B. Braun's Bet on Balloons

Until now, B. Braun, one of the oldest players in cardiovascular devices, has been comfortable in its niche. B. Braun's cardiovascular business is actually made up of two units, one that makes products for interventional radiologists and surgeons in the peripheral field, the other on a range of devices used in interventional cardiology. But the investment the company is making in a new technology, drug-eluting balloons, could be disruptive, if not to interventional cardiology, at least to the cardiovascular device companies and none more so than B. Braun itself.

One of the oldest players in cardiovascular devices, B. Braun’s cardiovascular companies have kept a low profile until now. But could the company’s investment in drug-eluting balloons radically alter its profile?

by David Cassak

Though B. Braun has arguably been in the cardiovascular device industry longer than today’s market leaders, few in the industry think of them as among the industry’s front line. Even B. Braun officials tend to see themselves as a smaller alternative to the cardiovascular Big 4.

B. Braun’s cardiovascular business is actually made up of two units, one focused on products serving interventional radiologists and surgeons in the peripheral field, the other on a range of devices used in interventional cardiology.

True to the core values of the larger B. Braun organization, B. Braun has built a cardiovascular device program on principles that other cardiovascular device companies run away from, including a focus on process innovation, manufacturing efficiencies, and product bundles.

That’s not to say B. Braun doesn’t value innovation; in fact, for nearly the past decade, the company has developed and launched one major new product a year, including what B. Braun officials claim is the best bare metal stent in Europe.

Until now, B. Braun has been comfortable in its niche. But the investment the company is making in a new technology, drug-eluting balloons, could be disruptive, if not to interventional cardiology, at least to the cardiovascular device companies and none more so than B. Braun itself.

Officials at B. Braun Vascular Systems, the Berlin-based cardiovascular device business of European device giant B. Braun Melsungen AG, like to point out how different the cardiovascular device landscape was when the business unit was founded in 1990. Virtually all of the companies who formed the vanguard of interventional cardiology then are gone. Market leaders like SciMed Life Systems Inc. (part of Boston Scientific Corp.), the USCI Angiographic Systems division of CR Bard Inc., Cordis Corp. , (then independent, now a Johnson & Johnson operating company), Schneider, and Advanced Cardiovascular Systems Inc. (ACS), then a division of Eli Lilly Inc., no longer exist—at least as independent companies. USCI, Cordis, Schneider, and SciMed would all be acquired before the decade of the ‘90s was done, while ACS formed the core of the medical device business Lilly spun off into Guidant Corp. , which was itself recently acquired by Boston Scientific. [See Deal] [See Deal]

At the same time, today’s Big 4 in cardiovascular devices had little or no position in the market at the time, all having built their business through a series of acquisitions throughout the following decade. Thus, Johnson & Johnson had little more than a coronary stent in development until it acquired Cordis in 1995, while Boston Scientific leapfrogged into a leading position with its deal for SciMed. Similarly, Abbott Laboratories Inc. , which had nothing in cardiovascular devices in 1990 and Medtronic Inc., which had little more, took major stakes through aggressive M&A programs, the former with a series of smaller deals until its recent acquisition of the vascular business of Guidant; Medtronic through its purchase of AVE, which had earlier acquired Bard’s USCI business. [See Deal] [See Deal] [#200610007] [See Deal] [See Deal]

Only B. Braun, say company officials, can claim to have made a significant commitment to cardiovascular devices for the better part of the past two decades. Of course, the fact that B. Braun’s cardiovascular business stands in just about the same position to today’s market leaders that it did to the market leaders of the early 1990s—a small niche player with a barely perceptible market share position—speaks volumes about the way B. Braun has managed its cardiovascular business. Slow, steady investment in organic growth, opportunistically looking for promising niche technologies, has been B. Braun’s strategy—in stark contrast to the high stakes, large-scale, acquisition-oriented approach taken by companies like Boston Scientific and J&J.

Indeed, says B. Braun, nothing illustrates the riskiness of the Big 4’s interventional cardiology strategies over the past decade or so like the fate of drug-eluting stents. The cardiovascular device industry’s one true blockbuster product, DES are facing something of a turning point themselves, beset by safety concerns and a re-thinking by interventionalists. Nothing is more apt, then, that much of B. Braun’s hopes for its cardiovascular business in the future lie in an intriguing new technology, drug-eluting balloons (DEB), that not only takes the company in a very different direction than its much larger rivals, but also challenge their core technology, DES, head-on.

No one, not even B. Braun, is arguing that the company will soon challenge Abbott and Boston Scientific, Cordis, and Medtronic for dominance in the global cardiovascular marketplace. An incremental, conservative approach is too deeply ingrained in the corporate body of the privately-held, 170-yearold German device and supply giant. But built on a business model that has generated solid financial performance for nearly two decades and armed with a DEB technology that they believe could be truly disruptive—disruptive, that is, not to interventional cardiology, but to the cardiovascular device industry because of its direct challenge to DES—B. Braun officials are beginning to make a case for the company’s presence as a player of some importance. "We think we have an opportunity to become a strong alternative to the US companies," says Gerd Wacker, who heads B. Braun’s Vascular Systems unit, its cardiovascular business.

A Play in Peripherals

Owned by the same family since its founding, B. Braun Melsungen ranks as one of Europe’s largest, if not the largest, medical device and supply firms, employing 36,000 people worldwide. B. Braun’s revenues will be €3.6 billion this year, up from €3.3 billion last year. Though B. Braun is truly a global player, not surprisingly, the majority of the company’s sales—some 60%--come from Europe, with Germany by far the biggest part of that (25% of total company sales). North America is, however, quickly gaining in importance, an effort that the company has been pursuing for the past ten years, and now represents around 28% of company sales.

B. Braun is divided into four operating units. Its largest, Hospital Care, makes up just under 50% of total sales and represents a broad-based hospital supply business, with product offerings in anesthesia, intensive care medicine, infusion therapy, and other supply categories used in the general delivery of hospital-based care. The company’s second largest division, and the one in which its cardiovascular businesses are located, is Aesculap AG & Co. KG, a nearly €1-billion business that represents just under 30% of B. Braun’s total sales and includes orthopedic implants and instruments, as well as surgical instruments. Both Aesculap and Hospital Care are growing at just under 10% a year. Smaller, but growing faster, at around 13% a year, are Braun’s other two businesses, OPM (Outpatient Market), which distributes B. Braun products to non-hospital, alternate site facilities, and the Avitum Medical Technology division, a dialysis company that competes with companies like Gambro AB and Fresenius AG.

