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Articles from 2016 In April

9 Robotics Companies You Should Know - Corindus


Name of Company: Corindus Vascular Robotics

CorPath Vascular Robotics System: The Massachussets company has developed the robot to provide a safer, better alternative to the manual angioplasty and percutaneous coronary interventions.

The system comprised a bedside robotic device that is controlled by the surgeon at an interventional cockpit. The cockpit also houses screens through which surgeons can get real time images of the anatomy being treated. The device is cleared by the FDA and has CE Mark.

Source: Corindus Vascular Robotics


9 Robotics Companies You Should Know - Verb Surgical

Name of Company: Verb Surgical

Unknown: In August, 2015, Verb Surgical was created as a joint venture between Verily (formerly Google Life Sciences) and Johnson & Johnson to rewrite the very definition of what surgical robotics or indeed surgery has come to mean.

The California startup's robotic technology comes from SRI Robotics and the platform will integrate advanced imaging, data analysis, and machine learning to remove variation, enable greater efficiency and provide better outcomes across the spectrum of surgery.

Source: SRI and Verb Surgical

Image Credit: user mathisworks]


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9 Robotics Companies You Should Know - TransEnterix

Name of Company: TransEnterix

SurgiBot and Alf-X: The North Carolina company got a rude shock in mid April when FDA rejected its SurgiBot robot deeming it to be not substantially equivalent to a predicate device. Its fate is unknown at this time.

However, TransEnterix has a second robot - the ALF-X system that it got through an acquisition. That device has the CE Mark and is planned to be introduced in the U.S. next year. 

Source: TransEnterix


9 Robotics Companies You Should Know - Titan Medical

Name of Company: Titan Medical

SPORT Surgical System: The Canadian company has developed the SPORT surgical system to aid surgeons to perform minimally invasive procedures to treat sport injuries. 

The system comprises a robot that includes a 3-D high definition vision system and multi-articulating instruments for performing the surgery as well a surgeon workstation. Through the latter, the surgeon controls the robotic instruments, while getting a 3-D view inside the patient's body cavity during surgery.

The device is expected to win CE Mark in 2016 and be introduced in the U.S. next year. 

Source: Titan Medical


9 Robotics Companies You Should Know - Stryker

Name of Company: Stryker

MAKO robot: The Michigan ortho company acquired the MAKO robot and has integrated its Triathlon total knee into that obotic system. Although already FDA-cleared, the company's CEO, Kevin Lobo, has decided to delay its launch for more than a year in order to conduct observational studies that will help inform the launch. 

MAKO is available to do partial hips and total hip replacements as well.

Source: Stryker


9 Robotics Companies You Should Know - OMNI


Name of Company: OMNI

OMNIbotics : The orthopedics company was the first FDA-cleared device to provide robotic assistance to total knee replacements.

The system procedures use a proprietary patented bone morphing technology to build and displays a 3D model of a patient's anatomy in real time during surgery. Surgeons can use this 3D imagery, to accurately plan and implement the surgery

Source: OMNI


9 Robotics Companies You Should Know - Medtech


Name of Company: Medtech

ROSA Brain: The French firm has develoepd the robot to robot to be used for any type of cranial procedure requiring surgical planning with preoperative data, patient registration and precise positioning and handling of instruments, according to the company's website.

The product is available in both the United States and Europe.

Source: Medtech


9 Robotics Companies You Should Know - Mazor


Name of Company: Mazor Robotics

Mazor Robotics Renaissance System: It is the first, FDA-cleared and CE Marked imaging-based surgical guidance system for spinal surgery and can be also used for brain surgery. 

The Israeli company has touted the fact that complications as well as revision surgeries are  are far fewer in robot-assisted spine procedures compared with free-hand. 

Source: Mazor Robotics


Is Dexcom on Its Way to No More Fingersticks?

Is Dexcom on Its Way to No More Fingersticks?

Dexcom has long envisioned a future where patients with diabetes don't need confirmatory fingersticks to make decisions about their treatment. 

Now, that future may be one step closer than before. 

The company, a major maker of continuous glucose monitors (CGMs), has announced that an FDA advisory panel will consider the issue of non-adjunctive labeling at a meeting on July 21.

Right now, Dexcom's CGM products have adjunctive labeling, meaning they are meant to be used alongside other standard glucose monitoring methods, like fingersticks. Getting non-adjunctive labeling would enable patients to skip confirmatory fingersticks before making decisions on insulin doses. Patients would still need to calibrate their CGM using fingersticks.

