Former Lutonix VP Pleads Guilty to Trade Secret Theft

On May 9, 2017, according to court records, Christopher Barry, former Vice President of R&D at Lutonix Inc., pled guilty to stealing Lutonix’s trade secrets in the form of several confidential electronic files.  According to the Plea Agreement, the allegedly stolen files relate to Lutonix’s proprietary design and manufacture of drug coated balloons, in particular the Lutonix 035 DCB.  The Plea Agreement stated that sales for the Lutonix 035 DCB, depicted below, exceeded $50 million in 2015.

The factual background provided in the Plea Agreement reports that, following his departure from Lutonix, Barry took a position as CEO of Urotronic, a medical device startup developing its own drug-coated balloon.  According to the Plea Agreement, Barry disclosed the contents of the purportedly stolen files to others at Urotronic.  However, according to news articles, following entry of Barry’s guilty plea, Urotronic denied that Barry had any involvement in the development of the Urotronic technology.

FDA Approves “First-of-its-kind” Infant Medical Device

The U.S. Food and Drug Administration (FDA) recently authorized the use of what it described as a “first-of-its-kind” medical device to treat infants for a birth defect called esophageal atresia, in which the upper esophagus is disconnected from the lower esophagus and the stomach. According to the FDA, babies with this condition require a feeding tube until surgery can be performed to connect the esophagus to the stomach.

According to Cook Medical, its pediatric esophageal atresia anastomosis device, called Flourish™, uses magnets to pull the upper and lower esophagus together, closing the gap and allowing food to enter the stomach. Dr. Mario Zaritzky, a pediatric radiologist at the University of Chicago Medical Center and one of the joint inventors listed on the patent on this technology (U.S. Patent No. 9,168,041), states:

“The idea was to create a minimally invasive procedure that could possibly be an alternative to surgery in selective pediatric cases. Any procedure that can potentially replace major thoracic surgery with a less invasive method should be considered before deciding to go to the operating room.”

Cook Medical’s press release notes that each of the 16 infant patients treated using this device had a successful joining of their esophagus with no remaining gap, within 3‑10 days after receiving the device.

According to the Cook Group, Cook Medical is a company that engages in “medical research and product development in minimally invasive medical device technology for diagnostic and therapeutic procedures.”

Intellectual Property Cases Dominate 2016 Verdict Awards

According to the annual Top 100 Verdicts report by ALM’s VerdictSearch, five jury verdicts for Intellectual Property cases cracked the top 10 with a sixth breaking into the top 25 verdicts of 2016. While the amounts do not account for judicial reductions, offsets or appeals, the report indicates that the more than $4.67 billion in total jury awards from the top 6 IP verdicts alone show that intellectual property cases dominated the Top 100 in terms of total dollars awarded.

The publication ranked Idenix‘s $2.54 billion royalty share of Gilead Sciences‘ profits from two blockbuster hepatitis C drugs as the #1 IP verdict and #3 overall on its list of “Top 100 Verdicts of 2016.” According to the report, Idenix successfully asserted that Gilead willfully infringed Idenix’s patents relating to an antiviral compound used in the treatment of hepatitis C, resulting what commentators have stated is the largest patent infringement verdict in U.S. history.

The second highest IP verdict in VerdictSearch’s 2016 list, $940 million (including $700 million in punitive damages), went to medical software company Epic Systems in what commentators have said is one of the largest trade-secrets verdicts on record. According to the report, Epic successfully asserted that Tata misappropriated information related to Epic’s health care software.

The #3 and #4 IP verdicts of 2016 according to VerdictSearch, $625 million and $302 million, respectively, went to technology patent-holder VirnetX for infringement of four of VirnetX’s internet security patents infringement by several Apple products, including iPhones and iPads.

Merck won the 5th largest IP verdict of the year according to VerdictSearch, a $200 million award against Gilead. The report noted that Gilead Sciences v. Merck & Co. involved infringement of different patents relating to the same drug compound as the Idenix case. The case was filed by Gilead as a declaratory judgment action, but Merck & Co. won on its counterclaim.

CardiAQ‘s $70 million win in CardiAQ Valve Technologies, Inc. v. Neovasc Inc. was listed in VerdictSearch as the #6 IP verdict and tied for #21 overall. As noted in a previous post here, according to the report, the jury found that Neovasc breached the non-disclosure agreement between the parties, misappropriated CardiAQ’s trade secrets, and breached its duty of honest performance to CardiAQ.

According to the report, the 11 IP verdicts in the top 100 totaled approximately $4.8 billion, more than a threefold increase from 2015, when the total was $1.43 billion.

