A long-standing battle between Boston Scientific (Natick, Massachusetts) and its former Israeli stent-supply partner, Medinol (Tel Aviv), was brought to an end in the latter part of September when Boston Sci reported that it would settle the dispute by paying Medinol $750 million, its largest-ever legal payout to another firm.

The two companies had been rumored for some time to be working out terms of a settlement agreement in order to avoid continuing their battle in court, slated to resume this week.

Medinol launched the lawsuit against the interventional cardiovascular specialist in 2001 after Boston Sci attempted to acquire the company, 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 far 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 Sci responded with its own countersuits.

The $750 million to be paid falls far short of what Medinol had been seeking, reportedly in the range of $4 billion to $5 billion. The agreement between the companies, besides specifying the payment to Medinol, cancels all agreements between the companies and “establishes a framework for resolving future [disputes],” Boston Sci said.

Other terms of the settlement include:

• A mutual release of existing claims against each other, effectively dismissing all outstanding stent litigation, including all disputes with respect to the Express and Taxus Express stents.

• Medinol’s agreement not to sue Boston Scientific under certain Medinol patents “other than through an established arbitration process.”

• Establishment of an arbitration process as “the sole forum” to hear any future disputes concerning certain Medinol patents, in which Medinol has agreed to limit any relief it seeks to reasonable royalties.

While Boston Scientific has developed a key partnership with Angiotech Pharmaceuticals (Vancouver, British Columbia) as its pharma partner for its drug eluting stent (DES) technology, Medinol early this year reported an agreement with Ariad Pharmaceuticals (Cambridge, Massachusetts) to develop stents and other medical devices to deliver Ariad’s mTOR inhibitor, AP23573, to prevent reblockage of vessels following stent-assisted angioplasty.

In June a Delaware jury issued a verdict ruling that a claim of a patent owned by Johnson & Johnson (New Brunswick, New Jersey) had infringed by the NIR stent, manufactured by Medinol, supplied to Boston Sci, but no longer sold by the company.

Also in June, Boston Sci agreed to pay $74 million to settle a Justice Department probe over delays in the handling of a 1998 stent recall.

And while the company winds up one legal matter, it now faces two others in the form of shareholder lawsuits.

Announcement of the settlement was followed by filing of a securities lawsuit by Scott+Scott (Colchester, Connecticut), the law firm that is pursuing a variety of lawsuits against Guidant (Indianapolis) in the wake of that firm's implantable cardioverter defibrillator recalls. Scott filed the suit against Boston Sci in the U.S. District Court for the District of Massachusetts for the period March 31, 2003, to Aug. 23, 2005. Besides the standard charges of providing misleading information to the public concerning its business prospects, the complaint alleges insider trading of Boston Sci shares, allegedly reaping sellers more than $400 million.

It goes on to cite the impact of three warning letters from the FDA in August concerning the company’s “broken quality program,” which the complaint says resulted in a more than a 43% drop in the company's high share price. A shareholder suit making the same claims also has been filed against Boston Scientific by Schatz and Nobel (Hartford, Connecticut).

Biophan entering VAD arena

Biophan (West Henrietta, New York) last month made a move into the ventricular assist device (VAD) sector in a deal with Myotech (Dedham, Massachusetts) to take a lead position in the development, regulatory approval and marketing of Myotech’s MYO-VAD cardiac-assist technology. In doing so, Biophan follows up with its earlier stated commitment to enter the cardiovascular device sector as a major player, and the Myotech buy offers potential for leapfrogging the current type of VAD technology.

Biophan said that it would “direct” all future Myotech development programs and that it has acquired “a substantial minority” position to garner a controlling interest in Myotech. In July, the company unveiled its strategy for broadening its activities – previously focused almost entirely on improving the compatibility of implanted medical devices – to the entire cardiovascular field and development of a separate division to achieve that goal. At the time, Biophan CEO Michael Weiner told CDU that the company “had [the Myotech agreement] in mind and a few other things.” He said that the acquisition of a controlling interest in Myotech is at Biophan’s discretion or at certain milestone points.

Weiner particularly touted Myotech’s VAD system as having the ability to move ahead of earlier-generation systems in the sector – primarily, small pumps attached to the heart to assist its pumping action, both commercialized and under development. The MYO-VAD is described as consisting of a flexible polymer cup which fits around the heart, coupled to a drive unit which pumps the heart to restore blood flow. Myotech terms the technology platform Mechanical Ventricular Actuation (DMVA) and says that the MYO-VAD is the first in a family of devices that will use DMVA.

As described by Weiner, a key advantage of MYO-VAD is that the device has no contact with circulating blood and thus avoids the various problems associated with the current generation of VAD devices. “Every VAD on the market requires some contact of an impeller pump with blood, but blood doesn’t like to be agitated and tends to clot,” Weiner said. “They also require cuts into the major vessels of the aorta and heart chambers.” Additionally, he said, VADS typically produce “bruising” of the heart and require the use of follow-on blood thinner medications.

