By Mark McCarty, Regulatory Editor
The 2011 draft guidance governing when a change to a class II device should trigger a new regulatory filing was highly controversial, and Congress instructed the FDA to withdraw the document. However, Yarmela Pavlovic of the San Francisco office of Hogan Lovells told Medical Device Daily that the revised draft released in August is not only more nuanced, it also forces companies that previously may have been less than fully diligent about such matters to make the same effort as their more meticulous brethren.
The Center for Devices and Radiological Health penned a new "510(k) changes" draft in August, the second attempt to overhaul the K97 memo, which as its name suggests came into being in 1997. One of the controversies surrounding the 2011 attempt was that it seemed to ensure the agency would be swamped with a large volume of additional regulatory filings at a time when the FDA's resources were already strained.
Some who commented to the docket for the 2011 version suggested the K97 memo and the quality systems regulations would suffice to handle any concerns the agency had about industry's understanding of when a device could be altered without the need for a new 510(k) application. Industry lobbied Capitol Hill intensively as the discussion of the 2011 version unwound, however, and Congress responded by requiring the agency drop the document via the Food and Drug Administration Safety and Innovation Act of 2012. (See Medical Device Daily, Aug. 8, 2016.)
Pavlovic said any effect on the volume of 510(k) filings that would stem from adherence to this latest draft guidance would likely be negligible, at least from the agency's standpoint. "I do think for some manufacturers, it will increase the frequency with which they will file 510(k)s, but not nearly the extent to which" the predecessor draft would have required, she said, describing this latest iteration as "a more nuanced version of the 2011 draft," which she characterized as more of a sea change.
In the past, the FDA often seemed to take the position that more than one change to an existing 510(k) design or labeling was cause for a new filing, but there are instances in which even a single change clearly requires a new 510(k). "Some industry players weren't always doing that, so you occasionally had circumstances in which [the latest configuration of a device] looked quite different" from the existing clearance, Pavlovic observed.
Pavlovic said this new draft may go a long way toward ensuring that no one benefits from the use of regulatory short-cuts, in part because the draft is more explicit about a need to document the rationale for not filing a new 510(k) application. Once the draft is finalized, device makers will "have a better sense of whether your competitors are taking the same approach you're taking," because implementation of the documentation mandates "puts everyone on a more flat playing surface," she said.
The draft puts more emphasis on risk analysis – which seems part of a trend given the additional emphasis on risk analysis in the recently completed overhaul of ISO 13485 – and hence a device maker will have "more to work through in making your determination" as to whether the change calls for a new 510(k), Pavlovic said.
This is "probably comforting for some in industry" who already are scrupulous about such matters, Pavlovic continued, but the ever-present matter of documentation is not going away because any failure to document a decision not to file "will show up in an establishment inspection report," even if the issue does not warrant a mention in an inspectional form 483 or a warning letter. Recent FDA warning letters frequently cite companies for failure to file new 510(k) applications for changes made to a device, such as the Sept. 20 warning to Collagen Matrix Inc., of Oakland, N.J., over a change in packaging for the company's dental bone filler. (See Medical Device Daily, Oct. 12, 2016.)
Whether the new draft will hit with a thud depends, to some extent, on the company. "Some manufacturers are already filing 510(k)s" in a manner that reflects the terms of the draft, Pavlovic said, but she indicated that the Office of Device Evaluation "is pretty overworked as it is," hence the need for a less ham-fisted approach than was reflected in the 2011 effort.
Despite any trepidation manufacturers may have about this new framework for the 510(k) changes question, Pavlovic said it is a far more modest proposal than the 2011 draft, and more useful in many ways than the K97 memo. "I see it as a more measured approach" to the question than the agency came up with five years ago, she said, adding, "it does provide more meat compared to K97," thanks to the flowcharts included in the document.
The additional documentation requirements will work out well for firms, too, because the additional documentation gives a device maker "a little more to lean on if an inspector raises questions," Pavlovic said. //
By Amanda Pedersen, Senior Staff Writer and Liz Hollis, Staff Writer
Abbott Laboratories and St. Jude Medical Inc. have kept analysts' busy this week, sifting through both companies' third quarter financials, looking for the read-through of Tuesday's $1.12 billion deal with Terumo Corp., trying to make heads or tails of Muddy Waters' latest cybersecurity attacks against St. Jude, all the while getting little clarity about the $5.8 billion elephant in the room otherwise known as Alere Inc.
And yet, after nearly eight months of turbulence related to Abbott's pending merger with Alere, one of the most surprising takeaways from Abbott's call Wednesday was a constrained-but-positive comment from CEO Miles White when analysts prodded rather gently for outlook on that deal.
"First of all, Alere is not a sensitive subject," White said after Larry Biegelsen, of Wells Fargo Securities, prefaced his question with "I know it's a sensitive subject."
The CEO was careful to limit his comments regarding the pending transaction, which was recently the subject of a breach of contract suit filed by Waltham, Mass.-based Alere, but he did provide some insights for analysts to chew on.
"We are pursuing all the necessary regulatory approvals for the deal. And at this point, that is the path," White said. "... We're doing everything we're supposed to do on the contract," he added, and other than that, the company will just have to "see what happens."
