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CEOCFO CEOCFO Monthly Analyst |
Conceptus, Inc. – bringing change to a market
that hasn’t seen change in 30 to 40 years with the ESSURE PBC™ a permanent
contraceptive for women
Healthcare CEOCFOinterviews,com Biography –
Steven Bacich, President/CEO
Mr. Bacich was promoted to President and CEO and was elected a director in January 2000. Mr. Bacich joined Conceptus in March 1997 as Vice President, Research and Development. Prior to joining Conceptus, Mr. Bacich spent seven years as a Co-founder and Director of New Product Development for Imagyn Medical, Inc., a medical device manufacturer of gynecological products for infertility and endoscopic procedures. From August 1987 to September 1989, Mr. Bacich held engineering positions in research and development most recently as Senior Staff Engineer, Business Development for the Edwards Less Invasive Surgery Division of Baxter. From 1985 to 1987, Mr. Bacich held research and development positions at Mentor Corporation, a reconstructive surgery and urology company. From 1983 to 1985, Mr. Bacich held research and development positions at American Medical Optics, an ophthalmic medical device manufacturer and Division of American Hospital Supply Corporation. Mr. Bacich holds a B.S. in Biomedical Engineering from the University of California, San Diego. About Conceptus, Inc.
CEOCFOinterviews
- Mr. Bacich, can you give us a brief history of Conceptus? Mr.
Bacich: "Conceptus was spun out of Target Therapeutics in 1992 and
then it went public on an infertility platform. In
the year of 1998, the company was restructured and reorganized to focus on an R&D
clinical program that it had in its own department. It sought out to provide women an
alternative to surgical tubal
ligation, the most prevalent form of birth control
in the United States. There are more women of a reproductive age that have been sterilized
via tubal ligation than those using oral contraceptives or condoms, the main
contraceptives. On the premise of the 13 million procedures being performed annually in
the United States and worldwide, the company refocused on the sterility market utilizing
the technology that will provide the product, which is delivered trans-vaginally through
the cervix into a woman's fallopian tubes. Mr. Bacich: "Just
like a tubal ligation or vasectomy, it is not intended to be reversed. These are
permanent procedures and we believe that ours is irreversible as well.”
CEOCFOinterviews – What stage are you in the development of your product in the United States? Mr. Bacich: "In the United States we went through three phases of testing; one, two and the pivotal trial. We have completed our four hundredth patient enrollment in December of the year 2000. Currently we are in the follow-up period of our pivotal trial. Roughly, a one-year follow-up is required. We anticipate third quarter 2002 to be the time when the FDA is going to be reviewing all of our data and we are looking to a mid-year 2003 market release. In the meantime we will be focusing on the international market, a with procedure that is performed all over the world." CEOCFOinterviews - How has the response been in the international market? Mr. Bacich: "We have received a great response from physicians. We finished the second quarter with 40 doctors in Australia trained, anticipating another 30 by the end of this month, with our goal of 90 Australian doctors trained by the end of this year. We will clearly hit the goal very comfortably. We are currently training doctors in Singapore and in Europe. On the physicians' side, there is a great deal of interest and we have not had any lack of participants for our training courses. On the patients' side, the demand has been demonstrated time and time again in situations when women are aware that this procedure is being offered. Through newspapers and media, women in great numbers can find out more about this procedure. We have clearly seen a strong response from women not only in the fact that they are interested in having the procedure. Women that had the procedure have been very effective in telling their friends, family members and coworkers about this option and recommending the procedure. We see this as a very important step for the growth of this technology." CEOCFOinterviews - Do you market your product by your own efforts or through partnering? Mr. Bacich: "Currently we are marketing the product directly in Australia and Singapore.
We are evaluating our distribution options in Europe in terms of large and small partners.
As to how do doctors and patients hear and know about this procedure, it is very important
that medical education be provided by the company, which we do. We have also been
very fortunate in that there has not been a change in contraception for decades. Roughly
for about 30-40 years’ we’ve been relying on surgical tubal ligation. Ours has
been proven to be a very great story from the human- interest side. That has also been
very effective in terms of getting the story out to women and potential customers which
are physicians." CEOCFOinterviews -
Do you have to spend a lot of money on marketing or do you get invitations from
talk shows to talk about your procedure? Mr. Bacich: "We get a lot of invitations. Last November we announced our patients' satisfaction data and literally, every major station and major market in the United States ran the story. In Australia, in June when we launched our product with the new name, all three major TV networks ran the story and morning talk shows provided update information to women via their medical correspondents. With a company like ours, you could not pay enough money for that type of advertising, because it is very credible and women appreciate getting information in this type of format as opposed to just being bombarded with commercials from advertising companies. Shortly, we will be continuing our medical education effort, as always trying to make sure that all our communication to patients and physicians is above board. The decision a woman makes in terms of permanent contraception, or permanent birth control is a very serious one and we regard it as a very significant issue in couples' lives." CEOCFOinterviews - How are the doctors trained in your procedure? Mr. Bacich: "The training consists of two parts. The first is typically a Saturday or Sunday, a one-day course in which there is theory, live cases, and model simulators, which provide a good thorough background on the mechanics of the system. In the second part which is critical, a credentialing period of the doctor, he or she must schedule three to five cases in which one of our trained doctors will oversee their performing procedures and credential them prior to allowing the physician to continue with the technology." CEOCFOinterviews - Do you have the staff to handle the kind of growth you are looking at? Mr. Bacich: "We have been hiring quite rapidly. The size of the company has