In a deal announced this week, Spectranetics will acquire Kensey Nash Corporation’s endovascular business for $10 million upfront and additional milestone payments of up to $14 million, pending sales, product development and FDA approval objectives.

Spectranetics will get a suite of products that generated $5.1 million in 2007 sales. These include:

• QuickCat thrombus aspiration catheter
• ThromCat thrombectomy device
• SafeCross products used to treat chronic total occlusions

Kensey will continue to manufacture the ThromCat and SafeCross products for an initial term of three years, which may be extended. Spectranetics will begin manufacturing QuickCat after a six month transition period.

After manufacturing of the ThromCat and SafeCross products is transferred, Spectranetics will be obligated to pay Kensey a share of any revenues. There are no royalties for future sales of the QuickCat line.

Spectranetics’ excimer laser system includes the CVX-300 laser unit and various fiber-optic delivery devices, including disposable catheters and sheaths. The device is used in atherectomy procedures to open clogged or obstructed arteries in the coronary and peripheral vascular system.

Kensey’s endovascular business should strengthen Spectranetics’ portfolio of thrombus and chronic total occlusions treatments and will leverage the Spectranetics’ sales team and existing physician relationships.

Spectranetics and Kensey will work together to improve products, though it is unclear how such a collaboration will unfold, or how mutually beneficial it will be. Initial efforts will be targeted at the next generation ThromCat and SafeCross products

The sale is expected to close by June 30, 2008. Spectranetics is not updating 2008 financial guidance at this time.

15 May 2008 | Blog, news2 | Douglas Cress | No Comments

NxStage Medical, a Lawrence, MA, company that makes dialysis systems, saw its share price plummet after announcing its first quarter financial results. The company traded as high as $15 earlier this year, but closed under $5 on Tuesday.

Though revenues grew nearly four-fold to $31.0 million (compared to $8.4 million in the first quarter of 2007), NxStage’s loss widened to $13.9 million from $12 million. The cost of sales grew to $27 million from $10 million; operating expenses rose 54% to $17.2 million, YOY.

Revenues were bolstered by the $78.7 million acquisition of Medisystems last June. In addition to manufacturing the cartridges used NxStage’s System One portable kidney dialysis machine (pictured), Medisystems makes hemodialysis blood tubing sets, A.V. fistula needles, and other hemodialysis disposables. Medisystems in-center business contributed $16.1 million in the first quarter of 2008.

System One

At the end of the first quarter 2008, NxStage was working with 355 dialysis centers to provide home hemodialysis therapy to 2,481 end-stage renal disease patients.

This compares to 200 centers and 1,295 patients at the end of the first quarter of 2007. The company expects to end the year with between 3,100 and 3,500 patients using its System One device. Previously, it projected between 3,700 to 4,100 patients by year end.

Jeffrey H. Burbank, President and CEO of NxStage, commented,

“We are confident that home daily hemodialysis is a significant market opportunity in particular, over the long-term because of its clear patient benefits. We remain focused on delivering on our top line growth and economic improvement initiatives.”

The company estimates that more than one million home treatments have been performed with the System One. Revenues from the device nearly doubled to $10.5 million in Q1 2008, compared to $5.4 million in the first quarter of 2007.

Looking Forward

Cash, cash equivalents and short term investments as of March 31, 2008 were $16.2 million. NxStage has an additional $20 million available under its revolving debt facility.

For the full year 2008, NxStage expects revenue in the $130 - $135 million range and a loss of $52 million to $56 million, or $1.41 to $1.52 per share.

14 May 2008 | Blog, news2 | Douglas Cress | No Comments

Liver and biliary diseases affect 25 million Americans, whose annual healthcare costs exceed $10 billion. Unfortunately, there are no direct treatments available for liver failure and patients must receive a liver transplant or endure prolonged hospitalization with significant mortality. Arbios Systems is developing products to replace liver function or provide support pending liver regeneration or transplantation.

The company’s SEPET Liver Assist Device is a blood purification therapy designed for use with a standard blood dialysis system. It uses a sterile, single-use, disposable cartridge containing microporous hollow fibers that filter a patient’s blood and remove harmful impurities like ammonia. These substances would otherwise accumulate in the patient’s bloodstream during liver failure, accelerating damage to the liver and other organs.

