Medical Device Daily National Editor

NEW YORK – What do you get when you combine direct-to-consumer advertising powered by the Internet, complemented by strong word-of-mouth support, for a product unique in its sector, can be delivered in a quick and easy office setting, has shown risk-free efficacy, and costs much less than the next-door-neighbor-but-standard-of-care, competition?

Answer: first a "too-good-to-be true" reaction from physicians, but then a 62% jump in recent quarterly sales – and a need to look over the shoulder at potential competition.

That was the story for Conceptus (Mountain View, California) delivered by President/CEO Mark Sieczkarek at this week's Piper Jaffray Health Care Conference at the New York Palace hotel.

Conceptus is that intriguing infrequent example in the device sector: a company that has focused entirely on developing a single product, has been able to grow robustly with that single offering, and sees big chances for continued growth based on that one product.

And it doesn't seem to want to acquire additional products or sell itself off to a larger company.

"The first isn't true, the second is," Sieczkarek told Medical Device Daily.

He said that the company is in fact looking to buy other technologies in the women's health sector but doesn't feel the need to be bought, for instance, by a big Johnson & Johnson-style player, given the strength of its one product.

That product is the Essure permanent sterilization device, a small insert but addressing a large market: the millions of women in the world who want, or require, permanent sterilization.

Most simply described, Essure is a microdevice inserted into the Fallopian tube, creating a plug to block the chance of pregnancy. It can be placed in an office procedure taking just 15 minutes, allows the woman to return immediately to regular activity, and currently "about 250,000 women are depending on the device on a worldwide basis," Sieczkarek said.

"And we still have no pregnancy. Essure is the most effective form of birth control currently available in the marketplace," he said.

The product was FDA-approved in 2002, and until recently it has been on a steady, but relatively slow-growth path. Sieczkarek said that an initial barrier was a "too-good-to-be-true" reaction from physicians.

But the company's most recent quarter (3Q08) was its first in the profit column, with a 62% jump over 3Q07, to $26.6 million.

"We've been very consistent in terms of metrics, by driving penetration, by gaining doctors," Sieczkarek said. And he compared repeated physician use to "same-source sale, from the retail perspective."

"The doctor community is more accepting now, no longer skeptical of clinical results. There have been a slew of peer-reviewed papers," supporting the efficacy of Essure, he said.

Asking the questions at this session was Piper Jaffray senior med-tech analyst Thom Gunderson, who wondered what the key "inflection point" was for the recent "amazing uptake" of Essure.

Sieczkarek's reply: "I wouldn't say inflection. We're actually waiting for a further inflection going forward. We've started a direct-to-consumer [Internet] program in 80 cities, which covers 5% of population of the states, and we're pleased with the early metrics coming out of that program."

Gunderson also questioned the use of the direct-to-consumer strategy as potentially controversial, but Sieczkarek said that besides informing patients, its web strategy had been a hit with doctors.

Every day, he said, the company's physician customers face "a room full of women that they have to work through on their annuals [exams], and they don't have 90 seconds to talk to them about where they're going on their birth control. But they say, 'If they come to me with [information about] Essure, I'm sure to talk to them.' In the big cities, their phones are ringing off the hook."

Besides noting ease of procedure for both doctor and patient, Sieczkarek cited big reimbursement benefits for the doctor.

"For 15 minutes of work, they make between $1,500 and $2,000. In a capitated system they may make $2,000 to follow a woman from pregnancy to childbirth. And it sure beats one to three hours to do a tubal ligation, with a 2%-to-3% complication rate, and the doctor walks away with $500."

He projected that a general switch from tubal ligation to Essure would save the healthcare system $1.5 billion dollars and put $1 billion more into physician pockets.

Plus, "the woman can go and have this done for nothing more than a co-pay – the economics work all the way around."

Gunderson also noted, in the wings, oncoming competition, a sterilization system being developed by Hologic (Bedford, Massachusetts), branded as Adiana Permanent Contraception device. A year ago Hologic won an "approvable" recommendation (10-3 vote) from an FDA panel for Adiana, and final approval seems likely some time next year.

So Gunderson asked about the possible impact of this "second player" in the sector.

Sieczkarek seemed unconcerned.

"We've been hearing about competition since the first quarter of 2004," he said, "and we've done everything strategically up until now, knowing we will eventually face competition."

For instance, besides the development of improved iterations of the device – for instance, by simplifying the delivery for less movement by the physician, more comfort for the patient – he said that the emphasis has been on building strength in office procedures to 55%.

"Defensively," Sieczkarek said, "anything we've seen on the map, most of those products are more hospital-based ... We've created a niche for ourselves in the office environment which is fairly well-protected."

And the future appears even more positive for Conceptus, with little downturn paralleling the general economic downturn.

Earlier this year, the company reported coverage of the procedure by Medi-Cal, California's fee-for-service Medicaid program (MDD, May 22, 2008), and Sieczkarek offered more good news to conference attendees concerning global opportunities.

"We've had growth from success over success in France ... and a lot more runway in France by itself. Spain and Holland have done very well and will continue to do well. Next year we'll see the UK do very well for us."

He said the company has added 10 distributors "across the world, in China and South America," plus recent approvals for the Essure device in Venezuela and Mexico.

"We've got a lot of runway for this procedure," Sieczkarek said.