Continuing its growth beyond its core arena of interventional cardiology, Boston Scientific (Natick, Massachusetts) early this month said it would buy neurostimulation specialist Advanced Bionics (Valencia, California), through the purchase of 100% of its stock for $740 million in cash, plus future milestone payments. The acquisition of Advanced Bionics may serve to allay some analysts' fears that the company was headed for a plateau in its growth curve, even with the strong push it has gotten from its success in drug-eluting stents.
That may have been the key point of the initial comments of Larry Best, Boston Scientific's chief financial officer, in a conference call, when he said that the neurostimulation sector Advanced Bionics plays in "is one of the few emerging markets that, over the next decade or two, will experience very handsome double-digit growth." He added that Advanced Bionics' products are "fundamentally based on microelectronics technology, and we were looking for a way to become fundamental in microelectronics."
Purchase of Advanced Bionics is actually Boston Scientific's second foray into the neurostimulation market following its January investment in Cyberonics (Dallas, Texas), a manufacturer of vagus nerve stimulator systems.
Advanced Bionics' products include a range of neurostimulators also referred to as implantable pulse generators plus programmable drug pumps and cochlear implants. The devices are used to treat chronic conditions such as lower back pain, urinary incontinence, Parkinson's disease, tremor, epilepsy and hearing loss, with other applications under development.
The pursuit of neurostimulation technology also provides Boston Scientific with another area of competition with Medtronic (Minneapolis, Minnesota), which is active in this sector. The total worldwide market for neurostimulation devices is estimated at $1.6 billion in 2004, with Best predicting it to grow to $3.8 billion by 2010.
Advanced Bionics is organized around three different businesses: Auditory, pain management and microstimulation. In the latter area, the company has developed the bion microstimulator, for clinical applications requiring smaller implants and to reduce the invasiveness of existing therapies. The bion microstimulator contains a rechargeable battery and stimulating electrodes in a cylinder only 3 mm x 28 mm and weighing only 0.75 grams, implanted through the use of a needle-like instrument, which leaves behind a small puncture that can be covered with a bandage. The bion has received CE mark approval to treat urinary urge incontinence and is currently in a U.S. Phase II clinical study for that indication. FDA premarket approval is expected in 2007.
Acknowledging the new direction for Boston Scientific, Best said Advanced Bionics is still in the company's primary area of interest because of the "trend toward less-invasive medicine and how neuromodulation devices are getting smaller and the procedures are getting simpler and so this really is falling within the core values of how we want to adopt technology." He noted also that more patients are becoming aware of "neurostimulation options as alternatives to drug therapy."
Standard & Poor's Ratings Services (New York) liked the deal, saying that it fits Boston Scientific's strategy of reinvesting "substantial cash flow expected from the company's new drug eluting stent focus" and that it will leverage its sales force "to incrementally grow sales of existing products in the acquired portfolio, commercialize new products in its pipeline and foster organic expansion of relatively immature markets."
In a separate announcement, Biophan Technologies (Rochester, New York), a developer of magnetic resonance imaging-compatible medical devices, reported completing Phase I of a three-part joint development program with Boston Scientific. The program involves exploring the use of Biophan's MRI-compatible technologies with a variety of Boston Sci products. Biophan said the companies have begun the next two phases, in which it will receive additional payments and will extend Boston Scientific's first right to negotiate the licensing of Biophan technologies that result from the joint development efforts.
"In addition," Biophan said the companies "are exploring ways to further expand their relationship by providing access to Biophan's technologies for additional products." Michael Weiner, chief executive officer of Biophan, said, "The access to Boston Scientific personnel has significantly helped us hone our solutions to meet the needs of the medical device industry, including identifying new applications that can benefit from MRI safety and image compatibility."
Novacor destination therapy turned down
In a virtually unanimous vote, the FDA's Circulatory System Devices panel voted early this month to oppose new labeling sought by WorldHeart (Ottawa, Ontario) for its Novacor LVAS (left ventricular assist system) for use with very sick heart-failure patients. The panel said WorldHeart did not present enough evidence to show the device would let those sicker patients improve enough to receive a heart transplant.
