By DON LONG and JIM STOMMEN
CDU and Executive Editor

In half-hour presentations and lengthier panel discussions, cardiovascular technology company officials, clinicians and industry analysts elevated the dispersal of information to a new art form during two bellwether investor conferences held on opposite coasts last month. The JPMorgan Healthcare Conference, holding its traditional early-January spot as lid-lifter for a year's worth of such events, drew its usual throng to the venerable Westin St. Francis Hotel in San Francisco. The JPMorgan gathering was followed at month's end by the US Bancorp Piper Jaffray Health Care Conference in New York's Pierre Hotel.

For the attendees, the two conferences offered answers to wide-ranging questions such as:

• Do we really need another expert panel discussing drug-coated coronary stents?
• Though drug-coated stents are better than bare-metal stents, what will their impact be on hospital economics over the short and long term?
• Six months from now, if you need a stent, will you tell your cardiologist that you'd prefer a bare-metal stent?

All of these questions were posed at a panel on drug-coated stents (thus responding to the first question) during the US Bancorp Piper Jaffray conference, and the discussion received a rapt audience. But the variety of answers given by four panelists appeared to lead to a much larger question: What will the uptake of this new technology be if cardiovascular practitioners have to start thinking like accountants in their operating rooms and cath labs? That appeared to be the underlying concern of the panelists who will have to grapple with the issue early on. Their collective wisdom turned out to be somewhat ambiguous, with the best answer being that only time is likely to tell.

Piper Jaffray med-tech analyst Tom Gunderson put the panel in future time to make it more interesting. And Ben Line of the hospital conglomerate Allina (Minneapolis, Minnesota) provided the worst-case scenario to match. He projected that one of Allina's hospitals with $25 million to $30 million in extra annual costs for these new stents might receive only $5 million to $10 million in private pay and reimbursement revenues for them.

Gunderson, who had noted that Line's title was "head of revenue enhancement," commented ruefully that this "doesn't sound like revenue enhancement necessarily." Additionally, Line projected the "de-enhancement" of other revenue for Allina's hospitals as a result of "losing volume in other cardiac services because of [drug-coated] stents."

Lloyd Klein, MD, director of interventional cardiology at Rush-Presbyterian-St. Luke's Medical Center (Chicago, Illinois), injected the complicating issue of competition, noting the hot contest for patients both within Chicago and at suburban hospitals, suggesting that they are likely to use this new drug/device technology as marketing leverage despite the cost. But, he added, "If [cardiologists] use these [stents] to a large extent, they could drive their hospitals out of business." On the other hand, "if they don't use them, the patient-doctor relationship is going to be compromised."

Klein noted that he is a member of a committee of the Society of Cardiac Angiography and Intervention (Bethesda, Maryland) that has developed a policy on the devices which emphasizes physician dependence on trial evidence and, beyond that, individual consultation with the patient. That policy, he said, would be published in the February issue of the group's journal, Catheterization and Cardiovascular Intervention.

Michael Mooney, MD, director of a cath lab in Minneapolis, suggested that no stated policy would have much impact against the reality of real-world situations and patient-physician dynamics. Cardiologists, he said, will not be able to "ration" use of drug-coated stents because of the strength of the clinical data thus far. "Seventy-five percent improvement is uniform across [the trials], so the ability to ration this based on costs and not to the patient's benefit is a fundamental issue," Mooney said. "If we do it only on cost, there will be an unbelievable conflict developing." While he characterized early trial data as "overstated," he said that the apparent benefits offer "the enormous conflict of putting physicians in the position where they many not feel like physicians" in exercising a final medical judgment.

Later in the discussion, Mooney directly raised a key underlying issue, not yet entirely defined: The exact cost that manufacturers will charge for these new products. He said that his organization would seek to move Cordis (Miami Lakes, Florida), the expected initial entrant to the market sometime this year, "off a line-item approach" to a capitated approach. In this way, he suggested, hospitals could use their own competitive leverage. "How we are treated in this is how we determine how the second vendor is used," he noted, referring specifically to Boston Scientific (Natick, Massachusetts), considered next out of the starting blocks.

