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For Roche, Drugs and Diagnostics are a Perfect Match

For Roche, Drugs and Diagnostics are a Perfect Match

Jamie Hartford

Lucy and Ricky, peanut butter and jelly, pizza and beer—these are some of the greatest pairings the world has ever known. Roche would add one more couple to that list: drugs and companion diagnostics.

In the Swiss company’s first quarter 2015 earnings call on April 22, CEO Severin Schwan told analysts that Roche is focused on exploiting synergies between its pharmaceutical and diagnostic divisions to drive personalized medicine.

“You can see 60% of our portfolio today is codeveloped with companion diagnostics, and there is no doubt that this approach will remain an important pillar of our strategy going forward,” Schwan said, according to a Seeking Alpha transcript.

That strategy was evident in Roche’s acquisition earlier this year of a majority stake in Cambridge, MA-based Foundation Medicine (FMI), which provides genomic analysis to pair cancer patients with appropriate treatments and trials.

“By combining FMI’s pioneering approach to genomics and molecular information with Roche’s expertise in the field of oncology, we can bring personalized healthcare in oncology to the next level,” Daniel O’Day, chief operating officer of Roche Pharma, said in a press release announcing the move this past January.

Schwan said the company also plans to ramp up development of companion diagnostics for its immuno-oncology drugs, medicines that leverage the immune system to fight cancer.

Pairing drugs with diagnostics seems to be a smart move. The market for companion diagnostics was estimated to be worth more than $3 billion last year and is expected to experience a compound annual growth rate exceeding 22% until 2019, according to market research firm MarketsandMarkets. 

Keep up on trends in the medical device and diagnostic industry by attending the MD&M East conference and exposition June 9–11, 2015, in New York City.

Jamie Hartford is MD+DI's editor-in-chief. Reach her at jamie.hartford@ubm.com or on Twitter @MedTechJamie

[image courtesy of NOKHOOG_BUCHACHON/FREEDIGITALPHOTOS.NET]

Competitors Abound But Edwards Lifesciences Rules TAVR Market

Competitors Abound But Edwards Lifesciences Rules TAVR Market

Edwards Lifesciences' CEO Michael Mussallem has been warning of a future competitive environment in transcatheter aortic valve replacement for a while now. In January 2014, Medtronic launched its CoreValve system in the U.S. and there are more competitors to Edwards' Sapien product line in Europe.

But despite the increased competition, Edwards Lifesciences has continued to surprise both itself and analysts with better and better sales data with each quarter. Analysts continue to believe that the company will be the dominant player in TAVR for some time to come.

In the first quarter, the Irvine, California company reported transcatheter heart valve sales of $268.5 million, a whopping 42.5% increase over sales in the same period a year ago. The domestic portion of the overall TAVR sales was $130.8 million, another eye-popping 84% jump from the first quarter of 2014. 

That huge increase in U.S. sales is perhaps not that surprising as it is stil a relatively new technology that has shown real clinical benefits and many expect TAVR care is well on its path to becoming the standard of care in treating aortic stenosis for many patients.

But even in Europe, where TAVR technology has been in place commercially for several years, Edwards saw roughly a 30% increase in sales in the first quarter.

Mussallem provided some reasons for this growing demand - more clinicians are recommending patients for TAVR procedures persuaded by strong clinical outcomes and Edwards has launched a newer device in Europe. 

"... our competitive position in Europe strengthened during the first quarter, driven by the introduction of Sapien 3 last year," Mussallem said, according to a transcript of the call from Seeking Alpha. "Clinician feedback on this platform has been very positive and sales of this product in the quarter represented more than 90% of our [transcatheter heart valve] sales in Europe. In total, we estimate newer competitors' products were used in approximately 10% of procedures this last quarter.

In fact, Mussallem signaled that FDA approval of Sapien 3 could come in the fourth quarter, ahead of what the company had previously expected was going to occur in the first half 2016. That should help support Edwards' competitive advantage in the U.S. even as the sales growth moderates over the second half of this year.

Transcatheter heart valves is expected to garner $1 billion to $1.1 billion in 2015, said Scott Ullem, the company's chief financial officer.

