Kensey Nash (Exton, Pennsylvania) last month rearranged some of its interventional priorities, reporting that it will leave the embolic protection sector, primarily in carotid stenting. Citing a slow-growing market with extremely high costs, the company said it will discontinue its TriActiv System platforms and the ProGuard system. The abandoned systems provide embolic protection, by capturing and removing the debris created by a percutaneous coronary intervention or to stop it from floating downstream into blocked arteries.
“The cost associated with continuing these [systems] was not justified,” Joseph Kaufmann, president/CEO of Kensey Nash, told Cardiovascular Device Update. In discontinuing TriActiv and ProGuard the company estimated that it will save $11.6 million a year.
Kaufmann told CDU that the factors determining the exit decision included slow growth in the carotid stent marke — in a press statement saying that the “embolic protection market dynamics are negative” — ongoing market resistance to balloon technology versus filter technology; and a reduction in the number of patients identified as benefiting from embolic protection.
“Unfortunately our efforts in the embolic protection markets have not been commercially successful, despite good clinical data, and we needed to make this decision,” Kaufmann said. “We now have the opportunity to focus our company on the two core endovascular markets of thrombectomy and chronic total occlusions, in addition to our strong biomaterials business, which present better opportunities to add value to Kensey Nash.
Charges incurred for the action will include staff severance payouts, clinical trial and other contract cancellation costs. The total charges are anticipated to be about $5.1 million, of which about $4.4 million or $.24 a share tax-effected, and $700,000, or 4 cents a share tax-effected, recorded in FY07 and FY08, respectively.
Previously, the company had touted the market for these types of embolic protection systems. It was then estimated at $100 million worldwide and was expected to grow substantially for the next several years as next-generation products are developed and indications are expanded. A major problem is that the carotid stent market has not been pushed by reimbursement. Earlier this year CMS declined to expand its payments for a broader range of applications.
The company said that it plans to continue with its thrombosis protection products and that its lead product opportunity will come from the ThromCat Thrombectomy Catheter System and its QuickCat Extraction Catheter. The products are used for vascular clearance. He put the opportunity for the Thromcat at $100 to $150 million worldwide, and for the QuickCat at about $75 million.
“The outlook for Kensey Nash is very bright,” Kaufmann told CDU. “We do believe the ThromCat and QuickCat will be very successful for [the company]. These products are very simple to use,” Kaufmann said.
In the U.S., the ThromCat System is indicated for mechanical removal of thrombus from synthetic hemodialysis access grafts and native vessel dialysis fistula, and is sold through Kensey Nash’s direct sales force. In Europe ThromCat System is used to remove blood clots in patients. It is a fully disposable catheter system that incorporates the company’s HeliFlex technology to flush, macerate and extract thrombus. An internal rotating helix creates a powerful vacuum to draw thrombus into the catheter and then macerate it, while simultaneously flushing the vessel to aid in the thrombus removal.
The ThromCat system is sold through a direct sales force in Germany and through a distribution network covering the European Union and certain other parts of the world.
The QuickCat Catheter is an aspiration system indicated for the removal of blood clots from vessels in the arterial system. The device is fully disposable system that rapidly removes thrombus from the body.
Boston Sci to pay $195 million to settle Guidant device claims
Attempting to avoid the difficulties posed by extended time in court, Boston Scientific (Natick, Massachusetts) late Friday reported that it will pay $195 million (e141.5 million) to settle around 4,000 claims involving implantable rhythm management devices made by Guidant, which it acquired last year for about $27 billion. In a statement, the company said that the settlement was reached during mediation sessions with U.S. Magistrate Judge Arthur Boylan in Minneapolis. The claims were all consolidated in the federal court in Minneapolis, with the first trial due to start July 30.
Boston Scientific said the agreement also includes an undetermined number of other similar claims from across the country, but not all of them.
Guidant — now Boston Scientific’s cardiac rhythm management unit — recalled more than 100,000 of the products between 2005 and 2006 which were at risk for failure. With the recalls, patients implanted with the devices were faced with the difficult decision of having the devices explanted and replaced, or not having an explant and dealing with the continuing concern that the device could fail. Thus, besides asking for the coverage of explant/reimplant expenses, many patients claimed pain and suffering.
