We also increased sales of our new Wrap version of the Dry, which is configured to be placed around, in-dwelling lines of catheters. In the third quarter, we recorded $153,000 in sales of ThrombiGel and Thrombi-Pad to King Pharmaceuticals under our distribution agreement, a quarterly level that we expect roughly to continue until we receive approval for the surgical indication for the ThrombiGel product.
In July, we completed the enrollment of the final patient in our ThrombiGel surgical clinical study and we have now completed the necessary 60 day follow up and expect to analyze the data and submit our PMA to the FDA by the end of December. We believe that this surgical indication will greatly expand King’s ability to sell our ThrombiGel into their targeted surgical markets, which based on current FDA review times. We are projecting to receive by the end of 2010.
In the fourth quarter, we also expect to launch the new Rad-Band, a low cost compression device for use following radial artery catheterizations, which has already received FDA clearance and also an improved version of our original D-Stat Radial. We are completing the build of launch quantities of our new Hunter biopsy marker device.
However, due to an FDA comment letter on our 510(k) submission in the third quarter, we will now need to submit additional information, which will push the launch of this device, the Hunter product, into 2010. Related to our hemostat products, we continue to await the appellate decision on our $4.5 million jury verdict for defamation against Marine Polymer Technologies, which has now been increased with interest to $5.2 million.
The oral argument was heard by the first circuit of the US Court of Appeals in Boston on February 4. Once the appeals court issues its decision, the only remaining steps would be a possible petition for rehearing by the entire panel of the first circuit and a potential writ of appeal to the U.S. Supreme Court. Only after all the appeals are exhausted will we record any resulting gain in our projections of net income or cash flow.
We continue to be highly confident in a favorable decision on the entire award, including interest, but given the delay by the appeals court, we do not expect to receive the judgment, if affirmed, until 2010.
In the third quarter, we also increased sales of Zerusa’s Guardian hemostatic valve by 15% sequentially over the second quarter. In October, the FDA cleared Zerusa’s 510(k) application for the new Guardian II version that we expect to launch next week. We believe that this new Guardian II version, particularly when combined with the Flamingo inflation device that we distribute for Pursue Medical, will substantially increase sales of access products in 2010.
Chris Cooley - FTN Equity Capital Markets
Just two quick follow-ups, James, maybe could you remind us what you kind of view the maintenance CapEx run rate going forward, as we think about 2010 and beyond? Then, secondly, when you just look at your hemostatic products, we’ve seen some of the larger coronary players report softness in that market in terms of PCI volumes, and also seen some pricing. Kind of can you walk us through, maybe either Howard or James, what’s baked into your assumptions for the market and pricing, as we think about the hemostatic space between now and calendar year end?
James Hennen
I’ll start with the CapEx question. We’ve been running the last three years at about $1 million a year in CapEx, but going into 2010, we may in which making some margin improvements and bringing some things in-house as far as more manufacturing capabilities. So we haven’t given guidance on 2010, but it may be more than that general $1 million, maybe $1.5 million type range, so nothing a substantially increase over $1 million run rate. So that’s where we expect it to be.
Howard Root
In terms of the market, in PCI volumes I mean I’ve been aware of the big companies in our space, with Saint Jude and Boston Scientific yesterday and their comments. The nice thing about our business strategy is we’re not dependent on market growth in order for us to be successful.
So, playing in the clinical niches, which sometimes we got abused for saying that we’re a small product company, now it’s really a plus, because we can go out there and develop new things, which aren’t material increases and most of the times actually decreases in the budget and even if the number of procedures don’t go up, they just shift to the next technology and being a clinically differentiated company plays well there.
In terms of pricing, we always focus on that being flat, but we don’t have price increases. In the patch market, I think we have bought a couple of new product launches a year or two ago or new product free samples a year ago and I think we’ve won that game. We’ve got the clinical data on our side.
We can show the benefit of our product and we’ve got approved indications, which a lot of these patches just don’t have. So I think you’ve seen in the last two quarters resumption on that area and I think keeping a steady price, not falling victim to the low cost patches that don’t have the data, has done us well.
In terms of long-term market, I am still optimistic about our strategy and I’m optimistic about the healthcare system. I need to get a little bit of certainty in terms of the healthcare reform and what’s going to go on as a general matter, a global matter, but as far as it affects Vascular Solutions that really like this space we are in because in a turbulent world, certainly start ups are going to have a hard time with it, anyone trying to replicate what we’re doing is going to have a hard time doing it and the big companies are having a hard time to find growth.
So we are in the perfect middle ground where we can still grow double digits with products that don’t demand an increase in the market and we have a wide-ranging international market open to us that we can expand into 2010 and beyond as well. I pay attention to what’s going on in the market, but it doesn’t affect us day-to-day, and I’m glad we are in that space because it’s not all roses out there for the overall healthcare system in the U.S.
source: seekingalpha
