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Up, up, and away with AngioJet®
9055 Evergreen Blvd NW
Minneapolis, MN 55433
Chacko, Vice President of Finance and CFO (Left) and
Robert G. Dutcher, Chairman, President and CEO (Right)
Minneapolis Star Tribune
Diane Reynolds, Co Publisher
of Eapen Chacko, VPF/CFO
Chacko joined Possis Medical in September 1999 as Vice President of Investor and Public
Relations. He became Chief Financial Officer in September 2000. Prior to joining Possis
Medical, Mr. Chacko was the Director of Investor Relations for Fingerhut Companies, Inc.,
one of the nations largest direct marketing and online retailers, now a division of
Federated Department Stores, Inc. While at
Fingerhut, he worked on the initial public offering of Metris Companies, Inc., an
information-based financial services company; the IPO was the most successful IPO of a
Minnesota company in 1996. He also worked on
business acquisition teams while at Fingerhut. Mr.
Chacko gained his investor relations experience as a consumer of those programs, having
been both a buy-side and sell-side equity analyst in a fifteen-year career on Wall Street. He was named a Wall Street Journal All-Star
Analyst for his stock picking prowess in 1995. As a senior consultant at Merrill Lynch
Economics, he provided forecasting, business analysis and strategic consulting services to
Fortune 250 companies. He has also had
extensive international experience as a senior officer with the United Nations Development
Program before entering the investment business.
A native of
New York City, Mr. Chacko earned his undergraduate degree in economics and statistics from
Columbia College in New York City. He holds a
masters degree in economics and operations research from The Johns Hopkins
University in Baltimore, Maryland. He also spent a year studying international economics
at the University of York in England, and he completed advanced finance courses at the
Stern School of Business at New York University.
has taught economics at The Johns Hopkins University and at Towson State University. Mr.
Chacko has been a guest lecturer in Finance at the University of St. Thomas in
Minneapolis. He is a member of the Financial
Executive International Twin Cities Society of Securities Analysts, the Association for
Investment Management Research, the Public Relations Society of America, and the National
Investor Relations Institute.
Description of Possis Medical, Inc.
Medical, Inc. develops, manufactures and markets pioneering medical devices for the large
and growing cardiovascular and vascular treatment markets.
Its primary product, the AngioJet® Rheolytic Thrombectomy System,
removes blood clots that cause acute, often life threatening events. The company has a portfolio of three FDA approvals
and clearances for the AngioJet System: for native coronary vessels and bypass grafts,
peripheral arteries in the legs and kidney dialysis access grafts.
Ceocfointerviews: Tell my readers, what is this company and how it
Mr. Chacko: We are the
leader in a category of medical therapies called Mechanical Thrombectomy, that
is we remove blood clots from a patients vessels, through minimally invasive
techniques. Blood clots usually arise from
some underlying disease process in the body, and they can reduce, or cut off, blood
circulation, thereby causing critical events like heart attacks, or amputation of a leg
that has gone cold from impeded circulation. Our
proprietary technology removes blood clots rapidly, safely, effectively, and in a
cost-efficient manner. Thats the
value we provide to our physician customers.
Ceocfointerviews: Does it require less time and less equipment to
actually do the procedure?
Mr. Chacko: Once
activated in the body, our AngioJet catheters remove clots in minutes or seconds, compared
to hours with some common drug therapies that seek to dissolve the clots. In an economic assessment of Rheolytic
Thrombectomy, Dr. David Cohen of the Harvard Clinical Research Institute concluded that
AngioJet treatment saved heart patients $3,500 per patient of in-hospital costs, and that
these savings were maintained at 1 year of follow-up.
Our marketing research shows that these savings can be $5,000 or more per
patient when compared to current treatment regimens.
Ceocfointerviews: Blood clots do reoccur, after using the AngioJet,
how often do they reoccur or is there a less percentage by using this procedure versus
using the other procedure?
Mr. Chacko: We are an
adjunctive therapy so we dont address the underlying disease process of coronary
artery disease, so we do not reduce the restenosis rate with our therapy. However, when our device is used to clear the
occluded vessel of clot before a balloon angioplasty, stent deployment and the
administration of GP IIb/IIIa inhibitors, the patient may get a better long-term result
than if we had not been used.
Ceocfointerviews: How many products do you have approved by the FDA
and out on the market?
Mr. Chacko: The
FDA has approved the marketing of our products for native coronary arteries and coronary
bypass grafts. We are the only mechanical
thrombectomy device approved for use in the heart .
We are also cleared to remove blood clots from the peripheral arteries of
the leg. We are the only mechanical thrombectomy device cleared for peripheral arteries.
