The tightening turns of the economic downturn has pushed SPO Medical (Kfar Saba, Israel/Woodland Hills, California) into a tailspin.
The company's story, grimly described in filings with the Securities and Exchange Commission, provides insights into the desperation beginning to grip start-up medical device companies.
A maker of biosensors for portable monitoring devices based on technologies developed in Israel, SPO reported a 45% drop in sales, with gross revenue of $2.8 million in 2008, down from $5 million in 2007.
The company lost $3.2 million that it attributed to the lost sales, though it also lost $1.6 million in 2007 on strong sales as it continued to burn cash to push the sales curve higher with product line extensions.
In its SEC reporting, SPO said it needs to "raise additional funds on an immediate basis in order to meet our on-going operating requirements," and that it has stopped non-essential product development.
The company reported an aggressive 35% growth in sales in 2007 as it expanded its PulseOx line of monitors that use a unique reflective detector capable of reading blood saturation level from a single side of the skin using a light emitter that picks up the intensity of blood flow from just a few millimeters of light penetration.
"As with many companies in our market sector, the current worldwide economic financial crisis has negatively impacted the potential purchasing decisions of our customers, leading to a decrease in revenues for fiscal 2008," explained President/CEO Michael Braunold.
"If the global economic environment continues to be weak or deteriorates further, there will likely be a negative effect on our revenues and earnings for the remainder of the current fiscal year and continuing into fiscal 2010," SPO reported to the SEC.
The company, with principal executive offices in Israel, is stepping up its bet on the U.S., saying it has taken on an independent sales representative group specialized in the medical market, a move SPO said is designed to intensify the sales in it what it considers its primary market.
"With continued increasing challenges in worldwide markets, we seek to extend our reach in the United States," Braunold said. "We hope our newly appointed sales representatives will vastly extend our distribution capability to medical facilities we could not reach before and strengthen our overall presence and penetration in the territory."
The competitive environment for patient monitoring equipment is fierce, with SPO, which employed 13 people as of March 31, facing the much larger and more well-established Nonin Medical (Plymouth, Minnesota) and Smiths Medical PM (Waukesha, Wisconsin) in its product segment.
The company said this price-sensitive market was further eroded in 2008 by the entry of several Chinese based medical device manufacturers who have extended their share of the homecare market and have become direct competitors.
"Their pricing models have significantly impacted this market and in particular under the current economic conditions," SPO said.
Braunold said, "In parallel to our existing medical market products, we continue to pursue strategic relationships with major players in non-medical markets who seek to license our technology for a number of mass-market consumer wellness applications."
SPO Medical has not returned a profit since its founding in 1997, and in a statement said it expects to incur losses for the immediate future requiring the need to raise additional funds.
The company went public in 2005 but has been quoted on the over-the-counter Bulletin Board since October, 2007 and in its filing with the SEC, SPO reports "there is no established market for our common stock and none may develop or be sustained."
"These conditions raise substantial doubt about our ability to continue as a going concern," the company concludes in its SEC report.
Medtronic's Endeavor cleared in Japan
Medtronic (Minneapolis) reported the approval of its Endeavor drug-eluting coronary stent system by the Japanese Ministry of Health, Labor and Welfare, clearing the way for the launch of the product in the world's second largest market for advanced medical technology, according to the company. Medtronic said it plans to launch the Endeavor immediately following the authorization of reimbursement, which is expected on May 1.
Following the launch in Japan, the Endeavor DES will be available for the treatment of coronary artery disease in every major market in the world, Medtronic said.
The company said that the ENDEAVOR clinical program has demonstrated that the Endeavor DES is associated with exceptionally low rates of stent thrombosis, myocardial infarction (MI) and cardiac death, as well as low rates of clinically-driven target lesion revascularization, out to as long as five years of patient follow-up. Representing various world geographies (including Japan) and patient subsets, the program has enrolled more than 10,000 subjects to date and will ultimately enroll more than 20,000 subjects in a combination of randomized controlled and single-arm trials.
