Pathway Medical Cuts One-Fifth of Staff as Fundraising, Sales Projections Fall Short

5/4/09Follow @xconomy

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of hospital budgets, and extra cost-effectiveness tests that administrators are requiring before doctors can order new technologies. “It used to be that when doctors said they wanted a new technology, they got it,” Buckman says.

This has put a damper on sales growth. As I reported back in February, more than 100 physicians had purchased the device, and three months later that number has now grown to about 150, said Stephanie Amoss, Pathway’s vice president of marketing. More than 1,000 patients have been treated with the device now, she says.

Still, Pathway is learning from its customers that it has more work to do. It is working on larger devices to cut through wider parts of clogged leg arteries in the thigh, and narrower versions that can slide through and carve out blockages below the knees, Buckman says. The company is also working to add another product that’s compatible with more than one type of sheath that doctors use to insert into arteries, particularly a smaller one that doctors prefer to use in more elderly, fragile patients, Buckman says.

“Right now, we’re playing in about one-third of the market,” Buckman says. “In September, and even in February, we didn’t know what we didn’t know,” about the market.

The cutbacks will run across all departments, and will affect 13 sales reps spread around the country, as well as 26 employees at headquarters in Kirkland, Buckman says. The savings are intended to make the company’s cash last long enough so that it can cross the break-even point in the first half of 2011, without having to raise more investment capital, Buckman says. He vowed to the company’s investors and board that this would be Pathway’s last financing, and he says he intends to keep his promise. The company has already raised more than $120 million since it’s founding in 1998, so it will require a hefty acquisition to get big returns on that investment.

“We’re not being forced to do this, but we don’t want to raise any more money,” Buckman says. “We want to make the money last.”

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