Global Economics

Itamar: Hearing Heart Disease

The Israeli company's EndoPat device "listens" to minute vascular functions through sensors attached to a patient's index fingers and warns of possible heart attacks

Sometimes the biggest advances in health care are made with small steps, not blockbuster breakthroughs. That's the case for Itamar Medical (ITMR.TA), a startup based in Caesarea, Israel, that has painstakingly developed a simple, inexpensive, diagnostic test able to spot a little-known indicator of heart disease—the leading cause of death in the U.S. and Western Europe. In the next five years, millions of people may be screened using the company's EndoPat device, potentially saving countless lives via early warning of impending heart attacks.

Sounds like a winner, but getting here hasn't been easy. Today the heart disease risk factors most commonly measured by doctors are blood pressure and cholesterol levels. But in 1998, three American scientists won the Nobel prize in medicine for showing that tiny cells in the lining of blood vessels, known as endothelial cells, play a vital role in regulating vascular functions. The activity of these cells is a marker of cardiovascular health, but nobody had a way to measure it quickly and cheaply.

One of the only diagnostic options was ultrasound, which is costly and requires trained technicians to interpret the results. Devising a cheaper, more available test had obvious benefits. "Fifty percent of those who arrive at emergency rooms with heart attacks don't have conventional risk factors," such as high cholesterol or blood pressure, says Amir Lerman, a cardiologist at the Mayo Clinic in Rochester, Minn. "Endothelial function may be the missing link." Lerman has tested EndoPat on hundreds of patients and expects it to become routine at Mayo in the next two years.

Itamar's long path to discovering a solution started 10 years ago, when founder Giora Yaron assembled a team of physicists, cardiologists, physiologists, and experts in digital signal processing to devise a noninvasive, easily administered test for endothelial function. They spent five years perfecting the technology, which involves "listening" to minute vascular functions through sensors attached to a patient's index fingers and interpreting the readings via software. Results are presented on a scale from 1 to 5: Healthy adults score around 3, while a mark below 1.7 raises red flags. The EndoPat received regulatory approval from the U.S. Food & Drug Administration and the European Union in 2003.

Medtronic was a Supporter

Along the way, Itamar picked up $67 million in funding from medical technology giant Medtronic (MDT) and two Silicon Valley venture capital firms, Bay City Capital and the Alejandro Zaffaroni Fund. In February, 2007, it went public on the Tel Aviv stock exchange, raising $25 million and valuing the company at $70 million.

Now, Itamar is set for a big expansion, widening its marketing efforts from research institutions to the general medical market. So far the EndoPat technology has been used only at major medical centers around the world. The company has sold about 400 of its diagnostic machines, at $30,000 each, and tests have been administered to nearly 100,000 people. Revenues last year totaled $10.5 million. Broader distribution will, of course, increase that many times over, though the company won't provide projections.

"There's a big advantage with the EndoPat test, as it can be easily administered in a doctor's office or a clinic by staff without any special training," says Marc Pritzker, a cardiologist at the University of Minnesota in Minneapolis. For now, Itamar appears to have only one direct competitor, Houston startup Endothelix, whose Vendsys device received FDA approval last September. Other companies such as Hypertension Diagnostics (HDII) of Eagan, Minn., work in related diagnostic categories.

Winning Over Insurance Companies

Administering a test with the Itamar system costs several hundred dollars, but Co-Chairman Yaron says he thinks the price can be brought down in the future through mass production of the disposable index-finger biosensors. Large-scale market penetration also will depend on persuading insurance companies and health funds to cover the cost of the test. Itamar is already in negotiations in the U.S. and Europe to gain reimbursement approval.

To fund Itamar's expansion, the company aims to list on the Nasdaq exchange, though Yaron says a floatation isn't likely before 2009 because of market conditions. A trained physicist, he has helped launch several tech companies before, including Exanet and Pentacom—now owned by Cisco Systems (CSCO), but Itamar is the first medical venture for the 60-year-old serial entrepreneur. Yaron's most recent successes were the $200 million sale of P-Cube, a network traffic management company he led, to Cisco in August, 2004, and the November, 2006, sale of software quality assurance company Mercury Interactive to Hewlett-Packard (HPQ) for $4.5 billion.

Shaky stock markets won't hold back Itamar's push to gain mass acceptance of the EndoPat. If the company succeeds as it hopes, someday endothelial scores could become as familiar to the average person as cholesterol levels and blood pressure readings are today.

Sandler is a correspondent for BusinessWeek in Jerusalem .

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