Boston Scientific takes a $3B hit on latest Lotus valve delay

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Boston Scientific's Lotus valveBoston Scientific (NYSE:BSX) saw its market capitalization lose $3 billion after yesterday revealing another delay for its Lotus replacement heart valve.

The Marlborough, Mass.-based company, which recalled the Lotus transcatheter aortic heart valve in February over issues with its locking mechanism, said it no longer expects the ensuing manufacturing and design specification changes to get the valve back on the market in Europe or allow the final filing in its pre-market approval bid with the FDA by January 2018.

“We continue to see value in the unique benefits of the LOTUS Valve platform in treating patients with aortic stenosis,” chairman & CEO Mike Mahoney said in prepared remarks. “While we are disappointed in this delay to our timelines, we are working to carefully analyze and implement necessary modifications to pass our rigorous internal quality standards.”

Boston Scientific said it plans to deliver an update on the Lotus valve’s status during its fourth-quarter earnings call, slated for Feb. 1, 2018. The delay is not expected to affect its finances for the fourth quarter or full year, the company said, but investors reacted by sending BSX shares down some -7.4% yesterday.

The stock closed at $26.39 per share yesterday after Boston Scientific pulled out of its scheduled appearance at the Piper Jaffray healthcare conference in New York City, but rebounded somewhat this morning in pre-market trading, rising 0.7% to $26.58 apiece. The drop yesterday pared its market cap from roughly $39.1 billion to $36.2 billion.

Last February Boston voluntarily removed all Lotus valve devices, including its Lotus with Depth Guard, from global commercial and clinical sites “due to reports of premature release of a pin connecting the Lotus Valve to the delivery system.”

At the time the company said it believed the issue to be caused by an excess of tension in the pin mechanism introduced during the manufacturing process, the same issue that caused an earlier suspension of implants of its Lotus Edge valve system device.

In January, Boston Scientific had reportedly found a fix for its Lotus Edge heart valve after the company paused implantations of the device in October last year.

Medtronic, Boston Scientific, St. Jude Medical escape catheter patent suit

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gavelA trio of medical device companies yesterday escaped a patent infringement lawsuit filed by the inventor of a catheter after a federal judge in Wisconsin ruled that the case was filed in the wrong jurisdiction.

Imran Niazi in April sued Medtronic (NYSE:MDT), Boston Scientific (NYSE:BSX) and Abbott (NYSE:ABT) subsidiary St. Jude Medical in the U.S. District Court for Western Wisconsin, alleging infringement of U.S patent 6,638,268 covering a coronary sinus catheter.

The companies moved to dismiss the case, arguing that it lacked jurisdiction in light of the U.S. Supreme Court decision in TC Heartland v. Kraft Foods Group Brands, which limited the ability of patent holders to sue in other states.

Yesterday Judge James Peterson found for the defendants based on the Heartland ruling, according to court documents.

“In these cases, it is undisputed that none of the defendants are incorporated in Wisconsin, so none of them ‘reside’ here. As to the second option for establishing proper venue, some of the defendants admit that they sell accused products in this district and some deny that they do, but all of the defendants deny that they have ‘a regular and established place of business’ in the district, so the court will focus on that issue,” Peterson wrote. “In light of the absence of any evidence or even allegations from Niazi that any of the defendants have a regular and established place of business in this district, the court concludes that Niazi has failed to show that venue is proper here.”

Peterson also ruled against allowing Niazi to proceed with discovery to prove residence in the western Wisconsin district, according to the documents.

“In these cases, Niazi has not identified any basis for believing that discovery will show that any of the defendants have a place of business in this district. Even if the court assumes as Niazi suggests that some of the sales people might keep some inventory at their homes, that type of de minimis evidence would not be sufficient to show that a defendant engaged in business from the employees’ homes,” he wrote. “To avoid questions about jurisdiction after a transfer, the court will dismiss the cases so that Niazi and the assignee can refile after determining the proper parties.”

Court upholds $27m pelvic mesh verdict against Boston Scientific

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Boston ScientificA federal appeals court last week upheld a plaintiff’s $27 million win over Boston Scientific (NYSE:BSX) in a product liability lawsuit brought over its Pinnacle pelvic mesh.