B. Braun’s cardiovascular business is actually made up of two different businesses, a coronary branch based in Germany and a peripheral business headquartered in the US but with roots in Europe. (One major difference between the peripheral business and the coronary business lies in their very different customer bases: the former calls mostly on interventional radiologists, vascular surgeons, and pediatric interventional cardiologists, the latter on adult interventional cardiologists.)

The roots of B. Braun’s peripheral business go back to the 1970s and a small Poitiers, France-based company, LG Medical, that sold cardiac pacemaker batteries to a then-independent Cordis. That relationship was managed by Allen Freelon, who was running all of Cordis’ European and Asian businesses. A shake-up at Cordis in the late 1980s led to Freelon’s departure and, looking for his next opportunity, he went back to LG Medical and proposed that he become the distributor for a new line of vena cava filters that the company had begun to manufacture.

Freelon and his partner, Paul O’Connell, who now heads B. Braun’s peripheral business, formed VenaTech, based in Evanston, IL, to distribute the LGM vena cava filters in the US and Canada, and had considerable success early on—they grew the business from nothing to $10 million in two years. When, in 1991, B. Braun acquired LG Medical, it also sought to buy VenaTech, all part of an effort to build a cardiovascular business.

Paul O’Connell notes that at the time, he and Freelon knew little about B. Braun, particularly given that the company then had no real vascular business. "We had no idea who they were," he concedes. "But it was clear B. Braun wanted to get into interventional medicine and they saw an opportunity with these products." B. Braun could simply have terminated LG Medical’s relationship with VenaTech and taken on distribution of the line itself, but that would have stalled the momentum the company had begun to build with customers. In acquiring VenaTech, B. Braun was taking on not so much a distributor as the infrastructure that would become its US interventional business. "We were looking for a longer-term arrangement, and they were interested in building on the momentum we had created," says O’Connell.

In fact, the acquisitions of LG Medical and VenaTech were one of a number of small deals B. Braun did early on in the cardiology sector. In the mid 1980s, for example, Braun acquired a US company, Nova Medical, and with it a line of Swan-Ganz catheters, its first cardiology products. Soon after, it completed its acquisitions of LG Medical and VenaTech, it acquired the cardiovascular accessories business, featuring products such as introducers and Y-connectors, from a Minneapolis-based company called Angeion Corp. [See Deal] But B. Braun officials quickly realized that such acquisitions wouldn’t by themselves create a true cardiovascular business.

In an effort to cut costs, B. Braun merged the nascent cardiovascular business with its US-based pain control franchise—the company is the worldwide leader in regional anesthesia—a move which O’Connell notes turned out to be "a serious tactical error." The pain control reps focused on anesthesiologists—a customer group irrelevant to the cardiovascular business. "Soon after the merger, all of the skilled interventional radiology and vascular surgery reps left," he says. Within nine months, the once-fast-growing vena cava filter business was down 65%. "It was like someone threw it out of an airplane," O’Connell goes on. "It just disappeared."

At the time, O’Connell was serving as more of a consultant at B. Braun, focusing on new product development and regulatory affairs, a role he had played when VenaTech was an independent company. But with the US business flagging, B. Braun re-organized again in 2001, creating a separate US Interventional Systems business, which comprised a peripheral and vascular surgery business, to be located within its flagship US B. Braun Medical operations, and the company asked O’Connell to run it.

A Third Generation Filter

At the time, B. Braun’s Interventional Systems was doing around $13 million, and the re-organization helped get the company growing again. Since 2001, it has more than doubled sales, and in January of this year it was spun out of B. Braun Medical into a separate operating company, along with three other US businesses, B. Braun Medical, Aesculap, the surgical instrument company, and Aesculap Implants, B. Braun’s US orthopedic implant and instrument division.

Today, the company’s vena cava filters, now on their second generation and soon to launch a third, remain the key product line in B. Braun’s peripheral offering. Vena cava filters are mesh-like products that capture clots that form in the vena cava, the veins that bring the blood from the legs and pelvis to the heart. In around 600,000 patients a year in the US--patients whose health has been compromised by some other condition, such as cancer or pelvic and long bone fractures or those who’ve experienced prolonged bouts of bed rest—clots form in the veins in the leg and are released by the big muscles in the thighs when patients begin to walk again. About 10% of the time, the clots cause instant death due to pulmonary embolism; another 25% of the patients later succumb to the embolism.

B. Braun’s second-generation VenaTech LP filter, the company’s best seller, is a cone-shaped device that sits in the middle of the vena cava. As clots form and begin to move, they get trapped in the filter and, over time, in the absence of clotting abnormalities, begin to dissolve naturally. A number of companies manufacture vena cava filters, including Bard and The Cook Group, but the market leaders in permanent filters are Cordis and B. Braun, with around 40% and 30% of the market, respectively.

Most of the vena cava filters offered by B. Braun’s competitors are optional devices—they’re inserted for a time while the risk of PE is greatest and can later be removed. (Many surgeons want clot protection only for a short period of time while their patient is recovering.) And B. Braun, too, has optional filters in its pipeline. But company officials are betting on a convertible filter currently before the FDA that O’Connell says could well represent a major advance in the field. What makes the new filter different is that it is a permanent implant.

The problem with temporary filters, notes O’Connell, is that a number of factors can prevent removal, including filter orientation or device incorporation into the vessel wall. B. Braun’s vena cava filter, by contrast, stays in the body, but quickly disappears into the vessel wall when the interventionalist removes the filter’s head, leaving only the filter scaffolding behind and opening the vena cava once again. And in this, the convertible filter represents an advance, O’Connell argues, both for patients and physicians. "One of the things the physician likes to do is to sit down with the patient and tell them there’s no more risk of clotting," he says. "But who knows how long the filter needs to be there? A week? A year?"

Vena cava filters are the biggest product line in B. Braun’s US portfolio—it represents around $30 million a year in sales—and it is also one of the most profitable businesses in all of the US operations. In addition, the company is the market leader in pediatric interventional cardiology, with a line of specialized therapeutic balloons which are hand-made and come in over 1,000 line items. Rounding out the Interventional Systems line are a number of cardiovascular accessories, such as Y-connectors, micro-introducers, and introducer kits, acquired several years ago in the Angeion deal.

A Steady Stream

To a certain degree, B. Braun’s interest in the peripheral business is, like that of other companies focused on peripherals, driven by a desire to find technology niches and clinical spaces that avoid or skirt the major (i.e., coronary) focus of the largest cardiovascular device companies. Perhaps that’s why B. Braun’s coronary device business is a separate company and a continent away. More to the point, if peripherals are a story of a business built to capitalize on opportunities in the here and now, B. Braun’s coronary business, for all of its success over the past two decades, is very much a story waiting to be told.

