Things could have gone badly for Stellarex.
The proprietary drug-coated balloon technology, used to deliver medication to narrowed blood vessels in the legs, was sold for the fire-sale price of $30 million as one consequence of the titanic tie-up between Medtronic and Covidien in January. To resolve antitrust concerns, Covidien agreed to sell Stellarex to new owners in Colorado, prompting uncertainty for its 75 employees in Minnesota.
Rather than do layoffs or forced moves, though, the Stellarex division got a new $2.1 million facility in Maple Grove and a commitment from the new owners — Colorado Springs' Spectranetics Corp. — to aggressively invest in the technology. Spectranetics will cut the ribbon Tuesday on its new research and testing facility for Stellarex balloons and other devices.
"We've had to pinch ourselves a little bit," Stellarex program manager Adam Podbelski said. "This could have gone some ways where we were talking about just shuttin' her down and transferring assets. And instead Spectranetics has come here and said, 'We want you to join us. Let's make this successful together.' "
Spectranetics is a fast-growing company that manufactures all its devices in the U.S. It is projecting at least $240 million in revenue this year, up from $118 million in 2010.
As the maker of single-use medical products, Spectranetics has been working to build a complete line of devices for the cardiovascular subspecialty known as vascular intervention. Such devices are designed to fit entirely inside blood vessels so that they can be routed to the treatment site through tiny incisions, avoiding the need for "open" surgery.
Drug-coated nylon balloons like the Stellarex are supposed to treat a common condition called peripheral artery disease, in which arteries above the knee and below the hip become severely narrowed and painful. The device is inserted in one leg and pushed through the arteries to the site of the clog in the other leg, where it is slowly expanded. Temporary contact with the vessel wall transfers the drug from the outside of the balloon to the tissue, with the goal of preventing a re-narrowing of the vessel once the balloon is removed.
Global sales of balloons that deliver drugs to the vasculature are expected to grow to $477 million in 2019, from $164 million in 2012, primarily because of the expanded sales in the U.S. and Japan following approvals of devices in those countries, according to a report from research and consulting firm GlobalData.
"It's a pretty good-sized market," said Spectranetics Senior Vice President Kim Bridges. "It is a very attractive market."
Medical device giant Medtronic already had a drug-coated balloon in the works last year when it announced plans to acquire Covidien, which had acquired Stellarex from a California company called CV Ingenuity in 2012. Since the Federal Trade Commission often requires duplicate assets to be sold off before a big transaction to maintain market competition, executives at Spectranetics saw an opportunity.
"We jumped in on that and we got [Stellarex] for about a tenth of the price what Covidien paid for it from CV Ingenuity. We are very grateful for that opportunity," Bridges said.
Plenty of hard work remains. Stellarex is legal to sell in Europe, but the device needs much more comprehensive safety data to gain U.S. approval, which is projected for 2017.
Much of the work that will take place at the Maple Grove location will be designing and running several studies to gather the clinical data, and testing the devices to make sure they perform as expected.
On one recent afternoon, a research chemist was working on one of the 4,000 individual tests being run to make sure the drug on the balloon doesn't degrade in potency over time. Others worked to make sure the device can travel through the vascular system effectively, and can be inflated without bursting — standard tests for such a device.
Next up will be work on the next generation of drug-coated balloon, intended for use in the narrower vessels below the knee.
"We have 75 teammates here, and we actually have the capacity to double that if we need to," Bridges said. "We're really excited about being here and having access to the intellectual knowledge, as well as the resources, here in the market."