With the surge of obesity among Americans and the aging of the U.S. population, the market for drugs and medical devices to help detect heart disease is expanding rapidly. For one such company in this field, Acusphere (NASDAQ:ACUS), June promises to be a defining month. In about three weeks, during the annual American Society of Echocardiology conference, Acusphere will release results from one of two pivotal phase 3 trials for the company's lead product, AI-700.
AI-700 is an ultrasound imaging agent that helps detect blood flow in the heart muscle. Currently, when patients are suspected of having heart disease, they are first tested by either having a nuclear contrast agent -- a "dye" -- injected inside them or with an echocardiogram, or ultrasound. The dyes are expensive and time-consuming, yet ultrasounds are not as accurate and don't reveal as much information about the heart. The theory behind Acusphere's AI-700 was to design a drug that retains the accuracy of a nuclear test but with the speed and easy use of an ultrasound.
In 2005, the potential market in heart-disease screening for AI-700 was $2.4 billion and growing rapidly year over year. It is vitally important to Acusphere that the phase 3 results it announces during the ASE are as excellent as the company's earlier clinical trials have been. If not, AI-700 would simply fall into a pack of competing imaging agents and technologies led by large competitors such as Bristol-Myers Squibb (NYSE:BMY) or GE (NYSE:GE) Healthcare, and it may never command much of this multibillion-dollar market.
Adding to the pressure, there are also other heart-disease-imaging agents either working their way through the FDA review process or about ready to do so, among them privately held Point Biomedical and Motley Fool Rule Breakers pick CV Therapeutics (NASDAQ:CVTX). If Acusphere can't show its imaging agent to be more accurate than these competing products, then its sales force would have a hard time persuading doctors to switch to AI-700, no matter how easy to use or cheap it is.
Another thing Acusphere has working against it is a lack of cash. By the end of 2006, the company will have anywhere from $35 million to $50 million in cash and short-term assets sitting on its balance sheet. A new drug application filing won't happen until at least the first half of 2007 for AI-700, and Acusphere would definitely be short on cash if the treatment doesn't get approval until 2008. Then the company would have to hire a sales force to push AI-700, and that would mean yet another round of financing would have to happen before revenue from the drug starts to come in.
One last thing to keep an eye on is how the buildout of the company's commercial manufacturing plant proceeds. As anyone investing in Discovery Labs (NASDAQ:DSCO) is acutely aware of, this is one area where small pharmaceutical companies trying to get new drugs onto the market can sometimes encounter huge delays.
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Fool contributor Brian Lawler owns shares of Acusphere and loves soccer. Feel free to tell him who you think will win the World Cup. The Motley Fool has a disclosure policy.