As noted, the coronary business was launched in 1990. "It just became clear that of all of the important markets in medical devices, cardiovascular devices was one where we didn’t have any business," notes Gerd Wacker, who has headed the coronary business from the very start. Though B. Braun had no existing cardiovascular operations in Berlin at the time, the city seemed a good spot to launch a business, two years after Germany’s reunification, in part because of the available work force, in part because of the number of leading hospitals there; indeed, the company’s drug-eluting balloon was licensed from Berlin’s Charité hospital.

By 1992, using technology acquired from US company Danforth Biomedical, B. Braun was manufacturing the first PTCA catheters in Germany and within the next year it was producing customized kits for angioplasty and angiography. Still, even B. Braun officials concede the company stumbled in its early efforts to establish a beachhead in the cardiovascular market. The Danforth relationship became problematic when the company failed to deliver catheters on a timely basis; worse, by the early 1990s, it became clear that balloons and catheters alone would no longer be a sufficient base of products on which to build an interventional business. As a result, B. Braun was a distant trailer to the leading interventional cardiology companies during its early days and clearly in need of additional products to compete in this growing market. "At the time, our visibility in the market was poor," notes Michael Boxberger, PhD, Director of Clinical Marketing, who has been with the Vascular business since its inception. It wasn’t until B. Braun introduced the Coroflex bare metal coronary stent that the company had what Boxberger calls "our first real breakthrough."

The development of the Coroflex stent is important, not just because it gave B. Braun a competitive stent to challenge those of the cardiovascular giants, but also because it provide a platform for an aggressive product line development. Indeed, by the late 1990s, and particularly for a company that has had such a low profile in interventional cardiology, B. Braun began a string of nearly a decade of surprisingly prolific product launches. In 1998, it launched its Coroflex coronary bare metal stent and followed that, the next year, with its Larus PTCA catheter. Two years later, it launched its Coroflex Delta, a second-generation stent designed to offer enhanced be more flexible than the original Coroflex stent, and the next year began to bundle all of its cardiovascular activities in one operation, located under B. Braun’s Aesculap division. (Until 2002, the different cardiovascular offerings of B. Braun were scattered in different divisions. The decision to gather all of the products in one business within Aesculap was done to gain critical mass in order to compete against the larger CV device companies and to enable the company to make investments in infrastructure such as sales force and customer service.)

That same year, 2002, B. Braun introduced its Coroflex Theca, its first polymer-coated coronary stent—a development effort that would also lead to the company’s drug-eluting stent--and launched a second generation Larus catheter as well. Over the next five years, Braun Vascular would release its fifth generation PTCA catheter, called SeQuent, which features a small rigid tip at the end of a flexible segment to allow for better placement through calcified lesions, as well as its Coroflex Blue, cobalt chromium stent, its Coroflex Please drug-eluting stent, and its Vasculfex SEC carotid stent.

And while B. Braun was slowly building its product portfolio, it was, even more slowly, growing its business. Though company officials tend to see the first Coroflex stent as their breakthrough product, Braun’s share of the global coronary stent market was, five years ago, still only around 2%. It wasn’t until the introduction of the Coroflex Blue cobalt chromium stent that B. Braun had a stent innovative enough to begin to take significant share away from the market leaders in Europe.

Still, the steady stream of products is noteworthy for Braun because they were virtually all internally-developed. Indeed, B. Braun resolutely resisted the opportunity to acquire new technology or product lines even as a host of companies, particularly European firms such as Schneider and Jomed NV, became available over the past decade or so. Not that the company has always been acquisition-averse—as noted, in the early 1990s, the company did a series of small acquisitions to establish an early foothold in cardiovascular devices. But as the company has grown, particularly in its coronary business, acquisition has become much less important. Says Wacker, because of its privately held status, "everything we do, we have to do with our own resources." In fact, B. Braun officials consciously decided that they would not use acquisitions to build their coronary business, given a broader Braun culture that stresses internal development and incremental growth rather than high-stakes acquisitions. "We were told by the board that we were not going to grow by taking over another company," says Wacker.

A Focus on Internal Development

At the same time, new products also have to be profitable immediately and have to reach certain market share goals, usually a minimum of 10% within a short period of time, or B. Braun won’t make the investment—a goal shared by Interventional Systems and all B. Braun businesses. "We had to be profitable every year and had to be able to demonstrate growth and prove that we could build the business within two years," Wacker goes on.

Thus, in the early 1990s, Wacker and Michael Boxberger largely played R&D and business development roles, as they sought to build on existing product lines in an effort to develop a full line of cardiovascular products. But they had to achieve these goals all without buying companies or technology. Surveying the myriad deals that were done in the mid to late 1990s in interventional cardiology, Wacker notes "Our strategy was completely different [from those of the big cardiovascular players]. We grew through our own efforts."

Indeed, Wacker says that "it was very important to our strategy that we didn’t do acquisitions." Asked whether B. Braun was ever tempted to do a deal, if only to quickly gain critical mass particularly when European interventional players such as Schneider or Jomed became available, he says no. For one thing, because of Braun’s focus on internal, incremental development, company officials believe it’s important to develop internally the capabilities to create successive generations of devices.

In addition, that internal expertise in one technology carries over to the development of other devices. Thus, the development of the polymer-coated CoroflexTheca stent was part of a conscious strategy to gain the polymer expertise that would be necessary to develop a drug-eluting stent. Similarly, now working on their sixth-generation catheter, the SeQuent II device which will be launched early in 2008, B. Braun officials insist the development of their coronary stents goes hand in hand with catheter development. "It’s become clear that if you have a stent, you also have to have a catheter—it’s all part of a platform," says Wacker. "For us, it was important, from a long-term perspective, to understand catheter development when we created our stent."

In fact, Wacker wonders how other companies mesh or integrate internal development and acquisition. "When I see a major company with such great R&D capabilities buying a tiny company to get a single catheter, I just don’t understand it," he says. "Our strategy is so different." But more, they argue, the high stakes, acquisition-driven approaches taken by companies like Cordis and Boston Scientific have proven far riskier than many anticipated. B. Braun officials point to recent announcements by both Cordis and Boston Scientific concerning lower than expected DES sales, as well as to moves by Boston, in particular, such as planned employee layoffs and the sale of its cardiac and vascular surgery businesses to Sweden’s Getinge AB, as evidence of the difficulties of navigating the current climate. [See Deal] If B. Braun has grown much more slowly than its larger US-based rivals, it’s also experienced fewer of the peaks and valleys as the interventional cardiology market has evolved. Gerd Wacker concedes that "we haven’t gotten to $1 billion in sales," but he notes, "we’ve grown and we’ve been profitable the whole time."