Here's how Michael Weinstein, an analyst with JPMorgan Chase characterized the future for Edwards in a research note Thursday.

Our TAVR model reflects continued share leadership for Edwards. We model a 53% share of the US market and 48% of the global market in 2018, resulting in a $1.5B business vs $930M in 2014. Overall Edwards revenues grow 10% organic in 2015-17 before slowing to 6% in 2018-19 with TAVR competition in the US and Japan. 

So competitors may abound but in TAVR Edwards still rules. 

Arundhati Parmar is senior editor at MD+DI. Reach her at arundhati.parmar@ubm.com and on Twitter @aparmarbb 

Stay abreast of industry trends at BioMEDevice Boston, May 6-7 at the Boston Convention & Exhibition Center

C.R. Bard CEO Hints M&A May Be Coming Soon

C.R. Bard CEO Hints M&A May Be Coming Soon

Do recent comments from C.R. Bard's CEO mean a transaction could be on the way soon?

Marie Thibault

For the past year, as other large medical device companies undertook major acquisitions and mergers, C.R. Bard had no new transactions to announce. But now, the company's chief executive officer may have publicly hinted that a deal announcement could be coming.

"There is [a] lot of things going on right now, and I wouldn't be surprised if you start hearing more from us soon about those kind of things, but again you got to have two sides to agree and we're very active right now. So we'll let you know as things occur," C.R. Bard chairman and CEO Timothy Ring told analysts during an April 23 earnings call, according to a Seeking Alpha transcript. He spoke briefly about the company's M&A outlook in response to an analyst question on the topic.

Ring also explained that Bard's management was not content with the dearth of transactions for the company in 2014, noting that "It wasn't for lack of effort or emphasis. It's just kind of the way deal flow happens."

While Ring's comment that analysts could hear more soon is by no means a commitment, it is more encouraging than previous discussion of the topic during earnings calls throughout 2014. On those calls, management reiterated that M&A with the ideal strategic fit was a priority, but that the right opportunity had not yet been found.

This week's comments seem to be the first instance a timeline—though of course a vague "soon"—has been mentioned.    

Bard's last M&A transaction was the purchase of Rochester Medical in November 2013 for $262 million. Also in that year, the company divested assets of its Electrophysiology division to Boston Scientific for $275 million and purchased Medafor for up to $280 million.

Earlier this year, Bard announced a distribution agreement with Boston Scientific. Under that collaboration, Boston Scientific agreed to distribute Bard's Lutonix 035 Drug Coated Balloon (DCB) Percutaneous Transluminal Angioplasty Catheter in the United States. Lutonix is the first DCB to receive FDA approval.

Despite Bard's lack of recent M&A, it appears the management feels confident about their ability to compete against the Medtronic–Covidien combination. During the April 23 earnings call, John DeFord, senior vice president of science, technology and clinical affairs, told an analyst, "when you look at the combined commercial presence between ourselves and sort of the proportion of Boston's rep's time, that you could expect would be spent detailing Lutonix, we're on a pretty even playing field with the new Medtronic Covidien commercial footprint. So from that standpoint, I think we feel like we're in good shape." 

Stay on top of the latest trends in medtech by attending the MD&M East Conference, June 9–11, 2015, in New York City.

Marie Thibault is the associate editor at MD+DI. Reach her at marie.thibault@ubm.com and on Twitter @medtechmarie

[Image courtesy of CHANPIPAT/FREEDIGITALPHOTOS.NET]

Seeing Nanoscale Objects in 3-D: Is It Possible?

A new imaging technique could serve as the foundation for the next generation of optical devices.

Kristopher Sturgis

The ability to image objects in three dimension at the nanoscale level could help researchers understand how light interacts on the microscale. This has been unattainable through traditional imaging techniques because, the smaller an object gets, the lower the resolution becomes in 3-D.

Engineers from Stanford University, however, have developed a technique that they believe will make it possible to visualize the optical properties of objects several thousandths the size of a grain of sand. The work, which was accomplished in tandem with researchers from a lab in the Netherlands, was devised to improve how we observe light interactions at the nanoscale level, according to the university.

