Device industry, FDA ink $595M user-fee deal

Mark Hollmer — Wed, 01 Feb 2012 11:32:01 -0500

After more than a year of negotiations, medical device industry groups have tentatively agreed to a new 5-year, $595 million user-fee agreement with FDA--about double the old deal. Congress must sign off on the new agreement by Sept. 30 before it becomes official.

Bloomberg initially broke the story of a rumored deal, which AdvaMed and others officially announced Feb. 1. While the industry is paying more, the FDA's part of the deal includes new performance goals sought by the industry for years. These include reductions in total review time, a greater rate of both pre-market and 510(k) approvals and more communication with companies during the review process. The agency will also hire an independent consultant to examine its regulatory review process and develop a long-term plan to correct problems.

"It is in the interests of patients and the American economy that this agreement functions well and we will work with FDA to make that happen," AdvaMed president and CEO Steve Ubl said in a statement.

Regulators had wanted to boost the device industry's fees to $805 million, according to minutes cited by Bloomberg from an earlier negotiating session. The device industry most recently countered with a $447 million offer, according to the story. Even though the device industry agreed to pay higher fees, it is still paying a much smaller portion of FDA's review budget compared to the drug industry. Pharma companies pay approximately 60% of the FDA's review budget for new or expanded-use drugs. The device industry, by contrast, estimated its $447 million offer would cover 26% of the FDA's device review budget by 2017, according to Bloomberg.

Regulators have been criticized in recent years for slow approval times, and for asking for last-minute safety data and other information that can be costly to companies seeking to launch new technology. The FDA has said it is trying to ensure safety, but the industry has argued the existing process has become cumbersome and hampers innovation due to unexpected costs.

- here's the AdvaMed release
- read the Bloomberg story

AngioDynamics scoops up Navilyst for $372M

Liz Jones Hollis — Wed, 01 Feb 2012 10:02:26 -0500

AngioDynamics ($ANGO) has agreed to buy rival Navilyst Medical, which focuses on vascular access, interventional radiology and interventional cardiology, in a deal valued at $372 million. The buy is expected to boost AngioDynamic's vascular access market share, The Post Star notes. The boards of both companies have approved the transaction, which is expected to close by the quarter ending May 31.

AngioDynamics CEO Joseph DeVivo, who joined the company last fall after serving as global president of Smith & Nephew Orthopedics, has been eyeing acquisition opportunities since he came on board. The two companies had previously spoken about a potential acquisition, but nothing came of those discussions. However, DeVivo restarted talks, culminating in this week's announcement, according to The Post Star.

"The acquisition of Navilyst brings AngioDynamics scale, technology and operational excellence," DeVivo explains in a statement. "It strengthens AngioDynamics' current business by enabling us to focus on our key channels--Vascular Access, Peripheral Vascular and Oncology/Surgery--and accelerates the ability of our global sales leaders to focus on key clinical call points. The combined company will offer a more compelling portfolio of products to our customers, allowing the sales force to be more productive and compete more effectively."

DeVivo noted both companies had faced challenges recently, but he is excited about the prospects of the combined businesses. AngioDynamics recently reported second-quarter net sales of $58.1 million, a 9% increase versus the same period last year. However, it saw profits reduced by $1.5 million as a result of a voluntary recall of NeverTouch procedure kits used with the VenaCure EVLT system, Morpheus Smart PICC CT PICCs and DuraMax chronic hemodialysis catheters.

Marlborough, MA-based Navilyst was formed in 2008 when Avista Capital Partners bought Boston Scientific's ($BSX) fluid management and venous access businesses for $425 million in cash. It generated sales of $149 million last year.

AngioDynamics has about 80 employees at its corporate headquarters in Latham, NY, and an additional 300 at a manufacturing facility in nearby Queensbury. Meanwhile, Navilyst employs more than 350 people at its Glens Falls, NY, plant. Both the AngioDynamics and Navilyst manufacturing facilities will remain open, leading to possible new employment opportunities in the future, The Saratogian notes. The combined companies' workforce total will be exceeded only by that of C.R. Bard for the region's medical device industry, the paper adds.