A Bundled Approach

Talking about the dynamic nature of the industry, Wacker notes, "It has positive aspects but some negative aspects as well." Having eschewed large-scale acquisitions, B. Braun has relied instead on a variety of other strategies, such as targeted geographic expansion—not surprisingly, the company is particularly strong in Germany and Central Europe—collaborations with other companies, and a leveraging with other B. Braun product lines to grow its cardiovascular business.

In Europe, the company has direct specialist sales forces in Germany, France, Italy, Spain, the UK, Switzerland, Poland, Hungary, and the Czech Republic and uses distributors in Austria and Denmark. The company is particularly aggressive in Eastern Europe where, says Wacker, it already has an existing infrastructure giving B. Braun a presence there that most other international companies lack.

In addition, the company is eyeing China, India, and Korea as promising markets . "Ten years ago, there were 10,000 interventional cath lab procedures in China; today it’s 120,000," notes Michael Boxberger. "That’s still less than Germany, but the rate of growth is much higher." Moreover, in China in particular, B. Braun Vascular can take advantage of some of the capabilities and facilities that the broader B. Braun organization is building to tap into the emerging market. "We really can’t put a market potential on these countries yet; they’re not like Europe or the US," adds Wacker. "But we know stent use is high and we have a network of distributors and we think we can get 10% of the market."

B. Braun is also relying on a limited number of strategic alliances, again in a way that other large cardiovascular companies don’t. It currently has two--one with Nipro Medical Corp., a €1-billion-plus distributor who is selling B. Braun’s cardiovascular products in Japan and one with Kimberly-Clark Corp., who supplies the drapes and gowns that go into cath lab kits sold in Europe—and is open to doing more.

As for leveraging other B. Braun product lines and businesses, Wacker notes that the increasing presence of hospital buying groups in Europe, and Germany in particular, has been good for Braun in a way that it hasn’t for other large CV companies. "The buying groups are trying to find more products that they can buy from one supplier," he says. "And so our ability to bundle our cardiology products with other B. Braun products helps us."

B. Braun takes a similar approach at the level of the individual hospital. As noted, the company’s second product introductions were custom kits for angiography and angioplasty. It’s part of what Wacker calls B. Braun’s focus on "process" innovation. "In the cath lab, they need a lot of products for each procedure, and in a lot of cases, those products, such as needles and syringes and other things, are available from B. Braun," he says. "It’s one of our real advantages because we’re the only company with such a wide product portfolio, the only one that can combine so many products to create a total solution for the customer."

Such product bundling is valuable for both Braun and its customers because of the convenience of the kit, but also because it creates a relationship that makes the introduction of its core interventional cardiology products easier. Braun officials concede that physicians still make the call as to which PTCA catheter or stent to use in a procedure. Still, they say, providing the convenience of a kit for the cath lab nurse makes that nurse a "gatekeeper," as Wacker describes it, when B. Braun wants to introduce a new product. "This helps us place some of our more sophisticated products in the cath lab as well," he says. Indeed, he goes on, B. Braun’s focus is "on understanding the complete process of the cath lab, not only the benefits of a stent."

An Incremental Approach

Such relationship building clearly has a geographic component. In Germany, B. Braun is not only the market share leader in cath lab kits, but also leads in coronary stents, with around 30%, company officials estimate. And in a lot of respects, though interventional cardiology remains a valuable market for a company like B. Braun, in Germany at least, a more economically-driven, relationship-based model has clearly taken hold. Indeed, with bare metal stent prices around €200, prices for both stents and catheters in Germany are among the lowest in the world.

Germany—and Europe—remain a market focus for B. Braun. And for right now, the Coroflex stents are approved only in Europe, not in the US. The US market is a tempting one: B. Braun officials estimate that the US stent market accounts for approximately one-third of all stents sold, but 50% of the value of the market. (By contrast, Europe, because of much lower stent prices, accounts for more than one-third of all stents sold, but only around 25% of the total market value.) But whether B. Braun stents will ever be sold in the US isn’t entirely clear. "We have so much to do and so many other opportunities," says Wacker. "We also know that it will be very difficult from a competitive point of view to enter the US." As a result, he says, they are only now talking to their colleagues in the US "about whether and what would be the right time to enter" the US market.

An Ambivalent Attitude

All of which validates the company’s incremental, profit-driven approach to building a business, say B. Braun officials. "We’d like to get a higher selling price," says Wacker. "But when we can’t, we focus on making the business we have profitable." That’s not to say that B. Braun isn’t committed to innovation, they go on. The company was, after all, the second to market with a CoCr stent, and, says Wacker, "we designed it to have the lowest profile and highest flexibility of any stent available." In fact, like any cardiovascular device company, B. Braun officials say that their goal is to have highly innovative products with features that appeal to the demands of interventionalists—features like the SeQuent rigid tip or the lower strut profile of the company’s CoCr stent.

But B. Braun officials note that their approach to portfolio building differs from that of the big companies in one important respect—its hedge against the importance of drug-eluting stents. While virtually all of the Big 4 have a considerable amount of their future invested in the continued prominence of DES, Braun officials offer what they call their Total Solutions-Oriented Angioplasty approach, one that combines a drug-eluting stent, the Coroflex Please, for those physicians who want one, with a line of bare metal stents. "We very much believe there’s a future for bare metal stents if you have an excellent stent," says Michael Boxberger. Most importantly, the much anticipated release of the drug-eluting balloon represents a clear challenge to DES, including its own.

B. Braun officials have had what might be called an ambivalent attitude toward drug-eluting stents from the beginning, and one very different from that of other cardiovascular companies who’ve made DES development the core of their strategy. Gerd Wacker acknowledges that it was competitive pressures that led to B. Braun’s early efforts to develop a DES. "It was important for us to have a drug-eluting stent because when we didn’t, our customers would always ask us for one," he says. Having such a stent enabled Braun "to be more competitive" when working with physicians and cath lab directors, he says.

At the same time, he goes on, "the pressure to have a drug-eluting stent is much lower than it was three or four years ago." Some of that is due to continuing cost pressures and a careful assessment of the relative cost and clinical value of the more expensive DES compared to bare metal stents. Some of that, too, is due to the safety scare around stent thrombosis raised by release of data from a Swedish registry, SCAAR, in 2006, a scare that still resonates among European interventionalists, Wacker says, notwithstanding the recent back-tracking of physicians from Sweden.

