Unable to strike a long-sought merger deal – at least long-sought by the larger U.S. firm – Boston Scientific (BSX; Natick Massachusetts) and Medinol (Tel Aviv, Israel) launched a war of words last month, with those words increasingly nasty as preliminary to a legal battle launched by the Israeli firm.

BSX has been attempting to acquire Medinol, its major supplier of stents and stent materials, for several months, but those negotiations were abruptly halted when the Israeli firm filed suit against Boston Scientific, charging fraud and theft of trade secrets. The U.S. company shot back, saying the lawsuit was a negotiating ploy intended to drive up the acquisition price for Medinol, and it used its mid-April annual meeting with market analysts to decry such tactics and to refute negative comments Medinol had attributed to Boston Scientific President and CEO Jim Tobin.

In the suit filed by Medinol, it claimed, among other things, that BSX had misappropriated its annual property but also had set up a "dummy" company for the purpose of stealing business from it. The Israeli firm said that Tobin had provided Medinol with a partial disclosure about the shell company, located in Ireland, that he had referred to his Boston Scientific colleagues as "crooks" and had made available many internal documents that "provide evidence of the fraud."

During Boston Scientific's meeting with analysts, Tobin said that he has "the highest confidence in the business ethics of the people I work with," and, specifically addressing reports that he was "passing information to Medinol on our independent manufacturing line," said that "any information that came from me or at my direction was given with Pete Nicholas' [BSX chairman] full knowledge and agreement." Tobin repeated his company's position that the lawsuit and other action by Medinol were all pointed to an ulterior motive: "to get us to pay a higher price for Medinol." He said that in its efforts to acquire the 80% of the Israel stent maker it does not already own, Boston Scientific made an opening offer last summer "we thought was reasonable." Tobin said that Medinol then countered with "a number that was in the stratosphere." After some posturing, "they came down significantly, but not nearly enough," Tobin said. "By year-end, they had come down to a figure that was in the ballpark, but still too high," while also continuing threats of legal action, he said. "By March, it actually looked like we were headed toward an agreement." Tobin said BSX at that point asked Medinol to sign a term sheet, but "they got seller's remorse and balked. Then they demanded to renegotiate." When Boston Scientific said no, he said, "they finally sued."

Tobin says the issue is clear: "This is all about leverage, plain and simple. It was about leverage when Medinol didn't want to give us our independent manufacturing line, and it's about leverage now when they are looking for more money."

Though continuing to express the company's desire to purchase Medinol, Tobin told analysts, "we will not be bullied, and we will not let Medinol hold our business hostage to their demands." He said that the plant in Ireland was set up because "Medinol was a start-up company [when the stent manufacturing and supply agreement between the two companies was set up in 1995, and there were real risks that it might not meet our supply needs." He said the contract "specifically provides for an independent [production] line." Medinol "was required by the contract to design and build the line and get us up to speed so that we could operate it ourselves. Medinol wouldn't do it, so we tried to do it ourselves," Tobin said.

He said that Boston Scientific never completed the stent production line in Ireland and "never sold a single stent made on it."

The difficulties with Medinol further help to explain Boston Scientific's activity in the acquisition market this year, which has resulted in the purchase of several technologies for the company's pipeline (see Cardiovascular Device Update, April 2001). But those technologies are not likely to emerge from the BSX pipeline any time soon, and the difficulties with Medinol threaten the company's continued ability to supply stents, primarily its NIR stent, to its customers. Tobin reported that the company has a backlog of products in that category, but an inability to strike a merger deal and a protracted legal battle threatens that supply.

AbioCor implant strategy outlined

By the time this issue of CDU is in readers' hands, the first implantation of the AbioCor artificial heart may have taken place – without any of us knowing about it. The implantation will come without any announcement, according to Abiomed (Danvers, Massachusetts), developers of the AbioCor. But more importantly, it won't come with any fanfare.

Speaking during a mid-April meeting of the National Press Club in Washington, executives of the company continued to promise that the first of five initial implants will come before June 30. And they emphasized a low-key approach to that event, one clearly reflecting that they have learned from history. When Barney Clark was implanted with the Jarvik artificial heart in 1982, the event launched a media circus of the three-ring variety. Going in, expectations were high. But Clark's 112 days of struggle with pain and infection brought a barrage of criticism that the Jarvik had merely extended his suffering.

