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Minimed

minimed/dy/19″/1stjc/mark2nd DOUGLAS YOUNG Staff Reporter This has been a rough stretch for most of L.A.’s publicly traded biomed firms but not MiniMed Technologies. Thanks to recent advances in the treatment of severe diabetes, the five-year-old Sylmar company has become an industry leader that commands 80 percent of the U.S. market for external insulin pumps. The pumps, about the size a pager, are worn on the belt, feeding a continuous supply of insulin into the wearer’s body. They are more convenient than the twice-daily insulin injections traditionally used to treat severe diabetes. The company’s pioneering technology and strong performance have won strong praise on Wall Street, where its stock rose 148 percent last year. Most other publicly-traded biomedical firms in L.A. County took a beating. MiniMed is the fourth company for biomed entrepreneur Alfred Mann. The research for the company’s current pumps began at Mann’s last venture, Pacesetter. Other biomed firms were competing with MiniMed to develop similar pumps when his firm launched its first products, according to Mann. “When we came out with our pumps, there were 34 companies trying to do it,” said Mann. That included pharmaceutical giants Eli Lilly & Co. and Baxter International, which both tried and failed at developing the process. Indeed, MiniMed’s only remaining competitor is Disetronic Holding AG, a Swiss company that controls the remaining 20 percent of the U.S. market for external insulin pumps. Wall Street is enamored in part because MiniMed has a way of outperforming analysts’ earnings expectations, said Melissa Wilmoth, an analyst at Smith Barney. “When you have that kind of track record, you’ll be awarded a premium for your stock,” she said. The company is expected to report net income for the year ended Dec. 31 of between $4 million and $4.5 million (36 cents and 39 cents per share), compared with $1.8 million (17 cents) for 1995. Revenue is expected to be between $55 million and $60 million vs. $45.1 million in 1995. Investors also are bullish on MiniMed because of the vast untapped market in the United States, Wilmoth said. She estimated that the company currently has a penetration of only 3 percent to 4 percent among the 800,000 to 1 million people in the United States who require external forms of insulin to treat their diabetes. “There’s a huge potential market, and a couple of studies show reduced complications if you use a pump,” Wilmoth said. In many cases, she added, doctors do not recommend external insulin pumps to their patients either because they aren’t aware of the benefits or they are simply unfamiliar with the devices. To remedy that, MiniMed conducts seminars in major U.S. cities each quarter to educate doctors especially primary care physicians. It also entered into a marketing alliance with German company Boehringer Mannheim, which manufactures strip and meter devices for diabetics to measure their glucose levels. Boehringer Mannheim will advertise MiniMed pumps in its newsletter for diabetics as part of the alliance, while MiniMed will include coupons for Boehringer Mannheim’s products with its pumps. “The marketing campaign is very unstructured now, but we hope it will become more structured over time,” Wilmoth said. Future success inevitably hinges on going beyond insulin pumps. The company has already developed a new glucose sensor that is currently on sale in Europe and could be available to U.S. consumers by sometime in 1998, according to Mann. Unlike existing sensors, which require diabetics to prick their fingers and place a blood drop on a strip and into a meter to get glucose level readings, MiniMed’s new sensors are inserted under the skin for extended periods of time and read glucose levels continuously. When levels become dangerously high or low, an alarm is sounded so the diabetic can take action immediately. “Their sensors could revolutionize the way diabetes is treated because they would obviate the need for conventional strips and meters,” Wilmoth said. MiniMed also is working on ways to combine its pump and sensor technology to create a completely prosthetic pump, which would be implanted in the bodies of diabetics and allow them to live essentially normal lives free of constant injections and testing of their blood sugar levels. Mann said development of the prosthetic system’s component parts is virtually finished, and now it will take a couple of years to integrate the parts into a complete system. He estimated a final product could reach the market as early as the year 2000.

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