Still another advantage of the MYO-VAD is procedural. Biophan noted that “conventional VADs take from 45 minutes to several hours to install at specialized transplant or cardiac care facilities. The MYO-VAD can be installed in about three minutes with a small incision. This procedure could potentially be performed in life-saving emergency situations at most hospitals by general surgeons. This provides the potential to extend the VAD market well beyond the small number of transplant and specialized cardiac centers today.”

Beyond its use to support the heart, the MYO-VAD provides a system for delivery of drugs to the heart, Weiner said, providing another broad path for linkup with various pharmaceutical partners. He noted that Biophan’s strategy is to link in licensing deals with big biomedical or pharma players “to move market share in an existing or successfully performing product,” rather than selling products to doctors or consumers.

Biophan already has made a large partnership mark, via financing position taken in the company by Boston Scientific. In February it reported acquiring a majority interest in Amris (Castrop-Rauxel, Germany), providing it additional patents in MRI tech. And in August, it reported the formation of the Biophan Business Development Group, a unit that will focus on leveraging the company's patent portfolio, supported by a $30 million fixed-price stock financing.

Guidant in pacemaker mode failure notices

In what appears to be yet another chapter in an ongoing saga of problems with its implantable devices, Guidant (Indianapolis) said Sept. 22 that it had issued notices to physicians about “two separate failure modes” occurring “at a low rate” in its Insignia and Nexus pacemakers (20 models for each type). The device “behaviors” related to these failure modes can produce serious complications, Guidant said.

While noting that there have been no deaths reported as a result of these failures, it said that loss of pacing output associated with these failures has resulted in syncope, as well as presyncope, requiring patient hospitalizations. The company said that one of the physician notices has been classified by the FDA as a recall and that the agency “may determine” the second as a recall.

The notices were sent, Guidant said, as the result of an FDA inspection of its Cardiac Rhythm Management facilities in St. Paul, Minnesota.

Guidant said that that the FDA noted “several observations of non-compliance, including an observation with commentary on two specific trends in its Insignia and Nexus families of pacemakers.” The company said it has provided the agency with “a thorough written response to the observations,” including steps to address them.

The failure rates are not out of line with predicted rates, but the company is clearly attempting to provide more information concerning these problems, in the wake of last month’s conference of the Heart Rhythm Society (Washington) on the issue and its own recent history of recalls. Since June, the company has issued recalls of 88,000 implantable cardioverter defibrillators and issued warnings for 28,000 pacemakers, with the new notices to be added to that total.

In last month’s statement, Guidant said that the first failure mode there had been 36 failures out of 49,500 implanted devices (0.073%). Seven of these devices exhibited no output during the implant procedures. For devices successfully implanted, the majority of failures occurred early in life, with an average implant time of seven months.

This failure mode demonstrates a failure rate that decreases with implant time. No failures have been reported beyond 22 months of service. Guidant said it received three reports of syncope, and six reports of bradycardia or heart block and requiring emergency hospitalization. One device was determined to have failed briefly and resumed functioning with no indication to the physician detectable during routine follow-up.

Guidant said that its “modeling,” based on field experience and statistical analysis, predicts the failure rate for the active device population of 41,000 to be between 0.017% to 0.037% over the remaining device lifetime, or seven to 15 more failures. It said an estimated 24,000 “are active” in the U.S. It identified the “root cause” as foreign material within a crystal timing component. “The supplier of the crystal component ... has eliminated foreign material within the crystal chamber, and no such failures have been observed in any devices shipped after March 12, 2004.”

The second failure mode was related to 16 failures out of 341,000 Insignia and Nexus devices distributed worldwide (0.0047%). For all 16 devices, a “no output” condition was exhibited at the implant procedure or pre-implant testing. Guidant said it received one report of a pacemaker-dependent patient experiencing syncope and resuscitated cardiac arrest that occurred in association with loss of pacing output during an elective pulse generator replacement procedure. It reported 145,000 of these devices active in the U.S. It said that it has not yet determined the reason for the failure and that a root cause analysis is under way.

In issuing its announcement of the notices, Guidant said it “has taken action to increase the flow of information to physicians and patients on device performance” and that it recently issued a product performance report with “more specific information than was contained in past such reports.” It promised “a further enhancement” of this information “by the end of the year. “

“Our efforts to provide product performance information in increasing quantity and frequency to physicians and patients is well under way,” said Fred McCoy, president of Guidant’s Cardiac Rhythm Management business. “We will work closely with physicians, patients, the Heart Rhythm Society and other industry participants and stakeholders on the broad issues highlighted at the recent HRS Policy Conference on Pacemaker and ICD Performance.”

Guidant recently announced the formation of an independent panel, chaired by Dr. Robert Myerburg, professor of medicine and physiology at the University of Miami (Coral Gables, Florida), to report on ways that Guidant can further enhance capabilities in understanding, detecting and disseminating product performance information and that it will present a complete report from this panel “within six months.” It said it would publicize “non-proprietary” observations and recommendations regarding these issues.

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