New Paradigms Brewing In Atrial Fibrillation Ablation

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1 ELSEVIER BUSINESS INTELLIGENCE AUGUST 2013 VOL. 15, NO. 7 New Paradigms Brewing In Atrial Fibrillation Ablation By Mary Thompson The $2.5 billion atrial fibrillation (AF) ablation device market is growing at double-digit rates, but still has only scratched the surface of its full potential, which some estimate at upwards of $37 billion worldwide. Hampered by complicated and lengthy procedures, long-term durability issues, and the inability to effectively address patients with more persistent disease, AF ablation is an area ripe for innovation. Now, this market could be headed for a paradigm shift, as researchers aided by the latest advances in computer analysis and signal mapping technology reveal new information about the underlying mechanisms that drive and sustain this common heart arrhythmia. At the same time, the next generation of ablation and imaging tools is making its way toward the US market and could have a substantial impact as well. Much of this research challenges the status quo, but it also could usher in a new era of more effective and more individualized AF care. See page 1 MARKET & INDUSTRY BRIEFS 40 MicroPort s Wright Bid Creates New Ortho Player 44 Neovasc Sees Opportunities In Refractory Angina And Mitral Regurgitation Markets 46 FDA Clears Resorbable Antibacterial Device Envelope 48 Vertos Medical Cashes In On Minimally Invasive Trend In Spine Surgery Trend 49 Wireless Revolution Raises Device Security Fears DEALS UPDATE 54 Recent device financings, alliances, and M&A activity WASHINGTON ROUNDUP 58 Peripheral DES, Retinal Implant Awarded CMS Bonus Payments 60 CMS Updates Medicare Readmissions Policy 61 CMS Takes Hard Look At Outdated NCDs Innovation Fuels Growth In GI Endoscopy By Anne Staylor Advances in imaging and interventional endoscopy are improving cancer detection and enabling less invasive approaches to diagnose and treat disorders in the gastrointestinal tract. These emerging procedures are poised to fuel growth in the $7 billion global market for GI endoscopy. OBSTRUCTIVE SLEEP APNEA: CPAP Under Pressure As New Market Segments Awaken By Tracy Neilssien Obstructive sleep apnea has been chronically underserved by traditional continuous positive airway pressure systems that are inconvenient and uncomfortable to use. To address this problem, CPAP manufacturers are making design improvements to optimize comfort and compliance, and promising new technologies are emerging that could help reshape the future management of this often overlooked, but serious disorder. START-UP NEWS 64 Colibri Heart Valve: Prepackaged TAVI System 66 Middle Peak Medical Goes To Europe For Funding MEDTECH EXECS ON THE MOVE 70 The latest moves in medtech INSIDE THIS ISSUE Estimated Global GI Endoscopy Market, 2013 See page 24 14% 14% 29% 43% GI Endoscopy Scopes & Equipment Devices Pathology (US Only) Infection Control ~$7 Billion Global GI Market

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3 GI ENDOSCOPY August 2013 Innovation Fuels Growth In GI Endoscopy by Anne Staylor T echnological advances in imaging and interventional endoscopy are paving the way for new and improved approaches to diagnosing and treating gastrointestinal (GI) disorders. At this year s Digestive Disease Week (DDW) meeting, held in Chicago in May, researchers and manufacturers were showcasing new endoscopes, tools, and imaging technologies designed to improve diagnostic performance, clinical workflow, and safety during GI endoscopy. These technologies are helping to improve cancer detection and are allowing gastroenterologists to use less invasive approaches to procedures that have typically been performed using surgical or percutaneous techniques. These emerging procedures are poised to fuel growth in the global market for GI endoscopy, which is currently valued at $7 billion, according to EndoChoice Inc., a competitor in this space. New Groundbreaking Colonoscope Colonoscopy is widely accepted as the gold standard for detecting colorectal cancer and precancerous polyps known as adenomas. However, physicians still miss a certain number of adenomas during colonoscopy and interval cancers do occur. The adenoma miss rate varies considerably in the literature, but researchers have reported a miss rate ranging from 24% to 42%. Over the last 10 years, device manufacturers have been developing new technologies and different imaging modalities in an effort to improve visualization and to decrease the adenoma miss rate during colonoscopy. (See GI Endoscopy: Thriving on Innovation Medtech Insight, June 2010.) And yet, the colonoscope s field of view has not really changed much in the past three decades. Most forward-viewing colonoscopes available today provide no more than a 170-degree field of view. But a new groundbreaking colonoscope with a 330-degree field of view debuted at this year s DDW that could potentially revolutionize colorectal cancer screening by allowing physicians to visualize almost twice as much anatomy as traditional forward-viewing colonoscopes. Developed by EndoChoice, the Full Spectrum Endoscopy (Fuse) system feels and handles just like a traditional forward-viewing colonoscope, but has a proprietary arrangement of