Medical Device Daily Associate

SAN FRANCISCO — Several companies that made the transition to the public domain this past year are making their first presentations at this week's annual JP Morgan Healthcare Conference at the Westin St. Francis Hotel.

Among the more interesting making their pitches in the med-tech sector were FoxHollow Technologies (Redwood City, California) and Animas (West Chester, Pennsylvania).

FoxHollow, which went public in October to the tune of $67 million, develops and markets minimally invasive plaque excision devices for the treatment of peripheral artery disease (PAD).

An estimated 12 million people in the U.S. are thought to suffer from PAD, with 2.5 million patients currently diagnosed. PAD results from plaque that accumulates in the arteries and blocks blood flow in the legs. These blockages can result in severe pain for patients and very limited physical mobility.

The company's SilverHawk Plaque Excision System, a minimally invasive method of removing the obstructive plaque and restoring blood flow to the legs and feet, is the company's primary product.

According to Robert Thomas, president and CEO, his is the only company to have such a device on the market. “And the system that we've developed has allowed for $24 million in revenue generation in our first three quarters of full commercialization in the U.S.“

According to Thomas, one of the cornerstones to a successful med-tech company is to have an intuitive, highly differentiated product, and he said FoxHollow certainly has that. “We are the only company that is successful at removing plaque that's obstructing blood flow down the legs.“

Plaque excision is a minimally invasive procedure performed through a tiny puncture site in the leg or arm. The SilverHawk system uses a small rotating blade to shave away plaque from inside the artery. As it is excised, the plaque collects in the tip of the device and then is removed from the patient.

Thomas said the system is unique because no capital equipment is required to use it. He also said that the single-use device “is very readily adopted by physicians. It's intuitive, easy to use [and] typically physicians are having success in their first and second cases.“

The company currently offers five different SilverHawk models in the U.S. of various catheter diameters and tip lengths to accommodate different artery sizes and amounts of plaque for use in the peripheral vasculature.

Another desirable aspect of the system is that it takes up only 17% of its current reimbursement code, giving the hospital a very desirable return. Compare that to carotid stenting, which takes up roughly half of the reimbursement code allotment.

FoxHollow sells the product to interventional cardiologists, vascular surgeons and interventional radiologists.

Thomas said that aside from the peripheral market, the company also would pursue two other primary revenue channels. The first is the coronary arena — specifically bifurcation disease. The other is plaque analysis for large pharmaceutical and biotechnology companies, since they can extract plaque from live patients. “Ultimately our goal is to go into early compound validation and new marker identification, really helping partner with pharma companies to develop new drugs,“ he said.

Animas President and CEO Kathy Crothall made the inaugural JP Morgan pitch for her firm, a maker of insulin infusion pumps and related products. The company went public last February, raising about $63.75 million

Crothall said the company's dual focus on both technology and patient service “sets us apart from our competition and has been responsible for our compounded annual growth rate revenues in excess vs. a market growth rate of 20% and our rapid rise in market share.“

Animas introduced its latest insulin pump product, the IR 1200, in April. According to Crothall, the device is the “smallest, most technologically advanced product on the market.“

Diabetes is a worldwide epidemic, and in the U.S. alone, one out of every $7 spent on healthcare goes to diabetes and its complications.

The company is primarily focused on the 1.2 million people with Type 1 diabetes, and, to a lesser extent, the 4 million to 5 million people with Type 2 diabetes who may require insulin.

Studies have shown that intensive management of diabetes can significantly reduce the complications. Intensive management involves the administration of insulin three or more times a day by either injection or a pump.

While she said that pumps offer many advantages to daily injection, the market is still vastly under penetrated. “Despite the benefits of pump therapy, the pump market with respect to Type 1 diabetes is less than 7% penetrated in Europe and less than 25% penetrated in the U.S, creating significant upside potential,“ she said, adding that the Type 2 diabetes market also presents “a growing upside potential for the insulin pump market.“

She characterized the 2004 insulin pump and pump supply market as around $780 million worldwide and $542 million in the U.S. She estimated that the value of that market could rise to an estimated $2.5 billion.

Crothall believes the Animas pump is “the coolest“ on the market because it is the “smallest, thinnest, lightest and most ergometric.“

Aside from the design of the device, the company attempts to make using the device easier for patients, which enhances compliance, she said.

Animas does so by an enhanced customer education and clinical support program. “We tailor the education and clinical support to meet the needs of the doctor and to meet the needs of the patient,“ she said.

Crothall also described recent acquisitions that her company made in the last half of 2004.

In November, Animas entered into license and development agreements with Debiotech (Lausanne, Switzerland) for micro-electromechanical systems technology and intellectual property related to next-generation insulin pumps and micro-needles.

In December, the company entered into a definitive agreement to acquire substantially all of the intellectual property rights, fixed assets, supplier, manufacturing and license agreements, inventory and tangible personal property of Cygnus (Redwood City, California), for $10 million in cash. Cygnus had been the manufacturer of the GlucoWatch and GlucoWatch Biographer products, devices worn like a watch but performing continuous glucose monitoring.

“The marriage of the micro-needle technology recently licensed from Debiotech to the Cygnus electrochemical sensor technology offers the possibility of a future-generation sensor with improved accuracy and less skin irritation than Cygnus' present technology,“ Crothall said.