Indeed, in an interesting way, B. Braun has been far less bothered by concerns about stent thrombosis and by the accompanying retrenchment in DES penetration than the other CV giants, and Wacker and Boxberger insist they expected early on that such safety concerns might arise. Thus, when the market for DES turned down, B. Braun was, arguably, hurt less than other DES suppliers. In the company’s largest market, Germany, DES stent use, historically among the lowest in Europe anyway, had peaked at around 30% penetration, B. Braun officials estimate, and has been decreasing—it now stands at around 20-25%. In some markets, such as Poland, it’s only around 6%, they say, and even in high penetration markets, such as Switzerland and Portugal, DES usage is in retreat and is now under 50%. Given the current safety concerns and cost pressures, B. Braun officials believe DES penetration will drop below 50% in the US and fall even lower, below 30%, in Europe. "It will never be 90% again with the current generation of drug-eluting stents," says Gerd Wacker.

Some interventionalists and industry executives believe DES use will rebound—but even if it didn’t, that would be okay with B. Braun. Wacker concedes that the Coroflex Please "is not the market leader." It’s "a good stent, but doesn’t have a compelling USP," he says. Acknowledging that B. Braun’s market share in DES is small, Wacker notes, "We have some customers and have been successful in some markets, but we’re not depending on the development of the DES market for our success. We don’t have to sell 20,000 drug-eluting stents a month to be successful."

If anything, Michael Boxberger points out that having a DES has helped to boost sales of its CoCr stent. "Since we’ve introduced the Coroflex Please, we’ve seen a dramatic increase in the sales of Coroflex Blue," he says. "We talk to them about the drug-eluting stent but in the end, a lot of physicians are choosing to use the bare metal stent." Indeed, B. Braun’s bare metal stent sales in Germany are up 40% this year. While other interventional cardiology companies such as Cordis and Boston Scientific "have been telling customers that now that drug-eluting stents are here there’s no need for bare metal stents, we’ve taken the opposite approach," Boxberger notes. "They’re suffering because they’ve bet entirely on drug-eluting stents."

A Balloon Rather than a Stent

To a large extent, B. Braun can find value in bare metal stents in a way other cardiovascular companies can’t because of characteristics unique to the company—its focus on process innovation and manufacturing, for example, and its faith in product bundles and the relationships they build with customers, all driven by the economics of its home market of Germany. But even more importantly, Braun’s take on DES penetration is being driven by the development of its SeQuent Please drug-eluting balloon (DEB). In fact, it would be perfectly fine for B. Braun if, after cost and safety concerns, the advent of the DEB drove the final nail into the DES coffin.

B Braun officials licensed the DEB technology from the Charité hospital in Berlin in 2004, based on work done by Ulrich Speck, MD, from the Charité and Friedrich Scheller, MD, an interventionalist at University Hospital in Homburg. And as evidence of the cardiovascular giants’ commitment to drug-eluting stents, they point out that virtually all of the large cardiovascular companies turned down overtures from Speck and Scheller to take on the technology before Braun got the license. "At the time, they all believed that drug-eluting stents were the answer and all of their development efforts were focused on that," notes Boxberger. Scheller had been doing some animal studies for B. Braun on another device; when he approached company officials about developing the DEB, they jumped at the chance. "At the time there was no clinical data, only animal studies, so it was something of a risk," says Boxberger. "But sometimes you have to take the risk."

B. Braun argues that drug-eluting balloons have several advantages over DES. For one thing, drug distribution or release is more even and consistent than it is with a stent, whose strut design leaves gaps where drugs aren’t eluted. Michael Boxberger notes that with DES, only about 12% of the vessel wall receives the eluted drug. "The advantage of a balloon is that we can put more drug on the balloon and more drug on the vessel wall, leading to greater efficacy of the drug," he says.

For another, says Braun, clinical trials have shown that DES aren’t effective in treating more complex cases such as diabetics, small vessels, bifurcations, CTOs, and AMIs. And balloons won’t lead to restenosis at the stent margins, the way DES do.

But clearly the biggest advantage of DEBs is that they address the current safety concerns. Even if the Swedish registry data from 2006 dramatically overstated the thrombosis risk, B. Braun officials insist even a small risk of thrombosis has interventionalists looking for a drug-eluting alternative. And whether the thrombosis threat derives from inflammation associated with the polymer or the implantation of the drug-eluting stent itself, drug-eluting balloons eliminate the risk because they do away with both. "What doctors are telling us is that they have a responsibility to look after their patient, and with bare metal stents, they feel confident they can manage the patient for the critical period of time after stent placement," Wacker explains. But with drug-eluting stents, the physicians say, they don’t have the same level of confidence. "They don’t know when the risk period is over and it’s a very uncomfortable situation for the physician to be in, not having control of their patient," he goes on.

Michael Boxberger estimates that after three years, approximately 2% of all DES patients will experience thrombosis—other studies put the figure lower—and half of those cases result in death. "That means 1% of their DES patients will die," he notes. B. Braun officials argue that even if the data doesn’t support a major risk, the thrombosis scare has rattled many interventionalists and many are re-considering their use of DES. "I know some prominent examples of leading drug-eluting stent users who, after some patients got thrombosis three to four years after the stent implant, completely changed their policy regarding drug-eluting stents," says Wacker.

With the SeQuent Please paclitaxel-coated balloon, the drug is released in ten seconds, with no sustained release needed, though B. Braun recommends that the balloon be inflated for 30 seconds. B. Braun officials note that the particular properties of paclitaxel make it a better drug to use on a drug-eluting balloon—specifically because it requires less drug and does a better job of sustained control of smooth muscle cell proliferation—than drugs in the limus family, such as sirolimus.

And, at least so far, in just over 300 patients who’ve been treated with drug-eluting balloons, there’s been no incidence of thrombosis. In the SeQuent Please balloon, the drug is attached to the balloon not with a polymer, but with a matrix coating using iopromide, which is hydrophilic and acts as a guide to lead the paclitaxel from the balloon to the vessel wall. Indeed, the key to the drug-eluting balloon is that not only does it do away with the stent, it also does away with the polymer.

The First Clinical Results

Not that B. Braun believes stents will go away altogether. Company officials do acknowledge the need for the structural benefits of the stent itself, and so they’ve begun to talk about using the DEB in conjunction with the Coroflex Blue CoCr stent. In fact, it is the combination of a superior bare metal stent and a drug-eluting balloon, which becomes in essence a drug delivery mechanism, that B. Braun is counting on.

With animal studies already complete and CE mark on the balloon expected next year, B. Braun officials believe they have a two to three year head start on others seeking to bring a DEB to market. Currently none of the Big 4 in cardiovascular devices has a program in DEB, says Michael Boxberger, though there are a couple of start-ups pursuing the opportunity. (For another player in that space, see the sidebar on Lutonix accompanying this article.) Of course, DEB technology has its skeptics—some insist that sustained drug release is critical to achieving the therapeutic benefit of drug-elution and that the short delivery time of balloons renders them ineffective in delivering the therapeutic agent. To prove its case, B. Braun has already begun a number of clinical studies, its PEPCAD series, to demonstrate the clinical value of DEB.

