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Q3 Review: Takeaways from the Most Prominent Players in Medtech

A quarterly snapshot of business news from the medical device and diagnostics industry during the third quarter of 2019.

  • It's earnings season again, which makes it a good time to check in on the most prominent medtech companies in the public sector to see what kind of a quarter they had and what the rest of 2019 looks like for the industry.

  • Abbott Awaits FDA Approval of Libre 2 iCGM

    Abbott continues to wait for approval to launch its Libre 2 system in the United States. The company won CE mark approval to launch the Libre 2 system in Europe in October 2018. The second-generation system offers optional customizable glucose alarms for patients who need them, using Bluetooth technology. The system can be set up to alert the user if their glucose is low or high, for example, or if there is a signal loss between the sensor and the reader. The user continues to be able to scan their sensor as often as desired to see their glucose reading, trends and patterns, and eight-hour history.

    The company filed for FDA approval of Libre 2 as an interoperable continuous glucose monitoring (iCGM) system, meaning it will need to meet the special controls established by FDA when the agency authorized the Dexcom G6 iCGM in May 2018. Abbott's management team has previously assured investors that the company would not have submitted Libre 2 as an iCGM had it not clearly met the standards set by FDA. In fact, the company said it was encouraged by the agency to file Libre 2 as an iCGM.

    But analysts and investors are beginning to get antsy, and Morgan Stanley's David Lewis mentioned during Abbott's third-quarter earnings call that some investors are becoming concerned about the product, given the longer-than-expected wait time.

    "Are you still confident in Libre 2 iCGM? And how are you thinking about the potential timing for that product?" Lewis asked Abbott CEO Miles White.

    White said he is "absolutely" confident that Libre 2 will be approved by FDA.

    "The product is performing wonderfully, the growth is strong, and the expansion is strong. There's a lot to be pretty encouraged about," he said. "And while I recognize a lot of people including us are feeling impatience, impatience doesn't translate to concern. We're all impatient, and you know we'd all like everything yesterday, but it's not quite working out as yesterday."

    Click here to read the full story on MD+DI

  • J&J Talks Up Surgical Robotics Plans

    Ashley McEvoy, EVP and worldwide chairman of Johnson & Johnson's medical device segment, addressed analyst questions about J&J's surgical robotics plans during the company's third-quarter earnings call.

    "I couldn't be more bullish around how J&J is going to create value in this space," McEvoy said. "The goal that we're trying to achieve is really to make medical interventions smarter, less invasive, more personalized, quite frankly, to change the standard of care, not just for the next 10 years, but to 20 years and 30 years."

    The New Brunswick, NJ-based company strengthened its surgical robotics offerings earlier this year with its $3.4 billion acquisition of Auris Health. Through that acquisition, J&J added the Monarch platform to its offering, an FDA-cleared robotic system currently used in bronchoscopic procedures.

    McEvoy said Monarch is off to a great start and the system has been used to conduct more than 1,000 bronchoscopes. 

    "We have a very healthy pipeline with Monarch for not just lung biopsies, but potentially lung treatment via ablation, and potential treatment via oncolytic viruses so that program is well on its way," she said, adding that future applications of Monarch could include endourology for the treatment of kidney stones, and possibly some gastrointestinal endoscopy indications.

    Last year J&J bolstered its capabilities in orthopedic robotics with its acquisition of Orthotaxy, a private company that at the time of the acquisition was in early-stage development of a system for total and partial knee replacement. J&J said at the time of that deal announcement that it planned to broaden Orthotaxy's application for a range of orthopedic surgery procedures. McEvoy said J&J plans to submit for an initial FDA clearance of its Orthotaxy robot in 2020.

    And then there's Verb, the soft tissue surgical robotics platform that the market has been anticipating for quite some time now. J&J formed Verb a few years back as a joint venture with Verily Life Sciences. J&J recently hired Kurt Azarbarzin to head its Verb program. Azarbarzin was the founder of SurgiQuest, which was acquired by Utica, NY-based Conmed, and served as chief technology officer at Conmed after that acquisition. He will be working with Fred Moll, MD, who came to J&J through the Auris acquisition and is best known for his role in creating the surgical robotics market as a founder of Intuitive Surgical.

    While McEvoy stopped short of giving a timeline for its soft tissue robotics platform launch, she did say that the company is making progress on that front and has been having active discussions with regulatory bodies in the United States and Europe.

    Last but not least, J&J entered into a co-marketing distribution and R&D agreement during the third quarter with Beijing, China-based Tinavi Medical Systems. Tinavi has developed the TiRobot robotic system for screw implantation during orthopedic and trauma procedures, including spine procedures. In 2016, the TiRobot received regulatory approval in China.

    Click here to read the full story on MD+DI

  • Boston Scientific's Lotus Edge Update

    Boston Scientific dedicated some time during its third-quarter earnings call to update investors on its Lotus Edge Valve rollout. 

    “The Lotus Edge launch is going extremely well and we’re building momentum in both the U.S. and Europe,” said CEO Michael Mahoney. “We remain on pace to open 150 accounts in our first 12 months in the U.S. and we’re currently in limited market release for the 15 FR iSleeve introducer sheath.”

    Mahoney also noted that the company is on track to launch the device in Japan in 2020 and continues to enroll patients in the REPRISE IV U.S. clinical trial to expand the indication to intermediate-risk patients.

    Click here to read the full story on MD+DI

  • Edwards Still Going Strong in TAVR

    Edwards Lifesciences had a strong third quarter, which the company attributed to a large increase in the number of patients treated with transcatheter heart valve therapy. Edwards was able to have this type of success despite the growing competition in the TAVR market.

