In a move that will make it the second-largest player in the spinal chord stimulation market, an area where it previously had no market share, St. Jude Medical (SJM; St. Paul, Minnesota) reported in mid-October that it plans to acquire Advanced Neuromodulation Systems (ANS; Plano, Texas), a maker of implantable devices used to treat chronic pain, in a deal valued at $1.3 billion. SJM will pay $61.25 in a tender offer, with the deal subject to various standard closing conditions. The merger is slated for completion by year-end.

ANS is a primary player in the estimated $1 billion neuromodulation medical device market and already holds a No. 2 market share position in the spinal cord stimulation segment behind Medtronic (Minneapolis). Neuromodulation is the delivery of very small, precise doses of electricity or drugs directly to nerve sites to treat patients suffering from chronic pain or other disabling nervous system disorders. The company also has clinical trials under way for new indications to address the expanding markets for Parkinson’s disease and essential tremor.

Daniel Starks, St. Jude president and CEO, said during a conference call that the acquisition provides his company “yet another major long-term growth platform” and an “immediate foothold in one of the fastest-growing and most exciting segments of the medical device industry where we do not already participate.” ANS, he said, will gain “a strong international presence and increased resources that we believe are necessary to fully capture the opportunities in ANS’s market.” About 40% of SJM’s revenues come from sales outside the U.S., while less than 10% of ANS revenues come from international sales. ANS products are sold in about 30 countries while SJM has a presence in more than 130 countries.

Starks said that the synergy produced by the deals would be the result of “technology crossover in microelectronics, batteries leads and programmers [that] will benefit the flow of electronics both in neuromodulation and cardiac rhythm management.” Chris Chavez, ANS president and CEO, emphasized that the combination is less a consolidation than an acceleration of ANS activities “by bringing new resources to help us tap our incredible market opportunities.” He noted that “there is virtually no overlap in the markets served by St. Jude Medical and ANS today, but our technologies are extremely complementary.”

ANS will become a newly created division of St. Jude Medical. The bulk of that company’s existing executive management team is expected to remain with the combined company, including Chavez, who will become the president of the ANS division which will remain headquartered in Plano.

ANS was itself a would-be acquirer in September 2004 but was spurned in its efforts to buy Cyberonics (Houston) in a transaction valued at the time at nearly $525 million. It had acquired a 14% stake in that company the previous month. Cyberonics is focused on vagus nerve stimulation therapy, an implantable strategy different than that of ANS. But the stake held by ANS could make it a beneficiary of the St. Jude acquisition.

Additionally, the neuromodulation market – because of its recent history of 20% growth – offers large possibilities for future penetration, and so appears as an increasingly attractive sector. These possibilities were underlined by the $740 million purchase of Advanced Bionics (Valencia, California) by Medtronic (Minneapolis) last year

John Heinmiller, St. Jude’s executive vice president and CFO, also pounded the growth drum during the conference call. “We see the financial upside primarily in terms of revenue and earnings,” he said, adding that the company now expects revenue growth in 2006 of more than 20%, “with at least five percentage points of our growth coming from the ANS transaction.” He also noted that due to the strength of SJM’s current business, the company expects to absorb the acquisition of ANS and still meet current earnings per share growth expectations for 2006. Heinmiller also projected earnings-per-share accretion in 2007 and beyond.

SJM also used the conference call to present 3Q05 earnings, projecting full-year 2005 earnings of $1.52 to $1.53 a share, excluding extraordinary items. St. Jude said ICD sales jumped 68% to $277 million in 3Q05. It said it holds about 20% of the global market for implantable cardiac devices. Sales of the company’s cardiology products rose 12% to $105 million, led by its vascular-sealing devices.

