FDA Approves Disruptive Medical Device

In February 2014, I labeled it “the most disruptive technology I’ve come across in years.”

A bold statement, for sure.

But here’s why it’s no exaggeration…

Based on a 2012 Army study, the technology in question provides a solution to the leading cause of death on the battlefield.

At the time, I mentioned that the only thing standing in the way of it being deployed – and saving precious lives – was the Food and Drug Administration (FDA).

Well, I’m happy to report that FDA approval has now officially been granted.

More importantly, the company behind this remarkable technology just announced its first commercial shipment.

Here are all the details, including why this startup remains at the top of my watch list…

A Quantum Leap Forward in First Aid
Oregon-based RevMedx is the startup behind the medical technology known as XStat.

To say it’s revolutionary would be an understatement.

In my previous article, I shared all the specifics on the device. But here’s a Reader’s Digest version, so we’re all on the same page…

XStat is a one-of-a-kind device to stop bleeding of junctional wounds, where the legs or arms meet the torso.

It consists of a 30mm-diameter syringe filled with compressed mini-sponges. Once they come in contact with blood, they expand up to 10 times their size.

Here’s the genius part: Not only do the expanded sponges act as a temporary barrier to blood flow, they also apply pressure.

The end result? Within 20 seconds, severe bleeding can be stopped. For up to four hours.

Now, if you’re worried about these sponges being lost inside a patient, fear not. RevMedx’s founders thought about this potential issue and placed an X-ray detectable marker on each sponge.

In short, RevMedx says XStat provides “quantum-leap changes to first responders in time of application and reduction of blood loss in the field.”

I agree. And so does the FDA…

Saving Critical Seconds on the Battlefield
After granting approval on April 7, 2014, Christy Foreman, Director of the Office of Device Evaluation at the FDA’s Center for Devices and Radiological Health, had this to say:

“XStat is a novel device that can be rapidly deployed, providing fast-acting hemorrhage control to stabilize a wounded patient for transport. This will be an important new treatment option for our nation’s military to treat injured soldiers who many not be in close proximity to a medical facility.”

In other words, it’s a no-brainer for approval.

And it’s easy to understand all the positivity when we consider the current standard of first aid. It involves a medic spending up to four minutes packing a wound with five rolls of combat gauze and applying constant pressure to control bleeding.

By contrast, XStat involves simply injecting sponges into a wound. Within 20 seconds, the bleeding stops, and there’s no need for a medic to constantly apply pressure.

As you can imagine, the difference between 20 seconds and a few minutes is critical on the battlefield – especially if the enemy is shooting at you. It could be the difference between life and death for the wounded solider and the medic.

Given that, the identity of the company’s first customer should come as no surprise…

Stop the Bleeding… Start the Profits
RevMedx originally got off the ground with a $5-million grant from the U.S. Army. But on April 16, the Army went from being a backer to the company’s first buyer.

While Jeff Luciano, Assistant Program Manager of U.S. Special Operations Command’s (SOCOM) tactical medical programs, didn’t reveal the size of the initial order, he did say that SOCOM plans to buy more in the next six to 12 months, once RevMedx ramps up production and reduces the costs.

XStat is currently hand-assembled and costs about $100 per unit – a miniscule price to pay for a soldier’s life, I’m sure you’ll agree.

But it’s only a matter of time before XStat gets deployed on a larger scale. And that’s why I’m so interested in the company.

Take the words of John Holcomb, a trauma surgeon and the former Commander of the U.S. Army Institute of Surgical Research: “From a strictly numbers point of view, there are a lot more civilians bleeding every day.”

How many?

Well, there are more than 100,000 people shot in the United States each year. And over 140,000 women die annually, due to postpartum hemorrhaging. In fact, it’s the leading cause of maternal mortality.

Indeed, RevMedx admits that law enforcement and civilian first responders are interested in XStat. And the company is already working with Oregon Health & Science University to develop a version of XStat to stop postpartum bleeding.

Bottom line: There’s no doubt that RevMedx’s XStat technology is going to positively disrupt medical treatment. But its greatest potential lies in the civilian market.

We’ve already profited handsomely from similar opportunities here – for example, Kinetic Concepts, Inc., which was acquired for $5 billion in 2011, and Patient Safety Technologies, which Stryker Corporation (SYK) bought last year at a 49% premium.

Rest assured, I’ll alert you the moment an opportunity arises to invest (directly or indirectly) in privately held RevMedx.

Ahead of the tape,

Louis Basenese

Louis Basenese, Chief Technology Analyst
May 7, 2015
Wall Street Daily


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