Kirkland, WA-based Pathway Medical Technologies has to be considered one of the bright spots in the recent history of Seattle life sciences. The medical device maker won FDA approval for its first product about 15 months ago, raised $42 million in venture capital, and recruited a CEO with loads of experience in commercializing medical devices. Back in February, co-founder and chairman Tom Clement said the company showed signs of becoming “a real winner.”
If only the story were that neat and tidy.
Even with that good fortune, Pathway has had some hard knocks. The company introduced its tool that drills through and vacuums out blockages in leg arteries right in the middle of the recession, as patients were losing health insurance and hospitals were tightening their belts. The old medical device business model of simply pitching a cool new toy to doctors who place orders appears to be morphing into a new paradigm in which hospital purchasing committees are calling more of the shots, and demanding more proof that such a treatment is cost-effective. These changing market forces are at least part of the reason why Pathway wasn’t able to meet its aggressive internal sales forecasts in the first half of this year.
In May, it axed one-fifth of its workforce. CEO Paul Buckman made clear then that the company had raised $120 million from investors, and with a plan to turn profitable in 2011, it needed to lower the burn rate so it wouldn’t have to raise any more venture capital.
So while Pathway hasn’t been quite the overnight success that it might have been with its nifty tool a few years ago, Buckman offered a candid assessment in a recent interview of how the company is adjusting parts of its plan while sticking to its long-range philosophy. Buckman says he sees encouraging evidence of acceptance from physicians even while Pathway has learned the hard way about what it still needs to prove.
Pathway doesn’t disclose absolute revenues or net losses, but it did say last month that it has seen 172 percent sales growth over the past two quarters. About 200 to 215 hospitals have ordered Pathway’s Jetstream products as of the last week of September, and they have treated about 2,500 patients, according to a conservative estimate, Buckman says. Some of the early adopter physicians
