Medical Device Link.

Boston Scientific's Nicholas and Tobin: Banking on superiority.

The quest to acquire Guidant Corp. (Indianapolis) has intensified, with control over the deal changing almost daily. Most recently, Guidant's board acknowledged that the $80 per share offer from Boston Scientific (Natick, MA) is "superior" to the $71 per share bid of rival suitor Johnson & Johnson Inc. (J&J; New Brunswick, NJ). J&J, which has been banking on its size and stability to trump Boston Scientific's higher bids, now has until January 25 to decide whether to up its bid or walk away.

In a communication from Boston Scientific’s chairman Peter Nicholas and its president and CEO James Tobin, the company asserted, "We are providing Guidant shareholders with certainty of completion, significant upside potential, and substantially more value today than the Johnson & Johnson transaction. By any objective measure, our offer is clearly superior to Johnson & Johnson's." [ More ]

Unlike last year, when Congress initially failed to appropriate any funding, the recently approved 2006 congressional budget package earmarks $61.7 million for the Office of the National Coordinator for Health Information Technology (ONCHIT), an agency of the U.S. Department of Health and Human Services (Washington, DC). In 2005, Congress did eventually provide about $33 million for the office, which makes this year’s allocation an increase of 87%. The 2006 budget, however, falls short of President Bush’s requested allocation by $13.3 million.

While many healthcare information technology advocacy groups were pleased with the increased level of funding,

Citing an untapped market that is largely ignored by the big orthopedic firms, Small Bone Innovations LLC (SBI; New York City) announced earlier this month that it had received a fresh infusion of $42.2 million in second-round financing. The funding reportedly marks the largest-ever venture capital investment recorded in the orthopedics sector. SBI focuses solely on orthopedic care related to arthritis and trauma in small bones and joints. The company was founded in 2004 by Viscogliosi Brothers LLC (New York City), a merchant banking firm specializing in the musculoskeletal-orthopedic sector.

"Small Bone Innovations concentrates on a critical area of healthcare," said Anthony G. Viscogliosi, SBI

chairman and CEO. "Injuries to small bones dramatically alter the quality of life. It is clear that as our population ages, more and more of us will be handicapped by diseases—like arthritis—that affect the hands and feet. SBI brings together the leading technology and the best minds in the field to address the need for new approaches to small bone medical science." [ More ]

Johnson & Johnson (J&J; New Brunswick, NJ) plans to acquire insulin delivery company Animas Corp. (West Chester, PA) in a cash-for-stock transaction valued at about $518 million. J&J reports that Animas will operate as a stand-alone entity within its subsidiary LifeScan Inc. (Milpitas, CA), which manufactures blood-glucose monitoring systems.

"Insulin pumps allow significant improvements in blood glucose control over conventional therapy for people with insulin-requiring diabetes, reducing the long-term morbidity of diabetes and improving quality of life," says Katherine D. Crothall, PhD, chief executive officer and president of Animas. "We expect that, in combination with LifeScan, our capacity to further contribute to the management of this disease will be meaningfully increased." [ More ]

MDMA’s Leahey: A wary eye on gainsharing.

In late December, after House-Senate conferees wrapped up the Deficit Reduction Omnibus Reconciliation Act of 2005, many legislators and healthcare industry watchdogs were surprised to learn that the final bill included funding for a gainsharing demonstration project. Under the provisions of the budget reconciliation package, the Centers for Medicare and Medicaid Services (CMS; Baltimore) will establish six gainsharing pilot programs, to be fully operational by January 1, 2007. The bill also requires that a final report on the outcome of the projects be submitted to Congress by May 1, 2010.

Earlier this month, Diomed Inc., a subsidiary of Diomed Holdings Inc. (Andover, MA), filed a motion for summary judgment against AngioDynamics Inc. (Queensbury, NY) and Vascular Solutions Inc. (Minneapolis) in the two-year-long patent infringement dispute over its minimally invasive endovenous laser treatment for varicose veins. The action came just two weeks after AngioDynamics sought a summary judgment against Diomed in the same court.

