Beleaguered interventional products maker Boston Scientific (Natick, Massachusetts) was in talks last month to purchase Medinol (Tel Aviv, Israel), a move apparently designed to recharge its coronary stent pipeline. The U.S. firm currently owns 22% of Medinol, which supplies the bulk of Boston Scientific's top-of-the-line stents. That part-ownership relationship has been a rocky one, however, resulting in a slowdown in stent production and product approvals and a loss in market share. Thus, the acquisition is seen as an attempt by Boston Scientific to smooth that process in rebuilding its momentum in the stent market.
Boston Scientific CEO James Tobin confirmed the discussions with Medinol and said there was a "50/50 chance" of the deal being made.
Rae Fishman, Israeli correspondent for Medical Device Week, a sister publication to Cardiovascular Device Update, said that sources in that country regard the buyout of Medinol by Boston Scientific as "inevitable, crucial and timely." She reported that the 64% owners of Medinol, Jacob and Yehudit Richter, are widely rumored to be holding out for $1 billion as their share of the purchase price, "which would net the couple more than $500 million in cash, but also shares of Boston Scientific." She said that the bottoming out of Boston Scientific's share price is "attributed mainly to its stormy relations with the Israeli stent-maker, as well as late deliveries of Medinol stents, a 1998 recall by the FDA and a related FBI investigation related to the defective stents." Other factors, she said, include strong competition from Guidant (Indianapolis, Indiana), Medtronic (Minneapolis, Minnesota) and the Cordis (Miami Lakes, Florida) unit of Johnson & Johnson. Fishman also reported that Jacob Richter is promising that a new NIR stent will re-establish Medinol and Boston Scientific's SciMed division as sector leaders. This will factor into the negotiations between the two firms, she said. The deal talks come in the wake of Boston Scientific's announcement that it will cut 1,000 from its work force.
The company's net sales for the second quarter dropped 4% to $695 million from $726 million in the year-ago period. Net income for the second quarter increased 12% to $122 million, compared with $109 million in the year-earlier quarter.
Australia suit targets St. Jude pacemaker
A group of patients in Australia has launched a multi-million dollar class-action suit against St. Jude Medical (St. Paul, Minnesota) and its Australian distributor, Medtel Australia pty (Sydney, Australia). The suit - initially carrying 40 names but potentially including nearly 1,000 - follows a warning from the Therapeutic Goods Administration, Australia's counterpart to the FDA, concerning potential failures of St. Jude's Medico pacemaker. St. Jude reportedly has offered to replace the pacmakers and pay up to $2,000 to each person for non-reimbursable medical expenses, but the offer was termed "woefully inadequate" by Rebecca Gilsehnan, the attorney who filed the action in Australia's Federal Court.
Gilsenan told the Australia Financial Times that the country's taxpayers should not be asked to retrieve any of the costs through either the country's Medicare system or their insurance carriers. "It is reasonable to expect that St. Jude and the distributor, Medtel Pty, should compensate those affected for their pain and suffering as well as medical costs and loss of income," she said, adding that the offer "does nothing for the patients' peace of mind."
An attorney representing Medtel responded by accusing Gilsenan's firm of conducting the trial through the media and said the publicity "will create more anxiety for pacemaker patients, most of whom won't be affected by the hazard alert."
Firms raise funds in IPOs, financing
Vascular Solutions (Minneapolis, Minnesota) began trading on Nasdaq last month, following completion of its initial public offering (IPO) which raised, with overallotments sold, $48.3 million. The market launch was strong, with a 35% increase in share price to $16.25 on the first day of trading. After scrapping its first attempt at an IPO earlier in the year, the company's second effort was an offering of 3.5 million shares at $12 each.
The company's lead product is the Duett, which allows cardiologists and radiologists to quickly seal a puncture site following catheterization procedures such as angioplasty and stenting. Vascular Solutions said it will use the new funding to hire and train a U.S. direct sales force and for general corporate purposes. The three-year-old company posted net sales of $643,000 and a net loss of $1.9 million for the quarter ended March 31. Vascular Solutions' current capitalization is about $204.8 million.
In addition to Vascular Solutions, two companies developing drug therapies for cardiovascular-related diseases were successful with IPOs in early August.
The Medicines Company (Cambridge, Massachusetts) sold 6 million shares at $16 each to raise a total of $96 million, about 28% more than the company anticipated in its prospectus. The Medicines Co. anticipated raising about $75 million from the offering. In initial trading, its stock rose $5.687, or 35.5%, to close at $21.687, rising $5.687. Underwriters have options on an additional 900,000 shares of the common stock to cover overallotments.