- see the AngioDynamics release
- check out the report from The Saratogian
- read The Post Star's take

New Zealand diagnostics company to hire 100 in PA

Liz Jones Hollis — Wed, 01 Feb 2012 09:07:33 -0500

New Zealand's Pacific Edge Diagnostics is taking its diagnostic expertise abroad, opening its first U.S. franchise in Hershey, PA. The move, which comes as the company looks to market its bladder cancer detection test to urologists in the U.S. by the end of the year, is poised to bring roughly 100 new jobs to the area over the next three years.

The product that will be the focus of the Hershey franchise is Cxbladder, a non-invasive, urine-based test for the detection of bladder cancer. It is available in New Zealand, Australia, Spain and Portugal. Pacific Edge cited the tenacity of the Hershey Center for Applied Research--as well as financial incentives--as reasons for choosing the mid-Pennsylvania location.

"It's a huge opportunity to be in the US market," explained CEO David Darling, as quoted by The National Business Review. "It's probably the biggest prize in the world when it comes to a responsive healthcare market that really understands what molecular diagnostics can do in a clinical setting."

The Hershey-based division will be the second-largest employer at the research center, PennLive.com notes. An area economic expert viewed the news as a positive sign for the rising life sciences industry in mid-Pennsylvania.

- check out the Pacific Edge release
- see the NBR story
- get more from PennLive.com

CartiHeal scores $5M ahead of 2013 product launch

Liz Jones Hollis — Wed, 01 Feb 2012 08:33:23 -0500

Hoping to help the more than a million patients who undergo cartilage repair procedures each year, Israel's CartiHeal has raised $5 million in funding from Accelmed and Access Medical Ventures in preparation for its first European product launch early next year.

The young company's first product, the Agili-CTM implant, is indicated for the treatment of cartilage and osteochondral defects. Today, the most common treatments for cartilage injuries have a disadvantage in that they do not result in regeneration of hyaline cartilage. Young patients with cartilage injuries therefore run the risk of developing knee osteoarthritis at an earlier age. But the Agili-CTM offers a promising alternative, allowing the cartilage to heal at an early stage and thus preventing further joint deterioration.

The potential market for cartilage repair products could be more than $3 billion, the Israeli Technology Incubators Forum said last year, citing data from Medtech Insight. CartiHeal is poised to jump in and capture some of this market: Its implant has CE Mark approval, and it has started post-marketing studies in Europe and Israel.

Company execs are very excited about the potential for Agili-CTM. "No other technology has shown such promising results in being able to regenerate true hyaline cartilage in a single arthroscopic procedure," Nir Altschuler, founder and CEO of CartiHeal, explains in a release. "Our clinical results, to date, confirm rapid cartilage and bone formation, as clearly visible on MRIs and X-rays. Patients are reporting significant improvement in pain level and return to normal function, including sports. Since the Agili-CTM allows nearly immediate load bearing, post-operative rehabilitation is very fast."

- see the CartiHeal release

Roche will nominate Illumina board candidates

Mark Hollmer — Tue, 31 Jan 2012 18:32:29 -0500

Roche ($RHHBY) has upped the ante in its $5.7 billion hostile bid for gene sequencing company Illumina ($ILMN). Bloomberg is reporting that the company wants to boost the number of members on Illumina's board to 11 directors from 9, and nominate 6 independent candidates to the board of directors during its annual meeting later this year. As a result, Roche said, shareholders could elect a majority of directors nominated by Roche. The board meeting hasn't been scheduled yet. Illumina, in response to the bid, adopted a "poison bill" shareholder rights plan that could make Roche's bid too expensive. Story

ConforMis nails $89M for iTotal knee manufacturing + launch

Mark Hollmer — Mon, 30 Jan 2012 15:19:18 -0500

ConforMIS will use $89 million in newly raised investor financing to fuel the commercial launch and manufacturing of its new iTotal total knee replacement system.