three, small, high-definition cameras at the distal tip (forward viewing, right viewing, and left viewing). (See Exhibit 1.) The system projects these views onto three monitors as slightly overlapping images stitched together to form a panoramic view of the colon. The additional cameras, monitors, and panoramic view allow colonoscopists to see what is difficult to visualize with a single-camera system, such as areas behind colonic folds and difficult anatomy. The Fuse system also includes a next-generation endoscopic image management system called FusePanel, a touchscreen system that allows clinicians to view the procedure, manage images, and export information to the electronic medical record or to endoscopy report writers. Results from a study featuring Fuse suggest this new technology could significantly improve upon the current gold-standard colonoscope in detecting adenomas and colorectal cancer. In a study presented at DDW, researchers from the US, Europe, and Israel compared the adenoma miss rate using Fuse with the miss rate of a traditional colonoscope in a 185-patient, randomized, tandem, multicenter trial. For the study, researchers used a commonly available traditional colonoscope to perform a colonoscopy on each patient. Immediately following the first examination, the same doctor performed a second examination using the Fuse colonoscope. After finding 28 adenomas, researchers found another 20 adenomas using Fuse. The miss rate for the traditional colonoscopes was 41.7%, which means Fuse had an incremental find-rate of 71%. In those patients where the order was reversed and a traditional colonoscope was used after Fuse, the miss rate for adenomas was only 7.6%. Physicians still miss a certain number of adenomas during colonoscopy and interval cancers do occur. The adenoma miss rate varies considerably in the literature, but researchers have reported a miss rate ranging from 24% to 42%. The company received US Food and Drug Administration (FDA) 510(k) clearance for its first-generation Fuse system in September 2012; that system is still in use at several pilot sites in the US and Europe. Since then, the company has made several improvements in the system related to the graphical user interface, and has received FDA 510(k) clearance for the second generation in April According to EndoChoice president and CEO, Mark Gilreath, the 2013 Windhover Information, an Elsevier company. All rights reserved. medtech insight 1

4 GI ENDOSCOPY August medtech insight Exhibit 1 EndoChoice Full Spectrum Endoscopy (Fuse) Field Of View Versus Traditional Endoscope Traditional Endoscope Limited 170 Field of View Fuse TM Endoscope Full 330 Field of View SOURCE: EndoChoice Inc. Fuse system and study results were very well received at DDW, and the company plans to start shipping the product this summer in both Europe and the US. To date, physicians have used Fuse on more than 300 patients worldwide. In addition to the 330-degree field of view, Gilreath says one of the things that excites physicians about the technology is that the Fuse looks, feels, and behaves exactly like current endoscopes. We don t have the traditional barriers to new technology. From the physicians perspective, they say, The scope is the same size. The working channel is the same size. I don t have to change behavior or fight for a new reimbursement code. I can integrate it into the ecosystem with no problem, and I can see 71% more adenomas, he explains. Besides the Fuse colonoscope, the company also has a gastroscope with a 220-degree field of view that is pending FDA 510(k) clearance. (Gastroscopes traditionally offer a 150-degree field of view.) The gastroscope is compatible with the FusePanel and monitors and is designed for use in upper GI procedures to diagnose and treat disorders of the esophagus and stomach such as gastroesophageal reflux disorder, Barrett s esophagus, and gastric bleeding. The market potential for these devices is significant. Approximately 15 million colonoscopies are performed each year in the US, according to Gilreath, who estimates the worldwide market for colonoscopy is currently $3 billion annually. Gilreath says both the Fuse colonoscope and the company s gastroscope will meet the majority of market demand in GI endoscopy. Of the 24 million GI procedures performed annually in the US, about 22 million are upper and lower endoscopies. From Idea To Innovation Expanding an endoscope s field of view seems like such an obvious way to improve visualization, so it is surprising that the leading manufacturers in this space, including Olympus Medical Systems Corp./ Olympus Corp., Pentax Medical Co./ Pentax Corp., Fujifilm Corp./ Fujifilm Holdings Corp., and Karl Storz Endoscopy-America/ Karl Storz GMBH & Co., haven t already done it. But startups are often in a better position to develop a new concept or disruptive technology than companies with already established products. The big players have their architecture and their framework pretty well set, says Doug Ladd, EndoChoice s chief marketing officer. They ve been doing the same thing for the last 30 years. And when you re in the middle of that business and you re going up against competitors that have very similar offerings to you, it s hard to step back, look outside the box and say, What if we did