Getting non-adjunctive labeling is also a key step toward securing Medicare reimbursement coverage for CGMs.

Dexcom filed a PMA supplement with FDA last fall for non-adjunctive labeling--also called a dosing claim--on its approved G5 CGM system. The device already has CE Mark for this labeling.

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Dexcom president and CEO Kevin Sayer told analysts on this week's first quarter earnings call that the company has been discussing the issue with FDA for almost a year and a half. "We have always believed that the information provided by CGM provides much better information for making an insulin dosing decision at a single finger stick, particularly when we look at the accuracy and performance of our system with our Software 505 algorithm," Sayer said, according to a Seeking Alpha transcript of the call. 

The European launch of Dexcom's G5 Mobile allowed patients in Europe to skip confirmatory finger sticks, though at least two daily fingersticks are still needed to calibrate the device. Discussing that launch on the company's third quarter earnings call in November 2015, according to a Seeking Alpha transcript, Sayer said, "We have always said that CGM will ultimately be the standard of care in diabetes management, and we see a clear path to the day when the only reason to take a finger stick will be to calibrate your sensor . . . or for a safety check to ensure proper sensor performance."

Sayer explained on the call that the company has been working closely with FDA to provide any extra data. The supplement filing included clinical data gathered using the company's Software 505 algorithm, thousands of treatment scenario simulations, and several human factor studies, he said. He added that FDA will be considering the technology's accuracy, the software's capabilities, and ability to ensure patient safety.

If the advisory panel offers a positive recommendation and FDA grants approval of a non-adjunctive label, Sayer said he expects a "very significant post-market study" would be required. Other CGM makers will likely be paying close attention, too. "The panel meeting could very well set the tone for all future CGM products," he said.

Gaining a non-adjunctive label is important for Dexcom's bid to get Medicare coverage for CGMs. CMS does not allow coverage for the technology as long as it is "adjunctive," and Medicare reimbursement is important to prescribers and users. Sayer noted, "As I've gone out in the field and met with physicians, question number one every time I walk in an office is 'When are you going to get Medicare?' So, we need this labeling." The company has not yet determined its CMS plan of attack if FDA approval is secured, but Steve Pacelli, executive vice president of strategy and corporate development, said on the call that Dexcom may approach individual, regional Medicare Administrative Contractors first before seeking a national coverage determination.

Non-adjunctive labeling may also help boost CGM adoption. Sayer said that there are some physicians who don't prescribe CGMs to patients because they note fingersticks are still required. "With this claim, we will be able to go to that group and say, 'Look, recommend this for your patients, they don't have to take finger sticks before they make the treatment decision.' This will be a very, very good outcome for us and we'll be able to get deeper and into more physicians," Sayer said, according to the call transcript.

It's too early to say what will happen at the July 21 panel meeting or what FDA will ultimately decide. For now, Dexcom is busy preparing. "We look forward to the opportunity and will take what comes, but we will be ready, rest assured. We will not lack for preparation here," Sayer said.

[Image courtesy of PAT138241/FREEDIGITALPHOTOS.NET]

The Inversion Battle

The Inversion Battle

Tax experts offer insight into the various government efforts to prevent inversions. Will these measures halt such transactions in the medtech space?

Ori Epstein, Robert Verzi, and Philip Brudney

About a year and a half ago, the pending mega-merger of Covidien and Medtronic was the talk of the medical device industry and, more broadly, the M&A world. The merger would have formed a medical device giant and been one of the largest mergers ever accomplished in the medical device industry.

Amidst all the buzz in the medical device community, there was a different type of buzz growing in our nation's capital. The Treasury Department, Congress, and the president were all interested in the pending deal for an entirely different reason. The merger was structured as an "inversion." Inversions have been hotly contested over the past few years, as they have been viewed as a way for companies to reap the benefits of the U.S. economy and workforce, while paying a much lower foreign tax rate and potentially even avoiding future U.S. income taxes.

Rather than wait for Congress to act, the Department of the Treasury has put forth various actions over the past year and a half designed to halt and potentially put an end to corporate inversions.

Despite these actions, inversion activity has continued, culminating in the Treasury's response to the recently proposed deal between Pfizer and Allergan.

We have previously addressed the basics of inversions in "Tax Inversion 101 for Medical Device Companies," so this article will focus on the various government efforts to curb them.

