Cardio's "next big thing": industry experts reflect on coming out of a downturn, market trends, new technology and the impact of healthcare reform.
Unless it is done strictly on the basis of numbers, assessing the state of an industry at any given point in time is an exercise in subjectivity--it's all in how one looks at it. To gauge the current outlook for medtech in general and the car diovascular space in particular, Medical Product Outsourcing asked three industry insiders from disparate positions for their views on how things stand.
Larry Haimovitch is a medtech industry watcher and investor who is president of Haimovitch Medical Technology Consultants, based in Mill Valley, Calif. Josh Makower, M.D., is CEO of ExploraMed Development, a Mountain View, Calif.-based medical device incubator, and widely known as a medtech entrepreneur and innovator, holding more than five dozen patents for various devices in the fields of orthopedics; ear, nose and throat; cardiology; general surgery; drug delivery and urology. Michael Minogue is chairman, president and CEO of Danvers, Mass.-based Abiomed, a company with a substantial and growing position in the hemodynamic segment of the cardiovascular market.
Medical Product Outsourcing: The cardiovascular sector has been buffeted by the same economic storms that have impacted industries of all types. With signs of economic recovery increasingly popping up, where does the sector stand relative to medtech overall?
Minogue: I think the medtech space is continuing to show reasonable trends, because people are still getting sick. But the new healthcare reform legislation will enact a new tax onto the industry, so that will have an impact.
Haimovitch: I was surprised by how the economic downturn affected procedures that I never would have expected to be impacted the way they were. Coronary artery bypass surgery, heart valve surgery--things that you wouldn't expect would be economically sensitive or affected by people's situations, all of a sudden some of those procedures were affected way more than any of us expected. Certainly less hit than consumer discretionary procedures--things like LASIK, plastic surgery procedures, things of that nature. But still, we saw some procedures slow down. We're beginning to see some signs of recovery now. The healthcare markets are perking up, but like the rest of the economy, it's nothing spectacular.
MPO: With "innovation" being a clear statement of fact far the medical products industry overall, the cardiovascular space, in particular, has ridden an unbroken wave of wondrous technologies over the past few decades. Is there a clearly visible "next big thing" coming out of the sector?
Haimovitch: This is not a new revelation, but anything minimally invasive just as a general thing, of course, and in that realm you have to mention the whole percutaneous valve and percutaneous valve repair space. In that space you have Edwards Lifesciences and the tremendous progress they're making--their percutaneous valve sales overseas have gone just gangbusters. They're working through their [U.S. Food and Drug Administration (FDA)] trial, and that has been tremendous, as has CoreValve. Now part of Medtronic, CoreValve is doing very, very well. That is a very exciting area. The FDA approvals won't be available for another year or two.
Minogue: Percutaneously, what you're trying to do is make it easier to put in, less expensive, quicker discharge, less adverse events--that can be applied across the board to all the different applications, not just heart pumps. That's what's happening, for instance, with percutaneous valves.
Haimovitch: We just had the Everest trial, which was the Evalve mitral valve repair trial, which proved to be a success. The pivotal trial results for Evalve's MitraClip were just released at the American College of Cardiology meeting. (Editor's note: Abbott acquired Evalve last year for more than $400 million. The company develops minimally invasive cardiac repair technology). That area looks as transforming to me as angioplasty was relative to coronary bypass, because you were taking a very invasive procedure and making it much less invasive, first with angioplasty and then with the advent of stents. Now you're taking another very invasive procedure with heart valves, where you have to crack the chest and do all these invasive things, and you're now starting to talk about a truly percutaneous procedure for a certain subset of patients. This could be just a huge, huge market. Many people are talking about this being the next billion dollar market, and it shows all the promise of being that. This is a very, very exciting area.
MPO: What other spaces are hot?
Minogue: Well, obviously I'm biased, but I think improving hemodynamics for patients to protect or help recover heart muscle is a big issue that can be addressed through percutaneous heart pumps or stem cells or muscular cells in the future, and there also is a lot of excitement for percutaneous valves.