The method involves a combination of two technologies, cathodoluminescence and tomography, which enable the generation of 3-D maps that detail the optical landscape of objects. A concept that was tested by imaging a gold-coated crescent 250 nm in diameter -- several hundred times as thin as a human hair.

In an attempt to study the optical properties of the crescent, the group first imaged it using a modified scanning electron microscope. As the focused electron beam passed through the crescent, it excited the object energetically, causing it to emit photons in a process known as cathodoluminescence. By scanning the beam back and forth over the object, the engineers were able to create a 2-D image of these optical properties.

This 2-D cathodoluminescence spectral imaging technique pioneered by the team, revealed the characteristic ways in which light interacts with this nanometer-scale object. However, the group revealed that interpreting the 2-D image can still be quite limiting. So in an effort to push the technique into the third dimension, the engineers began tilting the nanocrescent, rescanning it and collecting 2-D emission data at a number of different angles.

The group was eventually able to combine this tilt-series of 2-D images to create a 3-D map of the object's optical properties, much like how 2-D x-ray images of a human body are stitched together to produce a 3-D CT image. Until now, techniques that image light-matter interactions have been limited to two dimensions. The group believes that their proof-of-concept could enable a new era of 3-D imaging with nanometer-scale spatial and spectral resolution.

Last year researchers from Rice University created one of thinnest ever imaging platforms through the use of copper indium selenide.

The efforts of the Rice and Stanford scientists could also help us improve the way we image, study, and understand biological systems at the molecular level.

While the proof-of-concept is encouraging, the prospect of imaging and scaling nanometer-sized objects in 3-D with high resolution is still more of a goal. Potential applications could range from improving solar panel and LED technology to enhancing medical imaging.

Refresh your medical device industry knowledge at BIOMEDevice Boston, May 6-7, 2015.

Kristopher Sturgis is a contributor to Qmed and MPMN.

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Watch a Miniature 3-D Printed Heart Beat

Scientists at Wake Forest have created individual cardiac cells from stem cells that can be seen beating in a video. 

Qmed Staff

Apparently not content with merely printing skin, ears, bone, and muscles for use in lab animals, researchers at Wake Forest Institute for Regenerative Medicine are working on creating networks of miniature 3-D printed organs to create what they term a "Body on a Chip." The group released the recent video to commemorate the progress they had made since receiving $24 million in funding in 2013.

The researchers hope that they can ultimately produce networks of miniature human organs that can accurately predict the efficacy of drugs in the testing phase as well as their side effects. Animal testing has long been used for this purpose, yet many drugs that fare well in such tests fail in humans. Yet the benefits of studying cells in petri dishes is limited because of the lack of information related to how the cells function as part of an organism. Creating a functional miniature heart that acts as part of a "Body on a Chip" could be especially useful for pharmaceutical testing because a circulatory system is needed to test a drug for side effects.

The researchers plan on linking organoids in a network of microfluid channels and sensors that provides feedback on the function of individual organoids and the overall organoid system.

Like the University of Louisville and others, the group ultimately hopes to be able to produce fully functioning complex organs.

The cardiac organoid, shown as the three cells on the right in the video below, were grouped into a loose structure and placed into a cell culture. On the lower left is a conjoined liver cell and cardiac cell.
Lean more about 3-D printing at BIOMEDevice Boston, May 6-7, 2015.

The Decisions That Can Make or Break a Medical Device in the Marketplace

Craig Scherer, founder of Insight Product Development considers why medical technology fails to be adopted--and provides advice on how to avoid that outcome.

Qmed Staff

Craig Scherer
Craig Scherer is a senior partner and cofounder of Insight Product Development. 

You could have a good idea for a medical device that meets a real clinical need, and shepherd that device to the market, only to see it fail to get adopted.

In this Q&A, Craig Scherer, founder of Insight Product Development (Chicago, IL), reflects on why this happens, and provides some pointers on how to foster adoption of medical devices.

Qmed: In your opinion, what are the most common reasons that otherwise clinically effective medical devices fail to get adopted?

Scherer: Without falling into a medical industry economics dissertation, I believe that there are significant user-based influences underlying poor adoption and early abandonment.