To date, B. Braun has launched five studies and is preparing to start a sixth, a Japanese multi-center trial looking at the use of Coroflex DEBlue compared to Taxus in treating complex cases. (PEPCAD III, a European multi-clinical trial, will look at complex lesions, comparing the Coroflex DEBlue to Cordis’ Cypher stent, while PEPCAD IV and V will explore the use of SeQuent Please to treat diabetic patients and bifurcations, respectively.) The first two, PEPCAD I and II, both German multi-center trials, focused on de novo lesions in small vessels because B. Braun wanted specifically to assess the efficacy of the balloon without adjunct stenting. (All clinical trials will do follow-up at 3, 6, 12, and 36 months.)

Now with six-month follow-up, PEPCAD I has generated some impressive results, says B. Braun, with restenosis rates of 5.5% and MACE of 6.1% on 82 patients who received only the balloon, both significantly lower than restenosis figures for Taxus and bare metal stents of 31.2% and 49.4%, drawn from previously published studies. (MACE for the Taxus and bare metal stent populations was 18.9% and 26.9% respectively in those other studies.) The DEB also showed a 0.18 late lumen loss, compared to 0.49 in the Taxus studies and 0.90 in the bare metal stent trials.

Patients in PEPCAD I who got a bare metal stent as well as a drug-eluting balloon showed slightly worse results: a restenosis rate of 15.5% and a MACE rate of 13.7%. In short, says B. Braun, patients who didn’t need the additional scaffolding of a stent fared best. (Of course, as noted, some patients need a stent, which is why B. Braun is actively promoting the use of its DEB in conjunction with its CoCr stent.) PEPCAD II showed similar results in head-to-head comparison of the SeQuent Please balloon and Taxus stent. (Taxus was chosen because it, too, uses paclitaxel as the eluted drug.) In results of the trial presented at this year’s TCT meeting, after six months follow up, the 66 patients in the DEB arm scored restenosis and MACE rates of 3.7% and 4.8% respectively, compared to 20.8% and 22% for the 60 patients in the Taxus arms. (It should be noted the Taxus restenosis and MACE rates in PEPCAD II are higher than have been shown in some of the other Taxus clinical studies.)

Beyond DES

Moreover, note B. Braun officials, after two years there was no catch up effect in either restenosis or MACE in the pilot studies. "PEPCAD II was designed as a non-inferiority study, but it showed superiority," notes Michael Boxberger. And he says, while the PEPCAD patient populations have been small, in aggregate, "We think these results are sufficient to convince physicians that they should change from drug-eluting stents to drug-eluting balloons for the treatment of in-stent restenosis."

Indeed, Gerd Wacker acknowledges that in the company’s early discussions with interventionalists, the notion of a drug-eluting balloon was greeted with skepticism, largely because "no one thought you could move cardiologists away from using stents." As the data on DEB comes to the fore and safety concerns about DES linger, he goes on, the mood has changed. (The publication last year in The New England Journal of Medicine of some of Scheller’s early studies gave the concept a huge boost.) "Now I don’t know of a single doctor who doesn’t think this is the wave of the future," he says.

Enrolling patients in PEPCAD III took longer than B. Braun anticipated, but company officials say that getting physicians to take part in the clinical trials has been easy. To date, about 300 patients have been treated with B. Braun’s drug-eluting balloon; when the clinical trials are complete, that figure will be closer to 1,000. And B. Braun officials are already planning an aggressive education and sales effort to drive adoption once its DEB receives CE mark next year, though it will limit its efforts to selected European markets.

Right now, B. Braun’s marketing efforts are exclusively targeting interventional cardiologists, though company officials recognize that, particularly with safety concerns about DES becoming headline fodder, there may be a consumer-driven appeal. Not that B. Braun believes the market will move en masse toward DEB either. Michael Boxberger estimates that, over the next several years, the European stent market, now at around 1.1 million stents implanted each year, will divide fairly evenly between bare metal stents and drug-eluting balloons, with each taking around 40% of all coronary procedures; DES will make up the remaining 20%, they believe. Consistent with their general approach, B. Braun officials are aiming for 10% penetration within the first year or so, a figure they believe is within reach. "We won’t get to 40% the first year, but we think the market will be there," says Gerd Wacker.

And while most of the cardiovascular giants are now working on second-generation drug-eluting stents, B. Braun’s second-generation device will be a single, combination device called SeQuent DEBlue, which links its DEB and its Coroflex Blue CoCr metal stent, for which it will begin seeking CE mark in mid 2008. B. Braun officials do believe there will be advances in DES technology, but, more broadly, they say, drug-eluting balloons "will be the next important step in the evolution of angioplasty," as Wacker puts it. More precisely, he says, "the real challenge to drug-eluting stents will come not just from the balloon," but from the combination device.

Given the cost issues raised by DES, however, particularly in Europe, however, B. Braun officials will approach pricing the combination cautiously. There’s obviously a large price difference between a balloon and a DES, and the price of the new combination product will fall "somewhere in between," says Boxberger. "The overall investment the hospital makes, including the cost of anti-platelet therapy, has to be less than they would pay for a drug-eluting stent

Finding Common Ground

Despite their common clinical orientation, B. Braun’s two cardiovascular businesses couldn’t be more different. While Interventional Systems focuses mostly on the interventional radiologist and vascular surgeon (with a small business in pediatric cardiology), the Vascular Systems business targets interventional cardiologists. More to the point, where the latter has built its business around broad platforms and custom kits in an effort to promote stronger relationships with cath lab and hospital customers, Interventional Systems is the classic niche play, with a series of niche technologies that, though strong in their respective areas, offer little in the way of critical mass. With products sourced from other B. Braun operations as well as some outside suppliers, Interventional Systems is, as Paul O’Connell puts is, "a very, very specialized niche supplier."

But is there common ground? For an organization with such a strongly focused and incrementally-oriented culture, the answer is, surprisingly, yes. Paul O’Connell notes that when he looks at the products offered by Vascular Systems in Europe, "I’m looking down the road and into the future for the US business." To date, he notes, tough competition has limited the reach of the US business into adult interventional cardiology. "But that’s changing," he goes on, particularly as Vascular Systems develops proprietary products with strong appeal such as the Coroflex Blue stent and, it is hoped, the drug-eluting balloon.

"I’m conservative by nature, but I think the drug-eluting balloon could cause a paradigm shift," says O’Connell. "It’s very thrilling to see the data presented at TCT because we now have the ability to treat patients in certain populations with something physicians in our current call points can’t." Of course, with only two-years of follow-up, much work remains to be done. "We still have a ways to go to validate the technology," he goes on. "But we’ve made some very significant first steps."