Biegelsen's question followed one from Rick Wise, of Stifel Nicolaus & Co., who led into his question by acknowledging there has been "a lot of public noise" about the deal, but said the question he hears most is simply if the long-term, post-merger opportunity that Abbott initially saw in Alere is still there.
"Do you still see it as basically intact, and the plug-and-play for the portfolio – Abbott diagnostic portfolio – still makes sense?" Wise asked, rephrasing the question as "where are you today on Alere?"
White agreed that there has been a lot of noise about Alere, and it has come from a lot of places, but "not us." It's not prudent for Abbott to respond to such noise, he said. As to the strategic rational for continuing to pursue the acquisition, White's short answer is yes, the company does still like what it sees in Alere's products and businesses.
"Is the long-term, post-merger opportunity and fit there? Yes, it is," White elaborated. "And I've never wavered on that. And I believe that right now, even this minute."
While the CEO did not provide any anticipated closing time frame, BTIG's Dane Leone noted in a report after the call that it was "good to hear a more conciliatory tone" from Abbott, but "some of that may have been a function of the recent court mediation."
Alere took its Abbott Park, Ill.-based suitor to court in August for breach of contract, accusing Abbott of dragging its feet in obtaining regulatory approvals for
the deal. (See Medical Device Daily, Aug. 31, 2016.)
The allegations stemmed from what Alere – and several analysts – perceived as waffling on Abbott's part, after Alere failed to file its annual report for last year on time and then found itself in the cross-hairs of federal investigators looking into the company's third party dealings in Africa, Asia, and Latin America as part of a Department of Justice investigation that cited the Foreign Corrupt Practices Act.
Abbott became fairly tight-lipped from that point, and White declined to offer much of an update on the Alere deal during Abbott's second quarter earnings call in July, other than to say that there was "no change" and that he had "no particular predictions to make" about the fate of the deal because he is not an odds-maker. Those remarks came after Alere disclosed in an April SEC filing that it had refused an offer from Abbott to terminate the deal in exchange for a payment of $30 million to $50 million. (See Medical Device Daily, Aug. 31, 2016.)
In early September, the two sides agreed to mediation, and Abbott has since been ordered to alert Alere of any future discussions with antitrust regulators. A preliminary injunction hearing on Alere's claims is scheduled for Jan. 27, if necessary, and Alere stockholders are expected to vote on the proposed merger Friday.
ABT-STJ still on track
White said Abbott is, indeed, on track to close its $25 billion St. Jude acquisition, which St. Jude CEO Michael Rousseau also confirmed during his company's earnings call Wednesday.
While it's too early for Abbott to offer 2017 guidance, particularly as it relates to the deal, White did provide some reassurances that he expects underlying growth to be strong next year and that there is "a lot of growth to be seen" in St. Jude also.
Abbott reported total revenue of $5.30 billion, up 2.9 percent on an as-reported basis and up 4 percent excluding foreign exchange impact, which was just above analyst consensus. St. Jude reported net sales of $1.5 billion, a 12 percent increase on an as-reported basis and 2 percent bump on a comparable constant currency basis.
St. Jude shareholders are expected to vote on the proposed acquisition Oct. 26, and the pair already has identified senior team leadership to take charge upon the deal's closing.
That vote of confidence came a day after the company a $1.12 billion cash deal to sell assets from both companies to Tokyo-based Terumo. (See Medical Device Daily, Oct. 19, 2016.)
The company didn't take questions, saying it has withdrawn its guidance ahead of its anticipated buyout by Abbott.
Muddy Waters strikes again
St. Jude continues to find itself the target of attack by investment research firm Muddy Waters LLC and cybersecurity experts at Medsec, which have made aggressive moves to show St. Jude's implantable heart devices have lax cybersecurity. In August, Muddy Waters reported a "strong possibility" that close to half of St. Jude's revenue "is about to disappear" for roughly two years. The authors also called for a recall of St. Jude's pacemakers and implantable cardioverter defibrillators. (See Medical Device Daily, Aug. 30, 2016.)
Rousseau criticized Muddy Waters and Medsec during Wednesday's call for using tactics intended to "sensationalize, confuse, and misrepresent" in order to enrich themselves. He said the two firms have no regard for patient safety and emphasized that St. Jude takes cybersecurity very seriously, and has a history of working with regulators and other experts to develop standards in this area.
Timed to coincide with St. Jude's earnings call, Muddy Waters, a short-selling firm, and Medsec posted a series of videos to a new website Wednesday, purporting to demonstrate the lack of security of St. Jude's devices. Both Muddy Waters and Medsec stand to gain financially from a decline in St. Jude's share price.
It's not uncommon for cybersecurity researchers to reach out to companies regarding the discovery of possible vulnerabilities, but St. Jude said neither Muddy Waters nor Medsec ever contacted the company with their claims before going public with the concerns.
Analysts on Abbott's call also tried to pick White's brain about the cybersecurity claims and any potential impact it could have on the combined company after the deal closes. White simply said St. Jude has handled the situation "pretty well, pretty thoroughly," not only by taking it seriously and initiating its own investigations, but by keeping Abbott in the loop on the situation.
"I have to say, they definitely put patient safety and patient credibility, and physician credibility and the product performance and so forth, first," White said. "They've done all the right things."
