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NxStage Medical Rebounds on Wall Street, Looks to Grow Home Dialysis Biz

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$25 million a year into the project at DEKA since 2007, according to its annual reports for 2007 and 2008. Baxter’s system was expected to enter clinical trials in 2009.

Burbank says that machine that DEKA is developing for Baxter is likely to be years away from the market, and he believes that the competition from Baxter will actually help grow the market for home hemodialysis. Unfortunately, there has been a rapid increase in the number of Americans with diabetes and high blood pressure, the two leading causes of kidney failure. There are already more than half a million people in the U.S. with kidney failure that requires dialysis treatment, and many more with less-severe kidney problems that may end up on dialysis, according to the National Institutes of Health.

Kidney transplants are the best option for people with kidney failure, but someone could wait for years for a donated kidney. Yet the vast majority of patients with kidney failure are treated with hemodialysis in clinics. Though those patients typically go to their dialysis centers three times a week, Burbank said, studies have shown that more frequent hemodialysis helps patients stay healthier and live longer. (The company has also gathered evidence that use of System One reduces depressive symptoms, compared with patients who traveled to dialysis clinics.) He decided to start NxStage to develop machines that could be used by patients in their homes, where patients could more easily get more frequent treatments than traveling to a dialysis center. Hospitals are another large market for the company’s portable systems, which can be brought into a patient’s room rather than moving them to a dialysis clinic.

Still, there are an estimated several thousand patients using NxStage’s system. (The company doesn’t reveal exact numbers of patients.) And while the system offers potential health benefits, Burbank says that the company believes that its market is about 10 percent to 15 percent of people with kidney failure. He agreed that patients who want to adopt the firm’s technology are those who want to take charge of their care. (The truth is that many sick patients don’t take pills like they’re supposed to, which means that taking on the responsibility of managing hemodialysis in their homes may be too much for some people.)

A big plus in the company’s strategy is that it’s not entirely focused on selling equipment. Rather, the company receives about $18,000 per patient per year, a sum that covers the use of the system as well as the disposable cartridges and supplies of dialysate, which is the fluid used to clean the patient’s blood and replace electrolytes during hemodialysis. This means that the company gets recurring revenues from each system it deploys, rather than relying on one-off sales of medical equipment for all of its revenue. The 1,400-employee company also sells accessories for hemodialysis machines.

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