Perhaps least pessimistic about future costs was Keith Folker, MD, representing Blue Cross/Blue Shield of Minnesota. He projected "no major impact on total revenues," but noted that health plans generally "do DRGs [diagnosis-related groups] rather than carve-outs when contracting with providers, it's a whole package rather than individual features." There was general agreement among panelists that it will take some time for J&J/Cordis to meet the initial demand in the first year and thus time to see how some of these issues will be answered and general agreement that demand would be heavy, perhaps approaching 100% penetration of the stent market fairly early.

"At the beginning then, every doctor will have their own experience," Klein said, adding that he expected heavy use in "less-complicated cases, for diabetics, smaller vessels, about 30% of these populations." And he said "without a cost issue, [drug-coated stent use] would expand rapidly to 100%."

But there will be a cost issue, most agreed.

Folkert also raised the thorny issue of off-label use, a likely result given product efficacy. The probability of such uses was another consensus view among panelists, again raising the surrounding thorny issue of reimbursement.

Reimbursement hovered over the entire discussion again raising the issues of accountancy. While Medicare already has approved reimbursement coding for these stents, most agreed it would not be sufficient. Mooney again was most combative here, as if foreseeing future skirmishes with providers. "There should be a contract price for the stent and all disposables," he said, adding that a price of $4,000 for everything is "a reasonable number I don't think it needs to be higher. I challenge the idea that a $3,000 stent is really rational in any benefit."

But amid all the ambiguity and cross-talk of the panel, there was one clear answer given. About one-third of the way through the discussion, Gunderson polled the audience with one of our initial questions. He asked the room of about 350 attendees, "If six months from now you need a stent, will you want a bare metal one? Raise your hand."

None went up.

Boston Sci to be feisty No. 2

Boston Scientific appears happy with the role of feisty contender, hardly granting the championship belt to the Cordis unit of Johnson & Johnson (J&J; New Brunswick, New Jersey), which is expected to get the first U.S. approval for a drug-coated stent by the end of 1Q03 or early in the second quarter.

Larry Best, chief financial officer at Boston Scientific, was upbeat and in "We try harder" mode at the US Bancorp conference as the next company projected to come online with its drug-eluting stent products. This should happen anywhere from nine months to a year after the Cordis approval, according to industry watchers. And it bases much of its contending strength on a strong series of TAXUS clinical trials. "If we get approvals for the Taxus program later this year or early next year, it's basically a 'pinch me' scenario," said Best. "It's hard to comprehend the size of the growth we could have."

At the JPMorgan conference, Best referred to drug-coated stents as "by far the largest growth opportunity there has ever been in medical devices," and while Cordis is widely anticipated to be the early leader in the U.S. coated-stent sector, Best wasn't conceding anything during his presentation in San Francisco. He said he believes his company will be able to play catch-up on the strength of a superior product and physician preference.

"We have an elite stent, the Express; an elite delivery system, the Maverick; an elite coating, paclitaxel; and an elite polymer," Best said. "We think we have the best polymer carrier in the marketplace and our clinical data are showing that." He said there's plenty of room for two major players in the coated-stent sector, with the sales battle likely to hinge on physician preference that preference in turn being built on familiarity with a company and its products and on clinical results generated in trials.

Best said the results garnered by Boston Scientific from its array of TAXUS trials are second to none. "We have broader and deeper trial results than anyone," he said, citing the "extremely low" restenosis rates reported in its TAXUS I, II and III trials. He called those trials "a big-ticket item," offering "large barriers to entry" for competitors beyond Boston Scientific and J&J/Cordis. "The bar is being moved up by J&J and Boston Scientific with their trial data," Best said, adding that "it's expensive to get into this market. We've spent more than $79 million on trials alone." While he didn't concede anything to Cordis/J&J, he didn't downplay their work either. "They've got great data," he said, adding, "it's no accident that the two participants in this sector have been at it for six years."

He noted in particular Boston Scientific's choice of paclitaxel as the drug upon which to build its coated-stent franchise, compared to rapomyacin for J&J. Boston Scientific obtained rights to that drug through a co-exclusive alliance with Angiotech Pharmaceuticals (Vancouver, British Columbia), which Best characterized as "a great partner." He cited a study showing that 55% of physicians surveyed favored paclitaxel as a drug of choice for coated stents they may choose to implant.

