Medical Device Daily Washington Editor

CryoCor (San Diego) wasted li ttle time in harvesting the fruits of its hard-won approvable recommendation by the FDA circulatory systems advisory panel last week, reporting a development deal with Boston Scientific (Natick, Massachusetts) the following day.

The company won an 8-2 vote to approve the use of its cryoablation system to treat atrial flutter (AFL) (Medical Device Daily, June 29, 2007), and while CryoCor officials do not expect the agency to act on the panel’s recommendation until August, FDA almost always goes along with advisory panel votes.

The two firms will engage in “a strategic collaboration” for joint development of “therapeutic solutions for atrial fibrillation” (AF), the companies said in a press statement. It noted that the condition “affects approximately 6 million patients around the globe” and that AF results in more than $9 billion a year in healthcare costs in the U.S. alone.

The agreement stipulates that CryoCor “will be responsible for the development and possible manufacture of a cryoablation console for use with Boston Scientific’s internally developed cryo-therapy balloon, which may incorporate some of CryoCor’s catheter technologies.” Boston Sci will pay CryoCor royalties on any sales and has also agreed to two purchases of $2.5 million each of CryoCor common stock.

The initial purchase has already taken place and netted the larger firm about 370,000 shares of Cryocor shares, with the second purchase to be made “upon successful achievement of certain development milestones.” This first purchase comes to about $6.76 a share.

The firm currently has about 12.1 million shares outstanding with another 2 million in options. News of the agreement drove shares up to $6.77 when NASDAQ opened for business Friday morning, a significant jump over the price seen on Thursday morning’s opening, when CryoCor stock traded at $4.79.

In the company statement, Joe Fitzgerald, president of Boston Scientific’s electrophysiology division, said, “we believe that the proposed combination of CryoCor’s proprietary console design and cryogenics expertise, along with Boston Scientific’s extensive history of balloon catheter leadership, will be a significant strategic and competitive advantage in the Afib market.”

CryoCor’s CEO, Ed Brennan, said that his company is “pleased that Boston Scientific chose to collaborate with CryoCor for the development of this important product.” CryoCor sees the move as “further validation of cryoablation, and CryoCor specifically, and we believe that Boston Scientific can provide valuable assistance to us as we prepare for the launch of our cryoablation system” in the U.S.

At first glance, the deal would seem to fly against CryoCor’s business plan.

The company’s Cryoablation system is already commercially available in Europe for both AF and AFL, and according to Clinicaltrials.gov, CryoCor commenced enrollment for a U.S. pivotal trial for persistent AF in 2005, with the objective of enrolling 160 patients.

Gregory Tibbits, the CFO at CryoCor, told Medical Device Daily that the company actually commenced enrollment in December 2004, and the trial is designed as a randomized, controlled trial that is almost completely enrolled. Controls are randomized to drug therapy, with the clinical investigator deciding on the drug, one of which is amiodarone.

The firm is running into some difficulty in getting patients to consent to being randomized to drug therapy, he said, and will have to enroll a few extra patients in order to fully populate the control arm.

Tibbits admitted that “we are enabling a potential competitor,” but said that the larger firm is still working on feasibility studies of its cryogenic balloon catheter. He declined to speculate when Boston Sci will hit pivotal studies.

“We believe we are the leader in Afib,” Tibbits said, referring to the fact that the company will have completed enrollment in its AF trial “in the next couple of months.” This would leave CryoCor at least a year, perhaps a year and a half, ahead of the competition. He said that “it is our hope that since it works in flutter, it will work in Afib.”

CryoCath (Montreal) reported last week at the conference of the European Society of Cardiology (Europace) in Lisbon, Portugal, that a European trial of patients with true paroxysmal AF, 84% of patients were free of the condition after only one treatment. The company’s web site noted that the procedure was the same as is being used in its STOP AF trial, currently under enrollment in the U.S. The company also recently announced that it had sold its cryosurgical ablation business to ATS Medical (Minneapolis) for $22 million in cash (Medical Device Daily, June 21).

Tibbits suggested that CryoCor has reason for optimism. “We have our own second-generation catheter that we think is a very promising ... and will be commercially competitive,” he said.

Tibbits also said that “there’s no doubt that at some point, we’ll go back to the stock market,” in the next 12 months. Part of the reason for his optimism is that the deal with Boston Scientific brings intangibles, including enhanced credibility for the cryogenic approach to ablation. “None of the big firms had expressed an interest in cryoablation” up to now, Tibbits said, and the agreement also validates CryoCor’s technology.

“We believe that investors should take confidence” because Boston Scientific is very careful in taking on such projects, especially after the headaches that accompanied the Guidant buyout, Tibbits said.

At least one local Medicare carrier has issued a local coverage decision that covers ablation treatments for AFL and fibrillation for patients who are unresponsive to drug therapy or for whom such therapy is contraindicated. Tibbits said that CMS has issued codes for ablation for AFL and AF that are not specific to the energy source.

“For various reasons, we have focused on a limited commercial presence,” Tibbits said, including the greater difficulty of obtaining reimbursement in European nations. Japan is a market of interest to the company, but it has no specific plans to tackle that market.

However, over the next two or three years, CryoCor projects that it will be able to market the device to between 200 and 300 electrophysiology centers in the U.S., “at least,” Tibbits said.