The company focuses on the acquisition, development and commercialization of late-stage pharmaceuticals. Its lead product, Angiomax, has been deemed "approvable" by the FDA. The company plans to use IPO proceeds for the launch of Angiomax, trials for new indications and other product development and potential product acquisitions. Angiomax, an anticoagulant based on naturally occurring hirudin directly attacks the clotting factor thrombin. In May, the FDA said final approval of the product – for unstable angina patients undergoing percutaneous transluminal coronary angioplasty – is dependent on the company satisfying certain undisclosed conditions, which company officials said were attainable.
Angiomax also is in a Phase III trial with angioplasty patients who have experienced HIT/HITTS (heparin-induced thrombocytopenia/heparin-induced thrombocytopenia and thrombosis syndrome) and a Phase III trial for myocardial infarction. A separate Phase III trial to evaluate Angiomax in unstable angina patients is planned for next year.
The Medicines Co. acquired the drug after it was abandoned by Biogen (also Cambridge). In Phase III trials under the name Hirulog, the drug failed to provide positive results in myocardial infarction following angioplasty in comparison to heparin.
In another IPO, AtheroGenics (Alpharetta, Georgia) sold 6 million shares of common stock at $8 each, grossing $48 million. The underwriters have an option on 900,000 additional shares to cover overallotments. Proceeds from the offering, estimated to be about $44.6 million after expenses, will be used for research and development, clinical trials, licensing and acquisition opportunities and for general corporate purposes.
AtheroGenics' lead compound, AGI-1067, an oral coronary artery disease treatment, is in a Phase II trial for treatment and prevention of restenosis - post-angioplasty chronic narrowing of coronary arteries. AtheroGenics licensed AGI-1067 from Schering-Plough (Kenilworth, New Jersey) for worldwide distribution and commercialization in October 1999.
In another financing, CV Therapeutics (San Diego, California) closed a common stock equity financing deal with Acqua Wellington North American Equities Fund Ltd., worth $120 million, that gives the company flexibility and a financial boost as it prepares for commercialization of its arrhythmia and angina products. Both ranolazine, a partial fatty oxidation inhibitor used against angina, and CVT-510, a selective adenosine A1 agonist designed to treat atrial arrhythmias such as atrial fibrillation, atrial flutter and paroxysmal atrial tachycardias by reducing heart rate, are in Phase III trials.
CV Therapeutics CEO Louis Lange described the deal as "opportunistic and efficient." It calls for the purchase of up to $120 million of CVT common stock by Acqua Wellington over the next 28 months at CVT's discretion. The shares will be sold at a small discount. Proceeds from the sales will go toward commercialization of the company's two late-stage compounds and pipeline advancement of several treatments, including one focused on work with the recently discovered abc1 cholesterol transporter thought to increase HDL, or "good cholesterol," production.
"We're feeling fortunate to be rewarded in the market these days and to have the opportunity to advance all this science into the clinic," Lange said. "This drawdown time will give us the ability to keep the balance sheet strong, and it means we can run two clinical programs in parallel."
Ranolazine remains on schedule for a new drug application sometime in 2001, Lange said. The anti-angina treatment works by increasing the cardiac energy available by partially shifting from fatty acid to glucose metabolism.
The drug will be marketed and distributed by Innovex, a subsidiary of Quintiles Transnational (Research Triangle Park, North Carolina), through a deal signed in 1999 that provides a dedicated sales force for the product. It also allows CVT to acquire that sales force while retaining most of the profits. The most recent financing could herald a similar deal for the company's anti-arrhythmia drug, CVT-510.
In the courts
- Jeffry Kreamer, MD, a physician in Palatine, Illinois, last month filed a suit against Medtronic (Minneapolis, Minnesota), charging that the company infringed a patent he owns covering certain methods for repairing blood vessels with stents, citing in particular Medtronic's AneuRx stent graft system. Kraemer is seeking $45 million in royalties and other damages and penalties, as well as an injunction against further infringement. In a statement, Kreamer said that he was forced to file the suit because of Medtronic's "unwillingness" to acknowledge his patent rights concerning the devices and methods, and that he "had alerted the company on two separate occasions of their infringement." He added that Medtronic "seemed to feel that because of its size and power it did not need to deal fairly with me."