    During the company's earnings call, CEO Mike Mussalem addressed questions about the potential impact Boston Scientific's Lotus Edge Valve and Abbott Laboratories' Portico Valve could have on Edwards' TAVR offerings.

    “These are really good companies. We tend to think that our technology is pretty substantially superior, so we think that's going to give us a big advantage," Mussalem said. "But these are good companies that have great relationships out there and we think that they will have some impact.”

    Click here to read the full story on MD+DI

  • Baxter Investigates Accounting Issue

    In conjunction with its third-quarter earnings report, Baxter International disclosed an internal investigation it recently launched (with help from outside advisors) into misstatements in the company's previously reported non-operating income related to foreign exchange gains and losses. 

    "Our board and leadership teams have taken this matter very seriously," CEO Joe Almeida said during the call, as transcribed by Seeking Alpha.

    The CEO went on to explain that the misstatements were, in part, a result of Baxter's historical use of a foreign exchange rate convention that was inconsistent with generally accepted accounting principals (GAAP).

    "The investigation is in its early stages and we cannot predict its duration or outcome," Almeida said.

    After the investigation is complete, Baxter will either amend its periodic reports previously filed with the SEC to include restated financial statements or include in reports for future periods restated comparative financial statements that correct those misstatements.

    Investigation aside, Baxter's medical delivery business is pumping optimism. 

    "That business was able to perform very well. It actually has slightly exceeded my expectations," Almeida said, adding that Baxter's newest pump (version nine) doing "extremely well."

    In late July, FDA cleared Baxter's PrisMax system and integrated TherMax blood warmer, the company's next-generation platform for continuous renal replacement therapy and therapeutic plasma exchange. Almeida said PrisMax has been well received in the marketplace since the U.S. launch.

    "It’s one of the fastest launches I’ve seen," he said. "As soon as we launched in the U.S., within a couple of days we had purchase orders coming in. The system is really hitting the mark. And I feel the innovation of the company is really starting to bear fruit. So I’m excited about – when we talked to you about 2020 – about the impact of new products sales into next year."

  • Stryker Expands Global Footprint of Mako

    Stryker continues to report success with its Mako robot. Katerine Owen, vice president of strategy and investor relations at Stryker, said Stryker sold 51 robots globally during the quarter and 42 of those were U.S. sales. In total, the company has installed close to 800 robots, with well over 600 in the United States, she said.

    Looking at U.S. procedures, in Q3, Mako total knee procedures were about 18,000, increasing roughly 60% from the same quarter last year, while total Mako procedures were about 27,000, Owen said.

    Stryker is focused on expanding the robot's global footprint, and Owen noted that the company recently won approval for Mako in Japan. Mako is also approved in China and Stryker is anticipating approval for the total knee in China.

    "We're continuing to see the benefit of having indications for the use of the robot on hips, on knees, on cementless knees, and really a global footprint there," Owen said. "...We're in a good position to continue to take market share gains."

    Click here to read Stryker's second-quarter earnings call transcripts, courtesy of Seeking Alpha.

  • Zimmer Biomet: In It to Win It

    Two years. That's how long Bryan Hanson said it would take to right the ship when he accepted the job of CEO of Zimmer Biomet in December 2017. As Hanson closes in on his two-year anniversary at the orthopedic device company, it's easy to see that the ship is on the right course at last.

    "Our team remains focused and engaged in our key priorities and we continue to make progress in each of these critical areas," Hanson said during the company's third-quarter earnings call. "Although there is clearly still much to be accomplished, I’m pleased with the team’s momentum thus far."

    On the supply front, Zimmer Biomet has been able to meet customer demand and improve service levels, Hanson said.

    The CEO still sees plenty of opportunities for the company to decrease the complexity and increase the efficiency of its supply chain, but he said he's happy with the progress thus far.

    Quality remediation efforts at what is now referred to as Zimmer Biomet's "Warsaw North Campus" also remain on track, Hanson said. 

    "We continue to keep the FDA updated on our progress and are highly confident in our path to full remediation. To instill further confidence in our progress, we have engaged independent third parties to conduct comprehensive mocked audits of our remediation work and the feedback has been positive," he said.

    The company also has launched a global "Quality Begins With Me" program designed to support an environment of empowerment and accountability for all of Zimmer Biomet's manufacturing team members ensuring that every individual feels personal ownership of the quality process, Hanson said.

    On the innovation front, Hanson said Zimmer Biomet's focus his shifted aggressively toward enabling technology such as robotics, mini robotics, informatics, and operating room efficiency.

    "Although the implant will always be at the center of what we do, our goal is to provide a complete ecosystem that is both customer- and patient-centric," Hanson said.

    Examples of innovation that aligns with that focus include the company's Rosa Knee System for robotically-assisted knee replacement surgery; the mymobility app developed in partnership with Apple; the Walter mini robotic platform; the Signature ONE Planner for upper extremities; and other products aimed at improving the efficiency of the pre-surgical planning process.

    Relative to mission and culture, Hanson said the company is "relentlessly focused" on driving a winning Zimmer Biomet culture, and he mentioned the recent rollout of the company's culture of promises.

    "These promises of shaping tomorrow, igniting collaboration, and focusing to win are inspiring and actionable," Hanson said. "Each comprises a set of practices to empower the team at every level in the organization to collaborate and innovate with an emphasis on the future, while working with clarity and focus to maximize our impact today and to deliver on our commitments."

     Hanson said he is confident in the company's ability to consistently and durably deliver 2% to 3% top-line growth through 2020. 

    "Over time I also see a pathway for acceleration beyond 2% to 3% without the need for M&A," Hanson said. "This will take time but the pathway is clear to this team."

    Click here to read the transcripts of Zimmer-Biomet's second-quarter earnings call, courtesy of Seeking Alpha.

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