Five Questions for Seattle Biotech, Medical Device Leaders About the Year Ahead

1/21/09Follow @xconomy

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So when the environment is good, you take advantage, and you don’t wait until the last minute for anything.

X: Every year, bankers like to say acquisitions and partnerships between biotech and pharma companies are going to pick up because pharma needs innovative new drugs, and biotechs need cash to develop them. Do you really see this trend truly accelerating this year, and if so, why? (For this question, substitute big medical device companies and small medical devices in the roles of pharma and biotech.)

RS: I look at it from the device perspective, and the cardiovascular perspective. In cardiovascular, the space we are in, with percutaneous valve technologies, it’s one of the last big markets of interventional cardiology that can move the needle. You have stents, which are a multi-billion market opportunity, peripheral artery disease, which is a multi-billion dollar opportunity, you have CRM (cardiac rhythm management, pacemakers, et al), and the fourth pillar is structural heart, which is where we are.

We’re interested in the Big Five (medical device companies) and they all have strong franchises in interventional cardiology. When they look at an opportunity that can provide revenue on the scale of stents, peripheral artery disease, and cardiac rhythm management, percutaneous valves within the structural heart segment is it. When you look out five to 10 years, you can’t see what’s next. There’s nothing emerging that clearly has that kind of market opportunity. That’s a long way of saying, yes, I think there will be a lot of activity this year, in spite of the economic climate.

X: What kind of companies, technologies, and people will be resilient enough to survive this downturn?

RS: The technologies have got to be ones that make a big difference in whatever market you’re in. So me-too products, or a replacement for some other product will not do well. If you’re number three in your ability to get to market, you’re not in good shape. You need to be positioned as No. 1 or No. 2. You need good, solid financial backers. In the venture environment now, even the good, strong venture backers are having trouble. So they’re deciding which are their best companies, and which ones they’ll back or not. You have to be best of breed to survive.

To me, this economic downturn is no different than every day in a startup. Because startups are a series of enormous highs and very deep lows. You have great advances, and things are going well, and inevitably you’ll have a problem thrown at you. If you don’t have the resiliency to deal with that, you shouldn’t be in a startup anyway. So you got to be able to just maintain a positive attitude and keep your objective in focus, and get there.

X: Who would make a good FDA commissioner, and why?

RS: I really don’t know. I’ll just honestly tell you I don’t have any candidates in mind.

X: What’s the most surprising impact of the past year’s economic turmoil on your plans for this year?

RS: Last year, we hit all our milestones. Every single one of them. We’re very close to achieving a couple more that are extremely important. I would say that in spite of the economic downturn, the most surprising thing is the level of interest in the company, from the industry itself. You’d suspect that nobody would be interested in anything, and that’s not the case.

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  • http://mediligence.com/blog Patrick Driscoll

    Great insights here. From tracking activity at medtech startups, I anticipate a big impact of the financing squeeze being that the young medtech companies with promising innovation (and there are many) will become prime acquisition targets in 2009.