A Florida jury in November 2014 found for Amal Eghnayem and three other plaintiffs who alleged that the Pinnacle mesh caused injuries including pain, bleeding and infection. Pelvic mesh implants are used to treat pelvic organ prolapse and female stress urinary incontinence.

The company was ordered to pay the women $26.7 million in compensatory damages, between $6.5 million and $6.7 million each. It will not face additional punitive damages.

Marlborough, Mass.-based Boston Scientific appealed to the U.S. Court of Appeals for the 11th Circuit, arguing that the Florida district court abused its discretion by lumping the four cases together, that Eghnayem failed to prove her design defect and failure to warn claims and that the statute of limitations had expired by the time she filed suit.

A three-judge panel for the 11th Circuit disagreed, finding that the original trial judge was correct to allow the jury verdict, and to deny Boston Scientific’s bid for judgment as a matter of law, according to court documents.

Boston Scientific reported revenue of $8.3 billion last year, up 12.2% compared with $7.4 billion the previous year.

Boston Scientific to acquire Apama Medical in deal worth up to $300m

Boston Scientific, Apama Medical

Boston Scientific (NYSE:BSX) said today it inked a deal worth up to $300 million to acquire Apama Medical and its radiofrequency balloon catheter system designed to treat atrial fibrillation.

The deal includes an initial $175 million in cash up-front from Marlborough, Mass.-based Boston Scientific and an additional $125 million in contingent payments between 2018 and 2020 based on clinical and regulatory milestones. Boston Scientific expects the acquisition to close the 4th quarter of 2017.

Campbell, Calif.-based Apama’s novel RF balloon is a single-shot, multi-electrode device designed to combine the benefits of RF point-by-point and balloon-based ablation approaches, the company said, claiming the system delivers differentiated energy levels and shorter procedure times.

The system features an incorporated digital camera with LED lights and sensing electrodes for real-time visualization of the procedure and catheter electrode contact.

“The acquisition of Apama further advances our continued investment in the electrophysiology category, and, upon commercialization, would broaden our portfolio of differentiated arrhythmia solutions. We are also excited about the ability to integrate the Apama RF balloon system with our Rhythmia HDx mapping system to provide physicians with an unprecedented visualization of the heart during ablation procedures,” Boston Scientific rhythm management prez Joe Fitzgerald said in a prepared statement.

Results from the 1st-in-human study of the device showed the Apama RF balloon met safety and efficacy endpoints and achieved successful pulmonary vein isolation in treating paroxysmal AF patients.

“Study results reinforce the Apama RF balloon is an advancement in single-shot technology for PVI and can provide physicians with greater control and efficiency when performing AF ablations. We look forward to continuing the development and commercialization of this novel ablation solution to treat both paroxysmal and persistent AF,” Boston Scientific rhythm management and global health policy chief medical officer Dr. Kenneth Stein said in a press release.

The Apama RF balloon is currently being studied in clinical trials in Europe as the company looks to achieve CE Mark approval, which it hopes to receive in late 2018.

Boston Scientific said the acquisition is expected to be immaterial to its adjusted earnings per share for 2017 and 2018, and more dilutive on a GAAP basis due to amoritization expense, transaction and integration related costs.

Last November, Apama Medical said it raised a total of $19.7 million, with $13.2 million coming from a closed Series C round and $6.5 million from a debt facility with Silicon Valley Bank.

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Appeals court upholds Boston Scientific win over stent pioneer Jang

Boston ScientificA federal appeals court today upheld a Boston Scientific (NYSE:BSX) win over coronary stent pioneer Dr. David Jang.

The case dates back to 1999, when Jang won approval from the U.S. Patent & Trademark Office for a stent design featuring lateral struts. In 2002, Jang inked a deal worth up to $160 million to license the patents to Marlborough, Mass.-based Boston Scientific; Jang received $50 million up front, according to court documents, but only $10 million of the remaining $110 million in milestone payments.

Jang sued in 2005, alleging breach of contract and other claims. Boston Scientific filed a counterclaim in 2006 “denying any obligation to make additional contingent payments to Jang on the ground that that the accused stents did not infringe,” and thus were not covered under the deal with Jang, according to the documents.

