CD&Ds

Medtronic(Minneapolis) blew analysts' expectations out of the water in the latter part of May when it reported its 4Q financial results, based for the most part on the results of the initial sales of its new Endeavor drug-eluting stent (DES).

The device company reported 4Q08 revenue of $3.86 billion, up 18% from the $3.28 billion reported a year ago, aided by Endeavor sales of &81 million. Medtronic also reported a strong close to the year, with revenue for the year up 10% to $13.515 billion, compared to $12.299 billion in FY07.

In addition to launching the Endeavor DES in the U.S., Medtronic President/CEO Bill Hawkins said during a conference call that the stabilization of the implantable cardioverter defibrillator market, and that strong performance in "virtually every business and geography provides positive momentum as we begin our new fiscal year."

Medtronic said that total coronary stent revenue for the year, of $710 million, increased 27% over the previous year, and quarterly revenue jumped a whopping 56%. The company also reported that annual revenue from its CardioVascular business was up 12% to $2.131 billion and fourth quarter revenue of $643 million represented a 22% increase from last year.

Rick Wise, med-tech analyst for Bear Stearns (New York), wrote in a research note that the company's 4Q report "beat our estimate by $125 million." And he said that U.S. Endeavor sales of $81 million for the quarter were "nearly double our $45 million estimate." According to Wise, the device took about 17% of the U.S. market share in its first quarter of launch, exiting at a greater than 20% share.

Medtronic earlier this year was the first to win U.S. marketing approval for a second-generation DES, and it wasted no time making the Endeavor stent available to physicians. The Endeavor, coated with the drug zotarolimus, had received a panel recommendation for approval last October.

"This momentum reinforces the positive feedback we gleaned at the EuroPCR meeting and leaves us more optimistic that our 20% peak share estimate within 12 months post-launch is achievable," Wise said.

Hawkins said that Medtronic's quarterly performance was highlighted by double-digit revenue growth in six of the company's seven businesses, including Spinal, 35%; CardioVascular, 22%; Neuromodulation, 17%; Diabetes, 20%; and Surgical Technologies Group (formerly ENT), 18%.

Other highlights included: more than $800 million in ICD revenue; $174 million in DES revenue — $81 million in the U.S.; overall revenue growth outside the U.S. of 22%; and, on a non-GAAP basis, operating income increased 27%.

Noting that the ICD market appears to be on the road to recovery, Wise said in his research note that Medtronic's 4Q ICD sales of $806 million, 5% growth compared to 4Q07, was more than $10 million ahead of Bear Stearns' estimate and that the company "continues to regain ground lost post-Fidelis lead recall last October."

Boston Scientific ordered to pay $250 million in patent suit

A U.S. District Court jury in Marshall, Texas, late last month ordered Boston Scientific (Natick, Massachusetts) to pay Medtronic $250 million in damages for infringing on three patents owned by Medtronic. "We believe the jury did an excellent job of interpreting the evidence and the law," Medtronic spokesman Daniel Beach told CD&D. Beach said the $250 million figure is "almost exactly the amount we requested."

Medtronic sued Boston Scientific in 2006, asserting that Boston Sci's Taxus Express2, Express2, Liberte, Maverick, Maverick2 and Quantum Maverick products infringed the Fitzmaurice and Anderson catheter patents owned by Medtronic.

The trial began on May 16 and lasted 1-1/2 weeks. It was heard by Judge T. John Ward and concluded on May 27 when jurors issued their verdict following five hours of deliberations.

"Both our team and our client are extremely pleased with this verdict," said Sam Baxter, lead counsel for Medtronic. "The jury closely considered the facts and delivered what we believe is a just result."

The Fitzmaurice patents cover angioplasty catheters with narrowed distal ends, which improve the deliverability of angioplasty catheters. The Anderson patent covers semi-compliant angioplasty balloons. The Anderson balloons provide sufficient strength to withstand repeated inflations allowing custom vessel sizing.

