Medtronic Inc., the Minnesota-based medical device maker with about 650 workers at a Santa Ana heart valve plant and operations in Irvine, could be near a U.S. clinical trial for its less-invasive valve, its chief executive said.
Earlier this month, Chief Executive William Hawkins told investors and analysts that he was “cautiously optimistic” that the company would have approval to start a U.S. trial this summer for valves that are inserted via catheters.
Medtronic made a major push into less-invasive valves last year through two big deals, including spending $700 million for Irvine-based CoreValve Inc.
Medtronic’s CoreValve device already is sold in Europe, where it competes with a less-invasive valve from Irvine-based Edwards Lifesciences Corp.
Medtronic plans to spend $8 billion to $10 billion on research and development in the next five years, including research on less-invasive valves, Hawkins said.
The company is facing “life in the crosshairs” as various competitors continue to sharpen their knives, according to a recent article on Forbes’ Investopedia website.
Patents, long development times, doctor preference and the need for solid efficacy and safety data help to tamp down competition. But the enormous financial rewards guarantee that competitors will never give up on a good market, author Stephen Simpson said.
“To that end, Medtronic may be starting to see some of its leadership erode,” Simpson said.
Medtronic is the largest stand-alone medical device maker and is second overall to the medical device unit of diversified healthcare company Johnson & Johnson.
Medtronic faces a heart valve rival with “strong clinical data” in Edwards Lifesciences and its Sapien valve, Simpson said.
Edwards is considered the leader in less-invasive valves. Sapien is in a U.S. trial with an eye toward Food and Drug Administration approval next year.
The Investopedia article also talked up Medtronic’s acquisition strategy.
Simpson said Medtronic’s been a “willing (and smart) acquirer when management has realized that it cannot rely on its own internal efforts, or when it is simply cheaper to buy an existing business.”
Medtronic isn’t planning any big deals in the next 12 months or so, Chief Executive Hawkins said.
Instead, the company is planning to release 60 “major” products during that time frame, he said.
Funding for UCI-Linked Co.
Kineta Inc., a Seattle-based diabetes drug developer with ties to a pair of University of California, Irvine, professors, said it received an undisclosed investment from the Iacocca Family Foundation.
Kineta plans to use the money to speed up the development of compounds to treat Type 1 diabetes. The company’s lead compound, ShK-186, is based on work by UC Irvine professors K. George Chandy and Jonathan Lakey.
Kineta, which has 15 workers, licensed ShK-186 from UCI and Redwood City-based Airmid Inc. last July.
Lee Iacocca, the former chairman of what’s now Chrysler Group LLC, established the Iacocca foundation to fund diabetes research in honor of his first wife, Mary.
Although the foundation didn’t release the specific amount of its investment in Kineta, it told the Seattle Times that it was less than $1 million.
In 2008, the foundation made a $3 million equity investment in Bayhill Therapeutics Inc., a Palo Alto-based biotechnology company, for work on Type 1 diabetes, which allowed Bayhill to attract matching funding.
Private Equity Focus
Private equity investors are taking a shine to healthcare, according to a survey by RSM McGladrey Inc. and Costa Mesa-based investment bank McGladrey Capital Markets LLC, both part of Kansas City-based H&R Block Inc.
Half of respondents said they planned to invest in healthcare services and products this year, up from 27% in 2009, according to the survey.
Healthcare ranked second behind business services. More than 60% of respondents said they planned to make investments in business services this year.
As the population ages, healthcare will continue to draw private equity investors, said Paul Kacik, head of McGladrey Capital Markets’ healthcare team.
Those with products and services designed to cut costs for the government and insurance companies stand to benefit the most, according to the report.
Such companies could include those in information technology, outsourcing and disease management, according to McGladrey.
In 2008, private equity firms made two big buys here, with Lake Forest-based Apria Healthcare Group Inc. selling for $1.6 billion to Blackstone Group LP, and Newport Beach-based TriZetto Group Inc.’s $1.3 billion sale to London-based Apax Partners LLP.
Bits and Pieces
CombiMatrix Corp., a biotechnology company that’s in the process of moving to Irvine from suburban Seattle, said that its chairman, Tom Akin, and its chief operating officer, Brooke Anderson, resigned. Mark McGowan, a CombiMatrix director since January, took over as chairman and interim chief executive, replacing Amit Kumar. CombiMatrix said in late April that it would move to Irvine, where it has a diagnostic testing subsidiary, to cut costs … Tustin-based Bristol Park Medical Group said it signed a contract with United HealthCare that covers United HealthCare and PacifiCare PPO patients … UCI Medical Center, a teaching hospital in Orange, was recognized at the end of May for its role in supporting organ and tissue donation. The hospital had 16 organ donors and 56 transplants in 2009, according to OneLegacy, a nonprofit, federally designated, organ and tissue recovery group.
