CD&D

The stroke segment of the med-tech industry had both good and bad news in mid-summer, including Concentric Medical's (Mountain View, California) late-July launch of a new series of its Merci Retrievers in the U.S. The new V Series Retrievers, available in multiple configurations and sizes to match patient anatomy, join Concentric's existing Merci Retrievers already on the market, and provide physicians with additional options for restoring blood flow in patients who have suffered ischemic strokes.

On the not-so-good side of the news tally, Northstar Neuroscience (Seattle) said that it was dropping its focus on stroke as part of a broad retrenchment effort. After a major shareholder recommended that the company should sell or split its cash among shareholders, Northstar said last month that it had decided to change its focus, moving away from stroke rehabilitation therapy and instead emphasizing its cortical stimulation therapy for depression, putting all other clinical programs on hold. Besides dropping its clinical work on stroke, the company also will cut costs by laying off 20 more employees and subleasing about 40% of its office space. These moves should give the company enough cash to operate until 2012, President/CEO John Bowers said during a conference call.

"We have conducted a thorough evaluation of our clinical opportunities," Bowers said. "Based on our findings, we determined that increasing our focus on our existing depression program and putting our other clinical programs on hold is the best course to achieving a viable therapy for the millions of patients suffering from treatment resistant depression, while also conserving our financial assets and striving to enhance overall shareholder value."

In early July, Northstar turned down an unsolicited take-over bid from Tang Capital Partners (San Francisco) that valued the company at $58 million. Tang had offered to buy Northstar for $2.25 a share in cash, but the company's board judged the proposal "not in the best interests of all shareholders"

Then in a mid-July letter, RA Capital Biotech Fund (Boston) asked Northstar either to find a buyer or make a cash distribution."We value the input of all our shareholders and take their points of view and suggestions seriously," Bowers said. "We remain committed to exploring all options to enhance long-term shareholder value for all shareholders of Northstar." Je added, "Clearly, we're not happy with where our share price is," saying that the company is evaluating other strategic alternatives to enhance shareholder value. "Among others, these alternatives could include a strategic partnership, a sale of the company, or a licensing transaction," Bowers said, while declining to comment on the specifics of that process.

Northstar's value plummeted after its lead therapy which sought to stimulate the brain to improve motion in stroke survivors failed in a clinical trial in January. Tang's offer was a roughly 47% premium to Northstar's average trading price since Jan. 22 when the company reported its disappointing EVEREST clinical trial results. The company had $73 million cash as of March 31. Northstar said it expects to incur about $1.1 million in costs, including non-cash share-based compensation of $190,000, associated with employee termination benefits and sublease losses. The majority of these costs were expected to be incurred in the third quarter.

Bowers said, "During the quarter, we announced long-term data from our PROSPECT study showing that patient depression symptoms continue to improve over time. Additionally, we recently submitted an IDE supplement to the FDA for our PROSPECT II study to further evaluate cortical stimulation for depression in a larger number of subjects. Under our revised strategic plan, we are focused on moving this program forward in a way that preserves cash resources and financial flexibility." He said that company management continues to explore other alternatives as well.

The company released results of its PROSPECT feasibility study during the American Society for Stereotactic and Functional Neurosurgery (Manhassett, New York) meeting in Vancouver, British Columbia, in June.

Cortical stimulation therapy is a method for precisely delivering low levels of electricity to the outer layer of the brain via an implanted stimulator system. To do this, the company uses the Renova, a device in which electronic leads are implanted along the outer surface of the brain - the cerebral cortex.

In the PROSPECT trial for depression, the patients received 16 weeks of active stimulation. Hamilton Depression Rating Scale scores improved by an average of 27% from baseline and the Montgomery-Asberg Depression Rating Scale scores improved by 31% from baseline.

According to PROSPECT data, out of the 12 patients who underwent cortical stimulation for depression in the trial, four had improvement greater than 50% and one had improvement right at 49%.

"We made the difficult decision to put our stroke program on hold," Bowers said. "We continue to be encouraged by the subset analysis of the EVEREST data and believe that our cortical stimulation therapy retains promise to provide meaningful improvements for stroke patients with hand and arm impairment. We also believe that there is a path to confirm that clinically with a refined treatment protocol. Despite this, we believe that our most prudent strategic course is to focus solely on depression in the near term. We are considering alternative means to progress our stroke motor recovery and our other clinical indications while we focus on depression."

