January
2006 Archives:
January 28, 2006
Left to One's Own Devices:
Adverse Event Reporting
My plan for today was to shift away (finally!)
from the all-consuming who's-buying-who (whom?) story of the past
two weeks, and get to something far more important: the health and
safety of patients who are the recipients of these manufacturers'
devices. As it turns out, however, my agenda has intersected with "the
big story". More on that in a minute.
Iowa -- the day after Thanksgiving 2005.
Darrell has 3 Cypher stents implanted. Five weeks later he breaks
out in an unbearable burning itchy rash. It doesn't go away. His
doctors and cardiologist have no answer. His wife suggests that
he go on the internet to search "stent
allergies". He winds up on our Forum (the first hit) and
realizes that he is not alone; many other patients have experienced
similar symptoms. He writes: "I should listen to my wife more
often."
At Angioplasty.Org's Patient
Forums, we've been getting increasing numbers of postings
from patients who are having problems. Our top four "complaint" topics
have almost 500 postings. Call us a mini-MAUDE database,
if you will, but we're compiling a significant number of "adverse
reports". And we have the feeling that many of these anecdotal
incidents are not being reported to the FDA. The recent JACC
study "Hypersensitivity
Cases Associated With Drug-Eluting Coronary Stents" agrees
that these reactions are under-reported by the device manufacturers,
patients and physicians. We'd assume this applies across the
board.
The U.S. Food & Drug Administration also agrees.
The FDA Center for Devices and Radiological Health (CDRH) recently
announced a Postmarket
Transformation Initiative to "transform and strengthen the
way it currently monitors the safety of medical devices after they
reach the market" -- more of a "real world" observation
than what is seen in tightly-controlled clinical trials. We applaude
this effort.
But we would also like to see the device manufacturers
be proactive and take the initiative to help the real end-users of
their devices -- the patients. Terrie from Ohio's husband started
exhibiting all the symptoms noted in the JACC article and, until
she found our site and its link to the study, got no answers -- from
her doctors or from Cordis (in fact Cordis spokesman, Chris Allman,
disputed the conclusions of the JACC study to the Chicago Sun-Times,
calling it "pretty speculative"). And I don't mean to single
out Cordis; in the "stent allergy" Forum, we've gotten
postings from Taxus recipients as well.
In the good ol' days of angioplasty, Andreas
Gruentzig & Co. compiled as much data as they could. They
were not so concerned with the value per shareholder as they were "possessed
with the adventure", as Richard
Myler called it, of finding out how this procedure could help
patients. Unfortunately, in today's environment, what should be
important concerns about devices are getting drowned in what vascular
surgeon Sir Peter R. F. Bell characterized to me as "a tidal
wave of dollars".
If but a miniscule percentage of the billions of
device dollars that were flying through the columns of the Wall Street
Journal last week could be spent on really understanding how these
new and revolutionary treatments are affecting patients in the "real
world", and in helping them understand complications, if there
are any. Yet, these same device companies have reduced, not increased,
their expenditures on that non-revenue-friendly activity of patient
education.
Which brings me to the intersection of agendas.
As the sun was rising on January 25, Boston Scientific and Guidant
penned their agreement, announcing it to an anxious financial world
at 7:02am; ten hours later, the FDA faxed
a warning letter to Boston Scientific -- a stern company-wide
admonition that, among a number of other cautions, took them to task
for late or non-reporting of 145 adverse incidents involving a range
of devices. The FDA was upset because previous warnings had gone
unresolved. And why are these reports about patient experience so
important? As Daniel Schultz, director of the CDRH, told the Pioneer
Press:
"That is part of the feedback loop that is
critical for use to evaluate and recommend changes in devices
to make them more safe and effective."
The letter stated that most future approvals would
be on hold until the issues were dealt with. Boston's stock got hammered
and went down almost 7% which, according
to some analysts, might threaten to unravel the Guidant deal.
So, alas! My entry about patient safety and adverse
event reporting winds up discussing, yet again, its impact on the "big
deal".
But after all, that's what it's about: safety and
money.
January 25, 2006
Two Weddings and a Funeral
In honor of Sundance (and my Masters degree
in Film), I just had to make another movie
reference. This is not an apology.
