CD&Ds

For a decade Jim Tobin has been at the helm of Boston Scientific (Natick, Massachusetts). Throughout his tenure, he's faced unique situations and challenges, such as the med-tech industry's meteoric rise following the bursting of the dot.com bubble, and Boston Sci's highly controversial commitment of $27 billion to buy Guidant (Indianapolis).

Tobin, who is nearing his 65th birthday, said in late June that he was retiring from the company. The board of directors appointed Ray Elliott, former CEO of orthopedics powerhouse Zimmer Holdings (Warsaw, Indiana), to take the posts of CEO/president of the interventional technologies company, as of mid-July.

"From my point of view I have been here now for 10 years and that's enough," Tobin said during a teleconference to investors and media. "I believe and have always believed that 10 years is sort of a natural limit as to how long a CEO can expect to be effective and I've reached that. Beyond that personally, it's the right thing to do too."

Questions regarding the quick transition, which is poised to happen in about three weeks, prompted speculation on Tobin's health, which he denied was an issue.

"This has actually been in process since last November," Tobin said of his retirement. "I asked that there be as short a period between the announcement and when the transition occurred to minimize the period of time when it would seem as if I was a lame duck in the position. So three weeks is about right, from my point of view."

He added, "This place is like a video game you know, there's something happening practically everyday, the shorter period of time there is someone running it in a lame duck status, the better off everybody's going to be. So that's what it is. There are no health problems or that sort of thing."

Tobin gave Elliott a stamp of approval and added that he was leaving the company in more-than-capable hands.

Elliott, 59, has more than 35 years of experience leading healthcare and consumer products companies. He led Zimmer for 10 years, joining the company as president and later adding the titles of chairman and CEO.

Prior to joining Zimmer, he served as president/CEO of Cybex International (Medway, Massachusetts), a medical rehabilitation and cardiovascular products company.

Elliott began his career in the healthcare industry with American Hospital Supply, now Baxter International (Deerfield, Illinois), where he served for 15 years in sales, marketing, operations, business development and general management positions, leading to his appointment as president of all the Far East divisions, based in Tokyo.

He also has served on a number of boards, including the Advanced Medical Technology Association (AdvaMed; Washington), where he was chair of its orthopedics sector. He was a member of the Boston Scientific board of directors from 2007 until earlier this year. In addition to serving as president/CEO of Boston Sci, he will rejoin the board.

"Included in that is his international experience, which for Boston Scientific is crucial because we're more or less 40% non U.S. and that number is only going to increase as the years go by," Tobin said. "On top of that, [Elliott] has extensive knowledge in the cardiovascular industry which at this point is where at least 80% of our sales are concentrating. So 25 years with two of the world's leading healthcare companies, international experience, broad experience in leadership roles. That adds up to the right guy from in my point of view."

One of Elliott's first priorities will be to help the company tackle the warning letter it received from the FDA back in 2006, which prevents Boston Sci from winning approvals of new products. The company received the letter one day after it emerged victorious in its bid to snag Guidant, beating out industry colossus Johnson & Johnson (New Brunswick, New Jersey).

The FDA cited Boston Sci's management for not properly tracking complaints over certain products, including its wildly popular Taxus stent, as well as Vaxcel catheters, Leveen needle electrodes and the Enteryx device used in surgery to treat acid reflux.

"We must complete the work and satisfy ourselves without a doubt that we are ready to take on and maintain the final actions required to lift the corporate warning letter," Elliott said. "It goes without saying that these actions need to meet the FDA's view of the goal, but in any event that's one problem that needs to go away and stay away."

Elliott added that there were other conditions that Boston Scientific would face and that would create challenges for the company in the future.

"The financial crisis has had some limited impact on us — cash is more scarce and we do have some obligations coming due but not until 2010 and 2011," he said. "As we continue to integrate prior acquisitions, including Guidant, it's tough to take on more complexity and more debt. Our current stock is certainly underappreciated, depressed and less valuable as currency to attract new businesses."

But the hope remains in the company's strong product portfolio and news such as this week's release of initial results from the MADIT-CRT (Multicenter Automatic Defibrillator Implantation Trial with Cardiac Resynchronization Therapy) helps, promising to give a boost to the ICD market, where Boston Scientific has a strong stake.

Elliott said that the company needed to look to developing its other businesses beyond drug-eluting stents and cardiac-rhythm management market.

"The first order of business for me each day at 7 a.m. is to review sales from around the world and begin the process of asking why or why not," he said.

Tobin will serve as a senior advisor the company and to Elliott until Nov. 30. The outgoing CEO will receive his current base salary of $994,000 and will be eligible for a bonus of up to 120% of his base pay.

Results of MADIT-CRT boost ICD makers

Initial results from the MADIT-CRT (Multicenter Automatic Defibrillator Implantation Trial with Cardiac Resynchronization Therapy) are proving to be more than just a shining endorsement for the use of these applications. In the few days since the report came out in the latter part of June, companies occupying the market space for CRT-D devices have seen significant gains in their stock prices.

Boston Scientific (Natick, Massachusetts), the company that sponsored MADIT-CRT, and St. Jude Medical (St. Paul, Minnesota) are expected to have the largest benefit from the study results – as the two med-tech companies occupy the most CRT-D market space. Medtronic (Minneapolis) also saw impressive gains.

