Knobias ClipReport (8-29-2007)

Submitted from Knobias ClipReport

Scivanta Medical Corporation (SCVM) has entered into a development agreement with Sparton Medical Systems, a business group of Sparton Electronics Florida, Inc. which is a wholly-owned subsidiary of Sparton Corporation (SPA). Sparton will provide engineering and development support for the hardware component of the Hickey Cardiac Monitoring System (HCMS).

Sparton will plan and develop the design control documents; concept development, including mechanical, electrical and software design; completion of a detailed design and an engineering model; assembly of proto-type models and preliminary design verification testing; the production of "pilot" devices using formal drawings and validated processes; and design verification testing on the "pilot" units. The estimated cost for Scivanta under the development agreement are estimated to be up to $1,650,000 for services and materials.

President and CEO of Scivanta, David LaVance, told Knobias on Tuesday, "Sparton is an experienced engineering, designing and manufacturing firm that has a specialty in medical devices that operate similarly to the Hickey Cardiac Monitoring System. They have long worked in the fields of cardiac devices and other systems requiring automated pumps and monitors, as well as integrated electronics. Their facilities are superb, and they have a team of engineers and technicians dedicated to medical device engineering and manufacturing."

The Hickey Cardiac Monitoring System is a minimally-invasive two-balloon esophageal catheter system used to monitor cardiac performance. It is designed to be used outside of an intensive care setting.

Mr. LaVance noted, "The catheter component of the HCMS is being developed by Ethox International, Inc., while the software for the product is being developed by Applied Sciences Group, Inc. With Sparton now signed on to develop the hardware for the system, the development team necessary to bring the HCMS to the market is now intact. Given the established safety of esophageal balloon catheters, the Hickey monitor is currently entering a 510(k) expedited review with the FDA. Sales could be launched in about a year if trials demonstrate its safety and effectiveness to the FDA. We have already secured the funds necessary to design and manufacture the HCMS through the clinical trails stage."

"The gold standard for current cardiac monitoring technologies is the Swan-Ganz catheter, an instrument that is inserted through a patient's femoral artery and snaked into the heart. Aside from the obvious benefit of eliminating the need for a surgical procedure, the HCMS offers a number of other improvements over today’s standard for cardiac monitoring that include a minimally invasive esophageal route that reduces infection and other systemic adverse events; rapid insertion and positioning by non-physician personnel; performs phonocardiogram and monitors audible heart sounds unaffected by surrounding noise; includes integrated ECG and blood pressure measurement; disposable non-metal components that do not interfere with magnetic resonance imaging; instantaneous analysis and display of cardiac performance; and estimated maximum total cost of approximately $600, compared with $1800 for the Swan-Ganz catheter," he explained.

Mr. LaVance commented on the potential market impact of the HCMS, "The market for standard cardiac monitoring is more than 1 million procedures a year, a figure that non-invasive technology could greatly expand because of its ability to be performed outside of intensive care units. In the year 2000, direct and indirect costs of cardiovascular disease was $325 billion. The Hemodynamic monitoring market was estimated at $500 million in 2006, with a a 30% compound annual growth rate projected for noninvasive hemodynamic monitors."

According to a University of Buffalo research study, "The Hickey Cardiac Monitoring System has tremendous market potential. The system will generate sales from the consumer catheter component and capital equipment. The capabilities of make it well suited for other applications as well. Anesthesiologists may find the HCMS a useful tool when monitoring patients undergoing treatment for aneurysms, bowel obstruction, ruptured ectopic pregnancies, trauma surgery and burn management, or other heavy fluid-loss surgery that requires close monitoring of fluid balance and cardiac performance."

Mr. LaVance concluded, "Currently we are focusing our efforts toward the development of the HCMS. We expect to continue to review the acquisition of other medical technologies and products that are sold, or capable of being sold, in a specialty or niche market."
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