Admedus (ASX:AHZ): The small-cap medical company disrupting aortic heart valve technology
Since taking the helm of Admedus Ltd. in 2017, CEO, Wayne Paterson has steered the ASX small-cap company into a real contender for disrupting the global transcatheter aortic valve replacement (TAVR) market. Its innovative ADAPT® technology not only slashes surgical and recovery time but also enhances valve longevity and durability, which are critical issues currently plaguing the cardiac surgery industry.
The Australian Business Executive speaks with Paterson about how refining the mission of Admedus has been the driving force in its bright future. He also reveals how he intends to leverage his executive experience in healthcare to help Admedus make its mark on the multibillion-dollar heart health industry.
Shaking up the TAVR industry
Focusing all its recent energy on producing a single-piece 3D aortic valve using improved tissue science and unique valve design, the structural heart company is now poised to transform cardiovascular medicine with its ADAPT® technology platform. As the only technology of its kind in the industry, ADAPT® helps physicians offer life-changing procedures for a broader spectrum of patients, ranging from infants to the elderly.
Paterson explains that the mainstream procedure for aortic valve replacement can stretch across 2-4 hours as surgeons crack open the chest, stop the heart and change the stenotic valve. The ADAPT® technology when used as a TAVR device reduces surgery time to just 45 minutes and uses a non-invasive procedure to implant the valve through the femoral artery. Hospital stays are reduced from three weeks to as little as two days.
Calcium building up around the replacement aortic valve presents another major challenge. According to Paterson, “Over time, an ordinary valve will calcify because it is foreign material going into the body. It degrades, and you are then back in a position where another valve replacement must be done. Therein lies the challenge but also the opportunity for Admedus.” While he notes that the problem has largely gone unaddressed, he believes Admedus offers a viable solution. Based on 10 years of clinical data, the ADAPT® material does not calcify nor degrade. There is also significantly less risk of graft failure or infections with the non-invasive procedure.
Valve durability and longevity have become critically important as an aging global population faces longer life expectancies. The ADAPT® tissue science delivers a stronger, more durable alternative to the current three-tissue valves sewn together on a frame. “Our valve design is single piece, 3D moulded, which much more closely mirrors the anatomy of the native aortic valve,” Paterson explains. The ADAPT® treated tissue is made from DNA-stripped bovine collagen. Since it is acellular, there is improved tissue growth and immune tolerance, making it more durable, versatile and safer.
“When you combine the tissue science of ADAPT® with its anti-calcification properties and the single-piece design of our valve, you create a more durable valve. Our data shows 40 percent less wear and tear than the conventional valves,” Paterson adds. “Based on the current requirements of the market that these valves need to last longer, we are right in the middle of what is a perfect storm with the right technology.”
A refined focus drives momentum
A publicly listed medical company on the ASX since 2004, Admedus has undergone an extensive business renovation in recent years. After taking on the board chairman position in 2016, Paterson saw the company’s potential being diluted by its diverse focus on infusion treatments, immunotherapies (drug development) and cardiac technologies. “The company has had a bumpy past which is reflected in the share price. It certainly had a choppy history as you often see with these small-cap companies on the ASX,” explains Paterson, who believes the different focuses caused the company to swing around in circles trying to accomplish a multitude of things whilst diluting capital across too many “blue sky” projects such as Immunotherapies. “Frankly, Admedus didn’t have a great sense of self or what business it wanted to pursue”
When he transitioned into the CEO position the following year, his first objective was to “divest the peripheral businesses to make sure the company could focus the capital that was being raised through cap raises and shareholders. It was not necessarily being used efficiently across the three different divisions,” he says.
Betting its future on its proprietary ADAPT® technology, Admedus has spent the past year divesting all other business interests. By further refining its mission to bring ADAPT® exclusively into the TAVR space, Admedus has recently completed a $35 million transaction to focus on engineering its superior single-piece 3D aortic valve. “Our company has technology that is, in fact, very well positioned to disrupt that particular market,” says Paterson, who estimates the global worth of the TAVR market at “around $5 billion to $8 billion with just a couple of big players. So, we’ve had the focus on really bringing that technology forward. The ADAPT® technology is quite unique and creates an unassailable moat around the company.”
Paterson is especially excited about the company’s decade-long data proving that its material does not calcify. “It’s very well published, and has more data than any other company out there,” he notes. “Clinical data is the most relevant thing to success when you are in a competitive space. I thought, ‘If we’ve got data right now that nobody else has, then what else have we got, what else can we do?’ That’s what led us to the TAVR space and now puts us beautifully in the middle of what is a very big opportunity.”
Industry experience advances global commercialisation
Much of his ability to spot this opportunity is due to Paterson’s 25-year career in healthcare, which spans leadership positions at Roche Pharmaceuticals, Merck and Cepheid. His ever-increasing responsibilities in building and managing multibillion-dollar businesses moved him around the world, giving him valuable exposure to global operations, international commercialisation and government regulatory policies.
Paterson credits this unique experience, along with many lessons learned, as an asset in driving Admedus forward in its mission to commercialise globally. A native Australian, Paterson has earned a world-class business education at prestigious universities in Queensland, Switzerland, France, Hong Kong and the U.S. His work in China, South Korea, Japan, Canada, Australia and Europe introduced him to many therapeutic areas, including oncology, infectious diseases and cardiovascular medicine, while launching 36 drugs internationally.
Paterson also recognises that his experience in C-suite environments taught him how to operate within a large corporate setting. “At Admedus, we look to do deals with the large corporates in the medtech space. It’s important that you know how to walk the walk and talk the talk with those big corporates if you are trying to get a deal done as a small company,” he says.
When it comes to the most important business lessons learned, Paterson cites cultural agility as being critical to the leadership perspective. Successful deals, he believes, are dependent on being able to rally people to a common objective in a way that makes sense to them. Failure happens when expat managers judge the local cultures for doing something differently.
“That history of how to drive an organisation forward and rally people around a common cause has helped a lot with getting Admedus to where it is today,” Paterson explains. “This background puts us in a good position for getting deals made, for being able to articulate our opportunities to those big companies in helping them understand how we will help their business grow globally as well.”
Maximising opportunities in the global space
Moving forward, Admedus is focusing on investing in world-class partnerships and acquiring strategic assets to develop its next-gen technologies. Along with attending top international cardiac conferences, the company has formed a medical advisory board of TAVR doctors who inform decisions and advocate for the ADAPT® technology.
Paterson says having its headquarters situated in Minneapolis, Minnesota, USA, the global hub for medical devices, gives Admedus access to the biggest companies and brightest medical engineers in the industry. “The Minneapolis area is the global headquarters level where decisions are made on deals, so it’s most important we are here. Admedus is in the development phase, and we have so much talent sitting right here on our doorstep. That helps us drive our projects forward quickly and efficiently”
When discussing opportunities for investors, Paterson stresses that “what we have is actually novel and unique. There is only one ADAPT® process. It’s clinically relevant, and it’s very highly published. It also has the support of a lot of clinically relevant people, academics, scientists and doctors. It is primed to get in the middle of this multibillion-dollar space due to the novelty and the clinical benefits that this technology brings. There’s a ways to go, but it really does have the ability to disrupt this very large market space.”
Find out more about Admedus (ASX:AHZ) by visiting www.admedus.com.