Broadly speaking, first-quarter company reports released in late April across a broad range of industries gave U.S. investors little on which to hang an optimistic hat (a $1.1 billion loss reported by General Motors being just one very large example). But offering bright exceptions to this short-term trend were many companies in the med-tech sector, especially two firms – Boston Scientific (Natick, Massachusetts) and the Cordis unit (Miami Lakes, Florida) of Johnson & Johnson (J&J; New Brunswick, New Jersey) – in the cardiovascular device arena.
Both reported recent good growth driven by sales of their coronary drug-eluting stent (DES) products.
Appearing to produce the lion’s share of increases in this competition was Boston Scientific, which reported a 219% growth in Taxus DES sales worldwide, to $686 million, over the year-earlier quarter, and initial sales approaching nearly $500 million for its newest-generation DES, the Taxus Express2.
But Boston Sci’s overall piece of the DES pie actually dropped somewhat – a slim 1% – while still maintaining the clear majority share at about 61%, according to analysts.
Cordis, with its Cypher DES – the only other DES product currently approved in the U.S. – gained the additional 1% market share, posting sales of $317 million for the quarter, or about $10 million more than the previous quarter.
The rather small shift was an indicator of the heavyweight-style marketing competition between the two companies. Cordis/J&J’s marketing activities were supported by a variety of studies rolled out at the annual meeting of the American College of Cardiology (Bethesda, Maryland), studies generally supporting Cypher over Taxus. But Boston Scientific was able to counter that data with its own marketing efforts.
That was the view of Joanne Wuensch, device analyst for Harris Nesbitt (New York), who issued a report saying that Boston Sci has done “an admirable job in defending the safety and efficacy of Taxus.”
Overall, Cordis reported first-quarter sales growth at 10%, driven by a 72% improvement in international sales. That was good news for parent company J&J, although adding only a bit more to its wide-ranging healthcare offerings. J&J reported 1Q sales of $12.8 billion, an increase of 11% over the year-ago period.
William Weldon, CEO and chairman of J&J, pointed to “the strong performance of each of the franchises in our Medical Devices and Diagnostics segment” as helping to boost “the more modest increase” in its pharmaceutical sales.
For Boston Scientific, growth in its DES sales was the primary driver in the company’s overall sales increase of 49% – somewhat more than $1.61 billion, compared to $1.08 billion for the year-ago quarter. Worldwide first-quarter sales of coronary stents – both bare-metal and DES – was $721 million, compared to $284 million for the year-ago period.
Jim Tobin, president and CEO of Boston Scientific, pointed to the success of the Taxus Express2 DES for producing “in large part,” he said, the record quarter, though adding a clear qualification for investors looking to the future. “In the coming quarters, we expect our recent dramatic growth to return to more moderate levels,” Tobin said, “following a full year of Taxus system sales in the U.S.” He added: “Maintaining this leadership [in the DES market] will continue to be our No. 1 priority.”
Wuensch backed that performance perspective, putting expectations for Boston Sci at a 59% DES share for 2005, 57% in 2006 and 48% in 2007, the large decline in ’07 the result of the market entry by two big competitors. Guidant (Indianapolis), which is in the process of being acquired by J&J, and Medtronic (Minneapolis) are expected to win approvals for their DES systems in 2007, both potentially capturing shares of single-digit percentages.
Wuensch also warned that Boston Scientific’s market strength is a bit shadowed by the results of litigation that go to trial this year. This month, the company will defend its coating and stent design vs. J&J, and also defend itself against breach-of-contract charges by its former Israeli partner, Medinol (Tel Aviv). In October, it will again defend itself against J&J concerning a rapamycin patent. Wuensch noted the potential for these legal battles to extend over many months and years but that they do present “a risk to our market assumptions.”
Whatever the ultimate market shares for DES, even small ones will be significant, since this arena is expected to reach sales of $4 billion in the U.S. alone by 2007 and $6 billion to $7 billion worldwide.
Orqis gains MOMENTUM
Orqis Medical (Lake Forest, California), a developer of the catheter-based Cancion cardiac recovery system (CRS) to treat congestive heart failure (CHF), reported in late April that the FDA had granted an unconditional approval for researchers to treat up to 200 CHF patients at 40 centers participating in the company’s MOMENTUM (Multicenter trial of the Orqis Medical CRS for the ENhanced Treatment of CHF, Unresponsive to Medical Therapy) pivotal clinical trial.
The company previously reported conditional FDA approval in January to expand the MOMENTUM clinical investigation from eight to 40 centers nationwide after initially receiving a conditional approval for the trial last August.
Ken Charhut, the company’s president and CEO, told Cardiovascular Device Update that unquestionably, the big news here is the panel’s granting of an unconditional approval. “The Cancion CRS offers the promise of an exciting new percutaneous therapeutic modality to treat patients suffering from CHF,” he said. “Unconditional FDA approval to advance the MOMENTUM clinical investigation will allow us to discover its therapeutic potential.”
Since this is a new device, Charhut said there was a learning curve for the FDA to get comfortable with the system. “Once the FDA became familiar with the device,” he said, “they became more comfortable at lessening the restrictions on the Cancion trial.”
First, the agency agreed to increase the number of centers from eight to 40 and now it has granted the study unconditional status.
