Building Interventional Gynecology

Article preview from Start-Up - June, 2010

Once a sluggish category for clinical innovation, gynecology is drawing new venture-backed companies eager to build upon the lead created by first-generation companies operating in minimally-invasive endometrial ablation and female sterilization. First generation companies had the difficult task of creating paths to early adopters of minimally invasive procedures. These now exist, and the clinical specialty appears to be also evolving in ways that encourage the growth of in-office procedures.

Building Interventional Gynecology

Article preview from Start-Up - June, 2010

Several companies have shown that minimally invasive technologies can successfully address gynecological disorders and that physicians and their patients will adopt them. Those models are encouraging venture capitalists to back start-ups in the emerging sub-specialty of interventional gynecology.

by Mary Stuart

With major product categories like cardiology and orthopedics offering incremental innovations and diminishing returns, there's been a renaissance in women's health.

Once a sluggish sector for clinical innovation, companies are eager to build around minimally invasive products for endometrial ablation and female sterilization – two areas where technologies are succeeding. Uterine fibroid treatments will be the next big market.

Economic and market drivers are creating a demand for minimally invasive, "lunch-time" procedures. The goal here is not only convenience, but to provide definitive treatments for medical conditions for which there have been no therapeutic strategies between the two extremes of either doing nothing or surgical hysterectomy.

Traditional gynecologists offer a wide range of services including primary care and surgical procedures, in varying mixes from practice to practice and with regional differences as well. First-generation companies had the difficult task of creating paths to early adopters of minimally invasive procedures. These now exist, and the clinical specialty appears to also be evolving in ways that will further encourage the growth of in-office procedures.

Ernst & Young's "Pulse of the Industry: Medical Technology Report 2009" showcased a new and surprising winner among the top five fastest growing therapeutic device categories: women's health. Between 2007 and 2008, revenues from devices for women's health jumped 114%, while traditional categories like orthopedics and ophthalmology increased by only 12% and 11%, respectively. ( See Exhibit 1.) This good showing came from a medical device segment once known as a backwater of investing, and an innovation laggard.

Specifically, among investment circles, there is suddenly a great deal of fervor around minimally invasive devices for women's health. Companies in product areas such as endometrial ablation, therapeutic devices for uterine fibroids, less-invasive treatments for stress urinary incontinence, and office-based permanent contraception are attracting venture capital. VCs have turned their attention to women's health devices, and not just because more established areas like cardiology and orthopedics are yielding incremental innovation and more modest growth prospects.

In the past five years or so there have been several notable successes in what has been a difficult field. Start-up Novacept Inc., founded in 1995 by physician/entrepreneur Rodney Perkins, MD, and engineer Csaba Truckai, launched NovaSure, a new minimally invasive product for endometrial ablation (a treatment for excessive menstrual bleeding, also called menorrhagia). It overtook products from large companies Boston Scientific Corp. and Johnson & Johnson owing to superior ease-of-use, speed and efficacy. In 2004, Cytyc Corp. (now part of Hologic Inc.) acquired Novacept for $325 million. ( See "Novacept: A Patient Device Exit Strategy Succeeds," IN VIVO, June 2004.) At the time, Cytyc was already focused on women's health, but operating in diagnostics. Three years later, Cytyc strengthened its gynecology franchise by acquiring Adiana Inc., a start-up developing a minimally invasive trans-cervical method for female sterilization, for $60 million, plus earn-outs. Adiana was a fast follower to first-generation interventional gynecology company Conceptus Inc., which has been marketing its office-based alternative to surgical tubal ligation for permanent contraception since 2002. Johnson & Johnson, which kicked off the trend in the first place when it bought minimally invasive endometrial ablation company Gynecare for $79 million in 1997, continued to support the franchise with its 2006 purchase of Vascular Control Systems Inc., the developer of devices for the treatment of fibroids. The momentum increased when Cytyc merged with breast health company Hologic in a transaction worth $6.5 billion, creating a broad-based company focused on women's health, and a new, deep-pocketed acquirer.

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