Medical Device Daily Associate Managing Editor

SAN FRANCISCO — As the JP Morgan Healthcare Conference drew to a close at the Westin St. Francis last week, those who remained were treated to a host of interesting companies involved in the imaging and diagnostics space.

Two companies representing that sector on Thursday — and making their first-ever presentations at the conference — were Given Imaging (Yokneam, Israel) and SonoSite (Bothell, Washington).

Given Imaging, which went public in the U.S. this past May for roughly $95.78 million, provides products for gastrointestinal-related problems. Its flagship technology is the camera-in-a-pill Given Diagnostic System, also known as the PillCam.

The system utilizes wireless imaging technology to provide a visual (endoscopic) examination of the gastrointestinal (GI) tract. It employs a miniaturized video camera contained in a small disposable plastic capsule that when swallowed by a patient transmits multiple images from the GI tract to a data recorder as the capsule passes through the digestive system. That information is then uploaded to a workstation where it is analyzed to make a diagnosis.

The company already has PillCam products on the market in the U.S. and abroad for small bowel (PillCam SB) and esophageal (PillCam ESO) applications and is working on other versions of the system for the colon and stomach. Given CEO Gavriel Meron said each of those applications “represents multibillion-dollar revenue products in the U.S. market alone.“

To date, Meron noted that more than 145,000 patients worldwide have used the PillCam to diagnose Crohn's disease, celiac disease and other malabsorption disorders, benign and malignant tumors of the small intestine, vascular disorders and medication-related small bowel injury.

Meron said that each pill, which represents the recurring revenue stream for the company, is priced at $450. The data recorder, which patients wear around their waists after ingestion of the PillCam, costs about $8,350, and the workstation onto which the data is uploaded retails for around $17,500.

While there are other companies attempting to enter the market, including closest-to-completion competitor SmartPill Diagnostics (Buffalo, New York), Meron described what he feels are the barriers to entry for other companies looking to get into this space.

First is his company's strong intellectual property claims. “We have more than 120 patents pending, of which in the U.S., eight have already been converted into patents.“ He said Given has intentionally kept the patents open in order to perfect the technology because once they are finally approved, “you can't really change them anymore.“ He added that anyone that would try to get into this field “is going to be in infringement of numerous patents that we do have.“

Even stronger than the patent portfolio, Meron said, is Given's continuous product innovation. He noted that leading companies in the endoscopy world generally come out with what he termed a “revolutionary product“ every five years or so. “Given Imaging has every year come out with new products, new features that are revolutionary and we intend to continue to do so, probably even more so.“

According to Meron, 2004 was a banner year for the company, with more than 50% sales growth from the prior year. Additionally, Given transitioned to a profitable company last year.

Looking ahead to this year, he said the company would focus on growing PillCam utilization, an effort that will be bolstered by the company's exclusive sales representation and co-promotion agreement with Johnson & Johnson (New Brunswick, New Jersey) subsidiary Ethicon Endo-Surgery (Cincinnati) for the PillCam ESO. That agreement, inked last May (Medical Device Daily, May 12, 2004), calls for both parties to collaborate in expanding the installed base of the Given Diagnostic System, which will be used for both the PillCam ESO and SB products as well as future capsules.

Making the pitch for SonoSite, a company developing hand-held ultrasound imaging systems for use in a variety of clinical applications and settings, was CEO Kevin Goodwin.

According to Goodwin, Sonosite's systems combine all-digital, high-resolution imaging with advanced features and capabilities traditionally found only on cart-based ultrasound systems.

Goodwin said that the diagnostic ultrasound market represents a $3.5 billion opportunity.

The company was spun out of Philips Medical Systems (Andover, Massachusetts) subsidiary ATL Ultrasound (also Bothell) in 1998 to translate the advances made in digital circuitry into a hand-held unit. Essentially, Goodwin said the company is creating a market for hand-held ultrasound devices in a space that it is dominated by cumbersome cart-based systems.

Ultimately, he said, what the company possesses is high-performance ultrasound-on-a-chip technology. “One of the blurs it's creating is easing diagnosis and therapy into one continuum. We are working actively with large names in the medical device sector, both cardiovascular and otherwise, applying ultrasound-on-a-chip to create value.“

Goodwin said that traditionally, ultrasound devices have been large, expensive and stationary. He said that his company's hand-held units can help eliminate the often-lengthy physician referral process associated with cart-based ultrasound systems found in specialized imaging centers and provide ultrasound at the point-of-care, the patient's bedside or the physician's examining table.

He said that the company's hand-held devices could enable physicians to use ultrasound more frequently and in a wider variety of clinical settings.

While historically, the three healthcare sectors that have traditionally purchased ultrasound equipment are radiology, cardiology and ob/gyn, Goodwin said there are a “vast number of new markets“ that will drive the hand-held ultrasound market. Some of these include emergency medicine, surgery, internal medicine and vascular medicine. Typically these systems sell for between $20,000 and $40,000.

SonoSite currently enjoys an estimated 60% share of the hand-held ultrasound market and the largest installed base in the world. The installed base is particularly important in the device business, said Goodwin, “because you can move customers who came in earlier on up to your new technology as time goes on; it's a very profitable and efficient sell.“

Current products include the SonoSite Titan system for general imaging and cardiology applications, the SonoSite 180Plus system, for general ultrasound imaging, and the SonoHeart Elite, specifically configured for cardiovascular applications.

The company also markets the iLook 25 imaging tool, which is designed to provide visual guidance for physicians and nurses while performing vascular access procedures and the iLook 15 imaging tool, designed to provide visual imaging of the chest and abdomen for physicians and nurses while performing other procedures and examinations.

Goodwin predicted that by 2010 at the latest, one out of every three ultrasound systems will be a hand-held device because of the obvious migration of the technology in the direction of portability and mobility.

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