CD&D Staff

"Lumpy." That was a term occasionally heard at the Piper Jaffray Health Care Conference at the Palace Hotel in New York in early December to indicate, for instance, a company's herky-jerky cash flow, or the ups and downs of foreign exchange rates, or perhaps the occasional disruptions of patent challenges.

But the term also might be used to describe the positioning changes that many smaller and mid-sized companies often must go through to reach profitability and maturity.

Take, for instance, Abiomed (Danvers, Massachusetts) and Greatbatch (Clarence, New York).

While these companies undoubtedly would dislike being described as lumpy, their developmental pathways obviously have not been straight lines. Rather, they have experienced significant redirections and redos – occasional misdirections, perhaps – as they drive toward fulfillment of full potential.

Abiomed, for instance, may still be best associated in many minds with its AbioCor artificial heart. But it has clearly shifted to an aggressive emphasis on another heart technology, the Impella ventricular assist device, a platform system that the company says will drive profits and advance its presence in the cardiovascular arena.

Presenting at Piper Jaffray, President/CEO Mike Minogue told his audience at the Palace Hotel that up to 80% of the company's focus is on expanding Impella use, and Minogue has been the main driver in shifting emphasis away from the artificial heart, the technology pursued with missionary-like zeal by company founder David Lederman.

Minogue noted that the company has eight products cleared or approved by the FDA, but that "all these things are secondary to Impella."

Aimee Maillett, Abiomed public relations specialist, assured Medical Device Daily that the company has not abandoned the AbioCor heart, and that the company is expecting implantations of the AbioCor next year, with four centers readied to do them.

But she acknowledged that the company has shifted focus from a heart device that will simply extend survival – in best-case scenarios up to 24 months – to a device offering "recovery" of the heart and a much extended lifespan, the targeted patient pool younger people before they reach end-stage cardiovascular illness.

This, of course, also translates to larger profit potential.

Minogue told conference attendees that the Impella offers three types of action which not only provide greater infusion of blood but also help the heart recover pumping function. This clinical benefit, he noted, translates to huge healthcare savings, for instance, in making unnecessary the continuing use of drug therapy.

The goal, he said, is 'to obsolete balloon pumps and ionotropic drugs," used with the intention of strengthening the heart muscle.

Delivered by a less-invasive percutaneous method, the Impella currently is being used in the majority of heart transplant centers and the company is driving to penetrate cath lab environments with an expanded sales force and more staff to provide training in the use of Impella, Minogue said.

Greatbatch is an original equipment manufacturer (OEM) making key components used in implantable products for cardiovascular, neuromodulation, orthopedic and radiologic applications. Pursuing a refocusing strategy in 2004, it began scaling back from 16 locations to six "campuses," President/CEO Thomas Hook said in his presentation.

The company then went into acquisition mode last year.

"In 2007, we did a recapitalization and looked for targeted deals," Hook said. This resulted in the accumulation of seven companies and 30 facilities, with Greatbatch now undertaking what he called "a dozen consolidation exercises."

"We can probably get down to a dozen facilities. We've been aggressive in shedding overhead, shutting facilities, consolidating the manufacturing environment."

What, he was asked, gave the company the confidence to go through the integration process again?

"A lot of patience, operating skills, a little therapy," was Hook's response, accompanied by a wry grin. "What we looked at is the cost-effectiveness of smaller deals, the opportunities for synergies, the technologies we wanted."

Full integration will take another two years of "hard work," he said, but that the results are already being seen.

In its overview book for the conference, Piper Jaffray noted the company's expanding margins and growth of "71% YTD over prior-year levels." But it also expressed a "lack [of] conviction in the company's ability to achieve continued gains from its consolidation efforts."

Asked about new offerings, Hook cited the rollout of advanced technologies to aid medical device customers in making their devices MRI-compatible and "wireless sensing technologies, commercially based, for oil and gas and related industries, as well as medical implantable industries.'

Hook said that Greatbatch is "growing organizationally because we're serving customers very well."

And perhaps to allay investor fears concerning the need for even more integration "exercises," he said the company has "no other acquisitions planned."