This week, the company received an Investigational Device Exemption from the FDA allowing the company to begin a pivotal clinical trial for SEPET in acutely ill patients suffering from chronic liver disease.

The approval signifies the FDA’s satisfaction with the points addressed in its previously issued conditional approval. The news is certainly welcome for Arbios investors, who, this month, saw the company’s share price deteriorate to a 52-week low of $.23.

Shawn Cain, the company’s President and CEO, commented,

“We believe that the pivotal trial, if successful, should support our filing for approval of SEPET in the United States and marketing efforts in the United States and the European Union.  Further, we believe that the design of this trial will enhance physician acceptance of SEPET as a much needed tool in sustaining patients through acute life threatening episodes of liver failure, a market which we believe exceeds a billion dollars annually.”

13 May 2008 | Blog, news2 | Douglas Cress | No Comments

A story in the New York Times today sheds light on an increasingly common occurrence: squeaking hips.

A study in the Journal of Arthroplasty found that 7% of patients who received ceramic hips from 2003 to 2005 developed squeaks. No squeaks were found in a control group of 48 patients who received metal on plastic replacements.

Doctors who have removed ceramic hips have found dark stripes that indicate accelerated wear on the ceramic heads. Nonetheless, durability tests have suggested that even these extracted hips would have outlasted conventional replacement joints made of metal and plastic, which last an average of 15 years.

Stryker offers the Trident System, a ceramic-on-ceramic implant. Trident replaces the “ball and socket” joint of a hip when a total hip replacement is performed in patients suffering from arthritis or related conditions. It is anticipated that the improved wear characteristics will extend the life of an implant, possibly preventing cumbersome later-life hip replacements.

12 May 2008 | Blog | Douglas Cress | No Comments

Safeguard Scientifics is a holding company that invests in growth-stage life sciences and technology. In addition to capital, Safeguard provides strategic, operational and management resources to its portfolio companies. As a public company (NYSE: SFE), Safeguard is not subject to the limits of the three-to-seven-year fund raising cycles found in venture capital or buyout firms. This allows Safeguard to focus on growing its portfolio companies at an appropriate pace.

Safeguard has investments in ten technology and ten life science-focused companies; the latter includes the following diagnostics, medical device and specialty pharmaceutical firms:

• Advanced BioHealing
• Alverix
• Avid Radiopharmaceuticals
• Cellumen
• Clarient
• NuPathe
• Rubicor Medical

In this interview, James Datin, Managing Director of Safeguard, discusses the diagnostics sector, which, he notes, grew by 35% last year (among publicly traded companies). Datin believes growth will be driven by an increased focus on personalized medicine and changes in the reimbursement landscape.

Safeguard has a 60% stake in Clarient (profiled here). Clarient’s services include: diagnosing solid tumors, cancer sub-typing, classifying patients into prognostic categories (i.e. low, medium and high risk groups), identifying which drugs or therapy paths are best for patients, monitoring patient on therapy, searching for residual disease during and post therapy, and detecting relapse or cancer transformation.

12 May 2008 | Blog, news1 | Douglas Cress | No Comments

The $200 million NuVasive raised in a March offering may soon be put to good use. The company announced yesterday the pending acquisition of the Osteocel biologics business from Osiris Therapeutics.

Osteocel is a bone matrix product containing stem cells. Like an autograft, it is biologically active and provides the beneficial properties of osteoconduction, osteoinduction, and osteogenesis.

Unlike autograft, Osteocel does not require a secondary procedure or tissue harvesting. Stem cells contained in Osteocel are capable of differentiating into various cell types and can respond to their environment to differentiate into appropriate tissues as needed. The company’s processing facility offers “significant supply stream capacity”.

Osiris will receive $35 million in cash at closing plus milestone-based payment worth up to $50 million. NuVasive expects that the transaction will add revenues of $15 million in 2008 based on the contractual terms of existing distribution agreements, and $25 million of revenue in 2009. The deal is expected to close in the third quarter.

The acquisition gives NuVasive’s sales team a stem cell-based bone graft synergistic with the company’s Formagraft biologic product line. Formagraft provides a physical scaffold upon which bone will grow, and can be easily hydrated with bone marrow during surgery.

