.

The BPH market is currently dominated by Olympus Corp., whose resectoscopes are used to perform TURP, which represents roughly 40% of the overall BPH surgical market. TURP involves resectioning prostate tissue using a radiofrequency excising device under endoscopic visualization.

“Extensive animal studies of our system have found very little bleeding compared to TURP, even on subjects that were anticoagulated with Coumadin,” Davison says.

“So we don’t expect bleeding to be a problem, which is one of the most prevalent complications of TURP.” Another 25% or so of the market constitutes green laser therapy, provided by American Medical Systems Inc. The KTP laser vaporizes tissues, also under endoscopic visualization. “We don’t expect complications related to short-term urinary retention from swelling as a result of this thermal modality,” Davison says. “There is also moderate postoperative pain with laser therapy.”

In addition, unlike the office-based Histotripsy System, both TURP and green light require general anesthetic in a surgical center or hospital. Furthermore, green light takes well over one hour to perform (depending on the size of the prostate), according to Davison, whereas TURP has an

©

equivalent procedure time to the Histotripsy System. The new system also has a much easier learning curve than both competitors, Davison says.

Outcomes should also be better with the image-guided Histotripsy System than with an endoscopic procedure. “We are able to take a cross-section of the prostate and draw a circle around where we observe diseased tissue. Our device will then excise those tissues, as opposed to when you insert an endoscope into the urethra. With an endoscope, you cannot tell where the margins are for excising,” Davison conveys.

“We believe our technology should be more accurate for tissue excising because it is image-guided and robotic.”

HistoSonics has two issued patents from the University of Michigan and six pending patents, some of which are with the university. A royalty will also be paid to the university. The company expects the Histotripsy System to achieve 100% success, acknowledging that both competing devices have high success rates, too. “But we know the complications will be significantly less with our system,” Davison says. “Preclinical animal studies also support our belief that our technology will be relatively painfree postoperatively.”

Davison feels the medical community will embrace the Histotripsy System because urologists, on average, “make three times as much money with an office-based procedure compared to an OR-based procedure.”

From a financial standpoint, Davison feels the medical community will embrace the Histotripsy System because urologists, on average, “make three times as much money with an office-based procedure compared to an OR-based procedure.” HistoSonics has yet to reach a decision whether sales of the device will start internationally or in the US. The earliest launch date would be mid- 2013 and no new Diagnosis-Related Group (DRG) is needed. The company will probably begin with a network of distributors, then possibly segue to a direct sales force.

In the future, the company may expand the technology to other applications. HistoSonics’ technology can be used to treat cancer tumors anywhere in the body, Davison says. “The University of Michigan has also extensively tested Histotripsy for thrombolysis. It will dissolve a clot ten times faster than any other mechanical invention, noninvasively,” according to Davison, who

2010 Windhover Information, an Elsevier company. All rights reserved.

31

START-UP NEWS

September 2010

believes that noninvasive, robotic tissue excision as accomplished with Histotripsy is the greatest advancement in surgery since laparoscopic surgery.

HistoSonics closed an $11 million Series A round in December 2009, led by Venture Investors, of Ann Arbor, MI. Other venture capital firms who invested in the round included Fletcher Spaght Ventures LP, Hatteras Venture Partners, Early Stage Partners, and TGap Ventures LLC. A Series B round in the likely range of $5 million to $20 million may close by the end of 2013.

-Bob Kronemyer

Neuravi: Clot Removal for Acute Ischemic Stroke Neuravi Ltd.’s thrombus capture and removal device for treating acute stroke patients is designed to disengage offending clots from the wall of brain arteries, and then scaffold the clot inside a microfiber net during removal from the patient. The company thinks its technology represents a major advancement for the treatment of stroke because currently available products do not offer an effective clot disengagement system. The Neuravi device has a dedicated clot disengagement feature to break bonds and reduce the friction between the clot and vessel wall. Neuravi is initially targeting the roughly 250,000 stroke patients with large vessel occlusions that are treated each year in the US, representing a market opportunity of about $1 billion.

The major co-founder of the Irish start-up is Eamon Brady, Neuravi’s CEO, who previously worked at Abbott Vascular from 2004 to 2008, where, as director of new ventures, he “became very aware of the huge need for a solution to treat acute ischemic stroke.”

“In fact, 95% of people receive no intervention for this extremely debilitating disease,” he states. From 1997 to 2004, Brady also served as director of R&D and director of intellectual property at MedNova Ltd., a stroke prevention company that developed and commercialized embolic filters and carotid stents.

In 2008, Brady and co-founder Mahmood Razavi, director of the Center for Clinical Trials and Research at St. Joseph Hospital Heart and Vascular Center in Orange, CA,

32

discussed a handful of projects they might pursue together. “We both agreed that acute stroke is desperately in need of new technology,” Razavi recalls. Developing a new device for acute stroke is challenging because brain arteries are tiny, delicate, and tortuous. “We needed a system that provided a complete capture and efficient disengagement of the clot,” Razavi says.

Neuravi has approximately 40 patent applications, about half of which are issued, including a licensed portfolio of patents from an undisclosed major multinational company. The total portfolio gives the company key intellectual property covering its Neur-eXer product design and also other product designs being clinically tested.

The Neur-eXer is a single-use, sterile disposable thrombectomy device consisting of two main components: a basket and a clot disengager. The microfiber-meshed basket has a frame made of nitinol struts. “The frame is configured so you have an open mouth, which engages with the clot from one side,” Brady explains. The clot disengager, also made of nitinol, is placed on the proximal side of the clot. The basket is typically 2 to 4 mm in diameter, depending on the size of the vessel. When the basket is pulled proximally, “all the forces are absorbed by the disengager, thus protecting the vessel from trauma,” Brady says. The clot disengager, when expanded, is also about the same size as the basket.

In a clinical setting, an angiography is first performed on the affected part of the brain by inserting a catheter via an artery in the groin. The process is similar to the angiogram for heart attacks, where physicians use x-rays and sophisticated monitors to guide the treatment. When close to the site of the offending clot, a microcatheter is then navigated through the blockage and the device is deployed. Next, the clot is trapped by dispatching the basket and disengager at either side of the clot. The disengager is then activated. “The combination of the disengager and the motion of the frame of the basket removes the clot and traps it inside the basket,” Razavi states. The captured clot is then removed from the body in the basket.

By extracting the clot in one piece, normal blood flow is restored to the brain. “The of-

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START-UP NEWS

September 2010

fending clot is usually lodged in one of the vessels in the brain and can be cleared in this manner,” continues Razavi, who was an associate professor of interventional radiology at Stanford University Medical Center from 1996 to 2005. “The procedure is similar to a coronary angiogram during an acute heart attack. But instead of looking at the heart, we are looking at the brain.”

The procedure using the Neuravi device takes about 30 to 45 minutes, with a minimal learning curve. “The disengagement step should be practiced once or twice to ensure that the physician knows how the device works,” Razavi notes. “The rest of the procedure is fairly self-explanatory.” The first human clinical study of the thrombectomy device is scheduled to begin late in 2011.

Two companies have devices for the same procedure approved in the US: Concentric Medical Inc. (Merci Retrieval System) and Penumbra Inc. (Penumbra System). The Concentric device has a corkscrew and a wire, whereby the wire is extended horizontally for delivery, and then the corkscrew is expanded to engage the clot. The device is then pulled back while suction is applied to the guide catheter. The Penumbra device, on the other hand, relies on suction alone to remove the clot.

A key measure of this type of device is the frequency with which it restores full blood flow to the brain (recannalization). “We believe our device will achieve complete recannalization in excess of 90% of cases because of our dedicated disengagement system,” Brady says. “These rates are superior to current technology.” Neuravi’s device is also delivered into the brain through a very small 2.1-French microcatheter and the clot is removed through a 6-French guide catheter. “It is best if you have both a small guide catheter and a small microcatheter,” Brady states.

A major advantage of the Neuravi system, according to the company, is that it can significantly shorten the time to re-establish flow compared with the currently available devices in the US. “The Neuravi device is designed to re-establish flow very quickly— in about 30 minutes—which is critical for a stroke patient,” Razavi stresses. “Studies indicate that it can take between one and

©

three hours to restore normal blood flow by using the currently available devices, due to their performance limitations.”

CE mark for the Neur-eXer System is expected in 2012, followed by 510(k) clearance during 2014. Neuravi’s thrombectomy device is expected to begin selling in Europe in 2012, at a price of about $6,500. US sales are forecast to start in 2014, likely using a direct sales force. DRG codes and strong reimbursement are in place in the US. Founded in March 2009, the company has raised $1.8 million in seed funding to date. Two additional rounds of financing are anticipated prior to US Food and Drug Administration (FDA) approval, the first of which should close in the first quarter of 2011, in the region of about $5 million.

Neuravi is currently putting together an international VC syndicate that will consist of different investors than those that funded the seed round.

“We believe our device will achieve complete recannalization in excess of 90% of cases because of our dedicated disengagement system.”

- Eamon Brady, Neuravi Ltd.

-Bob Kronemyer

EndoControl: Offering Endoscopic Surgeons a Robotic Helping Hand France’s EndoControl SAS is operating in one of the few medical device markets that’s expected to enjoy double-digit growth rates over the coming years: robotic-assisted minimally invasive surgical systems. (See Exhibit 1.) High growth rates are largely based on the comprehensive platform of Intuitive Surgical Inc.’s da Vinci System, but EndoControl’s founders bet that there are large market applications where surgeons will want to reach for a single-function, low-cost robot to lend a helping hand. EndoControl has developed the ViKY System, a motorized endoscope holder compatible with any endoscope, which responds to a surgeon’s voice or foot command, and the company believes it will help increase endoscopic accuracy, avoid surgeon fatigue and realize cost-savings in the operating room.

EndoControl was founded in 2006 by CEO Clément Vidal, a biomedical researcher formerly with knee arthroscopy company Praxim SA, and Patrick Henri, EndoControl’s head of business development, who has spent 25 years in the medical device industry at Praxim, Technomed International Inc., Siemens Medical Solutions, GE Healthcare,

2010 Windhover Information, an Elsevier company. All rights reserved.

33

START-UP NEWS

ViKY is a compact system that gives a surgeon direct control of laparoscopic vision during surgery.

September 2010

MicroControl, and ScienceExport. With €4.05 million in funding in two rounds from VC firms Vizille Capital Innovation, Sudinnova, and Seventure, the company set up shop to commercialize ViKY, a motorized endoscope holder designed to make surgeons’ jobs easier during minimally invasive surgeries, originally developed by the TIMC/IMAG Laboratory, a joint research venture of the CNRS (French National Center for Scientific Research) and the Université Joseph Fournier in Grenoble.

ViKY is a compact system that gives a surgeon direct control of laparoscopic vision during surgery. Marketing and Communications Officer Mathilde Colas explains that a dedicated surgical assistant is generally required to hold an endoscope during procedures that can be several hours long. This can result in instability and shaky images, especially during highly delicate procedures. Futhermore, the operating surgeon doesn’t have complete control over the positioning of the scope.

ViKY, which is voice- or foot-activated, frees up a pair of hands in the OR and gives the surgeon control so that he or she can work more efficiently; the surgeon directly commands the movement and positioning of the scope. ViKY takes up less space than other robotic systems; the motorized arm is the size of a small office lamp, Colas says.

ViKY is available in multiple sizes, ViKY XL, a larger diameter device specifically for singleaccess and single-port laparoscopic surgeries, and ViKY XS, a smaller-diameter device for pediatric and thorascopic procedures.

The robot received the CE mark in 2007 and FDA 510(k) clearance in December 2008.

The company is using distributors to sell the device in the US, Europe, and Asia, and is seeing rapid adoption in urology, gynecology, bariatric surgery, and oncology. In gynecology, for example, Richard Rosenfield, MD, of Pearl Women’s Center in Portland, OR, and one of the first gynecology surgeons to use da Vinci, has reported that he was able to perform, with the help of ViKY, an unassisted laparoscopic hysterectomy procedure, the first such procedure in the world, he claims.

Highlighting the role for ViKY, Rosenfield said (as reported by EndoControl), “This is the first robot system priced within the reach of less affluent rural hospitals and many outpatient surgery centers.” The ViKY System costs a fraction of other robotics platforms, at $50,000 to $75,000.

The EndoControl platform is versatile, portable, easy to set up, and provides advantages to multiple surgical specialties, says Colas, who adds that the company will soon an-

Exhibit 1

Robotic-Assisted Minimally Invasive Surgical Systems, US Market Forecast 2008-2013E

Year

Total US Robotic Surgical Systems Sales

2008

$679.9M

--

$509.9M

--

2009

827.0

21.6%

620.3

21.7%

2010E

1,000.0

20.9

750.5

21.0

2011E

1,225.5

22.6

930.7

24.0

2012E

1,515,3

23.6

1,147.2

23.3

2013E

1,870.7

23.5

1,144.4

25.9

CAGR

22.4%

Annual Change

General and Pelvic Systems Sales

Annual Change

23.2%

Note: Figures are estimated and include Intuitive Surgical’s da Vinci Surgical Systems, accessories, systems and service contracts.

SOURCE: “New Directions in Robotic Surgery,” Medtech Insight, March 2010

34

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START-UP NEWS

September 2010

nounce the introduction of complementary accessories that will make ViKY even more versatile. EndoControl is also working in partnership with Mauna Kea Technologies SAS, the Institute of Intelligent Systems and Robotics of Pierre et Marie Curie University, the Institut Mutualiste Montsouris, and the cancer center Institut Gustave-Roussy to develop a tiny, robotic-assisted flexible endomicroscope. The partnership hopes to enable minimally invasive exploration of the abdominal cavity to help clinicians determine the best course of treatment for a cancer patient: surgery, chemotherapy, or radiation therapy. The partnership received $10.3 million in funding from the Industrial Strategic Innovation program of OSEO, a governmental economic development agency.

-Mary Stuart

Virtual Incision: Mini Robots Go Where Man Can’t The debate surrounding the future of minimally invasive surgery—whether single-incision laparoscopy will prevail or whether it is merely a stepping stone to a world of incisionless NOTES (natural orifice translumenal endoscopic surgery) procedures—is really not relevant to Virtual Incision Corp., a start-up developing mini surgical robots.

It will not matter whether its robots enter the body through a port in the belly button or through a hollow organ; in vivo robots have the potential to navigate to the chosen site of surgery and there perform all of the functions that surgeons normally rely upon in conventional laparoscopy—visualization, retraction, grasping, and cutting. The difference is that robots remove the limitations related to a particular access site.

Virtual Incision was founded in 2006 at the University of Nebraska, one of the earliest sites for the da Vinci Surgical Robotic System from Intuitive Surgical Inc., by Dmitry Oleynikov, MD, FACS, a surgeon and director of minimally invasive and robot surgery at Nebraska Medical Center, and Shane Farritor, associate professor at the department of mechanical engineering and an engineer with expertise in robotics. Farritor came to the University of Nebraska after a career designing robots for NASA, the rovers that autonomously explored Mars. The Mars rovers are a good example of the needs that robots fulfill, Farrator points out. “Why do we need robots? To do things humans can’t, because they’re inaccessible or too difficult.” Minimally invasive surgery presents such an access problem, and Virtual Incision’s founders believe robots are the solution.

The technology licensed to Virtual Incision from the University of Nebraska was initially funded by the US Department of Defense, NASA, and the National Institutes of Health.

Angel investors provided $500,000 to the company after spin-out, to set it on its way toward a commercial product in the field of robotic surgery. Virtual Incision wants to offer a cost-effective, and perhaps more broadly applicable, alternative to the only system that’s on the market today. The Intuitive Surgical da Vinci System offers surgeons dexterity in small spaces to accomplish certain high-volume applications that can’t be done better by other means—da Vinci is used almost exclusively for the minimally invasive removal of the prostate, for example—but the system requires surgeons to develop specialized expertise and costs more than $2 million. (See “Intuitive Surgical: Making Robotics Real,” IN VIVO, July 2006.)

E X P A N D E D

W E E K L Y

in vivo robots have the potential to navigate to the chosen site of surgery and there perform all of the functions that surgeons normally rely upon in conventional laparoscopy.

U P D A T E S

STRATEGY, REGULATORY, INNOVATION & INVESTMENT COVERAGE FROM THE INDUSTRY’S TOP PUBLICATIONS Highlights from

The Gray Sheet, Medtech Insight, IN VIVO, Start-Up, The Silver Sheet & Strategic Transactions www.MedicalDevicesToday.com

©

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START-UP NEWS

“If we provide the ability for a surgeon to do a single-incision procedure, we will have delivered benefit to the patient and to the surgeon.”

-Dmitry Oleynikov

Virtual Incision aims to offer less expensive mini robots (costing thousands, instead of millions of dollars) that are easy to use and accessible to larger numbers of surgeons. In fact, the tiny robots may allow surgeons to work much as they do with conventional laparoscopy tools, where they lean over the patient and control instruments that are inside the body.

