As noted in our final issue of Medical Device Daily for 2005 (MDD, Dec. 30, 2005), most of the major events of 2006 were achievements not realized.

But the medical device and med-tech arenas saw plenty of activity that bodes well for 2006 in terms of companies pursuing merger-related integrations, expanded reimbursement coverages and coverage proposals by the Center for Medicare and Medicaid Services (CMS; Baltimore), important clinical trials, important legal decisions and other regulatory and product accomplishments.

Med-tech and devices experienced a slight downturn in initial public offerings compared to 2004, but they produced a number of quality offerings that garnered more than $658 million for the sector overall (see sidebar, p. 4).

Following is a month-by-month listing of key events featured on the front pages of MDD (with the dealmaking listings focused on acquisitions of more than $100 million in value).

January

The usual lineup of opening year conferences predicted 2005 to be a solid but not spectacular year — expectations that proved to be on the money.

• In dealmaking: Elekta (Stockholm, Sweden) acquires Impac Medical Systems (Mountain View, California) in a $190 million merger.

• In regulatory news: Michael Leavitt is confirmed as secretary of the Department of Health and Human Services; CMS significantly expands its reimbursement coverage of implantable cardioverter defibrillators (ICDs) in response to highly positive data unveiled from the Sudden Cardiac Death in Heart Failure Trial (SCD-HeFT) study showing the ability of these devices to reduce the rate of death in heart failure patients.

• In product developments: NMT Medical (Boston) launches the Migraine Intervention with Starflex Technology (MIST) trial, a milestone study for demonstrating the relationship between heart defects and migraine.

February

• Dealmaking: Cytyc (Marlborough, Massachusetts) purchases Proxima (Alpharetta, Georgia) for $160 million.

• Regulatory: CMS rolls out proposed new, less restrictive criteria for reimbursement of power mobility equipment (wheelchairs and power scooters) with the final rules to be detailed in 2006.

• Products: Following a lengthy debate with FDA officialdom, Cyberonics (Houston) receives an approvable letter for its Vagus Nerve Stimulation therapy technology for treatment-resistant depression (but questions continue to swirl concerning efficacy of the therapy); Thoratec (Pleasanton, California) receives FDA approval for a trial of its Heartmate II left ventricular assist system for bridge-to-transplantation and destination therapy.

• In company news: Unable to withstand market assault of drug-eluting stent (DES) technology, Novoste (Norcross, Georgia) begins shutdown of its brachytherapy business (focused on treating in-stent restenosis) and seeks other technology opportunities.

March

• Dealmaking: Johnson & Johnson (J&J; New Brunswick, New Jersey) unveils plan to purchase Closure Medical (Raleigh, North Carolina) for $370 million in cash and stock.

• Regulatory: Picked to head the FDA, Lester Crawford begins congressional confirmation process; CMS expands coverage of carotid artery stenting.

• In association news: In an apparent surprise move, Pamela Bailey, president and CEO of AdvaMed (Washington) leaves that organization to head the Cosmetic, Toiletry and Fragrance Association (Washington).

• Products: W. L. Gore (Flagstaff, Arizona) wins FDA approval of its TAG system, the first approval of an endovascular grafting system to treat thoracic aortic aneurysms.

• Legal: Masimo (Irvine, California) wins an antitrust case against Nellcor (Pleasanton, California) which the Medical Device Manufacturers Association (Washington) hails as step in combating the market power of group purchasing organizations.

April

• Dealmaking: Agfa-Gevaert (Mortsel, Belgium) buys Heartlab (Westerly, Rhode Island) in a deal valued at $132.5 million in cash.

• Regulatory: An FDA panel votes to recommend approval of gel breast implants from Mentor (Santa Barbara, California) but turns thumbs down on gel implants made by Inamed (Santa Barbara); both companies subsequently receive “approvable“ letters but final approval is not received in 2005.

