The largest number in the initial public offering med-tech arena was posted last month by Visicu (Baltimore, Maryland), a company focused on improved monitoring of patients in the intensive care unit (ICU). It first filed with the Securities and Exchange Commission for an IPO estimated at $84 million and then boosted it to $110 million. The company said the net $100 million proceeds will be used for increased marketing efforts, R&D and potential acquisitions.

Founded in March 1998 by two intensivists affiliated with Johns Hopkins Hospital (Baltimore), Visicu has developed the eICU Critical Care Program (eICU) remote monitoring system. The system’s value proposition is that its use improves patient treatment in the ICU by leveraging scarce critical care staff and enabling more frequent patient monitoring to provide earlier intervention when necessary.

An eICU Center consists of direct data, video and audio links with ICU patient rooms and an eCareManager suite of software products. In the eICU Center, intensive care physicians, or intensivists, and critical care nurses use multiple screens at eCareManager workstations to monitor real-time data, current visual status, care plan, diagnostic results and treatment history for each patient.

The company says that the program enables one intensivist and two critical care nurses to manage up to 100 patients and direct on-site caregivers, with the goal of improving compliance with current ICU best practices, shorten recovery times and length of stay, reduce costs and increase revenue.

It reports that use of the program by a customer reduced mortality rates in its ICUs by about 27% and reduced average length of ICU stay by about 16%. These improvements, it said, were shown to reduce costs-per-case by about 25% and increase the hospital’s average contribution margin per case by about 56%.

The company provides its customers with a perpetual license of its software, clinical and technical implementation services and ongoing support services under a three-year support agreement. Customers pay license and implementation fees in installments prior to and within a short time following program implementation and pay support service fees throughout the three-year support agreement.

Renaissance Capital praised Visicu for helping hospitals grapple with a shortage of experts for ICUs. “We believe that Visicu is an exciting emerging growth company ready to take off,” Renaissance Capital said in its featured IPO column.

In its SEC filing the company noted among its key risks that a competitor, iMDsoft (Needham, Massachusetts) has requested that the U.S. Patent Office declare an interference and revocation of Visicu’s single issued U.S. patent and a patent with identical claims issued to iMDsoft. Also, Cerner (Kansas City, Kansas) has filed suit against the company seeking invalidity of the company’s patent.

The company had incurred about $34.9 million in accumulated debt as of Dec. 31, 2005.

Volcano IPO also big

Volcano Therapeutics (Rancho Cordova, California) last month also launched a hearty IPO effort, this one seeking to raise up to $86 million, all of the shares to be offered by the company. Founded in 2000, Volcano manufactures a suite of intravascular ultrasound (IVUS) and functional measurement (FM) products for the diagnosis and treatment of vascular and structural heart disease.

The company explained in its filing: “During an IVUS procedure, an imaging catheter is placed inside an artery to produce a cross-sectional image of the size and shape of the artery’s lumen and provides information concerning the composition and density of plaque or lesions and the condition of the layers of the surrounding arterial walls. Our IVUS products consist of consoles, single-procedure disposable catheters and advanced functionality options. FM devices measure the pressure and flow characteristics of blood around plaque thereby allowing physicians to gauge the plaque’s impact on blood flow and pressure. Our FM products consist of pressure and flow consoles and single-procedure disposable pressure and flow guidewires.”

The company filing says that one of its key risks is the difficulty of predicting the future growth opportunities for IVUS technology both domestically and internationally.

Volcano is sponsoring the PROSPECT study, calling it “a natural history study of plaque,” with Advanced Cardiovascular Systems, a unit of Guidant (Indianapolis), and says that if it fails to demonstrate a causal connection between vulnerable plaque and coronary events, this would hurt any demand for its products.

B&L has to make big lens recall

In the wake of a ballooning number of reports suggesting links between corneal eye infections and contact lens cleaning solution – mostly the ReNu with MositureLoc contact lens cleaning solution – Bausch & Lomb (B&L; Rochester, New York) last month was forced to issue a national recall of the product. “Forced” because while there had been no evidence of a problem with the product (according to testing which was ongoing), the company was getting heavy negative publicity about the problem, including the report that the product was being pulled from the shelves of retailers – including two of the bigger “big boxes,” Wal-Mart and Walgreens. Thus the largest pressure was probably from these retailers that were not exactly happy that they had a product on their shelves attracting so much bad press. While still maintaining the quality of the product, B&L launched the total recall and issued a public recommendation for people to make sure to switch to other lens cleaner brands.

