Other companies are following the example of Given Imaging (Yokneam, Israel), the maker of an endoscopic ingestible pill to diagnose diseases of the small bowel, by having or being in the process of developing similar products that can provide clinicians with details about what's going on inside a patient's gastrointestinal tract.

On a long-term basis, Infotonics Technology Center and Medi-photonics Development, a subsidiary of Mediscience Technology (Cherry Hill, New Jersey), last month reported their intent to agree to jointly develop the Compact Photonic Explorer (CPE), or what they called a "pill camera," for medical and non-medical applications. The parties' initial focus would be on developing a CPE that would detect cancer and monitor body functions, they said.

On a more near-term basis, SmartPill Diagnostics (Buffalo, New York) President and CEO David Barthel told The BBI Newsletter that the company would begin a Phase II trial in January with an eye toward releasing a product in October of next year. "We're still a ways away from getting FDA approval and releasing the product to the market," Barthel said of the SmartPill capsule.

Infotonics Technology Center is a consortium whose founding participants including Corning (Corning, New York), Eastman Kodak (Rochester, New York) and Xerox (Stamford, Connecticut). Infotonics is a not-for-profit corporation that operates New York State's Center of Excellence in Photonics and Microsystems. The entities said that the proof-of-concept research for the CPE, led by a team at City University of New York (CUNY; New York), has been successful based upon an ongoing four-year multidisciplinary and multi-institutional effort designed to develop miniature devices that use light to remotely monitor the health of various environments with researchers at various universities.

Mediscience President Michael Engelhardt said, "The first goal of a joint development initiative would be to create an ingestible photonic pill that would enable physicians to detect early-stage cancer of the complete auto-digestive tract." He added, "Such a non-invasive device would lead to reduced mortality and healthcare costs and would significantly increase the number of people who could be screened for this type of cancer; further, an agreement between Medi-photonics and Infotonics would be a synergistic and strategic fit leveraging the center's unique nanotechnology capabilities and resources to provide our customers and partners with an exceptional state-of-the-art competitive advantage."

SmartPill Diagnostics reported last month that it had selected Applied Sciences Group (also Buffalo) as a strategic partner to provide software engineering services critical to the development of current and future generation SmartPill capsule systems.

Barthel said that his company's product is different from that already on the market by Given Imaging, which recently reported that it was changing the name of its product from M2A to PillCam. "Although we fall under the family of what's called capsule endoscopy technology, we are not a camera in a pill . . . we're not a competitor [because] they are entering into a different market space than we are. They are a very successful company, a great company, and we hope to be as successful as they are," he said.

Where Given is focused on small-bowel disorders involving bleeding and lesions, such as colitis or Crohn's disease, SmartPill Diagnostics is focused on the entire gastroinstestinal tract, specifically focusing on GI motility disorders, such as gastroparesis. In gastroparesis, food does not empty the stomach at a normal rate, and it causes such symptoms as heartburn, bloating, regurgitation of stomach fluid and vomiting. Gastroparesis is common in diabetics, the company said.

"The current procedures that diagnose take quite a bit of time," Bartel told BBI. "It can take up to six months to accurately diagnose a gastroparesis patient. They use invasive procedures to do it [which are] very uncomfortable to the patient, very time-consuming and very costly."

The capsule is ingestible and is a sensing device that measures four things: pressure, temperature, Ph and transit time in the GI tract. Those measurements are used to aid in the diagnosis of disease. In June, SmartPill Diagnostics completed a Phase I proof-of-principle trial. The trial that is scheduled to begin in January will involve between 100 and 300 patients. Once the product gets a 510(k) clearance, it would initially be marketed to gastroenterologists and then to general practitioners, Barthel said.

"We have a very strong degree of confidence that we shouldn't have any problems, and we'll get the product approved in 2005," he said.

SmartPill would manufacture and market the product. And while marketing would include an educational effort, Barthel said Given Imaging already has paved the way for other products to a large degree. Ultimately, he hopes to develop other smart pills – for example, one that could diagnose irritable bowel syndrome. In fact, he said, a second smart pill is scheduled to be launched in 2006.

