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25 Most Attractive Medtech Companies on the M&A Radar - UPDATED

Needham & Co.'s Mike Matson has updated his list of 25 most attractive public acquisition targets in medtech. Find out which two companies were added to the list!

  • Editor's Note: This slideshow, originally published in July 2018, was updated July 23, 2019, to reflect companies from the original list that have been (or are being) acquired, as well as two newcomers to the list.

    Needham & Co.'s Mike Matson has a list of 25 public medtech companies he thinks are likely to standout to larger companies looking for M&A targets. Matson recently updated his list to include two newcomers, taking the place of two companies from last year's list that have since been acquired.

    Read on to see the most current list (in alphabetical order), with additional insights and updates from the most recent MD+DI coverage of each.

  • Abiomed

    Abiomed remains on Matson's list of potential M&A targets, despite recent controversy. In October 2018, FDA's medical product safety network (MedSun) database described two issues involving Abiomed's Impella heart pumps. Abiomed told MD+DI that the information in the MedSun report was inaccurate.

    According to the report, one Impella pump had an unknown "material" inside the pump, causing it to have flows "less than expected," and another pump's housing/outlet cage and impeller were somehow crushed and the device did not start. Abiomed said at the time that the pumps did not malfunction.

    "The first pump worked exactly as it was supposed to – a clot was detected in the patient’s bloodstream and a safety mechanism triggered, shutting down the pump, so the clot did not go to the patient’s brain.  The second pump was damaged during the insertion process," said Tom Langford, director of communications and public relations at Abiomed.

    FDA urged doctors in May 2019 to read and follow the revised labeling for Abiomed's Impella RP System, which includes a patient selection checklist to understand which patients may benefit most from treatment with the device.

    FDA also expanded the Impella 5.0 and Impella LD's labeling, allowing the Impella pump to provide support for up to 14 days. Previously the pump was approved for six days.

    Abiomed acquired the Impella heart pump technology back in 2005, and the company made MD+DI's list of Company of the Year finalists in 2017. In 2018 FDA approved the company's Impella CP heart pump with SmartAssist, which uses an optical sensor. 

    During Abiomed's fiscal third-quarter earnings call on Jan. 31, 2019, CFO Todd Trapp provided some interesting commentary on what makes Abiomed standout.

    "Our razor-razorblade business model enables us to recover hearts and save people's lives as we deliver top tier revenue growth, greater than 80% gross margins, and an operating margin now approaching 30%," Trapp said, according to Seeking Alpha transcripts.

    "What makes Abiomed really unique is that we've been able to deliver consistent top tier financial results while at the same time making significant strategic investments in the business," Trapp said. "We're investing in new products and enhancements like SmartAssist, Impella Connect, Impella 5.5 and Impella ECP. We're focused on clinical research and potential new indications like STEMI. We've expanded our manufacturing capacity in both Danvers and Aachen to support future demand. And we also continued to add to our industry-leading commercial team and provide education and 24x7 hospitals support, all with the focus on improving patient outcomes. It is a great time to be at Abiomed, and we are very proud of what we're able to accomplish for our patients."

  • AtriCure

    AtriCure, a key player in the atrial fibrillation (AF) space, also remains on Matson's list. In May the analyst reported that there was significant interest at the 2019 Heart Rhythm Society in AtriCure's Convergent hybrid ablation procedure for AF. The procedure combines a minimally invasive surgical ablation with standard catheter ablation and is intended to treat more severe AF patients (those with persistent or long-standing persistent AF). The company's pivotal trial of the procedure completed enrollment last year and all patients are expected to reach their one-year follow-up by September 2019.

    The hybrid procedure is intended to provide efficacy closer to surgical procedures while providing safety closer to catheter ablation procedures, Matson reported. Presenters cited data from smaller non-randomized trials that showed substantially higher rates of freedom from atrial fibrillation with the hybrid procedure than with catheter ablation alone, the analyst noted in his report dated May 13, 2019.

    In June 2018, Matson noted in a report on the company that both the Heart Rhythm Society and the Society of Thoracic Surgeons issued recommendations in 2017 on concomitant ablation and the analyst said that should serve as a long-term tailwind to AtriCure's open-heart ablation business, which represents almost half of the company's sales.

    This company is not without its challenges though. In March 2018, the company disclosed that it received a civil investigative demand from the Department of Justice over potential off-label marketing of the company's Deep hybrid procedure products, which account for about 10% of AtriCure's total sales. Matson said in a research note that these types of investigations typically take a year or more to be resolved, settlements generally require "manageable fines," and that "share prices decline sharply on the news but usually recover quickly."

    AtriCure's Deep procedure is not FDA approved to treat atrial fibrillation, but the devices that are used in the procedure have FDA clearances for tissue ablation and the company is currently running a trial to support approval for an atrial fibrillation indication.

