Novoste (Norcross, Georgia), a specialist in brachytherapy technology for the prevention of in-stent restenosis, reported last month that it would lay off 50 employees, mostly at its Norcross location, in ongoing moves to cut costs and restructure operations. Besides reporting the staff cuts, the company said that it is suspending enrollment in its MOBILE (MOre Patency with Beta In the Lower Extremity) trial, initiated in 2001, to test the use of vascular brachytherapy for the treatment of failed stents in the peripheral arteries.

Company management said that it "has determined that the current rate of enrollment in the trial would likely not result in the possibility of commercial approval of the product for at least three years." Realigning priorities in its research and clinical trial areas, it said, "will provide cost savings and a greater opportunity for growth by deploying resources elsewhere." Novoste said it would continue to follow the patients already enrolled in the MOBILE trial and that it will publish the clinical data once it is compiled.

The new staff reductions constitute about 20% of the company's current workforce. In January, Novoste reported a 12% reduction in its workforce, with the new cutbacks resulting in a total of about 30% in staff cutbacks for the year. The company reportedly now has about 210 employees. The January cuts were estimated to produce $3 million in annual savings, and Novoste took a one-time charge of $400,000 in severance costs at the time. The company estimates that the new reductions will produce costs savings of about $4.6 million annually. It will record about $600,000 in one-time severance costs in the third quarter of this year.

The company said the new layoffs would occur among "all levels of employees." Among those largely affected are Novoste's field clinical sales trainers, with the company saying that with the launch of its various vascular brachytherapy devices, it has reduced needs for extensive field training activities. "Therefore, most of its field clinical sales trainers have been released or reassigned to other positions with the company," it said.

Al Novak, president and chief executive officer of Novoste, called the decision to reduce workforce "always difficult, and [this] decision is even more difficult because of the terrific job the Novoste employees have done in development of the company's business, the creation of the market for our product and the positioning of Novoste as the market leader in vascular brachytherapy. However, the commercial environment in which we exist mandates strategies that will position the company to take advantage of other and new opportunities in the VBT [vascular brachytherapy] market with technologies that build on our proven product platforms, and in other market segments where our experience can maximize growth and profitability."

Panel upholds payment to Cordis

Johnson & Johnson (J&J; New Brunswick, New Jersey) reported last month that an arbitration panel in Chicago, Illinois, has upheld its preliminary findings, issued June 5, that Guidant's (Indianapolis, Indiana) Multi-Link Duet Coronary Stent system infringes a key Palmaz patent held by the Cordis (Miami Lakes, Florida) unit of J&J. This final decision requires Guidant to make a one-time payment of $425 million to Cordis within 90 days. J&J said it would account for the payment in the quarter in which it is received. No continuing payments or injunction is involved in this proceeding.

A Guidant spokesperson said that the company would make the $425 million payment in the fourth quarter. She said that the funds had been set aside in the second quarter following the preliminary ruling. No additional financial implications are expected, since the two companies have made cross-licensing agreements of their stent patents and agreed to terminate other legal actions in the dispute.

Separately, the U.S. Circuit Court of Appeals in Washington last month decided in favor of Cordis in its appeal of the Medtronic/AVE (Santa Rosa, California) case. The decision upheld the validity of key Cordis patents, reversing the trial judge's ruling to overturn a December 2000 jury verdict of $270 million in favor of Cordis, not including interest. In a statement, Cordis said that the decisions by the arbitration panel and the appeals court "reaffirm the importance and value of Cordis' intellectual property."

In other court action in the cardiovascular sector, Edwards Lifesciences (Irvine, California) reported last month that it had filed patent infringement lawsuits against Medtronic (Minneapolis, Minnesota) and Medtronic/AVE; Cook (Bloomington, Indiana); and W. L. Gore & Associates (Sunnyvale, California) in U.S. District Court for the Northern District of California. Edwards is seeking injunctive relief and damages for infringement of a patent that relates to modular or multi-part endovascular grafts especially suited for treatment of various types of aneurysms, including abdominal aortic aneurysms (AAAs).

Edwards said it filed the lawsuit because it believes Medtronic, Cook and Gore are infringing a patent owned by an Australian company formed by the inventors, Dr. Geoffrey White and Dr. Weiyun Yu, and exclusively licensed to Edwards. The products named in the suit include Medtronic's AneuRx Stent Graft and TALENT Stent Graft Systems, Cook's Zenith Endovascular Graft and Gore's Excluder Bifurcated Endoprothesis.

Edwards focuses on four main areas of cardiovascular disease: heart valve disease, coronary artery disease, peripheral vascular disease and congestive heart failure. The company's global brands, which are sold in about 100 countries, include Carpentier-Edwards, Cosgrove-Edwards, Swan-Ganz and Fogarty.