And when it does, there will be opportunities for Interventional Systems as well as the coronary business. "There are places in the periphery where stents just don’t work," he notes, superficial femoral arteries perhaps the best example to date. "If things go the way we think they will, I can definitely see us taking drug-eluting balloon technology into our current call points in interventional radiology and vascular surgery to treat patients that cardiologists aren’t treating right now."

Of course, Vascular Systems could choose a different path to get to the US: it could, for example, set up its own coronary-focused operation in order to take advantage of a cardiologist call point. And company officials are even entertaining the possibility of a strategic alliance with a leading US interventional cardiology company who would market the balloon as an alternative for those patients—diabetics, those with small or difficult or bifurcated lesions—who aren’t best served by DES—though privately they question whether any of the large CV companies can afford, psychologically as well as economically, to adopt a technology that, even to a minor degree, challenges the therapeutic dominance of drug-eluting stents.

But in one way, sharing the DEB technology between B. Braun’s two cardiovascular businesses has one clear advantage. O’Connell notes the turf battles that have arisen over the past two decades in cardiovascular medicine—much to the disadvantage of his core customers, vascular surgeons and interventional radiologists. "One interventional radiologist I know describes interventional cardiologists as being like the Chinese Army in Korea in the 1950s, with just waves and waves of them coming into his field," he says.

Some physicians are responding to the turf battles by hunkering down. O’Connell notes that "when times were good, it wasn’t unusual for surgeons to send patients to interventional radiologists or cardiologists for the treatment of certain conditions." But that’s all stopped—"It’s all about who controls the patient now," he goes on. Other physicians are responding by trying to beat cardiologists at their own game—witness the number of surgeons who are learning percutaneous techniques and taking up interventional technology. Either way, the turf battles may actually be good for B. Braun since the two cardiovascular device businesses together cover such a wide range of customer call points.

The Ultimate Diversification Play

B. Braun officials like to position themselves as "the European Alternative" to cardiovascular giants such as Cordis and Boston Scientific. To date, a better comparison might be with CR Bard or Cook—smaller, more low-tech oriented companies with strong offerings in individual niches. Even with the divestiture of its USCI business, Bard remains a competitor with, for example, a rival line of vena cava filters.

Indeed, B. Braun officials themselves are cautious about making too great a claim for their cardiovascular business. "Will we ever be as big as Boston Scientific or Abbott or Cordis?" asks Paul O’Connell. "Frankly, I can’t envision it. I just can’t." Still, the question begs to be asked, why not? Given the enormous resources of B. Braun and the fact that, as a privately held firm, it isn’t enslaved to quarterly earnings, why couldn’t B. Braun pull out the stops to build a cardiovascular business to rival the large public companies?

In part, the answer lies in a corporate culture that places great value on incremental advances and internal development--the same corporate culture that saw the company sit on the sidelines during the great cardiovascular consolidation wave of the late 1990s. But perhaps an even more central reason lies in the way B. Braun sees itself. Even as his business epitomizes a high-value niche strategy, Paul O’Connell notes that B. Braun’s core mission is to be "the low cost provider of high volume commodity products through manufacturing efficiencies."

Interestingly, B. Braun officials reject the strategy taken by companies like Boston Scientific and Cordis not because they’re too broad-based or all-encompassing in their approach to portfolio-building, but, in a funny way, for just the opposite reason. For Paul O’Connell, it all comes down to diversification. Notwithstanding B. Braun’s commitment to its Coroflex stents and combination stent-and-balloon platform, the DEB project is a kind of anti-DES strategy—not anti-DES per se, but opposing the kind of focus or concentration that the Big 4 have placed on drug-eluting stents in shaping their future success. "In our view, a lot of the top companies have collapsed their strategy into a single focus on one product," notes O’Connell—i.e. drug-eluting stents, seeing the rest of the portfolio as creating a context for their DES programs. And, particularly in Europe, where B. Braun has placed its largest bet, the big CV giants can hardly do anything else—with bare metal stents now selling for around €200-250, there aren’t enough PCIs performed to justify the kind of reliance or focus on bare metal stents that B. Braun has placed on its Coroflex CoCr stent.

But B. Braun, because of its focus on product bundles and process innovation and manufacturing efficiencies, can afford to build a business on bare metal stents, low-priced as they are, in a way that the other CV giants can’t. Moreover, as noted, B. Braun’s cardiovascular program from the very beginning has had an ambivalent attitude toward the potential of drug-eluting stents, even as the company was developing its own. But from a broader corporate perspective, the key to the cardiovascular business for B. Braun is that it’s the ultimate diversification strategy—one that balances the company’s primary focus on manufacturing efficiencies in high volume product lines with a secondary focus in selected businesses on finding innovative product niches. Other device companies tend to see an efficiency-driven, high volume strategy incompatible with a high-tech cardiovascular business—and might seek to jettison or at least downplay the former. B. Braun, in contrast, sees the two as complementary—and if anything, places greater value on the high volume, low margin part of its business. "I don’t think they’re opposing strategies," says O’Connell. "They’re just different." Interventional Systems simply represents another way to drive profits at B. Braun. "We are part of a unique group of entities within B. Braun," he says, referring to the physician-preferred business such as the peripheral and coronary businesses and Aesculap’s orthopedic lines.

That’s why an interventional strategy that rests on a small handful of products—vena cava filters, micro-introducer kits, pediatric angioplasty balloons—works for B. Braun. O’Connell insists that the company doesn’t feel a tug to add additional lines, such as peripheral stents, simply because other peripheral companies are placing bets on those products. "We aren’t interested in filling our bag with a line of me-too products just to have the products in our line," says O’Connell. "We’re constantly on the lookout for specialized product to add to our line, but we refuse more than 90% of what’s offered to us."

An Historic Opportunity

The Vascular Systems strategy in coronaries differs to a degree—not only is the product offering in interventional cardiology broader and more complete, B. Braun’s focus on relationship selling places great emphasis on custom kits and product bundles. But even in its coronary business, B. Braun officials acknowledge that the company didn’t begin to establish itself as a major player in Europe until it had developed a line of stents they believe to be superior to their competitors, the Coroflex Blue CoCr bare metal stent.

But that focus on small niches and diversification could, of course, all change if drug-eluting balloons have the potential B. Braun officials believe they do. And they clearly believe that drug-eluting balloons could be a disruptive technology—disruptive to the cardiovascular device industry if not to the practice of interventional cardiology—in much the same way drug-eluting stents have been. Gerd Wacker notes that the first generation of DES were "an important development," but, he goes on, the dominance of drug-eluting stents as a therapy "has come under a more critical appraisal." Asked where he thinks DES use in Europe will be in five years, given the recent decline, Wacker says, "It depends on the success of our drug-eluting balloon."