    It should also be noted that this isn't AtriCure's first DoJ investigation. The agency previously investigated AtriCure for off-label marketing, physician kickbacks, and reimbursement fraud. The company ended up paying $3.8 million to settle the allegations and signed a five-year corporate integrity agreement that ended in early 2015.

  • AxoGen

    AxoGen develops nerve grafts and other surgical solutions for peripheral nerve injuries. The company's core surgical products include the Avance nerve graft (pictured), an off-the-shelf processed human nerve allograft for bridging severed nerves without the comorbidities associated with a second surgical site; the AxoGuard nerve connector, a porcine submucosa extracellular matrix (ECM) coaptation aid for tensionless repair of severed nerves; the AxoGuard nerve protector, a porcine submucosa ECM product used to wrap and protect injured peripheral nerves and reinforce the nerve reconstruction while preventing soft tissue attachments; and the Avive soft tissue membrane, a minimally processed human umbilical cord membrane that may be used as a resorbable soft tissue covering to separate tissue layers and modulate inflammation in the surgical bed.

    AxoGen has been working to strengthen its balance sheet. In May 2018 the company reported that it had repaid a $25 million debt, which followed a $132.5 million equity raise.

    In October 2018, the Avance nerve graft received a regenerative medicine advanced therapy designation from FDA acknowledging that Avance is intended to treat, modify, reverse or cure a serious or life-threatening disease or condition.

    In November 2018, AxoGen updated its total addressable market to be $2.7 billion. CEO Karen Zaderej said the increase is primarily based on revised assumptions for net procedure revenue values and increased prevalence of connector assisted repair in trauma cases. Zaderej also noted that AxoGen is beginning market development and clinical initiatives to further study the surgical treatment of chronic neuropathic pain, an application that could add more than $1 billion to the company's total addressable market.

    AxoGen Inc.
  • Cardiovascular Systems Inc.

    Cardiovascular Systems develops interventional treatment systems for patients with peripheral and coronary artery disease, both of which have significant market opportunities. The company's Diamondback 360 and Stealth 360 peripheral orbital atherectomy systems use a diamond-coated crown, attached to an orbiting shaft, which is designed to sand away plaque while preserving healthy vessel tissue. 

    In May 2019, Matson reported that the company appears to be gaining share in the peripheral office-based lab (OBL) category. The company estimates that OBLs account for about half of peripheral atherectomy procedures today, Matson noted.

    This is another company on the list, however, that is no stranger to controversy. In 2017 a California jury awarded $25.1 million to a former sales manager who claimed the company gave kickbacks to doctors, promoted off-label products, and retaliated against him for reporting the information to management.

    Cardiovascular Systems also went through a 25-month investigation by the Department of Justice over physician kickbacks, which resulted in an $8 million fine and corporate integrity agreement. That investigation was settled in June 2016.

  • Conformis

    Billerica, MA-based Conformis' customized joint replacement system represented a shift in knee and hip replacement surgery because of the way it individualizes the entire process, as one orthopedic surgeon described to MD+DI back in 2016.  That same surgeon, Greg Martin, MD, of Boynton Beach, Florida, was a joint investigator on a study that was recently published in The Journal of Knee Surgery showing that patients treated with the iTotal CR knee replacement systems achieved better tibial fit and tibial rotational alignment compared to patients treated with three different off-the-shelf total knee arthroscopy products.

    “One of the compromises and decisions we surgeons often need to make intraoperatively is the best method to achieve an optimal “fit” for the patient while maintaining proper rotational alignment,” Martin, said. “The real benefit that I’ve found using Conformis implants is that this compromise is completely obviated. The implants fit precisely as designed with the in-built rotation, and enough relief to allow me to fine tune my rotation based on the specific patient’s anatomy. This is borne out in our results.”

    The year 2017 was a transitional year for the company under CEO Mark Augusti who joined Conformis in November 2016. While this transitional period earned some bearish comments from analysts like Canaccord Genuity's Kyle Rose, the longer-term opportunity afforded by the large addressable market and differentiated product position has been fairly clear from the get-go.

    In August 2018, launched its technology for hip replacement procedures. Read more about that procedure here.

    In June 2019 Conformis secured about $33 million from Innovatus and East West Bank. Read about that funding here.

    Conformis Inc.
  • Conmed Corp.

    One of the two newcomers to Matson's list, Conmed makes for an interesting addition. In an April report, Matson hypothesized that Utica, NY-based Conmed would be a good acquisition for Zimmer Biomet. He said the note was purely a hypothetical exercise on Needham's part and not in response to any news or speculation of a potential deal. Acquiring Conmed would serve to bolster Zimmer Biomet's sports medicine and powered instrument businesses while beginning to diversify the company outside of orthopedics into general surgery.

