Yesterday, Cardiovascular Systems Inc. (CSII) announced that it has agreed to market Japan-based Asahi Intecc Co. Ltd’s peripheral guide wire line in the United States. The peripheral guide wires address long, complex lesions above or below the knee, and complement the plaque removal capabilities of Cardiovascular’s main product, the Diamondback 360. The company intends to offer two Asahi 0.18 wire platforms; the Astato 30 and Treasure 12.

This agreement not only expands Cardiovascular’s product portfolio but also consolidates its top position in the peripheral arterial disease (PAD) market. This agreement is in tune with the company’s mission to provide in excess of 5,000 physicians and 2,000 hospitals treating PAD with comprehensive endovascular tools.

The Diamondback 360 Orbital Atherectomy System is a minimally invasive catheter system used for PAD treatment. PAD affects eight to twelve million people. It is caused by the accumulation of plaque in peripheral arteries (commonly the pelvis or leg) thus reducing blood flow.

Cardiovascular commenced a limited commercial introduction of the product in the United States in September 2007. Since then, this system has found use in almost 600 hospitals across the U.S. and patients in excess of 15,000 have been treated. The product is marketed in the U.S. through a direct sales force. A full commercial launch commenced in the quarter ended March 31, 2008.

The incidence of PAD increases with age, obesity and diabetes. We believe that strong demographic trends, under-diagnosis and increasing patient awareness should support long-term growth.

Cardiovascular Systems was transformed into a public company through a merger with Replidyne, Inc. earlier this year. Cardiovascular had a fast-growing product portfolio but was short on liquidity. Replidyne had liquidity but no prospects for its product. Hence, the merger appears to be a win-win transaction for both companies.

Cardiovascular’s main competitors include Boston Scientific Corporation (BSX) and ev3 Inc. (EVVV). The merger with Replidyne injected much needed cash into the company. We believe this will enable the company to see its business model through these difficult times.
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