Written by Brian Marckx, CFA
Despitecompelling proof that the PD2i Analyzer is superior in accuracy and reliabilty compared to conventional diagnostic tools in the prediction of future adverese cardiac events such as sudden cardiac death, sales of the Analyzer have been disappointing since the January launch and through the end of the second quarter. As we detail in our 26-page report on Vicor (VCRT) we attribute the lackluster sales not to a dearth of interest in the technology from physicians but instead mostly due to an insufficient sales force and to questions over reimbursement related to recent changes to Medicare. As CPT codes are already in place and physicians are currently being reimbursed for testing using the PD2i Analyzer, these fears have so far been unfounded.
Vicor is making headway on several fronts to spark near-term unit placements including the recent initiation of a Normal Range Study, the results of which will be used to support a 510(k) filing for normal heart rate variability ranges for people at rest and during exercise.Physicians will then be able to better identify non-normal heart rate variability using the Analyzer and stratify patients as to their risk of suffering future pathological events. We expect this to be a catalyst initially in the utilization of the Analyzer for the diagnosis of diabetic neuropathy, a large and high-growth target population. Vicor also has various other ongoing studies, several of which also incorporate very large and highly attractive target populations.
Vicor hasalso filed for and is awaiting FDA 510(k) approval for a claim for the identification of congestive heart failure (CHF) patients at elevated risk of cardiac mortality. This will offer Vicor a very potent marketing message with which to target cardiologists and other physicians. With approximately seven million people with history of myocardial infarction and five million CHF sufferers in the U.S. with 400,000 new cases every year, the marketing audience is enormous and growing fast. A regulatory filing for diagnosis of patients at imminent risk of death could also happen before year-end – this would open use of the Analyzer for victims of trauma and be appropriate for use in ambulances, emergnecy rooms and battle field hospitals.
On the marketing side Vicor’s sales efforts through the second quarter was largely handled by a 25-person sales distributor targeting physicians in three states in the Southeast. This has clearly been insufficient and was almost certainly a contributor to the poor placement rate through the first six months of the year. In response Vicor recently (September) brought ona national sales director to facilitate the U.S. roll-out of the PD2i Analyzer and to hire additional sales reps throughout the country. Chris Vissman’s background, detailed in Vicor’s September 14th press release, looks impressive and includes 20+ years at executive-level sales and marketing positions, a significant portion of which has been with several cardiac diagnostic companies. Mr. Vissman likely also brings to Vicor valuable customer contacts.
Since Mr. Vissman’s hiring Vicor has contracted with twelve independent sales reps throughout the country, spanning from as far West as Colorado to Texas and Florida in the South and to Boston in the Northeast. The company noted that they expect to bring on another ten independent reps by the beginning of December, most of which are located in the West and mid-West part of the U.S. Mr. Vissman is bringing on only well-established and experienced medical device salespeople in major cities which we expect to benefit the domestic sales effort.
Vicor is also getting the word out to the medical community through being a featured presenter at the Poster Session of the Heart Brain Summit earlier in the year and through an interview with CEO David Fater by The Wall Street Transcript in September.
While it’s still too early to tell what these recent developments will mean to Vicor’s sales, we see these as all positive moves in the right direction for the company. We remain highly encouraged about the company’s long-term prospects and believe it’s not a question of if Vicor will become earnings and cash flow positive but only when that will happen. Based on these recent developments, it may be sooner rather than later.
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