Abbott's stock (NYSE; ABT) slipped 2.82 percent ($1.16) to close at $40.01 Wednesday, while St. Jude's shares (NYSE; STJ) closed at $78.70, down 0.93 percent (74 cents) from its opening price.
A single-port laparoscopic device designed to knock down a key barrier in the space has earned a financial boost just days ahead of the product's official U.S. launch.
Chemelot Ventures led Fortimedix Surgical B.V.'s €11 million series A round to support the company's FMX314, which recently won both FDA clearance and a CE mark, and is compatible with a standard-sized trocar that laparoscopic surgeons are most familiar with.
Fortimedix, of Nuth, Netherlands, plans to launch the device in the U.S. at the American College of Surgeons Clinical Congress next week in Washington, with a European launch to follow in 2017. The company said the FMX314 is the first single-port device compatible with a standard 15 mm trocar for abdominal laparoscopic surgery. MKB Leningenfonds, and Rijksdienst voor Ondernemend Nederland (part of the Dutch Ministry of Economic Affairs) also pitched in cash for the series A round.
"The biggest barrier to minimally invasive surgery has been the size of the available devices," Santiago Horgan, chief of minimally invasive surgery at the University of California San Diego Health, told Medical Device Daily.
Since the introduction of natural orifice translumenal endoscopic surgery (NOTES), a development Horgan has played a key role in, laparoscopic surgeons have been trying to cut down on the number of ports they use to only one. This advancement in the space, called single-port surgery, fills the gap between conventional five-port laparoscopic surgery and NOTES. Single-port still enters the abdomen from the outside, while NOTES enters the abdomen from the inside (lumen).
Existing single-port systems require a trocar that is more than 25 mm in diameter, which is larger than the standard trocar used to remove a gallbladder, Horgan said. Most laparoscopic surgeons simply are not comfortable using a system that size for the cases they do, he added, "but the momentum is there."
Horgan recently performed the first two U.S. commercial procedures with the new system to remove the patients' gallbladders. It was not the surgeon's first time using the device, as he has been involved with the company through the development and trial phase as a consultant, but it was his first two U.S. cases with the technology. More importantly, he said, it was the first time his U.S. surgical team (nurses and other operating room assistant), had been involved with a procedure with the FMX314.
"I was impressed with how quickly they adapted to the new device," Horgan said. "The first case took 40 minutes, the second case took 30 minutes, so there was a very short learning curve for the surgical team. Nobody felt overwhelmed by the size of the device, nobody felt threatened – which are things that may happen in the operating room. Everybody felt comfortable with the technology very quickly."
Being aware of how a new technology impacts the entire surgical team, not just the surgeon, is important, he said, because the field has shifted to emphasize a team approach in the operating room, a trend that he said has emerged just over the past 10 years of his 25-year surgical career. From a business standpoint, keeping the learning curve short for the entire team also tends to make a difference in terms of adoption rate once the product is on the market, he said.
Horgan said the new device could help reduce the rate of port-site complications, lessen the amount of pain patients experience after surgery, and lead to faster recovery and "exceptional cosmesis in comparison to conventional multi-port laparoscopic surgery."
As such, Horgan said he expects the Fortimedix technology to have an impact on the space, as the lower-profile solution is likely to be an attractive benefit to surgeons, especially as the company continues to develop the platform and release newer generations. Horgan said the Center for the Future of Surgery at UC San Diego Health averages 800,000 laparoscopic cases a year in which the FMX314 could potentially be used.
Chemlot Ventures' Casper Bruens, a managing director at the Netherlands-based firm, said the device has the potential to "deliver on the promise of single-port laparoscopic surgery." Chemlot has backed Fortimedix since 2004, the company from which Fortimedix Surgical emerged in 2012.
By Amanda Pedersen, Senior Staff Writer
San Diego-based Biocept Inc. has been on a roll this year to carve out a spot for itself in the emerging field of liquid biopsy and personalized medicine. A $10 million offering of common stock and warrants is the company's latest move to support its expanding menu of available companion tests for immuno-oncology therapeutics.
The company said Friday it would sell stock (9.1 million shares) and warrants (for 9.1 million shares) at a combined price of $1.10. The warrants will be good for up to five years. The offering, which is expected to close Wednesday, includes a 30-day over-allotment option for additional shares (up to 1.365 million) priced at $1.03 each, and/or warrants (up to 1.365 million) priced at $0.01 per warrant.
Biocept has been focused on its blood-based liquid biopsy platform, which is intended to guide physicians' cancer diagnosis and treatment decisions based on molecular markers in both circulating tumor cells and in plasma. According to Chris Lewis, of Roth Capital Partners LLC, Biocept holds a leadership position in liquid biopsy and personalized medicine. The analyst noted the company's product expansion, IP portfolio and recent collaborations with major cancer centers as indicators of strong momentum in Biocept.
In May the company reported a partnership with Rosetta Genomics for a proof-of-concept study to determine the usefulness of microRNA profiling of circulating tumor cells as part of lung cancer diagnostics, and another with the Houston-based Baylor College of Medicine to develop a liquid biopsy test for mutations in the estrogen receptor gene, which play a role in identifying the roughly one-third of breast cancer patients who may easily become resistant to certain endocrine therapies.