The Burlington, MA-based company will also spend some of the Series E funding to develop implants for an as yet unnamed additional joint, Xconomy reports.

Plans call, in part, for beefing up the company's U.S. and international sales force for the total knee replacement implant, which CEO Philipp Lang claims is the first of its kind. The FDA approved the product last year. And in a win for growing jobs locally, the company said it hopes to manufacture the knees in-house and is looking for a Massachusetts site at which to build the product. Plans call for "significantly" adding to the company's 200-employee base in the Bay state in order to support the expansion, Lang told Xconomy.

ConforMIS drew the latest investment round from a variety of sources, including London's AGC Equity Partners, New York's Axel Johnson, government funds in Asia and the United Arab Emirates, plus private equity funds from the U.S., Europe, Asia and the Middle East. Many of the backers participated in a $50 million Series D financing in 2009, according to the report.

- Read the Xconomy story

Device reviewers sue FDA over personal email monitoring

Mark Hollmer — Mon, 30 Jan 2012 11:30:19 -0500

Six scientists and doctors who handled evaluations for FDA medical device approvals are suing their former employer. They accuse the regulatory agency of spying on their personal Gmail accounts for two years after the employees told Congress about medical devices with "unacceptable risks" that gained approval anyway.

"Who would have thought they would have the nerve to be monitoring my communications to Congress?" Robert C. Smith, one of the plaintiffs and a former device reviewer, told The Washington Post, which broke the story.

The suit is filed in U.S. District Court in Washington. Post journalists contacted the FDA, but regulators declined to comment.

This case will be pretty fascinating to watch. On the one hand, as the Post notes, FDA computers post a visible warning that users shouldn't expect privacy over anything that passes through or is stored on their work computers, and that government officials can intercept that data "for any lawful government purposes." But the former FDA employees, who reviewed cancer screening and other devices before, they say, they were harassed or dismissed, cried foul. They claim, according to the story, that the government violated their privacy rights because their action--talking to Congress--was legal. Therefore, they argue, their personal email accounts should have been off limits.

The folks, who worked in the FDA's Office of Device Evaluation, first complained internally about the device approvals in 2007. They balked at the notion that the FDA had either approved or was close to approving at least 12 radiological devices that hadn't been proven effective or safe, according to the Post's depiction of the lawsuit. In trying to get the word out, the group conveyed concerns to the inspector general for the Department of Health and Human Services, and in 2009, sent a letter to the White House and spoke to members of Congress, and news of their concerns made it to a number of news organizations, the Post writes.

Among their specific worries: three of the devices allegedly missed breast cancer signs and a number of colon cancer screening devices were alleged to have used radiation at levels that could cause cancer in healthy people. (The Government Accountability Office issued similar, more general concerns about device safety approvals in 2009 and 2011, according to the article.)

FDA officials were quoted in some of those stories as stating that the agency said it was addressing those concerns, the Post writes.

The suit, based on FDA internal documents the plaintiffs obtained under the Freedom of Information Act, claims that the monitoring began in 2009, after a device company alleged that the employee complaints led to the leaking of confidential business information. The employees said they were either fired, did not have their contracts renewed or were harassed or passed over for promotions.

- read The Washington Post story
- here's the Post's link to select, related FDA docs, as compiled by the plaintiffs

U.K. regulators launch metal hip investigation

Mark Hollmer — Mon, 30 Jan 2012 10:21:27 -0500

Anxiety is likely on the rise this week among the more than 30,000 British patients who have metal-on-metal hip replacements. That's because the U.K. regulators have launched an investigation as to how safe the implants actually are.

Britain's Sunday Telegraph writes about the details, including the stark finding that failure rates for the metal-on-metal full hip replacement could be even higher than the estimated 17% national figure.