Treasury Steps to Curb Inversions

While it would take legislative action to stop inversions entirely, those bills have yet to pass or be signed into law. As such, the Department of the Treasury has had to exercise its own power and target the various inversion loopholes. As companies find ways around these rule changes, the Treasury's only option is to take additional actions to stop these perceived abuses, thus creating a complicated and never-ending circle.

Since September 2014, Treasury actions have targeted two specific areas for enforcement.

The "80 Percent Rule"

To structure a transaction as an inversion, the parties must take careful steps to ensure that the resulting entity is not treated as a domestic corporation for U.S. tax purposes. To achieve this goal, the former shareholders of the domestic corporation cannot obtain 80 percent or more of the acquiring foreign corporation. This percentage is measured by vote or value.

In its recent actions, the Treasury has attempted to limit a company's ability to artificially inflate or deflate the values of the acquiring foreign corporation or existing domestic corporation. Specifically, the Treasury has focused on three practices: 1) using passive assets to inflate the value of the acquiring foreign corporation; 2) having the U.S. corporation pay out dividends to decrease its value; and 3) "stuffing" assets into the foreign acquirer in order to increase its value.

Preventing Erosion of the U.S. Tax Base

By inverting, companies escape U.S. income taxes on earnings of their foreign subsidiaries. Prior to inverting, this income is not subject to the high U.S. corporate income tax rates until repatriated to the United States. If the proper inversion structure is achieved, however, companies continue to have use of these earnings outside the United States and may never have to pay U.S. income tax on them.

The Treasury has specifically sought to block these strategies, for example, by banning a restructuring after the inversion where the acquiring foreign company takes control of any controlled foreign corporations owned by the U.S. company.

Get inspired to innovate in medtech at the MD&M East Conference, June 14-16, in New York City.

The Treasury has also eliminated strategies where the earnings of the foreign subsidiary are effectively repatriated without paying U.S. income taxes. The specific scenario in question involved the acquiring foreign parent selling its stock in the U.S. company to the foreign subsidiary for cash or other property. The transfer of the cash or property essentially pulls those assets out of the foreign subsidiary without having to pay U.S. tax.

Finally, the Treasury has blocked loans from either the acquiring foreign corporation or by a foreign corporation owned by the acquiring foreign corporation to the U.S. company. In these scenarios, the money has effectively been repatriated to the U.S. tax free, with the additional benefit of the U.S. company potentially being able to claim tax deductions for interest payments it makes on the loan. The Treasury's actions would require these loans to either be treated as stock or divided into partially debt and partially stock.

Effect on Merger Activity

While these various overhauls did complicate inversions, they have not been entirely successful in stopping them. As a case in point, the Covidien-Medtronic inversion was simply delayed but not killed by the Treasury's actions. Medtronic had previously planned to utilize the loan strategy described above. With the rule change, Medtronic instead financed approximately $16 billion from a third-party lender to complete the transaction.

That being said, the most recent announcements effectively killed the Pfizer-Allergan deal. In that case, though, the Treasury targeted specific predecessor steps to the transaction. Without speaking to the intent, Allergan had previously acquired U.S. companies over several years. The acquisition of these companies provided enough value to Allergan so that the inversion transaction would not run afoul of the 80 percent rule. The new rules released by the Treasury effectively do not allow acquisitions occurring within three years of the merger to count towards the overall value of the foreign company. As the transaction was predicated on those steps, there was no workaround for the parties.

So what does this all mean? While the Treasury has continuously taken steps to make it more difficult for U.S. companies to invert, each of these sets of rules is merely a stopgap. Most likely companies will continue to find ways around these rules, and in turn, the Treasury Department will continue to target aspects of each specific inversion to block the deals. It will take action from Congress to completely do away with inversions. Until that happens, companies that feel they are at a competitive disadvantage because of the high U.S. corporate income tax rate will seek opportunities to reduce taxes and increase return on shareholder investment.

Ori Epstein, CPA, is senior tax manager at accounting and business advisory firm Habif Arogeti & Wynne (Atlanta). Contact him at [email protected].

Robert Verzi, CPA, is an international tax partner at Habif, Arogeti & Wynne (Atlanta). Reach him at [email protected].

Philip Brudney, CPA, is tax manager at Habif, Arogeti & Wynne (Atlanta). Reach him at [email protected].