In a statement, Boston Scientific said it raised a number of defenses which were not considered by this jury, but which will be heard by the U.S. District Court in Marshall on July 31. If those defenses are successful, the jury's verdict will be set aside.

If the verdict stands, Boston Scientific said it would seek its overturn in post-trial motions, and, if necessary, appeal to the U.S. Court of Appeals for the Federal Circuit in Washington. The company said it is "confident" it will prevail on appeal.

Boston Sci fared better in an international legal setting. An arbitration panel of the World Intellectual Property Organization (WIPO) ruled in favor of the company in early May, finding that its Liberte and Taxus stents do not infringe any patents held by its former Israeli stent-supply partner, Medinol (Tel Aviv).

Medinol requested the arbitration as part of its 2005 settlement with Boston Scientific, alleging that the Liberté and Taxus stents infringed some of its U.S. and European patents. Medinol has the right to appeal the decision to another WIPO panel.

In 2005, Boston Scientific agreed to settle a long-standing dispute by paying Medinol $750 million, which the company said at the time was its largest-ever legal payout to another firm. Medinol had been seeking a much larger amount, reportedly in the range of $4 billion to $5 billion.

The legal battle began in 2001 after Boston Scientific tried to acquire Medinol, which was providing it stents in an effort, it said, to secure its line of supply. But the Israeli firm said that the price offered by the U.S. firm fell short of its value. Medinol then sued, charging that Boston Scientific had secretly established another facility in Ireland in the 1990s to provide an alternate supply of stents and had appropriated the Medinol technology. Boston Scientific responded with its own countersuits.

In protest of HBOC study, Biopure is rebuffed by JAMA

The development of blood substitutes, also known as oxygen therapeutics, has been rife with controversy and hurdles over the years. The latest installment in this series of difficulties is outlined in a formal Biopure (Cambridge, Massachusetts) protest of a published meta-analysis of a number of hemoglobin-based oxygen carrier (HBOC) trials that indicated a 30% increase in the risk of death and a nearly threefold chance of having a heart attack; it went so far as to suggest that no further Phase III studies be conducted considering these dangers.

Biopure responded with a letter to the Journal of the American Medical Association (JAMA) asking for a retraction and apology for the article, which was published in May.

"But JAMA has now responded, saying they won't publish our letter because it's already been published in the public domain," A. Gerson Greenburg, MD, Biopure's VP of medical affairs, told CD&D. The letter was posted on the company's web site and copies distributed to the media.

The original JAMA article coincidentally was published during the same week that FDA and National Institutes of Health held a workshop on HBOCs, during which the JAMA findings were center stage.

"Until the mechanisms and potential toxicities of HBOC products are better understood, patients cannot be placed at unacceptable risk," wrote lead study author Charles Natanson, MD, of the critical-care medicine department in the NIH Clinical Center.

Biopure's oxygenation therapy product, known as Hemopure, consists of hemoglobin that has been taken out of the red blood cells of cattle and then purified, chemically cross-linked for stability and formulated in a balanced salt solution similar to Ringer's lactate. The resulting hemoglobin solutions do not contain any cells.

"Doing a meta-analysis is an excellent idea when you're looking at an individual drug and a collection of analyses over time," L. Bruce Pearce, PhD, Biopure's director of pharmacology and physiology, told CD&D. "It's a very good approach for one drug. What fundamentally bothers us is, this is a collection of different drugs in different settings. The authors want to make sweeping generalizations. For all of these different drugs, you have to know that each one is contributing to the risk. You're not guilty by association. That is something that was completely ignored."

"Disturbingly, so convinced are the [JAMA] authors of their conclusions that they have taken upon themselves the dissemination of the work to regulatory agencies and clinicians around the world demanding that Hemopure be withdrawn from clinical use and all investigations with it stopped in the name of protecting the public," Greenburg wrote to the publication. "At the same time, they have widely disseminated and publicized their actions. This is most irregular and in my opinion unethical."