something completely different? (Before joining EndoChoice in 2012, Ladd worked for Johnson & Johnson as the director of marketing for Worldwide Franchise Development, where he launched new products and business units.) But EndoChoice s scope business is only one product line in a broad portfolio of GI products. The company was originally founded in 2008 by Mark Gilreath, who came up with the idea for the firm in his basement after working in the GI industry for more than 20 years. (Gilreath had previously served as chief marketing officer and president of Given Imaging Ltd., commercializing the revolutionary PillCam Video Capsule. He also served in a variety of leadership positions at Pentax Medical.) Gilreath says the GI industry is a highly fragmented space comprised of companies with just one widget to sell. So he decided he could better serve GI professionals by developing a platform company with the most innovative, broadest portfolio in GI. Gilreath initially launched EndoChoice with an endocart and some GI instrumentation. Since then, the company has grown very quickly, and today offers more than 600 products in

5 August 2013 GI ENDOSCOPY the areas of GI imaging, diagnostic technologies, devices, and infection control. Exhibit 2 Estimated Global GI Endoscopy Market, 2013 For the past three years, Inc. Magazine has recognized EndoChoice as one of the fastest-growing private companies in the US. The company is no longer operating out of Gilreath s basement and is now approaching 300 employees. Endo- Choice is headquartered in Atlanta and has its primary research and development facilities in Israel. Its international headquarters and scope manufacturing are in Germany. The company s revenues have increased from $1 million in 2008 to more than $33 million in And it looks like the growth is continuing. In 2013, our run rate is about $50 million, says Gilreath. And this is before we even sold the first Fuse scope. 14% 14% 43% 29% ~$7 Billion Global GI Market SOURCE: EndoChoice Inc. GI Endoscopy Scopes & Equipment Devices Pathology (US Only) Infection Control With its broad portfolio, EndoChoice competes in a $7 billion global GI endoscopy market that is dominated by industry giants such as Olympus, Fujifilm, and Pentax. (See Exhibit 2.) In terms of how EndoChoice will compete with the big players, Gilreath says the company is already well known in the GI community and will build upon its existing customer base, which includes more than 2,000 GI departments in the US and 30 distributors outside the US. The company also has established group purchasing organization (GPO) contracts for its other product lines, and its scopes will be priced competitively with the bigger companies. But in many respects, Gilreath believes EndoChoice actually has a competitive edge over these bigger companies. We built our platform company on how to serve the GI professional and we build GI products based on having deep insights into the GI market space. The other scope companies don t have the broad portfolio that we do. They re Japanese camera companies and make nice cameras. We are a GI company. We see the opportunity beyond just the camera solution, he says. But Gilreath also believes the company s competitive edge will come down to quality care and what is best for the patient. Our marketing strategy is to let the data speak. We know that the societies are driving the importance of adenoma detection rate. We know that both payors and patients are going to be paying attention to that. That s why these data from this particular study were so powerful. Because even if you re able to buy traditional forward-viewing scopes at a lower price, that s not going to improve your adenoma detection rate. So the whole point is about the patient and stopping cancers. And unless somebody is going to increase their time spent viewing by a factor of probably three or four on each endoscopy, they re not going to find the same level of adenomas as they re finding with Fuse. Given the changes that are happening in the reimbursement front, the quality measures that are taking place, and all the other data that were presented at the DDW meeting showing the link between adenoma detection rate and interval cancer rate, Gilreath thinks doctors will say, I ve got to have this. This is what we need. Of course, these days there has to be a good economic argument for a new technology as well, and the company is currently planning a study evaluating the economic model. But Gilreath believes the value proposition for Fuse is compelling. He says the price of the Fuse system is comparable to existing technologies, yet Fuse finds 71% more adenomas. He believes payors will pay for quality and will demand the technology because of the higher adenoma detection rate. He also notes that Fuse reduced the false-negative rate and changed the surveillance interval for 53% of patients in whom traditional colonoscopies had missed adenomas in the DDW study. This means those patients will return for a colonoscopy sooner and there will be fewer interval cancers a cost savings in the long term for the health care system. So what s to stop competitors from simply expanding the field of view on their endoscopes? Gilreath says EndoChoice has more than 20 patents pending for its technology and the barriers to creating a similar type of scope are high. He also notes that most providers in the US replace an endoscope system every three to five years, so as EndoChoice is the first to market with this 2013 Windhover Information, an Elsevier company. All rights reserved. medtech insight 3