ENDEAVOR Japan (n=99), a single-arm trial of Japanese subjects with a primary endpoint of TVF at nine months, reflects the consistent results of the ENDEAVOR clinical program overall and contributed to the regulatory approval of the Endeavor DES in Japan. At two years, the TVF rate in ENDEAVOR Japan was 8.7%, comparable to the same measure in other trials of the Endeavor DES, and there have been no instances of definite/probable stent thrombosis (early, late or very late), with predictably low rates of death (2.2%) and MI (2.2%).
The Endeavor DES received the CE mark in August 2005 and was approved by the FDA in February 2008.
U.S. firm buys Swiss RFID tagging company
Elecsys (Olathe, Kansas), a maker of ultra-rugged mobile computers and wireless remote monitoring systems, said it would acquire MBBS (Cortaillod, Switzerland), a developer of radio frequency identification (RFID) for harsh and extreme environments, including surgical instruments.
MBBS has developed a technology to read and write electronic data through metals such as non-magnetic steels and other alloys. The hermetically-sealed RFID tags can withstand 2,500 sterilization cycles, longer than the useful life of most surgical instruments, according to the company.
French nurses report workflow improvements with tagged instruments taking one third less time to process and meeting French requirements for traceability back through the most recent five procedures.
Elecsys sees opportunities to apply the technology to infrastructure assets, heavy equipment, weapons and other devices that must withstand harsh environments.
The Swiss start-up, which employs 12 people, reported revenues of $550,000 for the year ended Dec. 31, 2008.
The acquisition represents an exit in the form of a stock swap for the investment firm BSN Systems (Irvine, California), whose principal backers are Sandoz FF Holding SA (Pully, Switzerland) and Techniques d'Avant Garde SA, or TAG Group Holdings (Luxembourg).
BSN will receive 175,000 shares of Elecsys common stock as well as performance payments over the next five years.
Elecsys said it expects to close on the purchase by mid-June.
Veeva launches operations in Europe
On the heels of a corporate name change Veeva Systems (Pleasanton, California), formerly Verticals onDemand, reported the launch of operations in Europe. The company has opened an office in Stockholm, Sweden that will be managed by Peter Nordblad, Veeva's new EMEA director of sales. In addition, Veeva has established an exclusive partnership with Pharma Advisors, headquartered in Madrid, Spain. Through these two new locations, Veeva will introduce its SaaS CRM solution to life sciences companies throughout Europe as well as provide local implementation and support services.
Veeva develops SaaS-based solutions for the global life sciences industry.
Israeli sites added for Oxycyte trial
Oxygen Biotherapeutics (Costa Mesa, California) reported adding clinical trial sites in Israel for the planned Phase II dose escalation study of Oxycyte in traumatic brain injury (TBI).
Oxycyte is the company's perfluorocarbon (PFC) therapeutic oxygen carrier. The Israeli sites are in addition to those previously planned for Switzerland. Oxygen Therapeutics said it expects to begin the clinical trials in the second quarter.
Plans call for up to six treatment sites in Israel, the same number as in Switzerland. They will use the same clinical protocol. All trials will be supervised by the Israeli affiliate of PFC Pharma Focus AG, a Swiss-based contract research organization.
Oxygen Biotherapeutics has under development Oxycyte and an implantable glucose sensor. These products are based upon core technologies that include biomedical applications for PFCs and medical and industrial applications for biosensors.
Canadian firm names two distributors
Intelligent Hospital Systems (IH Systems; Winnipeg, Manitoba), has entered into agreements with distributors in Saudi Arabia and Spain for its first product, the RIVA System (Robotic IV Automation), a self-contained unit for filling IV syringes and bags.
The company's agreement with Arabian Medical Marketing Co. (AMCO), based in Saudi Arabia, calls for AMCO to provide direct sales and service support for the RIVA System across the Middle East.
In Spain, distribution will be by Palex Medical SA.