New HeartMate outperforms old for DT use

Patients implanted with the HeartMate II for destination therapy (DT) from Thoratec (Pleasanton, California) fared better than those implanted with an earlier version of the device, according to an interim analysis of data the company reported in early December. The DT study protocol called for an interim analysis to test for overwhelming superiority when 67% of the first 200 randomized patients had reached two years of follow-up.

The HeartMate II was approved in April 2008 for bridge-to-transplant (BTT) patients. The DT indication would be for patients too ill to receive a transplant. The company's HeartMate XVE already is approved for this indication, but hasn't seen much uptake because of durability of the device, which is 18 to 24 months. The newer pump is expected to have durability out to 10 years.

Thoratec spokeswoman Susan Benton told Cardiovascular Devices & Drugs that the HeartMate XVE is a larger device and is still the only FDA-approved device for the DT indication. "It is still a very capable device, but it is older and larger," she said.

The HeartMate II, smaller than a D-cell battery, allowed women and smaller men to receive the device as a BTT patient. Smaller body sizes had previously been underserved because the predicate device was too large.

The DT data shows that patients implanted with the HeartMate II achieved statistically superior outcomes vs. those in the control group who were implanted with the HeartMate XVE. The primary endpoint for the trial assessed in this analysis includes patients being alive, and free of stroke and the need of reoperation for device replacement at two years.

As a result of the data, an independent safety monitoring board agreed with Thoratec that the HeartMate II DT should be used in all new patients enrolled in the trial instead of the older pump, the company said.

Thoratec said it would file an investigational device exemption (IDE) Supplement with the FDA seeking approval for this action later this month, and that it now expects to file a pre-market approval (PMA) application seeking approval of the HeartMate II for DT in the first half of 2009.

"This is tremendous news for patients suffering from advanced-stage heart failure and the clinicians who treat them," said President/CEO Gary Burbach. "The data indicate that the HeartMate II achieved statistical superiority to the control group patients by an overwhelming margin." He added that the findings complement the experience with the device in BTT patients, both in the company's pivotal trial and as a commercially available device since April.

Thoratec shares rose $2.48, or 10%, after the study analysis was reported.

The HeartMate II is a mechanical circulatory support device intended for a broad range of advanced-stage heart failure patients. A continuous-flow device, the HeartMate II can pump up to 10 liters of blood per minute and is designed to provide long-term cardiac support, Thoratec noted. The device is implanted alongside a patient's native heart and takes over the pumping ability of the weakened heart's left ventricle.

The company says it is easier to implant than prior devices, and with only one moving part, the HeartMate II is designed to provide "exceptional reliability" and improved patient quality of life. The device is designed to have a much longer functional life than the previous generation of devices and to operate more simply and quietly, Thoratec noted.

Burbach said the company is in the process of providing the conclusions from the analysis to its clinical investigators and the FDA. He said Thoratec hopes to present the data publicly soon after it files its PMA.

Benton noted that the timing of these results is ahead of schedule. The company was expected to file for FDA approval in late summer or early fall; now it's on track to file in the first half of 2009.

"It just pushes things up a bit, which is exciting news," she said.

In May 2007, the company reported that it had achieved the required enrollment of 200 patients in the randomized portion of the trial. Since then, Thoratec has continued to enroll patients under continued-access protocols, including the most recent CAP approved by the FDA in mid-November allowing for enrollment of an additional 60 patients.

As of Oct. 24, 2008, the company had enrolled 607 patients in the trial, including 366 in the randomized portion of the study.

According to an Associated Press report, JPMorgan med-tech analyst Taylor Harris said he hadn't expected Thoratec to report this data until late 2009. The company could be as much as six months ahead of schedule, he said.

The AP also said Lazard Capital Markets analyst Sean Lavin raised his profit and revenue estimates for Thoratec due to the timing of the report and said the FDA should approve the HeartMate II for DT in the first half of 2010. He now expects the company to earn 76 cents a share that year on $416 million in revenue and 90 cents a share on $484 million in revenue in 2011.

Navistar suvives panel despite protocol switch

There are times when changing a clinical study protocol midstream creates major headaches for device makers, but Biosense Webster (Diamond Bar, California) managed to sail through an advisory committee hearing in late November with a unanimous vote for approvability despite the switch.