Haimovitch: Another area that's growing is LVADs--left ventricular assist devices are really starting to rock and roll. Thoratec has destination approval now, and that market is really growing, and there is a lot of innovation. A lot of startup companies are getting involved in that area.
MPO: How does Abiomed's work in this area fit in with that of other companies such as Thoratec, which now has a destination therapy approval?
Minogue: There essentially are two types of hearts. There are hearts that fail suddenly, like an acute event, a virus or a heart attack. Our focus is to provide some support for those patients to allow the heart muscle to recover so they can go home with their own heart. The destination therapy is for those folks who have had their hearts worn out over time, so they're looking for something that can give them the permanent ability to provide higher pumping power. So it's a different patient population.
MPO: Mike, you mentioned stem cells, which is a really interesting area. There was a lot of public hubbub, mainly surrounding ethical questions. Do you see a way clear where stem cells will be working their way toward real commercialization?
Minogue: Some of it is stem cells, some of it is muscular cells, and some of it is taking someone's own bone marrow and creating cells through that as well. So there are different ways around that ethical challenge. It is not clear yet which one will be the clear winner, but there are multiple versions that can potentially augment improving patient outcomes.
MPO: Which other cardiovascular segments are especially getting your attention these days?
Minogue: My viewpoint is pretty selective. We're really focused on the science of heart recovery, but there are a lot of other folks who are trying to understand how to not necessarily replace the heart, but repair it. That doesn't have to do specifically with our technology, but there are a lot of exciting things out there that are going to have to do with growing organs or repairing organs or protecting organs - anything from drugs to stem cells to mechanical devices.
Haimovitch: Left atrial appendage looks promising, although FDA has just slapped Atritech very hard. They had completed their pivotal trial it looked like the trial worked, they went to panel and got a 7-5 positive vote, but the FDA came back recently and said, "We want a confirmatory trial." However, that area does look very promising, because it addresses patients who cannot control their atrial fibrillation clotting risk through Coumadin, so the device-based approach looks promising.
Another area that we'll have a lot more knowledge about very soon is PFO (patent foramen ovule) closure. I follow that area very closely, and we're finally on the verge of some very significant data. NMT Medical has completed its trial, and the two-year follow-up for all 900 patients is just about over--I think they're going to close the trial mid-April. So we'll see that Closure I trial data probably released this fall. If that shows to be successful vis-a-vis traditional medical management, that could be a significant new market.
MPO: Mike, When you joined Abiomed in 2004 after a number of years at what is now GE Healthcare, you talked about your new company having a "special mission." How has that mission evolved over your time at Abiomed?
Minogue: The mission that we have is to help someone who has low hemodynamics, and to provide that support so they can go home with their own heart. If you can provide hemodynamic support, either by itself or with adjunctive therapy, you can help protect or help the heart muscle recover. So if you think about what our company does, we are the company that helps the heart muscle specifically, and that makes us unique. Stents help the plumbing of the heart, pacemakers help the electricity of the heart, but you need a pump in order to offset what the heart needs to do.
MPO: Abiomed is a company that got early notice far its efforts in developing a true replacement heart, but its commercialization is built on other technologies focused on treatment of heart failure. What is the status of the Abio-Cor program now?
Minogue: The AbioCor program has three hospitals. It's under a [FDA] Humanitarian Device Exemption, so those sites screen for patients who have no other alternatives.
MPO: Larry, you have mentioned FDA, so let's swing over to that. The cardio sector is especially hit in an era when the agency is making what appear to be rather dramatic changes in the 510(k) process.