The company noted that the Cancion CRS is the first therapy for congestive heart failure based on continuous aortic blood flow augmentation to the descending aorta. The trial will determine efficacy of the therapy to treat patients with acute decompensation resulting from CHF vs. traditional therapies.
Traditional therapies to treat acute CHF include drugs that pull off fluid (diuretics) or cause the heart to pump more strongly (inotropes). In contrast, the Cancion CRS is designed to create an environment that allows the heart to rest while it recovers from an acute decompensation event.
Acutely decompensated heart failure represents 1 million primary and 2.5 million secondary hospital admissions annually. CHF patients suffering an acute episode “have fluid backing up into their lungs and have severe shortness of breath, and that’s what generally brings them into the hospital,” Charhut explained.
Orqis Medical’s device would be used to treat that acute condition to send patients, deemed non-responsive to current medical therapy, home from the hospital. The extracorporeal, minimally invasive Cancion CRS system provides a circulatory boost while unloading the patient’s heart. Increasing blood velocity down the thoracic aorta, the CRS system consists of two arterial access cannulas, a pump and motor, and a control system. The therapy is applied via routine percutaneous catheterization, making it available to a wider population of CHF patients.
While there are a few similar therapies on the market, including CardiacAssist (Pittsburgh), with the TandemHeart percutaneous ventricular assist system, and CHF Solutions’ (Brooklyn Park, Minnesota) with its Aquadex system designed to remove excess fluid from fluid-overloaded patients suffering from CHF, Charhut said that his company’s system is unique. He said the Cancion CRS therapy creates a “rest to recovery” environment for patients and that Orqis is the only company focused on the notion of resting the heart but allowing it to continue to function, and he also pointed out that the Cancion is not another ventricular assist device.
“Clearly there are a number of companies that have blood pumps, but they are using them as functional replacements for the heart. We were the ones who discovered that by restoring flow to the descending aorta you could then invoke this therapeutic response,” Charhut said. “We’re really the only ones out there who are utilizing [blood pump] technology in this way to get this effect.”
The ultimate goal of the system, he said, is not to treat chronic advanced-stage CHF patients, but rather, to prevent patients from advancing to the stage where they need dramatic assist devices. The Cancion, he said, is designed to create an environment for the heart to recover, to break through the downward spiral that the patients have gotten themselves into within this acute episode, relieve that acute episode and then allow them to be discharged from the hospital and put on stable chronic medication.
Vasomedical pares staff for CHF focus
Realignment, frequently a harbinger of the negative, can also be a good news story, according to Vasomedical (Westbury, New York), which last month said that recent staff reductions will help it preserve resources for movement into a broader, more profitable market – in this case, congestive heart failure (CHF). Besides reducing staff – the total number of those released not disclosed – the company said it will make other budget tightening efforts in a “realignment” initiative with estimated savings of $3 million annually.
Vasomedical is the developer of enhanced external counterpulsation therapy (EECP) technology, a system that uses a number of large blood pressure-type cuffs that are placed around portions of the body, with air then pumped through them to assist in improving blood flow and the heart’s pumping action. Thomas Glover, president and CEO, said that Vasomedical has so far focused on the angina marketplace, and that it has been very successful there. “The company has sold 800 systems in the U.S.,” he told BBI, and “now, we’ve got an opportunity to focus on CHF [congestive heart failure].” He added: “We now want to place resources appropriately,” he said, with more focused targeting of the CHF market.
After already having a clearance for treatment of angina since 1997, Vasomedical received FDA clearance of its EECP system for CHF in mid-2002, at the time putting the potential market at 10-fold that of the angina treatment opportunity. But other critical steps were necessary over the past three years before marketing to the CHF segment could be launched, Glover said. Those steps included upgrades of the EECP system and, perhaps more importantly, the rollout of results from its Prospective Evaluation of EECP in Congestive Heart Failure (PEECH) study unveiled at this year’s meeting of the American College of Cardiology (Bethesda, Maryland).
Those results indicated that EECP therapy was significantly more effective in improving a patient’s exercise duration than optimal pharmacologic therapy alone. Additionally, overall quality of life, as reported on the Minnesota Living with Heart Failure scale, also improved significantly among patients treated with EECP therapy. The company also has established an EECP patient registry at the University of Pittsburgh Graduate School of Public Health to track patient improvement using EECP. Glover said that the registry now includes data on 7,000 patients, with 2,000 of them suffering from CHF.
All of these initiatives provide “opportunities we feel hold the greatest promise for future revenue growth,” with the cutbacks “preserving resources for key projects,” Glover said. Additionally, he said that the company continues its efforts to pursue expanded reimbursement coverage from the Centers for Medicare & Medicaid Services (Baltimore) for angina treatment with EECP and new coverage for the CHF treatment.
The company bills EECP therapy as an effective non-invasive strategy for increasing circulation in the heart restoring “systemic vascular function.” The therapy typically is delivered in 35 one-hour-sessions over seven weeks. Patients lie down on a padded table and their calves, lower thighs and upper thighs are wrapped in a cuff set. The system, which is synchronized to the individual patient’s cardiac cycle, inflates the cuffs with air to create external pressure when the heart is resting (diastole) and deflates the cuffs just before the heart beats (systole).