Judge Virginia Phillips of the U.S. District Court for Central California initially ruled that the Boston Scientific stents did not infringe the Jang patents, shot down the breach of contract claim and decided the other claims in Boston’s favor. After Jang appealed, the Federal Circuit in 2012 vacated the ruling and remanded it to Phillips.

A Patent Office re-examination in 2013 found the Jang patents invalid, prompting Boston Scientific to argue that it shouldn’t be required to pay royalties on invalid patents. Phillips denied that bid for summary judgment, ruling that Jang has the right to demand royalties covering the time up until Boston Scientific asked for the re-examination, according to the documents. Boston appealed, asking the Federal Circuit to review the Phillips decision; the appeals court in September 2014 declined to hear the petition. At trial the jury sent up a split verdict, finding that Boston Scientific did not literally infringe the Jang patents but did infringe under the doctrine of equivalents. Phillips found in 2015 that Jang’s claims covered previous patents, triggering an ensnarement defense barring a patentee from asserting a scope of equivalency that would encompass, or ensnare, the prior art.

Jang moved for judgment as a matter of law on the jury’s finding of no literal infringement, but Phillips found enough evidence to support the verdict and rejected Jang’s bid for a new trial. Jang appealed that decision, arguing that a reasonable jury couldn’t have found no literal infringement because the undisputed facts showed otherwise and Boston Scientific’s non-infringement arguments were legally erroneous.

Today the U.S. Court of Appeals for the Federal Circuit upheld Phillips’ ruling, according to the documents.

The jury heard Dr. Jang’s theory of infringement and his supporting evidence but nevertheless found that the Express stent did not literally infringe. The district court did not fail to consider Dr. Jang’s theory of infringement and it correctly found substantial evidence to support the jury’s finding that the Express stent’s microelements do not literally meet the connecting-strut-column-related limitations,” the appeals court found. “Dr. Jang failed to persuade the district court that BSC’s non-infringement arguments were legally erroneous. We are similarly unpersuaded.”

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How Boston Scientific is boosting medical device value

Boston Scientific over the summer unveiled a new value-add for its implantable cardio devices: an online Trugevity calculator that lets physicians predict battery life.

The idea is to help health providers quickly grasp the benefits of Boston Sci’s longer lasting EnduraLife battery technology, which the company touts has nine clinical studies and eight years of real-world data to back up its abilities.

“We used to do those [battery life] calculations in-house … for physicians who are interested. … We decided, ‘Why not let the truth be free?’” said Ken Stein, SVP and CMO for rhythm management and global health policy at Boston Sci.

Read the whole story on our sister site, Medical Design & Outsourcing

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Judge: Firms must have permanent, physical presence in Delaware to file patent suits there

The District of Delaware Chief Judge said this week that businesses must have permanent residences in the state to be sued for patent infringement within it, following a series of US Supreme Court rulings, and transferred a patent spat case to Indiana.

Chief Judge Leonard Stark said the precedent was set after the Supreme Court’s decision in TC Heartland LLC v. Kraft Food Group Brands and Bristol-Myers Squibb Co. v. Superior Court of California earlier this year.

In TC Heartland v. Kraft Foods Group Brands, the Supremes limited the ability of patent holders to sue in other states. Kraft sued TC Heartland in its incorporated state of Delaware over drink powder patents; a lower court blocked TC Heartland’s bid to move the case to its home base of Indiana. In May, the Supreme court reversed that decision, finding that the only place a defendant can be subject to a suit is their home court, a place where infringement occurred or where the defendant has a regular and established place of business.

Similarly, in the Bristol-Myers SquibbCo ruling the pharmaceutical giant was sued by more than 600 plaintiffs alleging injuries from its Plavix drug. The justices overturned a California state court ruling that, although there was little connection between the lawsuits and the Golden State (only 86 plaintiffs hailed from the state), the lawsuits could proceed there because of the company’s extensive links there.

The opinion from Judge Stark comes from a patent spat case between Boston Scientific (NYSE:BSX) and Cook Medical, in which he granted a transfer of venue from Delaware to the Southern District of Indiana, Indianapolis Division.

