St. Jude Medical (SJM; St. Paul, Minnesota), already a power in a variety of cardiovascular sectors, has entered the stented tissue valve market with the FDA approval last month of its Biocor and Biocor Supra family of stented tissue valves, its first offerings in that market sector in the U.S. St. Jude already is one of the leaders in mechanical heart valves, but it will be competing with Edwards Lifesciences (Irvine, California) and Medtronic (Minneapolis) in the stented tissue valve market.
George Fazio, president of St. Jude Medical’s Cardiac Surgery Division, called this particular sector “very important,” adding that the U.S. is “the largest tissue valve market in the world.” The approval enables St. Jude Medical to bring its expertise in valves to the U.S. stented tissue valve segment, which currently represents 60% of the U.S. market for heart valves, it said.
St. Jude Medical adds to its “expanding portfolio of tissue valves and other innovative technologies for cardiac surgeons and their patients,” Fazio said in a statement. “The SJM Biocor valve has a well-established track record around the world of outstanding clinical performance in both the aortic and mitral valve positions. We look forward to bringing our expertise to this important segment of the U.S. heart valve market and to offering this clinically-proven product to our U.S. customers.”
Edwards Lifesciences appeared unfazed by the new competitor, with which it does battle in the tissue vs. mechanical valve war. Barry Liden, spokesperson for Edwards, told Cardiovascular Device Update, “We don’t expect [St. Jude’s approval] to have this impact our tissue valve sales in any way because our Perimount pericardial valves have demonstrated superior long-term durability and performance and hemodynamic performance, as documented extensively in numerous ... peer-reviewed publications.” Liden said that Edwards’ valves have demonstrated about 20 years’ durability in aortic position. He also that that products in that position have shown “freedom from structural valve deterioration [SVD]” in those 65 years or older is “greater than 91%.” He said that according to abstract on St. Jude’s study, the company’s freedom from structural valve deterioration is about 73.9%.
For its part, St. Jude is bannering a variety of benefits for the SJM Biocor and Biocor Supra valves, saying they are designed to offer several ease-of-implant characteristics. The FlexFit stent, constructed of a flexible co-polymer material, “provides easy conformation to the annulus,” the company said. The valve also features “the lowest anatomic profile (height) in the U.S. tissue valve market,” according to St. Jude, minimizing aortic wall protrusion and left ventricular outflow tract obstruction in the mitral position. “The valve has considerable clinical usage and experience around the world,” Fazio said. Clinical experience with the SJM Biocor family of stented tissue valves is “now in its 20th year,” he added.
St. Jude introduced stented tissue valves in Europe two years ago. Since that introduction, it has achieved 15% market penetration, according to Fazio. In the U.S., the existing St. Jude sales force will offer the SJM Biocor and Biocor Supra to physicians. Fazio said he expected St. Jude to achieve market penetration rates “at least as fast” as it did in Europe; however, he noted, “There are very established competitors in the market, so we would expect it would take some time [to achieve significant market share].”
A peer-reviewed article, “Seventeen-Year Experience with the St. Jude Medical Biocor Porcine Bioprosthesis,” by Pia Myken of Sahlgrenska University Hospital (Gothenburg, Sweden), was published in the July issue of the Journal of Heart Valve Disease. The article demonstrates the SJM Biocor valve’s “excellent durability in both the aortic and more challenging mitral positions,” the company said.
In addition to the SJM Biocor aortic and mitral models, the company also has received FDA approval for the SJM Biocor Supra stented tissue aortic valve, a supra-annular valve implanted above the annulus, which is the supporting structure at the base of each aortic valve leaflet. The Supra valve is designed to optimize the orifice-to-annulus ratio for valves implanted in the small aortic root.
St. Jude said that it anticipates introducing both the SJM Biocor valve and the SJM Biocor Supra valve during the current quarter.
Jason Mills, a medical technology analyst at First Albany Capital (San Francisco), wrote in a research note that the St. Jude “approval [came] nearly a quarter earlier than we expected, as we had been anticipating a mid-4Q approval after several delays over the past two years.” As a result, in the report Mills reiterated First Albany’s “underperform” rating on Edwards Lifesciences’ stock, saying he expects “growth deceleration in revenue and [earnings per share], with the primary driver being expected decelerating growth in the heart valve franchise, owing to our expectations for increasing competition.” Mills also wrote that he expects that St. Jude plans aggressive marketing of the Biocor valves, since its cardiac surgery franchise “has been under considerable pressure.”
Thoratec CEO reveals plans to step down
In an unexpected move, D. Keith Grossman, president and CEO of Thoratec (Pleasanton, California), a leading maker of ventricular assist devices (VADs), informed the company’s board of directors last month that he intends to step down from those positions in order to pursue other professional interests. Grossman, who has served as the company’s top executive for nearly 10 years, said that his departure would occur only after a successor can be named and a smooth transition takes place. He added that he plans to continue serving as a director of the company after a new CEO is hired.
