ArthroCare plans to spend 9% to 10% of revenue on Coblation R&D

By Jennifer Lanning Drey

Eugene, Ore., June 23 - ArthroCare Corp. plans to spend 9% to 10% of its revenue each year for the next three to five years on research and development related to its Coblation technology, said Fernando Sanchez, senior vice president of business development of the company, at the Piper Jaffray London Health Care Conference on Friday.

Coblation is ArthroCare's patented technology that uses bipolar radiofrequency energy and a saline solution to remove soft tissue at low temperatures. The company combines the technology with existing surgical processes in sports medicine, spinal procedures and ear, nose and throat (ENT) procedures.

"We still invest very aggressively in advancing the Coblation technology," said Sanchez.

ArthroCare's fastest-growing business unit, the ENT unit, received approval from the Food and Drug Administration to use Coblation in tonsillectomy procedures in 2001. The technology is now used in more than 35% of tonsillectomies, according to Dr. Norman R. Sanders, vice president of corporate development and medical director of the company.

"We're reached, what we consider, the standard of care in this procedure," he said.

Coblation can also be used in procedures such as adenoidectomy and treatments for nasal airway obstruction and snoring.

ArthroCare also believes it can increase its market share by expanding the use of Coblation in its sports medicine business unit, Sanders said.

"We see that there's a $2.5 billion market opportunity, primarily in the shoulder joint and knee joint [surgeries]," he said.

The company presented data from two studies showing that Coblation devices were effective for treating symptomatic chondral defects in the knee, at the Arthroscopic Association of North America annual meeting in May.

The first study indicated Coblation could be safely used in procedures treating grade 2 and grade 3 lesions in the knee.

The second study indicated that there is no relationship between the onset of osteonecrosis and Coblation when used to treat chondral defects in the knee.

Austin, Texas-based ArthroCare is a medical-device company that develops, manufactures and markets minimally invasive surgical products.

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