by Casey Lynch, NeuroInsights

When Tom Wilder left Medtronic to join the neurovascular company Micro Therapeutics he saw a major untapped market opportunity and a floundering company with the potential to execute where bigger companies, like Medtronic, were hesitating. Since then, he has quietly transformed Micro from an over hyped single product company into one with a broad technology suite. For the 2005 first quarter, net sales increased to $11.4 million, a 50% increase over net sales of $7.6 million in the comparable period a year ago.

The neurovascular intervention market, which includes specialized catheters and guidewires for reaching complex cerebral arteries along with stents and embolic coils for treating brain aneurysms, was almost $500 million in 2004 with 20% annual growth. While Boston Scientific (BSX) is far and away the market leader in the space with 60% market share, smaller companies like Micro Therapeutics, Micrus, and Microvention are showing that they can compete by focusing on specific needs of neurovascular physicians and continuing to introduce innovative products.

When Micro went public in 1997 (MTIX), the focus was entirely on their liquid embolic product, Onyx, which can be used to prevent hemorrhagic stroke by stabilizing aneurysms (weak and bulging areas of a blood vessel). When Onyx suffered a major setback in 2002 many investors ran for the hills. The risk of using a liquid embolic to fill most aneurysms, considering that some of the liquid polymer might be placed into the blood supply and even clog normal vessels, was simply too high to justify its use under normal circumstances.

However, the company continued to develop Onyx for appropriate indications including sealing of arteriovenous malformations (AVMs) prior to surgical removal and filling of irregular aneurysms. After using Onyx to treat over 5000 patients in Europe and completing final labeling discussions with the FDA last month, Micro expects to receive PMA approval for use of Onyx in AVMs any day now.

But the real story is not with Onyx anymore. Under Wilder’s direction, the company acquired more conventional embolic coil technology from Germany’s Dendron and subsequently developed it in house into revenue generating products. Micro’s latest generation coil, dubbed ICE, which will be introduced this year has improved resiliency over standard platinum coils which helps keep the coil from deforming over time and collapsing under pressure from the blood vessel. Additionally, the coil has bioactive properties to promote healing of the aneurysm “neck” where it buds from the blood vessel.

Micro’s coils and other bread and butter products for neurovascular surgeons generated $35 million in 2004 revenue with almost 50% annual growth. With the closing of their German plant, the company is continuing to improve product margins, currently at 64%, and expects to be profitable by Q4.

While MTIX is generally being overlooked, their majority stock holder (70%) and product distributor, ev3, is about to go public. The pricing of the IPO announced 5/31 indicates that the company expects to bring in about $200 million to pay off debt and pursue “corporate objectives.” With Micro's products representing a good part of ev3's revenues, it's not much of a stretch to speculate that Micro shareholders might benefit from a successful ev3 IPO.