But first, a comment about disruptive innovation. True disruptive innovation comes along once every several years at best. The thing about this type of innovation is that it features technology so game changing that users are willing to entirely abandon their existing workflow and interaction expectations because the benefit is so compelling and transformative.

The reality is that most innovation is not in the disruptive category. Most innovation that happens on a regular basis helps manufacturers maintain a competitive edge, reduce costs and improve patient outcomes.

This type of innovation, which is often technology based, often fails to consider one very important factor: the user and their expected workflow. A common belief is that the new technology or design is so much better than the predicate devices, that end users will change their behaviors in order to receive the benefits of the new device.

This is usually not the case. People are creatures of habit and medical device users are no different. As product developers, we must strive to accommodate existing user expectations, behaviors, and workflows in anticipation of these barriers to adoption for non-disruptive medical device innovations. Requiring user's to change in order to use our new technologies is just not good design, and ethnographic research is the best way to understand these expectations.

Qmed: For medical devices today, where do you begin with technology development decisions to greatly increase your chances of widespread market adoption?

Scherer: To be the most effective, technology development decision-making begins at the start of the program during discovery research activities. Our programs are most often initiated with an in-depth review of existing users, products, and the environments in which they are used.

"Users do not need technology; they need to accomplish goals."

Having technology developers accompany a user research team on site visits to ORs and other clinical spaces provides an added layer of insight from which to make design decisions. Understanding these environments and workflows helps our technology team make better-informed decisions regarding how technology will enable better and more efficient outcomes.

Users do not need technology; they need to accomplish goals. Technology is not a solution, but an enabler that supports the user's tasks on the way to achieving their goals. If a user feels supported by technology, then adoption will increase. Conversely, if a technology requires users to adapt, adoption can be lower. Effective technology applications are often completely transparent to the end user.

Qmed: How can medtech engineers get a clear sense of the entire universe of medical device stakeholders that developers might not initially consider?

Scherer: Unfortunately there is no standard "list" of important stakeholders to consider. Every project will have unique stakeholders. Understanding this is key to ensuring that the universe of unique stakeholders is fully accounted for and understood.

The medical device industry is changing so rapidly and on so many levels, that device developers need to continue exploring the influence of often overlooked stakeholder groups.

One great example of this is the prevalence of clinical purchasing organizations. Not so long ago, it seemed like surgeons had carte blanche freedom to purchase their own tools based solely on their individual preference and experience. While these surgeons are certainly important influencers, their hospital network purchasing groups are now making these buying decisions based on a variety of factors.
 

Qmed: What are the leading criteria for a medical device that will ultimately have the most substantial impact on each of these stakeholders' election to adopt a device or not?

Scherer: It goes back to really understanding a user's goals. Assuming the end user's goals are fairly aligned with other relevant stakeholders, then the intended benefits of the device should be self-evident, and the criteria should be clear.

If a technology allows a medical procedure to be performed more efficiently and reduce overall time, then increasing throughput should be primary criteria of the device development program. Remember to focus on the ultimate user goals and develop technologies to help achieve those goals. A "user goals" driven approach to technology development will almost always result in increased adoption and reduced abandonment.
 

Qmed: How common would you say that "solutions looking for problems" is in medical device development today?

Scherer: This technology-in-search-of-a-need paradox can happen all too often. It's not, however, hard to see why. Many companies are built around technologies that they have developed and evolved over many years and that they have paid careful attention to protect as key assets at the IP level. It is only natural for these organizations to want to continue to look for new applications for the assets they've spent so much time and money to develop and protect.

It's also easy for companies to want to get on every new technology bandwagon, as success in other applications would seem to indicate users' desire to use and adopt these technologies.

At this point, it is so important to take a step back and really understand your stakeholders and their goals before force-fitting a technology into a certain application. As hard as it can be at times, approaching medical device opportunity with a technology agnostic point of view can certainly improve adoption rates and subsequent market success.
 

Qmed: Consumers want the latest in technology, yet regulatory timelines make that a tall order in the device sector. How can device developers create products that please both consumer-tech savvy patients and regulators?

Scherer: There is no question that the pace of technology development and expectations around reduced intervals between technology releases in the consumer world has also affected a patient's expectations around utilizing the latest technology in their treatment. This does not necessarily mesh well with the extended development cycles that are required for medical device development due to time consuming activities such as clinical trials and FDA approvals.