Panel meeting set on OTC HIV test

Oral fluid diagnostics company OraSure Technologies (Bethlehem, Pennsylvania) was scheduled early this month to make its case for its rapid at-home HIV test to be sold over-the-counter (OTC). The company was to go before the FDA’s Blood Products Advisory Committee (BPAC) on Nov. 3. If ultimately approved by the agency, the OraQuick Advance Rapid HIV-1/2 Antibody Test will be the first such OTC offering and the culmination of an 18-year saga. The product was first turned down for OTC sale in 1987, with ongoing concerns that non-prescription use would do more harm than good. The reason: concerns by AIDS advocates and government regulators over follow-up counseling and professional support for those who test positive for the disease and the possibility of suicides spawned by such a diagnosis.

The test was cleared by the FDA in March 2004. It is the only approved, CLIA-waived, rapid point-of-care test. It provides results for both HIV-1 and HIV-2 with greater than 99% accuracy, using an oral fluid, finger-stick or venipuncture whole blood or plasma sample. The OraQuick requires a person to simply swab their gums and then place the swab in a holder. Twenty minutes later, a strip displays one line for a negative result and two lines for a positive one.

The original version of this rapid test, the OraQuick Rapid HIV-1/2 Antibody Test, was FDA-cleared in November 2002 for detection of antibody to HIV-1 in blood, essentially a fingerstick test. And on March 19, 2004, the test was FDA-cleared for the detection of HIV-2 – a variant of HIV.

William Bruckner, vice president of strategic marketing for OraSure, told BBI in March 2004 that counseling “is a very important aspect of HIV testing.” Michels said the company plans to include advice about counseling on OraQuick’s label. “It could be a hotline number, a 24-hour manned counseling center, web support or printed material that is included in the product,” he said.

An estimated 40,000 people in the U.S. are infected by HIV each year. And advocates for OTC marketing are now less worried about the increased risk of suicide since HIV and AIDS can now be regulated as a chronic disease, at least in the countries where people can afford the expensive medication to manage the condition. And federal health officials are now more convinced that an at-home AIDS test will change sexual behavior and help reduce the spread of the disease.

West Pharmaceutical forms new device unit

West Pharmaceutical Services (Lionville, Pennsylvania) last month formed a new business unit combining its Device Group and The Tech Group, which West acquired in May. The new unit – to be headed by Robert Hargesheimer as president – will operate under The Tech Group name.

Hargesheimer previously served as president of the Device Group at West. He joined the company in 1992 as director of finance and planning in the Health Care Group and has held various positions throughout the organization, including operations, finance and business development.

“[Our] objective is to build a leading device engineering and manufacturing capability to support the growing healthcare and consumer markets,” said Steve Ellers, president and COO of West Pharmaceutical Services. The acquisition of The Tech Group has “significantly expanded” West’s presence in the medical device, healthcare and consumer markets, he said. The combined entity will continue to operate from existing engineering and manufacturing facilities in Arizona, Indiana, Michigan, Pennsylvania, Ireland, Mexico and Puerto Rico. Sales and administration functions will be handled in both Scottsdale and Lionville.

West Pharmaceutical Services manufactures components and systems for injectable drug delivery, including stoppers and seals for vials, and closures and disposable components used in syringe, IV and blood collection systems.

Bird flu fears boost NanoMask demand

Emergency Filtration Products (EFP; Henderson, Nevada) said it would increase production of the NanoMask, its environmental mask that uses a combination of hydrophobic or hydrophilic filters that capture, isolate or eradicate bacterial and viral microorganisms, it said, with 99.9% efficiency. It said ramp-up in production is due to a surge in demand linked with fears of the spread of bird flu.

“Over the past few weeks we have experienced a strong increase in orders for the NanoMask, which we believe is due to the growing threat of a possible avian flu pandemic,” said Douglas Beplate, president of EFP.

EFP said it has placed an initial order for the production of 500,000 filters from a U.S. supplier. The filters, which are expected to be manufactured within the next several weeks, will then be shipped to EFP’s Henderson facility, where they will be enhanced with nanoparticles and packaged. The company said it also expects to receive 50,000 mask shells from Taiwan and has placed an initial order for an additional 100,000 mask shells from its Taiwanese supplier. EFP said it plans to increase its production capacity “as demand dictates.”