 

Confirm Rx: Abbott Receives CE Mark for Smartphone Compatible ICM

Abbott recently announced the CE Mark and first use of what it claims is “the world’s first smartphone compatible” insertable cardiac monitor (ICM), as reported by a press release dated May 8, 2017.

According to the press release, Abbott produces the Confirm RxTM ICM, which is marketed as the slimmest ICM available. Pictured on the right, Abbott states that the Confirm RxTM is designed to continuously monitor a patient’s heart rhythm and proactively transmit information via the myMerlinTM mobile app, thereby allowing physicians to follow their patients remotely and ICMaccurately diagnose arrhythmias.  As noted on the Confirm RxTM webpage, the ICM is placed by a physician under local anesthesia by making a small incision in the pectoral region, inserting the ICM under the skin using an insertion tool, and then closing the incision. “Patients can record symptoms directly on their smartphone without the need for a bedside transmitter or separate activator,” said Georg Nölker, M.D. in prepared remarks.  Dr. Nölker was one of the first physicians to implant the Confirm Rx ICM after it received CE Mark approval.

According to Abbott, the myMerlinTM mobile app makes it easy for patients to stay connected to their physicians.  A listing of the product features from the Confirm RxTM product website includes:

  • Transmit nightly data reports automatically simply by being in range of the smartphone;
  • Manually record patient symptoms on their own smartphone and specify events such as fainting or if they experience a fast heart rate;
  • Confirm patient data was transmitted to their physician;
  • Automatic alerts when they have missed a scheduled transmission;
  • Offers secure transmission of patient data.

Mark D. Carlson, M.D., chief medical officer of Abbott’s cardiac arrhythmias and neuromodulation businesses, views these results as a step forward in ICM technology, stating:

Incorporating wireless technology directly into our devices enhances the quality of remote monitoring and patient compliance…The Confirm Rx ICM addresses a broad range of indications, such as syncope, palpitations and atrial fibrillation. The technology has been designed with robust data privacy and security measures to ensure peace of mind for both patients and providers.

Dr. Christopher Piorkowski, said to be one of the first physicians to implant the Confirm RxTM ICM, stated:

The Confirm Rx ICM will be particularly useful in monitoring for atrial fibrillation in my patients with paroxysmal AF, following AF ablation and with stroke of an unknown cause. It allows an objective way to quantify AF events to guide treatment decisions. The smartphone compatibility engages patients and allows better compliance to remote monitoring through a simple and intuitive user interface. This allows clinic staff to reduce follow-up burden and focus on reviewing transmitted data for AF.

As reported by the press release, the Confirm RxTM ICM is available in select European countries, with full European release expected during the second quarter of 2017.  It further states that the device is currently under review by the U.S. Food and Drug Administration.

WannaCry Malware and Medical Device Security

The WannaCry virus has infected and frozen computers in many industries around the world.  According to a news source report, the virus has extorted doctors and hospital administrators for the keys to unlock and regain access to their systems in order to treat patients.  The Telegraph reports that in the United Kingdom alone, up to 40 hospital trusts were hit by the WannaCry ransomware virus, which resulted in a wave of cancelled appointments and a general state of disarray.  Recently, the BBC has stated that at least 16 of these hospitals are still facing issues.  With the widespread damage associated with the WannaCry virus, many experts have advocated that the medical device industry should be on alert, now more than ever, regarding the cyber security of their medical devices.

Although the issues associated with medical device security have recently been discussed, some industry professionals believe there does not seem to be an adequate solution to the problem of device security.  Tressa Springman, the CIO of LifeBridge Health, explains:

“There’s a lot of talk in healthcare about device security. Discussions about what we’re comfortable pushing as endpoint security and what we’re unable to do – because certainly, we don’t want to create any harm to patients.  Many of these devices and the vendors who manage them, it’s very hard to go direct on patching and adding security.”

While medical devices are generally tested extensively for safety, some cybersecurity experts have observed the same cannot necessarily be said for security.  Brian NeSmith, co-founder and CEO of cyber security company Arctic Wolf Networks, has stated:

“Medical devices, similar to many other IoT devices, were not designed with rigorous security in mind and are more vulnerable to being hacked. They also do not fall under normal security operations procedures since they are used as needed by the medical practitioners and not deployed and maintained by the IT department.”

Security experts are emphasizing the importance of security patches.  Optimistically, Richard Staynings, the principal cybersecurity healthcare leader at Cisco’s Security unit, believes:

“This is going to cause a paradigm shift, at least for patching.”