Indicating that the board would immediately initiate the search for a replacement and hopes to fill the position by the end of 2005 or in early 2006, Grossman said that he would remain active in his current role during both the search and transition periods. He said he would “work closely” with the board to lead the search for his successor. “I am proud of the company’s accomplishments over the past decade, and of the Thoratec employees who are behind them,” Grossman said. “Thoratec has never been better positioned, based on its market leadership, solid financial condition, revenue growth acceleration and deep and talented management team.”
He said the company’s strong market position “is clearly evident in our development efforts for next-generation products, such as the HeartMate II – which is currently undergoing what I believe to be the most exciting clinical trial in our industry. It is for these reasons that I am comfortable initiating this professional transition now.”
Dr. J. Donald Hill, Thoratec’s board chairman, saluted Grossman’s efforts. “Keith has done a truly remarkable job in creating a world-class medical technology company,” he said. “He will be missed by employees and all those associated with Thoratec. We are most pleased that Keith will stay to lead the company through this transition and that we will continue to have access to his experience and leadership as a member of our board.” Hill noted that during Grossman’s tenure, Thoratec “has grown from a single-product company with less than $4 million in revenues to one with a current run rate of nearly $200 million in annual sales, and rapidly growing earnings and cash flow.”
Citing what he termed “a commanding leadership position in the market for approved VADs,” Hill added: “We are also the leader in the development of next-generation devices.” He said Grossman has built “a very deep and solid management team,” adding, “We have the highest level of confidence in the entire team’s ability to continue to execute on the company’s goals, including driving sales growth in the use of long-term VADs and the rapid clinical development of HeartMate II.”
First Albany’s Mills described Grossman’s announcement as “a surprise,” and said he expects it to “elicit negative sentiment in the stock near-term, given the uncertainty it breeds.” However, he said he thinks Thoratec is “in a strong position strategically,” adding that he expects the company to attract “a talented CEO, possibly one with a large-cap pedigree and strong ‘channel’ development expertise.” Noting that the company’s board “alluded to its desire for a CEO with transaction experience,” Mills said that underscores his belief that Thoratec could be acquired within one to two years, “owing to a potentially larger opportunity in the end-stage heart failure market [with its] next-generation technology.”
Biophan set to enter cardiovascular field
Biophan Technologies (West Henrietta, New York), a developer of next-generation biomedical technology, reported during a shareholder meeting in late July its intent to initiate a new strategic business initiative by entering the field of cardiovascular therapeutic and diagnostic devices. The company said the cardiovascular device market, which is expected to surpass $28.5 billion by 2009, includes a range of technologies that give doctors options for treating many types of cardiovascular disease, including heart failure. Under its cardiovascular initiative, Biophan said it intends to pursue a strategy to both develop and acquire a range of devices and technologies for therapeutic and diagnostic applications. The company would market these technologies and solutions to major medical device manufacturers, as it said it has done successfully in its other strategic business initiatives.
Michael Weiner, CEO of Biophan, said that the company, known for its MRI safety and visualization technologies, would create a separate division to develop these technologies and he believes the company will be successful in its new initiative, and he cited the company’s early July licensing agreement and equity investment – worth $5 million – with Boston Scientific (Natick, Massachusetts) as a major confidence builder. “Having done this deal with Boston Scientific and having taken on some really big challenges that the industry itself wasn’t able to solve,” Weiner told Cardiovascular Device Update that Biophan “has demonstrated that [it] is very effective at finding the most important and promising emerging biomedical technologies and developing them for critically needed applications in potential high-growth, multi-billion-dollar new markets. Biophan’s business approach is to attack major needs in the biomedical industry and then to be the first to solve and patent key solutions, as well as to roll up acquisitions and licenses from third parties involved in similar pursuits.”
Among the technologies the company is looking at are ventricular assist devices, designed to keep sick or injured hearts beating. Other technologies on the market or in development include emergency devices to restart stopped hearts, drug delivery systems, and devices to help physicians assess cardiovascular health and detect and treat potentially life-threatening conditions such as vulnerable plaque. “Cardiovascular disease is one of the most serious health problems in the U.S., accounting for more than 40% of all deaths in this country and representing the largest single cost in healthcare,” Weiner said, noting a primary reason for the attraction to this market.
Weiner said he believes his company offers a “much more attractive alternative for certain promising [medical] devices” than the more traditional venture capital route. He said his company is an organization that some of the more successful innovators in the industry “may find a bit more palatable” to the VC alternative. “We have a lot of infrastructure that we can bring to the table [particularly] in terms of knowledge of regulatory affairs and Six Sigma practices,” he said. He also noted that VC-funded projects tend to get sold “at the adolescent stage” before they have time to mature and reach their full value potential.