In August, the company delivered double-digit sequential volume growth for the fifth consecutive quarter, with total revenue of $663 million, beating consensus expectations and representing growth of nearly 800 percent. Significant billable sample volumes growth exceeding 194 percent drove most of the success in the quarter.
The company signed an agreement at the end of August with Teneovita Medical Innovations to distribute Biocept's full range of liquid biopsy products in Canada. That followed earlier expansions of the company's Target Selector products in Israel, Mexico, and the Philippines.
VCS TAKE A SHINE TO COMPANY
The venture capital community has also taken interest in the molecular diagnostic company, with Aspire Capital agreeing to buy $15 million of Biocept stock last December.
Biocept launched its PD-L1 protein expression test in mid-June, making it the first CLIA-validated blood test for detecting PD-L1 expression on the market. Determining PD-L1 status is required for patient's to qualify for treatment with certain immuno-oncology therapeutics because patients expressing the protein are more likely to respond to anti-PD-L1 therapeutics, such as Keytruda (pembrolizumab) for metastatic non-small cell lung cancer (NSCLC).
According to Raghuram Selvaraju, of H.C. Wainwright & Co. LLC's Rodman & Renshaw unit, physician adoption of Biocept's PD-L1 test has been robust, as it is designed to track and monitor protein expression without the need for invasive tissue sampling and can potentially catch PD-L1 expression in heterogeneous tumors that may be missed by simply testing tissue samples.
"Immunotherapy is among the most promising strategies being developed in oncology," Selvaraju said, adding that he expects Biocept's PD-L1 test to continue to drive test demand among patients that may benefit from anti-PD-L1 drugs, along with the company's other lung cancer biomarkers for targeted therapies such as Tagrisso (osimertinib) for EGFR T790M mutation-positive NSCLC.
Despite analyst enthusiasm for the company's potential, the stock (NASDAQ; BIOC) dropped 21.64 percent (26 cents) Friday to close at 93 cents.
With a market opportunity in the billions (as much as $20 billion by some estimates), diagnostic companies are rushing to open the liquid biopsy floodgates with new tests designed to make finding and monitoring cancer as easy as a blood draw or urine sample. The true clinical impact of the technology remains to be seen and there are some early limitations of these tests that will need to be addressed, but some doctors say liquid biopsies could really transform cancer treatment. Several key players in the space have invested significant resources into validating the power of both blood- and urine-based cancer tests, and the outcomes of some of that research has been presented at recent clinical conferences, including the annual meeting of the Philadelphia-based American Association of Cancer Research.
Interest in liquid biopsy is driven by the potential advantages the technology offers over invasive tissue biopsy, along with the potential for actionable information for treatment decision and patient monitoring.
By Mark McCarty Regulatory Editor
Electrophysiology devices made by Minneapolis-based St. Jude Medical Inc. are back in the bad news column due to an unexpected depletion of batteries the company said is associated with a buildup of lithium deposits. The problem could lead to complete battery failure within an hour of the sounding of an alert, but Wall Street sees the problem as limited as demonstrated by the fact that the announcement drained only about three percent from the value of the company's shares at the New York Stock Exchange.
One of the first sources to break the story was Muddy Waters Research LLC, the investment research firm that previously had disclosed information about the possibility that St. Jude's pacemakers and defibrillators could be hacked. That information is reported to have come to Muddy Waters from cybersecurity start-up Med Sec, and Muddy Waters disclosed the information in August and took a short position on St. Jude stock. That disclosure shaved seven percent from St. Jude's share prices.
The reports of battery problems come at a particularly sensitive time given the impending acquisition of St. Jude by Abbott Park, Ill.,-based Abbott Laboratories, which would represent a per-share value of roughly $85 for a total value of $25 billion. An investor's note from senior analyst Larry Biegelsen of Wells Fargo noted that two physicians had advised Biegelsen that the problem with the batteries in implantable defibrillators and cardiac resynchronization therapy devices "would have a modest negative impact" on the company's shares despite any reaction from cardiologists.
However, Biegelsen pointed out that St. Jude does not yet have any pacemakers or ICDs labeled as MRI-compatible, an increasingly important segment of the EP market, and that ICD sales will account for roughly one quarter of St. Jude's revenues for 2016. St. Jude ran into a problem with cardiologists over problems associated with the company's Riata line of EP leads, which the company withdrew from the market in 2010. The associated lawsuits were settled in early 2015 for roughly $15 million.
The battery problem affects nearly 399,000 units manufactured prior to May 23, 2015, all from the Fortify, Quadra, and Unify lines of devices. Approximately 840 of these were returned to St. Jude for analysis, and 46 of those units are said to have exhibited lithium clustering between the cathodes and anodes, with the obvious implications for short circuit. Two deaths have been reported in association with the problem, but it is not clear whether St. Jude was manufacturing the batteries in-house. At present, roughly 350,000 of the devices remain implanted in patients or are otherwise unavailable to the company.
The FDA issued an Oct. 11, 2016, alert stating that the device should be replaced immediately upon activation of the elective battery replacement indicator alert. The agency said there is no known method for determining when a battery associated with an alert would fail, and that depletion would not necessarily be universally reported to the FDA or the manufacturer, leading to some uncertainty as to the true rate of premature battery depletion. The agency did not recommend prophylactic device replacement as the rate of complications associated with device replacement exceed those associated with battery depletion.