By focusing first on user needs, and developing intuitive med devices enabled by technologies that are virtually "invisible" to the user, companies will be less likely to pursue technology for technology sake.

Patients' expectations around experiential equivalency have been raised and developers that provide them in the most appropriate, and sometimes technology agnostic way, will be best positioned to succeed.

Qmed: How do you increase the odds for technology adoption in a fast-changing healthcare landscape coupled with an evolving needs user base?

Scherer: The medical device development world is filled with continually changing influences that we absolutely cannot ignore. The focus on healthcare system efficiency, evidence-based healthcare and lower reimbursement rates under ACA legislation are key influences. 

While a consumer may desire a higher tech solution, they can't be accommodated if a viable solution doesn't exist under both reimbursement rate and performance guidelines.

To increase the odds for technology adoption, the chief challenge for the developer is leveraging technologies that enable the greatest therapy efficacy - at the right cost. The technologies that help drive better outcomes will always be reimbursed.

Lean more about 3-D printing at BIOMEDevice Boston, May 6-7, 2015.

Why Manufacturers Should Consider Nitrogen Dioxide Sterilization

Evan Goulet, PhD

Driven by the need to improve patient safety, reduce production costs, and optimize efficiency, new drugs, technologies, materials, and processes are continually being introduced. For example, new device and delivery system designs such as dual-chamber prefilled syringes and drug-device combination products offer increased functionality while simplifying medical procedures. But there’s a tradeoff: Along with new designs and applications, new sterilization challenges are arising. Because prefilled syringes and drug-delivery systems are frequently used in the operating room, their exterior surfaces must be sterilized, even when the drug itself is aseptically filled.

The most common methods used for sterilizing medical devices include ethylene oxide (EtO) and gamma radiation. While these methods have been used for decades and are known to be effective, the use of nitrogen dioxide (NO2) gas offers product designers greater freedom in material selection while enabling drug and biologics manufacturers to provide sterile primary packaging for their products. NO2 sterilization is advantageous for a number of reasons: It is a rapid, room-temperature process that can be performed without deep vacuum, it does not readily penetrate container closure systems and device materials, and it can be performed in-house, promoting increased efficiency and cost savings.

How NO2 Sterilization Works

The NO2 sterilization process is carried out in specially designed sterilization chambers that are available in load volumes from 360 to 5000 L. In general, the NO2 process is similar to that used in most other gas sterilization processes. First, the chamber is evacuated to a specified pressure, following which the sterilant and humidity are introduced. During the dwell period, the medical devices are sterilized, and then the sterilant and humidity are removed. While NO2 gas and humidity are typically introduced and removed using vacuum, a deep vacuum is not required. Multiple injections and dwells can be used to achieve the specified sterility assurance level (SAL).

The sterilization chamber requires minimal utilities. The NO2 cylinders are contained within the sterilizer, as is the water reservoir. An on-board scrubber system contains a chemisorbant material to remove the NO2 from the exhaust gas stream, and the resulting waste material is solid and nonhazardous. The chamber is also equipped with outlets to connect it to a plant ventilation system. In addition, the unit’s control system incorporates multiple electrochemical NO2 sensors to alert operators to potentially unsafe conditions in and around the enclosure.

The biological indicator (BI) organism used in the NO2 sterilization process is the spore of Geobacillus stearothermophilus, the traditional indicator organism used in both steam and hydrogen peroxide sterilization methods. The process used to sterilize a defined product is validated to ISO 14937:2009, a general sterilization standard that can be applied to novel, nontraditional sterilization processes. ISO 14937:2009 is similar to ISO 11135:2014, which governs EtO sterilization.

To validate a process, it is advisable to use the ‘overkill’ approach described in Annex D of ISO 14937:2009, which enables manufacturers to define a sterilization process in which a minimum six-log reduction in the BI population is achieved during a half cycle. The specified process consists of two half cycles, which are validated to demonstrate a repeatable SAL of 10–6. Provided that a justification can be provided showing that a given device is representative of a product family, manufacturers need only validate a single sterilization process for the entire family.