tripled in a little over a year. We anticipate continuing that growth especially as we open new markets. Operationally we have been doubling our capacity. It is a very exciting time for a company like ours. All this positive enthusiasm and the incredible reception we have received, certainly makes everyone to work that much harder. Particularly on Saturdays and Sundays the place is quite humming with people working very hard." CEOCFOinterviews – Can you break down the market segments? Mr. Bacich: "There are three markets for us. One is the surgical market, the women that currently go in for tubal ligation. That is roughly 700-800 thousand procedures done each year in the United States, with approximately 13 million procedures being performed worldwide. There are two other markets we have found our patients coming from. More and more women are coming in for our procedure, where otherwise their partner would have had a vasectomy. However, the biggest market opportunity, which is our third market are those couples that no longer want additional children. For example a 36-year old woman has 4 children, they know they do not want any more children, yet they also know they do not want surgery. They do not have time for it and it is not convenient for their lifestyle. We provide them an option, which hopefully will be a better alternative and will be more convenient for their lifestyle. All our market researchers indicate that this particular body of potential patients is by far the greatest." CEOCFOinterviews – What do you charge for the Essure pbc™? Mr. Bacich: "We
sell the blades for the procedure, not the razor. It is a kit, which is disposable and
provides two implants for the women's fallopian tubes. In Australia right now, in terms of
US dollars, we are getting 500-550 dollars a kit. We plan to maintain that pricing premium
throughout the world. Mr. Bacich: "Cost savings are going to be enjoyed by facilities and the healthcare system. Physicians, if they perform this procedure within their own practice, will see a cost savings because of time and risk factors. The insurance companies are very receptive to this. Right now 93% of the health plans in the United States cover tubal ligation. Only 40% cover oral contraceptives, it is a great liability for them when their plan participants are having additional children. Therefore they are so very keen in trying to find alternative forms of reliable contraception for couples who know they do not want more children." CEOCFOinterviews - Is there anything that would prevent a woman from being able to have your procedure? Mr. Bacich: "We find that we are unable to provide some women the device into their fallopian tubes due to their anatomy (they may have an existing underlying pathology which is unknown) or the ability of the physician to visualize inside her uterine cavity is impaired, which would not make the procedure successful. The alternative for these women is either stay on their current contraceptive methods or to get a tubal ligation. However, we are working very hard on continuing to improve that rate. Right now, 90% of the women that had our procedure have devices placed." CEOCFOinterviews - Do you know of any other companies working toward a similar device? Mr. Bacich: "We know that there are some companies working on other technologies. To our knowledge they do not have any human studies done on contraceptive patients, thus being quite a number of years behind us. We feel that our company is in a relatively enviable position. Most large companies would not tackle such a program, simply due to the regulatory pathway, which is extensive. We started our animal studies in 1995 and our phase one studies in 1997. This is quite a long road and companies have to make a very firm commitment in investment to see the thing through. Fortunately, I think, the technological and a majority of the clinical pathway, which can be arduous, is behind us. We are now in the follow-up time-period and the execution of getting our product to the market place. Ours is a story unlike any other medical devices because of two components. One, there is such a strong, direct-to-consumer appeal of our technology and two, just how widespread it is. Typically, medical devices serve a very small group of people. It is unusual to find such a huge potential number of patients for our procedure. Again, for a gynecologist tubal ligation is a bread and butter procedure. This is a very unique aspect to our program." CEOCFOinterviews - Are you still putting a tremendous amount of money into research and development? Mr. Bacich; "We put a lot of money into clinical research. We are going to continue to do that and to further getting our story out there to prove our training and placement techniques. Therefore, there is a considerable R&D investment. Right now, we are focused on this technology. We have other things that we would like to work on, yet this is the most important thing that we can do. People can accuse us of being a one-trick pony and I gladly take that label by telling them that we are the one-trick Clydesdale, because of the opportunities we have." CEOCFOinterviews - Do you feel that you have the cash and credit to continue your growth? Mr. Bacich: "It is not secret that we will probably be going out to the public market sometime in the future. One, we would love to get our story out there, tell people what we have been doing and what we have done and what our pathway looks like. That would he clearly a high mark for the company. The other alternative is that now we are selling the product in terms of capital infusion with the potential for licensing. And our current and new investors who would clearly like to get a position in the company, in terms of financing options in the future, we will be continuing to look and investigate the public and private markets." CEOCFOinterviews - What is your current cash and credit position" Mr. Bacich: "We finished the second quarter with 13.5 million dollars in cash in the bank and looking at current burn which is now creeping up towards 5 million a quarter, we should have enough cash to get to the end of the first quarter of the year 2002. Yet prior to the end of that first quarter we will have either completed the licensing arrangements or gained additional private or public financing." CEOCFOinterviews – What would you say is the underlying strength of your story? Mr. Bacich: "The
market potential is very large and we have made an incredible progress on the marketing
side in getting our product out there. The underlying strength of our story has been the
fact that patients have been very accepting of the procedure, and our results have been
very good. Our patient satisfaction rate at the follow-up time frame has reached 99% in
terms of good to excellent and, happily, we have not had a woman who has gotten pregnant.
We are certainly enjoying our current record.”
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