Webster's radio frequency NaviStar catheter with the Thermocool feature, a saline rinse used to reduce unwanted damage to heart tissues, was originally approved for treatment of atrial flutter, but will be the first ablation devices approved for atrial fibrillation (AF), assuming FDA follows the panel's unanimous recommendation for approval.

However, the panel saved its recommendation for only the NaviStar and declined to recommend that FDA authorize the same indication for the company's other Thermocool catheters. As for post-approval studies, Webster also managed to dodge a recommendation that the post-approval study (PAS) include a control arm, which would have substantially upped the cost of a study.

Leading off the company's presentation at the hearing, Marcia Yaross, PhD, its VP for clinical, quality and regulatory affairs, hinted at an unmet need in reminding the panelists that "no ablation catheter has been approved … in the U.S." for paroxysmal AF. She also said that the Navistar has marketed in 39 nations since its introduction in 1998.

According to the data presented by Webster, the probability of chronic success (at nine months) for the patients on ablation was 62.7%, which was deemed significantly better than the 17.2% probability for controls, who were on medical therapy for their arrhythmias. The data also indicated that there were no device-related serious adverse events (SAEs) such as death, heart attack, or stroke within seven days of the procedure, and no clinically significant pulmonary vein stenosis in patients receiving ablation. Overall SAEs in the study at 90 days were about half that in the control population, or 18.4% vs. 35.1%.

Regarding the study conducted to bolster the new indication, Yaross said that the study population "all had failed at least one anti-arrhythmic drug" and that the company had found that "enrollment … was extremely challenging."

This was the reason Webster had requested FDA's stamp of approval on the change from a traditional statistical analysis plan – the so-called frequentist model – to a request for a Bayesian analysis plan, which FDA approved in September 2007. She said that an interim analysis led to a conclusion of success for the device, which led to suspension of further enrollment.

Yaross said the final enrollment was of 167 subjects at 19 centers and that no centers accounted for more than 30% of enrollees.

Panelist David Slotwiner, MD, of the Long Island Jewish Medical Center (New York), gave an analysis of the application, noting that each of the procedures in the trial were performed with computerized tomography or magnetic resonance imaging data, giving the electrophysiologist "an enormous amount of information" on the patient's heart. However, he said, "We may need to consider" whether it is appropriate to allow use without 3-D imaging, "especially for less-experienced operators."

Bram Zuckerman, FDA's director of cardiovascular devices, replied that the device might be used in older populations, but panelist John Somberg, MD, of Rush University Medical Center (Chicago), countered that "you couldn't design a trial for amiodarone" because its side effects are "horrible" and the adverse event rate seen in the drug would still leave the device with better outcomes

As to whether safety had been established, panelists were comfortable with the data for the NaviStar, but some were less comfortable with expanding the indication to other Thermocool devices. Efficacy also was seen as sufficiently demonstrated, although some panelists expressed reservations about its use on older patients.

GE, Philips plan job cuts

Two of the world's largest medical products companies, GE Healthcare (Waukesha, Wisconsin) and Royal Philips Electronics (Amsterdam, the Netherlands), reported in late November and early December plans for substantial job cuts in response to the world economic crisis.

Philips reported that it will lay off 5% of its workforce at its Philips Healthcare division (Best, the Netherlands/Andover, Massachusetts) as part of an accelerated cost savings push sparked by the global economic slowdown.

GE Healthcare said it plans to eliminate an unspecified number of jobs across its various locations and business units, according to the Business Journal of Milwaukee.

"To strengthen the company to better perform in the current economic environment and position it for profitable long-term growth, GE Healthcare is announcing plans to reduce costs including downsizing our work force," GE Healthcare spokesman Brian McKaig said.

McKiag blamed an overall weakness in the U.S. and a number of Western European healthcare markets for the pending cuts. Governments, insurance companies and state legislatures also are taking a number of actions aimed at reducing the amount spent on hospital procedures, he added.

GE Healthcare has about 46,000 employees in 100 countries, including about 7,000 in Wisconsin, the majority of which are in Milwaukee and Waukesha counties.

