Senior Staff Writer
Change is difficult, as Clint Carnell, CEO of Perseon (NASDAQ:PRSN) (Salt Lake City) was quick to acknowledge in a recent interview with Medical Device Daily. But when faced with the challenge of taking a 36-year-old company and completely transforming its identity, Carnell was not afraid to be bold.
"Perseon really is essentially a new company in what's an exciting high-growth market," said Carnell, who joined the company in November 2014.
Within six months Carnell led the company through a transformation that included a new name, the divesting of a legacy hyperthermia business unit, and turning-over three-quarters of the leadership team and about half the board.
"Obviously change is difficult, and we've tried to do our best to lead our employees through that," Carnell said.
With 20 years of experience in the life sciences industry in a variety of market sectors, Carnell said he is comfortable being parachuted into situations where a company may have been mis-managed in the past or lacked the necessary resources to grow the business. In such situations, he said he has "been able to put a strategic plan in place, hire a team, and put the capital resources behind a team to grow shareholder value and essentially that's what we're doing."
Perseon, formerly known as BSD Medical, makes systems designed to treat cancer using heat therapy, including its MicroThermX microwave ablation system uses precision-guided microwave energy to ablate soft tissue. In April, the FDA cleared the MicroThermX system for the indication of laparoscopic ablation procedures using imaging guidance.
So far the changes appear to be paying off. Carnell said the company's second quarter earnings showed MicroThermX sales increased 117% year-over-year and gross margins expanded by 35% from the first quarter to the second quarter and 66% from 41% a year ago, reflecting the company's sole focus on the MicroThermX business. The company said it expects total MicroThermX revenues to range between $3.5 million to $5 million in fiscal year 2015, which would represent an increase of 67% to 138% over 2014. Perseon's management is expected to provide a business update and fiscal 2015 outlook today during a conference call at 11 a.m. EST. Details for that call can be found on the company's website.
Carnell told MDD that the most recent quarter offered "just a peek at what Perseon can look like as a stand-alone company with a new leadership and a new vision."
A second challenge Carnell faced after joining the company was its limited resources. He said the company's recent public offering of 5.75 million shares of common stock, and warrants to buy 11.5 million shares of common stock, helped satisfy the funding needs of the company and will allow Perseon to execute on its business strategy. That offering, on which Maxim Group was the book-running manager, raised about $5.2 million in gross proceeds.
"Fundamentally we have really good bones to work with as a medical device company, probably one of the better performers in the sector," Carnell said.
Perseon's stock price over the past 52 weeks has ranged from a high of $7.60 to a low of 51 cents and closed Wednesday at 53 cents, down 3 cents (5.36%).
A third challenge Carnell said the company has faced in his nine months as CEO is maintaining a focus. "There are so many things we could be doing, staying focused on the important issues, executing well against those and making sure people understand, that is both a short-term as well as a long-term challenge," he said. "We need to make sure both our constituents in the market place, the doctors and the patients, all understand the good things this company is doing for the business."
Currently Perseon has six clinical trials involving about 186 patients at various stages. Carnell said these trials are intended to support adoption of the company's existing technology, not for regulatory purposes. The company does, however have some new products in the pipeline including a next-generation generator and multiple new antennas designed to make the MicroThermX system faster, smarter, and even more economically feasible for the health care system.
"This [therapy] should be so much more popular than it is," Carnell said.
Perseon's major competitors in the microwave ablation space are Medtronic (NYSE: MDT) (Dublin), Angiodynamics (NASDAQ: ANGO) (Latham, New York), and Neuwave Medical (Madison, Wisc.). Carnell said it is in Perseon's best interest to work with those competitors to provide good clinical support and to educate more physicians and patients about the opportunities to treat cancer using microwave ablation in conjunction with radiation, chemotherapy, or other treatment modalities.
"There are some good companies, they're well-led, and we simply want to participate in that game because I think it's in the best interest of cancer patients globally," he said.
What sets Perseon's technology apart from competing systems in the space, Carnell said, is that the system is portable, easy for clinicians to use, is economical, and the company's Synchronous Wave Alignment technology allows the use of multiple Perseon antenna tips to increase the probability of reaching the center of large tumors and creating larger margins to ensure that all of the surrounding cells are eliminated.
"It gives you a better chance of that 30-day follow up where the physician doesn't have to say 'I'm sorry, I didn't get it all'," he said. "Unfortunately oncology is growing globally and fortunately we have one of the best technologies that provide efficacy, safety, and good economics for the health care systems to treat cancerous tumors."
In addition to the challenges of transforming an old company into a new company, Carnell seems to be mindful of broader hurdles that impact all medical device companies such as the ever-critical job of raising capital, working with regulatory agencies from the start, and setting the right expectations for investors about what it will take to bring a product to the market. Of course there is also the task of developing good intellectual property supported by clinical research to make sure it is superior or differentiated.
"You can't rest on your laurels. You need to be developing next-generation products. It is a global market, it's imperative that the U.S. stays competitive and the world leader in this," Carnell said. "In medical devices you make great products and you sell great products and it's really important we do that in an ethical manner and ensure that we're creating the best, safe, effective products for patients and doctors worldwide. At the same time, you need to make sure you make money so shareholders continue to put dollars behind a product like this."