The da Vinci System, as Oleynikov describes it, is as large as a refrigerator, with arms that occupy the space above the patient. The surgeon operates the da Vinci robot from a control console that is removed from the patient, and while it is a powerful, enabling system, that’s not how surgeons work most of the time, Oleynikov says.

Farritor says that Virtual Incision is addressing the high capital expense hurdle, but that wasn’t the primary goal. “We wanted to be independent of the entry path for the robot. Single-incision or orifice surgeries are the same to us. The surgeon will not be constrained by the entry method. Once the robot is on the inside, the surgeon can see and touch tissues and accomplish the required surgical tasks.”

The company is early in its development, and isn’t ready to disclose details. Before it was founded, much research was conducted at the University of Nebraska, where different versions of robots were tested in preclinical models of transvaginal, transcolonic, and transgastric cholecystectomy procedures; prostatectomies; and liver biopsies. Farritor says that the Virtual Incision robots fulfill the large set of requirements for an in vivo surgical robot, including “the need to manipulate, cut, and move tissue around; a way to maintain the device’s position in the body; power; a joystick to control the arms of the robot; and a display of what the robot ‘sees.’”

Virtual Incision also won’t yet be pinned down as to its targeted applications. Although most companies operating in the market of minimally invasive surgical devices for general surgery debut with gallbladder removal (because it’s a familiar and high-volume procedure), a mini robot, while less expensive than the da Vinci System, will still have a higher price than traditional laparoscopic instruments, which already handle the gallbladder procedure very successfully.

Oleynikov says, “It is difficult at this point to say that we are going after a particular procedure. It is more accurate to say that our robot will allow a surgeon to perform abdomi-

36

September 2010

nal wall and abdominal content and cavity procedures that range from looking for cancer inside the abdominal cavity to removing cancer and unhealthy organs, all inside the peritoneal cavity.” Among the array of specialties and procedures that Virtual Incision will assist are gynecology and the removal of the uterus, urology and prostate removal, and general surgery procedures including the removal of a colon or gallbladder.

While NOTES has a great deal of appeal for patients and surgeons because of its ability to avoid external incisions, Oleynikov believes such procedures will have limited uptake. “We think that flexible endoscopy is an extremely difficult way to do these types of operations,” he says, and although a number of surgeons have succeeded in doing several types of NOTES procedures, the amount of time and the level of expertise are prohibitive, he believes. “We think that our tools will facilitate those types of operations that would be just too darned hard otherwise.”

In vivo robots will be free from access-related constraints, which for flexible endoscopy include how difficult it is to achieve stable fixation while maintaining precise tip maneuverability, challenges in the open environment of the insufflated peritoneal cavity, and cases where the procedure is not performed in line with the light source and camera. With the robots, “surgeons will simply need routine endoscopic skills, not the high degree of flexible endoscopy skills that NOTES requires now.” The robots could play a role in both incisionless and single-incision procedures. “Patients are beginning to demand single-incision surgeries, but many surgeons are complaining that they’re difficult to do. If we provide the ability for a surgeon to do a single-incision procedure, we will have delivered benefit to the patient and to the surgeon,” Oleynikov says. He foresees a time when mini robots may even enable certain groups of surgeons who don’t tend to do laparoscopic surgery to offer minimally invasive procedures because the Virtual Incision robots “will be easier to learn than laparoscopy.” Gynecology surgery is a good example.

Today, more than 70% of the hysterectomies in the US continue to be performed abdominally.

“The minimally invasive hysterectomy would be probably high on our list of targeted procedures,” Oleynikov says.

-Mary Stuart [A#2010400076]

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Steps to Success

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1. Get data and analysis on the technology,

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windh over.c om |

Vol. 14 No. |3

MARCH 2009

Emerging Medical Ventures

The Epigenetics (R)evolution

1 VALU ATIO N WATC H

Constellation and Epizy me are poised to become dominant players in the unfolding field of epigenetics, an area of biology replete with novel interesting targets and broad , therapeutic potential.

2 VENT URE ’ROU ND

ELLEN FOSTER LICKING

Corporations Chiming In on Device Financings

|

From Verus to Meritage: A Biotec h Prototype for Tough Economic Times Enject’s GlucaPen: Mightier Than the Hypo-kit?

Another Twist in Myocet Plot: $55 Million Zoticon-led Financing for Sopherion

A New Chapter 20 for Device VCs? TOM SALEMI |

The current economic crisis is hard on everyone, including medi cal device investors and start-ups.

But can the challenges facing the industry ultimately lead to a happy ending?

PROFILES

Treating Late-Stage Prostate Cancer

28 Results are starting to roll in from severa

l key clinical trials of late-sta therapies. Start-ups embark ge prostate cancer ing on drug development may face significant competition.

30 AndroBioSys pursues a hybrid business model in prostate cancer drug discovery.

32 Bellicum Pharmaceuticals dimerizes dendritic cells for downstream signaling in prostate cancer.

34 Colby Pharmaceutical inhibits key enzymatic and hormonal prostate cancer. signaling pathways in 36 Med Discovery modifies natural ly occurring protease inhibito rs to treat prostate cancer.

Start-Upps Across Health Car e 38 AeonClad Biome

8 SLIC E OF THE INDU STRY Oncology Pharmaceutical Marke t in China: The Year of the Crab

10 BEST OF THE IN VIVO BLOG February 2009

48 SCIE NCE MATT ERS

A Friend-ly New Resource for Biomarker Validation?

50 ON THE MOV E

Who’s Going Where in Biopha rma and Medtech Start-Ups

59 EXEC UTIVE SUMM ARIES

dical coats devices and drugs

at a nanoscale level. to treat hypertension and type 2 diabetes. the China device market.

40 Arete Therapeutics blocks s-EH

42 Bonovo Orthopedics targets

44 Thrasos Therapeutics builds

BMPs without the usual side

46 EMERGINGS IN BRIEF: Bioinde

effects.

x, Eiger BioPharmaceuticals, Impel Neuropharma, Transmed Oncology

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DEALS

Recent Financings of Private Companies and Tech Transfers between Academia and Industry

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AF Ablation

September 2010

AF Ablation (cont. from front page) specifically pulmonary vein [PV] isolation) is now an accepted therapy for paroxysmal AF, it does not work for everyone, and there is still no clear cut way to identify which patients are most likely to benefit. Moreover, the data demonstrating the effectiveness of catheter ablation for persistent and longstanding AF remain less robust, and largescale prospective, randomized, controlled studies comparing ablation to drug therapy in these more complex patients are still needed.

lower than the results achieved with surgical ablation techniques. (See Exhibit 1.) Importantly, there is a high incidence of AF recurrence following catheter ablation, necessitating repeat procedures in 30%-50% of patients and/or continued use of AAD therapy.

A literature review published recently by Calkins et al in the journal Circulation: Arrhythmia and Electrophysiology reported a 57% rate of freedom from AF after a single ablation procedure, which increased to 77% Exhibit 1 with the addition of other ablation procedures and/or AAD therapy. (See Entry Criteria, Outcome, and Complications in Two Worldwide AF Surveys Exhibit 2.) The major complication rate was 4.9%, which is comparable to the Previous Survey Current Survey worldwide survey findings of 4.5%.

Period Investigated 1995–2002 2003–2006 The most common complication was Number of centers enrolled 90 85 PV stenosis, which occurred in 1.6% of patients, followed by cardiac tamponNumber of patients 8745 16,309 ade (0.8% of patients). The authors Number of patients per center 97 192 note that despite a shift toward the use Number of procedures 12,830 20,825 of ablation in more complex patients Number of procedures per patient 1.5 1.3 (older and with persistent AF), there were no differences in outcome over Male (%) 63.8 60.8 time, which they attribute to improveLower and upper age limit for entry (years) 18-82 15-90 ments in ablation technology and/or Proportion of centers (%) performing ablation of increasing physician experience.

Paroxysmal AF

100

100

Persistent AF

53.4

85.9

In addition to the frequent need for repeat procedures and the risk of Long-lasting AF 20 47.1 complications, catheter ablation of Success rate (%, median) AF faces other obstacles as well. It can take up to six hours to perform Free of AADs 52.0 70.0 (depending on the arrhythmia subOverall 75.5 80.0 type), even in experienced hands, Overall complication rate (%) 4.0 4.5 and current reimbursement levels do Iatrogenic flutter (%) 3.9 8.6 not adequately compensate physicians for the time involved in these SOURCE: Cappato R et al. Circulation: Arrythmia and Electrophysiology. 2010;3:32-38 procedures. In fact, electrophysiologists (EPs) can make more money in a day implanting defibrillators (ICDs) and pacemakers, which are reimbursed at Success Rates on the Rise, about the same level as AF ablation, but can be done in a fraction of the time. Not only but Limitations Persist is AF ablation as it is currently performed a Recent reports suggest success rates for AF tedious, underpaid procedure that exposes catheter ablation are in the range of 50% to both patients and physicians to prolonged 80%, depending upon the patient population radiation from fluoroscopy, there also is a treated and the definition of success applied. substantial learning curve for these proBut although outcomes have clearly improved cedures. The strong correlation between over the years, according to updated results operator experience and outcomes is why from a worldwide survey published this the vast majority of AF catheter ablations are year on the methods, efficacy, and safety of still performed at a limited number of very catheter ablation for AF, the numbers are still experienced centers.

38

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AF Ablation

September 2010

Nevertheless, patient demand for AF abla20% compounded annually for AF ablation is on the rise and there is a growing tion catheters, which are projected to grow number of EPs seeking to add AF ablation from about $450 million in sales this year to to their practices, a trend that is expected about $1.2 billion by 2015 (this includes all to accelerate as new, more simplified tools ablation catheters used during the proceenter the marketplace. One of industry’s dure—most physicians use one catheter primary goals at the moment is to develop to ablate AF and another to prophylactitechnology that is not only user-friendly cally ablate for atrial flutter). (See Exhibit but that also provides the quantitative in4.) The addition of diagnostic catheters sight needed to optimize the quality of the and advanced mapping systems to the mix ablation and reduce complications and the adds another $1.5+ billion in sales annuneed for repeat procedures. The ultimate ally, according to St. Jude, which pegs the goal is to offer a procedure that is easier worldwide AF market (including diagnostic and safer to perform, improving efficiency and ablation catheters, advanced mapping for the highly experienced specialists (estimated at 20%-30% of Exhibit 2 all EPs) who currently perform the bulk of AF ablations, while Efficacy Outcomes of Catheter Ablation in Patients With AF hopefully at the same time bringing in less experienced operators 80 and thus expanding AF ablation to a wider population of patients.

70

Strong Growth Ahead

60

One sign of the growing accep50 tance of catheter ablation for AF is the increasing number of pro40 cedures performed worldwide.

According to St. Jude Medical 30 Inc., one of the major competitors in this field, AF ablation cases in 20 the US, Europe, and Japan are expected to total over 160,000 in 10 2010. The firm says AF caseload has been growing at double digit 0 rates in those regions and now Single Procedure Multiple 2 Procedure SingleProcedure Multiple4ProcePatients5Requiring 1 3 accounts for about 50% of all Success Off AAD Success Off AAD Success On or dure Success On Repeat Ablation ablation procedures performed Off Medication or Off Medication annually in the US and Europe.

SOURCE: Calkins H et al. Circulation: Arrhythmia and Electrophysiology. 2009;2:349-361 Assuming growth rates remain fairly stable, the number of procedures in Exhibit 3 the US, Europe, and AF Ablation Procedure Forecast: US, Europe, and Japan, 2009-2015 Japan could grow to

over 380,000 by 2015.

Procedures (000s) (See Exhibit 3.)

In terms of revenues, strong growth in the number of AF ablation cases, along with the introduction of several new catheter products over the next several years, could drive worldwide revenue growth of nearly ©

2009*

2010E*

2011E

2012E

2013E

2014E

2015E

CAGR

US

86

100

116

135

157

182

211

16%

Europe

43

50

58

67

78

90

105

16%

Japan

8.5

13

19

28

40

52

68

41%

Total

137.5

163

193

230

275

324

384

18.7%

*Data from St. Jude Medical Note: Numbers include all AF ablation procedures, both percutaneous (catheter-based) and surgical. In the US, an estimated 65-70% are catheter based in 2010.

SOURCE: Medtech Insight

2010 Windhover Information, an Elsevier company. All rights reserved.

39

AF Ablation

September 2010

systems, surgical ablation devices, recording devices, introducers, and all other tools) at about $2.06 billion in 2010. (See Exhibit 5.)

by 2050. The result, says AHA, would be a “staggering burden” on public health and patients’ quality of life. AF-related hospitalizations are predicted to climb to over 3.3 million by 2025, according to Heart Rhythm Society (HRS) estimates, with a concurrent rise in the number of AF-related strokes (AF accounts for at least 15%-20% of all ischemic strokes). Exactly what it will take to penetrate more of this market remains to be seen, but companies developing new technologies in this arena are all hopeful that they have the answer.

Although $2 billion is a sizeable sum, it barely scratches the surface of the AF market’s total potential, which has been estimated to be as high as $13 billion by some analysts. In fact, the number of AF ablation cases performed today pales in comparison to the potential number of patients who might benefit from the procedure but haven’t received it. The prevalence of AF in the US is estimated at 2.7 million, with 75,000 new cases diagnosed each year, according to the American Heart Association (AHA). And, since the risk of developing AF increases with age, those numbers are expected to grow significantly with the aging populations in both the US and Europe. According to the AHA, applying AF incidence estimates to US population projections suggests that the number of people in the US with AF could grow to over 12 million

Strong Pipelines Set the Stage for Robust Competition Biosense Webster: Leading the Way It’s been more than 18 months since FDA premarket approval (PMA) was granted for Biosense Webster/J&J’s NaviStar ThermoCool irrigated RF Ablation Catheter, (including a bidirectional version, the EZ Steer ThermoCool Navigational Catheter) for the treat-

Exhibit 4

EP Catheter Ablation Market Revenues

Revenues ($M) $1,500 AF Other Arrhythmias $1,000 $1.5B in 2015 20% CAGR 50% Atrial Fibrillation

$500

$0

2002

2004

2006

ACTUAL

2008

2010

2012

2014

PROJECTED

SOURCE: Endosense

40

www.ElsevierBI.com

AF Ablation

September 2010

ment of paroxysmal AF when used with the company’s CARTO Electroanatomic Mapping System. As the first, and still the only, company marketing an ablation catheter approved in the US with a specific indication for AF, J&J has a sizeable lead on its US competitors and a leading share in the European market as well.

man and worldwide franchise chairman, who spoke during the company’s Analyst Day meeting in June. Fischer noted the firm is also developing other irrigated products, including circular catheters and crescent catheters. PMA and CE Mark applications for a circular ablation catheter could occur as early as 2012, Fischer said.

The company doesn’t break out its device sales by product, but Biosense Webster claims the #1 market share worldwide in the EP market. The company anticipates strong growth in this market going forward (13.3% CAGR 2009-2014), led by growth in the AF segment. J&J expects the worldwide EP ablation market (all indications, including AF) to nearly double over the next five years, with sales revenues growing from $1.9 billion in 2009 to $3.5 billion by 2014.

(See Exhibit 6.)

The ThermoCool SMARTTouch was described in a poster abstract presented at this year’s HRS meeting in May as a 7.5-F contact force Exhibit 5

AF Products Worldwide Market Breakdown, 2010 Conventional Recording

Other

6%

Surgical Ablation Devices

EP Ablation Catheters

8%

28% And the firm expects to continue to per8% form well in AF ablation, even in the face of increased competition, as it introduces 9% Introducers new product enhancements over the next several years. Earlier this year, J&J submit22% ted a PMA for its ThermoCool SF Irrigated19% tip Ablation Catheter, a next-generation EP Diagnostic device designed with a more porous tip to Advanced Cathers provide more even cooling and potentially Mapping reduce fluoroscopy times. ThermoCool SF was launched in the European Union in Note: Total revenue in 2010—$2.06 billion; overall market growth: 13% May. In addition, the company plans to subSOURCE: St. Jude Medical mit a PMA for its ThermoCool SMARTTouch Contact Force AF Catheter in 2011 (the Exhibit 6 device is pending EP Ablation’s Growing Share of the Worldwide Cardiovascular Device Market CE Mark approval).

SMARTTouch is differentiated from 2009 Sales, $B 2014E Sales, $B other “contact” 1.1 1.4 .6 1 catheters in that it .9 Cardiac Rhythm 1.5 senses both contact with the tissue and the amount of pressure being used against the tissue, and thus should reduce the risk of perforation and provide better lesion formation, according to Seth Fischer, Biosense Webster/Cordis Corp. group chair©

1.9

Management Cardiology

1.6 3.8 10.6

2.1

12.5

3.5

Cardiac Surgery EP Ablation

2.7

4 8.7

Peripheral

Heart Valves

5.4

9

Neurology Cardiac Assist

Total $32B

Total $41B

Other

SOURCE: Johnson & Johnson

2010 Windhover Information, an Elsevier company. All rights reserved.

41

AF Ablation

September 2010

catheter with a 3.5 mm tip electrode (with magnetic transmitter) connected by a tiny spring to a shaft containing three location sensors. The system measures contact force every 50 milliseconds (ms) and displays it as a continuous waveform. According to the authors of the HRS abstract, bench tests and canine studies have shown that the device has a high degree of accuracy in measuring contact force and the measurements correlate well with lesion size. In the HRS study, the catheter was able to consistently recognize even slight changes in contact force as studied in beating canine and human hearts. An ongoing singlecenter study in Prague is currently evaluating the device in 40 patients.