The problems leading to the litigation were first revealed in 2005 with the FDA’s recall of 11 models of Guidant ICDs with electrical flaws.
The company may have made a troubling situation worse by attempting to address these problems by categorizing them, not as recalls, but “physician communications.”
On May 23, 2005, the company sent out that type of communication regarding the VEntak Prizm 2 DR defibrillator model manufactured before November 2002, advising physicians concerning what it called “a rare failure that results in the device’s inability to delivery therapy.”
Following, on June 17, the company issued another “voluntary” worldwide communication to physicians notifying them of important safety information, designed to limit the number of adverse events associated with six additional models of defibrillators. Then on June 25, Guidant sent letters to physicians worldwide regarding defects with four more defibrillator models.
On July 1, 2005, the FDA characterized the communications as recalls.
A major allegation in the liability lawsuits is that Guidant continued to ship and sell the heart rhythm devices even after learning that there were possible defects.
Charles Zimmerman, lead attorney for the plaintiffs, in a statement said that the settlement provides “meaningful and expedient relief” for plaintiffs and their families. “We are pleased that we were able to come to an agreement with the company that serves the best interests of all parties involved.”
In other company news, the Boston Globe has reported that Boston Scientific is planning broad job cuts that could affect its Massachusetts employees. Plans call for an extensive restructuring as well as a sell-off of most of its $500 million in stock and other investments the Globe said.
Boston Scientific employs 28,000 people worldwide, including 2,400 in Massachusetts, chiefly at its Natick headquarters, its Marlborough endosurgery division, and a Quincy distribution center. On a conference call with analysts to discuss second-quarter earnings, new CFO Sam Leno said the company expects to disclose an expense-reduction plan, including job cuts, by year-end.
The company is also considering a partial initial public offering of its growing endosurgery division. In May, Donovan told the Globe the potential public offering and the asset sell-off would not affect Massachusetts jobs, but did not address restructuring.
Two cardio firms active in equity investment waters
Two cardiovascular firms rasied more than $60 million. A third, in the biopharmaceutical/device arena is eyeing an IPO.
• Ablation Frontiers (Carlsbad, California), a privately held company focused on developing treatments for irregular heart rhythms, reported the close of a $21.8 million Series C financing led by the Novartis Venture Fund. Additional new investors included Affinity Ventures, Hexagon Investments and Trellis Health Ventures. Previous backers Versant Ventures, Aberdare Ventures, and Pequot Ventures also participated in the round.
Ablation Frontiers has developed a portfolio of devices for treating dangerous arrhythmias without the use of imaging systems or robotics. The company recently reported the launch of commercial operations in the European Union after their Catheter Ablation System received the CE mark.
Currently, the company has focused their efforts on the treatment of atrial fibrillation — the most common type of abnormal heart beat — and is supporting clinical trials in the U.S. and Europe to demonstrate safety and efficacy in curing the disease. A proven treatment for atrial fibrillation has been described as a major unmet medical need, with market estimates of about $2 billion.
The company said the proceeds from this round will be used to fund its investigational device exemption (IDE) clinical trial in the U.S., and expand commercial operations. “This funding will help us accelerate market growth internationally while driving clinical activity for our recently-initiated IDE study,” said CEO Keegan Harper.
Founded in 2004, the company develops products for the treatment of cardiac arrhythmias. In late 2006, it received the CE mark for its Cardiac Ablation System consisting of a portfolio of anatomical-based catheters and a multi-channel radio frequency generator.
• Paracor Medical (Sunnyvale, California), a venture-backed company developing device-based treatments for heart failure, reported the closing of $44.35 million in its Series D funding. New investor Aberdare Ventures, with the participation of Montagu Newhall Associates, led the financing round. All of the current institutional investors participated in the financing, including Delphi Ventures, Pequot Ventures, InterWest Partners, Alta Partners, DeNovo Ventures, RWI Ventures, Saratoga Ventures, and Palo Alto Investors. The new funds will primarily be used to support the recently initiated PEERLESS-HF pivotal clinical trial of the company’s HeartNet device, Paracor said.