Pearce said the impact on Biopure has been dramatic. "Considering the timing of the article immediately before the workshop this article says to start all over again and don't do anything in humans. The timing couldn't have been worse."

Biopure has four ongoing Phase II trials of Hemopure for these indications: during percutaneous coronary intervention; for patients undergoing coronary artery bypass graft surgery; for use in lower limb amputation resulting from critical limb ischemia; and in-hospital use in trauma patients.

Hemopure [hemoglobin glutamer-250 (bovine)], or HBOC-201, is approved for sale in South Africa for the treatment of acutely anemic surgical patients.

Biopure also is developing Hemopure, with support from the U.S. Navy, for a potential out-of-hospital trauma indication.

Biopure failed to win approval for a Phase III trial for pre-hospital treatment of hemorrhagic shock resulting from traumatic injury in December 2006.

Despite the original JAMA article, Greenburg said there was a general sense at the FDA meeting that, perhaps, the article was inaccurate and overstated. "At the end of the meeting, it was said to proceed with caution. [And that] when blood is not an option, [substitutes] should be looked at very closely."

Synthetic Blood International's (SBI; Costa Mesa, California) President Dick Kiral agreed with that conclusion. "I just came back from the HBOCs meeting in Bethesda," he told CD&D at the time. "There seems to be some safety issues and cardiovascular events reported. The FDA will publish a paper looking at the whole thing overall. But the tone of the meeting was 'don't treat all HBOCs alike,' in response to the fact that JAMA grouped findings about various products."

Greenburg added that for patients with no other options, oxygenation therapy is the only alternative. "Hemapure can assist in prolonging or saving them from their situation. That's to be weighed against no treatment which could result in organ injury from ischemia. When you look at a therapy that has a slight increased risk of MI [myocardial infarction] or death, weighed against survival ... patients make that decision all the time."

Biopure reported on June 18 that the U.S. Naval Medical Research Center (NMRC) had submitted a new protocol for review by the FDA for a Phase II clinical trial of Hemopure [hemoglobin glutamer-250 (bovine)], or HBOC-201, for resuscitation of operational casualties with severe traumatic hemorrhagic shock without availability of blood transfusions. The proposed trial hypotheses is that for such casualties Hemopure will improve survival and other clinical parameters, and will be relatively safe and well tolerated, in comparison with "standard fluid." Subjects will sign an informed consent prospectively. The study is entitled "Operational Restore Effective Survival in Shock (Op RESUS).

Op RESUS is designed as a single-blinded, randomized and controlled trial with up to 340 evaluable subjects, including operational military and civilian personnel (Department of Defense health system-eligible). The primary aim of the study is to compare the 28-day relative rate of death in patients receiving Hemopure versus the group of patients receiving the "standard fluid" for resuscitation (Hextend). Secondary and tertiary outcome measures are also defined. All subjects would receive blood transfusions, when indicated, upon availability.

If attained, Biopure said a successful completion of Op RESUS safety primary objectives would be expected to support an application to the FDA for allowance to conduct a definitive Phase III trial and have potential to improve survival of hemorrhagic shock casualties.

Under a research agreement with Biopure, the NMRC has had primary responsibility for designing, seeking FDA acceptance of and directing a pivotal trauma trial. In carrying out that agreement, the Navy designed and submitted to the FDA a proposed Phase II/III trial titled Restore Effective Survival in Shock (RESUS). That trial would have been conducted prehospital in civilian trauma patients.

The trial was placed on clinical hold by the FDA and continues to be on hold following changes intended to address FDA comments. The newly filed protocol is intended to remove requirements attendant to waiver of informed consent. To date, Congress has appropriated a total of $24.2 million for the development of Hemopure.

Nanogen to close operations in Canada as part of cost-cutting

Diagnostic company Nanogen (San Diego) said last month that it would consolidate its point-of-care manufacturing operations by closing its cardiac test manufacturing operations in Canada by the end of 2008 as part of an effort to cut costs and improve margins of its rapid-testing products. The company said its current operations in Toronto would be moved to its San Diego facility.