Biosense Webster also continues its co-development and distribution agreement with Stereotaxis Inc. In late July, the company extended its exclusive distribution rights to Stereotaxis’ Nonirrigated Catheters for the remainder of the year in anticipation of an AF indication for Stereotaxis’ Niobe Magnetic Navigation System, a remote, robotic catheter delivery and control system designed to enable the treatment of more complex AF patients.

J&J also touts ongoing advances in Biosense Webster’s EP mapping and navigation systems. Last October, the firm received FDA

Exhibit 7

approval for the third-generation CARTO 3 3-D Magnetic Navigation System, which expands on previous CARTO devices, offering features such as Advanced Catheter Location technology, Fast Anatomical Mapping, and Connection of Choice, a streamlined workflow feature.

In July of this year, the company announced it had enrolled 10 patients in the CLARITYAF trial, a head-to-head comparison of CARTO 3-guided RF ablation using the NaviStar ThermoCool Catheter versus conventional fluoroscopy-guided RF ablation using Medtronic Ablation Frontiers LLC/Medtronic Inc.’s Pulmonary Vein Ablation Catheter (PVAC) for the treatment of paroxysmal AF. The prospective study, planned at up to 15 sites throughout Europe and Canada, will randomize up to 350 patients in a 2:1 ratio.

The trial will test the hypothesis that the NaviStar ThermoCool, with CARTO 3 guidance, has superior efficacy and safety and is noninferior for efficiency compared with the fluoroscopy-guided PVAC ablation strategy.

Primary outcome measures are freedom from any AF/atrial tachycardia without new AADs at one-year, the incidence of PV stenosis at six months, and total procedural times. Safety and efficiency data is expected to be available by Q2 2011, with one-year efficacy results by Q2 2012.

Highly Acquisitive Market Major shifts driven by acquisitions

Catheter Ablation Market Players and Their Acquisitions in the AF Space Johnson & Johnson • Webster ( ‘94) • Biosense (’97) • Atrionix (’ 00)

St. Jude Medical • Irvine ( ‘04) • ESI ( ’04) • Mediguide (’08)

Medtronic •CryoCath (’08) •Ablation Frontiers ( ’09) Other Companies

Boston Scientific • EPTech (’95) • Cardiac Pathways ( ’02) • Cryocor (’08)

SOURCE: Endosense

42

www.ElsevierBI.com

AF Ablation

September 2010

Medtronic and St. Jude Ratchet Up the Competition Although J&J has first-to-market advantage in the AF catheter ablation space in the US, both Medtronic and St. Jude are rapidly closing in, and are expected to have FDAapproved AF ablation catheters on the market within the next few years.

Medtronic significantly bolstered its position in the AF market when it acquired CryoCath Technologies Inc., manufacturer of the Arctic Front Cryoablation Catheter System, for about $325 million in late 2008, followed by Ablation Frontiers Inc., which it purchased for $225 million plus milestones in early 2009. (See Exhibit 7.) The deals not only pushed Medtronic to the front of the line in catheter-based AF ablation, but they also reinvigorated the space and helped to validate the market’s importance and potential.

With the acquisition of CryoCath’s Arctic Front, Medtronic is now the next likely competitor to enter the US market with an FDA-approved AF ablation catheter. The company also got a jump start in Europe, since both the Arctic Front and the Ablation Frontiers devices are marketed in Europe (Arctic Front since 2005 and Ablation Frontiers devices since 2007). Although Medtronic does not break out individual product sales, company executives said during the firm’s Q1 fiscal 2011 (ended July 30) earnings call in August that the devices continue to perform well in Europe, with its global AF Solutions business contributing strong, double-digit growth for the quarter.

Medtronic completed its Arctic Front PMA submission in March of this year, and company executives said during the earnings call that US approval of the device could occur as early as the second half of this fiscal year (since Medtronic’s fiscal year runs from May through April, that would be sometime between November 2010 and April 2011).

The PMA submission was based on data from the pivotal STOP AF trial, a 245-patient study conducted at 26 centers in the US and Canada that randomized paroxysmal AF patients to receive either cryoablation with the Arctic Front or AAD therapy. According to STOP AF data released this year at the American College of Cardiology (ACC) and HRS meetings, the trial demonstrated su©

periority of cryoablation over drug therapy, with 69.9% of Arctic Front patients free of AF at one year, compared with 7.3% of those in the drug therapy control group.

Among those successfully ablated with the Arctic Front, 60% required only a single ablation and 58% remained free of AADs at one year. However, there were some serious adverse events related to the procedure, including phrenic nerve injury in 29 patients, resulting in persistent nerve paralysis in four, and PV stenosis in five patients. At ACC, principal trial investigator Douglas Packer, MD, of the department of cardiovascular diseases at the Mayo Clinic, Rochester, MN, noted that there is a learning curve associated with the Arctic Front System, which is different from the RF devices physicians are more used to working with. Unlike RF catheters, most of which require the catheter to be moved to make numerous point-bypoint lesions in order to isolate the pulmonary veins, the Arctic Front is a balloon catheter designed to encircle the PV orifice and isolate the vein all at once, in one or two freezes, without having to move the catheter to different locations.

Medtronic completed its Arctic Front PMA submission in March and believes US approval could occur as early as the second half of this fiscal year.

While the Arctic Front device has the potential to greatly shorten and simplify a PV isolation procedure, there is a trick to correctly positioning the device in the orifice of the vein and being able to assess when the device is positioned properly, as Packer noted during a press conference held at ACC. Improper positioning could increase the risk of adverse events, although Packer said that concern should lessen as physicians gain more experience with the device. Moreover, Arctic Front procedure times, which averaged six hours during the STOP AF study, should also be reduced with experience, he said.

Long-term (12-month) results from STOP AF, presented at HRS, demonstrated significant improvements in several measures of patient quality of life. But once again, the device’s “steep” learning curve was noted

by Jeremy Ruskin, MD, chair of the STOP AF trial steering committee and director of the cardiac arrhythmia service at Massachusetts General Hospital, who said that success rates rose dramatically as operator experience with the system grew. Also of concern to some was the relatively high rate of phrenic nerve palsy (11.2%) in STOP

2010 Windhover Information, an Elsevier company. All rights reserved.

43

AF Ablation

AF cryoablation patients, although the vast majority of those cases had resolved by 12-month follow-up.

St. Jude is currently in limited release with several next-generation devices in Europe, including the EnSite Contact Platform and the Therapy Cool Flex Ablation Catheter, both of which were CE marked in June.

The Arctic Front is targeted only at PV isolation, currently the cornerstone catheter ablation technique for patients with paroxysmal AF. However, Medtronic hopes to eventually offer catheter-based tools for the treatment of persistent and permanent AF as well, via its Ablation Frontiers line of anatomically designed RF ablation catheters, each of which is targeted to a specific location in the heart. These include the PVAC, an over-the-wire RF catheter with a helical design that can map, pace, and selectively ablate using any or all of 10 electrodes and is capable of isolating the PVs in about 30 minutes; and the Multi-Array Septal Catheter (MASC) and Multi-Array Ablation Catheter (MAAC), both designed for mapping and ablating complex fractionated atrial electrograms (CFAE) in more complex AF cases, including patients with persistent/permanent AF. All three devices were evaluated in the pivotal TTOP-AF trial, which investigated the tailored treatment of permanent AF in 209 patients enrolled at 24 centers. Patients were randomized 3:1 to receive either ablation therapy or AADs. Patients in the drug therapy group could cross into the ablation group if they did not respond to drug therapy. TTOP-AF completed enrollment in May 2009 and the results of this trial are expected to be released later this year, although it is not yet known when and where that will occur. The company is hoping for FDA approval of the Ablation Frontiers product line in calendar year 2011.

On Medtronic’s heels is St. Jude, which is pursuing an FDA-approved AF indication for a cooled RF ablation catheter. In February of this year, St. Jude was granted investigational device exemption (IDE) approval to begin enrollment in its pivotal IRASE AF study, a 324-patient, multicenter, randomized, single-blind trial evaluating the firm’s Cool Path Duo 12-Port Open-Irrigated RF Ablation Catheter for the treatment of paroxysmal AF. The trial, which is now enrolling patients by invitation only, is designed as a head-to-head, 1:1 randomized comparison of the Cool Path Duo Catheter vs J&J’s NaviStar ThermoCool and is

44

September 2010

expected to be completed sometime in 2013.

The efficacy end points include targeted PV isolation and freedom from symptomatic AF out to 12 months. The Cool Path Duo catheter is CE marked in Europe and was recently approved for use in Japan.

St. Jude, which sells a number of products to the EP market, including ablation and diagnostic catheters, surgical ablation devices, and the EnSite family of advanced EP mapping systems, has experienced strong growth in its AF business since 2005 and estimates its current share of the total $2 billion worldwide AF market at about 34%. In its latest quarterly results, St. Jude reported AF product sales of $176 million for the second quarter, a 13% increase yearover-year. International sales accounted for $100 million of that total. The company is projecting third-quarter AF sales of $155-$170 million and expects AF sales for the full year 2010 will be in the range of $680-$710 million, which is slightly less than the firm’s previous guidance due to the stronger dollar, company officials said during the firm’s recent earnings call.

In addition to pursuing FDA approval for its AF ablation catheter, St. Jude is expanding its AF product line outside the US (OUS) and is currently in limited release with several next-generation devices in Europe, including the EnSite Contact Platform and the Therapy Cool Flex Ablation Catheter, both of which were CE marked in June.

St. Jude is generating additional clinical evidence with these two devices and when that process is complete plans to initiate full market launches in Europe.

Both devices offer unique features to physicians performing AF ablation. The Therapy Cool Flex ablation catheter is the first to feature a fully irrigated and flexible tip, which the firm says enables the device to conform to the cardiac anatomy while four ports at the distal catheter tip permit fluid to be infused around the entire tip of the electrode to improve cooling. The EnSite Contact technology delivers a quantitative, real-time measurement of the electrical contact between the catheter tip and the tissue during the ablation procedure; the aim is to improve catheter control and procedure efficiency and potentially reduce the need for lesion touch-ups. www.ElsevierBI.com

AF Ablation

September 2010

Like many of its competitors, St. Jude has also entered into outside collaborations in the AF arena. The latest, announced at HRS, is a co-marketing agreement between St. Jude and start-up iRhythm Technologies Inc., which is developing a simplified device for monitoring and detecting heart rhythm abnormalities—including AF. The technology combines the best attributes of Holter monitors and event monitors into a patientfriendly wireless, adhesive patch. The firm’s Zio patch is FDA cleared for up to 14 days of continuous recording, and thus is more likely to detect intermittent, asymptomatic episodes of arrhythmia than a Holter monitor. iRhythm recently completed a $10 million Series B funding round, led by St. Jude.

(See “St. Jude Joins With iRhythm In Wireless Cardiac Monitoring,” START-UP, June 2010.)

St. Jude also recently announced a $60 million equity investment in CardioMEMS Inc., which is developing an implantable monitoring technology for heart failure. (See “Is There a Market for Wireless Cardiac Monitoring Implants?,” START-UP, January 2010.)

Other Companies in the Wings Other large competitors actively involved in this market, but much further from US approval, include Boston Scientific Corp. and CR Bard Inc. Boston Scientific acquired CryoCor, another cryoablation company, for $17.6 million in 2008 and reportedly planned to integrate that technology into a cryoablation system it was developing in house.

However, at the moment the firm appears to be primarily focused on RF ablation with its Blazer and Chilli line of cooled RF ablation catheters. According to Minda Lehto, chief content officer of cvPipeline, an online service that tracks the competitive landscape in cardiovascular devices in development, Boston Scientific announced in July of this year that it expects to begin US AF clinical trials with its Blazer Open-Irrigated Ablation Catheter in late 2010. Moreover, two small AF ablation studies presented in abstract form at this year’s HRS meeting suggest that Boston Scientific’s Chilli II Catheter—a 4-mm tip internally cooled ablation catheter—can provide an effective alternative to open-irrigated systems such as J&J’s NaviStar ThermoCool without the downside of fluid overload.

Meanwhile, CR Bard has faced some recent challenges in this space. Late last year, Bard suspended its MAGELLAN US pivotal AF ©

ablation trial in order to redesign its HD Mesh Ablation System to make it a “best in class” device. The decision was made after an assessment of clinical performance with the first-generation device, which led the company to refine its “understanding” of customer needs. The changes include: 1) modifications to the catheter mesh that provide enhanced anatomical positioning and conformability, improved delivery flexibility, and over-the-wire capability—which the firm says will “meaningfully improve placement while enhancing tissue contact” important for long-term efficacy; 2) changes to the RF power delivery algorithm (which company execs called the most significant change in the second-generation device) to improve the creation of transmural lesions (quickly, safely and repeatably is the goal, they say); and 3) improvements to the user interface to provide real-time physician feedback and greater connectivity.

Boston Scientific expects to begin US AF clinical trials with its Blazer OpenIrrigated Ablation Catheter in late 2010.

In April, during the company’s Q1 results call, Bard management said the firm was in discussions with the FDA regarding the initiation of a US trial for the second-generation device and is on track to start that trial in early 2011 (US market approval is anticipated in 2015). Bard had hoped to introduce the second-generation system in Europe by the end of this year, but management said during the call that European introduction has been delayed until early to mid-2011 due to recent regulatory changes. Specifically, European regulatory bodies have classified the device’s heparin coating as a medicinal agent, which will require a drug-like review, the firm says. Meanwhile, the company continues to sell the first-generation system in Europe.

Emerging Competitors While offerings from large competitors are set to expand in the coming years, the AF catheter ablation market has proven to be a fairly tough space for smaller companies and start-ups to crack, largely due to the expense and difficulty of developing devices for a complex and continuously evolving procedure. Still, the market has enormous potential, given the aging population and the sheer numbers of people who might benefit from AF ablation (and the limited market penetration achieved to date). And, in recent years, as evidence has mounted that PV isolation is an effective treatment

2010 Windhover Information, an Elsevier company. All rights reserved.

45

AF Ablation

option for paroxysmal AF patients, physicians, and industry alike have begun to take notice. As a result, the space has yielded outstanding exits for a few lucky companies—of which Medtronic’s CryoCath and Ablation Frontiers are the best recent examples.

the fundamentals of the market continue to drive strong interest among investors, who are still keen to support companies with innovative AF technologies, despite today’s more risk-averse investment climate.

Importantly, the fundamentals of the market continue to drive strong interest among investors, who are still keen to support companies with innovative AF technologies, despite today’s more risk-averse investment climate.

Below are snapshots of several interesting emerging competitors in this field, including a few who have managed to close on substantial funding rounds in the past year.

Endosense Founded in Geneva, Switzerland, in 2003, Endosense SA is beginning to see some payoff from its work on a force-sensing RF ablation catheter, gaining CE Mark for its TactiCath device last fall. The company has managed to thrive despite losing its principal shareholder in 2008 when London-based 3i pulled out of venture investing (Endosense is now backed by Paris-based Edmond de Rothschild Investment Partners, which purchased 3i’s shares as part of a $36 million Series B round).

Endosense has spent the last seven years gathering data on its system and as a result, has established itself as the intellectual leader in force-sensing technology for AF ablation.

Its TactiCath device provides physicians a real-time, objective measurement of contact force independent of the position of the catheter during ablation. The device, which was granted CE Mark for the treatment of supraventricular tachycardia (SVT) and AF in October 2009, is an open-irrigated RF catheter that incorporates the company’s Touch+ forcesensing technology, consisting of fiberoptic sensors at the tip of the catheter, allowing monitoring of the force in multiple directions.

The device displays red, yellow, and green lights to indicate the level of force being applied, and it also provides feedback on the angle of the force applied. The catheter is used in conjunction with the TactiSys System, which consists of a graphical user interface, base station, and splitter. Despite the fact that other, larger companies are now developing force-sensing technology for their ablation catheters, Endosense believes it has both an intellectual and first-to-market advantage.

46

September 2010

And the company is taking a slightly different approach to the market than many of its larger competitors, focusing on providing advanced tools for experienced, high-volume AF specialists who perform the majority of AF ablations today, rather than trying to bring other, less experienced EPs into the fold. The latter strategy makes more sense for companies like Medtronic, which has an established presence in the ICD and pacemaker markets and would benefit more from simplified technologies designed to appeal to physicians just beginning to branch into AF ablation. Endosense is not aiming to compete with Medtronic in that effort, CEO Eric Le Royer told IN VIVO recently, but believes its technology is complementary to what Medtronic and other companies are doing. (See “Endosense: Facing Technology and Financing Challenges in AF,” IN VIVO, March 2010.)

