CDU Washington Editor

WASHINGTON Negative decisions by the FDA's Circulatory System Devices Panel vote in late June left officials at two cardiovascular firms surprised, but nonetheless still optimistic about the outlook for the products involved and their companies. Both Rich Lunsford, president and CEO of Acorn Cardiovascular (St. Paul, Minnesota), and Michael Min-ogue, chairman, president and CEO of Abiomed (Danvers, Massachusetts), said the separate panel decisions that went against their firms weren't what they had expected, but said the outlook was still positive for each of the products involved.

The Circulatory System Devices Panel of the FDA's Center for Devices and Radiological Health voted 9-4 against recommending approval of Acorn's CorCap cardiac support device, a high-tech polyester mesh device that is positioned surgically around the heart like a sock.

"We were told by a number of different entities that are expert panel watchers that this was one of the best, most comprehensive presentations they have ever seen the pre-clinical data, the clinical trial data, safety data, the way it was presented by the doctors," Lunsford told Cardiovascular Device Update. "We felt we were well-prepared."

Despite the "brief setback," Lunsford said that he, company management and investors, remain "as optimistic as we were prior to panel."

Privately held Acorn has positioned the device as an alternative therapy for heart failure patients with enlarged hearts and decreased pumping function who no longer respond to other therapies. CorCap is the company's only product.

It is the first medical device specifically designed to address the problem of enlargement of the heart by providing direct support to it, improving its structure and returning it to a more normal shape and thus designed to help it pump more efficiently, the company says.

According to a short summary released by the FDA following the meeting, the panel's concerns were "a lack of clinical outcome data, missing effectiveness data and potential risk to patients."

"We were surprised, and I think the FDA was a little surprised, too," Lunsford said. He explained that the company had worked closely with the agency prior to submitting its data. Acorn already has had meetings with the FDA on the next step for the device submission. "We already are in dialogue with the FDA," he said, noting there have been two meetings so far. "The outlook is reasonable for us to go through the continued process with them [the FDA] and ultimately gain approval."

Lunsford said the company is preparing to go through the panel transcript with agency representatives and address key issues that came from the hearing and described the agency as being ready and willing to help. Acorn would not have to return to another panel hearing, but would present data to answer the agency's post-panel questions, he said.

Lunsford told CDU that all the panel's concerns could be answered by re-examining the company's current data set, hopefully leading to approval. Lunsford said Acorn was eager to clear up any confusion there may have been on the panel's part about the data presented.

"Our initial impression is that with the present data set we're going to be able to deal with the questions that came up at panel," he said. "The FDA and Acorn executives have been in discussions to identify the issues that came up in panel and to work together in working tighter to address those issues effectively."

No specifics about timeframe have been discussed, but Lunsford said the "potential for approval remains reasonable" toward the end of this year or the beginning of 2006. "If you asked me to handicap it, I think we've got a very good shot at having this approved by the end of the year," he said.

One of the issues Acorn will be working on is labeling, Lunsford said, working with the agency so that the device is marketed to the populations the FDA says are appropriate based on the evidence available.

Some panel members also expressed concern about the impact CorCap would have on the effectiveness of possible procedures after the device is implanted, such as a coronary artery bypass graft, or CABG. Lunsford said that such a procedure would still be possible, though not that common. "The probability of redoing a CABG operation on a patient that has heart failure that is declining is very, very low," he said. "And with more and more devices in the cath lab being successful, you don't have to do bypass as often because of drug-eluting stents. You can perform an intravascular procedure effectively with this device on the exterior of the heart."

The responses from cardiologists and surgeons that have seen the company's data presented at recent meetings of the American Heart Association (Dallas) and the American Association for Thoracic Surgery (Beverly, Massachusetts) have been "very positive," he said.

In the near future, he said Acorn also would initiate a trial specifically to evaluate the use of CorCap concomitantly with CABG.

Overall, Lunsford said he would not categorize the panel's decision as a major setback, but said it would push back the company's efforts to raise financing for the product's launch following its anticipated approval. "We planned on coming out of panel and ready to raise money immediately for commercialization," Lunsford said. "With the vote that came about, we aren't going to be able to prepare for commercialization as aggressively as we would have."

He said the company is well positioned through the third quarter of next year, describing Acorn as in "good shape financially." Lunsford said, "Right now the strategy has shifted to getting FDA approval then to close out financing. Our confidence level for approval hasn't changed, but we're just going to have to go through another couple of steps. The data is very comprehensive."

Current investors in Acorn are willing to continue to invest in the product, he said. One of the company's current investors is Johnson & Johnson (New Brunswick, New Jersey). The company's board of directors has "re-emphasized its support," he said. "They are confident in the study. We have very strong support right now. Investors that are really ready, and the management team and the board are working very closely. If timelines are pushed out to a year, that would be difficult, but we don't think that is going to happen."

Other possible strategic investors, such as Medtronic (Minneapolis), Guidant (Indianapolis), Boston Scientific (Natick, Massachusetts) and St. Jude (also St. Paul), all are watching the company and the process very closely, Lunsford said. Representatives from all four were present at the panel meeting.