    Conmed, a well-established global company that specializes in the development of surgical and patient monitoring products and services, recently acquired Buffalo Filter for $365 million. That deal, announced in late 2018, closed in February. Buffalo Filter develops surgical smoke evacuation technologies such as smoke evacuation pencils, smoke evacuators, and laparoscopic solutions.

    The acquisition was rather timely, given that in March 2019 Colorado became the second U.S. state (after Rhode Island) to pass a surgical smoke law to protect perioperative nurses and other surgical team members from the harmful effects of plume. The new law requires facilities to implement a policy that prevents human exposure to surgical smoke via the use of a surgical smoke evacuation system.

    "The acquisition model that we had built was really largely based on the enthusiasm in the marketplace for the technology and the concept to smoke evacuation and filtration," Conmed CEO Curt Hartman said during the company's earnings call in April, as transcribed by Seeking Alpha.

    Regarding the new law in Colorado, Hartman said the company does view it as positive news for the company, but he also noted that regulations like that take time to be put in place and for everyone to understand exactly what the mandate is.

    "But, clearly, we see it as positive news. And you've got Rhode Island. Now you've got Colorado. There are other states that are working on legislation," he said. "So we think the momentum is continuing to move in the right direction. And certainly, it's favorable news relative to our outlook with the acquisition."

  • Dexcom

    Few medtech sectors have been as competitive in recent years as the diabetes device space. While Dexcom faces stiff competition from Abbott and Medtronic, the company has shown that it can hold its own on the continuous glucose monitoring (CGM) front. In March 2018, FDA cleared Dexcom's G6 CGM system, which has created a considerable buzz in the marketplace, according to CEO Kevin Sayer.

    During Dexcom's first-quarter 2018 earnings call, Sayer touted the elimination of fingersticks, the simplicity of the technology's auto-applicator, and an improved on-body form factor.

    "This is the most exciting time ever to be at DexCom," Sayer said, according to SeekingAlpha transcripts of the call. "The business is performing exceptionally well, even in the face of shifting market dynamics. Not only did we see sustained strong year-over-year revenue growth, but we again demonstrated good financial leverage. As we have always said, our long-term goal is to replace fingersticks with CGM as the primary tool in glucose management across the board."

    Matson is not the only analyst who seems pumped about DexCom's prospects. Commenting on the Q4 earnings report from Dexcom (released in January), Canaccord Genuity's Kyle Rose said: 

    "The fourth quarter was unequivocally a strong finish to the year, with Dexcom delivering record new patient additions and robust global revenue growth. Looking forward, [DexCom] remains in the early stages of rolling out the G6 and continues to drive patient awareness with DTC investments which we expect will support robust new patient additions through year-end. Lastly, impressive execution outside the U.S. (which remains very early days) and a strong R&D pipeline underpin what we believe is a durable outlook for top-line growth in 2019 and beyond."

    Earlier this year Sayer laid out DexCom's big ambitions for 2019. 

    "In light of our meaningful uptick and demand, we have set the aggressive internal goal to double our G6 production capacity by year-end," he said. "We need to expand our footprint dedicated to manufacturing within the Arizona facility, both to meet our G6 goals and in anticipation of a late 2020 launch of G7."

    In addition to scaling its manufacturing capacity, Sayer said DexCom has had to rethink how it builds its customer-facing infrastructure to better serve its rapidly growing patient base in order to build a sustainable infrastructure for the future.

    We have therefore expanded and reorganized our customer support efforts, which includes an increase of resources on our new Philippines location, as well as outsourcing other functions through third parties," he said. "This move will provide the ability to serve our customers with the same high level of quality that they have become accustomed to and grow in a much more efficient manner."

    Sayer said the expansion will result in organizational changes, including a workforce reduction at its San Diego and Arizona facilities, despite an expected overall increase in employee numbers in these locations this year.

    Dexcom Inc.
  • Endologix

    Endologix has had its fair share of hurdles over the past couple of years, but it seems like things are finally be looking up for the Irvine, CA-based company.

    The most recent victory for Endologix came just last month (June 2019) with the reinstatement of the CE mark for the company's Nellix EndoVascular Aneurysm Sealing System, allowing the device to return to the European market.

    In January, Endologix initiated a voluntary recall of the existing inventory of its Nellix endovascular aneurysm sealing system. The company decided to limit the device to use under clinical protocol with pre-screened patients that adhere to the current indications. The company's CE mark for the Nellix system was subsequently suspended. Endologix said the reinstatement followed an assessment of clinical evidence.