ANS presses Cyberonics bid

Advanced Neuromodulation Systems (ANS; Plano, Texas) last month attached a price tag to its offer made in August, saying it is prepared to offer shareholders of neurostimulation competitor Cyberonics (Houston) $22 a share in cash and stock to merge with ANS. That would amount to a purchase price of just under $525 million. ANS said that in a letter to Skip Cummins, president and CEO of Cyberonics, it again proposed that the two companies meet "immediately" to investigate the possibility of a merger. It said its $22 offer represents a premium of 47% to Cyberonics' closing price of $14.95 on Aug. 19, the day before ANS reported that it had acquired 14.9% of Cyberonics' outstanding common stock.

In response, Cyberonics issued a statement indicating that its board of directors, "after consulting with its financial advisor, Merrill Lynch & Co.," unanimously rejected ANS's invitation to discuss a business combination. Cyberonics said it "reconfirms its previously stated position ... that it is not interested in any combination or merger."

Chris Chavez, president and CEO of American Neuromodulation Systems, said, "As the only two publicly held 'pure play' neuromodulation companies, a combined ANS and Cyberonics could build a world-class company that offers the most technologically advanced implantable devices on the market to address pain, epilepsy, and in the future, many other neurological conditions." He said the combination of the companies would make them more competitive and lead to more innovation in the field.

"We believe that a combined ANS and Cyberonics would create significant synergies in technology development, manufacturing, sales and marketing, regulatory, administrative and other areas, and create a company that is even better positioned to aggressively compete and innovate in the expanding neuromodulation field," Chavez said. He added that such a combination "provides the best financial opportunity for Cyberonics' shareholders, as they could participate in the ownership of a company with revenues in excess of $200 million focused on the electrical stimulation market."

BSD cites planned initiatives

BSD Medical (Salt Lake City) disclosed the three primary initiatives of its corporate strategy, following the company's success in securing funding through the sale of TherMatrx (Chicago) to American Medical Systems (Minnetonka, Minnesota). The sale was first disclosed in May and completed in mid-July. The company has projected that its total cash infusion from the sale of TherMatrx will be about $40 million, with a maximum potential of $62.5 million.

"The core of our business has been and will continue to be the development and commercialization of microwave thermal treatment systems for cancer therapy," said Hyrum Mead, president of BSD Medical. "That is our first initiative, and it has not changed, except that we are far better empowered financially to aggressively pursue our objectives than ever before." Adding that "our second initiative is to further expand the use of microwave thermal treatments beyond therapy for cancer," Mead quipped: "After the success of TherMatrx, some would say that we are good at that."

He said, "We discovered and developed an innovative treatment for the symptoms of enlarged benign prostate [benign prostatic hyperplasia, or BPH] through microwave thermal treatments, sparing patients from a major and dangerous surgery, or from a lifetime regimen of undesirable drugs. We wish to underscore, however, that resolving symptoms of BPH is just one item from our long list of targets for treating non-cancerous conditions." Mead added that the company intends to expand its portfolio of core competences beyond microwave heat therapy. "We believe that some diversification of our business and its assets are part of a balanced approach to a healthy company," he said. "We have therefore anticipated both focus and balance in our business strategy."

MedicalCV to focus on AF

Cardiovascular surgery device manufacturer MedicalCV (Inver Grove Heights, Minnesota) said in late September that as a result of its expanded efforts in the atrial fibrillation (AF) sector, it is "re-evaluating the long-term strategic implications and alternatives for its mechanical heart valve and pyrolytic carbon platforms," a statement suggesting that it is pursuing the possible spin-off of the technology.

Historically, the company has developed mechanical heart valves known as the Omnicarbon 3000 and 4000. It said its new long-range strategy "is to achieve profitability by diversifying into high growth markets in cardiovascular surgery" by introducing products targeting treatment of AF. MedicalCV also said that Adel Mikhail, PhD, its founder and a director, has resigned from the board of directors, citing "disagreements over the company's strategic direction."

Marc Flores, president and CEO, said: "Our focus and corporate structure has moved aggressively toward the support and dedication to better outcomes in standard and minimally invasive procedures for the 5.5 million people worldwide afflicted with atrial fibrillation." In July, the company rolled out a restructuring of operations to reduce its costs in the heart valve division and, obviously, to lay groundwork for its new focus. MedicalCV is developing a new soft-tissue ablation system called Atrilaze. The treatment uses a laser device to ablate soft tissue, including cardiac tissue, thus intended to treat AF and reduce the incidence and severity of congestive heart failure.

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