Colorado Springs-based Spectranetics has grown from $100 million in sales four years ago to almost $300 million in 2015. Yet, the company has no problems with the prospect of losing about 25 percent of that amount this year.
The firm, with 800 employees globally, manufactures devices that clear occluded veins in the legs and eliminate cardiac leads from devices no longer used but which had been implanted to aid the heart. An example is a pacemaker that has been removed but the leads remain. Procedures done with Spectranetics technology for the legs can prevent amputation of limbs.
“This team has done amazing work,” said President and CEO Scott Drake. “We’ll lose about $75 million this year. All of that is investment in R&D [research and development] and clinical work we are doing.
“Shareholders have applauded us every step of the way. Three to four years ago, our market cap was about $170 million, and now we’re about $1.5 billion, so they love how we’re spending capital.”
It was one of four Colorado health care firms that U.S. Sen. Michael Bennet toured last week. Bennet, who serves on the Senate Committee on Health, Education, Labor and Pensions, said he sought information about health care to eventually help expedite approvals by the U.S. Food and Drug Administration and keep jobs from leaving the United States for other countries.
“It feels good to see people today who are now being treated with cystic fibrosis drugs or lung cancer drugs. That’s why I’m here today, to see what I can do to help,” Bennet said.
Health care companies in the U.S. face a challenge in the corporate tax realm, Drake said.
“Our corporate tax rate is about twice what’s going on in other developed countries. It is very important to address that,” to prevent American companies from moving their operations and jobs overseas, Drake said.
A relatively new technology in vein science, drug-coated balloons used to break down occlusions were approved three months ago in the United States, but they’ve been used for eight years in Europe, Drake told Bennet.
Also, it cost $500,000 to get the device approved in Europe, “and it’s going to cost us $80 million here,” he said. “So the economics are bonkers.”
“That’s what I need to know,” Bennet said. “There’s real bipartisan interest in the committee on the device side.”
“What could a company like ours do with $80 million? That’s hundreds of jobs, 12 R&D programs,” Drake said. “We can do better for the economy, we can do better for jobs, and we can do better for patients by being a little bit more nimble from a regulatory standpoint.”
Companies that manufacture medical devices must obtain a “certificate of free goods” to use it in the emerging market of China, said Shar Matin, COO of Spectranetics.
“The FDA won’t give us that because the product’s not approved here, so that doesn’t allow us access to those external markets,” Matin said. By manufacturing overseas, the company can receive approval in Europe quickly, allowing access to those large, emerging markets.
A primary technology developed and sold by Spectranetics helps people with peripheral artery disease, or PAD, which is a “global pandemic,” Drake said.
“To put it into context, HIV-AIDS affects approximately 30 million people around the world. That’s a disease our society tends to know a lot about. That patient population thankfully has declined about 10 percent in the last decade. In contrast, PAD afflicts around 200 million people around the world. That patient population has increased about 25 percent in that same period of time,” Drake said.
Eighty percent of the people who have PAD have Medicaid and Medicare insurance, paid by the U.S. government, Drake added.
Spectranetics competes with many businesses, including Medtronic, Boston Scientific, Abbott Labs and others. Spectranetics products are used in both a complementary and a competitive way with their competitors’ items, so the share position varies “pretty significantly” from one medical use to another, Drake said.
In the vascular arena, Spectranetics has about a 20 percent share in atherectomy.
In the lead management business, the company has about 80 percent of the market share.
“We compete fiercely, but we have a great deal of respect for those competitors in the marketplace.”
During the tour, Bennet “virtually” injected contrast into a fake patient. The X-ray images showed the senator how Spectranetics’ devices work. He also met with a beneficiary of Spectranetics technology, Frances Wolf, 75.
A resident of Fort Worth, Texas, Wolf developed PAD without knowing it. Her daughter noticed her limp and encouraged her to see a vein specialist. Her daughter’s husband works for Spectranetics in Texas and suggested she may have PAD.
Wolf was diagnosed with PAD and underwent treatment in both her legs, yet was able to walkout of the doctor’s office after the minimally invasive procedure.