    “We continue to believe that the Nellix system has the potential to transform the treatment of patients with infra-renal abdominal aortic aneurysms,” said Matt Thompson, MD, chief medical officer at Endologix. “This therapy continues to generate positive results when used in patients that conform to the anatomical indications for use. We are delighted that the available data supports the reinstatement of our CE mark, and we look forward to utilizing this technology to improve the patient experience and drive better outcomes.”

    In May 2018, the company promoted John Onopchenko to the role of CEO. Prior to the promotion, Onopchenko was the company's chief operating officer, a position he took in October 2017.

    "At that time, the company had recently experienced the AFX2 recall and a temporary suspension of our CE mark,"  Onopchenko told investors during the company's first-quarter 2018 earnings call, the same day his promotion was announced. "That reality drove my focus over the last six months and led me to take a critical look into our quality systems, including how we design and develop products, our production and quality management review processes, along with our supplier management practices. The team has embraced my continuous improvement mandate, and I’m proud to say that we are upping our game on all fronts."

    Endologix has also made some strides toward bringing the Nellix system to the U.S. market. The company is enrolling patients in its EVAS2 confirmatory clinical study of the device and expects to wrap up enrollment during the third quarter of 2019.

    The Nellix System was developed as an alternative treatment to traditional endovascular aneurysm repair for an abdominal aortic aneurysm. The system is designed to seal an entire aneurysm.

    For the most recent MD+DI coverage of Endologix, check out this story: How Endologix Renewed One Doctor's Confidence in the Ovation Device

  • GenMark Diagnostics

    GenMark Diagnostics' ePlex system was a 2017 Medical Design Excellence Awards Winner in the category of testing and diagnostic products and systems.

    The ePlex system is a sample-to-answer instrument designed to perform multiplex molecular testing for infectious disease diagnostic in high-risk patients. Physicians can quickly and effectively identify bacterial, viral, and fungal infections, as well as antibiotic resistance markers to aid in determining the appropriate treatment.

    The Carlsbad, CA-based company received FDA clearance in 2018 for its ePlex Blood Culture ID – Gram Positive (BCID-GP),  and Fungal Pathogen (BCID-FP)  panels, and recently received FDA clearance for its GramNegative (BCID-GN) panel. 

    "We think that recent regulatory clearances could help to drive additional ePlex placements in 2019," Matson noted in a report dated May 1, 2019.

  • Glaukos

    FDA approval of the iStent inject Trabecular Micro-Bypass System in June 2018 gave San Clemente, CA-based Glaukos an opportunity to pull ahead in the minimally invasive glaucoma surgery (MIGS) market. Glaukos said the iStent inject is designed to optimize the natural physiological outflow of aqueous humor by creating two patent bypasses through the trabecular meshwork, the main source of resistance in glaucomatous eyes, resulting in multi-directional flow through Schlemm’s canal.

    The system includes two heparin-coated titanium stents preloaded into an auto-injection system that allows the surgeon to precisely implant stents into two trabecular meshwork locations through a single corneal entry point in a straightforward click-and-release motion. Each iStent inject stent is about 0.23 mm x 0.36 mm, or about one-third the size of the first-generation iStent.

    FDA approved the company's first-generation iStent back in 2012.

    For the most recent MD+DI coverage of Glaukos, check out this story: Glaukos Keeps Its Eye on the Prize at J.P. Morgan

  • Inspire Medical

    Nearly 11 years after being spun off from Medtronic, Inspire Medical stepped forward in 2018 to go public through an IPO that raised $124.2 million in gross proceeds (before deducting underwriting discounts and commissions and offering expenses).

    The Minneapolis-based company has developed a neurostimulation device that provides treatment for moderate-to-severe obstructive sleep apnea. The technology is a closed-loop solution that uses an algorithm to continuously monitor breathing patterns and delivers mild stimulation to the hypoglossal nerve to maintain an open airway during sleep.

    FDA approved Inspire's device in 2014. The company was formed in 2007 after Medtronic spun out the technology and significant intellectual property portfolio.

    For the most recent MD+DI coverage of Inspire Medical, check out this story: Inspire Puts Sluggish IPO Concerns to Bed with Filing.

  • Insulet Corporation

    Medtech analysts have been pumped about Billerica, MA-based Insulet for a while now.

    "After a stellar 2018, [Insulet] started 2019 at full speed with another quarter of strong growth ahead of top and bottom-line estimates," Canaccord Genuity's Kyle Rose said in a May 2019 report following Insulet's first-quarter earnings release.

    Rose said he thinks Insulet is still in the early stages of a transformative 24-month period that "will see meaningful global share gains and significant margin expansion as the new manufacturing facility comes online in 2019."

    While Insulet is faced with an increasingly competitive market, reimbursement wins in 2018 improved what was "already a fundamentally strong U.S. market position," Rose noted in an earlier report.