Inspection of firm associated with recall
A November 2015 inspection of Collagen Matrix Inc. (CM), of Oakland, Calif., for the company's manufacture of its Zcore porcine xenograft particulate (syringe form) was followed by a March 14, 2016, recall, suggesting that the inspection drove the recall. The Sept. 20, 2016, warning letter to Collagen Matrix (CM) made note of issues associated with design validation, but the agency also said the company made changes to the device without filing a new 510(k) despite that the changes could have affected the device's safety and efficacy profile.
The class III recall of the device was prompted by reports that the syringes used with the device, a matrix used in bone reconstruction following dental surgery, did not dispense the device readily. The distributor of the device had advised customers to quarantine any unused product, 200 of which had been distributed in the state of Texas. The warning letter stated that CM had received several complaints regarding the syringes, and that the design verification/validation studies failed to establish that the device/syringe combination comported to defined user needs and intended uses.
The warning letter said that CM had vowed to update its validation requirements by the end of March 2016, but that the company had forwarded no confirmatory documentation. The FDA also said the company had changed the device's packaging from the use of a plastic jar wrapped in a blister package to the pre-filled syringe, which the letter said was not described in the 510(k) filing. The agency added that CM had changed the diameter of the syringe's perforated cap and the color of the syringe plunger, noting that testing for leachables should have been conducted prior to releasing the design into distribution. CM did not respond to contact for comment.
By Mark McCarty, Regulatory Editor
The comment period for the FDA draft guidance addressing the use of public gene-variant databases to support clinical validity for next-generation sequencing (NGS) systems is closed, but at least one stakeholder sees a major point of ambiguity that could stymie regulatory review of these high-volume DNA tests. San Diego-based Illumina Inc. said in its comments to the docket that the draft fails to spell out what sort of role these databases will play, speculating that they could serve as anything from industry-wide standards to special controls for specific tests, a difference that could have important implications for premarket review.
The FDA released the public gene variant database/NGS draft in July, at the same time as the agency released a draft guidance for the use of standards for NGS systems for detection of germline disease, two documents the agency has labored over for some time. The FDA conducted a webinar in July to answer questions regarding both drafts, during which the agency suggested it would conduct inspections or audits to ensure the gene databases are well managed for curation, interpretation, and other matters. (See Medical Device Daily, July 8, 2016.)
The draft guidance spells out details such as the documents the agency would need to see in order to approve a database for recognition, along with procedures required to maintain recognition. The draft further pointed to the possibility of third-party recognition procedures and entities, citing the third-party review program for 510(k) applications as an existing use of such regulatory instruments.
The agency stated that data from these recognized databases would "generally constitute valid scientific evidence" that a sponsor could employ in support of a premarket filing, data that could be used, "at least in part," to support claims of clinical validity. Depending on the agency's views of the sufficiency of the evidence supporting the genotype-phenotype relationships as characterized in that database, the agency said it could waive any need for scientific evidence other than that found in the database.
Illumina noted in its comments to the docket that the agency had cleared two of the company's assays based in part on a database for genetic variants, and said there are few industry standards for genomic database formats. However, the company said there are at present "no empirically validated methods to adjudicate differences" between experts on the point of interpretations of gene variations.
In addition to the question of what sort of regulatory role the databases will serve, Illumina asked whether FDA review of applications invoking genetic database information would be subject to "established timelines," possibly a reference to the target review times for 510(k)s and PMAs as provided for in user fee agreements.
The Advanced Medical Technology Association's (Advamed) diagnostic division suggested the agency consider "a wider application of this proposed approach" to include other technologies, such as tests using multiplexed polymerase chain reaction methods. Advamed also urged the FDA to clarify whether the final guidance would pertain in its entirety to proprietary databases as well as public databases.
The association's letter recommended the agency be more descriptive about the meaning of the term "qualified expert" as applied to the draft's language regarding interpretation of the presence or absence of a gene variant. However, Advamed also took exception to the FDA's position that summary literature is necessarily inferior to data made available for independent evaluation, arguing that such a categorical declaration fails to account for the possibility that the literature "can play a vastly important role, particularly in a rapidly moving area such as sequencing."
Another point of interest for Advamed's diagnostic division was the agency's use of the term "validated methods" in the context of the scientific evidence generated by a database. The association pointed out that one interpretation of the term could be validation by means of the CLIA regulations, but also that the methods of validation are likely to evolve, a predicament that would fly against a highly prescriptive definition of the term.
One area of the draft that would seem to suggest a conventional good manufacturing practices approach is the discussion of version control for database standard operating procedures used to govern functions such as aggregation, curation and interpretation. Advamed said this portion of the draft lacks definition, but nonetheless suggested that the version control paradigm be applied to the addition of new evidence regarding the variants housed in the database.
The association further suggested the FDA recommend that operators of the databases adopt a standard database format in an effort to avoid interoperability issues. The group said any guidance the agency could offer regarding the nomenclature used to describe information, such as genetic variants and genomic coordinates, might make such information more readily usable.
In its comment to the docket, the Association for Molecular Pathology (AMP) expressed skepticism as to whether the FDA is statutorily authorized to govern lab-developed testing services, but said also that the agency should work with CMS "to facilitate streamlined coverage determinations and higher payments for tests" that a lab posts in a publicly available database.