6 GI ENDOSCOPY August 2013 Although Given Imaging is still working to establish reimbursement in the various EU countries, it estimates physicians already have performed thousands of PillCam COLON procedures worldwide. 4 medtech insight type of technology, he sees a lot of opportunity to gain market share in the next few years. In terms of financing, the company started in 2008 with about $3 million in Series A funding and was able to reach profitability after raising only $16 million. In January 2013, the company raised an additional $43 million in Series D funding led by Menlo Park, CA-based Sequoia Capital. The funding allowed EndoChoice to acquire RMS Endoskopie-Technik, a German GI endoscope developer and manufacturer, and to merge with Israel-based Peer Medical Ltd., which developed the Fuse technology. Because it will start shipping the Fuse system this summer, the company s biggest challenge right now is to scale up its manufacturing and sales teams to meet demand. I think the big story here is that the fastest growing company in medtech is about to accelerate, says Gilreath. PillCam COLON 2 Nears US Regulatory Clearance Another company making advances in GI imaging and colorectal cancer detection is Given Imaging, the clear market leader in capsule endoscopy. (See Capsule Endoscopy: Poised For Growth Medtech Insight, August 2012.) In 2001, the company pioneered capsule endoscopy for use in diagnosing disorders of the small bowel and is now in the final stages of regulatory clearance with the FDA to market its second-generation PillCam COLON 2 for use in patients following incomplete colonoscopy. At DDW, researchers presented the results of a subset analysis of the PillCam COLON 2 US pivotal trial data that suggests the device approaches the effectiveness of optical colonoscopy (OC) in its ability to detect conventional adenomas and provides direct visualization of the entire colonic mucosa. Of the 884 subjects enrolled in the study, 689 were included in the subset analysis, which evaluated the safety and accuracy of capsule endoscopy compared with OC in detecting subjects with lesions 6 mm. Subset patients underwent a PillCam COLON 2 exam and investigators stored and saved the resulting video sequences until after the patients had a traditional OC exam four to six weeks later. Researchers unblinded and reviewed the capsule results after the traditional colonoscopy, and then compared the two video sequences to identify all polyps that were at least 6 mm and 10 mm. When physicians found a polyp on the PillCam COLON 2 video that they did not see during the colonoscopy, they performed a follow-up colonoscopy to confirm or rule out the capsule finding. The results of this study showed PillCam COLON 2 had 88% sensitivity and 82% specificity in detecting adenomas at least 6 mm in size, and 92% sensitivity and 95% specificity in detecting adenomas at least 10 mm in size. PillCam COLON 2 received the CE mark in 2009 and the technology is available throughout the European Union. Although Given Imaging is still working to establish reimbursement in the various EU countries, it estimates physicians already have performed thousands of PillCam COLON procedures worldwide. Obtaining reimbursement in the EU is a long-term project for the company, as colonoscopy is not the goldstandard screening technology in Europe, and fecal occult blood testing is a more commonly used and less costly screening exam. Moreover, only a minority of EU member states currently has a fully implemented and effective colorectal cancer (CRC) screening program. According to United European Gastroenterology (UEG), an organization that combines the leading European societies concerned with digestive disease, only eight of 27 EU member states have a population-based screening program in place. As a result, CRC is the second most lethal cancer in the EU. Each year, 334,000 Europeans are diagnosed with CRC and approximately 150,000 die of the disease. In Europe, PillCam COLON 2 is approved for visualization of the colon and is used for screening and in patients with incomplete colonoscopy, Crohn s disease, ulcerative colitis, and obscure GI bleeding. The company has established a web site in Germany to create greater awareness of PillCam for use in colon cancer screening and to make it available to patients who choose to pay for it out-of-pocket. In the US, Given is initially expecting FDA clearance for PillCam COLON 2 in patients who have had incomplete colonoscopies, which is approximately 5% to 15% of all colonoscopies, translating to a market of approximately 750,000 procedures annually, the firm estimates. The company also sees a big opportunity for PillCam COLON 2 in Japan, where it received regulatory approval in July Japan is a big market for Given, with an estimated one million procedures that are potential targets for PillCam COLON 2. The company expects that reimbursement for PillCam COLON 2 will be established in Japan within six months of obtaining regulatory approval.