    FDA cleared Insulet's Omnipod Dash insulin management system last year.

  • Intersect ENT

    Menlo Park, CA-based Intersect ENT is nothing to sneeze at. The company launched its Sinuva Sinus Implant in April 2018, representing a new approach to treating nasal polyp disease in adult patients who have had previous sinus surgery. FDA approved the device in December 2017.

    Sinuva is placed during a routine office visit and it is designed to provide a less invasive treatment option for patients who have previously undergone sinus surgery, yet suffer from recurrent sinus obstruction. The company said the device delivers anti-inflammatory medication directly to the site of the disease.

    The technology differs from Intersect ENT’s Propel Implant. The Propel Contour features a low-profile flexible delivery system to make it easier to access tight areas of the sinus anatomy. 

    “When in the operating room we believe that surgeons will still want to surgically remove the sinus obstruction and use Propel,” Susan Stimson, general manager for Sinuva, told MD+DI.

    The company is on the brink of a major management shift, however. Lisa Earnhardt recently resigned as CEO after more than 11 years in the position.

    Intersect ENT Inc.
  • Invuity - SOLD

    Invuity, known for its Intelligent Photonics devices used to evenly light surgical cavities, was acquired by Stryker not long after this list was originally published. The deal, which was valued at $190 million, was announced in September 2018 and closed about a month later.

    Invuity's handheld lighting devices are primarily used in breast, orthopedic, and spine procedures, but the company expanded into gynecology in 2016.

  • iRhythm Technologies

    With a wearable device that works and big data that can make a difference, it's easy to see why Needham & Co. included San Francisco-based iRhythm Technologies on its list of most attractive public medtech companies for potential M&A. The company also was a finalist for MD+DI's 2016 Medtech Company of the Year.

    iRhythm's FDA-cleared chest-worn Zio XT patch one-ups the cumbersome Holter monitor by recording patients' heart rhythm continuously for up to 14 days, even in the shower, in order to detect arrhythmias. At the end of the monitoring period, the patient sends the device back to iRhythm, which condenses the information gathered into a report that can help the patient's physician characterize their condition and recommend treatment.

    iRhythm also keeps a repository of all the ECG data it collects and offers quarterly reports to help providers measure utilization and diagnostic yields.

    Another analyst that has been fairly bullish regarding iRhythm this year is Canaccord Genuity's Jason Mills. In a May 16, 2018 report, Mills said the publication of the KP-RHYTHM study in JAMA Cardiology gives him even more confidence in the stock. Results from the study, which highlighted the relationship between higher atrial fibrillation (AF) burden in paroxysmal AF patients and a significant increase in stroke risk (by more than three times), exemplify not only Zio’s core competency as the preeminent long-term, continuous ambulatory electrocardiography monitoring device, but also speak to the strength of iRhythm's "competitive moat as a disruptive force in this rapidly changing space," Mills said.

    For the most recent MD+DI coverage of iRhythm, check out this story: iRhythm Finds Its Groove at the Intersection of Cardiology and AI

    iRhythm Technologies Inc.
  • K2M - SOLD

    K2M, a company that developed minimally invasive spine technologies and techniques, was also snatched up by Stryker. The $1.4 billion deal was announced in August 2018 and closed in November 2018.

    The company is known for its Balance ACS platform of products, services, and research designed to help surgeons achieve three-dimensional spinal balance across the axial, coronal, and sagittal planes.

    K2M's Serengeti minimally invasive retractor system (pictured) garnered a Medical Design Excellence Award in 2010 and was included later that year on MD+DI's list of 50 Companies to Watch.

    K2M Holdings Inc.
  • Masimo 

    While it's no surprise that Masimo stands out to medtech analysts as an attractive potential acquisition target, Masimo's management indicated as recently as August 2017 that it may be on the prowl for an acquisition or two of its own.

    Masimo isn't likely to buy companies that are too similar to itself though. Masimo CEO Joe Kiani told investors during a quarterly earnings call in 2017 that Masimo is more interested in M&A opportunities that are "totally separate from our business" rather than adjacent to it because it wants to create diversification.

    "We're looking for opportunities in big markets" that are estimated to be about $3 billion or $4 billion in size and growing and seeing at or near double-digit growth. We're not looking for [a] $1 billion, $2 billion type of acquisition," Kiani said. "We're looking for what I call fixer-uppers in great neighborhoods."

    And even as Kiani talked about the company's appetite for M&A, CFO Mark de Raad assured investors that R&D is still the lifeblood of the company. Masimo has historically spent more on R&D than most of its competitors, de Raad said, and "there is no reason to assume that's going to change."

    Masimo's Rad-67 handheld pulse CO-oximeter was a finalist in the 2018 Medical Design Excellence Awards in the category of Nonsurgical Hospital Supplies and Equipment.