During his presentation in New York later in the month, Best on more than one occasion referred to J&J, in effect raising expectation via association with the competition. "It's no coincidence that two companies appear to be standing when other programs have been aborted," he said. "We're in the game, J&J is in the game, and it's a great [market] opportunity."

While granting that the drug-eluting stent technology was probably the main focus for attendees, Best repeatedly stressed the larger opportunities for Boston Scientific going forward in the cardiovascular sector, and its rebound from a recent three-year period of flat, even stagnating, growth and share losses. Bannering his firm as "the largest interventional company in the world," he promised "product flow that is going to be very high ... we have great franchises, great market shares, we love every business we have."

But he could not help returning to the drug-eluting stent opportunity as key to the company's 2004 prospects and beyond. And he trumpeted a message of optimism. "We intend to lead this coronary stent market," Best said. "The only thing between us and the opportunity is the TAXUS data and approval in a timely manner."

During a "Where to Make Money in 2003" panel discussion at the JPMorgan conference, Arnie Douville of American Century cited Boston Scientific, which he said "took time during its absence from the coronary stent sector to fine-tune the operational side of its business and develop a well-run, fine-tuned machine. It will be a big player in the coated-stent sector, but the key is what it can do to augment its business offering to drive growth in 2005."

Douville cited Johnson & Johnson and Boston Scientific for their leading roles in the drug-eluting stent sector, along with the large companies operating in the cardiac rhythm management space [unnamed, but including Medtronic, Guidant, St. Jude and Boston Scientific], which he said "have the ability to continue to innovate, which will allow them to continue to grow."

Steve Slaughter of UBS Global Assets cited coated stents, with J&J and Boston Sci as the key players. "We continue to think Johnson & Johnson is a reasonable investment, notwithstanding the slowdown in its 2004 drug pipeline. It will be the first into the U.S. drug-coated stent market, and we really do think there are higher hurdles [for other companies] to get into that market."

Guidant restates coated-stent commitment

Those trials are a thorn in the corporate side of Guidant (Indianapolis, Indiana), which also presented at the US Bancorp conference, and the company indicated no plans for abandoning the field to Boston Scientific or any other competitors. "We're committed to our drug-eluting stent program," said Guido Neels, group chairman in the office of the president at Guidant. The company will pursue this with its SPIRIT trials and its proposed acquisition of Biosensors (Singapore/Newport Beach, California), deals emphasizing the drug sirolimus.

"We may continue to work with Cook [Bloomington, Indiana]" was Neels' lone comment concerning the recent decision not to pursue acquisition of that company. That deal was abandoned in early January after setbacks both in the clinical trial and courtroom arenas.

Rather than focusing on any stent battles lost, Neels emphasized Guidant's continuing strong presence across a range of cardiovascular markets and especially cardiac rhythm management. That arena is primed and growing, he said, fueled by the influence of robust data from recent trials showing the life-saving potential of both implanted cardiac defibrillators and resynchronization pacing.

As a secondary emphasis, Neels also referred to Guidant's goal of not just producing technology but also attempting to influence its markets by taking strong positions on reimbursement and liability issues and "by influencing health policies on a global basis."

At the earlier JPMorgan conference, Guidant President and CEO Ron Dollens stressed his firm's new-product capabilities. He cited the company's growth from revenues of $862 million in the first year after its 1994 spinout from Eli Lilly and Co. (also Indianapolis) to some $3.2 billion in 2002. Parodying real estate's "location, location, location" mantra, he said that the key to Guidant's operational capabilities is "product development, product development, product development." The emphasis on the company's steady flow of new products was underlined by Dollens' comment that some 60% of company revenues come from products that are less than 12 months old.

Noting that Guidant's vascular intervention business posted 40% growth in the most recent year, he cited the positive results from the COMPANION and MADIT II clinical trials, including substantial reductions in patient mortality and the impact those results will have the firm's resynchonization and defibrillation product sales, projected to increase "in excess of the growth of the market."

As for drug-eluting stents, Dollens set the tone for Neels' comments later in the month. "We have a novel stent and delivery design," he said, "and that will be important moving forward." He cited the company's agreement with Novartis (Basel, Switzerland) to provide everolimus as a drug coating for Guidant's stents as a "next-generation" coated-stent product. The company's VISION-E trial with the everolimus coating will begin in the present quarter, he said. Dollens also noted that the acquisition of Biosensors would provide his company with "a bioresorbable stent opportunity."