Advantages of NO2 Sterilization

Table I: Comparison of the key attributes of NO2 and EtO sterilization processes.

Room-Temperature Process. Because the EtO sterilization process is performed at elevated temperatures, it is not well suited for sterilizing devices containing new drugs and biologics, which exhibit limited stability at elevated temperatures. In contrast, because NO2 gas sterilization is performed at room temperature, it can be used to sterilize drug- and biologic-delivery devices, especially prefilled syringes developed for use in the sterile field of the operating room. While the contents of prefilled syringes may have been aseptically processed, sterilizing the syringes’ exterior surfaces can enhance patient safety during surgery. As shown in Table I, a room-temperature sterilization process reduces the risk that biologics will become agglomerated or denatured and that drugs will degrade.

Figure 1: The temperature and pressure profiles of a typical NO2 vacuum sterilization cycle.

The NO2 sterilization process can be accelerated by using a deep vacuum level of P < 100 mm Hg to drive the sterilant into the packaging and device geometries, as presented in Figure 1. However, a minimal vacuum process has also been developed for pressure-sensitive products, as shown in Figure 2.

Figure 2: The temperature and pressure profiles of a typical NO2 minimal-vacuum sterilization cycle.

One such application is a prefilled syringe, in which the expansion of air in the headspace can cause the stopper to move under vacuum. To minimize the risk of stopper movement and the ingress of sterilant into the syringe, a vacuum level of approximately 90% of sea level pressure (P > 700 mm Hg) is employed to help humidify the chamber and facilitate NO2 dosing. This pressure level is equivalent to an elevation of 700 m. Both water vapor and NO2 gas readily diffuse through the porous packaging, typically a Tyvek lid on a blister tray, sterilizing the surfaces of the syringe. Under minimal vacuum, aeration is also performed by continuously exchanging the chamber environment with filtered room air.

Rapid Sterilization. Faster than EtO gas sterilization, a typical NO2 sterilization vacuum cycle lasts approximately two hours. In contrast, the NO2 sterilization process under minimal vacuum typically lasts approximately three hours because the diffusion of NO2 and water vapor is not aided by a vacuum to force the gases past the sterile barrier packaging. Both of these process time estimates include an aeration step, which is carried out in the sterilization chamber rather than in a special aeration room. Because the actual duration of a sterilization cycle depends on the device’s geometry, materials, and packaging, it can be determined only on the basis of the validation process.

A Safe Process. In addition to being a low-temperature and rapid process, NO2 sterilization is unlikely to affect the contents of prefilled syringes. At room temperature, NO2 does not readily diffuse past most stopper materials. It remains primarily on the syringe surface, from which it can be readily removed using aeration. In contrast, EtO sterilization is known to penetrate stopper materials over time, increasing the risk that residuals will migrate into the drugs or biologics and posing a safety concern. Radiation can also have a negative impact on the contents of prefilled syringes, causing them to degrade or agglomerate.

The European Pharmacopoeia (EP) specifies that water for injection (WFI) have a nitrate limit of 0.2 ppm. Recent studies involving parenteral drug containers filled with WFI showed that the level of NO2 ingress was below the 0.1-ppm detection limit for nitrates, as measured by poststerilization ion chromatography tests. This result indicates that prefilled syringes exposed to NO2 meet the EP standard for nitrate levels. While the WFI data do not preclude the need to perform quality and safety testing on the actual drug or device, they can serve to complement quality and safety testing.

In the case of implantable medical devices, NO2 sterilization leaves behind low concentrations of sterilant residuals. In addition, recent device testing has demonstrated that on compatible metals and polymers, these residuals are noncytotoxic, nonirritating, and nonsensitizing, even when they appear on devices used in mucosal membrane applications. Nevertheless, even devices composed of materials of known compatibility must be tested during the validation process.

Conclusion

The growing availability of biopharmaceuticals—coupled with the prevalence of increasingly complex drug-delivery and implantable products—makes it incumbent on medical device manufacturers to select an appropriate sterilization process. Additionally, cost-reduction efforts and market responsiveness are driving shorter sterilization turnaround times and reduced time to market, further challenging device designers.

