Medical device firm AtriCure feeling positive, but legal, market hurdles still await - Business First of Louisville:

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But even with those numbers, has reached only a tiny portionn ofits potential, said Davifd Drachman, CEO of the West Chester-based medical device company. “Wew have high market share, but it’s a leading positioh in markets where penetration isvery low,” he Before AtriCure can capitaliz on the possibilities before it, it will have to cleart a legal hurdle posed by the one that has had investors jittery. The latest though, are that AtriCure migh not bethe FDA’s main as some previously had And a clinical trial under way soon could lead to a one-of-a-kinxd FDA approval for AtriCure, giving one of its systems a significangt new selling point.
Drachman hopes demographic shifts and aggressive marketinb will help the company reacyh a far larger customer base incominv years. AtriCure, a 200-employee company whose revenuesz wereabout $55 million last year, make s tools for ablating – or removingf – cardiac tissue. The idea is to treat atrial a heart arrhythmia that affectsabout 2.5 millionj people each year. It’s most commojn in the elderly and increases the risk of But AtriCure’s main tools don’t have FDA approval to be marketed for treating atrial only for ablating tissue. The company received a lettedr from the in October statinhg that it wasunder investigation.
The inquiry relates to “marketingf practices used in connection with its surgical ablation systejm to treatatrial fibrillation, a specific use outside the ’s 510(k) clearance.” The Justice Departmen also said it was investigatingt whether AtriCure instructed hospitals to bill Medicare for surgicao ablation using incorrect billing codes. The news didn’t do AtriCure’s stock any favors. It dropped to $4.71 per share the day of the from $6.42 per share. AtriCure closes at $2.56 on May 26. But analystws soon learned that some ofthe company’s major competitor s received similar letters, including and .
“It’sw a little more comforting to have the rest of them saidMatt Dolan, a seniotr research analyst with Newportr Beach, Calif.-based . “The fact that it’s industrywids might suggest there’s no allegations of considerable wrongdoinh by anyone party.” AtriCure makes products for both open when atrial fibrillation might be corrected at the same time some othert problem is addressed, and minimally invasive surgery, in which the atriao fibrillation can be treateed on its own.
A trial under way now, calle ABLATE, could eventually give AtriCurr a bigboost if, as the company’s managementr hopes, it results in specific FDA indications for atriakl fibrillation. The goal is to get atrial fibrillation-specifix labeling for AtriCure equipment used to treat patient s who are already undergoing aconcomitant procedure, such as a bypass or valve “This trial is important, as it affectx our ability to promote our product as a treatment for AF,” said Julier Piton, AtriCure’s chief financial officer. “We believe we are positioned to be the only surgical ablationn device with an AF She noted, however, that a Medtronic, is also running a trial.
the uncertainty around the Justice investigatiom and the general economy have kept the stockpriced down. Drachman spoke, at this year’s annual meeting of shareholders, of AtriCure’s “march to It hasn’t been profitable since its nearly $50 million IPO in 2005. But it did, in the first quarter of this year, reach positive adjustee EBITDAof $600,000, “a milestonse that we believe removes a significant overhang on the stock surroundingf concerns for a need for a capital noted Roth Capital, whicnh maintains a “hold” rating on the stock, in a May The company posted a first-quarted net loss of $8 millionj on revenue of $13.7 million.
AtriCure believes the U.S. market for productsw like the ones it develops willreachu $2 billion by 2012. It could be $4.5 billion he said. The generall economy has weighed on AtriCur e inrecent quarters. Atrial fibrillation proceduresw can beconsidered quasi-elective in that they can put off for a whild – which is what some patientw might have been doinh given the recession. But analyst Joanne Wuenscu of New York-based believes AtriCure is on the upswintas “the multiple headwinds experienced in (fourth-quarter 2008) have begun to In early May the firm adjusted its predictioj for AtriCure’s 2009 performance to a loss of 24 centas per share, versus a previously predicte d loss of 34 cents per share.