Neurotech Executives Report Progress at J.P. Morgan Healthcare Conference

by James Cavuoto, editor
January 2011

More than 8000 investors, financial professionals, and healthcare company executives attended the 2011 J.P. Morgan Healthcare Conference, held in San Francisco earlier this month. Participating in the conference were CEOs of several public and private neurotechnology firms.

Medtronic CEO Bill Hawkins, who will be stepping down soon, explained how his company was doing well despite the “perfect storm” that 2010 presented with its economic downturn, regulatory woes, and payor pushback from healthcare reform. He said the company would continue to look for “tuck-in” acquisitions and mentioned the Ardian purchase as a “transformative business.”

Hawkins mentioned two neuro­modulation product categories as particularly promising: its Interstim line of incontinence stimulators, growing at an annual rate of 28 percent, and DBS, with a 22 percent growth rate. Commenting on potential changes in the FDA's 510k process review, he expressed hope that the government would not raise the bar for new manufacturers. “I want to see this country maintain its advantage in medical devices. If I have to give up a little business it's worth it to advance the U.S. position in the global marketplace,” he said.

Boston Scientific CEO Ray Elliott said his company would be looking for the least-invasive, most cost-effective products to add to its portfolio. He said the company had lots of IP and two opportunities to compete in the hypertension neuromodulation space, which he sees as a $5 billion business by 2020. The approaches include stimulation of baroreceptors and renal nerves.

Elliott also cited women's health and pelvic floor stimulation as good long-term opportunities. And he touted the company's Vercise DBS system, which is currently undergoing clinical trials in Cologne, Germany, along with the recent Intelect Medical deal [see article, p3].

St. Jude Medical CEO Dan Starks touted the company's 11 percent top-line growth. In neuromodulation, Starks said the company has a leadership position in Japan with its Eon Mini device and that SJM would be first to market with neuromodulation system to treat migraine.

Natus Medical CEO James Hawkins said his goal was to make Natus a $500 million company by 2014, and that more acquisitions would be in the works. He said that the company tries to pay about half the valuation of a potential acquired company. Natus' most recent acquisition, Medix, makes a cerebral function monitor that is used to diagnose the severity of brain injuries. It includes a one- to three-channel bedside EEG. Hawkins also said that Natus is taking market share “left and right” from its neurodiagnostics rival CareFusion Inc.

Neuronetics CEO Bruce Shook gave attendees an update on events at his company, including new Category I CPT codes for its NeuroStar transcranial magnetic stimulation system [see article, p4]. Shook detailed his company's target market, which includes 45,000 psychiatrists, 1,300 hospitals with psychiatric facilities, and 500 psychiatric hospitals. He said the company is in the process of raising a $20 million E round.

The company currently has 22 sales territories in the U.S. serviced by an in-house sales force. Shook said Neuronetics looks for psychiatrists who tend to write a lot of prescriptions for depression. Although many patients pay cash for their treatment, which costs about $300 per session, Neuronetics has set up a hotline that helps patients get reimbursement from their providers.

Shook said that customers could break even with just one patient per month, though with two patients they would net $56,000 per year and with six they would clear about $240K per year.

Although not part of the J.P. Morgan Conference, a healthcare conference called OneMedForum took place a couple blocks away and several neurotechnology CEOs made presentations. Among these were Hugh Sharkey of EMKinetics , which is developing a treatment for overactive bladder using surface stimulation of the tibial nerve. The therapy consists of 12 half-hour sessions once per week and then every three to four weeks for chronic patients. The session cost would be about $120.