NuVasive will be better positioned to compete in all segments of, what it estimates to be, a $1.5 billion U.S. market, currently dominated by bone morphogenetic protein (BMP), a group of growth factors and cytokines that induce the formation of bone and cartilage.

Osiris has an exclusive license to 47 U.S. patents. In addition to its orthopedic activities, Osiris has been developing uses for stem cells to improve heart function following myocardial infarction and to prevent progression to congestive heart failure.

C. Randal Mills, President and CEO of Osiris commented, “This transaction allows Osiris to focus on the near-term commercial launch efforts of our stem cell drug products, knowing Osteocel is in the hands of a capable team with a track record of rapid growth in the spine market.”

9 May 2008 | Blog, news1 | Douglas Cress | No Comments

Myriad Genetic Laboratories develops and markets proprietary predictive and personalized medicine products. This includes the poorly branded BRACAnalysis, to assess a woman’s risk of developing breast or ovarian cancer based on detection of mutations in the BRCA1 and BRCA2 genes. The test is reimbursed by most insurance carriers and is recommended for women with a family history of breast or ovarian cancers.

The company’s first advertising campaign began in 2002 and lasted five months. Airing in Atlanta and Denver, Myriad intended to raise awareness of cancer prevention through television, radio and print media. The direct-to-consumer (DTC) campaign stirred up some controversy in the process.

The Centers for Disease Control (CDC) worried that the ads could cause unnecessary worry among the general public (given that mutations in the BRCA1 and BRCA2 genes occur in only a small percentage of women).

The CDC commissioned a study in response and found that, not surprisingly, consumer awareness of the diagnostic test increased substantially in Atlanta and Denver compared to the control cities. Physicians reported more patients asking about and ordering a BRACAnalysis, but generally “were not able to address complexities around the test”.

The novelty of genetic testing at the time may have contributed to the knowledge gap, as did the lack of genetic counselors. At the time there were only 400 such counselors in the U.S. That number has since blossomed five-fold, though some believe genetic testing is still limited by a lack of qualified interpreters, especially in rural areas.

This time around a direct-to-physician education component will precede the DTC campaign. Myriad will focus its marketing efforts in the southern U.S., principally Texas and Florida. The $8 million campaign will begin in September and run through March 2009.

I’m speculating here, but I believe the company may have picked the southern U.S. simply because consumers in this area tend to be more responsive to advertising, at least in my own experience marketing a genetic taste test.

I don’t want to go too far with the analogy, but some online advertising data supports the conclusion that that the people who click on ads are less educated, have lower household incomes, and are more likely to live outside of major metropolitan areas.

8 May 2008 | Blog, news1 | Douglas Cress | No Comments

Although freckles occur most often in light skinned individuals with blond hair and blue eyes, freckles are also common among Asians, including Koreans. While they can look good, I’ve learned in my 25 years to never get between a woman and her happiness.

Cynosure, based in Westford, MA, offers an array of laser-based aesthetic treatment systems. This week, the company received market approval from the Korean FDA for its Accolade workstation for the removal of pigmented lesions. The Accolade is the third Cynosure product approved for marketing in South Korea, following the Elite for laser hair removal and the Cynergy for the treatment of dermatological vascular conditions.

Introduced earlier this year, Accolade is a high-powered 755 nm, Q-switched Alexandrite laser that can remove benign epidermal and dermal pigmented lesions (such as freckles). The laser’s high repetition rates allow for rapid treatment.

As one of the world’s major aesthetic markets, South Korea represents a substantial opportunity for the company’s products. Freckles are quite common among Asians, making Korea a primary target market for Accolade. Cynosure is also pursuing regulatory approval in other Asia Pacific countries, including China.

All three workstations are being distributed in South Korea through Seoul-based OrientMG Ltd.

7 May 2008 | Blog, news2 | Douglas Cress | No Comments

Most investors won’t touch a stock trading on the pink sheets with a ten foot medical device. But for the risk-inclined among you, BioElectronics Corp. (BIEL) may warrant a first look.

The company, which has gone largely unnoticed by investors, is trading near its year-long low, despite management initiatives that have already begun to pay off.