    The Rad-67 is a handheld pulse CO-oximeter that allows clinicians to obtain noninvasive spot-check measurements, including SpO2 blood oxygen, hemoglobin, perfusion index, and pulse rate. The device features a small size, lightweight design, six-hour battery life, and hi-resolution touchscreen. 

  • Nevro

    Nevro's spinal cord stimulation technology surely checks most, if not all, of the boxes when it comes to what acquiring medtech companies are likely to be looking for (high growth and large market opportunities, differentiated products, and regulatory approvals).

    In a May 2018 report, Canaccord Genuity's Jason Mills pointed out several things he favors about Nevro, and the spinal cord stimulation market in general. Technology like Nevro's offers an alternative to opioids, an issue that is gaining more and more attention in healthcare. Mills also said Nevro has been expanding its sales force to drive more share gain, and the analyst noted the potential for upcoming the company's total addressable market to expand, especially within the peripheral diabetic neuropathy patient population, which he said Nevro's Senza HF-10 therapy is "uniquely positioned to address."

    Nevro is also going through a major leadership change. In March 2019 the company announced that Keith Grossman would assume the roles of CEO and president of the company. Mills viewed this change as favorable.

    "Keith Grossman’s enjoys long-tenured, broad-based experience and an exemplary leadership skill set, which we think he will lean on once again in his new role at Nevro, which we think needs exactly what Grossman brings to the table naturally," Mills said in a report dated March 20, 2019.

    For the latest MD+DI coverage of Nevro, check out this story: Nevro Excels in Sales, but Misses on EPS Consensus 

    Nevro Corp.
  • Nuvectra

    While the Greatbach spinout's technology shows a lot of promise in the space, Nuvectra suffered a regulatory setback last year in both the United States and Europe with its sacral neuromodulation system designed to treat chronic urinary retention and the symptoms of overactive bladder.

    FDA asked the Plano, TX-based company for additional information related to any modifications or changes to its Virtis device, labeling, and manufacturing as well as clarifications of data related to MRI. The company also has been asked to submit clinical study data to the European Union regulatory before it can recommend CE mark approval for the same device.

    For more on Nuvectra's recent regulatory news, see this story: Nuvectra Suffers Painful Stock Drop After Regulatory Update.

  • OrthoPediatrics

    OrthoPediatrics was founded in 2006 to focus on the neglected field of orthopedic implants for children. By that time, implantable orthopedic devices in adults were becoming the norm, but too often, adult implants were modified in the operating room so they could be used in children. The company's founders asked why a more appropriate standard of pediatric care should not be available, too. The founders were composed of orthopedic industry experts in Warsaw, Indiana drawn from DePuy Synthes, Smith & Nephew, and Zimmer Biomet. Their vision was to address the problem of off-label use of adult implants by building a different kind of orthopedic company; a company focused exclusively on pediatric orthopedics and committed to the cause of improving the lives of children with orthopedic conditions.

    And the company has come a long way since its founding. In May 2018, the company's newly launched rigid intramedullary nailing system, the Pediatric Nailing Platform femur system was used to correct a femur that was rotated too far in a 13-year-old girl.

    Capable of addressing trauma and deformity corrections alike, the first surgery performed with the new system represents the culmination of 18 months of development as the company enters the next step in the evolution of its Intramedullary Nailing franchise, OrthoPediatrics said in a press release.

  • Penumbra

    Penumbra is another company on the list that more than meets the criteria for this list. The company has a broad portfolio of medical devices, including an aspiration-based stroke treatment system that competes with several other devices, including Stryker's Trevo stent retriever.

    The aspiration system creates a low-pressure vacuum to suck a clot out of its location, while the stent retriever uses a mechanism to pull it out. However, both are inserted into a guide catheter, and according to the COMPASS trial, led by Aquilla Turk, director of the stroke and cerebrovascular program at the Medical University of South Carolina, outcomes of each technique result in a "pick 'em" situation for clinicians.

    "If you look at the technique we use with aspiration, it's not a competitor to the stent retriever," Turk said. The trial results showed outcomes of the technique, dubbed ADAPT (A Direct Aspiration, First Pass Technique), were virtually identical to outcomes of thrombectomies performed with the stent retrievers. Turk said he's had many cases in which aspiration opens the affected blood vessel within five minutes of the insertion of the catheter in the groin.

    "We'll try that two or three times and if it doesn't open it, then at that point, through the aspiration catheter, you can put a stent retriever," Turk said. "If you do that approach, and do it in that sequence, we find we are about 95% effectively getting the blood vessels open in a fast and efficient manner."

