Pathway Medical Grinds It Out, Seeks Profit Formula, Three Years After FDA Approval

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as seriously as blockages in the heart.

Pathway has focused on chipping away at this market a couple ways. It has continued to win FDA approval for a series of design modifications that don’t require long, expensive new trials, but that do improve the user experience for physicians, Buckman says. One example: Pathway recently won clearance for a new device with an improved guidewire system, which won’t get temporarily stuck during a procedure, even when a doctor is trying to remove a much bigger blockage than the Pathway device is designed to clear out. “It seems like a minor thing, but it was a nice improvement to the device,” Buckman says, because it saved time and hassle.

Like many device and drug companies, Pathway has learned about all kinds of nuances in its chosen market that weren’t totally understood when it was back in pure R&D mode. Pathway’s original device was designed to get rid of blockages in the thighs, where the arteries are like wide thoroughfares carrying blood, and its rotating drill was made to cut at two different diameters—2.1 millimeters and 3 millimeters. But that left a lot of the anatomy—the lower leg below the knee—and a lot of the potential market still untapped. So in the fourth quarter of last year, the company introduced a narrower drill, 1.85 millimeters, for those thinner vessels of the lower leg. Now it is miniaturizing even more, preparing to roll out a 1.6 millimeter drill. By going below the knee, Pathway is hoping to gain access to about 40 percent of the market it couldn’t sell into before.

The opportunity, to hear Buckman tell it, is open for the taking. Stents, the tiny wire mesh devices which cardiologists have used for years to prop open clogged up arteries around the heart, don’t work well in the legs because they twist and break. There’s interest among doctors in improving blood flow in the legs, and a system like Pathway’s, known as atherectomy, makes sense. Since no device gets implanted in the patient, this is a procedure that can be done repeatedly, if a patient needs it. Still, it’s a procedure that takes experience, and carries some significant risks of complications, like puncture wounds.

Pathway won its original FDA approval based on studies that showed it could get rid of big masses of arterial blockage, safely. What it lacked, and what the FDA typically doesn’t ask for, is long-term follow up data that health economists and insurers want to see. These are things like whether the treatment reduced heart attacks, strokes, hospitalizations, and repeat hospitalizations. Those kind of trials take time and money, and since there’s a risk of failure, many device companies aren’t inclined to sponsor them. But as insurers demand more justification for high-priced drugs and devices, Pathway has been listening. It is sponsoring a study in which 500 patients will have long-term follow up analysis done by an independent laboratory, Buckman says.

Getting more data to win over doctors and insurers, getting more engineering improvements out of the R&D team, and getting more productivity out of each salesperson is all part of the formula to get Pathway to the point where it’s profitable, and where it will have more attractive options than going back to the VCs and asking for more money.

“For the short term, it’s about blocking and tackling, gaining market share, expanding our ability to treat the entire leg,” Buckman says. “Those things alone will continue to grow our business. If we do that, it enables us to enlarge our footprint a bit, maybe add some attractive products. It could make us a more attractive acquisition candidate.”

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