That outcome is one that Abiomed officials are clearly hoping to avoid with their trial. And the hope that implantation will provide the implanted patient "quality of life" was a major theme of their presentation before those who will put the result on a worldwide stage. David Lederman, PhD, president and CEO of Abiomed, was careful to outline what quality of life will mean in this case. He said that for these patients it should mean freedom from pain, maintenance of "mental acuity" and the ability to do "everyday working activities." More generally, the heart should "bring patients back to productive life." To do this, he said that the Abiocor would not only have to pump safely, but also be free of maintenance problems – or require very little maintenance – and should show "no other complicating factors such as causing infection or rejection issues." Lederman described various parameters defining the first patients selected in order to increase the chances of success. Though nearing total heart failure, they should have no other major organ failiure or psychiatric problems and no major infections.

And they should have a system of support to help them withstand the various stresses that will come with the procedure. Ed Berger, PhD, vice president of governmental/external affairs for Abiomed, said that the company is making "a special commitment to the well-being of the patients that volunteer to be a part of this trial. They will be under enormous stress, facing death and a therapy that has never been tried before." Because of these stresses and the need for intense clinical focus, Berger said that the privacy of the patients and families would be protected. "We plan at this point," he said, "to make announcements about the initial implant of the trial 30 days after the event." That news blackout is intended to assure "100% total focus on taking care of the patient, to provide optimal care in order to maximize that care," he said.

Mehmet Oz, MD, associate professor of cardiac surgery and director of the Cardiovascular Institute at Columbia University (New York), said he was "intrigued by some of the issues" involved in the trial. "For clinicians such as myself, the man-machine interface, the paradigm of confluence, is the major challenge of this trial." He too emphasized the quality-of-life theme. The earliest human implantations had insufficiently focused on this issue and the challenge of the Abiomed trial, he said, would be "to prove that what we're delivering is cost-effective and actually consistent with a sustainable value-building contribution to health care."

Lederman noted a stark fact of the trial: Because the patients in the trial are at an end stage of life, "Every single one of these patients is going to die on the AbioCor. Some will live longer, but we have to be prepared. The question is how success ultimately will be defined."

Cook, Spectranetics settle suit

Cook Vascular (CVI; Leechburg, Pennsylvania) reported last month that it had settled its litigation with Spectranetics (Colorado Springs, Colorado), which it had filed in October 1999. CVI charged patent infringement, breach of contract and misappropriation of Cook trade secrets relating to the field of pacemaker lead extraction technology, and had sought the assignment of certain Spectranetics U.S. and international patent rights to Cook. CVI President Louis Goode said the company is prohibited from disclosing the terms of the settlement agreement, but said the results of the litigation "confirm our commitment to vigorously protecting Cook's technology and reputation in the field of implanted heart lead removal."

News of new financing

Vascular Architects (San Jose, California), a maker of devices to treat vascular disease and nonvascular obstructions, said it has closed a $20 million private placement of its Series C preferred stock. Bruce Barclay, president and CEO, said, "This financing will allow us to commercially launch the aSpire Covered Stent and Controlled Expansion Delivery System in the U.S. and Europe in the second quarter of this year, as planned. We can also continue to enroll patients in our two clinical trials currently underway in the U.S. using the aSpire Covered Stent to treat iliac and superficial femoral artery occlusions, and dysfunctional arterio-venous access grafts." Barclay said the funds also will be used for product development and other general purposes.

The company recently received both the CE mark to market the device in Europe for treating peripheral vascular disease, and FDA 510(k) clearance for treatment of tracheobronchial strictures.

CenterWatch launches research databases

CenterWatch (Boston, Massachusetts) has launched a wireless personal data assistant (PDA) suite of searchable databases designed for clinical research and other health care professionals seeking clinical trials information in a portable format. CenterWatch-Mobile is comprised of three databases that include detailed listings of more than 8,000 ongoing industry-sponsored clinical trials; summary descriptions of hundreds of drugs recently approved by the FDA; and more than 1,500 profiles of drugs in Phase I to Phase III clinical trials.