Pathway Medical Learns Lessons During Tougher Than Expected First Year on Market

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have done 50 or more procedures, so there are signs that repeat business will grow. If all goes well, about 4,000 patients will get the Pathway treatment by year-end, he says. Back in March, the company said about 100 medical centers had bought its device, and it had been used on 500 patients.

While that might look encouraging, it’s not the kind of breakout performance Pathway had envisioned earlier this year.

“Our projections at the beginning of the year were a bit over-optimistic,” Buckman says. “It is taking longer to get accounts started than we thought.”

For those relatively new to the Pathway story, here’s a little background. The Jetstream device was first approved in July 2008 for patients with peripheral artery disease, in which fatty plaque buildups accumulate in leg arteries, like they do in the hearts of people with cardiovascular disease. An estimated 2 million Americans have sought treatment for peripheral artery disease, complaining of pain when they walk. Most people go undiagnosed now, partly because there haven’t traditionally been many good options for treatment. The Pathway device is designed to work with a tiny stainless-steel drill mounted on a catheter that slides inside clogged leg arteries, where it cuts through and vacuums out blockages.

The company hopes to make its money via a classic razor and razor blade business model. Pathway sells a console for about $15,000 to a medical center in order to power the high-speed drill, and then charges about $4,000 apiece for a disposable component used for each patient, which is where the real potential profit margins are.

Pathway has a few competitors fighting for a piece of this market, although each has a technology that’s quite different. Plymouth, MN-based ev3 (NASDAQ: EVVV) markets the SilverHawk and RockHawk that slice through and scrape out blockages in the legs. Colorado Springs, CO-based Spectranetics uses a laser-based system. St. Paul, MN-based Cardiovascular Systems has a high-speed diamond-tipped cutting tool.

Pathway has tried to separate itself from the pack by showing … Next Page »

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