INC Research Merges with inVentiv Health Creating a $7.4B Combined Entity

According to press releases, INC Research Holdings, Inc. has agreed to merge with inVentiv Health, creating a combined company having an enterprise value of approximately $7.4 billion. The press release further notes that the combined company will be the second largest biopharmaceutical outsourcing provider, one of the top 3 contract research organizations and the largest contract commercial organization by net revenue.

In other news, INC Research was recently recognized for its cybersecurity awareness training at the 5th annual CSO50 Conference + Awards event held on May 1–3.  The CSO50  recognizes 50 organizations for security projects that demonstrate “outstanding business value and thought leadership” and are selected through a nomination and review process each year by a team of security experts and academics.  CSO is an online publisher focusing on information security, physical security, business continuity, identity and access management, and loss prevention.

According to its website, INC Research is a contract research organization that provides clinical development services to the pharmaceutical, biotechnology, and medical device industries.  With more than 6,000 employees across 110 countries, over 100 client audits a year, and access to sensitive medical information by most employees, INC Research was tasked with providing adequate and efficient cybersecurity training—in addition to many other internal training programs.

The award-winning program it developed was said to save over 3,500 hours of disruptive training time.  According to news sources, INC Research’s security program focused on frequency of training communications, as opposed to a single one-hour yearly session.  Its program used two 15-minutes trainings per year, quarterly two-minute training videos and regular contacts with employees using the company’s intranet and email systems to reinforce cybersecurity principles.

Other honorees included AstraZeneca, Beebe Healthcare, Celgene Corporation, the FDA, and Health Management Systems.

Becton Dickinson to Acquire C. R. Bard for $24 Billion

Becton Dickinson (“BD”) recently announced an agreement to acquire C.R. Bard for $24 billion in cash and stock. The transaction remains subject to regulatory and shareholder approvals, but is expected to close in the fall of 2017.

Both BD and Bard are century-old (BD was founded in 1897 and Bard was founded in 1907) medical device companies based in northern New Jersey.  Bard offers devices for vascular medicine, urology, oncology and surgery, whereas BD provides syringes and infusion products, including those for diabetes management, and products for collecting and transporting diagnostic specimens.  According to BD, Bard will expand BD’s focus on the treatment of disease states beyond diabetes to include peripheral vascular disease, urology, hernia and cancer.

The agreement to acquire Bard follows BD’s 2015 acquisition of San Diego-based CareFusion Corp. for $12 billion.  The acquisition of CareFusion expanded BD’s product offerings to include devices used for administering and managing medication.  Regarding its acquisition of Bard, Vincent Forlenza, Chairman and chief executive officer of BD states:

Combining with Bard will accelerate our ability to offer more comprehensive, clinically relevant solutions to customers and patients around the globe…We expect the transaction to contribute meaningfully to BD’s plans for revenue growth and margin expansion, and generate outstanding value both near- and long-term for shareholders.

Additionally, BD says the acquisition of Bard which registered approximately 500 products internationally in 2016 will accelerate the company’s growth in emerging markets outside of the U.S., including $1 billion in annual revenue in China.  Tim Ring, Bard’s chairman and chief executive officer explains that: “our fast-growing portfolio in emerging markets can significantly benefit from their well-established international commercial infrastructure.”

Johnson & Johnson’s Codman Neuro Announces Acquisition of Neuravi

Codman Neuro, part of Johnson & Johnson’s DePuy Synthes business unit, recently announced its acquisition of Neuravi Ltd., a privately-held Irish medical device company, for an undisclosed amount.  The Irish Times reported that the acquisition is the largest price paid for a European venture-backed medtech company since Medtronic’s $700 million buyout of CoreValve in 2009.  According to its website, Neuravi focuses on neurointervention therapies for acute stroke treatment.

Neuravi’s sale to Codman Neuro comes after several rounds of fundraising, in which Neuravi secured tens of millions of dollars for the development and commercializing of its EmboTrap Revascularization Device.  Neuravi explains that the EmboTrap Revascularization Device is a thrombectomy system designed to restore blood flow to the brain by capturing and removing blood clots.  EmboTrapIn a 2016 press release, Neuravi CEO Eamon Brady quoted the most recent investment of $16.7 million as important for building a commercial presence in the U.S. and cited the “opportunity due to the under-developed stroke treatment ‘toolbox’ available to stroke clinicians today.”  The EmboTrap devices are now commercially available in Europe and are currently undergoing clinical trials in the U.S.  Speaking to the Irish Times regarding Neuravi’s acquisition, Justin Lynch, a partner of one of Neuravi’s early institutional investors, said:

This is a company that has knocked the ball out of the park. They have beaten every milestone, earlier and with less money that budgeted, which is almost unheard of in this business.