7 August 2013 GI ENDOSCOPY Strategically, Given decided to pursue the diagnostic imaging claim first for the device in the US, rather than a screening claim, as the fastest route to the US market a move that disappointed some Wall Street analysts. But the addressable global market, even with the narrowed indication in the US, is still quite substantial, with more than three million procedures performed annually, for a total market size of $1.7 billion. The company believes GI physicians in the US are more likely to initially embrace PillCam COLON 2 for use in incomplete colonoscopies, because the device is complementary and provides a better option than indirect visualization provided by radiology. In the long term, Given hopes to expand the use of the PillCam Colon 2 capsule for screening and other indications in the US. The company plans to next seek FDA clearance to use Pill- Cam COLON 2 in patients who are at a higher risk for complications from colonoscopy due to the risk of sedation or bleeding. It also plans to seek indications for diagnosing ulcerative colitis and Crohn s disease in both the small bowel and colon. For all these indications, the company estimates the addressable global market for PillCam COLON 2 is more than six million procedures annually. (See Exhibit 3.) In 2008, the FDA rejected the firm s 510(k) submission for use of its first-generation technology in the colon, and the company went back to the drawing board to improve the specificity and sensitivity of the device. The next-generation PillCam COLON 2 incorporates an advanced video imaging capsule platform that takes more frames per second and has a broader field of view. It also has adaptive frame rate technology that allows it to adjust its frame rate as it moves through the GI tract to capture more images in areas with faster transit times. Outside the US, Given has seen a boost in sales for PillCam COLON 2 since the European guidelines outlining recommendations on the clinical use of colon capsule endoscopy were published in the May 2012 edition of Endoscopy. In the US, the company is doing advocacy work with the Crohn s and Colitis Foundation of American for inflammatory bowel disease, and is working with the American Gastroenterological Association (AGA) on everything from developing guidelines to reimbursement support. The company is also working with key opinion leaders in the US to develop guidelines for physician education and training in colon capsule. Exhibit 3 Addressable Global Market Opportunity For PillCam COLON 2 Region/Indication Procedures Per Year NEAR-TERM OPPORTUNITY EMEA 1,300,000 USA 750,000 Japan 1,000,000 TOTAL NEAR-TERM OPPORTUNITY 3,050,000 LONG-TERM OPPORTUNITY US expanded indications 1,850,000 (sedation/bleeding risk) Ulcerative colitis 100,000 Crohn s disease (small bowel and colon) 1,300,000 TOTAL LONG-TERM OPPORTUNITY 3,250,000 TOTAL MARKET OPPORTUNITY 6,300,000 Note: EMEA = Europe, Middle East, and Africa. SOURCE: Given Imaging Financial Community Meeting, May 21, 2013 In addition to PillCam COLON 2, Given s US offerings include systems for imaging the esophagus and small bowel as well as complementary GI products in the area of functional diagnostics. Since 2001, physicians have used PillCam capsule endoscopy on approximately two million patients worldwide. At DDW, the company was showcasing several next-generation products, including PillCam SB3, Rapid for PillCam Software v.8.0, and the 96-hour Bravo recorder. Earlier this month, the company announced FDA 510(k) clearance for the PillCam SB3 to detect and monitor small bowel abnormalities associated with Crohn s disease, obscure GI bleeding, and iron-deficiency anemia. According to Given, the SB3 combines a 30% improvement in image resolution with adaptive frame rate technology to deliver more detailed small bowel images and coverage. The company also improved the overall efficiency of the platform with improved video processing and complilation. Given also has a strong pipeline of products in early-stage development, including the Voyager platform for magnetically maneuvering capsules in real time, as well as a single capsule for both the small bowel and colon to diagnose inflammatory bowel disease throughout the GI tract. Improving Fine-Needle Aspiration With Confocal Laser Endomicroscopy Advances in imaging and minimally invasive technologies are allowing gastroenterologists to 2013 Windhover Information, an Elsevier company. All rights reserved. medtech insight 5