Endosense’s force sensing technology is most valuable to experienced EPs who perform more complicated point-to-point ablations, Le Royer says. And in that regard, the company believes it is filling an important niche, providing an enabling technology that goes beyond the one-third of patients with paroxysmal AF. In fact, company executives assert that the chronic AF population represents an even greater opportunity because it is even less penetrated and it requires a great deal of skill to treat. In time, as experience with AF ablation widens, newer operators also will benefit from the technology that Endosense can provide, Le Royer asserts. But in the meantime, any new device that expands the number of EPs performing ablation and the number of patients treated is good news for the industry as a whole, he says.

In April 2010, Endosense launched a second-generation version of its TactiCath device, now 7-F sheath compatible (vs 8.5-F) and with a smaller fiberoptic sensor in the catheter tip, which houses three (vs four) optic fibers. Contact force is calculated every 100 ms from the strain on the three fibers with a sensitivity of less than one gram. Reportedly, the device is more flexible than the first-generation device, owing to the reduction in size. Upgrades were also made to the TactiSys, which now displays the force-time integral (the calculation of force over time) and automatically generates procedure summary reports. www.ElsevierBI.com

AF Ablation

September 2010

CE Mark for the system was granted based on selected data from the TOCCATA (Touch+ for Catheter Ablation) trial, a nonrandomized, multicenter European study that evaluated the safety and performance of the TactiCath for the treatment of SVT and paroxysmal AF. Of note, operators in the study were required to perform the procedure without modifying their practice based on real-time contact force measurements, allowing investigators to determine the relationship between contact force applied and chronic success.

Among the 34 AF patients enrolled, success (defined as the absence of AF, atypical flutter, or atrial tachycardia with no reintervention) was achieved in 71% at three months.

Longer-term results (six to 12 months) were presented at HRS this year and showed an overall success rate (combining symptomatic and asymptomatic AF episodes) of 51% at six months and 44% at 12 months. When considering only symptomatic episodes, the 12-month success rate was 61%.

Importantly, the contact-force applied during ablation showed very high inter- and intra-operator variability. And, in a retrospective analysis, investigators noted a statistically significant relationship between contact force applied and chronic success at 12 months, in which arrhythmia recurrence was associated with low contact forces (p < 0.05). Similar findings supporting the correlation between low contact forces and recurrence rates were reported in abstract form at Cardiostim 2010, held this past June in Nice, France.

The results of TOCCATA and subsequent studies support the hypothesis that objectively tailoring ablative technique based on real-time contact-force measurements could improve outcomes—a hypothesis to be explored in two single-arm, multicenter, prospective pilot studies within the EFFICAS series of trials. In the EFFICAS I study, which began patient enrollment in May 2010, operators will use the TactiCath to perform ablation but without access to the contact force measurements; the primary end point of the study is the incidence of reconduction areas in the PV isolation lines relative to the contact forces applied. The EFFICAS II study, in which operators will have access to the device’s contact-force control features, will evaluate the reduction

©

in PV isolation reconduction compared with rates reported in EFFICAS I. In June, Endosense announced enrollment of the first patients in its international postmarket ProForce registry, which will evaluate the use and impact of the TactiCath in as many as 2,000 patients. In addition, the company plans to enroll the first patients by the end of this year in its randomized, pivotal TOCCASTAR (TactiCath Contact Force Ablation Catheter Study for Atrial Fibrillation) trial, which will compare TactiCath versus J&J’s ThermoCool for the treatment of paroxysmal AF. The noninferiority trial will compare the efficacy (freedom from atrial tachycardia/AF at 12 months) and safety (procedure-related events) of the two ablation catheters and will be used to support US FDA approval. Secondary end points include the number of gaps after encircling the lesions, the total duration of RF energy required, and the total time required to successfully isolate the PVs. Assuming all goes well, the company anticipates a US PMA filing by the second half of 2012.

Endosense plans to enroll the first patients by the end of this year in its randomized, pivotal TOCCASTAR trial, which will compare TactiCath versus J&J’s ThermoCool.

Endosense, which closed its $36 million series B financing in August 2009, signed an exclusive international distribution agreement with Biotronik SE & Co. KG in January 2010, granting Biotronik rights to market TactiCath in Europe, Latin America, Canada, Australia, and Africa. The device was commercially launched by Biotronik in those markets in May of this year. Given Biotronik’s market reach in Europe and Latin America in the ICD and pacemaker area, and Endosense’s confidence that TactiCath will be a nice complement to Biotronik’s existing AF technology portfolio (acquired from VascoMed GMBH in 2008), the agreement should nicely position Endosense in these markets.

Voyage Medical Combining real-time lesion assessment with direct visualization of the endocardial anatomy, Voyage Medical Inc. continues to develop its IRIS Catheter System, which the company says will enable the operator to visualize targeted endocardial sites, confirm tissue contact, and assess lesion formation in real-time. The system employs a multilumen, steerable, fiberscopic deployment catheter with an attached imaging hood that can be expanded into a number of shapes and configurations.

2010 Windhover Information, an Elsevier company. All rights reserved.

47

AF Ablation

Since its founding in January 2006, Voyage Medical has raised more than $45 million, including $20.6 million of a planned $21.1 million Series C round of equity financing, which closed in June 2010 and was led by new investor, Abbott Laboratories Inc.

The deployment catheter is advanced for placement against or adjacent to the tissue to be imaged. Saline then is infused through the distal cone-shaped hood to displace blood at the tissue interface, creating a clear region to target the endocardial surface, which is visualized by direct high-resolution imaging captured by a camera and light source connected to the fiberscope within the deployment catheter.

The current configuration of the system for AF ablation, as described in meeting abstracts, employs an RF ablation probe that is passed through the hood under direct visualization to the target ablative site. The infusion of saline through the catheter creates a “saline bridge,” which acts as a conductor for the RF energy. A handful of small preclinical studies presented at HRS this year demonstrated the utility of the IRIS Catheter, both in its visualization and therapeutic applications. Warren Jackman, MD, and colleagues at the University of Oklahoma Health Sciences Center presented findings demonstrating that the saline bridge created by the catheter can act as a “virtual RF ablation electrode” to create effective RF lesions without the need for direct tissue contact and with a low risk of thrombus (monitored visually).

Similarly, a series of studies by Australian researchers demonstrated the IRIS saline bridge created lesions that were consistently larger and used lower RF power compared to lesions created by the ThermoCool Catheter, which they state, suggests that the saline bridge is a more efficient way of RF delivery. Using temperature probes, the researchers found that lesions created by the IRIS System had more even surface cooling than ThermoCool lesions with no significant gradient in temperature across the surface, which could translate into a reduction in complications secondary to excessive energy delivery. A third study by the same group of researchers also found that the full-color direct endocardial visualization feature of the system yielded significantly greater accuracy in identifying lesion gaps compared with fluoroscopy.

According to cvPipeline, Voyage has completed an OUS first-in-man study with the device in patients with atrial flutter and is now performing further development work—including improvements to the catheter mechanism and the 3D visualization system—based on the study results. The firm’s primary target is ablation of AF and other complex arrhythmias, but, according to the company, the technology could also be applied to atrial septal defects, transcatheter heart valve replacement, and

48

September 2010

ICD lead placement and management. In January, the company announced a six-year supply agreement with Medigus Ltd. of Omer, Israel, under which Medigus will supply its new miniature, single-use cameras for integration into Voyage’s IRIS Tissue Ablation Catheter.

The Medigus camera technology integrates miniature electronics and objective lenses into a device with an outer diameter of only 1.2 mm, and is the smallest video camera in the world, according to the companies.

Since its founding in January 2006, Voyage has raised more than $45 million, including $20.6 million of a planned $21.1 million Series C round of equity financing, which closed in June 2010 and was led by new investor, Abbott Laboratories Inc. Other large backers include Three Arch Partners, Kleiner Perkins Caufield & Byers, and RWI Ventures.

CardioFocus CardioFocus Inc. believes it can address many of the shortcomings associated with current AF ablation technology with its second-generation Endoscopic Ablation System–Adaptive Contact (EAS-AC), a visually-guided laser balloon system that offers point-by-point ablative capability. Unlike other AF ablation devices, which may require the use of multiple catheters of different sizes to complete an ablation procedure, the EAS-AC utilizes an adjustable compliant balloon that can be inflated to over 30 mm in diameter, enabling access to a wide range of PV morphologies with the use of a single catheter. The result is a single device that can treat all varieties of vein shapes and sizes and that provides something “very unique in the field,” according to CardioFocus president and CEO Stephen Sagon, who spoke recently with Medtech Insight.

After advancing the device into the left atrium via a 12-F internal diameter deflectable transseptal sheath introducer, the EAS-AC balloon is maneuvered by fluoroscopy or intracardiac echocardiography to the PV ostium where it is inflated with fluid that is continually circulated within the catheter for cooling. The central catheter shaft contains a 500-micron diameter fiber-optic endoscope with a wide field of view, allowing direct visualization of the face of the balloon and surrounding tissue, as well as real-time continuous feedback and postablation lesion assessment. A second fiber, which can be moved and rotated, generates a 30° arc (or spot) of light (decreased from a 90° to 120° ablative arc with the first-generation device) and projwww.ElsevierBI.com

AF Ablation

September 2010

ects an aiming beam to identify the exact location for ablation. Once a site is selected (based on the aiming beam), a 980-nm laser diode source projected via the same fiber creates the ablation lesions, with each individual lesion covering the 30° arc. To ensure the creation of a continuous lesion set, multiple lesions are delivered in an overlapping manner.

According to Sagon, a real-time, full-color view of the anatomy during the ablation procedure “is a huge benefit to not just enabling one to perform the procedure, but being able to perform the procedure well.” Early clinical studies evaluating the new generation device support that assertion, suggesting that the use of EAS-AC results in rates of PV isolation that are comparable to or better than those achieved with other ablation techniques.

A paper published in May 2010 in Circulation: Arrhythmia and Electrophysiology presented preclinical and clinical results demonstrating that visual guidance provided by the EAS-AC could predict reliable and persistent PV isolation. The single-center clinical feasibility phase of the study, headed by Vivek Y. Reddy, MD, director of electrophysiology laboratories at Mount Sinai Hospital (New York, NY), evaluated the EAS-AC in 27 patients (101 PVs) with symptomatic, drug-refractory, paroxysmal AF. During the procedure, 100% of the PVs were successfully isolated after 1.3 attempts per vein, with 84% isolated after the initial placement of lesions.

The mean fluoroscopy time per patient was 17.3 minutes, mean ablation time was 110.9 minutes, and total laser energy delivery time was 65.9 minutes. There were no reports of major adverse events or complications, including phrenic nerve palsy, significant PV stenosis, or cardiac tamponade.

Of the 23 patients available for three-month follow-up, four reported recurrent AF symptoms and two in the follow-up cohort remained on AADs. (Monitoring for recurrence was recorded and transmitted upon the occurrence of any symptomatic event, or, in the case no symptomatic events were detected, as least weekly by event monitor). Remapping was performed at three months in 18 patients, regardless of whether patients were experiencing symptoms, demonstrating sustained PV isolation in 90% of PVs treated. The use of remapping postprocedure, while not a standard test in AF clinical studies, “gave us some ©

very interesting information about the persistence of the effect we were trying to create,” according to Sagon, who said there is some evidence from remapping studies going on in Germany that the traditional RF ablation technique is “quite a bit less effective over time.”

The investigators acknowledge that the study’s short follow-up period may not account for the development of late onset reconnections. However, a recent feasibility trial conducted in Germany and published in the same journal suggests that the results can be sustained beyond three months. In the German study, 80% of patients treated with a single EASAC ablation remained free of AF (off of AADs) after a median follow-up of 168 days, and three of the six patients with AF recurrences were reportedly wellcontrolled with previously ineffective AADs. One patient underwent a repeat RF ablation.

In their discussion, the study investigators note the potential advantages of the EAS-AC compared with other balloon technologies, namely that EAS-AC offers greater flexibility with respect to ablation line design as well as the ability to adjust catheter expansion to account for individual PV size—a feature they say allows “for treatment of virtually any PV with a single device.” In addition, the use of the endoscope for direct visualization may preclude the need for additional imaging technology. Importantly, the use of laser light as an energy source offers the advantage of more uniform and efficient tissue heating compared with RF, cryo, or high-intensity focused ultrasound balloons, and the ability of EAS-AC to titrate energy could decrease injury to adjacent structures.

This month in

Features • Opening A Door To Biosimilars In The US • Covidien - Back on Top: An Interview With Richard Meelia • Ironwood Pharmaceuticals: Independent For The Long Haul • The How And When Of Applying Sequencing To Clinical Diagnostics • Welsh Carson Sits in K2M Driver’s Seat • Increasing The Odds of New Pharma Product Access: Engage Payors During Product Development • The Changing Face Of Medical Technology Innovation Around The Industry • Genzyme, J&J Troubles Highlight The Importance Of Quality Systems • Medtronic Looks to Strengthen Spine With Osteotech Purchase • Lilly To Cease Development Of Alzheimer’s Drug: A Blow To The Amyloid Hypothesis?

September 2010

Vol. 28, No. 8

elsevier business Intelligence www.elsevierbI.com

Medical Devices

Covidien - Back on Top: An Interview With Richard Meelia

by DaviD Cassak

Biopharmaceutical

Biopharmaceuticals

According to Sagon, the EAS-AC has been used by more than thirty operators in 178 patients worldwide since early 2009. Six- to 12-month follow-up is available on approximately one-third of those patients and demonstrates a single-procedure success rate of about 70% off of AADs. He attributes this success rate, which is 20% to 30% higher than what has been achieved to date with RF technologies, to two unique characteris-

2010 Windhover Information, an Elsevier company. All rights reserved.

Opening A Door To Biosimilars In The US

Strategy

als: Ironwood Pharmaceutic Independent For The Long Haul

by Christopher Morrison

Medical Devices

The Changing Face Of Medical Technology Innovation

by Christopher L. WasDen anD DougLas J. MoWen

by jessica merrill

In Vitro Diagnostics

The How And When Of Applying Sequencing To Clinical Diagnostics

by Mark L. ratner

Seat Sits In K2M’s Driver’s Access • Welsh Carson Of New Pharma Product Increasing The Odds

For a free copy call 1-800-332-2181 +1 (908) 547-2159 (outside US)

www.ElsevierBI.com 4

september 2010 | START-UP

|49 www.elsevierbI.com

AF Ablation

tics of the technology: the fact that laser light energy offers more predictable energy transfer than RF without the need for precise tissue contact, and the ability of operators to see what they are doing during the procedure.

CardioFocus expects to file for IDE approval to conduct a pivotal US trial before the end of this year and hopes to begin that trial in early 2011.

The EAS-AC received the CE mark in late June 2009 and the company expects to initiate a staged European market launch by the fourth quarter of this year, likely beginning in Germany and surrounding countries. The second-generation device entered US clinical trials in September 2009 with the company’s Phase II feasibility study, which will enroll up to 100 patients with paroxysmal AF at 10 study sites. CardioFocus expects to file for IDE approval to conduct a pivotal US trial before the end of this year and hopes to begin that trial in early 2011. According to Sagon, the pivotal trial will be similar in design and scale to St. Jude Medical’s IRASE trial. The system is also under evaluation outside the US in a 100-patient, nonrandomized Phase III German study, which began in August 2009, as well as the 100-patient En-GARDE (EndoscopicallyGuided Ablation vs Radiofrequency Ablation Guided by Electroanatomical Mapping to Achieve Permanent Pulmonary Vein Isolation) study, a postmarket randomized controlled trial comparing the safety and efficacy of PV isolation using the EAS-AC versus RF ablation guided by electroanatomic mapping.

In June 2009, CardioFocus raised $8.5 million in a debt offering, which was supplemented in April 2010 by another $5 million offering of equity, debt, options, and warrants.

Asked about the company’s future, Sagon commented that “electrophysiology is so specialized and well identified that it’s conceivable a small, single-product company with a good product can serve the market.

But given the broad interest in new therapies for treating atrial fibrillation and the way in which [such companies] are funded, being incorporated into a larger company is also a likely outcome.”

Advanced Cardiac Therapeutics A limitation to existing open-irrigated RF ablation catheters is that the saline used to cool the catheter tip interferes with the ability of the thermocouple to record real-time tip temperatures, potentially leading to over- or underheating. Start-up Advanced Cardiac Therapeutics Inc. (ACT) hopes to overcome this obstacle with its Tempasure 7-F irrigated RF catheter,

50

September 2010

which incorporates the company’s unique Veritas Technology, a catheter-tip chip-based microwave radiometry system to provide realtime, in-tissue temperature sensing. ACT’s microwave radiometry technology does not rely on the catheter tip temperature; rather, it measures the microwaves emitted by the RF ablation heat from a distance of 3 mm inside the cardiac tissue. An external module displays the results during the procedure as real-time temperature readings at the site of the ablation.