Concerns about metal-on-metal implants aren't new. Safety worries date at least back to 2010, when Johnson & Johnson ($JNJ) issued an extensive and costly global recall of implants made by its DePuy subsidiary because of high failure rates, and problems such as metal fragments breaking off into the body. Many patients in the U.K. had received the DePuy hips. Doctors have been anxious that the device breakdown could cause inflammation, harm muscle and bone and potentially poison the nervous system, heart and lungs, the Sunday Telegraph article explains.

The paper says it determined that more than 30,000 patients in Britain have received the implants and many may not have even been notified that their health might be at risk. In light of those concerns, the Medicines and Healthcare products Regulatory Agency, which evaluates the safety of these and other devices, already had advised patients with metal-on-metal implants to be checked annually, especially if they had any health problems that could be related to metal pieces in the body. But regulators are now considering additional data and plan to issue tougher recommendations based on heightened concerns about "systemic toxicity" due to contamination from implant-related metal pieces, the Sunday Telegraph notes.

MHRA regulators cautioned, however, that most of the implants are "at low risk" of causing serious health problems. And a DePuy spokesperson told the paper that his company was actively trying to communicate with affected patients and give them "information and support."

European regulators have been criticized for months for not doing enough to ensure the safety of medical devices before they're approved for commercial use. The U.S. Food and Drug Administration has also followed the metal-on-metal hip replacement closely. In May, FDA officials asked 20 device makers including Stryker ($SYK), Zimmer ($ZMH) and J&J to investigate whether their hip implants raise the level of metal in patients' blood to dangerous levels.

- read the Sunday Telegraph article
- check out The Huffington Post's take
- consider the Daily Mail's coverage

Covidien sees strength in medical device unit as profits rise

Liz Jones Hollis — Sun, 29 Jan 2012 23:15:13 -0500

The medical devices earnings news kept rolling in last week with Covidien ($COV) reporting good news with its medical device unit, which saw sales of $1.98 billion in the fiscal 2012 first quarter that ended in December, up 6% from $1.88 billion a year earlier. The company's results beat analyst expectations and sent its stock up, the Boston Business Journal reported. Covidien also saw profits of $494 million during the quarter, up from $427 million last year. Covidien release | More

KCI installs new CEO, chairman

Liz Jones Hollis — Sun, 29 Jan 2012 22:13:08 -0500

Things will be looking different around Kinetic Concepts ($KCI) soon. Apax Partners, KCI's new owner, has named Ronald Matricaria as the chairman of the San Antonio-based company's board of directors. Matricaria will take the reins of the board and will oversee the installation of KCI's new management structure, a process that includes the promotion of Joseph Woody to CEO. In addition, Lisa Colleran, who held positions at Baxter Healthcare, has been appointed president and CEO of LifeCell, a regenerative medicine company KCI bought for $1.7 billion back in 2008. Colleran was tapped as LifeCell's president that same year.

At the same time it announced the management changes, KCI said it will pursue "strategic alternatives" for its therapeutic support systems business. The business focuses on specialized therapeutic support systems, including hospital beds, mattress replacement systems, overlays and patient mobility devices. It has retained Credit Suisse as an adviser for the transaction, but a sale is not a sure thing, according to a statement.

Matricaria is a familiar face in both the medical device and pharmaceutical industries. Until 2002, he served as president, CEO and chairman of St. Jude Medical ($STJ). Before joining St. Jude, he spent nearly a quarter century at Eli Lilly ($LLY), where he served in a number of positions, culminating as president of North American operations and executive VP of the pharmaceutical division.

Woody's résumé is also impressive and includes a stint as global president, vascular therapies for Covidien, where he was responsible for the $2.6 billion acquisition of ev3. He held positions at Smith & Nephew ($SNN), Alliance Imaging, Acuson and GE Medical Systems as well.

It has been a big year of changes for KCI, which Apax bought last year in a deal valued at $6.3 billion, including outstanding debt. The deal valued KCI at $4.98 billion, or $68.50 per share. The company said it won't make disclosures as to what it will do with its TSS business until it deems it appropriate.

- read the KCI release

Special Report: Apax Partners/Kinetic Concepts - Top 10 medical device deals of 2011