  • Presbia

    Presbia is focused on the development of the presbyopia-correcting Presbia Flexivue Microlens – a solution for the common age-related loss of the ability to read or focus on near objects. The 3mm diameter lens is implanted in a corneal pocket created by a femtosecond laser. Learn more about the Microlens solution.

    The company said its solution responds to the market’s need for a surgical procedure that is safe, effective, quick, and easy to learn and implement. The Presbia Flexivue Microlens solution relies on surgical equipment already in use at most eye surgery centers. Most distinguishing, the Presbia Flexivue Microlens is designed to be removable, meaning the lens can be removed and replaced without any residual effect on the eye.

    The device has a CE mark in Europe but is not yet FDA approved.

  • Senseonics

    Senseonics’ Eversense continuous glucose monitoring (CGM) system is currently the only CGM available to patients that features an implantable glucose sensor and provides long-term continuous monitoring for up to three months.  Tim Goodnow, the Germantown, MD-based company’s president and CEO, spoke with MD+DI about the Eversense CGM system in June 2018 at the American Diabetes Association’s 78th Scientific Sessions in Orlando, FL.

    “Once a person is diagnosed with diabetes, it’s not curable, but you can manage it effectively and really minimize the long-term effect if you’re very aggressive in managing your glucose control. Diabetes patients already know this, they just want tools and techniques to help them do it easier. They don’t want one more thing to think about. The value of a long-term implantable is it takes the interaction with the sensor off the table,” Goodnow said.

    The Eversense CGM system uses a small sensor that is implanted just under the skin by a qualified healthcare provider during an outpatient procedure. After it is implanted, the sensor regularly measures glucose levels in adults with diabetes for up to 90 days.

    For the latest MD+DI coverage of Senseonics, check out this story: Senseonics’ CGM Becomes More Effective with Latest FDA Nod

  • Shockwave Medical

    It's not all that shocking to see Shockwave Medical land on Matson's list of potential M&A targets. The Fremont, CA-based company went public in March with an IPO that raised $97 million.

    Shockwave also landed a sweet deal with Danvers, MA-based Abiomed last year. Abiomed agreed to invest about $15 million in Shockwave and the companies said they would work together on a training and education program in the United States and Germany focused on the benefits of complementary use of their respective technologies.

    Shockwave is led by CEO Doug Godshall, who was CEO of HeartWare before the company was acquired by Medtronic in 2016. The company expects to rake in between $33 million and $36 million in revenue for the full year 2019, Godshall told investors during the company's inaugural earnings call in May, which was transcribed by Seeking Alpha.

    Shockwave has developed an intravascular lithotripsy technology that employs sonic pressure waves to safely crack vascular calcium within the vessel wall, which enables arteries to expand under low pressure and become more compliant. FDA cleared Shockwave's technology in 2016.

    The Shockwave M5 catheter is being used in patients with heavily calcified Iliac arteries in order to facilitate the transfemoral delivery of sophisticated devices with catheters, including transcatheter heart valves and Abiomed’s Impella. IVL enables this patient group to benefit from these life-saving therapies when they would otherwise be ineligible for the procedure or would be at increased risk for procedural complications.

    "One novel and increasingly significant use of M5 is to expand calcified arteries to facilitate passage of large diameter catheters such as TAVR devices, stent-grafts, or Impella pumps," Godshall said during the earnings call. "If you don't have Shockwave, and the iliacs are so heavily calcified that they prevent you from being able to pass the catheter through the standard transfemoral approach, you're left with a choice of making a surgical incision to provide access for these larger catheters or not using them at all."

    And of course, surgical access leads to more complications, higher costs, and longer hospital stays compared to minimally invasive transfemoral access, he noted.

    "The profound and obvious benefit of using Shockwave to facilitate femoral access has really caught the attention of our customers and has emerged as an important sales strategy to accelerate customer acquisition," Godshall said. "Abiomed also took note of this last year, which helped motivate their investment in Shockwave and led to the partnership in sales and training that we are in the process of rolling out presently."

    Godshall also told investors and analysts that the company has seen an increasing number of Shock-Impella cases in which Shockwave opens the iliac for Impella delivery, allowing patients to avoid surgery and still receive the Impella pump.

    The company also has a second peripheral device, the S4, which is designed for small vessels, primarily below the knee. That device has four emitters inside the balloon, hence the number 4 in its name. Like M5, the S4 system is also approved in the United States and in Europe, but Godshall said the company is in a limited launch of the 3.5 millimeter and 4 millimeter versions of the device, which are the first two of four sizes Shockwave intends to bring to market. 

    Shockwave also has a CE mark in Europe for its coronary catheter, Shockwave C2. The C stands for coronary and the 2 is for two emitters, Godshall explained. The company started its U.S. investigational device exemption trial earlier this year and anticipates FDA approval for C2 sometime during the first half of 2021.