AMP said the FDA certification of a test may convey the notion that non-certified databases are less reliable, which the association said would impinge on the practice of laboratory medicine. AMP added that any requirement that a participating database conform to the draft's transparency requirements "may deter some owners of proprietary databases from participating in the program," which could in turn impede the use of high-quality databases as a source for establishing the clinical validity of an NGS test.
By Amanda Pedersen, Senior Staff Writer
Growing up really is hard to do – especially for a small med-tech company in a big pond – but ICU Medical Inc. has "finally delivered" in a transformative way, according to analysts reacting to ICU's $1 billion deal to acquire Pfizer Corp.'s infusion therapy business, Hospira Infusion Systems.
"Small companies either have to get bigger or get consolidated, and it's incredibly hard for small companies to get bigger in maturing markets," ICU CEO Vivek Jain said during a conference call Thursday.
The acquisition will create a pure-play infusion therapy company with combined revenue in the neighborhood of $1.45 billion and is expected to remove a long-standing customer concentration overhang for the San Clemente, Calif.-based company. Despite the many facets of the ICU-Hospira story that make this deal rather unique, the acquisition also makes a lot of sense, according to Jain.
For starters – Hospira began integrating ICU's needle-free technology into its infusion offering globally more than 20 years ago, and both companies have faced a fair amount of challenging transitions. Hospira was spun out of Abbott Laboratories in 2004 and has only been owned by Pfizer for about a year. The drug company acquired the business in September 2015 through its $15 billion purchase of Hospira Inc., which is developing biosimilars, but in July Pfizer indicated that it was looking to sell the infusion products.
ICU faced its own tough situation, Jain said, with one customer controlling 35 percent of its earnings, which he said created a concentration risk that was hard to solve and has been a primary concern for ICU's investors. So much so that he said the company was prepared to accept 16.6 percent primary equity ownership dilution to secure 35 percent of its EBIT, independent of any other transaction that had surfaced.
ICU agreed to pay New York-based Pfizer 3.2 million shares of common stock for roughly $400 million ($125 a share) and $600 million in cash, which Jain said will be split $90 million in retained working capital and $510 million in cash funding. The deal is expected to close in the first quarter of 2017, and the drug maker will own about 16.6 percent of ICU Medical.
The company's total cash outlay, including fees, will be roughly $530 million at closing with $300 million in incremental committed financing in a "very straightforward" term loan, Jain said.
"We recognize the situation of a small supplier buying their customer is unusual, and [Pfizer's] willingness to believe in our team and the opportunity with this asset made this happen," he said.
"We know that all customers have a boss and a budget, and we want them to be successful. And being focused around them is the right first step."
The CEO was frank with its investors during the call and laid out both a best-case and a worst-case scenario for the future. Best case, he said, the deal will allow ICU to execute better to improve its top-line performance, drive operating improvements, and focus on cash conversions and returns. Worst case, the company will continue to fight headwinds on the top line, but will still drive operating improvements and generate solid cash returns over time, he said.
"Investing outside of one's core vertical is dangerous," Jain said, and the company saw the Hospira opportunity as a way to grow within the circle of what the management team understands.
Also, he said, the ability to offer the full product suite was a "unique opportunity to become a big player where ICU has been a small player in a category dominated by multinationals," he said.
ICU's stock (NASDAQ: ICUI) spiked 14.86 percent ($18.72) Thursday to close at $144.68, beating its 52-week high was $128.93.
"After years of building its cash war chest, ICUI finally delivered on the M&A front in a transformative way," said Chris Lewis, of Roth Capital Partners LLC. "While many of the deal's details will take time to fully digest, we are overall positive on the deal as it removes the long-standing customer concentration overhang and grows ICUI into a legitimate pure-play infusion therapy with a complete product portfolio" that adds infusion pumps and IV solutions to ICU's existing offering of IV sets and accessories.
The analyst said he is confident in the long-term value of the deal, but expects 2017 to be a transition year consumed with integration and "choppy one-time expenses."
Jain said the company expects revenues of about $1.1 billion and adjusted EBITDA of about $75 million, which he said is due to the "complicated carveout of a business Pfizer didn't own for very long" that will take significant stand-up and separation costs,
For 2018 and beyond, however, he said ICU aims to be $300 million-plus EBITDA business, assuming the initial costs of doing the deal are offset by the synergies. "We are not pinpointing that as a specific full-year guidance right now, or as the existing run rate for 2018, but bracketing it a little bit," he said.
Doug Giordano, senior vice president of business development at Pfizer, will join ICU's board and the drug company has agreed to an 18-month lockup correlated to successful carveout of the business, Jain said, adding that "ICU provided an incentive for an orderly disposition of the shares through an underwritten offering."
By Amanda Pedersen, Senior Staff Writer
Transenterix Inc.'s Senhance recently scrubbed in, so to speak, to lend its robotic hands to a gynecologic surgeon in Italy during a major cervical cancer procedure. It was the first time the company's recently re-branded surgical robotic system has been used during a radical hysterectomy and, if the surgeon's feedback is any indication, it probably won't be the last time the Senhance is involved with a complex gynecologic oncology case.