Nanogen estimates that it will reduce its workforce by about 30 people and cut overall costs, starting in 2009, by roughly $3 million.

The company's qualitative cardiac products, purchased two years ago from Spectral Diagnostics, are made in Toronto, while development and pilot manufacturing activities for the company's next-generation immunoassay activities are in San Diego. Transferring operations will reduce manufacturing cost and further focus resources on the next generation platform and products, it said.

Nanogen's congestive heart failure product, based on NT-proBNP, will continue to be supplied by Princeton Bio Meditech and is not affected by these actions.

"The decision to consolidate these operations is driven by our commitment to improving profitability and reaching positive operating cash flow," said David Ludvigson, Nanogen's president/COO. "It also supports our ongoing commitment to bringing new quantitative cardiac and infectious disease products to market on an innovative, proprietary point of care platform. R&D and manufacturing will now be in the same facility and will be more closely aligned as we develop our future rapid testing products."

The company said it would transition manufacturing activities to San Diego over the next several months and does not expect any interruption of product supplies to customers.

Additional indication OK'd for CorMatrix's ECM technology

CorMatrix Cardiovascular (Marietta, Georgia) last month reported an additional FDA approval for its Extracellular Matrix technology (ECM). The company's platform ECM technology is described as an extracellular matrix biomaterial that provides a natural bioscaffold that enables a patient's own host cells to repopulate and repair otherwise damaged tissues.

"When we talk about our technology to cardiologists and [describe] how it works, we like to use the example of an acorn," Beecher Lewis, CorMatrix's president/COO, told CD&D. "You can take one acorn and put it on your desk and it won't grow into an oak tree. You can put a thousand acorns on your desk and still nothing will happen. But if you put that acorn in rich soil then it's going to grow into a tree because then it's in the right environment. That's what ECM is for — damaged tissue. It provides the right environment for that tissue to grow and repair itself."

The initial FDA clearance, which came in August 2005, is for the reconstruction and repair of the pericardium during cardiac surgery. It received the CE-mark shortly after. To date, this application has been implanted during in excess of 4,000 cardiac procedures at more than 160 U.S. hospitals, according to the company.

ECM was developed in the 1990s at Purdue University (West Lafayette, Indiana).

The additional indication expands the use of the implant to include suture-line reinforcing, buttressing for soft tissue reaproximation, repair of cannulation sites and bleeding sites, and as an intracardiac patch or pledget for tissue repair of structural problems such as septal defects.

CorMatrix isn't the only company to use extra cellular biomatrix materials. Depuy Spine (Raynham, Massachusetts) a Johnson & Johnson (New Brunswick, New Jersey) company, and Cook Biotech (West Lafayette, Indiana) hold patents and have developed applications using the technology. The only difference is, CorMatrix's applications are primarily for the cardiovascular market.

"The FDA was pretty familiar with ECM because of previous [offerings] from Cook and Depuy," Lewis said. In fact, Cook and CorMatrix established a cross-license agreement in 2005 to help with the development of certain cardiovascular medical devices using proprietary extracellular biomaterials held by each company.

"That agreement is still ongoing," Lewis said.

Among its future offerings, CorMatrix is working toward an injectable form of ECM. Evidence supporting this application was presented at the American College of Cardiology (ACC; Washington) scientific sessions in Chicago in early April.

VentriPoint Diag develops new method to measure RV thickness

If the measurement of right ventricular volume of the heart is the "Holy Grail" of cardiology as VentrPoint Diagnostics (Seattle) believes it is then the company may just have the diagnostic tool that cardiologists have been searching for.

According to the company, the need for assessing right ventricular volume is well recognized by cardiologists, but often is unavailable to them because it is a time-consuming process that requires expensive equipment.