8 GI ENDOSCOPY August 2013 US physicians perform approximately 250,000 EUS FNA procedures each year. 6 medtech insight extend diagnosis and therapeutics beyond the GI tract and into digestive and adjacent organs that have historically only been accessible using a surgical approach. One company working in this area is Mauna Kea Technologies SAS, manufacturer of Cellvizio, a probe-based Confocal Laser Endomicroscopy (pcle) system. (See A Bright Future For Optical Imaging Medtech Insight, December 2011 and Mauna Kea Technologies Takes Confocal Microscopy to the Tissues: An Interview with Sacha Loiseau Medtech Insight, September 2008.) The company received FDA clearance in April 2013 for the AQ-Flex 19 miniprobe, the first ever needle-based Confocal Laser Endomicroscopy (ncle) miniprobe that provides real-time optical biopsies during endoscopic ultrasoundguided fine-needle aspiration (EUS FNA). EUS allows physicians to visualize the layers of the GI tract wall, pancreas, liver, lymph node, and bile ducts structures that are typically not visible during standard intestinal endoscopy in real time. Under EUS guidance, physicians can advance a fine needle into these structures to aspirate tissue, which is then sent for cytological analysis. EUS with FNA has revolutionized physicians ability to diagnose and stage cancers of the GI tract, assess tumors and cysts in the pancreas, and biopsy suspicious-looking lymph nodes. However, the reported sensitivity of EUS-FNA for pancreatic cysts ranges from 80% to 90%, and many patients do not get a definitive diagnosis after this procedure. A study presented at the DDW meeting suggests the new AQ-Flex 19 miniprobe may improve diagnostic specificity and sensitivity for EUS FNA by providing real-time microscopic images of previously unreachable areas, such as the inside of pancreatic cysts. The prospective, multicenter French study CONTACT evaluated the diagnostic performance of ncle in diagnosing pancreatic cysts in 18 patients who had a single pancreatic cyst and no evidence of chronic pancreatitis. Investigators used diagnostic criteria as defined in a previous study (INSPECT). However, in this preliminary series, they also sought to validate the diagnostic performance of a new criterion: the superficial vascular network (SVN). The researchers found SVN was a common histological finding in serous cystadenoma (SCA), which is a benign tumor of the pancreas. They concluded that SVN is a histological particularity of SCA that is 100% specific to this benign tumor, and its presence could be used to avoid unnecessary surgery for SCA. At 0.8 mm in diameter, the AQ-Flex 19 is smallest of the company s six miniprobes and is the first that can be threaded through a needle. What s great about this technology is that it allows physicians to see inside an area of the body that is never accessed by any visualization technique, says Sacha Loiseau, PhD, Mauna Kea Technologies co-founder, president, and CEO. When the researchers threaded our probe through the needle and into the pancreatic cysts, they saw the vascular networks and discovered a histological feature that can only be visualized with the AQ-Flex 19 miniprobe. And that feature is 100% specific for a benign cyst, he explains. Loiseau says defining the criteria was the first step, and they will be further evaluated in the prospective CONTACT 2 study. He believes if the AQ-Flex 19 miniprobe proves to be a highly sensitive, highly specific test for characterizing pancreatic cysts, it would radically change the way physicians manage these patients. It could potentially save a patient from going through unnecessary surgery and orient those who need surgery to a faster treatment, thus saving a significant amount of money for the health care system. According to the company, physicians are diagnosing a growing number of pancreatic cysts as a result of the estimated 70 million computed tomography (CT) scans being performed in the US every year. Data from a large retrospective analysis showed that pancreatic cysts were present in 2.4% of asymptomatic patients who underwent CT scans of the abdomen for nonpancreatic issues. The market potential for the AQ-Flex 19 is significant. Loiseau estimates that US physicians perform approximately 250,000 EUS FNA procedures each year. And, although the initial application for the technology is in diagnosing pancreatic cysts, Loiseau says the technology could potentially be used to diagnose conditions in other solid organs accessible with a needle, such as the breast, prostate, or inside the brain. Mauna Kea Technologies raised 56.5 million in a successful initial public offering on the New York Stock Exchange Euronext in July Since then, the company has grown dramatically, with net sales increasing by more than 76% between 2011 and 2012 alone. (See Exhibit 4.) The company has trained more than 500 physicians in the use of Cellvizio and has an installed base of approximately 300 systems worldwide. And physicians have used the Cellvizio system in more than 15,000 patient procedures.