- Boston Scientific (Natick, Massachusetts) has entered into a settlement with the Securities and Exchange Commission concerning business irregularities in its Japanese subsidiary, Boston Japan, the agreement described by the company as "part of corrective actions" begun in 1998 after discovering the irregularities. Boston Scientific neither admitted nor denied wrongdoing -- and the settlement involves no fines -- but the company has consented to an order prohibiting future federal securities laws violations. The violations were described as "inaccuracies in Boston Japan's books and records, misstatements in Boston Scientific's periodic reports and inadequacies in Boston Japan's internal controls." The problems were found by the firm's finance department and internal auditors in connection with routine review procedures, according to the company, and they involved product shipments improperly recorded as sales to the subsidiary's dealer network in Japan. After discovery of the problems, the company in February of 1999 restated certain of its prior financial statements.
- Angeion (St. Paul, Minnesota) reported that the Minnesota Court of Appeals has affirmed a November 1999 decision by the Hennepin County District Court that denied the motion of U.S. Bank National Association, the trustee for the holders of Angeion's 7.5% senior convertible notes for a temporary injunction preventing the company from using cash assets for acquisitions or other business developments. The Court of Appeals concluded that the district court's February 2000 decision granting summary judgment was premature, and it has reversed the decision, remanding the case to the District Court. The Hennepin County District Court ruled that five transactions by Angeion did not constitute the sale of all or substantially all of its assets, and that the noteholders were not entitled to prepayment of their notes. The trustee had appealed this decision.
Datascope gets FDA warning
The FDA in late July sent a warning letter to Datascope (Montvale, New Jersey), saying it had used unapproved information – in letters that it sent to doctors and on its VasoSeal web site – concerning the rate of complications for the VasoSeal ES Vascular Hemostasis Device used to seal artery holes following catheter removal. "These statements essentially contradict the complication rates identified in the approved labeling," the FDA letter said, noting that the actual rate is substantially greater than stated. This misrepresentation "changes the safety of the device," the warning letter said.
Ari Zak, vice president of regulatory affairs for Datascope, expressed surprise at the warning letter, saying the agency had known about the promotional materials and that the company already had undertaken changes in the promotional statements.
FDA groups set trials workshop
A group of FDA units and the Pharmaceutical Quality Institute (PQI; Edison, New Jersey) have announced Clinical Trials 2000, a workshop on clinical research involving medical devices, drugs and biologics. The workshop will be held Oct. 5, 8:30 a.m.-4:45 p.m., through Oct. 6, 8:30 a.m.-12 noon, at the Doubletree Hotel in Rockville, Maryland.
Goals of the workshop are to promote patient safety and data integrity in the clinical trials process and the proper conduct of such trials, according to the FDA. Those encouraged to attend include clinical investigators, clinical trial sponsors and monitors, contract research organizations and institutional review board members and any others engaged in clinical trial practice.
The FDA agencies co-sponsoring the workshop are the FDA office of the Commissioner, the Office of Regulatory Affairs-Baltimore District, the Center for Drug Evaluation and Research, the Center for Biologics Evaluation and Research and the Center for Devices and Radiological Health. To register, contact PQI at (973) 812-9033.
Companies... in brief
Advanced Bypass Technologies (Pleasanton, California) has changed its name to Converge Medical, and Richard Lotti has been named president and COO of the company. The name change reflects the company's focus on "joining blood vessels together without clamps or suture," according to Kenneth Widdeer, MD, chairman and CEO .... American Risk Management (ARMM; Princeton, New Jersey) said it has consolidated the assets of Cardiovascular Labs Pennsylvania (CLIX) through its wholly owned subsidiary, Cardiovascular Laboratories. CLIX is a provider of noninvasive vascular ultrasound, echocardiography, trans-esophageal echo and stress echo, and manages cardio and vascular laboratories in Pennsylvania, New Jersey and New York. ARMM also said it had acquired Comprehensive Medical Group (Princeton, New Jersey) as part of its shift into health care .... Beckman Coulter (Fullerton, California) has signed an agreement with an estimated value of approximately $35 million annually to provide hematology instrument systems and supplies to the group purchasing alliance, Premier (Chicago, Illinois), which includes 957 health care facilities nationwide and is affiliated with more than 900 others .... Biocoral (New York) said it has obtained the EC Certificate of TUV Product Service for its Blood Bag System for the preparation of Biological Glue. The company said it will begin product distribution in Europe in 2001 .... Pall (East Hills, New York) has received a $6 million contract for blood filtration systems from the German Red Cross Transfusion Center, Lower Saxony (Springe, Germany). The center is Germany's second-largest blood center and the first in the country to implement, voluntarily, 100% blood filtration, Pall said.