According to CEO Peter van der Sluis, knowing the temperature inside the cardiac tissue allows operators “to increase or decrease RF power to reach therapeutic in-tissue temperature levels and create an appropriate lesion.”

With the exception of the radiometer chip-set at the distal tip of the catheter, the Tempasure catheter is identical to other currently available irrigated catheter systems.

The catheter system, according to van der Sluis, “is designed to reduce overall procedure time and increase therapeutic effectiveness.”

The company is preparing to begin its firstin-human clinical trial in the fourth quarter of this year. The trial will be conducted at seven sites in Europe and will enroll 30 patients with atrial flutter. ACT expects to receive European CE Mark approval for the Tempasure system early in 2011.

In December 2009, ACT closed on a $5 million Series B financing, led by NBGI Ventures of London. The company is seeking strategic partnerships, and in March 2009 signed an agreement granting Hansen Medical Inc. exclusive rights to certain ACT intellectual property for robotic applications. In addition, ACT is actively pursuing additional, as yet undisclosed, applications for its microwave radiometry technology within the cardiac arrhythmia space, van der Sluis told Medtech Insight recently.

Apama Medical Founded in 2009 as the first spin-out from Silicon Valley device incubator Shifamed LLC, Apama Medical Inc. is developing a next-generation AF ablation technology designed to improve performance, cost, and reliability. According to Amr Salaheih, Apama’s founder and CEO, the company’s technology is the first in the field that will truly take cost and efficiency into account www.ElsevierBI.com

AF Ablation

September 2010

DEALMAKING

many more proteins (and therefore more pills) in

measles, mumps, and rubella; hpV; and influenza. earlier this year, Merck enhanced its marketed Apamaadult is targeting both paroxysmal andMasvaccines portfolio through a deal with sachusetts Biologic Laboratories that got the persistent AF with the device, which Big pharma uS rights to a tetanus and diphtheria Salaheih says will be versatile enough to toxoids adsorbed (Td) vaccine.

deliver either one-shot PV isolation or more myLan inC. complex single-point ablation procedures.

UDL Laboratories Inc. And, Salaheih believes the device’s simple bioniCHe pHarma HoLdings Ltd. intuitive approach will appeal to both EPs To gain entry into the uS generics injectables experienced inMylan AF ablation and thoseinjust business, Inc. will pay $550mm cash to privately held Bioniche Pharma Holdstartingacquire out. The company is currently ings Ltd., a global manufacturer of injectable conducting animal studies while it finaldrugs for hospitals and institutions. (July) izes the device’s design and hopes to begin Bioniche has been majority-owned by private a first-in-human within healthcare the next partners year. equity grouptrial RoundTable Headquartered CA, Apama since 2006 in andSaratoga, had net revenues of $130mm for the 12 million months ending May 31, 2010. has raised $1.2 to date from angelThe company markets over 30 products worldwide, investors and is planning to initiate Series though the bulk of its revenues come afrom the A venture round by the end of 28 it funding sells in the uS, covering various therapeutic including pain, firm orthopedics, and 2010 orareas early 2011. The is alsocancer, seeking urology. There are also 15 ANdAs awaiting FdA corporate partnerships. approval, and 25 more in clinical trials. Following the close of the acquisition, Bioniche will be

combined with Mylan’s UDL Laboratories Inc. nContact Surgical

division to form Mylan Institutional. Similar to Teaming surgeons and EPs, the nContact Bioniche’s current business, new unit will focus providing generic to hospitals and SurgicalonInc. is taking a injectables slightly different institutions through GpOs, wholesalers, surgical tack with its convergent procedure, which and radiology services, and home infusion chancombines high of members epicardial nels.the Mylan hassuccess offered rates to retain of management teamperformed to work with the (surfaceBioniche’s of the heart) ablation company. Investment Banks/Advisors: during combined closed-chest surgery, with the bencredit Suisse Group (Mylan Inc.); deutsche Bank efits of AG the(Bioniche endocardial via conpharmaapproach holdings Ltd.)

ventional catheter ablation. The result is a

THIS MONTH IN

sanofi-aventis

order for treatments to be effective.

Altus Pharfor AF ablation procedures.

Salaheih, who single-setting targegen inC. procedure typically maceuticals originally discovered spoke recently with Medtech Insight,liprotamase declined Sanofi-Aventis performed in lab using hasthe paidEP $75mm up frontthe to buy and developed it under a 2001 alliance with privately held TargeGen Inc. (focusing mainly on to provide specific details about the device, company’s endoscopic epicardial the Cystic Fibrosis Foundation Therapeutics cancer treatments). up to an additional $485mm (cFFT).

2009, the biotech halted work on which is still In inearly early-stage development. ablation device. in earn-outs are also possible. (June) the phase III compound--then known as TrizytekHowever, he said the company is building TargeGen was founded in 2001 and has since -to focus on other projects. It then handed full on whatrights has over beentolearned aboutthereafter, AF ablation nContact was granted markrounds. raised over $110mm throughCE venture cFFT. Shortly cFFT company is an exclusive worldwide over thegranted yearsAlnara to develop a much faster,license. sim- The approval indeveloping Januarysmall-molecule 2007 for usekinase for leukemia, lymphoma and other TheThe purchase of Alnara gives Lilly the opportunity pler tool. result is a more versatile device inhibitors of its Numeris Coagulation System blood cancers, and has also researched their to make an entrance into the field of enzyme that will offer a new wayThe of achieving RF with VisiTrax forofthe coagulation use in the treatment certain blood disorders. replacement therapy. acquisition no doubt Itsoflead candidate, to for which earn-outs are ablationcame using a single, catheter as good news integrated for Alnara’s investors who cardiac tissue thethetreatment tied, is TG101348, an oral janus kinase 2 (JAK-2) have put a total of just $55mm into the company’s capable of mapping, ablating, and monitorof AF and atrial flutter; the system inhibitor that has completed phase I trials for myfirst two rounds, most recently its $35mm Series B ing the inprocedure—without the needJpfor can be useddiseases in open-chest, con- brosis eloproliferative including myelofi January. Investment Banks/Advisors: Morgan and polycythemia vera (pV).

Research behind the timechase consuming andpharmaceuticals expensive catheter comitant surgical procedures as the & co. (Alnara Inc.) candidate originated at Harvard University and exchanges required with current technology. well as in closed-chest, convergent merCk & Co. inC. has been further expanded upon by TargeGen. procedures.

Intothe US, the closedSanofi looks forward growing its cancer pipeline Hawaii bioteCH inC. with the TargeGen acquisition, also taking note A recentMerck patent application on the technolchest version, Numeris-Guided & Co. Inc. has paid struggling vaccines the fact that while some of its competitors are developerflexible, Hawaii Biotech Inc. an undisclosed ogy describes conformable electrode of Coagulation System with VisiTrax, working on JAK-2 inhibitors for similar indicasum for its dengue fever vaccine unit.

(July) assemblies that can be used to “sense, map, received 510(k) approval in Februtions, no therapies have yet been approved.

The Thestimulate capital will muscles help hB, which filed for bankdeal a busy Sanofi. The Big ablate, or or nerves.” aryends 2009 for June the for coagulation ofpharma ruptcy in december 2009, to stay on its feet once signed four alliances during the month, commitThese assemblies arelinefoldable and can adapt cardiac tissue using RF energy a $2mm credit it is operating on runs out. ting over $1.5bn (including up-fronts and milefrom a very lowfor profile for insertion, with through thorascopic, endoscopic, and Remaining hB to develop on its ownand or get rid stones) development deals with Vivalis, of isaa large vaccineelectrode for West Nile virus. The Regulus, Metabolex, and Ascenta. they offer surface to company seleclaparoscopic surgical techniques. had been planning a phase I trial of its tetravalent tively apply energy. According to the patent, sHire The system is now under study pLC dengue fever vaccine later this year under contract the electrode provide superior for the treatment of long-standing movetis nv with theassemblies National Institute of Allergy and Infectious Diseases Advanced BioScience, apposition to the targetand site, limit the numAF and Inpersistent a move to enhance its symptomatic gastrointestinal portfoa testing supplies manufacturer. Merck will now lio, Specialty pharmaco Shirethe PLCname is acquiring ber of required catheter manipulations, and paroxysmal AF under take over all activities and add the candidate to public Belgian firm Movetis NV, a Johnson & “greatlyitsreduce procedure times and the skill Numeris-AF Guided Coagulation pipeline of vaccines for unmet diseases. It is Johnson spin-off, for €400.5mm ($522.6mm). working on for hepatitis A and B; level required to prophylactics achieve successful results.”

System withisVisiTrax.

The company paying €19 in cash (a 100% premium) for each of Movetis’ 21mm outstanding shares. (Aug.)

Used in the epicardial portion of

Movetis’ lead product Resolor (prucalopride) rethe convergent procedure, the ceived european marketing approval in October system consists of aconstipation cannula inand 2009 for treating chronic women for whom laxatives are ineffective.

Three months the ablation device, as well as an later and just weeks after raising €97.8mm via its RF generator that is controlled by IpO, the company enlisted the help of cRO Quina foot pedal.

During theResolor procetiles to launch and commercialize in the uK and Germany.

(Movetis originally got rights dure, a 2-cm incision is made into the drug from J&J’s Janssen subsidiary in early 2007.) the midline of the abdomen and a Shire believes that Resolor, which is protected under provides through a cannula composition of matteraccess patent until 2020, has potential to achieve sales in excess of €300mm. the diaphragm to the posterior of Movetis’ current ceO will lead the european team the heart. An endoscope is placed responsible for marketing Resolor. The acquired through for direct for concompany alsothe has cannula clinical-stage programs stipation, ascites (fluid build-upintegrates in the abdomen), visibility.

The system and reflux, and preclinical candidates for irritable suction, perfusion, and RF energy bowel syndrome and diarrhea. Shire’s gastrointestitoofferings createinclude long,the linear lesions nal ulcerative colitis on (uc) drug Lialda, which holds surface an 18% market share in the the epicardial of a beatuS; Lialda/Mezavant for diverticulitis; and Pentasa ing heart. The EP then employs a for uc. Movetis reported 2009 sales of €1.2mm conventional endocardial ablation with a loss of €15.4mm, and at the end of March 2010 it had €100mm in cash. Investment Banks/ approach to complete (or “touchAdvisors: deutsche Bank AG (Shire pLc); evercore up”) thecapital biatrial lesion pattern and healthcare LLc (Movetis NV)

uses a circular catheter to check for

Alliances any reconduction. The total proce-

/pharmaceuticals dural time is estimated to be three to four hours, with each phase of aCtient pHarmaCeutiCaLs LLC the procedure taking approximateuCb group ly 90 minutes to complete. AccordIn its first collaboration, Actient Pharmaceutiing to the company, the learning cals LLC (specialty drugs) has licensed uS rights curve for surgeons is relatively

FEATURES

In Glaucoma, Devices Go Eye-toEye With Drugs In the treatment of glaucoma, device start-ups began, 10 years ago, to try to fill a void between first-line drugs with compliance issues and end-stage surgeries with their safety and durability limitations. But now, device companies are going head-to-head with drugs as a first-line therapy, hoping to improve glaucoma care and create an enormous device market.

In the Midst of a Shakeout, Biotech VCs Must Embrace New Partners, New Math With funds and firms closing, a new reality awaits those who survive until the next economic upswing.

Medtech Risk Capital? Anything But. A VC Roundtable from IN3 At our recent medical device meeting in Boston, VCs let us in on their thinking about the future of investing in medtech.

PROFILES

Biotechs Target Cancer Metabolism

Profiles of Advanced Cancer Therapeutics, Cornerstone Pharmaceuticals and Dynamix Pharmaceuticals

Start-Ups Across Health Care

Profiles of Allocure, ArisGen, HistoSonics and Neuravi Venture ’Round

VC Investments In Diagnostics and Eyes Delivering Strongest Returns Stem Cell Researchers Appalled

By Court Ruling Welsh Carson Taps Into Spinal Market With K2M Buy Conatus Acquires Idun’s Assets

For a free copy of START-UP, call 800-332-2181 (US) +1 908-547-2159 (outside US)

www. ElsevierBI .com

©2010 W i n d hover Information Inc., an elsevier company | IN VIVO: The BuSINeSS & MedIcINe RepORT | September 2010 | ©

2010 Windhover Information, an Elsevier company. All rights reserved.

109

51

AF Ablation

September 2010

Exhibit 8

Selected AF Ablation Technologies in Development Company Advanced Cardiac Therapeutics AFreeze GMBH Apama Medical

Device Tempasure

CoolLoop

Apama Ablation Catheter

Bacoustics LLC Epicardial ablation system capable of combining ultrasound and cryo energies Biosense Webster

NaviStar ThermoCool SF ThermoCool SMARTTouch

Boston Scientific

Chilli II Blazer

Boveda Marco B2M Catheter and Medical (B2M) Console Cardima

Cardima Cadence EPL

CardioFocus

Endoscopic Ablation System–Adaptive Contact (EAS-AC)

CathRx

CathRx ablation catheter

CR Bard

HD Mesh ablation system—second generation

CyberHeart

Endosense

52

TactiCath

Description Irrigated RF catheter using the company’s Veritas CatheterTip Chip-Based Microwave Radiometry System to provide real-time, in-tissue, temperature sensing Cryoenergy-based ablation catheter designed to mimic the surgical Maze procedure by both isolating the PV orifices and segmenting the left atrium Versatile, integrated RF catheter capable of mapping, ablating, and monitoring without the need for time consuming and expensive catheter exchanges required with current technology Patent application describes an apparatus that includes a vibrating probe utilizing ultrasound energy to mechanically ablate tissues and penetrate epicardial fat, exposing the myocardium, which can then be ablated using cryo or ultrasonic energy and/or a combination thereof Next-generation irrigated-tip RF ablation catheter, designed with a more porous tip to provide more flow and even cooling.

Contact force RF catheter, senses both contact with the tissue and the amount of pressure being used against the tissue Internally-irrigated RF catheter, can potentially create deeper lesions with low power settings Open-irrigated catheter for RF ablation; designed for better proximal electrode cooling A multi-array, flexible, irrigated RF ablation catheter that can create both circumferential and linear ablation lines with a single catheter placement Company’s next-generation percutaneous linear RF ablation system with temperature feedback, tissue temperature stability, and improved tissue contact and ease of manipulation

Endoscopically-guided laser light energy balloon system that provides real-time, full-color view of the anatomy during the procedure. EAS-AC consists of adjustable compliant balloon allowing access to various PV morphologies Modular irrigated RF ablation catheter with hollow lumen for insertion of a range of stylets to facilitate appropriate shape formation at the distal end of the catheter allowing accurate positioning for therapy delivery RF catheter with expandable multielectrode mesh array designed for mapping and ablating from 36 discrete points around the catheter simultaneously; creates curvilinear lesions at the PV-LA Noninvasive stereotactic robotic radiosurgery; company is developing own software application for the noninvasive ablation of cardiac arrhythmias that will operate on the CyberKnife hardware platform (licensed from Accuray Inc.) Open-irrigated RF ablation catheter with fiber optic sensors in catheter tip enabling real-time, objective measurement of contact force independent of the position of the catheter during ablation

Development Status Preparing to begin FIH trial OUS in Q4 2010; CE Mark anticipated in early 2011 In development

In early-stage development; company hopes to begin FIH trial in 2011

Intellectual property issued. Company was founded in 2005 by two Austrian scientists

PMA submitted in 2010; European launch in May 2010 Planned PMA submission for AF in 2011

Ongoing study comparing Chilli II with ThermoCool for persistent AF US AF clinical study expected to begin in late 2010; CE Mark pending Preclinicals underway

Company is planning “aggressive regulatory strategy” in 2011 focused on CE Mark approval and US PMA filing. However, according to its most recent 10Q filing, its low cash reserves (only about $1.7 million in cash was on hand as of June 30, 2010—enough to take it through mid-Sept) raises doubts about its ability to continue as a going concern CE Mark in June 2009; limited European market launch expected by end of 2010.

Anticipate IDE filing for US pivotal trial before the end of 2010 Filed for CE Mark in January 2010

In discussions with FDA re: IDE trial, anticipates starting trial in early 2011; US market approval anticipated in 2015.

