An ambitious new direction for Cardiovascular Systems Inc., the New Brighton maker of a catheter treatment for blocked arteries, is coming into view after a series of announcements in recent months.
The company, known as CSI, plans eight new products in the next six years, relying on diversification to boost its sales and profits.
“CSI, historically, has been a single-product company that really focused on sales only in the United States,” Scott Ward, its chief executive, said in an interview. “We’re really transforming CSI to become a multi-product, multinational company.”
Since its start in 1989, the company grew around a single core product: the Diamondback 360 Peripheral Orbital Atherectomy System. It’s a hand-held device for physicians treating patients with arterial calcium.
The catheter-based system helps restore blood flow. CSI also makes support products like guidewires and catheters that are often used with Diamondback.
But several other companies also make atherectomy devices, including heavyweights Medtronic and Boston Scientific.
As well, CSI has been coping with the effect that the COVID-19 pandemic has had on hospitals, which were forced to defer some surgeries, including those that relied on the its devices. The company expects sales for the current fiscal year, which ends in June, to be down around 7%.
Ward, a Medtronic veteran, first joined CSI as a board member in 2013, became interim CEO in November 2015 and took the job on an ongoing basis the next year. In 2018, CSI quietly began planning to broaden its work by entering four new product categories in the mid-2020s.
Such long-range planning is necessary with medical devices, which go through years of testing and regulatory scrutiny, often in multiple countries or jurisdictions.
Last November, CSI announced the start of enrollment in a clinical trial for coronary drug-coated balloons, developed in partnership with California-based Chansu Vascular Technologies.
Then, in January, the company announced that it has made significant advances toward commercializing intravascular lithotripsy systems used to treat calcific coronary and peripheral artery disease — sometimes colloquially called a “hardening of the arteries.” Lithotripsy uses sonic pressure to break up calcium in an artery. The next step is often implanting a stent.
Last month, CSI revealed it was partnering with California-based Innova Vascular Inc. to create a “full line of novel thrombectomy devices.” A thrombectomy is a surgical procedure to remove blood clots. CSI is providing financing to Innova to develop the devices and will then have the right to buy the devices at a pre-determined price.
“Broadening our product offering helps us reach more patients, drive sustainable revenue growth and profitability,” said Jack Nielsen, spokesman for CSI. “If successful, these [new] products substantially increase our total addressable market from $1.8 billion to over $18 billion.”
Analysts have known for several years these actions were in the pipeline.
“This is something that Scott Ward has been doing almost since he took over as CEO,” said Mike Matson, a senior analyst at New York-based Needham & Co. “I think it makes sense.”
Matson said CSI is focused on devices adjacent and complementary to its core cardiac technology.
“I think [Ward] has done a good job, all things considered,” said Matson. “They’ve had some tough competitive headwinds that they’ve been dealing with.”
The company went public in 2009 through a reverse merger with a dormant public company.
It has a long history of being unprofitable, though that’s common for medical device companies roughly the same size as CSI, Matson said.
For fiscal 2021, CSI posted a net loss of $13.4 million, significantly less than the year before when it lost $27.2 million. The company posted a small net profit in fiscal 2018 — the only year in its history that it was in the black.
Ward said believes that CSI is making the right investments to grow.
“We will invest probably in the range of 15% to 17% of our revenue in [research and development]. That puts us on the high end of our peer group,” said Ward. “That’s a heavy investment … but that’s what it takes to really build this kind of portfolio and drive that growth that comes from it.”