The funeral is, of course, the Johnson & Johnson
deal to acquire Guidant. Hold the tears, however. While J&J's
quarterly report yesterday showed a slowdown in sales, their
profits soared and their Cordis Cypher drug-eluting stent overtook
Boston Scientific's in the worldwide market. They now claim 51%
of the total drug-eluting stent market, although their U.S. share
has remained at 46%. And many J&J stockholders seem to be
relieved that their company didn't overspend by trying to outbid
Boston Scientific. With $50 billion in revenue for the year (that's
eight Boston Scientifics) don't cry for me, New Jersey.
And now the double nuptials:.
Wedding number one -- the bride Guidant's
maiden name is Lilly -- in 1995 several of Eli Lilly's device
subsidiaries, cardiac rhythm management among them, were spun
off to form part of a new device company, called Guidant. The
groom, Boston Scientific's Founder Chairman Pete Nicholas, worked
at Eli Lilly from 1967-78 (alongside Guidant Chairman James Cornelius).
And Nicholas really is the groom because he is
married to Eli's great-great-granddaughter. Now Pete's company
will be buying this former Lilly division. Congratulations are
in order.
As for wedding number two -- a long time ago
in a galaxy far, far away, when interventional cardiology was just
beginning, a cardiology fellow named John Simpson was working with
angioplasty pioneer Dr.
Richard Myler in San Francisco. Dr. Simpson saw this burgeoning
new field of medical devices and became an avid inventor/entrepeneur.
His innovative balloon catheter and steerable wire system turned
into a company named Advanced Cardiovascular Systems (ACS). In
1984 Simpson sold ACS to Eli Lilly (small world) and a decade later,
it became -- you guessed it -- Guidant.
Another of Simpson's inventions was a vascular
closure device, used to seal the femoral artery after an angiogram
or angioplasty without the time-consuming process of manual compression.
It was called Perclose. This device turned into a company, also
called Perclose, and in 1999 it was bought by Abbott. Now Guidant's
vascular division, formerly Simpson's ACS, is betrothed to Abbott,
formerly Simpson's Perclose. Congratulations are in order.
So the happy couples are now making plans to
set up house and figuring out how to merge their record collections,
and what to do with their duplicate copies of Hotel California.
Meanwhile, deep-pocketed Johnson & Johnson,
having been rebuffed, is reportedly on the prowl for another eligible
device partner. So, to console the lonely Johnson & Johnson,
we send out this request tune, "Hey, [St.] Jude":
Hey, Jude, don't make it bad
Take a sad song and make it better
Remember to let her into your heart
Then you can start to make it better
Hey, Jude, don't be afraid
You were made to go out and get her
The minute you let her under your skin
Then you begin to make it better.
'Nuff said.
January 23, 2006
Abbott's Partner -- It Ain't Costello
Two
weeks ago I wrote about Abbott's historical connection with
Boston Scientific. Last
week, I called the game-plan to acquire Guidant a "shared
Boston-Abbott defensive move to prevent the giant Johnson & Johnson
from getting it". This is a theme I've seen since in several
articles, one of which from Mark
Jewell of the Associated Press quotes an analyst, stating "I
don't think [Boston Scientific] could be there at all without what
has in effect become, 'The Bank of Abbott.'".
So one has to wonder if history will repeat itself,
and if the 2006 Boston Scientific Annual Report will contain a
passage similar to this one from 14 years ago in 1992:
"Abbott Laboratories deserves a special
note of recognition and gratitude. Our ten-year association
was a critical building block in BSC's success. Without it,
we could not have become the company we are today. In addition
to Abbott's wise counsel, its investment allowed us to keep
most of the ownership of BSC in the hands of our people. Today,
even after our public offering, the men and women of this company
own 75% of its equity."
It is reported that BSC co-founders Pete Nicholas
and John Abele alone currently hold 30% of the company's stock.
A few days ago, a reporter asked me if I thought
there were still a lot of "personal bonds" between Abbott
and Boston Scientific. I'm not sure if corporate entities are wired
to experience personal bonds, but as any fan of Battlestar
Galactica can tell you, even robots can fall in love.
* * * *
A brief note: in my January
10th entry, I referred to the 1983 investment from Abbott
as $100 million. My source was an interview with Pete Nicholas
published in last month's Directors
Monthly. My research has since shown that it was a more modest
$21 million, made over four years.