    "C2 has quickly become our lead product in international geographies since its launch last summer," Godshall said. "The speed of adoption and diversity of coronary anatomies we are treating shows how significant the unmet need is. We continue to see strong evidence that C2 is enabling the expansion of the treatment of calcified coronaries by the nature of what our customers are treating, including left main arteries, osteo lesions, bifurcations, and even STEMI patients."

    He noted that the majority of these types of lesions are either not treated or are treated reluctantly with atherectomy devices.

  • Sientra

    Sientra, a medical aesthetics company, gained traction last year, having received FDA approval in April 2018 of a premarket approval application supplement allowing commercialization of its Opus breast implant products manufactured by Vesta, a Lubrizol Lifesciences company. The approval allowed the company to sell its Opus breast implants with an improved manufacturing process and represented a critical milestone for the company, CEO Jeffrey Nugent said when the approval was announced.

    But earlier this year the Santa Barbara, CA-based company was one of two breast implant makers hit with FDA warning letters for inadequate progress on post-approval studies. The agency cited Sientra for poor follow-up with patients after the company reported a follow-up rate of 61%. Adding insult to injury, France made a move in April to ban several types of textured breast implants that have been linked to cancer.

    Nonetheless, the company's breast products segment sales grew 14% year-over-year during the first quarter.

    "In spite of these factors, our plastic surgery consultants stayed focused and demonstrated strong execution against their targets," CEO Jeff Nugent said during the company's earnings call in May, as transcribed by Seeking Alpha. "I'm confident that we are well-positioned to continue this momentum in the quarters ahead."

    Nugent also noted that during the first quarter the company's sales force generated sales from more than 100 new breast implant accounts that had not placed an order with Sientra in 2018.

    Sientra has shown resiliency in the face of adversity, however. In September 2015, the company's stock plummeted more than 52% in light of the potential contamination problems and the decision by UK regulatory authorities to halt sales there involving the company's former contract manufacturer Silimed. This, in turn, triggered a shareholder lawsuit organized by several law firms nationwide. The company also decided to halt U.S. sales of breast implants made by contract manufacturer Silimed. A month later there was a fire at one of the facilities used to make its products in Brazil.

  • Tandem Diabetes Care

    San Diego-based Tandem Diabetes Care is another diabetes device maker that has had a lot to celebrate recently. In 2018, FDA approved the company's t:slim X2 insulin pump with Basal-IQ technology, a predictive low glucose suspend (PLGS) feature designed to help reduce the frequency and duration of low glucose events (hypoglycemia). This is the first automated insulin delivery system approved for use by children as young as 6 years old, and the first insulin pump designated as compatible with integrated continuous glucose monitoring (iCGM) devices, the company noted. Tandem plans to launch its new product with the Dexcom G6 CGM integration, which requires no fingersticks for calibration or diabetes treatment decisions and was the first CGM device to receive the iCGM designation from the FDA in 2018.

    FDA approval of the t:slim X2 insulin pump created a new device category called alternate controller enabled infusion pumps (ACE pumps). Along with this authorization, FDA established criteria, called special controls, which outline requirements for assuring the accuracy, reliability, cybersecurity and clinical relevance of ACE pumps, as well as describe the type of studies and data required to demonstrate acceptable pump performance.

    The approved indication for the t:slim X2 pump states that the pump is able to reliably and securely communicate with compatible, digitally connected devices, including automated insulin dosing software, to receive, execute, and confirm commands from these devices.

    In the first quarter of 2019, Tandem reported revenue of $66 million, beating analyst expectations by $18.45 million, and representing a 142% increase over the same period of 2018 (from $27.3 million). Pump shipments increased 232% in the quarter compared to the first quarter of 2018 (from 4,444 pumps to 14,732 pumps).

    “Our explosive growth in the first quarter was driven by strong domestic demand for the t:slim X2 insulin pump,” said John Sheridan, president and CEO. “We believe the high interest in our Basal-IQ technology, our expanding international sales efforts, and our robust product pipeline will continue to drive the company’s positive momentum in 2019.”

  • Wright Medical Group

    In a May 2018 report, Needham & Co.'s Matson noted that Wright Medical Group saw improved revenue growth as strong U.S. lower extremities and international growth improved and U.S. upper extremities growth remained strong. The company saw improved productivity from its U.S. lower extremities sales force, the analyst said, and also addressed its cash needs with $31 million from an insurance settlement and a $40 million increase in its loan agreement.

    "With [Wright's] U.S. lower extremities business on the mend and the capital overhang lifted, we are more positive on [Wright] but maintain our hold rating given our expectation of a large share price increase."

    The company shelled out $435 million to acquire Cartiva last year.

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