to take some time building inventory and hiring a sales team, said Stephanie Amoss, Pathway’s vice president of marketing.
Clement has taken a successful device to the market once before. Along with Auth (who is an Xconomist), Clement was in the founding group at Heart Technology that developed the Rotablator for drilling out heart blockages. The company sold to Natick, MA-based Boston Scientific (NYSE: [[ticker:BSX]]) in 1995 for $500 million, and the product reached peak annual sales of about $150 million. That technology ended up getting supplanted by stents in the late 1990s, tiny mesh devices that prop open clogged arteries, which were easier to use.
In 1998, Clement moved on to start up Pathway, intent on improving on the earlier-generation drill for clearing out heart blockages by adding the vacuum feature to suck out debris that could form blockages. The company stumbled six years later when it couldn’t win new investment for treating cardiovascular disease. Then an investor syndicate convinced Clement to take another shot with the device, applying it to the legs, partly because stents don’t work well there and can cause complications if they twist and break. So, in March 2005, Pathway was re-born with $10 million investment from Oxford Bioscience Partners, ABN Amro, and Giza Venture Capital. Pathway has since raised another $50 million in two venture rounds to get this far.
Pathway has now staffed up to 120 people in operations, manufacturing, engineering, and sales in new offices in Kirkland, WA. About one-third of the employees are veterans of Heart Technology, and a new group of 10 sales representatives will be hired.
The Pathway crew will be up against Plymouth, MN-based ev3 (NASDAQ: [[ticker:EVVV]]), which acquired FoxHollow Technologies, the maker of the first device approved to clear fatty buildups out of leg arteries. That tool, called SilverHawk, cuts and scrapes out buildups. It sells for about $2,600, and generated more than $170 million in annual sales in 2007, although it is expected to decline to about $100 million this year because of integration woes between ev3 and FoxHollow, Clement says.
The Pathway device will have an advantage, because it can cut through both hard and soft blockages, while the SilverHawk can’t cut through hard calcium deposits, Auth says. Ev3 is preparing to address that weakness with a newer version it calls the RockHawk.
Pathway has gotten encouraging feedback from physicians familiar with all the devices, Clement says. His company sent 14 of what it considers the leading physicians specializing in peripheral artery disease in the U.S. on individual tours to meet with the clinical trial investigators in Germany. At least one doctor, a scientific advisor to the company, told Pathway he was surprised that the device actually worked as well as the company said it would.
“We’ve had these doctors say to us, ‘You really have something here. You said it could do X, Y and Z, and it’s doing X, Y and Z,” says Amoss, the marketing head. (Apparently, this straight-shooting approach is considered highly unusual in the world of cardiovascular device marketing.)
We will find out soon if Pathway can translate that physician interest into actual sales. “We think we can sell everything we can make for the first 18 months,” Clement says. If that turns out to be the case, you can bet the folks from Boston Scientific, and other medical device giants will want to become Clement’s friend again in a hurry.