January 17, 2006
Breaking News: Boston Scientific bids
$80 per share
In my last post I said that Boston Scientific's
bidding for Guidant was really a shared Boston-Abbott defensive
move to prevent the giant Johnson & Johnson from getting Guidant
and totally dominating the field, something you do in RISK -- get
together with a partner to stop the elephant in the game.
Well, defensive turned seriously aggressive this
morning with Boston Scientific offering
a stunning $80 per share for Guidant with a "sell by 5:00pm" date
stamped on the package. The deal includes a greater financial involvement
from Abbott, higher price for the vascular business divisions,
greater loan, and, new to this iteration, Abbott will now own 4%
of the new combined company.
Last week I noted that Abbott
used to own 20% of Boston Scientific. What goes around, etc.
etc.
Update: Guidant's
Board has
deemed the Boston offer "superior", so they now have
five days to decide whether to formally accept it. That means five
days for Johnson & Johnson to up its offer, or give up the
year-long acquisition process.
Stay tuned!
January 15, 2006
"You've got to know when to hold
'em, know when to fold 'em"
While it may be possible for yet another
round of bidding to occur in this week's Celebrity
Poker Showdown, starring Boston Scientific, Guidant, Johnson & Johnson
and Abbott, some analysts think that might just change the game
into Celebrity
Deathmatch, where the contestants just wipe each other out
in the name of winning.
The most recent bid was announced Friday
evening. Johnson & Johnson upped their bet and Guidant
accepted it, rejecting Boston Scientific's $2 a share higher
offer. One reason proffered by some Wall Street analysts was
the potential of antitrust problems that the Guidant-Boston
Scientific deal might face during an FTC review. (I wrote about
this last
Monday.)
The announcement capped a week of frantic
bidding and counter-bidding and a day of bizarre events with one
press release issued to kill a
previous press release -- and on Friday the 13th to boot.
You can access the blow-by-blow in the Timeline I
have constructed.
Johnson & Johnson and Boston Scientific
have been arch-rivals since the mid-90s, when Johnson & Johnson
successfully obtained FDA approval for a new coronary device
called "the stent", which Drs. Palmaz and Schatz had
licensed to them. According to a 2004 Fortune Magazine article,
titled "Blood
Feud", Palmaz and Schatz first brought their stent to
Boston Scientific, but the company didn't offer enough for it.
J&J did. Then J&J, wanting to get into the cardiology
device business in a bigger way, tried to buy Boston Scientific
and was rebuffed, and so bought Cordis instead.
For the past two years the competition
has taken the form of the "Stent Wars". J&J had
the first drug-eluting stent (the Cypher, approved in March 2003)
and a year later, Boston's Taxus was approved and rapidly took
two-thirds of the market away. Ding! Round Two. Three months
later, Boston Scientific recalled its Taxus stents to fix a non-stent-related
problem in the catheter shaft. The recall was done voluntarily
and smoothly and the new product was back on shelves instantly
with Boston retaining its lead, although a bit lower. Then, at
the 2005 ACC, J&J successfully spun a safety issue from the
REALITY trial. Although the issue (as
I reported) was not really supported by the data, Taxus'
market share dropped to around 55%.
For the past couple months, the competition
has taken the form of the "Guidant Wars". As with the
Cypher stent, J&J had a whole year to itself, having announced
the Guidant acquisition agreement in December 2004. Then
Boston Scientific swooped in on the action with a
surprise move last month. But Boston Scientific's bid, and
its side-deal with Abbott regarding Guidant's endovascular businesses,
is not just about "getting Guidant". It's also a shared
Boston-Abbott defensive move to prevent the giant Johnson & Johnson
from getting it and totally dominating the field (if you've played RISK,
you've probably done something like this).
The main sticking points seem to be (1)
Guidant and Johnson & Johnson have been working on this acquisition
for over a year and seem comfortable with each other; and, (2)
there are some unresolved antitrust issues that seem to cause
concern. Boston Scientific's COO Paul LaViolette stated in a
webcast last Monday that the company had already talked to the
FTC at high levels and is assured that the way is clear for a
quick completion. Compare that to Friday's Reuters
interview with the FTC's person in charge of medical device
mergers, Michael Moiseyev, who agreed that the Boston-Guidant
review could be quick (he means two-to-three-month-quick) because
the FTC recently did the J&J-Guidant review so it'll be working
in familiar territory. But he also stated that there was no guarantee
about the outcome of such an investigation and that he has not
reached any conclusions about whether Boston Scientific's proposed
deal raises antitrust problems, or what kind of divestitures
could be required.