Angiotech: Vessels are 'valuable real estate'

The current stent wars are being fought primarily between the large cardiovascular players making these devices and scrapping to carve out the looming and potentially large drug/device sector. But William Hunter, MD, president and chief executive officer of Angiotech Pharmaceuticals, the maker of a paclitaxel drug proving a valuable part of the therapeutic arsenal, doesn't put the battle in strictly drug or device terms.

Rather, he said during an appearance at the US Bancorp gathering that all the tubes and conduits of the body are "extraordinarily valuable real estate," suggesting that this is what the stent wars and many peripheral battles yet to come are all about. Hunter talked about this valuable cardiovascular turf and his company's approach to it.

He said that when a surgeon places and leaves a stent in the body of a patient, "the body recognizes it as a foreign body that shouldn't be there." Thus the cell buildup that eventually results in restenosis is a quite natural and needed reaction. The trick, he said, is to get the right amount of build-up around the stent and then to prevent more.

Hunter said that the development of paclitaxel for this application was no accident, but rather the result of screening a variety of anti-cancer drugs "for cell division and cell migration." The result was the selection of paclitaxel "in a rational manner, based on its mechanism."

While Hunter clearly was aware that his standing-room-only audience was most interested in the latest skirmishes in the stent battles, he was equally anxious to emphasize that Angiotech "is more than stents."

He noted "an awful lot of vessels in the human body," with opportunities for annexing perhaps even more of this real estate, Hunter said, and the primary vision guiding his company's extremely tantalizing future.

Putting drug coatings on vascular grafts is one fairly obvious application for this strategy, and combining drugs with surgical glues is another, perhaps less obvious, on whuch he elaborated.

The latter application is the point of Angiotech's purchase of Cohesion Technologies (Palo Alto, California), announced in November and on the verge of closing at the time of his New York presentation. Hunter cited Cohesion's CoSeal product as an extremely likely target for further development as a "fully synthetic" material that thus offers no risk of infection and can be sprayed on, so is valuable in laparascopic procedures. "It's a sealant that we can drug-load to prevent leakage and restenosis," he said. And increasing concentrations of drugs could well boost its secondary goal of reducing adhesions and scar formation.

Other applications for targeting included treatments for rheumatoid arthritis and psoriasis using paclitaxel, Hunter said, adding: "We'll be rolling out new products every year for the next seven or eight years."

While acknowledging the role its licensing deals with Boston Scientific and Cook (Bloomington, Indiana) have played in bringing Angiotech to the threshold of financial break-even, Hunter noted during his presentation in San Francisco earlier in the month that investors should think of the firm as a "device coatings company."

Even though the drug-coated stent sector is the hottest thing going in the medical technology arena, he pointed out the much broader potential for the device market overall, pegging it at $180 billion in the U.S., with some 280 million implants done worldwide each year. That's the market Angiotech is looking at, believing it can replicate the clinical success its coatings have realized in the coronary stent space in various other sectors.

"We feel the device industry has plateaued, as far as engineering is concerned," Hunter said, adding that drug coatings represent "the next wave of innovation for companies that want to differentiate their products from those of their competitors."

As an example of replicating its success in coating coronary stents, he cited Angiotech's efforts in the vascular arena, where it has developed a paclitaxel "Saran Wrap" to go around arteries. That product, licensed to C.R. Bard (Murray Hill, New Jersey), has been shown to reduce restenosis in peripheral arteries by as much as 85% in animal testing. He said it would go into the clinic toward the end of this year.

'Stents will fail,' says Novoste

For its part, Novoste (Norcross; Georgia) attempted to understate the potential benefits of drug-eluting stent technology, maintaining that drug-eluting stents will fall short of therapeutic panacea. Making Novoste's case at both the San Francisco and New York events was president and CEO Al Novak, who more than once during his US Bancorp presentation maintained that "stents will fail," coated, uncoated or eluting, and that this then offers a continuing opportunity for his firm and its vascular brachytherapy (VBT) radiation system to treat in-stent restenosis, or the need for redo after a stent has been placed and fails.

While acknowledging an earlier conference panel prediction of 100% uptake of DES, he pointed to the clinical rates of failure and projected more failures in real-world use, at least 7% and as much as 10% potentially. "We're building our business model around that 7% failure" and higher, he said.