9 August 2013 GI ENDOSCOPY Strategically, the company s focus has been not only to expand geographically, but also to expand the indications for its products. The firm has regulatory approval in more than 40 countries, including the US, Europe, Canada, Brazil, Russia, and China, where Mauna Kea Technologies has partnered with Fujifilm, one of the largest endoscope manufacturers. The company is also working to further establish reimbursement for the technology, and obtained three new category-one Current Procedural Terminology (CPT) codes that became effective in January This means hospitals can now obtain Centers for Medicare and Medicaid Services reimbursement for Cellvizio when used in procedures in the upper gastrointestinal tract at a payment rate of $927. Mauna Kea Technologies is also targeting several applications for its technology in preclinical research/molecular imaging, gastroenterology, pulmonology, and urology. Looking to the future, the company is considering several other potential applications such as using the technology in other solid organs, intensive care, robotic surgery, and in women s health. Given all the current and potential applications, the firm estimates the global market for optical biopsy using Cellvizio is approximately 3.75 million procedures each year. (See Exhibit 5.) Improving Workflow And Safety Another company working to improve EUS FNA procedures is Needham, MA-based start-up Beacon Endoscopic, which has developed the first delivery platform for multi-needle exchanges designed to improve the safety and efficiency of EUS FNA procedures. These procedures can be very time consuming, as physicians have to remove the entire delivery system from the endoscope to exchange needles or to use different tools. The company s bnx system incorporates a novel delivery method that saves time by allowing physicians to pass multiple sequential needles through a single delivery platform without removing the system from the endoscope. In a prospective, observational study presented at DDW, researchers compared the efficiency of a single-needle delivery system with a multi-needle exchange platform (Beacon bnx system) in 22 EUS FNA procedures. Four endoscopists completed all the procedures and there was no significant difference in the mean number of needle passes performed between the two platforms. The mean total FNA time was significantly lower with the multi vs single platform, as was the mean time per needle pass. The study found that the multineedle exchange platform decreased FNA time by nearly 50% compared with the traditional single-needle platform. The researchers concluded that the increased efficiency of FNA may lead to improved clinical workflow, shortened procedure time, reduced anesthesia exposure for the patient, and enhanced endoscopic unit efficiency. Researchers are currently planning a multicenter randomized trial to further validate these results. According to Brian Tinkham, Beacon Endoscopic co-founder and VP of sales and marketing, Exhibit 4 Mauna Kea Technologies Revenue Growth, M Sales +76% 8.8M SOURCE: Mauna Kea Technologies, May 2013 Hospitals & clinics +69% Preclinical research labs +129% Cellvizio Systems +82% Miniprobes +96% Services +4% Exhibit 5 Annual Global Market Potential For Cellvizio In Gastroenterology Potential Number of Procedures Per Procedure/Application Year That Would Benefit from Cellvizio Biliary strictures 50,000 Barrett s esophagus/esophageal diseases 500,000 Colonoscopies 500,000 US GI Procedure Potential 1,050,000 OUS GI Procedure Potential 2,700,000 Total GI Market Potential 3,750,000 Note: OUS = Outside the United States. SOURCE: Mauna Kea Technologies 2013 Windhover Information, an Elsevier company. All rights reserved. medtech insight 7

10 GI ENDOSCOPY August 2013 Tinkham anticipates the global market for EUS FNA will increase at a compound annual growth rate (CAGR) of approximately 10% over the next five years, with the US growing at 5% and emerging countries growing in the double digits. 8 medtech insight the bnx system attaches to any EUS scope and the rapid-exchange platform allows physicians to send different tools through a single delivery system in a manner that is similar to the rapid exchange catheter systems used in interventional cardiology. In addition to improving efficiencies, Tinkham says the system is unique in that it is designed for safety and interchangeability, allowing various size needles and other devices currently in development to be delivered through the delivery platform. Every time a needle leaves the delivery platform, it is covered by a safety shield to prevent needle sticks. According to Tinkham, the bnx is the only EUS FNA system designed for safety that is available on the market today. Tinkham values the worldwide market for EUS FNA procedures at approximately $150 million, which includes most of the standard procedures performed today such as FNA of a suspicious mass or node, cyst fluid aspiration, pseudocyst drainage, and celiac plexus block injection for chronic pain management. However, the market potential is three to four times higher if emerging procedures and other applications are added to the mix. These include urology, thoracic, and pulmonary