Boston Scientific may well raise their bid a
few dollars more. Or maybe they'll stay content with the knowledge
that they cost Johnson & Johnson almost $3 billion. Or maybe
the folks at Boston Scientific will pick up the phone and call
Paul Buckman, ex-President of their SciMed Division, who currently
serves as Divisional President at St. Jude Medical, a company which
has slightly under a quarter of the heart rhythm market, and which
has continued to pick up share since Guidant's defibrillator troubles
last summer. The only major product overlap between St. Jude and
Boston Scientific is in the neuromodulation market (each company
has acquired a capability in the past year) thus few antitrust
worries (divest one of the neuromodulation companies to...say...Abbott).
Such an acquisition would give Boston Scientific not only the heart
rhythm business, but heart valves (St. Jude's are reportedly the
quietest) as well as the top-selling vascular closure device, Angio-Seal.
(Boston Scientific's foray into this area, an ultrasound sealing
device from their partner Therus, has had difficulties and is being
reworked for another round of clinical trials.)
St. Jude is just down the road from the Taxus
plant in Minnesota. Maybe they can do lunch?
January 13, 2006
GAT: Guidant Acquisition TimeLine
So much so fast in the saga of Guidant's
acquisition by Johnson & Johnson, or Boston Scientific, depending
on which hour you read the news. In fact, if you use news aggregator
sites, like Google News or Yahoo! News, you might see a headline
that indicates Boston Scientific has made another new bid for
Guidant -- only to find that the site is two headlines behind,
and that article is discussing a bid from 8:00pm the night before
last.
So, to put this in order and in perspective,
I have constructed
a timeline of events, starting with Johnson & Johnson's
announcement that they were going to acquire Guidant in December
2004, and ending with the last news from Friday 13th, that Guidant
was accepting J&J's bid of $71 per share. I have also placed
a graphic depicting the price being offered per Guidant share throughout
the story.
I invite all readers to add
pertinent events that I am sure I've left out, and we'll
keep this online.
January 11, 2006
Would you be mine? Could you be mine?
Won't you be my neighbor?
It could have been ever so convenient. If
only Guidant's Board had said "yes" to the Boston Scientific
crowd. Guidant's heart rhythm group in Arden Hills could go to
lunch with their new co-workers at the Taxus stent plant in Maple
Grove, a mere 20 minute drive over US 94 in Minnesota. And the
whole Guidant endovascular division could load into some buses
and drive 20 miles up 101N to the Redwood City Seaport and sit
on the dock of the SF Bay with their new Abbott Vascular friends.
But Guidant decided to go with those guys from Joisey.
Of course, there's still 20 shopping days
till Chri...till the shareholder meeting at which the owners
of Guidant stock will vote for their Board's recommendation or
not. Elliott Associates LP, hedge fund owner of 3 million of
those Guidant shares, had
recommended the Boston deal and was none too pleased with
the Board's decision to go with J&J. Nancy Havens whose fund
owns 2 million Guidant shares told
Reuters, "I can't believe that Guidant said yes to this
deal. It seems outrageous to me." As for Boston Scientific, they
came right back with an 8:00pm
press release boldly proclaiming, "Our discussions with
Guidant are ongoing. We intend to vigorously pursue this transaction
to its completion."
Given that 30% of Boston Scientific stock is
owned by founders Pete Nicholas and John Abele, they could pretty
quickly "up" their offer, or make some other changes
more favorable to Guidant shareholders. So it's not over till at
least somebody sings.
An interesting observation was made to
Reuters by Allen Michel, an M&A prof at BU School of
Management, who thinks that the winner of the contest will be
the loser. "Whenever you have multiple bidding ... the firm that
wins usually ends up paying too much. It's a phenomenon that's
known on Wall Street as the 'winner's curse.'"