While such traditional sterilization methods as EtO and gamma radiation continue to serve the medical device industry, manufacturers of sensitive products—including novel drugs, technologies, and materials—now have another sterilization option. NO2 sterilization, in addition to its processing and safety advantages, can also benefit device makers interested in improving manufacturing efficiency.

Evan Goulet, PhD, is director, sterilization operations at Baltimore-based Noxilizer Inc. Reach him at egoulet@noxilizer.com.



 

Facing Felony Charges, Medtech CEO Gets Raise

The CEO of Vascular Solutions has been charged with promoting a medical device for an unsanctioned uses.

Nancy Crotti

A company under federal indictment for alleged off-label promotion of a product has warned the Securities & Exchange Commission of the potential for a financial disaster. That was after it gave its embattled CEO a raise.

The scenario described in the SEC filing warns of potential risks stemming from the November 2014 west Texas indictment of Vascular Solutions (VASC, Maple Grove, MN) and its CEO, Howard Root. The indictment alleges that the company's sales force promoted off-label use of a laser ablation device for treating varicose veins.

The Vari-Lase products were cleared by the FDA only for the treatment of superficial veins, but Root led a sales campaign from 2007 until 2014 that sold them for the ablation of "perforator" veins, which connect the superficial vein system to the deep vein system, the U.S. Justice department said in the indictment. Root and his employer are each charged with one count of conspiracy and eight counts of introducing adulterated and misbranded medical devices into interstate commerce.

A criminal conviction under the Social Security Act, or a felony or misdemeanor health care fraud conviction, would automatically exclude Vascular Solutions from participating in the federal reimbursement programs such as Medicare and Medicaid, the company warned the SEC. That would "substantially adversely affect our ability to continue to conduct our business," the filing says.

Vascular Solutions previously paid $520,000 to settle a Department of Justice civil lawsuit, denying any wrongdoing. It has vowed a vigorous defense in the criminal case.

After the indictment, several law firms began investigating the company for potential securities law and shareholder derivative action lawsuits, representatives at the company told the SEC.

"We may become subject to shareholder litigation, which could divert the attention of management from the day-to-day operation of our business or result in us incurring substantial costs and liabilities," the company said.

Despite the indictments and potential for financial disaster, the firm gave longtime CEO Root a 3% raise to $1.17 million for 2014. Root's compensation and that of other company executives can be found here.

Apparently, investors in the company are not concerned with the short-term risk to the company's bottom line. Its stock is trading in the neighborhood of $35 per share--a considerable increase from the $23 ballpark it was trading at in April of last year.

Analyst firm Canaccord Genuity has increased the price target for the firm from $37.00 to $33.00, which praised the company for beating its financial estimates for its most recent quarterly earnings.

Refresh your medical device industry knowledge at BIOMEDevice Boston, May 6-7, 2015.

New Products Breathe Life into Abbott's Diabetes Business

New Products Breathe Life into Abbott&#039;s Diabetes Business

Jamie Hartford

Abbott's Freestyle Precision Neo glucose monitor launched in the United States earlier this month.

Last year we asked if flash glucose monitoring technology could revive Abbott’s flailing diabetes business. Now, 12 months later, we have an answer: Yes.

The company’s diabetes care sales finally returned to growth last quarter, thanks in part to strong uptake of its FreeStyle Libre Flash Glucose Monitoring System.

“We have had a very positive early response to the launch of our new FreeStyle Libre device,” Abbott chairman and CEO Miles White told analysts in an April 22 earnings call, according to a Seeking Alpha transcript. “As I mentioned last quarter, we are already expanding capacity to meet this demand.”

Freestyle Libre, which received the CE Mark in September 2014, does not require diabetics to routinely prick their fingers to check blood glucose levels, relying instead on a sensor worn on the back of the upper arm for up to two weeks. It also eliminates the need for users to prick their fingers for calibration.

The device launched in Europe last year, and Abbott is continuing to expand the product portfolio and bring it to new countries. In April, it launched the Freestyle Libre Pro, which enables physicians to track a patient’s glucose data over a two-week period, in India, where the diabetic population exceeds 65 million but self-monitoring of blood glucose is uncommon.

