Executive Summary

Over the past several years, new tools have helped interventional cardiologists capture patients who historically would have been candidates for surgery. Drug-eluting stents are apt to only increase this trend. These technology innovations have sparked the latest round of proclamations that there is no future in cardiac surgery since the sector's largest component--bypass--is waning, and that the only worthwhile coronary device investment opportunities lie in products with interventional applications. Yet cardiac surgery remains a major device opportunity. A significant increase in M&A activity and recent later-round financings by companies like Percardia and Converge indicate that investing in cardiac surgery start-ups remains alive and well, albeit with new challenges. Indeed, some investors believe that heart surgeons, traditionally conservative adopters of new technology, are now more receptive than ever to new devices and procedures because of the threat to their livelihoods posed by interventionalists' increased encroaching on surgeons' core patients.