Paracor’s HeartNet device is implanted in a minimally invasive procedure averaging just more than 70 minutes. Initial indications are that the device has enabled patients to demonstrate substantial improvements in exercise capacity and quality of life measures, key indicators of patient response in heart failure clinical studies, the company noted.
The PEERLESS-HF study, currently underway, is intended to compare the impact of the HeartNet therapy versus an optimally medically managed control group in a randomized trial that is expected to involve up to 30 U. S. clinical sites.
• ImaRx (Tucson, Arizona), a developer of therapies for vascular disorders associated with blood clots, has filed with the Securities and Exchange Commission for an IPO of about 3 million shares priced at $5 a share.
The company, which reported in May that it had filed with the SEC for an IPO of up to $75 million, said it expects to raise net of about $12.3 million, or $14.4 million if the underwriters’ 45-day over-allotment option to buy 450,000 shares is exercised in full. Shares are anticipated to begin trading Thursday.
The company’s development efforts are focused on therapies for treating ischemic stroke and massive pulmonary embolism by restoring the flow of blood and oxygen to the brain and vital tissues, and clearing occluded catheters. ImaRx said it will use the proceeds to fund the development and commercialization of its therapies, including clinical trials.
The company is pursuing two development programs as the foundation for its products. The first is a group of clot-dissolving drugs that are variants of urokinase, a natural human protein primarily produced in the kidneys that stimulates the body’s natural clot-dissolving processes.
The second program, SonoLysis therapy, is a treatment that breaks blood clots apart by applying ultrasound to the company’ submicron-sized bubbles, which it calls SonoLysis bubbles.
ImaRx licensed the oxygen delivery technology that is being incorporated with its SonoLysis therapy from Sonus Pharmaceuticals (Bothell, Washington) two years ago.
Raytel launches CardioCare for arrhythmia patient care
Raytel Cardiac Services (Windsor, Connecticut) reported the full launch of its newly designed CardioCare diagnostic arrhythmia service, including CardioCare eManagement services. The new program is designed to ensure high quality care and compliance for arrhythmia patients, to assist the patients and their treating physicians in using the various cardiac monitoring technologies as effectively as possible, and provides physicians with a flexible, user-friendly patient data management tool to enable quick access to accurate test results for use in diagnosis and management of their patients, the company said.
CardioCare is a “branded” arrhythmia service that offers physicians the option for selecting for their patients a 24- or 48-hour digital Holter monitoring service, a 30-day loop or event arrhythmia monitoring service, or Atrial Fibrillation/Auto-trigger monitoring to track silent and elusive, hard to catch arrhythmias.
The foundation for the service is Raytel’s new testing and patient data management platform, which more supports the use of akk arrhythmia monitoring technologies, including wireless and cellular monitoring technologies to be introduced in the next few months, it said.
“Earlier this year we introduced Raytel’s new CardioCare Service to part of our customers, and we are now pleased to make this innovative service and platform available to all of our customers. When products are intended for use directly by patients, they need to be easy to use to ensure compliance with the test protocol in order to obtain the proper diagnostic data for the treating physician,” said Robert Sass, general manager at Raytel Cardiac Services.
Sass said, “Multiple technology options for individual patient needs increases the level of convenience our services provide to our clients, as well as providing the foundation for exciting, soon-to-be-available new cellular technologies. This investment in arrhythmia services reinforces Raytel’s commitment to leadership in ambulatory remote cardiac monitoring and to quality care for physicians and patients.”
Raytel Cardiac Services is a division of Raytel, a subsidiary of SHL-Telemedicine (Tel Aviv, Israel), developer of advanced telemedicine systems. Raytel healthcare specialists use telephone and Internet technology 24/7 to monitor patients with pacemakers, suspected arrhythmia, implanted defibrillators (ICDs) and other cardiac-conditions.