NMTX: Heart Monitor Expected To Quicken Sales
By JANICE D'ARCY
This story ran in The Courant on December 16, 1998
A little company in Wallingford that has carved out a niche in medical
technology is poised for big growth with the release of a much anticipated
new product.
Officials at Novametrix Medical Systems Inc. (Nasdaq: NMTX) are counting on
their NICO - Non-Invasive Cardiac Output technology - to push annual
revenue from $30 million to several times that in coming years.
''This is an exciting time for us right now,'' Novametrix President William
J. Lacourciere said as he showed off the blinking metal box and jumble of
plastic tubes his company created.
NICO can measure the strength of the heart without any needle poking or
blood tests. The alternative is a risky procedure of inserting a catheter
into the heart. But NICO requires a patient to do no more than breathe into
a tube.
The machine uses an infrared light, as well as patented technology
officials decline to discuss, to continuously measure the airflow strength
and amount of carbon dioxide exhaled.
Those calculations allow doctors to monitor cardiac output, or the amount
of blood pumped through the heart. They are calculations that can be
critical to monitoring the health of sedated patients during operations.
With NICO, the little company - fittingly located on Technology Drive, just
off Research Parkway in Wallingford - has ignited interest on Wall Street.
''It is a breakthrough product,'' said analyst Virgil Cilli, who follows
Novametrix for Keane Securities.
''It has great potential. I think it will add revenues and earnings for
years to come.''
The U.S. Food and Drug Administration approved NICO in October, and the
company introduced it at a trade show last month. Judging from the
response, said Philip Nuzzo, the head of Novametrix's marketing, the
company will have a hot seller when NICO is released early next year.
Few expect that it will outright replace the traditional heart monitoring
method used during surgery, in which doctors thread a catheter through the
heart into the pulmonary artery. Because the catheter method can lead to
complications, and is relatively expensive, doctors tend to use it on only
their most critically ill patients.
Analysts and company officials believe NICO will allow doctors to monitor
many more patients less expensively and more safely. One analyst said he
expects that the machine will eventually be used in 5 to 6 million
surgeries annually.
NICO monitors will cost about $10,000 each. But with a relatively limited
number of hospitals, the company is looking to a little piece of plastic as
its real revenue source.
Each new procedure requires a small plastic insert to be replaced. The $40
replacement cost adds up when the number of new procedures is expected to
be in the millions.
Independent market research commissioned by Novametrix shows that NICO
alone will generate $10 million in its first year, $25 million to $30
million in its second, and $65 million in its third.
Novametrix already has dozens of patents, and product distribution in 84
countries besides the United States. Since 1978, researchers at Novametrix
have consistently been pioneers in equipment to monitor the heart and
respiratory mechanics, analysts say.
Novametrix researchers began by developing neonatal equipment designed to
help doctors monitor newborns that were too sensitive to have blood drawn.
They went on to develop similiar monitors that could be used on adults and,
within a few years, the technology was standard in operating rooms.
The company steadily rose from a volatile upstart to a stable company with
increasing profits.
But in the early 1990s, a patent infringement lawsuit crippled the company.
Revenue plummeted, and Novametrix officials fired close to half of their
then 325-member work force.
''They would have been a $100 million company by now,'' analyst Cilli said.
Novametrix eventually won the case, and has gradually recuperated. It
reported a rise in revenue from its prelawsuit days for the first time in
the past fiscal year.
Lacourciere said the company rebuilt by focusing on its own original
technology. Every year it improves, updates and minimizes. NICO itself is
actually a combination of technologies the company created years ago.
This year, the company has released two other new products, both of which
have been praised in their own right.
One, called a Vent Check, is a hand- held respiratory monitor. The second,
called Tidal Wave, is a hand-held carbon dioxide monitor.
So if NICO is not the hit company officials expect when it reaches the
market early next year, few fear downfall for Novametrix.
''Even without the new product, this is a company with good growth
potential,'' said Cilli, quickly adding:
''But I think [NICO] will do very well.'' |