Philips spokesman Arent Jan Hesselink said in a statement that some 32,000 workers are employed at Philips' healthcare division, giving a total number of 1,600 job cuts.

Philips aims to improve its healthcare margins and streamline operations, particularly in its imaging systems business. "The 5% reduction in the workforce is one of the borders of the programs we are working on," Hesselink said.

The Boston Globe reported that fewer than 100 jobs in Andover were affected by the cuts. Philips has about 4,300 workers in Massachusetts, with nearly 3,000 in the healthcare unit.

FDA panel says 'nay' to imaging agent

The Cardiovascular and Renal Drugs advisory committee of the FDA rendered a lopsided vote of 16-1 against approvability for a contrast agent proposed for use in cardiovascular imaging as recent reports of adverse events with other imaging agents hung overhead.

The product's sponsor, Acusphere (Watertown, Massachusetts), had hoped to get the product on the market as an adjunct to cardiac ultrasound for patients with angina. Imagify was seen as similar to products that rely on microbubbles as contrast agent vehicles despite relying on the use of a porous microsphere to deliver the contrast effect.

Panelists at the Dec. 10 meeting cited a lack of consistent efficacy data in the pivotal trial for Imagify (AI-700) as well as indications that the product induced low blood pressure in some patients.

Sherri Oberg, President/CEO of Acusphere, said in a statement posted at the company web site that the firm "continue[s] to believe in Imagify for its intended purpose and will work with FDA through the completion of the review process to determine what additional information might be required for approval."

Stem-cell firms raise funds

Two stem-cell firms – Cellular Dynamics International (CDI; Madison, Wisconsin) and Pluristem Therapeutics (New York) – reported fund-raising efforts last month aimed at helping advance their efforts in the cardiovascular research arena.

CDI raised $18 million in a Series A financing round to support its development of stem cell-derived research tools. The money is expected to last one to two years and will allow the company to increase the quantity and quality of the cells its offers, a spokeswoman told CD&D.

Pluristem Therapeutics reported that it was raising $600,000 through the sale of 1.5 million shares of common stock priced at 40 cents each. Purchasers also have the option, by notice to the company no later than 10 business days following the announcement of the first clinical trial, to purchase an additional 800,000 shares priced at 75 cents apiece and to receive warrants for an aggregate purchase price of an additional $600,000.

In addition, Pluristem's management and board invested another $150,000 at a price of 40 cents per share. Funds are expected to support a Phase I trial. The company's lead product, PLX-PAD, is an allogeneic cell therapy product aimed at peripheral artery disease.

CDI was founded in 2004 by James Thomson – who gained fame in the late 1990s for first isolating embryonic stem cells – and other researchers from the University of Wisconsin (Madison). The start-up specializes in the production of stem cell-derived cardiomyocytes for use in toxicity studies.

Current cardiotoxicity studies are done in animal models or in human cells taken from muscle or other non-heart sources, and their lack of accuracy is evidenced by the fact that 30 percent of all drug failures result from cardiotoxicology problems, the company said. CDI coaxes pluripotent stem cells to differentiate into human cardiomyocytes, which it sells to pharmaceutical companies and uses in its own cardiotoxicity testing services.

CDI's Series A round was led by Tactics II Stem Cell Ventures LP, with participation from Tactics II Ventures LP and the Wisconsin Alumni Research Foundation. Both of the Tactics II venture firms were founded by Robert Palay, CDI's chairman/CEO, who also serves as chairman for Tactics II Group, a Wisconsin-based merchant banking and investment partnership. Palay previously served as founder and chairman of NimbleGen Systems, a microarray and DNA sequencing player acquired last year by F. Hoffmann-La Roche (Basel, Switzerland) in a $272.5 million deal.

In addition to closing its financing, CDI merged with two of its sister companies, Stem Cell Products and iPS Cells. Both were founded by Thomson and based on University of Wisconsin research.

The near-term future for CDI's stem cell-derived products is in the research tool field, which the company said is a multibillion-dollar market in its own right. But CDI's long-term goals are loftier: The company said it envisions stem cell-based diagnostics, in which a patient could undergo toxicity screening prior to receiving a drug, as well as stem cell-based therapeutics.