European introduction delayed until early-tomid 2011 due to regulatory changes In early stage development

CE Mark for AF and SVT in Oct 2009; launched in Europe in May 2010. Enrollment in pivotal TOCCASTAR trial, comparing TactiCath with ThermoCool, expected to begin by end of 2010, with US PMA filing anticipated by 2H 2012

www.ElsevierBI.com

AF Ablation

September 2010

Company

Device

Description

Development Status

Epicardial Technologies

ETI Protektor ETI Perikor ETI Praxis Therapeutic Device Arctic Front

Catheter-based system designed to safely enable a combination epicardial and endocardial ablation performed via percutaneous access

In development

Cryoballoon catheter designed to encircle the PV orifice and isolate the vein all at once, in one or two freezes, without having to move the catheter to different locations Over-the-wire RF catheter with a helical design that can map, pace, and selectively ablate using any or all of 10 electrodes; capable of isolating the PVs in about 30 minutes 12-electrode RF catheter is designed for mapping and ablation of complex fractionated atrial electrograms (CFAE); can safely create lesions without the need for irrigation 8-electrode RF catheter designed for mapping and ablation of CFAE in the left atrial body Microwave cardiac ablation system with linear ablation catheters; company is initially targeting OUS markets (Europe, Hong Kong, China) Companyâ&#x20AC;&#x2122;s device is used in closed-chest epicardial portion of the convergent ablation procedure. Via a 2-cm incision, cannula provides access through the diaphragm to the posterior of the heart. Endoscope is placed through the cannula for direct visibility. The system integrates suction, perfusion, and RF energy to create long linear lesions on the epicardial surface of a beating heart. Epicardial portion is followed by endocardial ablation to complete biatrial lesion set 12-port open-irrigated RF ablation catheter

PMA submitted in March 2010; company anticipates US approval in fiscal 2011; CE marked in 2005 Company is hoping for FDA approval of the Ablation Frontiers product line (PVAC, MASC, MAAC) in calendar year 2011; CE marked in 2007

Medtronic

Pulmonary Vein Ablation Catheter (PVAC) Multi-Array Septal Catheter (MASC)

Medwaves

nContact Surgical

St. Jude Medical

Multi-Array Ablation Catheter (MAAC) Medwaves Microwave Cardiac Ablation System Convergent procedure using Numeris-AF Coagulation System with VisiTrax

Cool Path Duo

Therapy Cool Flex

SurgiVision

Toray Industries Voyage Medical

VytronUS

4-mm open-irrigated tip ablation catheter with four irrigation ports located at the distal end of the tip, with an integrated coil that runs through the entire length of the tip; tip is flexible EnSite Contact Platform Diagnostic system of ablation catheters, a hardware module, and specially designed software that measures, analyzes, and displays electrical coupling to determine the level of contact the ablation catheter's tip has with endocardial tissue during the procedure ClearTrace Cardiac MRI-compatible, catheter-based, fully integrated cardiac Intervention System ablation system that allows the physician to see cardiac tissue during the procedure (similar to what is possible with an open Cox-Maze procedure) Toray-Satake Hot RF thermal balloon ablation catheter for performing Balloon circular lesions IRIS Catheter System A direct endocardial visualization catheter with the ability to guide transseptal punctures, identify anatomical structures, and deliver RF energy to create transmural lesions Ultrasound mapping Per patent info, device is a catheter with an ultrasound and ablation system transducer that is capable of echo-anatomically mapping tissue, producing a 3-D surface map, and ultrasonically ablating tissue while moving the ultrasound transducer along an ablation path

Ongoing OUS clinical trials

Two ongoing IDE trials are evaluating the device in long-standing AF and paroxysmal AF

IRASE US pivotal trial began this year and is expected to be completed in 2013; CE marked; approved for use in Japan in June 2010 CE mark in June 2010; currently in limited release

CE mark in June 2010; currently in limited release

Developed in partnership with Siemens Healthcare; preclinicals underway

Clinical trials have occurred OUS FIH study complete OUS

In development. Company completed a Series C financing round in June

Note: FIH = first-in-human SOURCES: cvPipeline; Medtech Insight

Š

2010 Windhover Information, an Elsevier company. All rights reserved.

53

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AF Ablation

September 2010

DEALMAKING MONTH IN ThisTHIS month in

short, ranging from one to four cases, depending upon their familiarity with endoscopes and laparoscopic approaches.

Antibiotic Development Incentive Menu: Options Getting Longer Congress continues to look at ways to stimulate more research on anti-infectives. The list of potential incentives gets longer each time another drug category wins a new form of incentive.

None of the ideas has succeeded yet in coalescing a political consensus; but potential legislative vehicles are out there.

A Painful Decision For King And Acura An FDA advisory committee rejects the idea of adding niacin to abusable drugs in order to provoke a flushing reaction and thereby discourage abuse.

King and Acura respond by flushing the idea itself and focusing on physical barriers to abusability. For other sponsors, King’s failed attempt to change FDA’s mind looks like a study in what not to do.

Going Around In Circles Early on in the committee discussion of Acurox, FDA made its feelings about the product clear. Here is a transcript of the exchange between two committee members and two FDA officials on the key question about the King application: what exactly should be required to allow inclusion of niacin in the formulation with the goal of provoking adverse effects in abusers of immediate release oxycodone.

Ladies & Gentlemen Of The Jury...I Mean Advisory Committee When King Pharmaceuticals Inc. Chief Scientific Officer Eric Carter concluded his presentation during the April 22 advisory committee review of the novel oxycodone/niacin formulation Remoxy, he sounded almost like an attorney making a closing argument before a jury

for a complimentary copy of

The RPM Report:

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Over the past two years, the system has been used for various indications in close to 750 patients (80% of procedures using the company’s main platform are closed-chest procedures).

The device costs hospitals about $8,500 and it is reimbursed under an existing DRG (Diagnosis-Related Code). Presently, about 25% of the system’s sales are in Europe, with the remainder in North America.

A multicenter investigator-initiated study presented at HRS demonstrated favorable long-term results in 43 long-standing AF patients who underwent the closed-chest convergent procedure (all patients were monitored by repeat Holter and event recorder; an implantable loop recorder was used in 11 patients). At 7-month follow-up, 31 of the patients (72%) remained in sinus rhythm, with only one of the patients taking a previously ineffective AAD. Eight patients (19%) had recurrence beyond a three-month blanking period, resulting in an 81% overall arrhythmia free rate on or off AAD therapy.

At the 2010 International Society of Minimally Invasive Cardiac Surgeons (ISMICS) meeting, held this summer in Berlin, Germany, Solvenian researchers reported the six-month and 12-month follow-up results of 65 patients with long-standing AF treated with the convergent procedure. At six-month follow-up (available in 40 patients), 91% of patients remained in sinus rhythm on or off of AADs, with 72% of patients in sinus rhythm without the need for AAD therapy. Rates at 12 months (available in 25 patients) were similar, with 88% of patients remaining in sinus rhythm on or off of AADs, and 80% of patients in sinus rhythm off of AADs. Of note, continuous monitoring with Medtronic’s Reveal Implantable Loop Recorder was used in 19 of the 20 patients who remained in sinus rhythm and off of AADs at 12 months.

In April, the company announced IDE approval to evaluate its closed-chest system in combination with St. Jude’s Therapy Cool Path Ablation Catheter in the CAP STOPS LSP-AF (Combined Ablation Procedure for the Treatment of Long-standing Persistent Atrial Fibrillation) study for the treatment of chronic AF. nContact has a right of reference agreement with St. Jude with regards to this particular study and has rights to use the Cool Path Catheter (St. Jude is also sharing expenses for the trial). Enrollment in the 25-patient feasibility study is expected to be complete by the end of 2010. In addition, nContact’s system is being paired with Biosense Webster’s NaviStar ThermoCool Catheter, guided by CARTO, for the treatment of paroxysmal AF in the ongoing CAP STOPS AF (Combined Ablation Procedure for the Treatment of Paroxysmal Atrial Fibrillation) trial. Following completion of these two patient feasibility IDEs, the company plans to meet with the FDA to discuss the design of pivotal trials aimed at PMA approval for the system, which will likely have a new name to account for the AF indication.

Intersouth Partners has contributed about $12 million of nContact’s $26 million raised to date. nContact is in the process of completing a Series D financing round in the amount of $15 to $20 million, which is targeting new and existing VC investors and should close before the end of the year. nContact Surgical isn’t alone in its efforts to develop a hybrid approach to AF ablation.

Surgical ablation competitor AtriCure Inc. is also working on its own hybrid procedure, according to cvPipeline. In August, AtriCure announced plans to begin a US feasibility trial in Q4 2010 called DEEP AF, which will use Biosense Webster’s NaviStar ThermoCool Ablation Catheter as part of the study protocol.

Remote Systems for AF Ablation Another niche in the AF catheter ablation arena is the development of remote, robotic systems used to guide diagnostic and treatment catheters, with the aims of reducing procedural time, providing more consistent results, and improving the quality of the lesion set, while also minimizing a physician’s exposure to the radiation field. These remote systems range from large magnetically-guided systems (Stereotaxis’ Niobe) to robotically-assisted

113 www.ElsevierBI.com

AF Ablation

VytronUS, which completed a Series C round of financing in June, is using ultrasound energy to both ablate and map tissue.

catheter-based systems, such as Hansen Medical’s Sensei X Robotic Catheter System and the Amigo Remote Catheter Manipulation System from Catheter Robotics Inc. Adoption of these devices will be heavily contingent upon outcomes-based data proving their benefits over manual approaches, as well as the ability to overcome potentially prohibitive cost limitations, and space and training requirements. Although expensive robotic systems are probably out of the reach of smaller hospitals at the moment, they may appeal to high-volume, specialized EPs who are looking for technologies that can improve their comfort and efficiency and potentially help enable catheter ablations in more complex patients.

One new competitor in this space is start-up Strategic Polymer Sciences Inc. (SPS). The company is working towards commercializing a novel electroactive polymer (EAP) developed at Pennsylvania State University that can be used in a host of applications, ranging from military weaponry and electrical vehicles to capacitors for cardiac defibrillators and actuators for guiding catheter-based systems for AF. SPS states that the EAP technology will enable significant device miniaturization and enhanced reliability, while in many cases reducing procedural costs.

The company is currently working with Penn State’s Milton S. Hershey Medical Center to apply its EAP-based actuator technology to an advanced electric microsteerable mapping and ablation catheter. Catheters with EAP technology could be programmed with coordinates, allowing the device to be remotely steered with an electrical signal controlled by a computer, without the use of an external joystick. The device, according to SPS, could replace current steerable mapping and ablation catheters and reduce procedural times through its robotic-level precision, steering control, and advanced automation capabilities. In June, SPS received a $2.2 million grant from the National Institutes of Health to continue development of the AF system.

A Technology-Rich Field As has been the case almost since the field’s inception, AF ablation remains a technologyrich arena, with no shortage of novel ideas about how to improve the procedure. In fact, cvPipeline is tracking 35 companies currently

56

September 2010

developing ablation products for this application. (See Exhibit 8 for a list of selected companies in this field.) Interesting earlystage participants include CyberHeart Inc., which is working on a completely noninvasive method of ablating AF using computer controlled radiosurgery (see “AF Ablation: The Pulse of Innovation,” Medtech Insight, September 2008); Epicardial Technologies Inc., which is developing tools to enable percutaneous epicardial ablation for AF (see Start-Up News “Epicardial Technologies Inc.: Percutaneous Epicardial Ablation of Heart Arrhythmias,” Medtech Insight, January 2010); and VytronUS Inc. VytronUS is following current trends and developing a simplified, multifunction, single-catheter AF ablation system. However, unlike its competitors, the company, which completed a Series C round of financing in June, is using ultrasound energy to both ablate and map tissue. Based in Sunnyvale, CA, VytronUS is still in stealth mode; however, a patent filed recently on the technology describes a catheter with an ultrasound transducer that is capable of echo- anatomically mapping tissue, producing a 3-D surface map, and ultrasonically ablating tissue while moving the ultrasound transducer along an ablation path. The ablation path is directed around ultrasonically identified anatomical features and may be selected from a catalog of pre-existing ablation paths or indicated by the treating physician.

[A#2010400068] Ariana Del Negro is a contributing writer for Medtech Insight. Mary Thompson is Executive Editor of Medtech Insight. (E-Mail: M.Thompson@Elsevier.com.) related reading St. Jude Joins With iRhythm In Wireless Cardiac Monitoring, START-UP, June 2010 [A#2010900147] Medtronic: Doing Just What the Doctors Order, IN VIVO, June 2010 [A#2010800096] Endosense: Facing Technology and Financing Challenges in AF, IN VIVO, March 2010 [A#2010800045] Start-Up News, “Epicardial Technologies Inc.: Percutaneous Epicardial Ablation of Heart Arrhythmias,” Medtech Insight, January 2010 [A#2010400011] Is There a Market for Wireless Cardiac Monitoring Implants?, START-UP, January 2010 [A#2010900004] Medtronic Makes Another Big Play in A-Fib, Purchases Ablation Frontiers, “The Gray Sheet,” January 19, 2009 [A#01350030009] AF Ablation: The Pulse of Innovation, Medtech Insight, September 2008 [A#2008400065] Access these articles at OUR online store: www.windhover.com/article

www.ElsevierBI.com

Diabetes Device Market

SEPTEMBER 2010

Diabetes (cont. from front page) According to Boston Biomedical Consultants, worldwide compound annual growth in the diabetes care market (meters and test strips) is expected to be about 3% between 2009 and 2014. Growth is expected to be significantly lower in the US and Europe, where the economic crisis has negatively affected all consumer-based health care markets and driven down pricing for diabetes supplies. The downturn is quite striking considering previous years had shown growth of about 8% to 10% worldwide, and although sales have picked up a bit in 2010, some companies have seen negative growth in the US over the past couple of years. The four major competitors in the diabetes meters and strips market are Roche Diagnostics/Roche, LifeScan Inc. (a Johnson & Johnson (J&J) subsidiary), Bayer HealthCare LLC/Bayer AG, and Abbott Diabetes Care Inc./Abbott Laboratories Inc., which combined control close to 90% of the US market. (See Exhibit 1.)

Exhibit 1

Estimated Blood Glucose Monitoring Systems Market by Supplier, 2008

Home Diagnostics 3.7%

Others 0.9%

Medtronic 6.6%

Bayer HealthCare 12.4%

39.8%

LifeScan/J&J

15.3%

Abbott Diabetes Care

21.3%

Roche Diagnostics Note: Includes sales of continuous blood glucose meters and software as well as glucose meters, lancets, test strips, and accessories.

SOURCE: Medtech Insight Report #A376, US Markets for Diabetes Management Products, May 2009

58

Pushing into Emerging Markets Partly as a result of sluggish sales in the US and Europe, competitors in the diabetes device market are developing a strong interest in increasing or establishing their sales presence in emerging markets outside the US. Not surprisingly, two of the most sought after emerging markets are also the two most populous—China and India. Until this year, conventional wisdom held that the need for expanded diabetes care was more urgent in India, where the population is older and more cases of the disease (50.8 million) are believed to exist. However, a study published in the March 25, 2010, issue of the New England Journal of Medicine found that China is facing a much bigger diabetes epidemic than previously realized.

Based on a representative sampling of more than 46,000 people in China aged 20 years and older, researchers concluded that 92.4 million Chinese adults (1 in 10) currently have diabetes and nearly 150 million have early symptoms of the disease. In 2009, the International Diabetes Federation (IDF) had estimated China’s diabetic population at 43.2 million. (See Exhibit 2.)

The reason for the surprising increase in prevalence can be traced to economic prosperity, which, in turn, has led to increased consumption of processed food, larger calorie intake, and less physical activity for a large section of the population. Essentially, China is in the early stages of the same basic problem that has plagued the US for years and that has heavily contributed to America’s current battle to prevent diabetes. How the Chinese government intervenes to address this problem over the next few years could be key to the long-term health outlook for that nation’s citizens.

Certainly, nutritional education and exercise programs are needed, as well as treatments and therapies that can prevent diabetes from becoming more serious or producing the other serious comorbidities associated with the disease. The cases reported in China fall primarily in the type 2 diabetes category, which is directly related to the lifestyle changes associated with affluence, such as

www.ElsevierBI.com

Diabetes Device Market

SEPTEMBER 2010

obesity. Device manufacturers now have an opportunity to make inroads into China and provide the glucose meters and test strips as well as the educational programs that have accompanied the use of these products in the West.

However, it could be some time before these new opportunities translate into significant benefits for the overall market. Although heavily populated countries such as China, India, and Brazil are in need of devices to manage growing diabetes populations, the economic conditions in these countries cannot support the same pricing structures seen in the West. Thus, while increased business in Asia and South America will certainly help boost overall market growth, the necessity for lower pricing in these regions will dampen the effect on the bottom line until manufacturers begin posting substantial sales volumes in these markets. Moreover, all of these regions (and particularly China) come with additional political and socioeconomic risks, including potential threats to intellectual property, that make doing business in these areas a bit more dicey.

Nevertheless, the large diabetes product manufacturers appear to have decided long ago that the potential rewards of moving into these markets far outweigh the risks.

In fact, for a number of years, emerging markets have been part of the strategic expansion plan for many of the companies in the diabetes device space, including market Exhibit 2

International Prevalence of Diabetes by Select Countries

China

92.4 million*

India

50.8 million

Russian Federation

9.6 million

Brazil

7.6 million

Japan

7.1 million

Indonesia

6.9 million

*Previous analysis estimated this number at 43.2 million SOURCES: Yang W et al. Prevalence of diabetes among men and women in China. New England Journal of Medicine.