CFO Ray Calvert said, "Our balance sheet remains strong and debt-free. The cost reductions implemented in February 2008, along with the current actions, will significantly reduce cash use during 2009 as we advance our cortical stimulation program for depression. We expect to end 2009 with approximately $53 million in cash and investments."

Calvert said Northstar has reduced its workforce by about 60% since the results of the EVEREST trial were disclosed, resulting in estimated ongoing annual personnel cost reductions of $5 million to $6 million. The company now has 38 employees. With an employee base in the 30s, Bowers said Northstar is "sized" appropriately as a small-focused organization, even smaller than it was as a private company pursuing early-stage studies.

Concentric launches V series Retrievers

Less than a year after receiving the FDA go-ahead to sell its Merci L6 Retriever and about four years after the agency cleared its original Merci Retriever Concentric Medical has launched its V series Merci Retrievers domestically. These new Retrievers, available in multiple configurations and sizes to match patient anatomy, join Concentric's existing Merci Retrievers already on the market, and provide physicians with additional options for restoring blood flow in patients who have suffered ischemic strokes, the company said.

In 2004 the original Merci Retriever became the first device cleared by FDA to remove blood clots from the brain in patients experiencing an ischemic stroke. The device is a catheter that contains a coil-shaped wire that resembles a corkscrew.

According to Concentric, the V series Retrievers have been designed to be the most efficient Merci Retrievers yet and are "the culmination of the company's many years of experience providing neurovascular retrievers for ischemic stroke patients." The distal end of the latest Retriever is tightly coiled, which resists stretching and assists in dislodging clots, Concentric said. The proximal end of the V series Retrievers is more loosely coiled, which facilitates wrapping and holding a dislodged clot. Similar to Concentric's L family of Retrievers, the V series of Merci Retrievers incorporate filaments that provide an additional mechanism for securing blood clots during retrieval from the brain. The V series of Retrievers will be available in diameters of 2.0 mm, 2.5 mm and 3.0 mm.

FDA cleared the Merci L6 Retriever in September 2007. "The Merci Retrieval System is the most widely used clot retrieval system for ischemic stroke, and we continue to incorporate the knowledge gained from our experience, as well as input from many clinicians, into improved devices," said President/CEO Maria Sainz.

The Merci Retriever is made with a flexible, shaped nitinol wire that allows delivery of the Retriever in linear form using standard catheterization techniques. A neurointerventionalist makes a small puncture in the groin to introduce the Merci Retriever into an artery leading to the brain. The Merci Retriever returns to its original shape when deployed in and around the blood clot in the brain.

Concentric's competition in this space includes Ekos (Bothell, Washington), which in July launched its EkoSonic endovascular system with Rapid Pulse Modulation intended to provide a safer, faster and more complete way to remove dangerous blood clots. The device can deliver microsonic energy and thrombolytic drugs simultaneously, with no evidence of thrombus breakage or hemolysis, according to Ekos.

CMS declines more coverage for CAS

The Centers for Medicare & Medicaid Services (CMS) has decided to hold its ground on its current reimbursement for angioplasty and stenting for carotid artery occlusion, which is widely seen as the primary driver of stroke. According to CMS, between "20% and 45% of all strokes in patients with 70% to 99% carotid stenosis are unrelated to the carotid disease," and "aggressive medical therapy would be the most important treatment" for those whose strokes are not due to carotid artery disease "since surgical intervention would not reduce these strokes."

The current coverage set-point for carotid artery stenting (CAS) is for symptomatic patients who exhibit 70% occlusion, but a coalition that includes the American College of Cardiology (ACC; Washington), requested that the agency expand the reimbursement set-point to include patients with symptomatic carotid artery stenosis of 50% or greater or asymptomatic carotid artery stenosis of more than 80%.

However, some clinicians, including Peter Bell, MD, of the Royal Infirmary Hospital (Leicester, UK) see the procedure as overused. Bell was quoted in 2007 as stating that "the majority of those using [carotid artery stents] cause more problems than are caused by endarterectomy."

CMS took the position in a July 31 memo that for CAS to be necessary and reasonable for the asymptomatic patient whose stenosis is greater than 80%, "the perioperative morbidity and mortality rates should be less than 3%." The agency set a limit of less than 6% death and stroke within 30 days of the procedure for patients with stenosis less than 50%. CMS said the literature "does not demonstrate that CAS can be performed at that level."