I too have a couple quick observations: (1) who
would have thought that such a phenomenal billion-dollar-knock-down-drag-out
bidding war would be going on over a company that only a month
ago was generating headlines in the New York Times like, "More
Deaths are Linked to Device"; and (2) what was it about
the Boston Scientific deal that Guidant's Board didn't like? After
all, Boston was offering $4 a share more than J&J, with a collar
in case Boston's stock dropped below a certain level, and many
assurances of financing, etc. The Wall
Street Journal reported that Guidant's concerns "were
said to deal with how Boston Scientific would divest itself of
Guidant's stent and catheter businesses" to Abbott. There
was no elaboration on this point and I can only wonder if what
I discussed a
couple of days ago might have been a factor, namely that since
Guidant and Abbott have the only two FDA-approved carotid stents,
wouldn't selling Guidant to Abbott cause some questions for the
FTC regulatory review and possibly slow down the merger approval?
In conclusion, I'd just like to say that, in
case any shoppers out there feel left out, I have a web
site I might be interested in selling: it's very popular, read
by 60,000 visitors a month, top search engine placement, all that
good stuff. In fact, I could even mess it up a little and throw
in a few mistakes if that would make it more attractive. Talk
to me.
January 10, 2006
There's Some History There
Over the weekend, Abbott signed an
agreement with Boston Scientific to buy Guidant's vascular
intervention and endovascular businesses, if Boston successfully
concludes its acquisition bid for Guidant.
But when Boston Scientific founders
Pete Nicholas and John Abele were struggling back in 1983
to make their company into a significant player in the medical
device field, Abbott invested $100 million (that's million,
not billion) with them -- in 1983 that constituted 20% ownership
of Boston Scientific and the investment allowed Nicolas and
Abele to grow their company until they took it public in
1992. At that time Abbott, unsure of the future of medical
devices vis-a-vis the healthcare reforms being discussed
in the Clinton years, decided to cash in its investment,
then worth $340 million (not billion).
Now, a decade-and-a-half later, Abbott
will pay Boston $4.3 billion (that's billion, not million)
for the Guidant division and a 50/50 partnership in the everolimus
drug-eluting coronary stent. Abbott will also give Boston
a $750 million loan. Why the loan? As Boston said in its
conference call yesterday, "Why not?"
I think it's just for old friendship's
sake....
January 9, 2006
Quick Thoughts on Boston/Guidant Deal
There's much to digest and discuss in an
acquisition deal that will change the business of interventional
devices in a big way, no matter whether J&J or Boston Scientific
winds up with Guidant. But here's just a quick thought, to which
I may have a confirmation soon. A big (and newly announced) part
of Boston Scientific's deal to buy Guidant is a divestiture of
Guidant's vascular intervention and endovascular businesses. This
package would be sold to Abbott for $4.3 billion in order to ease
FTC approval of the deal in terms of anti-trust issues -- Boston
has its own endovascular products that would give it too big a
monopoly on the market. (J&J already offered to license its
rapid exchange technology to Abbott for the same reason -- Abbott
has it coming or going, it seems.) Speed of FTC approval is important
to Boston, to give Guidant shareholders the confidence that this
deal could be pulled off quickly, especially since J&J's offer
has already been cleared by the FTC.
But here's something that I haven't heard discussed
in any of the news articles or in the conference call this morning: carotid
stents. There are only two currently approved in the
United States. Guidant has one: the ACCULINK™ and RX ACCULINK™ Carotid
Stent System was
approved for use by the FDA back in August 2004. The ACCULINK
Carotid Stent System, last I looked, was part of Guidant's endovascular
division. And now, a year later, Abbott has the other carotid stent:
its Xact® Carotid Stent and Emboshield® Embolic Protection System was
approved for use by the FDA on September 15. If Abbott gets Guidant's
endovascular products, doesn't that then give Abbott a monopoly on
carotid stents? (Boston Scientific has a carotid stent product in
the works; J&J has one that's "approvable", but has
not gained FDA approval until it resolves some manufacturing concerns.)
Okay, I'm sure wiser heads than mine have a simple
answer to this; but I'm just curious as to why the words "carotid
stent" haven't been discussed in all of the press flurry today.
After all, as Abbott Vascular President Chip Hance said during a
recent webcast, if the current CREST and ACT I clinical trials show
results, carotid stenting could become a billion dollar a year business
in a very short time.
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