We also help to treat people who have end-stage renal disease. Those people have to get repeated dialysis because
their kidneys are failing. After a
while their native vessels collapse from repeated puncturing, and a graft is put in to
gain access for their dialysis. These grafts
clot over, and the AngioJet is cleared for removal of clot from these dialysis access
grafts. In the dialysis access graft
indication, we compete with a number of other devices and drugs, but we believe we
probably have one of the leading market shares in that indication as well.
Ceocfointerviews: Is this done on a global basis or just here in
Mr. Chacko: Currently,
the vast majority of our sales are in the U.S. through our own, dedicated sales force. We have some European sales through distributors,
and we are currently seeking approval from the Japanese Ministry of Health and Welfare to
market our product for coronary indications in Japan.
company was founded 1952. Its been
around for a long time. Has it always been
involved with this type of procedure or was it involved in another area?
Mr. Chacko: Its
evolved considerably. Our founder, Chris
Possis, was a second-generation, Greek immigrant who enlisted in the army as a paratrooper
and came back out with a degree in engineering.
He founded his own company, Possis Corporation, as an engineering
manufacturing and services company. We
manufactured specialty equipment for companies in a variety of industries from automotive
to food services. After conversations with a
surgeon at the University of Minnesota who told of the need for a mechanical heart valve,
Chris invented and patented the first, bi-leaflet, mechanical heart valve. That was the
origin of our entry into the medical field, and eventually Chris brought in our current
CEO Mr. Dutcher came in to develop a business out of medical device inventions like the
heart valve. The AngioJet System came out of
that effort, and eventually Possis Medical succeeded the original company, Possis
Ceocfointerviews: How much is this company spending on R&D?
Mr. Chacko: At
the end of our current fiscal year ending July 30th, we will be running R&D
expenses at approximately ten percent of our revenues.
Ceocfointerviews: Is the manufacturing done at your
plants or do you partners?
Mr. Chacko: We
control all of our catheter manufacturing in-house, and we assemble our drive units
in-house from component sub-assemblies. We do everything in about 50,000 square
feet, and we are able to monitor processes and control quality. In addition to
strong patent protection of our intellectual property, we also have a number of trade
secrets associated with our products. We are ISO 9001 certified, and all of our
products currently carry the CE mark.
Ceocfointerviews: How about the marketing process, is it done
strictly by the company?
Mr. Chacko: Yes,
it is. Our marketing department is located in our corporate headquarters, while our
sales force is located throughout the country. We divide the country into twenty-one
territories, and we have about 56 salespeople, and four sales executives, including a VP
of U.S. sales. In a territory, we have at least one salesperson and one clinical
specialist. The salespeople are experienced professionals from companies like
Johnson & Johnson. Our clinical specialists have come from the coronary cath
labs and radiology labs, and so they have intimate knowledge of how our customers think
and whats important to them. Territories with more procedure potential get
more clinical specialists per salesperson. The team looks to place or sell a drive
unit, open the account, service the account and grow utilization of disposables within the
account. This is quite a challenge, given the geographical spread, level of
competition from drugs and devices, and the challenge of changing clinical practice.
Ceocfointerviews: So you work with other companies as far as your
products are concerned.
Chacko: No, right now we do not, but we are open to doing so
in a way that speeds adoption of our therapy, leverages our sales force, and improves our
Ceocfointerviews: I think one of the hardest things to do is
educate the medical community on what is new and upcoming.
Chacko: Yes, and no. The interventional community are like children in FAO
Schwartz. They are barraged by device companies with messages about new
toys, and they always like to have the newest and the best. We have to
cut through all the marketing static and get our message across: we provide value for you
the physician, for your practice and for your patients. On the other hand, in other
parts of the community, there is lots of inertia. If you have been working
successfully under pressure eighteen to twenty hours a day with certain techniques, it is
very difficult for you to sit there and listen to a salesperson from a small medical
device company say, Look doctor there may be a better way to treat your patients
with the AngioJet. So, thats been tough for us but we have clearly
turned the corner. Now the trick is, is to keep the momentum going. Youre
right, that is exactly what we spend our time doing, and I think that were doing a
is awfully hard especially some of the older doctors who are set in their ways.
Mr. Chacko: It
certainly can be.
Ceocfointerviews: Once they become a customer of yours, can they
buy the products on line or go through your office?
Mr. Chacko: I
came from a company that made significant investments in online purchasing. Online
purchasing for hospitals is not a significant enterprise right now. We actually perform a
service for hospitals in that we hold inventory for them. We dont have a minimum
order amount or a minimum commitment; if you want to order one, ten or fifty catheters,
you can call an 800 number, page your rep or clinical specialist 24 hours a day; if they
dont have a disposable unit in their trunk stock, we ship out of Minneapolis
overnight, if thats what the customer wants.
