Jim Corbett Wants to Keep You Out of Surgery

“This is our time,” he says. “We’re seeing our expenses stay flat and our revenue grow. We’re getting to the point where we’ve reached critical mass in our markets, and we’re able to leverage our platform into greater revenue growth.”

Last year’s net sales of $133.7 million were a 55 percent increase over net sales of $86.3 million in 2004, when the company’s net loss was $99.2 million. Ev3 is expected to report a net loss again in 2005, but then more product launches—on the heels of 20 last year—and a maturing sales and marketing infrastructure should pull it into the black.

One of ev3’s big expenses in 2004 was a doubling of its U.S. sales force. That was in line with the fact that more of the company’s products that were already sold in Europe were gaining approval for sale in the United States. (In those markets, as in Canada and Japan, ev3 sells directly to hospitals; in other Asia Pacific countries and Latin America, it has distributors.) Ev3 expects to keep making roughly half of its sales at home and half abroad, as it does now. But domestic sales have grown faster than international sales lately: In the fourth quarter of 2005, U.S. net sales were $22.7 million, up 91 percent from a year earlier; international net sales were $18.3 million, up 34 percent. Corbett says, “What you’re seeing is the confluence of sales force expansion and new product launching in the U.S.”

Being a global company has been an important piece of ev3’s strategy. It was expensive to build an international infrastructure up front, Corbett and Spencer say, but there are returns on that. One is that faster regulatory approval in other countries brings revenues from those markets while the company works on FDA approval at home. And there’s the simple fact that “94 percent of the global population lives outside of the U.S.,” Spencer says. “You have to know what’s going on in other areas of the world and leverage your products there to get a greater return.”

Then, Corbett says, there’s the chance to learn from market response to a product: “When you start doing something, you always learn faster.”

It comes down to incremental improvements and that innovation gap that ev3 is trying to fill. Corbett says, “If you look at the two areas we finally settled on, peripheral vascular disease and neurovascular disease, they were so underinnovated, it wasn’t like you had to change the world; you had to make the product that they had better, and then better again, and then better again. You know what I mean? That’s what the physician wants,” devices that are just a little more flexible, or smaller in diameter, or that can treat vessels a little farther down in the leg or farther up in the brain, he adds.

This winter, Corbett was looking forward to one of those new iterations: the U.S. launch in February of a new stent. A focus group of doctors had told ev3 that in certain applications, the stents available on the market tended to fracture after they’d been placed in patients.

Corbett recalls the meeting last April where the need for a nonfracturing stent emerged: “So we agreed on how to do it . . . and we set about trying to invent it in a way that would solve the problems that they have—which we think we have done, and we have submitted to the FDA, and we will launch within the next month. So from April 20th to February something, we had genesis, we had development, we had manufacturing, we had testing, we have FDA submission, and we have manufacturing scale-up, and we’re in a launch.

“And that,” he says, along with an unlikely beginning, “is what makes ev3 different.”