Even Paul O’Connell, playing in a different market and a continent away, recognizes the broader importance of the drug-eluting balloon to B. Braun’s cardiovascular strategy when he talks about the potential of drug-eluting balloons in treating peripheral arteries. B. Braun isn’t the first company to try to build an interventional cardiology business through a niche strategy—Abbott, most recently, took such an approach, acquiring or licensing technologies such as femoral artery closure and embolic protection devices. But it wasn’t long before the lure of drug-eluting stents proved too tempting and Abbott began to build a broad-based vascular business to support its DES play. Is the promise of its drug-eluting balloon great enough that B. Braun could be tempted out of its historic incremental approach?

Though its DEB development effort is now taking 75% of the company’s efforts in cardiology, B. Braun officials say no. Drug-eluting balloons "have our highest priority—no doubt about it," says Gerd Wacker. But B. Braun’s broad corporate reach and its focus on relationships and process innovation is too strong a corporate value. "We’ll never lose our focus," Wacker goes on. "We believe it’s important to have a wide range of products and offer them in bundles and not concentrate all of our efforts on one project. We have a responsibility to the customers we serve."

Still, B. Braun officials aren’t shy about the potential of their DEB to transform B. Braun, if not the practice of interventional cardiology—ironic for the company because it represents the kind of blockbuster it has always resisted. "This is an historic moment for us," says Wacker, who concedes that, particularly in its early days, "we were not considered a real player in this market because we didn’t have products as good as those of our competitors." For B. Braun officials, the introduction of the Coroflex Blue stent represented the company’s first real breakthrough, but it will be the drug-eluting balloon that, if successful, makes the company not just a "European alternative" but a global rival to cardiology’s Big 4. "This is our first real chance since 1990 to take a big step forward and challenge the big cardiovascular companies," says Wacker. "What’s been missing is a real technology innovation, and now is our time."

Lutonix—Creating the Next Drug-Eluting Balloon

When Fredrich Schiller, MD, took his idea for a drug-eluting balloon to the top cardiovascular giants several years ago, they all passed, leaving the door open for B. Braun and its bet on what company officials believe could be a disruptive technology. Indeed, perhaps because of the investment so many companies have made in drug-eluting stents, interest in drug-eluting balloons has been surprisingly light. That’s not to say, however, that B. Braun has the field to itself. In Minneapolis, a former interventional cardiologist who launched his first successful device company nearly a decade ago is hoping to strike gold a second time with a next-generation drug-eluting balloon.

In 2001, Dennis Wahr, MD, founded Velocimed, a developer of interventional devices, including an embolic protection system and a PFO device, which was sold four years later to St. Jude Medical Inc., in a deal valued at $82 million, plus an earn-out. [See Deal] After working part-time for St. Jude for a year, Wahr joined RiverVest Partners, a Minneapolis-based venture firm that had been an early investor in Velocimed (along with other investors, Warburg Pincus and The Vertical Group). At RiverVest, Wahr led a handful of investments when earlier this year, a chemist and balloon polymer scientist who had previously worked at Boston Scientific and most recently for ev3 Inc., Lixiao Wang, approached him with an offer to co-found a new company. The company’s technology: drug-eluting balloons.

Wang had already filed several patents around his balloon technology and wanted Wahr to run the company, Lutonix Inc., while he would serve as CTO. For Wahr, a former interventionalist, the appeal of DEB technology was immediate. "It’s all about the promise of being able to inhibit restenosis without leaving hardware behind," he says. "I think everyone would agree that it’s better not to have a foreign body left behind in your circulatory system." And even though he discounts the current safety debate around late-stent thrombosis with drug-eluting stents (DES)—the concerns raised in 2006 by the SCAAR registry from Sweden have had little impact on the company’s development to date, he says—Wahr believes DEBs will fill an important clinical niche in interventional cardiology. "I think that long-term, stents have a very, very low risk, but that said, I think everyone would agree that, given the choice, you’re better off not having a stent," he says.

In fact, Wahr argues that DEBs won’t so much replace stents, either drug-eluting or bare metal, but offer an alternative to treat patients who currently aren’t well served by stents—patients with in-stent restenosis and difficult cases such as small vessels and bifurcated lesions. Drug-eluting balloons, he argues "serve an unmet clinical need that opens a large market before you even get to the theoretical question as to whether they will replace stents."

Because Lutonix is still in its earliest stages, Wahr won’t say what drug the company will use on its balloon or how the drug will adhere to the balloon. The company raised $5 million in a Series A financing that closed this past July with RiverVest and US Venture Partners co-investing. The financing will, says Wahr, get Lutonix to proof of concept; if the DEB proves itself at that stage, the company will raise more funds.

To its proponents DEB technology is intuitively appealing—there’s no hardware left behind meaning safety concerns are minimized, and the architecture of the balloon allows for a more even and consistent elution of the drug to the vessel wall. But Wahr acknowledges DEBs have their skeptics. For one, stents have become so well established in PCIs that convincing interventionalists that they’re no longer necessary may be difficult. That’s why, as noted, Lutonix is positioning its DEB as an adjunct to current stenting, not a replacement. "You have to remember that stents are attractive to cardiologists for reasons beyond the reduction of restenosis rates, including the prevention of vessel dissection and recoil," he says. As a result they made PTCA faster, easier, and less stressful for the average physician. "In fact, there are several reasons why stents have been so widely adopted." In fact, Wahr points out, the notion that stents help lower restenosis rates—something DEBs will arguably do as well—came later. "It wasn’t even part of the discussion about stents at the beginning," he says. "Their initial clinical indication was to treat coronary dissection."

But Lutonix doesn’t intend to position DEBs as a replacement for stents. "These are distinct and independent markets," he says. Small vessel and bifurcated lesions, in particular, "are pretty good-sized markets in their own rights," he says, and not currently indicated for DES. Whether interventionalists ever use DEBs for de novo coronary lesions, the approved indication for DES, is a matter for "a healthy debate," says Wahr, who argues that if the data is good, some interventionalists will use them for such patients, while others will stick with DES.

Also promising for DEBs are applications in peripheral vessels, where the current failings of stents concern not stent thrombosis, but risk of stent fracture. Even as an alternative rather than replacement technology, Wahr believes that DEBs could capture as much as 25% of PCIs, though he concedes, "Only time will tell." As a former interventionalist, he says, "I’ve always been impressed by how hard it is to change physicians’ practices." With stents "so deeply engrained in the practice of interventional cardiology today," he says, DEB adoption will come, "but it will take some time."