The company said it was initiating the voluntary market withdrawal in order to eliminate any confusion among contact lens wearers about what to do while the investigation is ongoing, but it could be argued that it ultimately gave in to pressure from their larger customers. The decision to recall the product came just days after B&L Chairman and CEO Ronald Zarrella told analysts during a conference call that the company might be inclined to take back product if the situation was not resolved soon, apparently reversing its stated intent to simply halt shipment of new product and not reclaim those supplies already in stores.

The product suspension followed release of a report by the Centers for Disease Control and Prevention (CDC; Atlanta) that it is reviewing reports of 109 cases in 17 states since June 2005 of suspected fungal keratitis, caused by the fusarium fungus.

The CDC verified that there was a heavy connection between the infection and use of lens cleaners (28 of 30 cases), 21 of them connected with use of the ReNu lens care products; five reported using a combination of ReNu and products manufactured by Advanced Medical Optics (Santa Ana, California) and Alcon (Fort Worth, Texas).

Concern about an increased incidence of the fungal infection among users of B&L products first arose in Singapore, where health officials noticed an increase in reports of infection in January and discovered 39 cases involving contact lens users from 2005 to February of this year. Cases have also been reported in Malaysia and Hong Kong.

The company took a large step to provide widespread information to the public through Friday/Saturday advertisements in USA Today. The ad primarily consisted of an open letter to consumers from Zarrella, explaining the situation and providing guidance on alternatives. Marketing-wise, you might say, the ad also showed some savvy in its effort to maintain what was probably eroding good will. A lot of big companies have found that being upfront about errors and adversity, they end up being stronger. But the short-term results are likely to hit the company hard – in terms of sector loss to competitors and the need to bring back a new product to fill that gap, and also in a bevy of lawsuits that were already appearing to line up in “take-a-number-and-get-in-line” fashion.

Zarrella said in his letter: “We find ourselves in a position where the safety of one of our products, ReNu with MoistureLoc manufactured at our United States plant, is in question. We’ve done a series of exhaustive tests on the product, and a thorough inspection of the plant, and nothing has yet been found to show that ReNu with MoistureLoc contributed to these infections in any way. However, in the cases of infections reviewed to date, the majority of patients reported using ReNu with MoistureLoc manufactured at our U.S. factory.”

Coratus terminates GENASIS trial

Corautus Genetics (Atlanta) reported that it is terminating patient enrollment in its Genetic Angiogenic Stimulation Investigational Study (GENASIS) Phase IIb clinical trial, based on the recommendation of its independent data monitoring committee (DMC). The trial had enrolled patients with Class III or IV angina who are not suitable candidates for traditional revascularization procedures and had involved the injection of genes – specifically vascular endothelial growth factor-2 (VEGF-2) – into the heart to stimulate the formation of new blood vessels via a process known as therapeutic angiogenesis.

The DMC recommended to the company that, based on available efficacy data, enrollment should be terminated under the current protocol since, the DMC said, it saw “very little chance for significant efficacy” as to the primary endpoint relative to the safety/risk signal it saw. Trial termination follows enrollment suspension by the company on March 14 to investigate three recent serious adverse events that the company said it did not believe were associated with the biologic. The March 14 disclosure also prompted the company to cancel a planned public stock offering of 7.5 million shares at $3.85 a share. The offering had been slated for March 15.

In a conference call, the company said it will continue to collect efficacy data until the last patient previously enrolled in the trial has been followed for six months. At that time, the company plans to lock the study database and perform unblinded endpoint analyses of VEGF-2 efficacy. Safety data will be followed for a period of 12 months from the date the last patient was enrolled.

At the time of the mid-March trial suspension, 295 patients had been enrolled in the trials originally scheduled to enroll 404 patients at 30 centers in the U.S. In response to the company’s action, the FDA placed the trial on clinical hold, pending review by the DMC.