2010;362:1090-1101; International Diabetes Federation, 2009

Exhibit 3

External Insulin Pump Systems Market, Estimated Share by Supplier, 2008

Insulet 3.6%

Estimated Continuous Glucose Monitoring Market by Supplier, 2010

Others 1.3%

Abbott 2% DexComm

Roche Diagnostics

8% 15.2% 54.4%

Animas

Medtronic

25.4% 90%

SOURCE: Medtech Insight Report #A376, US Markets for Diabetes Management Products, May 2009

Š

2010 Windhover Information, an Elsevier company. All rights reserved.

Medtronic SOURCE: Medtech Insight

59

Diabetes Device Market

SEPTEMBER 2010

leader Medtronic Inc., the leading producer of insulin pumps and CGMs, used primarily by type 1 diabetics. (See Exhibit 3.)

Worldwide Diabetes Prevalence On the Rise An estimated 24 million people in the US have diabetes, with the number of type 1 patients believed to be as high as three million, according to the Juvenile Diabetes Research Foundation (JDRF). (See Exhibit 4.) Worldwide, the number of diabetics is estimated at about 285 million, and that number is expected to grow to 438 million by 2030; however, those figures were calculated before the new information on China’s sudden increase could be added to the mix.

Although type 1 patients make up a smaller portion of the diabetic population, their needs can be greater and more expensive Exhibit 4

Diabetes Stats US Prevalence Diabetes

23.6 million people (7.8% of the population) (17.9 million diagnosed; 5.7 million undiagnosed)

Pre-diabetes

57 million people

Type 1 diabetes

As many as 3 million people

Incidence

1.6 million in people aged 20 and above annually

with a lifetime dependence on insulin, insulin delivery systems, and monitors.

Unfortunately, like their type 2 counterparts, the number of type 1 diabetics is on the rise, and poor nutrition and environmental conditions are believed to account for a significant portion of the blame.

According to the IDF, 479,600 children aged 0 to 14 years have type 1 diabetes worldwide, and 75,800 new cases are diagnosed every year, with the incidence increasing 3% annually. Meanwhile, the American Diabetes Association (ADA) estimates that one in every 400 to 600 people in the US under the age of 20 has type 1 diabetes.

Progress Continues Toward An Artificial Pancreas While scientists continue to look for a cure, the push to make diabetes more manageable has fallen in large part on the medical device community, which continues in its efforts to develop an “artificial pancreas.” Also known as a closedloop system, the technology would give insulin-dependent patients better control over their high and low blood sugar episodes and hopefully help prevent serious comorbidities such as heart disease, blindness, kidney disease, nervous system disease, and amputation. (See Exhibit 5.)

SOURCES: Juvenile Diabetes Research Foundation; American Diabetes Association, 2010

Worldwide Prevalence of Diabetes, 2010 and 2030E

2010

2030E

Global prevalence

6.6%

7.8%

Comparative prevalence*

6.4%

7.7%

285 million

438 million

Number of people with diabetes

*The comparative prevalence has been calculated by assuming that every country and region has the same age profile (the age profile of the world population has been used). This removes the differences of age between countries and regions, and makes this figure appropriate for making comparisons. The comparative prevalence should not be used for assessing the proportion of people within a country or region who have diabetes.

SOURCE: International Diabetes Federation, 2010

60

Every year, progress on a closed-loop system seems to be measured around June, when ADA’s Scientific Sessions take place, and at this year’s 70th annual meeting in Orlando, several important announcements were made in this area.

Medtronic, which leads the industry in the quest for an artificial pancreas, released the results of the STAR 3 clinical trial, a 485-patient study of the company’s MiniMed Paradigm REAL-Time sensor-augmented pump system, which combines an insulin pump with CGM and therapy management software.

(See Exhibit 6.)

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Diabetes Device Market

SEPTEMBER 2010

The trial’s findings showed diabetic patients—adults, children, and adolescents— that used the MiniMed Paradigm REAL-Time Revel System achieved better control over their glucose levels without an increase in hypoglycemia compared to multiple daily injections, the current standard of care.

The study compared patients’ glycated hemoglobin (A1C) levels, deemed the best measure of glucose levels over an extended period of time. Patients using the sensoraugmented pump system had significantly larger reductions in A1C levels than patients who manually injected insulin daily.

Specific data from the study showed that after one year the reduction in mean A1C levels for MiniMed patients was 0.8% compared to 0.2% for the daily injection group.

Both groups started with baseline mean A1C level of 8.3%, but that level dropped to 7.5% in the MiniMed group compared to 8.1% for the injection group.

The results, published online by the New England Journal of Medicine, are expected to help Medtronic’s marketing efforts for the MiniMed Paradigm REAL-Time Revel System, which received approval from the US Food & Drug Administration (FDA) in March.

The system is similar to the MiniMed Paradigm Veo System launched in Europe in late 2009; however, there is one big difference.

The Veo includes a user-controlled insulin suspend feature, which, when activated, causes the pump to suspend insulin infusions for two hours if glucose levels reach a predetermined threshold. The feature is designed to reduce the number of hypoglycemic incidents, a major fear for many diabetics who can sometimes slowly slip into a hypoglycemic state without realizing it. The Revel, on the other hand, has not yet been approved to use the suspend feature, therefore the internal programming that allows that function has not been included.

However, Medtronic’s VP of R&D for its diabetes business, John Mastrototaro, PhD, told Medtech Insight that a six- to nine-month in-clinic study on the suspend feature began in June in the US. Before that study is completed, a second, year long, inhome trial will begin, and if everything goes as planned, the Revel with a suspend feature could be available in the US sometime in ©

2012. The company views the product as a key step toward a completely closed-loop system that could not only automatically suspend insulin infusions but also initiate insulin dosing.

The Race for a Closed Loop System As the only company that produces both pumps and CGMs, Medtronic has easily been able to establish itself as the clear leader in the market, but there certainly are competitors with notable technology helping to shape the landscape and give

Exhibit 5

Diabetes Comorbidities Heart disease and stroke • In 2004, heart disease was noted on 68% of diabetes-related death certificates among people aged 65 years or older.

• In 2004, stroke was noted on 16% of diabetes-related death certificates among people aged 65 years or older.

• Adults with diabetes have heart disease death rates about 2 to 4 times higher than adults without diabetes.

• The risk for stroke is 2 to 4 times higher among people with diabetes.

High blood pressure • In 2003–2004, 75% of adults with self-reported diabetes had blood pressure greater than or equal to 130/80 mmHg, or used prescription medications for hypertension.

Blindness • Diabetes is the leading cause of new cases of blindness among adults aged 20–74 years.

• Diabetic retinopathy causes 12,000 to 24,000 new cases of blindness each year.

Kidney disease • Diabetes is the leading cause of kidney failure, accounting for 44% of new cases in 2005.

• In 2005, 46,739 people with diabetes began treatment for end-stage kidney disease in the United States and Puerto Rico.

• In 2005, 178,689 people with end-stage kidney disease due to diabetes were living on chronic dialysis or with a kidney transplant in the US and Puerto Rico.

Nervous system disease (Neuropathy) • About 60% to 70% of people with diabetes have mild to severe forms of nervous system damage.

Amputation • More than 60% of nontraumatic lower-limb amputations occur in people with diabetes.

• In 2004, about 71,000 nontraumatic lower-limb amputations were performed in people with diabetes.

SOURCE: American Diabetes Association, 2010

2010 Windhover Information, an Elsevier company. All rights reserved.

61

Diabetes Device Market

Medtronic an extra push to keep moving forward. San Diego-based DexCom Inc., for example, offers the the SEVEN PLUS Continuous Glucose Monitor, which, as the name suggests, is a CGM device with a sensor that can be worn for seven days.

The sensor for Medtronic’s CGM device, the Guardian REAL-Time Continuous Glucose Monitoring System, is approved to be worn for three days.

Although Dexcom is clearly the smaller player—with somewhere around 8% of the CGM market, compared to Medtronic’s more than 90%—the company has performed well. Of course, DexCom is still waiting to record a profit, but all indications

Exhibit 6

Medtronic’s STAR 3 Study

Participants

SEPTEMBER 2010

are things are headed in that direction, and the company’s stock price has satisfied investors. More importantly, the SEVEN PLUS has been well-received by users, who can become very loyal to a product that plays such a personal role in their everyday lives.

However, to compete with Medtronic on a closed-loop system, Dexcom needed a partner in the pump business, which it found in 2008 via an agreement with J&J’s Animas Corp. In January of this year, the relationship between the two companies proved to be even more valuable when JDRF announced a four-year, nonexclusive partnership with Animas to develop an artificial pancreas. DexCom is part of that partnership as the provider of CGM technology.

The project has been setup within JDRF’s ongoing Artificial Pancreas Project, which has worked with a number of academic institutions on the all-important algorithms that would make glucose management possible using an integrated insulin pump/ CGM device.

• 485 adult and pediatric patients (ages 7-70) with type 1 diabetes Design and duration

• Prospective, randomized, controlled, multicenter trial at 30 sites in the US and Canada • Both groups used diabetes management software • The study had an initial two-arm treatment phase that lasted one year, followed by a rollover and continuation phase lasting an additional six months Key findings

• Patients on sensor-augmented insulin pump therapy had a reduction in mean A1C levels four times greater than the multiple daily injection group (0.8% study vs 0.2% control (p < 0.001).

• Adult participants in the sensor-augmented insulin pump therapy arm experienced a 1% reduction in A1C levels.

• The decrease in A1C observed in STAR 3 occurred without an increase in the rate of hypoglycemia • The benefit of the sensor-augmented insulin pump therapy was gained early (ie, at three months) and sustained over the course of one year • Patients who used the sensor 81% or more of the time reduced their A1C levels by 1.2% • The study showed superior glucose control for children and adolescents in the sensor-augmented pump arm • Nearly 44% of pediatric patients using sensor-augmented insulin pump therapy achieved the ADA’s age-specific glucose control targets, compared to only 20% in the multiple daily injection group SOURCE: Medtronic

62

Aaron Kowalski, PhD, research director of the JDRF project, told Medtech Insight the Foundation has accomplished a great deal in its research and work with academic scientists. However, it is now time to take the product of all that research and put it in the hands of manufacturers who can take the work to the next level, which would be a real device that goes beyond studies and concepts. Kowalski noted that an artificial pancreas might have eventually been developed without the collaboration, but with JDRF involved, that development is in a better position to happen much sooner.

As has been demonstrated by the progress with Medtronic’s efforts, the JDRF project is expected to move in incremental steps, and the first device to come out of the project will likely have only partial ability to suspend and/or dose insulin. But the eventual goal is to produce a device that can suspend, dose, monitor, and send alerts automatically. At this point, no one wants to place an exact estimate on how long it will take to develop such a device, but it is more than likely going to take all—if not more— of the four-year agreement.

Although JDRF is working with Animas and DexCom in this deal, the Foundation www.ElsevierBI.com

Diabetes Device Market

SEPTEMBER 2010

will continue to work with Medtronic—and other companies as well—on any projects that would benefit the diabetes community.

Likewise, Medtronic’s Mastrototaro says he does not view the JDRF deal with Animas and DexCom as a barrier to Medtronic’s work with the Foundation, and he pointed out that the largest clinical trial currently taking place within the Foundation’s artificial pancreas study involves the technology Medtronic is developing in this area. However, the new deal involving J&J certainly creates more formidable competition for Medtronic, and from a purely business perspective, that in turn produces market dynamics ideal for innovation. As a result, a very interesting race-to-market could develop as both parties move forward on an artificial pancreas.

DexCom and Animas: How Close Is Too Close?

The other development to watch is how close the DexCom/Animas relationship will become. When the two companies announced their initial joint-development agreement in 2008, it stipulated the use of DexCom’s CGM technology for integration into Animas’ pump for sales only in the US.

However, in January 2009, the agreement was amended to include rights to sales outside the US (OUS), for which Animas will pay a one-time, $5 million fee to DexCom after the forthcoming product receives its first OUS regulatory approval. The deal with JDRF marks the third year in a row Animas and DexCom have moved into a tighter alliance.

Given the evolving relationship, it is not surprising that some observers believe the expanding partnership could be a precursor to a J&J acquisition, a growth strategy J&J has employed in the past. In fact, Animas was acquired in such a deal in 2006, with the goal of pushing J&J into a top spot in the insulin pump market. J&J’s stated business philosophy is to be the number one or two company in each of the markets in which it operates, and while the company’s glucose monitoring business has lived up to that goal, the Animas deal has not propped J&J to the position it probably would like in the pump business.

Medtronic has a hefty lead in that market— more than half of the market compared to Animas’ roughly 25%—but a deal for J&J to acquire DexCom could help change that once a CGM-integrated pump is produced.

The JDRF project is expected to move in incremental steps, and the first device to come out of the project will likely have only partial ability to suspend and/ or dose insulin.

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Off ...................... icials Urge Ge There is a new that emerged from 20 address supply chain security threats. nerecommen Many of the ric Drudations Union FDA g Indust officials are current best ons to modificati collaborative program between European were ry workshops urgi to the ng the generic Ad some to that t QbD to Impro tical industry, whileop customs officials and Johnson & Johnson adopt quality by desi pharmaceu industry in the drug practices ve Submission gn to imp therborder atthei submissions rove the qua joint FDA and allows officials to scan J&J products ideas. s new and lity were Generic Pha to understand of of aions useulat theform workshop on rmaceutical their drug to ensure they are authentic through bett Association May 4-5 in file” often und er. The fight to be the Bet 11 for case new computer-based validation tool. “first-toermines the study details). hesda, Md. (see box, strictly quality or transmission applications p. by magnetic or electronic means is gen photocopying, storageof and eric use Reproduction, internal con for reserved. drug items rights All sumesElsevier, company. the agency an exo 914-332-1419. Authorization to photocopyAt the at rbit © 2010 F-D-C Reports, Inc., an Elsevier Danvers, ant amo ’s – contact: Intelligence articles mee Center, 222 Rosewood Dr., and thKen May, ting Clearance un or bulk reprints of Elsevier Business to Copyright •

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Diabetes Device Market

Medtronic’s Strategic Plan

Roche officials have said they see the patch pump as a product that could grow at about 30% annually in a market that is currently underpenetrated.

Whether or not such a deal is on the horizon, Medtronic, which has adopted a growfrom-within philosophy, is already moving ahead to strengthen its position in the diabetes space. The company is investing $120 million in research and development to expand the diabetes markets in which it already operates, it has a plan to completely “refresh” its entire line of diabetes products, and it is sitting on an interesting pipeline of new products that feature what Medtronic calls its Next-Generation Pump (NGP), which will have a new technology platform.

The Revel and Veo are new versions of pumps based on Medtronic’s Paradigm platform, which has been in use for around six years, and moving forward, a completely new platform will begin to replace existing systems in late 2011 or early 2012.

Mastrototaro says the goal is to offer more user-friendly pumps with better-designed interfaces, since patients are becoming more particular about what they expect from their pumps as well as how they want the pumps to look.

In the past, as Medtronic has developed technology that supports control over glucose levels, the emphasis was on how much technology could be put into the pumps for optimal usage. Now, customers are living in an age where a number of smart, mobile technologies are part of everyday life, and there are expectations for how that technology should look, feel, and function.

The NGPs will be designed with current customer knowledge of smart technology in mind.

Meanwhile, a product that could be launched to the market sooner than the NGP is the Enlite, a “comfort sensor” designed to be used with Medtronic’s CGM devices and CGM-enhanced pumps. The Enlite, which recently finished the last planned rounds of clinical trials, will be about half the size of the current sensor.

Additionally, the needle used to measure a user’s A1C levels will be smaller and contain an auto-retract feature to prevent accidental finger sticks. An approval application will be filed with the FDA later this year and the product could be on the market in the first half of 2011.

64

SEPTEMBER 2010

Whither Medtronic’s Patch Pump?

The other product in the works is a patch pump, which had a higher profile in Medtronic’s past pipeline product briefings.

The planned device is believed to be something similar to the OmniPod from Insulet Corp., which only makes up a small portion of the overall insulin pump market, but the company has staked out an early lead in this relatively new product area.

The OmniPod is a small (1.6 inch x 2.4 inch x 0.7 inch), tubeless pump that holds up to 200 units of insulin and can be worn for up to 72 hours. It works with a Personal Diabetes Manager (PDM) that wirelessly communicates with the pump to customize insulin delivery. The PDM also comes with a built in FreeStyle Glucose Meter from Abbott Laboratories, which also produces the third CGM system on the market, the FreeStyle Navigator Continuous Glucose Monitoring System. The OmniPod can be used—though not integrated—with any currently available CGM systems, and Insulet has a development agreement for CGM integration with Abbott.

Last year, Medtronic appeared to be positioning itself to compete in the patch pump business as soon as possible, and company officials noted resources had been moved to get such a pump to market sometime in 2011. However, priorities have changed, and the emphasis is now on the Veo, Revel, NGP, and comfort sensor, which fit better into the company business model. Mastrototaro says it made sense to focus on the core devices ahead of the patch pump, expected to produce smaller profit margins for the company. That is not to imply the patch pump is no longer in Medtronic’s future plans, but it could be until late 2012 before the device is launched, and by that time it could be clearer how much demand exists for a disposable pump.