Haimovitch: I have never seen the FDA become such a challenge to the medical device industry. I don't know exactly why. I can't say it's political. For some reason they have become much more risk-averse, much more cautious. People I've talked to who follow the agency, who consult with companies on the FDA path are telling me that it's much harder to get decisions made now than ever before. The Atritech decision is a good example--the primary trial made its endpoint, the panel approved it 7-5. It was a contentious panel meeting, but they [recommended it for approval]. Now here we are a year after the data was released--a year later--and the FDA says, "Sorry, you gotta go back and do another trial." For a small company like Atritech, that is really a tough blow. (Editor's note: Atritech is a small, privately held medical technology company based in Plymouth, Minn. In April 2009, an FDA advisory panel voted 7 to 5 in favor of approving the firm's Watchman device for closure of the left atrial appendage, or LAA, but the cautious approval came with conditions, including that implantation be performed in centers with surgical backup and the creation of a physician-certification program. The panel also recommended the creation of a registry and extended follow up of current clinical trials. In March this year, the FDA decided the device requires further study. The company said it "obtained clarity" from the FDA, essentially meaning that another study is needed before the Watchman can be approved. The study is meant to provide more safety and effectiveness data, and although the details of the study have not yet been finalized, Atritech said that it will be working closely with the FDA in designing the trial.)
The difference between the European Union and the U.S. is dramatic. What I'm hearing from many of the companies I talk with is, "We're going to become much more aggressive about commercializing in Europe, a lot sooner than we normally would have, because we have to fund the ongoing FDA regulatory expenses, and we have the CE mark in Europe, and we see opportunities to generate sales and cash flow which can support the company." I have never had so many of the companies I talk with tell me that they are going to be aggressive about getting into markets in Europe and other countries. I really think that is what is going to happen is that the U.S. is going to become later rather than sooner for some of these new devices and technologies, and are going to start lagging behind in the availability of these technologies.
Coming from the financial side of things, I worry about the availability of venture capital funding. When you know that you have a much more difficult regulatory path, a much longer regulatory path, that means your funding needs change, and it's harder to get deals funded. I don't think I'm an alarmist, but I am very concerned. I have followed the space for a long, long time, and I don't recall a time over my career when I have felt this pessimistic about where the FDA was going.
Makower: Unfortunately, the new conservative direction that the FDA is taking, the increased challenges to navigate the Centers for Medicare & Medicaid Services and our private reimbursement system, and the delay in obtaining patents have combined to result in a great deal of uncertainty for medical technology companies. It is a challenging time.
Minogue: In Europe, we're there for selective countries. We do our first-in-man and a lot of clinical publications out of the Europe sector.
MPO: The cardiovascular space has been among the most active sectors when it comes to mergers and acquisition activity, with a number of big players playing substantial roles as buyers. Am any "big" deals still undone, or do you expect that we'll see more acquisitions of the technology "fill-in" variety?.
Haimovitch: I would say mostly fill-ins, more niche kinds of companies being acquired. For instance, I don't see one of the traditional acquirers, Boston Scientific, being able to do much of anything--they have their hands more than full. Abbott obviously is. I think the AAA [abdominal aortic aneurysm] sector might see a deal. I could see Medtronic buying a peripheral vascular company. I could see them making a move in lead removal. Filling in product lines, not blockbusters, using their distribution muscle, etc.
Minogue: We're always looking for innovative technology that fits into our core competency of recovering heart muscle.
MPO: Healthcare reform is now law. What are your thoughts after watching more than a year of debate on this contentious topic?
Haimovitch: I will say that I'm very disappointed with healthcare reform as passed. I know we need healthcare reform. I know a country as wealthy as ours needs to cover its citizens. I know there are a lot of issues and problems in healthcare, but I'm disappointed that they didn't address malpractice, that there isn't competition among insurance companies across state lines, that they didn't emphasize reward for those who take better care of themselves and provide incentives for people to do so.
Minogue: My primary thought is that taxing the industry that creates this innovation that can potentially get better patient outcomes and lower costs doesn't make a lot of sense to me.
Makower: One important fact to remember in light of the device tax is that medtech is not the culprit in driving up costs. Medical technology comprises approximately 5 percent of the total spending on healthcare. If we're guilty of anything, we're guilty of allowing people to live longer and extending quality and duration of people's lives. I think medical technology is the solution; it is not the instigator of costs.
Jim Stommen retired in 2009 after 15 years as executive editor of industry publication Medical Device Daily and now writes on healthcare topics as a freelancer.
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|Title Annotation:||FEATURE: Cardiovascular Trends Q&A|
|Publication:||Medical Product Outsourcing|
|Article Type:||Industry overview|
|Date:||Apr 1, 2010|
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