• Products: Arrow International (Reading, Pennsylvania) discontinues focus on Lionheart left ventricular assist system to focus on development of CoreAide ventricular assist device; after exiting mechanical heart valve business in late 2004, Medical CV (Inver Grove Heights, Minnesota) said it would discontinue distribution of its Omnicarbon mechanical heart valve product line by April 2005.

• Legal: To end a legal battle, Medtronic (Minneapolis) agrees to pay $1.35 billion to acquire all of the spine-related intellectual property of Karlin Technology and Gary Michelson, MD; the Department of Justice issues subpoenas to major orthopedics firms concerning consulting and service fees paid to physicians.

May

• Dealmaking: Fresenius Medical Care (Bad Homburg, Germany) unveils plan to buy Advanced Renal Care (Nashville, Tennessee) for $3.5 billion.

• Products: TM Bioscience (Toronto) wins first-ever FDA approval for test to detect cystic fibrosis, the Tag-It Cystic Fibrosis Kit; at EuroPCR, a variety of new studies continued to support the efficacy of DES devices over bare metal stents, and data from NMT Medical's MIST study indicates strong relationship between a heart defect known as a patent foramen ovale (PFO) and migraine.

• New funds news: Split Rock closes on $275 million fund; Canaan Partners close on $450 million fund.

June

• Dealmaking: Affymetrix (Santa Clara, California) buys ParAllele BioScience (South San Francisco); Roper Industries (Duluth, Georgia) buys Civco Medical Instruments (Kalona, Iowa) from KRG Capital Partners for $120 million in cash.

• Companies: Dr. David Lederman, developer of the AbioCor artificial heart, leaves Abiomed (Danvers, Massachusetts), with Michael Minogue now heading the company as president CEO and chairman; Cardima (Fremont, California) releases staff in wake of “going concern“ audit report.

• Regulatory: Guidant announces first in a series of recalls of its ICD devices; Boston Scientific issues recall of ICDs.

• Funds: Frazier Healthcare Ventures closes $475 million fund; Angiotech unveils ADDVANCE equity unit which will invest in new device and high-tech ventures.

• Legal: An Alabama jury finds Richard Scrushy not guilty on various counts of masterminding the multi-billion-dollar inflation of accounts at HealthSouth (Birmingham).

July

• Dealmaking: Philips Royal Electronics (Best, the Netherlands) buys Stentor (Brisbane, California) for $280 million in cash; Invitrogen (Carlsbad, California) to buy BioSource International (Camarillo, California) for $120 million.

• Regulatory: Lester Crawford is confirmed as new head of FDA.

• Products: At end of seven-year regulatory road Cyberonics (Houston) receives approval for use of its VNS therapy for treatment-resistant depression; Congress becomes involved in wide ICD recalls, Sen. Charles Grassley (R-Iowa) asks for defect reports from Guidant (Indianapolis).

• Associations: Steven Ubl is picked as new president and CEO of AdvaMed.

August

• Dealmaking: Quest (Lyndhurst, New Jersey) agrees to acquire LabOne (Lenexa, Kansas) for $934 million; Alliance Medical (Phoenix) and Vanguard (Lakeland, Florida), leading reprocessors of single-use medical devices, announce merger.

• Market news: Nasdaq debuts its healthcare index.

• Regulatory: FDA approves stented tissue valve product from St. Jude Medical (St. Paul, Minnesota), to launch challenge of Edwards Lifesciences (Irvine, California) and Medtronic in that sector. St. Jude receives FDA approval for its Effect of Septal Closure of Atrial PFO on Events of Migraine with Premere (ESCAPE) study to investigate PFO/migraine link using its Premere closure technology.

• Products: Medtronic launches its Endeavor DES product in 40 countries in Europe; St. Jude launches trial to demonstrate link between migraine headache and PFO.

September

• Dealmaking: Cardiovascular firms Cardiac Science (Irvine, California) and Quinton Cardiology (Bothell, Washington) merge in major consolidation in sector; Schick Technologies (Long Island, New York) plans to purchase Sirona Dental Systems (Bensheim, Germany) in reverse merger valued at $1.46 billion.