"Diomed is pleased that this case has advanced to the stage at which the judge will have the opportunity to review and consider the extensive evidence, including expert reports, which we believe clearly establish that the

Diomed’s Wylie: Confident in evidence.

defendants have copied our patented method and are infringing our valuable intellectual property rights," said James A. Wylie, president and CEO of Diomed Holdings. [ More ]

Despite its relative maturity, the minimally invasive surgical instrument market should continue to experience mid- to high-single-digit growth in 2006 and beyond. Driving forces behind growth, according to Jack Serino, president and chief executive officer of laparoscopic instrument maker Encision Inc. (Boulder, CO), will be an increased emphasis on patient safety, as well as improved ergonomics of instruments and an expansion of surgical applications for laparoscopic products.

In its January/February issue, MX explores the forces and issues driving a wide range of medtech sectors in 2006 and the years to come. To read expanded

versions of these market analyses, including coverage of the cardiovascular, orthopedic, in vitro diagnostics, imaging, information technologies, and ablation markets, visit the MX Web site at www.devicelink.com/mx.
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Kyphon Inc. (Sunnyvale, CA), a manufacturer of medical devices to restore spinal function using minimally invasive techniques, has entered an agreement to acquire InnoSpine Inc. (Palo Alto, CA). Under the terms of the agreement, Kyphon will acquire the company, which has developed a proprietary technology platform for the diagnosis and potential treatment of back pain due to disk degeneration, for an initial cash payment of about $2.5 million. Kyphon might pay up to an additional $27.5 million based on the achievement of milestones and royalties on future sales.
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Throughout 2006, MX will be announcing members of an editorial advisory board that will help to guide the overall direction and content of the publication. In its January/February issue, MX presents the first members of the advisory councils for two rapidly changing areas of critical importance to medtech executives: information technologies (IT) and reimbursement affairs.

Ted R. Mannen, JD, managing director of the consulting firm of ContentHealth LLC (Washington, DC) and newly appointed member of the reimbursement affairs council of the MX editorial advisory board, notes that medtech companies frequently make erroneous choices that can hurt the chances of appropriate reimbursement for their products. "The fastest regulatory route may be the best

one for many products," he says. "But for others, getting to market quickly, but doing little to differentiate the product from competitors’ products, may lead to disappointment in reimbursed markets." [ More ]

Last month, a number of clinics and healthcare centers in the New York, Los Angeles, and San Francisco regions reported a higher-than-expected incidence of false positives on the saliva-based OraQuick Advance HIV test, which is manufactured by OraSure Technologies Inc. (Bethlehem, PA). Following FDA’s recent announcement that it was considering an HIV test for at-home use, OraQuick was widely believed to be a likely candidate for approval. However, many industryanalysts now believe that the reports of false positives will delay expansion of FDA’s approval for any HIV test from clinically supervised settings to at-home use.

"We are certainly taking seriously the recent reports from these clinical sites, and we have moved aggressively to systematically evaluate each situation as quickly as possible and to report our findings as soon as we are able," said Douglas A. Michels, president and CEO of OraSure Technologies. "Based on our investigation to date, we remain confident in the overall performance of the test." [ More ]

Throughout 2006, FDA will commemorate the 100th anniversary of the passage the 1906 Pure Food and Drugs Act. The act represented the founding of the modern FDA, which acting commissioner Andrew C. von Eschenbach, MD, describes as "the oldest consumer protection agency in the nation." Looking forward, he says the agency will "create a science-led regulatory agency dedicated to improving and enhancing health . . . based on new opportunities, but grounded in even-greater responsibility."

In addition to joining in the centennial celebration, FDA's Center for Devices and Radiological Health will note milestones of its own in 2006, including the 35th

anniversary of the transfer of the Public Health Service Bureau of Radiological Health to FDA and the 30th anniversary of the Medical Device Amendments of 1976. Passage of the 1976 amendments to the Federal Food, Drug, and Cosmetic Act established the foundation of today’s regulation of medical devices. [ More ]

Organizers of the Medical Design Excellence Awards (MDEA) competition have announced the members of the 2006 juror panel for the competition, as selected by a team of medical industry editors from Canon Communications LLC (Los Angeles), the presenter of the awards program.

Established in 1998, the MDEA competition recognizes the design achievements and healthcare contributions of medical product manufacturers. Judging of each year’s entries is conducted by an impartial panel of jurors who carefully review all of the submissions and narrow them down to a select group of exceptional products in each of the competition’s 10 categories.

Recommendations of potential MDEA jurors come from a wide variety of sources, including academic and professional organizations, industry associations, and previous jurors. Background materials about juror candidates are reviewed by a team of medical industry editors from Canon Communications, who then select each year’s jurors as necessary to provide balanced expertise for the competition's categories.
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