Novak refused to downplay the larger company's efforts, though he salted his large praise with the considerable condiment of irony. "You've got to hand it to J&J," he said. "This will be wonderful from the patient's point of view and Novoste can fix the failures."

Overall, he projected "120,000 cases available to us" for treatment and described 4,000 to 5,000 actual treatments annually, for a small firm, as "a wonderful opportunity."

Novoste also stays in the ring with J&J in somewhat leaner shape. Just prior to its presentation at the New York conference, it announced a 12% reduction of its work force to about 270 "to focus on pro-fitability," Novak said. And at the same time it is gearing up to extend its platform brachytherapy technology in other areas for instance in the treatment of various types of graft restenosis such as occur in renal therapy.

Novoste also is still feeling the effects of voluntary recall of its 3.5F catheters last year, but it still retains a leading 60% of its BVT market, Novak said, and is making a strong recovery toward profitability.

Overall, he said that the company is clearly focused as "a growth opportunity" in the vascular brachytherapy market, and offered that as a challenge to anyone thinking otherwise.

Destination therapy pumps up Thoratec

It isn't hard to understand why Thoratec (Pleasanton, California) looks at the applicable statistics and sees market opportunity galore for its heart-assist devices. Two figures stand out: 400,000 late-stage congestive heart failure (CHF) patients a year in the U.S., but just 2,300 heart transplants annually.

Keith Grossman, CEO of the leading player in the ventricular assist device (VAD) sector, said during a presentation at the JPMorgan conference that the FDA's early-November approval of the company's HeartMate VE left ventricular assist device for "destination therapy" use brought real hope to a large group of CHF patients who otherwise face a steadily declining quality of life.

That approval was largely based on impressive data accumulated in the REMATCH trial operated by the National Institutes of Health (Bethesda, Maryland), which showed that survival rates for patients in the VAD arm was double that of the drug-treatment control arm at one year and triple at two years. In fact, Grossman said that 92% of the patients in the medical management arm of the trial have died.

As part of his presentation to a standing-room-only audience of interested investors, Grossman cited a follow-up study indicating the median cost of a Thoratec implantation to be $141,000 favorable in comparison to the heart, liver or other organ transplants that cost in the neighborhood of $250,000. And the study further noted that elimination of the sepsis problem common to many major surgical procedures would have lowered that cost to $80,000.

With FDA approval in hand for the destination therapy indication, Thoratec's next big hurdle is in the reimbursement arena.

Since both private payers and the Centers for Medicare & Medicaid Services-administered Medicare program already have established reimbursement for Thoratec LVAD use as a bridge to transplant, Grossman expressed confidence in gaining a positive reimbursement decision for destination therapy use probably in the second half of this year. He cited a recent favorable technology assessment decision by Blue Cross/Blue Shield as reason for optimism on the reimbursement front.

Given the number of CHF patients in the U.S. and worldwide, the potential market value of Thoratec's technology is eye-opening. Grossman said the company estimates the destination therapy market as having an annual value of $350 million to $1.1 billion, based on a 5% to 15% market penetration.

In order to maintain that lead, Thoratec has a substantial product pipeline that includes the new HeartMate XVE, which Grossman said includes some 40 technical advancements which have resulted, he said, in a "much more durable product."

Future VAD products include the IVAD, an air-driven device; HeartMate II, a smaller model that can be implanted with less-invasive techniques; and HeartMate III, designed to be bearing-free, so there are no moving parts to wear out. The latter device is currently in animal trials, with clinical trials in humans likely to begin in about two years.

Grossman also cited Thoratec's work on products for the vascular access graft and coronary artery bypass graft markets, as well as the diagnostic blood testing products made by its International Technidyne (Edison, New Jersey) subsidiary, the latter of which account for about 35% of the company's revenues. He said ITC's share of the revenue total would drop in the future as the VAD and graft sectors continue their growth.

"This is not an easy market to get into," Grossman said. "There are large barriers to entry," not the least of which are long product development and clinical testing cycles. Given the hurdles that his company has cleared, and that other companies would still have to overcome, "we think we will have very little, maybe no competition for the next several years," he said.