Possis halts Phase I stroke trial

Possis Medical (Minneapolis, Minnesota) has ended its Phase 1 TIME (Thrombectomy in Middle Cerebral Embolism) clinical trial for ischemic stroke after study investigators decided that the company's device, the Angiojet NV 150 neurocatheter, did not demonstrate sufficient efficacy. However, Possis' top executive said research into other possible remedies would continue.

The study investigators, who according to Possis, "included some of the world's leading clinicians and researchers in treating ischemic stroke," that is, stroke caused by a clot or other material lodging in the middle cerebral artery, determined that the Phase I results did not suggest moving into a Phase II trial. Overall, the device effectiveness at delivering thrombectomy, or clot removal, was about 30%.

Robert Dutcher, chairman, president and chief executive officer of Possis, said in a statement, "While we are disappointed in the short-term outcome [of the trial], we are resolved to continue our research efforts along several paths, including using drugs and our device together, to discover a therapy with the right balance of safety and effectiveness."

Possis, which manufactures devices for cardiovascular and vascular treatment markets, said the challenge in treating this type of stroke is to intervene rapidly from symptom onset (within six hours), and to be safe, while also rapidly and effectively removing the material blocking blood flow. It was the conclusion of the study investigators, and Possis agreed, that the NV 150 neurocatheter, while safe, had not met the clinical challenges of being effective enough to warrant a Phase II trial.

The company said that at present, the therapies available to clinicians for treating stroke victims, along with the requisite infrastructure, are not very advanced when compared to treatments available for heart attacks. Dutcher said, "Effective future stroke treatment will likely require combination therapies, along with significant commitments to community support and improved medical reimbursement. We hope to help bring about this future through our continuing R&D and market development efforts."

Possis reported in August 2001 that it had received a $248,000 grant from the National Institute of Neurological Disorders and Stroke of the National Institutes of Health (Bethesda, Maryland) for the trial.

Possis markets the AngioJet Rheolytic Thrombectomy System in the U.S. for blood clot removal from coronary arteries, leg arteries, coronary bypass grafts and AV dialysis access grafts.

Tenet to pay $54M in heart surgery probe

Tenet HealthCare (Santa Barbara, California) will pay $54 million in what the U.S. government is calling the largest-ever settlement involving allegations of unnecessary surgeries, stemming from an investigation at a Tenet hospital in Northern California. Tenet said it would pay $51.35 million to the federal government and $2.65 million to the state of California under the deal, which will not include any admission of wrongdoing by Tenet, its subsidiaries or Redding Medical Center (Redding, California), the Tenet hospital accused of wrongdoing.

In an affidavit issued last October as part of a criminal and civil investigation, the U.S. Department of Justice said Chae Hyun Moon, MD, director of cardiology, and Fidel Realyvasquez, MD, chairman of the center's cardiac surgery program, had performed unnecessary catheterizations, angioplasties and open-heart surgeries. No charges have been filed against either doctor at this time.

The U.S. Attorney's Office said the $54 million covers procedures performed only on Medicare, Medicaid and Tricare programs under the settlement with the No. 2 U.S. hospital operator.

Prior to the settlement announcement, some had predicted that Tenet would pay huge sums as much as $6 billion for aggressively billing Medicare for risky procedures at Redding and other hospitals. But the $54 million payment will effectively end the company's exposure to government fines at Redding and shift the burden to individual doctors or practices who helped carry out the alleged "medical necessity fraud" scheme.

Ventracor sets $33 million rights issue

Assistive heart pump developer Ventracor (Sydney, Australia) reported the terms of a proposed rights issue to shareholders to raise about $33 million. The renounceable rights issue will be on the basis of 1 new share for every 12 shares held at an issue price of $2.25 per new share, the same price at which Ventracor recently made a placement to Australian and international institutions and investor clients of ABN AMRO Morgans Ltd., which raised $33.75 million.

John Massey, chairman of Ventracor, said that the company was in the process of finalizing the regulatory issues, including completion of a prospectus, and was also in discussions with ABN AMRO Morgans with regard to underwriting the rights issue. "We expect to have the details finalized shortly," Massey said.

The funds raised will be used mainly to assist in undertaking regulatory commercialization for the company's VentrAssist left ventricular assist system. "The funds will allow us to accelerate these processes depending on the ongoing performance achieved in the current pilot trial and the subsequent global pivotal trial," Massey said.

A fully underwritten 1-for-12 rights issue at $2.25 per share will result in the issue of at least 14.8 million new shares.