Neuravi’s revascularization devices appear to have successfully caught the attention of Codman Neuro.  Shlomi Nachman, Company Group Chairman of Johnson & Johnson Medical Devices Cardiovascular & Specialty Solutions recently stated:

Rapid restoration of flow is of utmost importance when treating stroke patients . . . .  The EmboTrap platform was designed to address this critical need and we are excited to combine Neuravi’s expertise in clot research with Codman Neuro’s global resources to accelerate innovation in acute ischemic stroke treatment.

Codman Neuro describes its portfolio as including medical devices for hydrocephalus management, neuro intensive care and cranial surgery, and endovascular treatment of cerebral aneurysms and stroke, including aneurysm coils and vascular reconstruction devices.

Shortly before Codman Neuro’s acquisition of Neuravi, Integra Lifesciences announced that it plans to purchase Codman from Johnson & Johnson for $1.05 billion.  Integra explained that it intends the acquisition to expand Integra’s international presence.  Integra markets products in orthopedic extremity surgery, neurosurgery, and reconstructive and general surgery, including wound repair.  According to Integra’s press release,  Codman Neuros’ neurosurgery business generated $370 million in 2016 from the sale of neuro-critical care and electrosurgery devices.  Johnson & Johnson reported to Reuters that the deal with Integra excludes its neurovascular and drug delivery businesses.

Boston Scientific Announces Worldwide EMBLEM™ Study

Boston Scientific recently announced that it is launching a worldwide study for its EMBLEM™ MRI Subcutaneous Implantable Cardioverter Defibrillator (S-ICD) device.  According to the press release, a multicenter trail of the device will focus on a group of patients who are above 65 years old with a history of prior heart attack, diabetes, and moderately reduced left ventricular ejection fraction, considered to be at higher risk of sudden cardiac arrest but unsuitable for implantable cardiac defibrillators. The study, according to Boston Scientific, is designed to evaluate whether the company’s EMBLEM MRI S-ICD System improves the survival rate in the target group of patients in comparison to patients continuing with their present treatment. Boston Scientific indicates that it is also seeking parallel approvals for a new indication from the FDA and the Center for Medicare & Medicaid Services for use of the device in treating the target group of patients.

Commenting on the study, Senior VP and Chief Medical Officer of Global Health Policy and Rhythm Management Dr. Kenneth Stein, stated:

“In addition to the knowledge we hope to gain from this population of patients with diabetes, we are excited for the opportunity to improve the broad applicability of the [multicenter] trial results by increasing the enrollment of women in this study. Moreover, the trial emphasizes our continued commitment to expanding access to all patients who may benefit from this proven technology.”

Dr. Valentina Kutyifa, principal investigator and research assistant professor of cardiology at the University of Rochester Medical Center, also stated:

“Our hypothesis is that the S-ICD device may reduce all-cause mortality in this high-risk cohort of cardiac patients with diabetes. The value of eliminating unnecessary patient complications by implanting a defibrillator which does not require intracardiac leads was an important factor in our decision to utilize the S-ICD device when designing this trial.”

Boston Scientific previously reported acquiring the S-ICD technology from Cameron Health in 2012.

NeuroTronik Closes $23.1 million Series B Round

neurotronik_logoNeuroTronik, a North Carolina based subsidiary of NeuroTronik LTD of Dublin, announced that it recently closed a $23.1 million Series B funding round. The press release noted that the round was led by contributions from Boston Scientific, Synergy Life Science Partners, and several venture capital firms.  NeuroTronik was quoted in the release as aiming to improve patient outcomes, shorten hospital stays, and reduce hospital recidivism rates.

 

According to NeuroTronik, the therapy, known as CANS Therapy, utilizes a neuromodulation device designed to stimulate the cardiac autonomic nerve via a catheter. NeuroTronik describes the device as less invasive than currently used implantable defibrillators, providing an alternative to drug-based treatments. According to the company, NeuroCatheterTM is temporarily placed in a vein just above the heart and is controlled via an external NeuroModulatorTM that can be positioned bedside.

“Physicians need better therapy tools to treat Acute Heart Failure in the hospital. With the achievement of our Series A milestones and through subsequent work, our team has demonstrated that NeuroTronik CANS Therapy™ holds considerable promise to be a unique and valuable tool for physicians for use in this clinical setting,” said Fred McCoy, CEO and Director, NeuroTronik LTD in a prepared statement.

NeuroTronik stated that it plans to use the Series B funding to obtain regulatory approval to market its CANS Therapy device in Europe. After obtaining European approval, NeuroTronik plans to bring the treatment to the United States.

Previous news sources state that NeuroTronik closed a $13.1 million Series A round in May of 2013, and was spun out of a medical technology incubator called Synecor in 2012.

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