"Most people are not measuring the right ventricle because it's too costly to measure," Joe Ashley, CEO of VentriPoint, told CD&D in the early part of May. "The only acceptable method right now is MRI and manually tracing the borders, and that takes a lot of time, hours ... so it ends up not being done."

Two-dimensional echocardiography is a less expensive and more accessible method; however, the results of this type of measurement are only about 50% to 65% accurate, according to VentriPoint.

In clinical practice, cardiologists "eyeball" echo images to form a visual impression of the size and function of the right ventricle, the company said, with clinicians falling back on estimating the status of heart-disease patients' right ventricles by repeating the 2-D echo studies multiple times or by ordering a more invasive procedure.

VentriPoint's diagnostic system is designed for use with traditional echocardiography or MRI. The technology uses a software-based analysis tool known as Knowledge-Based Reconstruction (KBR), which provides the computational engine for generating a 3-D surface reconstruction of the right ventricle and accompanying volume measurement, the company said. "The method basically is accurate, it's simple and it's fast; that's the key attributes of it and that's what the cardiologist needs today," Ashley said.

VentriPoint's diagnostic system is based on technology it received through a license from the University of Washington (Seattle). The system, together with its associated online service, is being developed for a variety of heart-related disease states, including congenital heart disease.

Right ventricular measurement is critical for diagnosing cardiovascular disease, he said, adding that the market for all right ventricular measurement is estimated at half a billion dollars. "There are 80 million people with cardiovascular disease 80 million people. It's an unbelievable number, but that's what is published and that's what we're addressing, and the best way to do that is to do the right ventricle," Ashley said. "Everyone is asking for it."

After EVEREST stumble, firm pushes ahead on PROSPECT

Northstar Neuroscience (Seattle) might have struck out with its EVEREST pivotal trial for studying cortical stimulation for stroke patients, but it intends to move forward with its PROSPECT feasibility study for cortical stimulation for depression, the company said late last week.

"Now our biggest goal is to get FDA approval and move forward with the enrollment of a larger depression study," John Bowers, president/CEO of Northstar Neuroscience, told CD&D. "We don't have any other projects on the backburner."

The company released results of the PROSPECT feasibility study during the American Society for Stereotactic and Functional Neurosurgery (Manhassett, New York) meeting in Vancouver, British Columbia.

In January the company received a tremendous blow when it failed to meet the primary endpoints for its EVEREST pivotal trial - which sent the company's stock plunging 83%. "Unfortunately we didn't meet our primary endpoint," Bowers said.

The results for EVEREST included: At the four-week follow-up, 30.8% of the patients receiving cortical stimulation achieved the threshold of clinically meaningful improvement for the composite primary efficacy endpoint defined in the study protocol, compared to 29.1% of the patients in the control group.

The primary efficacy endpoint required a 20% absolute difference between these two groups.

Northstar was founded in 1999 and has 58 employees. The company has a market capitalization of $44 million.

AGA Medical settles, agrees to pay DoJ $2 million

AGA Medical (Plymouth, Minnesota), a manufacturer of products for the minimally invasive treatment of congenital heart defects, has agreed to pay a $2 million criminal penalty in connection with corrupt payments to Chinese government officials in violation of the Foreign Corrupt Practices Act, Acting Assistant Attorney General Matthew Friedrich reported.

The Department of Justice (DoJ) said it will delay prosecuting AGA for three years, and if AGA abides by terms of an agreement during that period, the case will be dismissed.

The two-count criminal information charges AGA with one count of conspiring to make bribe payments to Chinese officials and one count of violating the FCPA in connection with the authorization of specific corrupt payments to officials in China.

According to the charges, between 1997 and 2005, AGA, a high-ranking officer of AGA and other AGA employees agreed to make corrupt payments to doctors in China who were employed by government-owned hospitals and caused those payments to be made through AGA's local Chinese distributor. In exchange, the Chinese doctors directed the government-owned hospitals to purchase AGA products rather than those of its competitors.