“After reviewing thorough briefing and hearing oral argument, the Court finds that Defendants do not have a “regular and established place of business” in Delaware. Therefore, the Court concludes that venue is improper in Delaware for this action. Accordingly, the Court will grant Defendants’ motion and transfer this case to the United States District Court for the Southern District of Indiana, Indianapolis Division,” Judge Stark wrote, according to court documents.

Earlier this year, a number medical device makers were reportedly looking to slip patent infringement and product liability lawsuits based on the TC Heartlands U.S. Supreme Court ruling.

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New Bos Sci acquisition raises question: Will the Lotus (valve) ever blossom?

Boston Scientific has long expected to be the third wheel to Medtronic and Edwards Lifesciences in the U.S. transcatheter aortic valve replacement (TAVR) marketplace.

It has sung the praises of it Lotus TAVR valve but the product line stands pulled from Europe because of device malfunctions. and has suffered delays in its regulatory pathway in the U.S. And now, while senior management of the company argue that Lotus valve’s introduction in the U.S. is still on track for mid 2018, a transaction announced last week may allow the company to introduce a wholly different TAVR device to the marketplace.

On Thursday, Marlborough, Massachusetts-based Boston Scientific shelled out $435 million in cash to purchase structural heart company Symetis. The Swiss company makes the Accurate and  Accurate neo/TF valve systems for patients suffering from severe and symptomatic aortic valve stenosis and those who have a high-risk of undergoing open-heart surgery.

“The steps we are taking reflect our commitment to being a leader in TAVI and structural heart technologies now and over the long-term, as we broaden our portfolio and pipeline to address the needs of our global health care providers and their patients,” said Ian Meredith, M.D., executive vice president and global chief medical officer, Boston Scientific in a news release. “The ACURATE family of valve products is strongly complementary to our cornerstone Lotus valve platform, and this compelling combination of technologies will allow us to provide interventional cardiologists and cardiac surgeons with multiple TAVI offerings for varying patient pathologies and anatomy.” [TAVR is termed transcatheter aortic valve implantation (TAVI) inEurope]

Some analysts did not fully buy the line on Lotus being the cornerstone TAVR product

“… with Lotus being delayed multiple times, taken off the market in Europe, and with BSX yet to launch all five sizes, one has to wonder if this is a backup plan and if Lotus may not be as ready to go as the company hopes,” wrote Sean Lavin, an analyst with BTIG, in a research note on Thursday. “While BSX paid a hefty multiple and this deal may indicate Lotus isn’t quite ready at this point, we see having a backup option as a positive in this multibillion dollar growth market.”

Boston Scientific paid 12 times the 2016 revenue of Symetis, which was $38.2 million last year.

Another analyst — Danielle Antalffy of Leerink Partners —said that the purchase will provide “air cover” for the six-plus months that the Lotus valve is expected to be off of the market. Still, most analysts viewed the deal positively.

The transcatheter aortic valve space is dominated by Medtronic and Edwards Lifesciences in the U.S. though in Europe the two heavyweights have smaller rivals. It is also a place that has seen numerous legal fights over patent infringement.

Edwards Lifesciences prevailed over Medtronic in 2014 in its long battle and the saga ended with the Irish medtech company agreeing to pay royalty payments of at least $750 million to Edwards Lifesciences.

Meanwhile Boston Scientific and Edwards are in the midst of their own legal battle over TAVR. In Nov. 2015, the Massachusetts company slapped a  lawsuit against Edwards in Germany related to its European patents pertaining to outer seals of transcatheter heart valves. Edwards countersued, alleging patent infringement by the Lotus valve.

On March 3, a U.K court ruled that the Lotus valve did infringe on one of Edwards’ patents surrounding its TAVR valves but not the other. It also noted that the Sapien 3 valve from Edwards infringes two of Boston Scientific’s patents for outer seals of transcatheter heart valves. A German patent court issued a similar ruling days later. Edwards has promised to appeal.

In other words, the ” TAVI space is fluid and litigious,” wrote Lavin in the research note and he concluded that “With all the various IP issues, manufacturing issues, doctor preference, and different valves offering different benefits, the reasons for buying Symetis could be multifactorial.”

Photo: Ian Fung Koo / EyeEm, Getty Images