The restrictions on elective surgeries as hospitals struggle to manage the unfolding global pandemic are hitting medical device companies particularly hard. Abiomed Inc., which specializes in a tiny, minimally invasive heart pump to support heart failure patients, saw its first fiscal fourth-quarter revenue flatten as procedures were postponed. Still, U.S. revenue remained stronger than Wall Street had expected, even as ex-U.S. revenue had deeper declines.
The Danvers, Mass.-based company also made a move to ensure that its offerings remain essential; it acquired extracorporeal membrane oxygenation (ECMO) startup Breethe Inc. for an undisclosed sum. Abiomed was already an investor in Breethe since mid-2019.
ECMO systems are already used in conjunction with the Impella heart pump, particularly in Japan. The portable, all-in-one artificial lung system could be used in combination with the tiny heart pump to enable patients to walk during their recovery, which can be a crucial aid to improving patient outcomes. But it’s also expected to prove useful for COVID-19 patients during their recovery.
“This ECMO technology will allow us to treat cardiogenic shock patients requiring oxygenation who are already being supported with Impella, about 10% of our patients, add ECMO pediatric offerings and treat a new patient population with respiratory failure,” said Abiomed chairman, CEO and President Michael Minogue on the earnings call.
“This acquisition provides Abiomed with the opportunity to innovate traditional ECMO technology, focusing on patient ambulation and recovery from acute respiratory failure, such as ARDS, H1N1, SARS and COVID-19,” he continued. “For many patients cardiogenic shock, Impella is the optimal technology because it unloads the left ventricle, it perfuses end organs and allows the heart to rest and recover.”
More than 10,000 cardiogenic shock patients have been treated with ECMO plus Impella, a combination known as Ecpella. In Japan, more than half of Impella patients receive Ecpella for hemodynamic and oxygenation support. Ecpella has been shown to improve survival rates for some heart failure patients.
The novel Breethe system has an integrated oxygen concentrator, so it eliminates the need for bulky oxygen tanks for use during patient ambulation. It is designed to be easy for health care providers to set up, manage and monitor.
“Abiomed is the best positioned company to build on the legacy of what we started,” said Bartley Griffith, who founded Breethe. “The addition of Breethe’s technology into Abiomed’s product portfolio will further enhance Abiomed’s ability to improve outcomes for their patients and serve a new patient population.”
Griffith is the Hales Distinguished Professor of Surgery at University of Maryland School of Medicine. He has been a long-time collaborator with Abiomed and has served as a principal investigator on one of its clinical trials. The Breethe system is designed to improve patient outcomes, improve quality of life and reduce total cost of care by changing the way oxygenation is delivered.
Abiomed and Breethe currently are completing the 510(k) process for the ECMO system. Abiomed expects to start marketing the Breethe system during the fourth quarter of fiscal 2021, which is the first quarter of the calendar year 2021. The company has an upcoming investor day planned for May 27, at which it will more fully address the Breethe ECMO technology.
“We expect management to discuss the ECMO offering in more detail, the growing body of evidence on Impella, as well as new and upcoming products. COVID-19 and utilization are likely to remain major topics of discussion as well,” said BTIG analyst Marie Thibault on her expectations for the upcoming investor meeting. She remains cautious on the company’s near-term prospects, retaining a “neutral” rating without a price target.
Wall Street was more enthusiastic, driving Abiomed (NASDAQ: ABMD) shares up 13% April 30 on the earnings news. Unlike so many companies in the current volatile market, Abiomed has actually seen its valuation rise this year to about $8.6 billion from around $7.7 billion at the end of 2019.
At the upcoming investor event, Abiomed will more fully elucidate the potential role for the Breethe system in treating the acute respiratory failure that is characteristic of advanced COVID-19 patients. Minogue was critical of some of the existing oxygen support options for COVID-19 patients in intensive care.
“In the next five years, we're going to continue to innovate,” summed up Minogue. “Because we combine the technologies, and we've got the world's smallest heart pumps, and we can do left and right side support, you're going to see real new innovation come to that space. This COVID-19 time has shown that many of the technologies that are out there for oxygenation and hemodynamics are already 20 years old and they're 510(k) technology. So, they haven't been put through a PMA safety and effectiveness process.”
“We're going to bring that same discipline in innovation, the integration of our waveforms, integration of what's happening in these patients, and we'll be able to optimize both oxygenation and unloading because the end game and goal is to keep the patient alive and send him or her home with their own heart,” he concluded.
Abiomed said it had identified more than 100 COVID-19 patient cases in its quality databases – and every Friday it is hosting a conference call with more than 200 physicians to try to identify lessons they have learned in treating COVID-19 patients with cardiogenic shock, myocarditis or organ failure. They also review specific COVID-19 case studies on Impella and ECMO support.
It remains as yet unclear the extent to which COVID-19 patients may have permanent heart and/or lung damage that will weaken these organs and require treatment after recovery from the initial infection.
For the quarter ended March 31, Abiomed reported $206.7 million in revenue, which was down a bit from the $207.1 million in revenue from the same period a year earlier. For fiscal 2020, revenue was up 9% to $840.9 million from $769.4 million. Abiomed declined to offer any guidance for its outlook for the ongoing fiscal 2021.
Minogue underscored that heart pumps for these heart failure patients can be delayed, but not eliminated. So, hospitals are building up a backlog of patients who will require Impella eventually. Summed up Minogue, “Our elective cases are truly not elective like having cosmetic surgery or knees, they're still having heart failure. Many of them are still being admitted to the hospital with acute or chronic cases. We do expect, unfortunately, for many people, coronary disease is going to grow, and we think that, with COVID-19, it's going to grow even more.”