'Surrounding' the clinician

St. Jude Medical (St. Paul, Minnesota) attempts to "surround the clinician" with its cardiovascular offerings, the company vision stated by Chairman and CEO Terry Shepherd at the US Bancorp meeting. Having just issued its fourth-quarter and year-end financial report that saw 2002 sales hit a record $1.59 billion, Shepherd mostly provided color commentary concerning St. Jude's offerings in the sectors of cardiac rhythm management, vascular surgery and vascular closure. The highlights included a 45% quarterly growth in the implantable cardioverter defibrillator (ICD) marketplace, pushing the company to a 14% share overall, even before expected rollout of more advanced products, with Shepherd promising "an every-six-months cycle with new ICDs," complemented by "advanced leads" technology.

A growing push for the company is in what Shepherd called "co-morbidity management." Patients receiving pacemakers, he said, often have related cardiac disorders, such as sleep apnea, atrial fibrillation and heart failure, with the company seeing a potential for market growth expansion "by adding therapeutic and diagnostic features that address these conditions," he said.

During a presentation at the earlier JPMorgan conference, CFO John Heinmiller had cited the growing focus on co-morbidities, identifying sleep apnea and orthostatic intolerance are two targets, with pacemaker and low-voltage atrial fibrillation suppression devices being eyed for possible applications in those disease states.

Heinmiller said St. Jude Medical expects to continue to gain market share in the cardiac rhythm management market, citing an array of new products and more on the way. He emphasized the opportunities for growth in the ICD arena, saying the company's goal is to double its present 13% to 14% share of that sector.

He cited another favorite new St. Jude product, the Symmetry Bypass System, a connector technology aimed at eliminating the clamping of the aorta in bypass procedures. That system "has a good growth profile," Heinmiller said, "and it is still early in the product cycle." Also highlighted was the company's Angio-Seal vascular closure device, with Heinmiller saying the Angio-Seal SST Platform gained 10% additional market share in 2002 and now is the clear leader in that segment, with "a new product planned in this category in 2003," he said.

In New York later in the month, Shepherd said St. Jude is ramping up development in tissue heart valves, thus augmenting its strong mechanical valve line. Tissue valves are an area where the company has not yet achieved significant play. Further top-line growth is expected by St. Jude with the acquisition and integration of its Japanese distributor, Getz Bros. (Tokyo), with the company projecting this will bring it an additional $74 million to $100 million early on, Shepherd said.

During the "Analyst Wrap-up" session that traditionally closes the JPMorgan conference, lead medical technology analyst Michael Weinstein went with St. Jude as his top stock for 2003, saying, "I think the Street's estimates are really conservative on this stock."

Weinstein, whose focus is large-cap players, noted that med-tech "has been a great space to be in" to dodge many of the trials and tribulations that have roiled the public equity markets of the past three years. Admitting to being "uncertain" whether 2003 will be another year of the device sector outperforming the market as a whole, he said he is "looking at a real upside in 2004."

Medtronic has its 'strongest' pipeline

Like Guidant's Dollens, Art Collins, CEO of Medtronic (Minneapolis, Minnesota), stressed his firm's "very strong technology development line" during his JPMorgan presentation, noting that two-thirds of its revenues come from products less than two years old. He emphasized the company's strong diversification over the last several years, saying that in addition to major revenue gains in cardiac rhythm management (up 26%), revenue growth also was strong in its neurovascular/diabetes (20%) and spine/ENT (31%) businesses.

Emphasizing Medtronic's diversification, he noted that pacemakers the business on which it was founded now represent only about one-quarter of the firm's business vs. one-half as recently as 1998.

Telling his investor audience that Medtronic positions itself in "very large markets with plenty of room to grow," Collins said the company holds a No. 1 position in eight of the nine business areas (No. 4 in vascular) in which it operates. And it intends to hold those positions, he said, noting that the firm's current R&D spending rate is about $750 million, or 10.1% of sales, up $100 million over the prior year.

Collins said Medtronic introduced 10 major products in the cardiac rhythm management sector in 2002, and that the company today has its "strongest product portfolio in history." Collins said that its implantable cardioverter defibrillator (ICD) business, buoyed by last year's approval of the InSync system, is poised for large growth. "ICD is a dramatically under-penetrated market," he said.