The charge also states that from 2000 through 2002, AGA sought patents on several AGA products from the People's Republic of China State Intellectual Property Office, and a high-ranking AGA officer of AGA agreed to make payments through their local Chinese distributor to Chinese patent officials to have the patents approved.

Company attorney Ron Lund told the Associated Press that AGA disclosed the problem to the government after an internal investigation and has put in procedures to prevent future problems.

Lund said the company has been working with the Justice Department to dispose of the case and is "very happy to have it behind us." He said that AGA also has stopped doing business with the distributor in China who was involved in the allegations.

Cytori adds IP protection for stem/regenerative cell tech

Cytori Therapeutics (San Diego) received Notification of Issuance from the U.S. Patent & Trademark Office for its core patent covering the Celution System. Patent No. 7,390,484 protects Cytori's key device technology, which processes adult stem and regenerative cells from adipose tissue at the patient's bedside.

The new patent is a central part of Cytori's global patent portfolio, which includes more than 150 pending patent applications and five new previously unannounced international patents. The new patents in Korea and Singapore cover the Celution devices.

Cytori also was granted patents in Korea and Australia related to its StemSource Cell Bank. In South Africa, Cytori was granted a patent for using adipose-derived stem and regenerative cells in cardiovascular cell therapy.

Celution 800 is being sold into the reconstructive surgery market and the Celution 900 System is being offered around the globe as part of the company's StemSource Cell Bank.

"The '484 patent is the key foundational patent within our intellectual property portfolio and offers Cytori long-term protection through at least 2024," said CEO Christopher Calhoun. "Our patent portfolio works in concert with many other barriers-to-entry to protect all of our target markets for our first-in-class Celution System."

Cytori is focused on providing patients with new options for reconstructive surgery, developing treatments for cardiovascular disease, and banking patients' adult stem and regenerative cells.

CryoCath sells additional shares for total of nearly $18 million

CryoCath (Montreal) will issue an aggregate of 138,100 common shares at $4.15 a share, for additional total gross proceeds to CryoCath of $573,115. The total gross proceeds to the company, including the over-allotment gross proceeds, will be $17,961,615.

The syndicate of underwriters for the offering was led by GMP Securities and included Blackmont Capital and Macquarie Capital Markets Canada.

CryoCath said it would use the net proceeds of the offering for additional R&D and commercialization of its products, including its pivotal clinical trial aimed at getting FDA approval for its Arctic Front system to treat atrial fibrillation, to expand marketing efforts in Europe and the U.S., and for general corporate purposes.

CryoCath makes cryotherapy products to treat cardiac arrythmias.

Datascope eyes options following spin-off of monitoring unit

Datascope (Montvale, New Jersey) said it is considering strategic alternatives, including the company's possible sale, after receiving interest from several unnamed third parties. It also issued earnings expectations for the current quarter and the next fiscal year.

Datascope said it was approached by several third parties that were considering making a bid for the company after the $202 million sale of its patient monitoring business to Mindray Medical International (Shenzhen, China) was disclosed in March.

The company said while its board has not yet made a decision whether or not to sell itself, it has authorized its financial adviser, Lehman Brothers, to begin discussions with those interested parties. Datascope said it will hold the cash from the sale of its patient monitoring business to allow for financial flexibility during the process.

Datascope said it would not discuss the status of negotiations until the strategic review process has been completed.

Because the company said its business has "significantly changed" following the patient monitoring unit sale, Datascope decided to offer earnings expectations for the current quarter and the next fiscal year.

The company predicts fiscal fourth-quarter earnings from continuing operations, which exclude some items, of 46 cents per share to 48 cents per share. It expects year-over-year quarterly sales growth of 6% to 7%. Datascope's fiscal year ends in June.

For FY09, Datascope forecasts earnings from continuing operations of $1.92 per share to $2.03 per share. It anticipates sales growth of 7% to 9%, or revenue of $250 million to $254 million.