The therapy had been administered into the heart using Boston Scientific’s (Natick, Massachusetts) Stiletto catheter system, a device specifically designed for the delivery of genes. The injection procedure is performed by a cardiologist in a standard cardiac catheterization laboratory. The company currently has a distribution and development agreement with Boston Scientific for use of VEGF-2 in a delivery platform for the treatment of cardiovascular disease. Via that arrangement, first disclosed mid-2003, Boston Sci acquired a 17% stake in the company, with the most recent stock purchase of 4.3 million Corautus shares valued at about $18 million having taken place this past June.

Jack Callicutt, vice president of finance and administration, told BB&T that the trial setback doesn’t affect its relationship with Boston Scientific at this time. “They’re still the largest shareholder of the company,” he said, adding that they “still have the worldwide marketing rights for any of our therapeutics, and we still have a really good relationship with them.” He noted also that both companies are committed to “fully understanding the results of this trial before we decide on the next course of action.”

The primary endpoint in the GENASIS trial was improvement in ETT measured 90 days after the administration of the therapeutic. The DMC received 90 day ETT summary data on 220 patients. It also received ETT summary data on 135 patients with 6 month follow up and 26 patients with 12 month follow up. The DMC did not review any other efficacy data.

SeraCare in trouble, subpoenaed by SEC

SeraCare Life Sciences (Oceanside, California) reported that, following a previously disclosed request from the SEC for a voluntary production of certain documents, the company has received a subpoena from the SEC. The subpoena calls for the production of the documents that were originally requested, as well as additional documents. Separately, the company reported that it has appointed Cathryn Low as its interim CFO, describing her has a turnaround specialist.

In March, the company filed for Chapter 11 bankruptcy protection, shortly after reporting problems in its internal controls and the firing of Chairman Barry Plost, President and CEO Michael Crowley Jr., Secretary Jerry Burdick and CFO Craig Hooson. With that report, it also said that its FY05 guidance was to be withdrawn because of its unreliability, and that its financial statements for the quarters ended Dec. 31, 2004; March 31, 2005; and June 30, 2005, would be restated.

SeraCare is a manufacturer of biological products and services to diagnostic, therapeutic, drug discovery, and research organizations. Its offerings include plasma-based therapeutic products, diagnostic products and reagents, cell culture products, specialty plasmas, in vitro stabilizers, and the SeraCare BioBank, a database of medical information and associated blood, plasma, DNA and RNA samples.

Software offers ‘new way of going to market’

Launching and supporting a medical device means training a large audience covering a large geography, something smaller companies may struggle with due to lack of distribution or manpower. Training solutions provider Vuepoint (Rosyln Heights, New York) said it is helping to “level the field between the huge player and the small player” in the medical device industry with its Vuepoint Learning System (VLS 5.1).

“It’s a new way of going to market,” Ara Ohanian, president and CEO of Vuepoint, told BB&T. With VLS, he said, “upcoming, mid-market companies are becoming more competitive because they are adding a new element to their marketing mix. That element is the rapid, broad and scalable delivery of knowledge around the product.”

VLS is enabling companies to offer the healthcare professionals who buy or use their products consistent training programs and competency evaluations. Vuepoint “can literally within a few days launch a global initiative for an organization, and on their side they don’t need to have a team or any new resources to make that possible,” Ohanian said.

For example, Vuepoint is helping CME Devices (New York), a maker of infusion pump devices, to train and certify nurses and pharmacists on its Bodyguard 323 multi-therapy pump. “Their challenge was to get information about their pumps out to not only their sales organization, but certainly to the practitioners who need to use those devices,” Joe Fuchs, Vuepoint’s vice president of medical knowledge delivery, told BB&T.

Vuepoint has developed a full product simulation that allows the Bodyguard 323’s end user to virtually operate the device on a computer and become competent with the pump’s functionality, before using it with patients. Once enrolled, the user accesses the training program through the CME Devices web site.

Fuchs described the course as a “virtual simulation that a nurse or pharmacist anytime, anyplace with internet connection can go in and learn how to use that pump.” Users are taken through a series of exercises where they learn to use and program the pump. “If they do something wrong, the pump is going to display exactly the same error message, in the same timing, with the same protocols [as would] a physical pump,” Fuchs explained.

Fuchs said VLS engages the user “so that we make sure that information sticks,” he said. “Being able to make this knowledge available 24/7 in a measurable fashion, where you can actually gage what people know and don’t know, is a huge benefit.” After completing the online training course and mastering the product simulation, the user is approved to operate the device.