procedures; fiducial delivery for radiotherapy; wire delivery liver core biopsy; glue/coil injection for GI bleeds; ablation via ethanol injection; and EUS-guided injection of Botox (onabotulinumtoxina) in the pylorus for treatment of stenosis. Tinkham says Cook Medical Inc./ Cook Group Inc. and Boston Scientific Corp. are the company s biggest competitors, but he is not concerned about going up against these big companies. We have a completely different way of doing this, says Tinkham. They sell traditional devices. We sell a platform that accommodates a lot of different tools. In the end, our goal is not to become an FNA company. Our goal is to be an EUS platform company for both diagnostic and therapeutic tools. We don t have group purchasing organizations [GPOs] and integrated delivery networks [IDNs] negotiated to go against the big companies, but we do have a highly differentiated product and the only safety EUS device available on the market. Although bigger companies can use their contracting muscle and broad product lines as leverage against smaller companies in negotiating with GPOs and IDNs, Tinkham believes safety supersedes any IDN or GPO. It s never easy, he says. But we ve been in the market now for almost a year, and the safety aspect of our device seems to be what really matters to people, because the needles automatically withdraw into a safety shield. That has been our most powerful selling feature to date. But the most impressive thing about this technology is the adoption rate. I think it s telling that we have just two sales people and in less than a year are already in 100 of the top academic medical centers in the US. Although Tinkham declined to discuss the company s revenue growth, he did note that in January 2013 the company finalized a strategic partnership with industry heavyweight Fujifilm Corp. to handle Beacon s international distribution. The two are also exploring co-development of next-generation designs for emerging procedures. Tinkham anticipates the global market for EUS FNA will increase at a compound annual growth rate (CAGR) of approximately 10% over the next five years, with the US growing at 5% and emerging countries growing in the double digits. He says there is no start-up cost for capital equipment and the per-procedure cost for bnx disposables is approximately $300. He maintains that price has not been an issue with the device, as Medicare reimbursement for EUS FNA is almost $1,000 per procedure. He also notes that in 2011, EUS was the only CPT code in GI that actually had an increase in reimbursement. Beacon Endoscopic was founded in 2010 by Tinkham and Christopher Thompson, MD, and it has raised $11 million to date through angel investors and venture capital firm MVM Ventures. It expects to hit profitability by mid [A# ] Anne Staylor is Senior Editor for Medtech Insight ( A.Staylor@Elsevier.com) RELATED READING GI Endoscopy: Thriving on Innovation Medtech Insight, June 2010 [A# ] Capsule Endoscopy: Poised For Growth Medtech Insight, August 2012 [A# ] A Bright Future For Optical Imaging Medtech Insight, December 2011 [A# ] Mauna Kea Technologies Takes Confocal Microscopy to the Tissues: An Interview with Sacha Loiseau Medtech Insight, September 2008 [A# ] ACCESS THESE ARTICLES AT OUR ONLINE STORE

11 009M_END MedTech Insight_Layout 1 9/24/13 8:27 AM Page 1 Fuse. Full Spectrum Endoscopy. Find what traditional endoscopes are missing. Colonoscopy is widely accepted as the gold standard for screening, surveillance, and diagnosis of lower GI diseases. However, endoscopy technology has not changed significantly in decades and interval cancers still occur1. In a tandem study using traditional forward viewing (TFV) endoscopes, Rex et al. found they missed 24% of the adenomas in the first colonoscopy. Since that landmark study, other technologies have shown the miss rate for TFV to be 31%2. How was this achieved? Traditional endoscopes provide no more than a 170 field of view. Fuse Full Spectrum Endoscopy provides a 330 field of view, allowing the endoscopist to see nearly twice as much anatomy as traditional endoscopes. In another multi-center tandem trial, the Fuse endoscope system demonstrated the miss rate on adenomas with TFV was 42%. Out of 88 patients, a total of 48 adenomas were observed. TFV identified 28 adenomas. Fuse observed an additional 20 adenomas. This means an additional 71% more adenomas were detected by Fuse that traditional forward viewing endoscopes missed3. Conversely, when the patient received a colonoscopy with Fuse first, followed by TFV, the researchers had an adenoma miss rate of only 8%. TFV Gralnek et al. Adenoma Miss Rate TFV 42% Siersema et al. TFV 42 % Miss Rate with TFV endoscope 8% Miss Rate with Fuse endoscope % 24% Fuse Endoscope 71 31% Rex et al. Traditional Endoscope Limited 170 Field of View Full 330 Field of View Incremental adenoma find rate with Fuse CE Marked, FDA 510(k) cleared Gralnek et al. 8% To schedule a Fuse experience, call your EndoChoice sales representative, or the EndoChoice Headquarters, at x.5, or fuse@endochoice.com. EndoChoice.com/Fuse (1) Rex et al. Gastroenterology 1997; (2) Siersema et al. World Journal of Gastroenterology, 2012; (3) Gralnek et al DDW AGA/ASGE Plenary