"While a rising tide will likely float all boats, and the news is positive for Boston SCi, Medtronic, and St. Jude Medical – we note that as a Boston Scientific-sponsored study there should be a run-off benefit for Boston Sci and as St. Jude has the largest exposure to ICDs it should have the most meaningful revenue benefit (STJ's 35% versus BSI's 21% and MDT's 20%)," said BMO Capital Markets (New York) med-tech analyst Joanne Wuensch in a research note.

Wuensch added that this is the first positive clinical trial for the ICD industry in five years, and the study is expected to help expand the patient pool as physicians look to intervene earlier in NYHA Class I and II patients to stop the natural progression of hart failure.

In addition to increased market penetration, market growth should be further aided by the higher ASP CRT-D devices, she said. "Estimates range for an increase in the market's growth rate from 1%-2% to 2% to 4% in a worldwide market we expect will increase 4.7% in 2009."

"We're very encouraged by the initial results," Annette Ruzicka, director of media relations for Boston Scientific, told CD&D. "I think it was positive for the patients and for all three of the major players in the field."

The company's CRT-D, Cognis, stands to gain significant attention once the study is completed. Cognis was granted FDA approval in mid-May.

St. Jude's portfolio of CRT-D applications also stands to gain more attention and includes; Promote Plus – a cardiac resynchronization therapy defibrillator (CRT-D) that offers alert features for atrial tachycardia and atrial fibrillation, and Promote Accel CRT-D – a CRT-D device designed to tailor treatment to each patient's unique needs, including features such as AT/AF alerts and three chamber capture confirmation (approved for use in Europe only).

Until the study is complete, many companies still remain have a level of anticipation, noting that the entire story has yet to be told.

"I think what happens now is that we wait for the final results of the study to be published, which we'll probably see later this year," Ruzicka said. "Then at the end of the year depending on what the study reveals [Boston Scientific] will ask the FDA for an expansion for Cognis ... to serve Class 1 and Class 2 patients suffering from heart failure."

Stronger data means stronger ammunition to bring to the FDA to build a stronger case for the expansion of the product, she said.

More than 1,800 patients were involved in the trial, with findings that show there is a 29% reduction in heart failure or death in those with heart disease who received an implanted cardiac resynchronization therapy device with defibrillator (CRT-D) versus those who received only an implanted cardiac defibrillator (ICD-only). The trial followed the patients for up to 4-1/2 years.

"The MADIT-CRT trial has shown that if intervention is conducted early enough, the outcome for the patient will be better over time," said Mark Carlson, MD, chief medical officer of St. Jude's Cardiac Rhythm Management Division, in an e-mailed statement to CD&D. "The next step for our industry is to ensure physicians and patients are aware of the clinically proven effectiveness of this treatment and that they benefit from the currently available cardiac resynchronization therapies."

Cardiac resynchronization therapy is used to treat the symptoms and complications associated with certain types of heart failure. CRT is administered using a pacemaker, called a CRT-P, or an ICD with pacing capabilities, called a CRT-D.

A CRT-D has the added ability to defibrillate the heart if a patient is at risk for life-threatening arrhythmias. CRT stimulates both of the heart's lower chambers so that they are "synchronized" and more efficient in pumping blood to the body. The stimulation takes place via a pulse generator (the ICD or pacemaker) and pacing leads, which are placed next to the heart's tissue and deliver electrical impulses to the heart.

$4.2 million financing for Stentys

Stentys (Paris/Princeton, New Jersey) said it has secured the second tranche of its Series B financing from Sofinnova Partners and SEP-closing an additional $4.2 million investment from new investor Crédit Agricole Private Equity, bringing the total B round financing to more than $22 million.

"I am delighted to see Stentys reinforce its financial base," said Jacques Séguin, MD, PhD, co-founder/chairman of Stentys. "I am more than ever convinced that the company is uniquely positioned to develop its breakthrough approach for treating acute myocardial infarction and bifurcation lesions."

Stentys was founded in 2006 to develop a new-generation stent designed for treatment of acute myocardial infarction and coronary artery bifurcations. According to the company, treatment of acute myocardial infarction accounts for 50% of stent implantations worldwide, a $5 billion market. However, existing balloon-expandable stents do not ensure optimal contact with the artery wall, and clotting can occur between the stent and the coronary wall and within the stent itself, the company said.

Stentys said its self-expanding stent is constantly applied to the vessel surface and ensures immediate and permanent optimal apposition during thrombus and vessel spasm relief, therefore avoiding any malapposition and subsequent clotting.

"Stentys has completed an initial 40-patient clinical trial demonstrating safety and efficacy of the stent. This second financing tranche of the Series B' round will enable Stentys to obtain CE marking and begin European marketing of the first self-expanding stent platform for the treatment of myocardial infarction," said Stentys CEO Gonzague Issenmann.

Antoine Papiernik, managing partner with Sofinnova Partners, Stentys' initial and largest institutional investor, said, "The ability of the company to add an investor to the syndicate in this very difficult financing environment bears strong testimony to the strength of the Stentys' platform."