The Freestyle Libre helped to keep international sales of diabetes care products in the black, but where Abbott has really seen a turnaround since last year is in the United States. In the first quarter of 2014, Abbott’s sales of diabetes care products domestically dove a whopping 27.6% over the same period a year earlier. The company has managed to improve that business this year, with U.S. sales climbing 4.9% over the same period in 2014.

The Freestyle Libre is not yet available in the United States, but earlier this month Abbott initiated the stateside launch of its FreeStyle Precision Neo over-the-counter blood glucose meter. The low-cost, low-profile device can provide a reading in five seconds and stores up to 1000 test results.

All this has Abbott optimistic that it can keep up the growth.

“For the second quarter, we are forecasting low- to mid-single-digit operational sales growth in our diabetes care business,” said Brian Yoor, vice president of investor relations for Abbott.

Learn how to design innovative medical devices at the MD&M East conference in New York City June 9–11, 2015.

Jamie Hartford is MD+DI's editor-in-chief. Reach her at jamie.hartford@ubm.com or on Twitter @MedTechJamie

[image courtesy of ABBOTT] 

B. Braun CFO Argues for Repeal of Medical Device Tax

B. Braun CFO Argues for Repeal of Medical Device Tax

Marie Thibault

At a Senate Committee on Finance Subcommittee on Health Care hearing held Thursday morning, the chief financial officer of B. Braun, a major medical device company, took the floor to plea for a repeal of the medical device tax. 

The hearing, titled "A Fresh Look at the Impact of the Medical Device Tax on Jobs, Innovation, and Patients," was held to explore the idea of legislation to repeal the tax. The notion of a tax repeal has enjoyed broad bipartisan support in the House and Senate. Legislators from healthcare-heavy states like Massachusetts, California, Minnesota, and Pennsylvania have been especially vocal on the topic.

Bruce Heugel, senior vice president and chief financial officer of B. Braun of America, told senators Thursday that although the company has not had to undertake a large workforce cut, its American medical device staff has been reduced by 200 because of budget constraints. Workers were not given raises twice, which Heugel says is the first time ever that B. Braun has not given raises. Research and development funding and clinical trials were slashed, as were investments in product line expansion, and plans for building a new North American headquarters campus and training center.

Additionally, Heugel said, B. Braun of America is on a hiring freeze, employees must pay for more of their benefits, and the pension plan has been cut. His testimony contrasts sharply with the findings of a much-cited November 2014 report from the Congressional Research Service that estimated minimal impact to the industry and employment from the tax.

The Advanced Medical Technology Association (AdvaMed) has lobbied strongly for a tax repeal. In a statement released Thursday, Stephen Ubl, president and chief executive officer of AdvaMed, said, "A recent survey of AdvaMed's membership underscores the need to repeal this tax, as companies are forced to curtail R&D and other capital investments—cuts that may chill medical progress for decades to come. More than half of survey respondents (53 percent) said they had reduced R&D as a result of the tax, and 58 percent said they would consider further or first-time reductions in R&D if the tax stays in effect."

Heugel's description of B. Braun's experience mirrors AdvaMed's observations. He noted that the company's federal tax bill increased by 29% and that since the medical device tax is a tax on revenue, not profits, they are taxed on young product lines that aren't yet turning a profit. He also noted that the potential benefit of new covered patients has not offset the impact of the tax for B. Braun, and that the tax has been a large factor for the decline in the company's operating margins the last two years.

Senator Patrick Toomey (R–PA) started the hearing, frankly admitting that he wants to see the medical device tax fully repealed. He highlighted a few medical devices, including HeartWare's HVAD for severe heart failure, a Synthes spinal implant, and Cyberonics's vagus nerve stimulator, as evidence of innovation in the industry.  

Senators also heard from other stakeholders in the debate, including one former medical device research employee who lost his job due to the tax impact, and two patients, one of whom expressed her gratitude for insurance coverage under the Affordable Care Act and another who lamented the potential loss of R&D and technology development that could further disease treatments.   

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Marie Thibault is the associate editor at MD+DI. Reach her at marie.thibault@ubm.com and on Twitter @medtechmarie

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