As for Abiomed, Minogue said in a conference call held a day after the panel made an unusual decision regarding its humanitarian device exemption (HDE) application for the AbioCor totally implant-able artificial heart that the company was moving forward with confidence. Minogue said he was "more optimistic today than ever before" about the device's ultimate marketability and use for heart patients.

The AbioCor is designed to sustain the body's circulatory system and to extend the lives of patients who would otherwise die of heart failure. It is the first artificial heart to be totally implanted within the body.

In a performance described by one observer as an embarrassment to the FDA, the Circulatory Systems Devices Panel, after multiple rounds of inconclusive voting, ruled that the AbioCor failed to meet the criteria for the HDE type of application. Offering a beam of hope for Abiomed, the panel's votes included one turning down a "non-approvable" recommendation. But the panel then voted 7-6, with one abstention, that the submission did not meet HDE requirements.

The company submitted the AbioCor to the FDA in September 2004 for marketing approval under an HDE. Approval under an HDE would make the AbioCor commercially available to treat a defined subset of not more than 4,000 irreversible end-stage heart failure patients. Abiomed's submission for the AbioCor, along with the transcript and proceedings, will be further reviewed by the FDA, the company said in a release, adding that it is committed to working with the agency to submit additional data regarding patients' anti-coagulation and quality-of-life information.

"While we are disappointed in the panel's recommendation, there is more work to be done to clarify our submission and HDE requirements," Minogue said. "The company today is stronger than it has ever been, with 48% growth last year, 110 patents or patents pending and $44 million in cash."

Minogue highlighted both Abiomed's bottom-line growth and growth in its product line, citing five new products slated for FDA review in the near future, and that AbioCor was only one of them. "We have expanded our portfolio of circulatory products and have transitioned the company from an R&D shop to a commercial leader," he said.

Minogue also said that the panel's decision wasn't all bad. "There are no guarantees, but based on [the] meeting and outcome, it was not a 'no' and it was not a 'yes.'"

Many of the panel members cited excessive bleeding and the risk of stroke as their main concerns, and Minogue said that the company would quickly work to design an anti-coagulation protocol for device use. "The patients are extremely sick they can either bleed to death or stroke," he said. "If we give them standard-medication blood thinners, you have a choice to make. You can risk the patients bleeding to death or stroking."

Many of the co-morbidities of the patient population make blood thinners an added complication, he said. "Remember, these patients are the sickest of the sick."

The panel also had questions about the way the company measured benefit and quality of life. Min-ogue was not as conciliatory on these points. "Where I would disagree with the debate that happened on the panel is that I don't think you can debate statistically a probable benefit or any benefit," he said. "If you give the alternative to people, I don't think that it is up to a panel to decide and measure. It is up to the expert surgeons and informed patients."

Abiomed has worked with an independent third-party patient advocate that shares pros and cons with patients and their families, Minogue explained. "These patients are so sick they have zero days to live, on average, outside the hospital without any support," he said. "We have extended life more than 10 times for the sickest of the sick."

The panel's decision not only left company officials scratching their heads, but also the shareholder/analyst community as well.

"I went into yesterday thinking odds favored approval," said Greg Simpson, a medical device sector analyst at Stifel, Nicolaus & Co. (St. Louis). "This is not a perfect device and the company acknowledges this but this is an important first step," he told CDU's sister publication, Medical Device Daily.

Simpson said the panel probably should have approved the application, with several conditions, given the selective population it is treating. "That's the purpose of an HDE," he said. "These patients are in dire straits. These patients are so close to death, with so many co-morbidities. I think the panel may not have really understood what was going on. Given the significance of the device, you're talking about serious complications, but that is the nature of an HDE." Many panel members "missed the boat," he said.

Simpson offered his view that the physicians presenting the case for the AbioCor could have done a better job of representing some of the data, and that the panel was "on target" with some of its criticism, especially in the area of anticoagulation. Overall, however, he said that the panel's performance was "an embarrassment" for the FDA.

Simpson said the decision would not critically impact Abiomed's business picture in the near future or long term, since the company's growing product portfolio bodes well for its future prospects. "Five years ago, the company would have been reeling," he said. "But this company is going to have a broad cardiovascular product line, and I am telling investors to focus on the long term. There are a lot of good thing going on with this company."

Minogue said Abiomed has invested more than $100 million in the AbioCor development effort. He said he would not expect that the company would ever pursue a premarket application for wider marketing of the first-generation of the device, due to its limited patient target, the desperately ill and those not able to receive a heart transplant.

The company currently is working on its AbioCor 2, being implanted in animal studies. Abiomed said it is being developed to sustain life longer perhaps as much as five years with a 35% reduction in size. Theoretically, this would enable implantation in women, as opposed to the current size, limiting it to implantation in men.

Minogue also said that even after the panel decision, the company has been getting a lot of response from European heart centers. "They are very excited, and they want to move forward with CE mark in Europe," he said.

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