Smith & Nephew Ortho launches Mobilab

Smith & Nephew Orthopaedics (S&N; Memphis, Tennessee) reported the launch of its Mobilab Mobile Training Center, which will take training directly to surgeons all over the U.S. The Mobilab Mobile Training Center is equipped with general instruments and Smith & Nephew products such as the Achieve CAS system for computer-assisted hip and knee implant surgery. Surgeons also can use Mobilab’s facilities to perfect new techniques and practice with systems before a live surgery without having to travel.

The Mobilab unit is a 53-foot-long, 80,000-pound tractor-trailer, which expands to a six-station, operating room style training facility that can accommodate up to 24 surgeons at one time for training sessions or product demonstrations. S&N said that the unit will appear at nine orthopedic meetings over the next year, and plans to make stops in Washington, Philadelphia, New Jersey, Chicago, New York, Albany, Indianapolis, Connecticut, Atlanta and Orlando by the end of 2005.

Mobilab contains a conference room and an outdoor seating area for surgeon meetings and product demonstrations. The trailer also includes six screen monitors, one for each lab station, and plasma screens in the conference room and in the outdoor canopied area, allowing surgeons to watch instructing surgeons perform procedures and view surgical techniques during hands-on labs.

In addition to expanding the capability to meet surgeon training needs, S&N said that the Mobilab will be used to launch future products such as its Legion Revision Knee System and Journey Knee System and educate medical personnel on Smith & Nephew’s existing product portfolio, including the Peri-Loc Plating System, minimally invasive surgery techniques and the Genesis II Total Knee System.

EP MedSystems fires CEO over sales/reports

The board of directors of EP MedSystems (West Berlin, New Jersey) last month fired Reinhard Schmidt as CEO, president, COO and a company director in the wake of a report that certain sales by the company to Iran are being investigated by the Department of Commerce and the U.S. Attorney’s Office for the District of New Jersey. The probe involves possible violation of U.S. law in the sales and the accuracy and completeness of voluntary statements filed with the Department of Commerce with respect to those sales.

EP Medsystems said Schmidt’s termination resulted from his certification and authorization of such statements to have been “inaccurate and incomplete.” The company said that its audit company had discovered some of the inaccuracies and that its investigation is ongoing.

The company said Schmidt’s termination did not result from the discovery of any financial or accounting irregularities by the audit committee.

David Jenkins, founder of EP MedSystems and its chairman, has been appointed by the board of directors to serve as president, CEO and COO. Jenkins previously served as CEO of the company from its inception in 1993 until August 2002 and as president from its inception until August 2001.

The company develops electrophysiology products used to diagnose and treat certain cardiac rhythm disorders.

CyberKnife to be used in prostate cancer trial

The CyberKnife Center of Miami (Miami, Florida) has reported plans for a prostate cancer trial this year using CyberKnife technology. CyberKnife, manufactured by Accuray (Sunnyvale, California), delivers targeted doses of radiation to often-inoperable tumors with sub-millimeter accuracy.

James Schwade, MD, executive director of the CyberKnife Center of Miami will oversee the trial. Schwade said, “Typically, prostate cancer patients can receive up to 37 daily treatments of radiation within a two-month period. Earlier trials have shown that CyberKnife can be as effective with as few as five treatments in a one-week period. We hope to back those assertions up and help make CyberKnife procedures a primary treatment for prostate cancer.”

Until recently, CyberKnife technology was used to augment traditional radiation treatment of prostate cancer. The Miami trial is designed to help determine if CyberKnife treatments could be used as a primary treatment. The facility is seeking to enroll 20 patients in the trial. Developed by John Adler, MD, a neurosurgeon at Stanford University (Palo Alto, California), CyberKnife is the only robotic image-guided radiation system that enables the precise targeting and treatment of tumors throughout the body, according to Accuray.