• Regulatory: Lester Crawford resigns as head of the FDA under suspicion of holding stock in companies for which agency made rulings; FDA issues guidelines for handling approval protocols for combination products; The New York Times charges the FDA may have delayed its recall of Guidant ICDs for up to four months after learning of life-threatening defects; Heart Rhythm Society (Washington) holds meeting on reporting of implantable device defects and FDA issues report that over a recent 12-year period there were more than 17,000 reported defects with ICDs and pacemakers resulting in 61 deaths.

• Products: Abbott Laboratories (Abbott Park, Illinois) becomes second company, after Guidant, to enter carotid stenting sector with FDA approval for its Xact Carotid Stent and Emboshield Embolic Protection Systems.

• Funds: Aurora V funds close with $50 million.

• Legal: Boston Scientific (Natick, Massachusetts) agrees to pay $750 million to its former Israeli stent supplier Medinol to settle long-standing dispute.

October

• Dealmaking: J&J gives first sign it is having cold feet concerning purchase of Guidant, considering “alternatives“; Accellent (Wilmington, Massachusetts) acquired by Kohlberg Kravis Roberts & Co. (New York) for $1.27 billion; Global Healthcare Exchange (Westminster, Colorado) agrees to acquire Neoforma (San Jose, California) for $200 million; St. Jude unveils plans to buy Advanced Neuromodulation Systems (Houston) for $1.3 billion; pSivida (Perth, Australia) agrees to buy Control Delivery Systems (Watertown, Massachusetts) for $104 million.

• Regulatory: Medtronic files first module of premarket approval application for its Endeavor DES, later unveils trial data indicating failure to meet primary endpoint; St. Jude gives notice that some of its implantable devices may be affected by cosmic radiation.

• Legal: A judge dismisses suit brought by FDA vs. Utah Medical Products (UTMD; Salt Lake City), rules UTMD is in compliance with quality system regulations; the Department of Justice issues subpoenas to Guidant, St. Jude Medical and Medtronic, seeking information concerning implantable device defects.

November

• Regulatory: An FDA panel recommends over-the-counter sale of the HIV test from OraSure Technologies (Bethlehem, Pennsylvania).

• Products: Various companies report development activities for flu tests in response to global avian flu threat.

• Associations: AdvaMed issues policy statement in opposition to gainsharing; the American Heart Association (AHA; Dallas) issues new guidelines concerning percutaneous coronary interventions.

• Funds: Versant closes $400 million fund.

• Legal: Guidant files suit vs. J&J, seeking to push forward with merger deal, and J&J subsequently reduces its offer for Guidant by $3.9 billion to $21.5 billion.

December

• Dealmaking: Boston Scientific makes a late $25 billion offer for Guidant, an offer serving to trump bid of J&J; Dec. 31 set as date for Guidant shareholder vote on J&J offer; J&J unveils plays to acquire Animas (West Chester, Pennsylvania) for $518 million.

• Products: Arbios (Los Angeles) launches Phase I safety trial of its SEPET artificial liver; QLT (Vancouver, British Columbia) lays off 46% of staff, reduces guidance for its Visudyne products in response to competitive products; Asthmatx (Mountain View, California) raises $27 million to push development of first device-based approach to treating asthma.

• Associations: American College of Cardiology (Bethesda, Maryland) and AHA release new guidelines for treatment of peripheral artery disease.

• Regulatory: CMS issues national coverage decision involving Microvolt T-Wave Alternans cardiac diagnostic test from Cambridge Heart (Bedford, Massachusetts), considered important for expanding use of ICDs.

• Legal: Advanced Medical Optics (Santa Ana, California) wins a $213.9 million judgment in a patent dispute related to cataract surgery devices with Alcon Laboratories (Fort Worth, Texas); Alcon promised an appeal.