Ceocfointerviews: Looking at this company, there is a lot going on
and you are spending a lot in R&D, you are a small company, but does this company have
the cash/credit available to make the impact it wants to?
Mr. Chacko: We
have, because of the changes made in the business model about a year ago, the answer is,
Yes, we do. If we wanted to grow faster, then we would look at
additional equity funding, and we believe that option would be viable given our
performance and the interest in medical device companies. However, right now, we are
funding our growth strictly through internal cash flow.
Ceocfointerviews: You mentioned inventory. How are you able to control the inventory with
all of the changes and improvements that are taking place?
you look at our releases over the last three or four quarters, our sales are growing 40%
to 47% year over year and five to six percent, quarter to quarter, while our working
capital growth has been virtually zero. Weve done a fantastic job controlling
that inventory. Weve had some new products and weve done a nice job
bleeding down one products stock and introducing another one. I think
weve done an exemplary job here.
Ceocfointerviews: Growth of this company is internal. Are there any acquisitions or partners as an
alternative for growth in the future?
Mr. Chacko: We
have not actively sought out acquisitions, but a meaningful acquisition for a company this
size poses outsized risks, both in terms of managing and developing another technology,
marketing it, and integrating it; we dont have any experience with those activities.
A partner that would bring a complementary culture, marketing mass, and similar
call points would be very interesting, and this is something we are looking at for
accelerating our future growth.
Ceocfointerviews: To a potential investor sitting with you now,
what would you say to him/her?
Mr. Chacko: Our product makes a difference in
peoples lives. The number of people that we can help is large and growing, because
we help people with heart disease, peripheral vascular disease, and end stage renal
disease. In so far as people care about that, it is something they should look at.
Were not a me too product, or a tiny improvement on a competitors
product. Our product makes a big difference. Someone gets up and walks out of
the hospital from one of our operations or someones leg is saved from amputation,
thats number one.
Next, we have
proven that we have a viable business around that concept. We have a very clean
balance sheet, with no debt, and our asset value is probably understated because we do not
value our patents on the balance sheet as larger companies do. We have significant
deferred tax assets that we will be recognizing, probably this fiscal year. We
control our design, manufacturing, and sales internally. We have a proprietary
technology platform, with strong patent protection, and we have done much of our clinical
and regulatory approval to support our growth.
The risk for a
new investor is execution. If we dont meet our sales and earnings goals in one
quarter, the market will punish our stock disproportionately, because we are a relatively,
small, illiquid stock with no strong market makers. We would tend to be a relatively high
volatility stock. We dont have a dividend, so its a pure growth story.
I think those
are the kinds of risk the investor would have to understand. The flip side to the
risk is return, and we have very high potential returns because of the large markets we
serve, our proprietary technology, and the value we can bring to our customers.
Ceocfointerviews: What have you brought to the table since
youve joined the company?
Mr. Chacko: On the investor relations side, I
believe that I brought a very high degree of professionalism and service to our individual
and institutional shareholders, and to our analysts. I have communicated
pro-actively, consistently, and clearly. I have also brought their concerns in to
our management and Board. I believe that an effective IR officer has to function
both as a partner to the CEO and as a shareholder ombudsman. I believe
that I can point to our record level of institutional ownership, increasing analyst
coverage, and declining short interest as evidence of this.
On the public
relations side, I have been able to get some great placements in publications as varied as
Red Herring, Prevention Magazine, The Grey Sheet, Wall Street Transcript, Investors
Business Daily and The Week. We have built some strong bridges to media around the
country, including our home market in Minneapolis. I think that this will stand us
in good stead as we move forward.
Finally, in my
position of CFO, I focused the Companys attention on our business model eighteen
months ago, which was very prescient given the failure of most technology company models
in the interim. Robust revenue growth, continuing losses, and an addiction to
private placement financing were eventually going to bring this company to its knees and
keep a wonderful technology platform from taking its rightful place in the sun.
Through our reduction in force, shifting of R&D priorities, and strong internal
messaging to the organization, we were able to galvanize our people into driving us to
profitability for the first time in history and to keep that growing. I am extremely
proud of that leadership contribution.
Ceocfointerviews: Do you have any closing statements for my
Id say Im grateful that a publication with your readership is interested in
our story. That would not have been true a year ago,so that tells me that we are on the
right track. Again, keep an eye on us and watch what we do.
Were a good company, and we have good sound values. We have added value for our shareholders, and thats our goal going forward. So, in so far as people looking for a good medical
device story, look at Possis Medical.
Rheolytic Thrombectomy System
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