Medical Device Daily Executive Editor

SAN FRANCISCO — One of the most interesting gauges of the level of investor interest in the med-tech sector at gatherings such as this week's JPMorgan Healthcare Conference, ongoing here this week, is the turnout in the smaller venues of the Westin St. Francis Hotel for presentations by the so-called "little guys."

Among those that have drawn overflow crowds to their sessions in the early going of the 24th annual version of the traditional kickoff to the healthcare investor year was FoxHollow Technologies (Redwood City, California), whose SilverHawk plaque excision device for treatment of peripheral vascular disease has stirred considerable interest despite a paucity of clinical data and apparent turmoil in the executive suite.

In introducing the company, JPMorgan Chase (New York) med-tech analyst Michael Weinstein called FoxHollow "one of the most dynamic healthcare companies to go public in recent years." In notes on the company in the conference compendium of information on participating firms, he said he anticipates another year of "robust" sales growth.

The company's founder, president and interim CEO, Dr. John Simpson, handled the FoxHollow presentation in the wake of the surprise departure via "retirement" of former CEO Robert Thomas late last year.

Citing peripheral artery disease (PAD) as "an extraordinarily large market" with some 2.5 million patients diagnosed with the disease and four times that many as yet undiagnosed, Simpson noted the tendency for clinicians to recommend amputation of the lower limbs for many suffering from extreme forms of the disease, including a disproportionate number of African-Americans suffering PAD.

Adding that 40% of such amputations are done without an angiogram even being taken, he said that use of the SilverHawk device to shave off arterial plaque offers "opportunities to treat this disease that are short of amputation."

Simpson said the company's goals for 2006 include the initiation of three new clinical studies as part of its market-building efforts, along with continued expansion of its sales force, which grew to 206 in 4Q05 and is targeted to grow to 250 by the end of this year.

Calling the SilverHawk system a "disruptive technology," he said there are "all kinds of opportunities" for the company in the sector as it pushes to meet its goal of "eradicating" vascular disease.

That same description might apply to the Crosser system, made by FlowCardia (Sunnyvale, California), designed to allow interventional cardiologists to quickly and safely cross chronic total occlusions (CTOs) in coronary arteries.

Another standing-room-only crowd jammed into the smallish Elizabethan C&D space to hear President and CEO Wick Goodspeed discuss that privately held firm's approach to this vexing problem, estimated to involve more than 20% of all interventional cardiology procedures.

"This is a very common thing," he said, and that CTOs "show up regularly when interventional cardiologists do angiograms."

Noting that CTOs "represent a challenging clinical interventional procedure," Goodspeed said it represents "a very big market opportunity," valued at more than $750 million.

The big risk to interventionalists in trying to open a CTO via a guidewire — the current standard of care — is perforation of the artery, so "a system that would avoid perforation gets their attention," he said.

The Crosser system features a nitinol core wire that transmits "vibrational energy" to the site of the occlusion. Goodspeed characterized it as a "mini-jackhammer" vibrating against the occlusion to bring about recanalization of the CTO.

While it is a transformational type of technology, the system uses a 0.14" guidewire, the typical wire used in cath labs, which brings familiarity to the interventional cardiologist using the system.

"It's a simple, intuitive, straightforward device," Goodspeed said, "one that doctors pick up quickly."

The company has a 235-patient study under way in Europe, with participating cardiologists including such luminaries in the field as Eberhard Grube, Antonio Columbo and Patrick Serruys. A total of 105 CTOs have been treated thus far under a protocol involving patients who have failed standard care.

A U.S. pivotal trial has seen 82 of a planned 105 patients treated with the Crosser system thus far.

Enrollment is expected to wrap up by the end of March, and Goodspeed said the company anticipates FDA clearance by 3Q06.

He emphasized the safety of the procedure, noting that no arterial perforations have occurred in the 232 cases performed thus far, all of which took place after conventional guidewire treatment failed.

In the FlowCardia product pipeline is a peripheral version of the Crosser device, currently in the design stage.

Also drawing an overflow crowd to the Elizabethan C&D space was Zonare Medical Systems (Mountain View, California), developer of compact ultrasound solutions powered by its Zone Sonography technology.

Don Southard, president and CEO, cited both the speed of the technology, which allows acquisition of images a zone at a time, and the portability of the company's Convertible Ultrasound approach, by which the system can be used as a 160-pound, cart-based system, or as a hand-carried scanner weighing just 5-1/2 pounds.

"This is a software-based product," he said, "which allows us to have an annual upgrade cycle that provides a recurring revenue stream." It's also Internet-downloadable, adding to the convenience factor for users.

"There are increasing demands for portability in this sector," Southard said, driven in part by the growing incidence of repetitive stress injuries suffered by technicians.

Introduced at the Radiological Society of North America (Oak Brook, Illinois) conference in late-November 2005, the first system was shipped to a customer last March. The company shipped its 200th system last month.

Southard said Zonare believes its potential market is valued at some $1.5 billion, and that the company anticipates rapid sales growth, particularly after the imminent signing of a distribution agreement in Japan, with shipments to that country, the world's second-largest medical market, expected to begin by July.