Volcano courts investors with pulmonary embolism device launch

Volcano is launching the Crux Vena Cava Filter.--Courtesy of Volcano/Crux

Volcano ($VOLC) is hitting the market with its new device to treat pulmonary embolisms, and the launch could help it regain the favor of a restive investor base over time.

The San Diego producer of intravascular imaging, diagnostic and therapeutic devices gained ownership of the Crux Vena Cava Filter when it snatched up its developer, Crux Biomedical, for $36 million in December 2012. At the time, the Crux VCF System already had an FDA clearance and a CE mark, approved to ease bidirectional retrieval through the femoral or jugular veins. So its official commercial release and initial implantations under the Volcano name are both big milestones.

Volcano stands to gain because its device could reach a relatively large segment of the population. As the company explained, the migration of a large blood clot coming up from the deep veins of the legs causes pulmonary embolisms and kills 200,000 people annually in the U.S. More than 600,000 patients are affected by the condition, and Volcano said the new product can improve the standard of care over competing devices because of the way it addresses filter tilt, which can make retrieval of existing filter devices hard to accomplish.

"This milestone represents one of many recent developments at Volcano that demonstrates the company's commitment to expanding our peripheral product offering," Dr. Neil Hattangadi, vice president and general manager of Volcano's Peripheral Vascular Business unit, said in a statement.

Traders didn't seem to be wildly enthusiastic late morning on Nov. 13, when Volcano's stock traded at $20.73. That's up over 2%, but Volcano's stock has wallowed near that price since the end of October, when the company faced a 17% share price plunge in reaction to Volcano's executives setting diminished expectations for the rest of this year and into 2014.

While Volcano's third-quarter revenue grew, it missed earnings targets. Executives also warned that foreign exchange rates adversely affected Q3 numbers, and that its fractional flow reserve business didn't meet revenue expectations in Japan. What's more, the company said the decline in percutaneous coronary interventions in the U.S. would affect its bottom line.

Projections now are for revenue growth of between 9% and 11% in 2014 and a return to higher double-digit growth beginning in 2015. The Wall Street Journal reported that some activist investors are calling for a stock buyback or an improvement in pay incentives to help propel management to drive better returns sooner. New product launches will also help, and the Crux VCF system is a positive step in that direction.

- read the release
- here's the recent WSJ article (sub. req.)