Lombard to sell artery repair kit in United States
SHARES in Lombard Medical Technologies soared by a third yesterday after it was given access to the US market, sparking talk of takeover bids from American life science giants.
Its stent devices are used to treat abdominal aortic aneurysms (AAAs), which occur when the aorta – the main artery, which carries blood from the heart to the lower parts of the body – swells up and splits.
Doctors insert a stent – which is a fabric tube reinforced with wire – into the aneurysm so that the blood passes through the stent, reducing the pressure.
Analysts said that the US Food & Drug Administration (FDA) had approved the sale of Lombard’s “Aorfix” stent – which is made at its factory at Prestwick – because it is more flexible than other products on the market and so it can be used to tackle AAAs that have unusual shapes.
The market for treating AAAs using stents is expected to hit $1.6 billion (£1bn) in 2015, with the US market alone currently worth more than $600 million.
Simon Hubbert, Lombard’s chief executive, said: “FDA approval of Aorfix is a major milestone and sets the stage for the next chapter in the company’s growth. We look forward to launching Aorfix in the US through our own sales force and are confident of securing a meaningful share of this growing market.”
Some 4.5 million people are living with AAAs in the developed world and a further 600,000 cases are diagnosed each year.
Julie Simmonds, an analyst at Canaccord Genuity, said: “No other company currently has a product, either with approval or in development, for use in high angle AAA patients.
Once Aorfix is launched, use of competitor devices in the patients would leave surgeons open to litigation, giving Lombard a very strong competitive position.
“Aorfix will see rapid adoption in the US – the device already has an 8 per cent market share in the UK – and ultimately bring Lombard to the attention of the medical device majors.”
Securing FDA approval will allow Lombard to tap its investors for £14.2m through the second tranche of a £27.2m share placing unveiled in May 2011. The cash will fund the roll out of Aorfix in the US.
Getting the green light will also let the firm draw $2.5m from a $5m lending facility put in place by Medico’s Hirata, its exclusive distributor in Japan, where the firm hopes to gain regulatory approval next year.
Aorfix is already on sale in Europe and generated £1m of the company’s £2m turnover in the six months to 30 June.
A spokeswoman for Lombard said the company had no plans to manufacture Aorfix at its facility in Pheonix, Arizona, but would instead carry on producing the stent in Ayrshire.
Lombard received a £200,000 regional selective assistance grant from the Scottish Government in 2010 to create 39 jobs in Prestwick, taking its headcount up to 46.
So far the factory’s headcount has only grown to 16 after delays to the FDA approval.
Shares in Aim-quoted Lombard closed up 33.9 per cent or 60.5p at 239p last night.
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