Based in Frederick, MD, BioElectronics Corp. makes anti-inflammatory patches sold under the ActiPatch brand. The device (details available at the recently launched, albeit corny-looking website: actipatchonline.com) delivers pulsed electromagnetic frequency (PEMF) to accelerate healing of soft tissue injuries. PEMF has been shown to reduce pain and swelling by lessening the body’s inflammatory response.

BIEL recently enacted a series of changes that should position the company for growth in 2008. In addition to the introduction of several new retail-oriented products, the company substantially reduced manufacturing costs and overhauled its distribution strategy.

New Retail Oriented Products

The company’s retail product line targets four common conditions: back pain, foot and ankle pain, knee pain, and arm and wrist pain (including carpal tunnel syndrome and tennis elbow).

BIEL expects marketplace introduction in Canada, Italy, Netherlands, Mexico, and the U.K. over the next few months.

The most notable new product may come in 2009, when BIEL plans to introduce a topical patch to alleviate arthritis pain.

ActiPatch could prove especially useful to patients who can’t take common pain relievers like aspirin, ibuprofen and naproxen. These medications have the potential to exacerbate existing conditions or create dangerous drug interactions. Last month, Maryland Medicaid announced it will offer reimbursement for ActiPatch in kidney-compromised patients.

Manufacturing

In 2007, BIEL transferred all of its manufacturing offshore. The company estimates the change will reduce the costs of goods sold by 75%. As a result, gross margins will increase significantly; manufacturing costs are approximately 20% of the end retail price.

The move already appears to be having a positive impact on the balance sheet. From 2005 to 2007 sales nearly doubled with very little increase in the costs of goods sold.

Distribution

In 2007, the company signed 20+ new distributors in key international markets. Locin, one of Canada’s largest wholesalers, will begin selling Actipatch next week (Health Canada has approved ActiPatch for over-the-counter sales for the relief of pain in muscosketal complaints).

Clinical Trials

ActiPatch is currently FDA cleared for the treatment of edema following blepharoplasty (eyelid surgery). One of the company’s stated goals in 2008 is to complete clinical trials in order to expand the use of ActiPatch in the U.S.

It goes without saying that any expanded indications would substantially increase shareholder value. Andrew Whelan, BIEL President and CEO, commented in April,

“While it is still too early to comment publicly on our exact plan relative to this area, we are currently in negotiations with several entities of import. Our overall long-term goal is to receive full approval from the [FDA] to allow our products to be sold over the counter within the [U.S.]. We urge shareholders to stay tuned over the coming quarters as we announce developments in these areas.”

More information on BIEL can be found here.

6 May 2008 | Blog, news1 | Douglas Cress | No Comments

Bioject Medical develops and markets needle-free injection technology used to administer injectable medications.

Bioject’s technology works by forcing liquid medication at high speed through a tiny orifice (smaller than a human hair) held against the skin. This creates an ultra-fine stream of fluid that penetrates the skin in a fraction of a second. Several studies have indicated that patient prefer for Bioject System over a traditional injection.

Bioject has developed a portfolio of injection systems that leverage their core technology. These include devices designed for heavy use in a professional healthcare environment, as well as small, lightweight injectors designed for home use. With partners, Bioject is developing an inexpensive, pre-filled, disposable injection system.

Bioject is able to deliver medications and vaccines to the subcutaneous and intramuscular depths. The Biojector 2000, designed for use in professional healthcare settings, can deliver over 100,000 injections.

Expansion through strategic partnerships

Bioject is exploring the ways in which needle-free injection can increase the efficacy of certain medications, particularly DNA-based vaccines and immunotherapeutics. Early-stage clinical testing has shown a significant improvement of some of these products when delivered with Bioject’s needle-free systems.

Status

In November and December 2007, Bioject entered into a convertible note financing agreements with Mr. Edward Flynn, a board member and executive officers of the company and with Signet Healthcare Partners for a total $1.215 million in convertible debt, of which $615,000 was converted into Series F Preferred Stock in January 2008. On March 18, 2008, the Company announced a new two pronged strategy: (i) Strategically focus on the most promising potential partnership opportunities with both current & new partners and (ii) Secure their own therapeutic offerings by creating drug+device combinations for their own account.

5 May 2008 | Executive Summary, Blog, Member Spotlight, news2, Video | Douglas Cress | No Comments