A radical hysterectomy involves an extensive pelvic lymph node dissection and removal of the patient's uterus and parametrium, ovaries, fallopian tubes, and part of the vagina. Salvatore Alletti, of the Policlinico A. Gemelli Foundation in Rome, said the Senhance is a promising technology for this type of procedure, because it is designed to enhance the surgeon's precision, camera control, and ergonomics – along with providing the haptic feedback that sets Transenterix apart in the surgical robotics space.
Until about a month ago, the multi-port surgical system was known as the Alf-x, but Transenterix CEO Todd Pope told Medical Device Daily the company re-branded the robot, primarily based on surgeon feedback. After using the system for the first time, surgeons often tell the company that it "enhances their senses."
One of the biggest selling points of the system, Pope said, is that it gives surgeons the sense of touch that they don't get with other robotic surgical technology on the market. "That's such an important feature for a surgeon to have, to be able to feel," he said.
Enhancing the surgeon's performance, as opposed to trying to replace the surgeon, has been a key focus for the company throughout the development process of the system.
"We really feel like this is a great meld of man and machine," Pope said.
Another way the Senhance is designed to enhance the surgeon's senses during procedures is through a 3-D camera and eye-tracking feature that allows the surgeon to move the camera with their eyes instead of having to rely on someone else to drive the camera or having to disengage from the operating arms in order to reposition the camera for a better view, as is the case both in traditional laparoscopic procedures and current surgical robotics, Pope said. The system is designed to track the surgeon's eye movements so that when they move their eyes from top to bottom or left to right, the camera follows their gaze. The feature not only adds convenience but also saves procedure time, Pope said.
The Senhance has a fairly broad CE mark, allowing the robot to be used for general surgery as well as procedures in gynecology, urology and thoracic surgery. The company has received a lot of interest from gynecologic surgeons in particular, Pope said. He said traditionally, surgeons in Europe have been slow to adopt robotic technology because many of the procedures they do are not complex enough to qualify for the higher level of reimbursement they needed in order to justify the investment. In Europe, most of the robotics procedures that are done are prostate procedures, he said.
But Pope said the Senhance system has been developed at a lower cost compared to competing systems, so surgeons can perform even minor procedures with the technology at a lower reimbursement level and it's still cost effective. Now, gynecologic surgeons in Europe have used the Senhance for everything from benign ovarian procedures and benign hysterectomies to the more complicated radical hysterectomies like the one Alletti performed with the system. The system is designed to work within the hospital's ecosystem, he said, by not requiring a lot of additional capital investment, such as specialized beds or trocars.
Transenterix has had a challenging year, including an FDA rejection of its Surgibot robot and an $80.1 million net loss in the second quarter, but Pope said the company is still working with the FDA to provide clarity on the Surgibot and is "encouraged" so far by the progress on that front. He said he plans to update investors on that progress during the company's next quarterly earnings call. The agency rejected the company's original submission for the Surgibot because it did not meet the criteria for substantial equivalence based on the data Transenterix provided. (See Medical Device Daily , Aug. 8, 2016.)
By Amanda Pedersen, Senior Staff Writer
Johnson & Johnson's diabetes unit warned patients this week that the Animas Onetouch Ping insulin pumps may be vulnerable to a cyberattack, but the probability of one of the devices actually being hacked is "extremely low," the company said.
The pump could potentially be accessed through its unencrypted radio frequency communication system, but such an attack would require technical expertise, sophisticated equipment and proximity to the device, according to a letter the West Chester, Pa.-based Animas Corp. sent to patients on Monday. The company noted that the Onetouch Ping system is not connected to the Internet or any external network.
Patients do have the option of turning the pump's radio frequency feature off to prevent unauthorized access, Animas said, but that would also block communication between the pump and meter and blood glucose readings would need to be entered manually on the pump.
Another option would be to program the pump to limit the amount of bolus insulin that can be delivered, using one of several customizable settings, such as the maximum bolus amount setting, the two-hour amount, and the total daily dose setting. If a hacker attempted to exceed or override these settings, Animas said, the attack would trigger a pump alarm and prevent bolus insulin delivery.
The company also recommended patients use the system's vibrating alert feature so that if a bolus dose of insulin is initiated remotely they would have the option of canceling the delivery.
Both of these safety measures – the bolus delivery alert and the customizable limits – can only be enabled on the pump itself, Animas said, and cannot be altered by the meter remotely. The system is also designed to record any insulin delivery and its source (pump or meter remote) for the patient to review.
Animas assured patients in the letter that it has worked with regulatory authorities and security experts to address the issue and that the Onetouch Ping system continues to be safe and effective for managing diabetes. Still, the warning comes at a time when the device industry is particularly vulnerable to cybersecurity concerns.
Last month St. Jude Medical Inc. filed a lawsuit against short-selling firm Muddy Waters Capital LLC, Medsec Holdings Ltd., and their affiliates over a report claiming St. Jude's implantable heart devices were vulnerable to cyberattack. The St. Paul, Minn.-based company said it filed the suit to hold the firms and individuals accountable for their "false and misleading tactics," and to "set the record straight" about the security of St. Jude devices. Shortly after the claims were made, the company's stock (NYSE; STJ), which had been trading around $82 a share before the Muddy Waters report, dropped about 5 percent. The stock has fluctuated between $79.55 and $80.71 over the past month, and closed Tuesday at $79.82. (See Medical Device Daily, Aug. 30 and Sept. 8, 2016.)