Weiner said the company is not planning on doing the marketing of these products that it develops, rather it plans to get a device through clinical trials and then either license or sell outright the technology to a larger company with a large sales force and established marketing outlets. He also noted that the company already has some specific technology acquisitions in mind and is not going to be in the business of taking on all comers with a new product.
“This isn’t an announcement that we’re shopping,” he said. “We’ve already identified the things we like and we have already entered into negotiations that we aren’t ready to talk about just yet.” The announcement was largely made for the benefit of the company’s shareholders and to make institutional buyers aware of the company’s new play, Weiner said.
CABG halts graft clinical trials
CABG Medical (Minneapolis), the developer of the Holly Graft, a drug-eluting graft for coronary artery bypass surgery, said that it would temporarily delay its CE mark clinical trials for that device be-cause the first two devices implanted became occluded. The company made its disclosure in conjunction with its 2Q05 earnings release last month, although the first implant in the trial occurred in May. The Holly Graft System is designed to treat blockages in multiple coronary arteries from a single graft. The system consists of a flexible, thin-walled vascular graft made of expanded polytetrafluoroethylene; it is attached to the coronary arteries via connectors coated with a drug combination to reduce the risk of blockage and thrombosis. The major benefit of the system is to eliminate a secondary surgery conducted as part of a heart bypass procedure to harvest healthy vessels from the chest, legs or arms for use in the bypass, the company said.
The implant of the graft system in the first patient enrolled in the clinical trial – the second patient treated with the system – was completed by Peter Tesar, MD, and Trevor Fayers, MD, at Prince Charles Hospital (Brisbane, Australia). The two surgeons also completed the first implant of the system last November. The company reported that the grafts implanted in the first two patients had become occluded and were no longer functional. It added that both patients are in good health without symptoms and the surgical team indicated their intent to continue with the human clinical trials once device and clinical trial modifications are complete.
In a quarterly conference call that disclosed the trial problems, Manny Villafana, the company’s chairman and CEO, said that the occlusion in the first trial patient was discovered following a routine 60-day angiogram. Following that, a review was done on the first implant patient and it was discovered that patient also had an occlusion. “Fortunately,” he said, “both grafts closed gradually, resulting in no reported adverse events for either patient.” Nonetheless, he noted that “our device is not working and the results were disappointing.” Because of the delays, Villafana said the company would have to postpone its investigational device exemption (IDE) submission to the FDA from its projected late 2005 early 2006 estimate to at least the second half of 2006.
After analyzing the clinical results to date with its surgeon collaborators, CABG said it has identified improvements related to manufacturing, its procedure and the post operation anti-coagulation regimen that will be implemented in the ongoing clinical trials which the company estimated would begin this month or next as the devices become available. Villafana said the company has developed a new coating process to spray the heparin coating on the vessel connector. The spray heparin, he said, “allows for a more uniform and consistent application of the coating, which has demonstrated superior in vitro bench testing results and in vivo preclinical results.” After reviewing its preclinical work, the company said it believes that a “simple improvement in the surgical procedure” is necessary and will be incorporated into its human cases.
Cardima stays alive with $2M infusion
Atrial fibrillation (AF) device firm Cardima (Fremont, California) has received at least a short-term lease on continued life, reporting last month that it had entered into a loan term sheet with Apix International. It said in a statement that it “expects” to receive up to $2 million in new financing via the agreement.
The company has seen dimming prospects for continued existence as it awaits a much-delayed and increasingly unlikely FDA approval of its Revelation Tx Microcatheter system. The FDA told the company in early June 2004 that its NavAblator Ablation System was “not approvable” and that it would have to conduct additional trials. The delays have resulted in a series of negative announcements: “going concern” reports by its auditors over the past two years; and layoffs of virtually all staff in June, along with notification of loan defaults by a previous lender, Agility Capital (Fremont, California).
In last month’s announcement, the company reported that it has so far received an initial $500,000 in bridge financing, with a portion of these proceeds used to retire its outstanding secured loan agreement with Agility. The bridge financing is secured by a first lien on all of Cardima’s assets and intellectual property. The company said that the remainder of the proceeds would be used for working capital.
The term sheet provides for Cardima to receive an additional $500,000 upon execution of the loan agreement, anticipated by Aug. 28. It said it expects the remaining $1 million of financing to be advanced to it in two tranches of $500,000 each – available on or before Sept. 12 and Oct. 12 – based on monthly accordance with Apix’s approved budget. The financing is anticipated to be convertible into shares of Cardima stock at 10 cents a share.