OmniSonics tunes in to big markets

When it came to emerging medical technology companies, the organizers of this year's JPMorgan conference literally saved the best for last. The final med-tech presenter, appearing just before the closing analysts' wrap-up program, was OmniSonics (Wilmington, Massachusetts), a company that, unlike many which misuse the word, truly is developing a "novel" technology.

OminiSonics' focus is vascular occlusive disease, in which materials such as blood clots or plaque block blood vessels and lead to heart attack, stroke and, in the case of the peripheral arteries, amputation of limbs. President and CEO Robert Rabiner told an audience of investors who managed to find their way to the most distant of the conference presentation rooms that the company's platform OmniWave technology, which takes the form in the Resolution System, uses acoustic energy to remove plaque, fresh clots and organized thrombus from arteries.

There is "no other device solution" to this problem, Rabiner said, noting that patients instead are placed on anti-thrombotics. "We are reinventing the treatment of coronary occlusive disease" with the Resolution system, he said. That system "removes large volumes [of such materials] quickly, with no adverse effects on the arterial walls."

The Resolution system is comprised of a small generator, a handpiece and small-diameter guidewire. Make that very small-diameter guidewires 0.004 mm to 0.025 mm, much smaller than normal guidewires used in interventional procedures. "The best thing about our system for physicians," Rabiner said, "is that there's no change in technique it uses conventional introducers and guide catheters." And it's compatible with any manufacturers' products in that area, he said.

In what is billed as a quick procedure (usually two or three minutes long, Rabiner said), a guidewire is introduced into an artery with a blockage from a thrombotic material, advanced through the vessel to the blockage site, and then a low-power, 360-degree acoustic wave is sent along the wire. When activated, that acoustic wave removes pieces of thrombotic material up to 6 m in size. "And it targets only the discarded materials, with no vessel damage," he noted.

In going after such artery-blocking materials, OmniSonics is targeting two enormous markets peripheral arteries, a $4.5 billion-a-year market opportunity, and coronary arteries, an even bigger opportunity estimated at $8.5 billion a year. Its first approved indication is in peripheral arteries, having received the CE mark for use in clearing obstructions from hemodialysis access grafts and lower-limb occlusions. "We have successfully treated 100% of the patients on whom the Resolution systems has been used," Rabiner said. In addition to Europe, use in that indication has been approved in Australia and New Zealand. A pivotal trial for access-graft use is under way in the U.S.

The company also is "quite far along in developing the technology for cardiovascular use," he said, citing a substantial need. "Stents and balloons either compress or displace thrombus, but they don't remove it," Rabiner added. In safety studies in swine, he said particles of 10 microns or less in size have been removed by the system, adding that, "the best distal embolization filter on the market claims to capture only particles of 70 microns or up."

The company's regulatory timeline is for FDA approval for use in cases of acute coronary syndrome by late 2004 to early 2005, complete thrombotic occlusions by late 2004 to mid-2005, and acute myocardial infarction by mid-2006. Babiner said the company will begin to receive revenues from international markets this year, and will begin hiring a U.S. sales force about mid-year to prepare for domestic launch.

With a business model built on revenues from the disposable guidewires, which he characterized as having "high margins," he forecast rapid sales growth for the firm, saying that OmniSonics' technology is "complementary to every technology out there balloons, stents, everything that's used in an arterial intervention."

A part of many others' products

A smaller company but one also having a global influence technologically is Wilson Greatbatch (Clarence, New York), which provides many of the batteries, capacitors and leads for much of the cardiovascular industry or, as Chairman, President and CEO Edward Voboril put it during his US Bancorp presentation, "at least one component in almost every [implanted] device."

Voboril was eager to stress the point that Wilson Greatbatch is not a contract manufacturing company, but rather does highly customized work that then builds to future product development. "We don't have a catalog," he said. "Customers come to us with a problem to be solved. We design something based on our proprietary technology, deliver it, and sometimes put the pieces together, whereby we can achieve much higher margins."

Future opportunities are large, Voboril said. "Nobody yet is using all our components, so we still will have growing market share." And he too mentioned the increasing uptake in ICD implantations and resynchronization pacing devices and the increasing technical complexity of this sector overall, such as new filtering technologies and "more leads in more devices."

Voboril predicted Wilson Greatbatch's growth will continue in "the high teens," pushed by a variety of other sector pumps: "New therapies, an aging population and continuation of expanding indications."