Roche and Others Enter the Fray Of course, if demand is high, Medtronic could find itself in heavy competition with not only Insulet, but also other companies developing patch pump devices. Roche pushed itself to the forefront of that arena in April, when the company reached a $200 million deal with Elron Electronic Industries Ltd. to acquire www.ElsevierBI.com

Diabetes Device Market

SEPTEMBER 2010

Medingo Ltd., which produces the Solo MicroPump. This device is tubeless and consists of a semi-disposable insulin-dispensing patch and a remote control device to program the pump wirelessly. The actual pump portion of the system is referred to as the MicroPump, which consists of a disposable insulin reservoir capable of holding up to 200 units of insulin and a 90-day reusable pump base.

The Solo received FDA approval in July 2009, but a major market launch did not immediately follow. Roche now plans to scale up production capabilities to meet an expected global launch in 2012. Although a specific date has not been given, it is likely the company would want the upper hand in marketing and would therefore try to move ahead of any announcements Medtronic might make.

Roche officials have said they see the patch pump as a product that could grow at about 30% annually in a market that is currently underpenetrated. However, it is still not clear which diabetic patients might find a patch pump more appealing.

Exhibit 7

Selected Start-Up Companies Developing Insulin Delivery Devices Company

Notes

Altea Therapeutics

Drug-delivery firm developing PassPort patch for sustained transdermal delivery of basal insulin. Is collaborating with Eli Lilly and Amylin Pharmaceuticals.

Calibra Medical

Received FDA approval in July to market the Finesse Insulin Patch-Pen. Can be worn up to three days and uses Novo Nordisk Inc.â&#x20AC;&#x2122;s NovoLog rapid-acting insulin.

Cellnovo

Working on a full-feature insulin pump with novel mechanism of delivery through a mobile-enabled, wireless platform. Has a partnership deal with Home Diagnostics Inc. (recently acquired

by Nipro Diagnostics Inc.), a co-brand supplier of blood glucose monitoring systems to a large number of US pharmacies.

CeQur

Developing the CeQur Insulin Infuser, which delivers both basal and bolus insulin; pump, aimed at type 2 diabetics, includes a disposable insulin reservoir that attaches to a reusable electronic messenger.

Nilimedix

Working on a continuous subcutaneous insulin infusion system based on pressure-triggered release mechanism controlled by unique valves and sensors.

Tandem Diabetes Care

In stealth mode; new pump rumored to be full-featured, for the type 1 diabetes market.

Valeritas

Produces V-Go, a disposable device for patients with type 2 diabetes. Currently waiting for FDA approval.

SOURCES: Elsevierâ&#x20AC;&#x2122;s Strategic Transactions

66

Some have suggested the pump might be an effective alternative to a traditional pump for those who currently self-inject insulin, but others have said the patch pump is better suited for someone already familiar with the durable pumps. Ultimately it could be some combination of both, but with all the technology currently available in the durable pumps, it might be difficult for some diabetics to switch completely to the smaller, disposable design, which has fewer features.

Some companies view a patch pump as a product for the type 2 diabetic population, which is quite large and the majority of that group is not currently using any type of pump.

A potential opportunity exists for significant growth there, but only if type 2 diabetics can be convinced to use such a device and overcome the psychological barrier of having a pump attached rather than treating the disease with diet and glucose checks via a finger-stick meter. There is obviously a belief that a strong and untapped market exists for a patch pump, evident by the number of companies working on potential products, and the race is not limited only to the large and well-known players.

A number of small companies also are involved, and many are targeting the type 2 diabetes opportunity. These include Altea Therapeutics Corp., developing the PassPort patch to deliver insulin via the skin. The company has partnership agreements with Eli Lilly & Co. and Amylin Pharmaceuticals Inc. to develop and commercialize a patch to deliver the drug Byetta to type 2 diabetics. Other players in this area include CeQur SA, working on the CeQur device, a small insulin patch infuser designed for the continuous delivery of rapid-acting insulin for type 2 diabetes; Nilimedix Ltd., working on the Patch CSII with a CGM system to complement the companyâ&#x20AC;&#x2122;s durable ADI Insulin Pump; and Valeritas Inc., awaiting FDA approval for the V-Go, a once-daily, disposable pump for type 2 diabetics. (See Exhibit 7.)

Although the economy has made it difficult for some smaller companies to receive the necessary financing, optimism still exists for solid technology in the diabetes field because the number of patients continues to grow, as does the cost of treating those patients. A report released www.ElsevierBI.com

Diabetes Device Market

SEPTEMBER 2010

in August from the Agency for Healthcare Research and Quality (AHRQ) shows diabetes and its comorbidities are still costing patients and insurers—including Medicare—a good deal of money.

With Medicare covering nearly 60% of total hospital costs for patients with diabetes, the government continues to look for ways to gain financial control over the situation. Any product or therapy that can help reduce costs has an advantage, but to be successful, companies must find a way to maneuver in a very competitive field.

In “Hospital Stays for Patients with Diabetes,” 2008, AHRQ found nearly one in five hospitalizations were related to diabetic patients, who contributed a total of more than 7.7 million stays and $83 billion in hospital costs. Additionally, hospital stays for diabetic patients were longer and more costly than stays for patients without diabetes. Co-morbidities are one of the major drivers of high costs, and the report, based on data from the Healthcare Cost and Utilization Project (HCUP), found comorbidities among hospitalized patients were twice as frequent for diabetics as for patients without the disease. (See Exhibit 8.)

[A#2010400069] Robert Neil is Senior Staff Writer for Medtech Insight (E-mail: R.Neil@Elsevier.com) related reading Device Opportunities in the Diabetes Treatment Market, Medech Insight, October 2009 [A#2009400080] Diabetes: CGM Goes Mainstream, Medtech Insight, August 2008 [A#2008400057] Access these articles at OUR online store: www.windhover.com/article

Exhibit 8

Comparison of Hospital Stays for Patients with and without Diabetes

Hospital Stays for Patients with Diabetes*

Hospital Stays for Patients without Diabetes*

Hospital Stays for Patients with Diabetes as Principal Diagnosis**

7,726,000

32,158,600

540,317

19.4%

80.6%

1.4%

5.3

4.4

5.0

$10,937

$8,746

$8,612

Aggregated costs for US (billions)

$82.2

$274.99

$4.6

Percentage of total costs

23.1%

76.9%

1.3%

Percentage admitted through the Emergency Department

61.3%

41.7%

72.4%

Mean number of co-morbidities

2.6

1.3

2.4

Medicare

59.7%

32.0%

41.8%

Medicaid

9.9%

20.4%

18.2%

Private Insurance

23.4%

38.2%

26.0%

Uninsured

4.0%

5.6%

10.1%

Total number of discharges Percentage of total discharges Mean length of stay (days) Mean cost of hospitalization

Payer Mix (%)

*Based on all-listed diagnoses **Based on records with diabetes as a primary diagnosis SOURCE: Agency for Healthcare Research and Quality, Center for Delivery, Organization, and Markets, Healthcare Cost and Utilization Project, Nationwide Inpatient Sample, 2008

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67

COMPANY INDEX

A Abbott Diabetes Care Inc. . . . . . 58 Abbott Laboratories Inc. . . . 48, 58 Ablation Frontiers Inc. . . . . . . . . 18 Accentus Medical PLC . . . . . . . 24 Adoptics AG . . . . . . . . . . . . . . . 24 Advanced Cardiac Therapeutics Inc. . . . . . . . . . 50 Allergan Inc. . . . . . . . . . . . . . . . 12 Altea Therapeutics Corp. . . . . . . 66 American Medical Systems Inc. . 31 AmeriNet Inc. . . . . . . . . . . . . . . . 9 Amylin Pharmaceuticals Inc. . . . 66 Animas Corp. . . . . . . . . . . . . . . 62 Apama Medical Inc. . . . . . . . . . 50 Aptus Endosystems Inc. . . . . . . 25 Artes Medical Inc. . . . . . . . . . . . 15 Ascent Healthcare Solutions Inc. . 2 AtriCure Inc. . . . . . . . . . . . . . . . 54 B Bayer AG . . . . . . . . . . . . . . . . . 58 Bayer HealthCare LLC . . . . . . . . 58 BioForm Medical Inc. . . . . . . . . 12 BioImagene Inc. . . . . . . . . . . . . 24 BioniCare Medical Technologies Inc. . . . . . . . . . 23 Biotronik SE & Co. KG . . . . . . . 47 Bond University . . . . . . . . . . . . 28 Boston Heart Lab Corp. . . . . . . . 25 Boston Scientific Corp. . . . . . . . 45 Broadlane Inc. . . . . . . . . . . . . . . 9 BTL Industries Inc. . . . . . . . . . . 17 C Cardiac Concepts Inc. . . . . . . . . 25 Cardica Inc. . . . . . . . . . . . . . . . 24 CardioFocus Inc. . . . . . . . . . . . . 48 CardioMEMS Inc. . . . . . . . . 24, 45 Catheter Robotics Inc. . . . . . . . . 56 Cedars-Sinai Medical Center . . . 29 CellMed AG . . . . . . . . . . . . . . . 13 CeQur SA . . . . . . . . . . . . . . . . . 66 China Kanghui Holdings . . . . . . 25 Columbia University . . . . . . . . . 28 Complete Genomics Inc. . . . . . . 25 Concentric Medical Inc. . . . . . . . 33 Cordis Corp. . . . . . . . . . . . . . . . 41 CoreValve Inc. . . . . . . . . . . . . . 18 Cowen Healthcare Royalty Partners . . . . . . . . . 15 CR Bard Inc. . . . . . . . . . . . . . . 45 Curemark LLC . . . . . . . . . . . . . 25

CyberHeart Inc. . . . . . . . . . . . . .56 D Delcath Systems Inc. . . . . . . . . 25 Dermik Laboratories . . . . . . . . . 14 Devicor Medical Products Inc. . . 26 DexCom Inc. . . . . . . . . . . . . . . 62 D Medical Industries Ltd. . . . . . . 25 E Electromed Inc. . . . . . . . . . . . . 26 Elemé Medical Inc. . . . . . . . . . . 17 Eli Lilly & Co. . . . . . . . . . . . . . . 66 Elron Electronic Industries Ltd. . . 64 EndoControl SAS . . . . . . . . . . . 34 EndoGastric Solutions Inc. . . . . . 26 Endosense SA . . . . . . . . . . . . . 46 Epicardial Technologies Inc. . 55, 56 Erchonia Medical Inc. . . . . . . . . 16 Ethicon Endo-Surgery . . . . . . . . 10 Ethicon Inc. . . . . . . . . . . . . . . . 12 Exactech Inc. . . . . . . . . . . . . . . 24 F Fresenius Medical Care AG . . . . 24 H Hansen Medical Inc. . . . . . . . . . 50 HealthTrust Purchasing Group . . . 9 Helixis Inc. . . . . . . . . . . . . . . . . 24 HistoSonics Inc. . . . . . . . . . . . . 30 Hoya Surgical Optics . . . . . . . . . 24 I IDev Technologies Inc. . . . . . . . 26 Illumina Inc. . . . . . . . . . . . . . . . 24 Insulet Corp. . . . . . . . . . . . . . . .64 Intuitive Surgical Inc. . . 24, 34, 35 Ion Torrent Systems Inc. . . . . . . 24 iRhythm Technologies Inc. . . . . . 45 J Johnson & Johnson . . . 10, 12, 18, . . . . . . . . . . . . . . . . . . 41, 58 K K2M Inc. . . . . . . . . . . . . . . . . . 24 Kyphon Inc. . . . . . . . . . . . . . . . 19 L LensAR Inc. . . . . . . . . . . . . . . . 26 LifeScan Inc. . . . . . . . . . . . . . . 58 Life Technologies Corp. . . . . . . . 24 M Massachusetts General Hospital 15, 43

September 2010

Mauna Kea Technologies SAS . . 35 Mayo Clinic . . . . . . . . . . . . . . . 43 MedAssets . . . . . . . . . . . . . . . . . 9 Medicis Aesthetics Inc. . . . . . . . 12 Medigus Ltd. . . . . . . . . . . . . . . 48 Medingo Ltd. . . . . . . . . . . . . . . 64 Medtronic Ablation Frontiers LLC . . . . . . . . . 18, 42 Medtronic CoreValve LLC . . . . . . 18 Medtronic Inc. . . . . 18, 24, 42, 60 Mentor Corp. . . . . . . . . . . . . . . 12 Merz Aesthetics US . . . . . . . . . 12 Merz GMBH & Co. KGAA . . . . . .12 MindFrame Inc. . . . . . . . . . . . . 26 Mount Sinai Hospital . . . . . . . . . 49 Moximed Inc. . . . . . . . . . . . . . . 19 MyoScience Inc. . . . . . . . . . . . . 13 N National Institutes of Health . . . . 56 nContact Surgical Inc. . . . . . . . . 51 Neuravi Ltd. . . . . . . . . . . . . . . . 32 Nikkiso Co. Ltd. . . . . . . . . . . . . 24 Nilimedix Ltd. . . . . . . . . . . . . . . 66 Novartis AG . . . . . . . . . . . . . . . 25 Novartis Molecular Diagnostics . 25 O Olympus Corp . . . . . . . . . . . . . 31 OptiMedica Corp. . . . . . . . . . . . 24 Opto Circuits Ltd. . . . . . . . . . . . 24 Osteotech Inc. . . . . . . . . . . . . . 24 P Pacific Biosciences of California Inc. . . . . . . . . . . . 26 Pathwork Diagnostics Inc. . . . . . 25 Pennsylvania State University . . . 56 Penumbra Inc. . . . . . . . . . . . . . 33 PowerVision Inc. . . . . . . . . . . . . 26 Premier Inc. . . . . . . . . . . . . . . . . 9 Q Quick-Med Technologies Inc. . . . 25 R REVA Medical Inc. . . . . . . . . . . 26 Revance Therapeutics Inc. . . . . . 13 Roche . . . . . . . . . . . . . 58, 64, 66 Roche Diagnostics . . . . . . . 24, 58 RS Medical . . . . . . . . . . . . . . . 23 S Sanofi-Aventis . . . . . . . . . . . . . 14 SI-Bone Inc. . . . . . . . . . . . . . . . 26

Solta Medical Inc. . . . . . . . . . . . 17 SomaLogic Inc. . . . . . . . . . . . . . 26 Stereotaxis Inc. . . . . . . . . . . . . 42 SterilMed Inc. . . . . . . . . . . . . . . . 2 St. Francis Medical Technologies Inc. . . . . . . . . . 18 St. Jude Medical Inc. . . . . . 24, 39 Strategic Polymer Sciences Inc. . . . . . . . . . . . 56 Stryker Corp. . . . . . . . . . . . . . . . 2 Suneva Medical Inc. . . . . . . . . . 15 Swift Biosciences Inc. . . . . . . . . 26 Syneron Medical Ltd. . . . . . . . . 17 T Tenaxis Medical Inc. . . . . . . . . . 26 Tenet Healthcare Corp. . . . . . . . 10 Thoratec Corp. . . . . . . . . . . . . . 22 TIMC/IMAG Laboratory . . . . . . . 34 Topcon Corp. . . . . . . . . . . . . . . 24 U UltraShape Ltd. . . . . . . . . . . . . . 16 Unetixs Vascular Inc. . . . . . . . . 24 University of Alabama at Birmingham . . . . . . . . . . 14 University of Michigan . . . . . 30, 31 University of Nebraska . . . . 35, 36 University of Oklahoma Health Sciences Center . . . . . . . . . 48 University of Southern California 29 US Department of Defense . . . . . 9 V Valeritas Inc. . . . . . . . . . . . . . . 66 VascoMed GMBH . . . . . . . . . . . 47 Ventana Medical Systems Inc. . . 24 Ventor Technologies Ltd. . . . . . . 18 VertiFlex Inc. . . . . . . . . . . . . . . 24 VHA Inc. . . . . . . . . . . . . . . . . . . 9 ViewRay Inc. . . . . . . . . . . . . . . 26 Viridis BioPharma Pvt. Ltd. . . . . 25 Virtual Incision Corp. . . . . . . . . . 35 Visterra Inc. . . . . . . . . . . . . . . . 26 Voyage Medical Inc. . . . . . . . . . 47 VytronUS Inc . . . . . . . . . . . . . . 56 W WaveTec Vision Systems Inc. . . . 26 Weizmann Institute of Science . . 29 Z Zeltiq . . . . . . . . . . . . . . . . . . 16, 17 Zimmer Holdings Inc. . . . . . . . . 24

Correction: In our August feature, Seeking New Options for Prostate Cancer, we incorrectly reported the volume of Prostate Cancer Cryotherapy Procedures and US Prostatectomy Procedure in millions rather than thousands.

68

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