PERSON to watch: MICHAEL MUSSALLEM
HEALTHCARE
SPECIAL REPORT
by Vita Reed
Michael Mussallem has steered a generally smooth course since becoming chief executive of Edwards Lifesciences Corp. upon its 2000 spinoff from Baxter International Inc.
But he faces a new challenge in 2002: branching out from Edwards’ core heart valve market.
Edwards’ heart valve profits have grown under Mussallem, a mainstay of Baxter’s former cardiovascular unit. Mussallem has dumped slow-growing businesses, such as Bentley Labs and Novacor. The company counted a market value of $1.6 billion at mid-December.
While Wall Street has cheered the moves, cost-cutting only gets you so far. Edwards saw sales fall to $147.8 million from $185.8 million in the year-ago quarter, largely due to the selloffs. Still, the restructuring has put Edwards at a crossroads: it either can settle for slow but profitable growth or seek the gains shareholders and analysts are looking for in new markets.
Mussallem has opted for the latter, saying the company is focused on the “real value creation thing.”
“This really comes back to the core reason why we spun off the company,” he said in October.
As 2002 begins, Edwards is continuing with second-stage clinical trials of its Lifepath system for treating abdominal aortic aneurysms. Lifepath recently resumed American trials, and has received a European Union nod.
Edwards also said two weeks ago that it’s introducing more products to treat peripheral vascular disease, which involves arteries in areas such as the legs or abdomen becoming clogged. Edwards struck deals with two Florida companies to reach that goal.
Among analysts, the prevailing take is that Edwards needs to branch out from heart valves to bolster its growth. Juan Noble, an analyst with Fahnestock & Co., wrote that sustainable longer-term growth for the company could hinge on the commercialization of other device-based treatments for end-stage cardiac disease besides heart valves.
, Vita Reed
COMPANY to watch: CARDIAC SCIENCE
HEALTHCARE
SPECIAL REPORT
Irvine-based Cardiac Science Inc. may get a jolt in 2002 from selling machines that give faulty hearts little electric shocks.
The company, which makes heart defibrillators and employs around 100 people, is heading into 2002 with a growing list of clients and with a beefed-up war chest.
Cardiac Science recently raised $38 million in two stock placements. Cardiac Science used proceeds from a $28 million direct offering to finance its recently finished acquisition of Survivalink Corp. and for working capital.
Funds raised in a subsequent $10 million placement are being earmarked for expanding the company’s sales force, launching two new products and general corporate purposes. The new products are a second-generation Powerheart for hospital use and a new defibrillator for public use.
Cardiac Science also completed its $15 million acquisition of Artema Medical AB, a Swedish maker of external heart defibrillators and patient monitoring devices, in November.
In other events, Cardiac Science received Food and Drug Administration approval to market a second-generation version of its signature Powerheart defibrillator. The company also said it received three additional U.S. patents related to its automatic external defibrillator products, while noting that a wearable version of the Powerheart was in development.
Cardiac Science’s stock has traded in the range of around 2 to 6 this year. The company counted a market value of about $325 million at recent check. Like other OC medical device makers before it, Cardiac Science could find itself catching the eye of potential big-name suitors. The company has a distribution pact with Medtronic Inc.
, Vita Reed