Johnson & Johnson's stock (NYSE; JNJ) held steady Tuesday after news of the Animas letter, closing at $118.82, a 0.01 percent increase over the day's opening.
Past problems abound
Cybersecurity issues are not new to the device industry, but it has been a growing concern over the past couple of years. In 2015 the FDA made an unprecedented move by telling hospitals not to use the Symbiq infusion pump from Lake Forest, Ill.-based Hospira Inc., now owned by Pfizer Inc., because of specific cybersecurity vulnerabilities associated with the device. The company later issued guidance on the topic to clarify how existing quality regulations apply to cybersecurity maintenance activities. The topic has also gained attention at industry events over the past year, including the annual meeting of the Advanced Medical Technology Association (Advamed). (See Medical Device Daily, Oct. 7, 2015.)
At a heavily-attended Advamed panel last year, Scott Rea, vice president of government and education relations at Digicert Inc., said device companies would be better off putting a plan in place for when a cybersecurity issue does happen, rather than focusing all the attention on preventing an attack. There is "no such thing" as a perfect solution that will solve all the industry's cybersecurity problems, Rea said.
It may be difficult to understand the motivation behind a cyberattack on an individual infusion pump, or other device, but cybersecurity firm Trapx suggested in a 2015 report that hackers may be trying to hijack medical data, which has become more valuable to cybercriminals than stolen credit card numbers. (See Medical Device Daily, June 10, 2015.)
Medtronic plc dealt with a similar issue with one of its infusion pumps back in 2011 after security software manufacturer Mcafee alerted the company to a flaw in some models of the Paradigm insulin pumps. Mcafee said at the time that such problems could exist with other drug pumps as well, given the devices' increasing use of wireless technology and software.
By Amanda Pedersen, Senior Staff Writer
About 15 years ago Chris Toumazou imagined that if the electronics industry could scale down electronic circuits so that they were smaller, faster, and cheaper to produce – paving the way for consumer-based products like mobile phones and tablets – it might be possible to apply microchips to the health care industry.
Inspired by that idea, Toumazou, a professor at Imperial College London, invented a way of detecting protons released during DNA synthesis to enable DNA sequence detection using a standard silicon-chip based transistor. This optics-free, label-free method shifted DNA sequencing from specialized, expensive genome centers into the mainstream of local labs and primary care clinics. Now, the company that Toumazou founded as a spin-out from Imperial College, DNA Electronics Ltd. (DNAe) is in the late stages of developing a point-of-need solution for rapid DNA analysis – and the platform has attracted the attention of the U.S. government.
The Biomedical Advanced Research and Development Authority (BARDA) awarded the London-based company a contract worth up to $51.9 million to develop its DNA sequencing platform for the rapid diagnosis of antimicrobial resistant infections and influenza. DNAe said the contract will support the development and validation of its Genalysis platform, as well as a series of applications for FDA clearance.
As the father of a boy who lost his kidneys at a young age due to a genetic predisposition, Toumazou told Medical Device Daily that early detection is something he has long been passionate about.
"You wonder, if we detected it early enough, maybe we couldn't have prevented it, but we could have managed it better," he said.
According to the company, the platform will combine the ability to sequence the DNA of the infectious organism, in a sealed microchip-based system, direct from a clinical specimen, with analysis that enables actionable identification of the disease agent within a few hours. The first product will be a rapid blood-to-result diagnostic system aimed at bloodstream infections that lead to sepsis.
DNAe said the new system is already in late stage development and testing and is expected to be ready to launch in 2018.
The collaboration with BARDA demonstrates the suitability of DNAe's next-generation sequencing platform to address a range of clinical needs, Toumazou said, as demonstrated by the application in antimicrobial resistance and influenza testing, where there is a very high unmet need."
When a doctor prescribes a patient a drug, such as an antibiotic, for instance, making sure that person can metabolize that drug quickly becomes critical, Toumazou said. Blood tests can take up to three days to answer those questions, and by that time the antimicrobial-resistant bug has mutated so many times that it's too late, he said.
The Genalysis platform is designed to return results within a couple of hours to guide treatment decisions before it's too late.
The company is also leveraging technology from Nanomr Inc., an Albuquerque, N.M.-based company DNAe acquired in January 2015 for that developed a system for rapid isolation of rare cells in the bloodstream. The acquired technology is designed to target multiple rare cell types such as those contained in bacteria and fungi from bloodstream infections at levels of 1 cell/mL or lower in less than 30 minutes, making it the ideal sample preparation technology for DNAe's rapid point-of-need diagnostic tests, the company said.
By combining the two systems, Toumazou said, "we go straight from sample to result almost on a desktop" simply by taking a blood sample and putting it into something that looks like a mother board of a computer with a microchip, he said.
BARDA had a hand in moving along the development of the automated sample preparation system as well, with a $21.5 million contract awarded to Nanomr in 2014.
Sam Reed, president of DNAe's Washington-based office, who is leading the sequencing program, said the platform can be operated by users who are not specially-trained in sequencing, enabling it to be used in a wide range of near-to-patient environments where sequencing has not been possible before. "Unlike existing sequencing devices, the platform operates 'push button' directly from raw clinical specimens such as blood or swabs, delivering a clinically-relevant report for the physician," Reed said.