Ekos, Enduring Tough Year for Devices, Sticks With Goal to Break Even Next Year
Ekos is on a quest to change the way doctors think about how to best dissolve blood clots. Like a lot of bold visions, this hasn’t happened overnight or without some bumps along the way. But even in a very tough year for new medical devices, the Bothell, WA-based ultrasound company has been gradually increasing sales, and has put itself on a trajectory to break even for the first time by the second half of 2010.
That’s according to Ekos CEO Bob Hubert, who I caught up with by phone a couple weeks ago while he was in New York at a medical meeting. He was there for the VEITHsymposium, which gathers vascular surgeons, interventional radiologists, and interventional cardiologists looking to keep up with state-of-the-art tools for treating all kinds of variations of cardiovascular disease.
Ekos started 2009 with a bang, when it raised $12.5 million in venture capital in January to support its push to make a commercial splash. The company’s tool uses ultrasound pulse vibrations, along with clot-busting drugs, to loosen up the clots and dissolve them faster than the drugs can do it alone. The technology first reached the market in January 2007, and this fall, Ekos has refined it into a third-generation product, called EkoSonic Mach4e. The big advance has been to get rid of clots in patients with deep vein thrombosis in as little as one day (sometimes in an outpatient procedure), compared with two to four days with previous versions, Hubert says. About 300 medical institutions in the U.S. have adopted the Ekos technology, and most of them are looking to upgrade to the latest version, he says.
“We did a lot of listening to our customers and came out with a new product that’s easier to use, faster, and allows them to use lower doses of the drug,” Hubert says.
It all sounds good, but it isn’t quite as rosy a picture as Ekos envisioned at the start of this year. Ekos isn’t immune from the tough environment for devices: As unemployment has climbed, people are losing their employer-sponsored health insurance, and postponing elective medical procedures. That means hospitals and government payers are tightening their budgets, and like President Obama, they are increasingly looking for comparative effectiveness studies that would add time and expense to device development.
Ekos doesn’t disclose its sales numbers, but even in this tough climate, sales are up about 20 percent year-over-year, Hubert says. Instead of reaching the break-even point in early 2010, as Hubert said when I interviewed him in January, the company now expects to reach that milestone in the second half of 2010, he says. Ekos will probably raise a little more capital soon to tide it over until it reaches break-even, Hubert says. The company cut about 30 jobs shortly after it closed the financing, leaving it with a staff of about 100.
“The economy has thrown everybody for a loop,” Hubert says. Essentially, even when doctors want a new medical technology, hospitals are slowing down the purchasing process, which caused Ekos to fall short of its internal sales projections, he says.
But there are reasons for optimism, Hubert says. Doctors are starting to come around to the idea that they need to get more aggressive about interventional therapies against deep-vein thrombosis (blood clots in the legs), because of the long-term consequences patients suffer when they go untreated, Hubert says. The condition affects more than 250,000 people in the U.S. each year, and it’s not considered life-threatening, although associated blood clots that break off and enter the lungs are thought to kill 100,000 people a year. Most patients with deep vein thrombosis live with secondary effects, like varicose veins, leg pain, heaviness, or ulcers. About one in 10 patients with the disease currently get interventional treatment in the hospital, Hubert says.
How can Ekos prove that the health care system can actually save money in the long term by paying $2,700 for the firm’s disposable ultrasound catheters, plus clot-busting drugs, and the valuable time of medical personnel?
Ekos says that hospitals can make money on the Medicare reimbursement rates they get for using its technology, but the company isn’t sponsoring any long-term clinical trial that might show the health system really saves money with fewer long-term complications and hospitalization bills. The company’s technology is, however, being tested in a big trial called ATTRACT, sponsored by the National Institutes of Health. That $10 million study will monitor 692 patients for two years after they get one of several different interventional treatments. It will probably take three years to fully enroll the patients, Hubert says.
Even without that kind of comparative data which might help Ekos stand out against competitors like Covidien’s Santa Clara, CA-based Bacchus Vascular unit, or Warrendale, PA-based Medrad, Ekos has started to benefit from word of mouth from physicians who have had experience with its product, Hubert says.
Ekos knows this partly because it is getting orders from resident physicians who trained somewhere on the EkoSonic system, and want to buy one for themselves as they establish their own practices, Hubert says. As opposed to cold-calling on doctors who’ve never heard of the technology, like all companies have to do with a new product, “we’re in the phase of growth where we’re now getting calls from physicians,” Hubert says. “We’re really entering the second wave.”