Several members of the panel said they viewed the company's attempt to gain an approval for this niche indication as an attempt to "backdoor" into the destination therapy (DT) market by circumventing the full premarket approval (PMA) clinical trial and review process. WorldHeart currently has FDA approval for use of the system as a bridge-to-transplant, but has actively been seeking the full destination therapy indication.
The Novacor system, which WorldHeart acquired from Edwards Lifesciences (Irvine, California) in June 2000, is an implanted, electromagnetically driven pump that provides circulatory support by taking over part or all of the workload of the left ventricle. With implants in more than 1,500 patients, no deaths have been attributed to device failure, and some recipients have lived with their original pumps for as long as four years. WorldHeart was seeking approval to implant the pump in so-called "bridge" patients who are not organ transplant candidates but are expected to need transplants. The pump has broader approval in Europe and Japan, including some nontransplant heart patients. Currently, only Thoratec (Pleasanton, California) has a destination therapy approval in the U.S. Its Heartmate XVE was cleared via a PMA supplement in April 2003, and the original HeartMate VE device was granted the first DT clearance in November 2002.
At the panel meeting, WorldHeart officials presented data from earlier studies they said showed Novacor could help restore critical organ function necessary to meet transplantation criteria. However, the FDA panel, which voted 10-1 against the label change, said the patients studied were already organ transplant candidates and did not represent those fringe patients who would get the device under the proposed new wording. WorldHeart Chief Executive Officer Roderick Bryden said the company is conducting further studies to seek FDA approval for Novacor as a permanent device. But some panelists said they were concerned the company's proposal was an attempt to bypass that process. "We're obviously disappointed with your conclusions," Bryden told the panel, adding that the company was not seeking a quick route to permanent Novacor LVAS use.
Judah Weinberger, a panel member from Columbia University (New York), said World Heart's request seemed like an attempt to "open the back door" to permanent use of the device. Panelists suggested that the company should conduct a randomized trial with patients who are not well enough to receive donor hearts as well as provide long-term data on survival rates. The FDA's experts pointed out that the device was not currently prohibited from use in sicker patients and that such a decision should be left up to doctors, not regulators. "In my judgment, the current indication does in fact allow the current population to have its needs met," said panelist Clyde Yancy of the University of Texas Southwestern Medical Center (Dallas, Texas).
In a research report, Jason Mills, an analyst with First Albany Capital (San Francisco, California), characterized WorldHeart's attempted expansion request as a "Bridge to Bridge" in other words, bridging patients with a heart pump in order to qualify them for a donor heart, at which time they would be eligible to be bridged with a heart pump until a donor heart is found.
"Even if [WorldHeart] were to have been successful in its attempt at the panel," Mills said, "we believe Thoratec would have filed a PMA supplement to receive approval for this indication." Mills viewed the setback as a "modest positive" for Thoratec, noting that the company's HeartMate now is all but assured of a U.S. monopoly for the DT market through at least 2008.
Bryden said in a press release that WorldHeart's business plan for 2004 did not include an expanded indication for the Novacor, and that the company did not anticipate any adverse effect on its business activities because of the turndown. "Approval of the indication as requested would have modestly increased the potential patients within the bridge-to-transplant indication and we are disappointed that this will not occur," he said.
Bryden added that the company "will continue its program to increase market share in the United States, through our approved bridge-to-transplant indication and through our FDA-approved and CMS [Centers for Medicare & Medicaid Services]-reimbursable RELIANT [Randomized Evaluation of the Novacor LVAS In A Non-Transplant Population] trial for destination therapy use."
WorldHeart received conditional approval from the FDA last month to proceed with full enrollment of recipients in the RELIANT trial. That trial, first unveiled by the company last November, will randomize patients to receive either a Novacor or HeartMate XVE on a 2:1 ratio. The conditional approval for the trial permits immediate enrollment of up to 390 patients at up to 40 centers in the U.S. The primary enrollment will be 300 patients, with approximately 90 additional patients expected to be enrolled during the follow-up period.
WorldHeart also is developing its next-generation technology, the HeartSaverVAD, a fully implantable assist device intended for long-term support of patients with heart failure.