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Boston Scientific sees pending heart disease trial data as 'highly manageable'

Boston Scientific Corp. executives sought to ease concerns surrounding the impact of a heart disease trial on the company and its drug-eluting stent business during an Oct. 23 earnings call.

The U.S. National Institutes of Health is conducting a trial, called Ischemia, to evaluate the best management strategy for over 5,000 higher-risk patients with stable ischemic heart disease, patients of which experience obstructed or inadequate blood supply. Results of the trial are expected to be presented at the American Heart Association's annual meeting in Philadelphia on Nov. 16.

Drug-eluting stent sales were down by mid-single digits in the third quarter, which CEO Michael Mahoney noted is an improvement from trends seen in the first half of the year. The business, although not a key growth driver, is an important contributor, the CEO noted on the call.

Mahoney downplayed the concerns regarding the impact of the trial's results on the drug-eluting stent business, noting that it will be "highly manageable in all scenarios with the potential future dollar impact ranging from slightly positive to negative $40 million" based on a 5% to 10% reduction in revenue related to treatment of these patients with coronary syndromes.

"I really feel like the Ischemia level of questions are so disproportionate to the overall business," Mahoney said in response to analyst questions on the outcome of the trial. The launch of the Synergy Megatron stent in the U.S. will likely have a larger impact, he added.

Global Chief Medical Officer Ian Meredith noted that the population of patients in the trial are stable patients undergoing revascularization — restoration of circulation to a body part or organ that has suffered ischemia — instead of the vast majority of patients who received therapy to place a stent for opening up blood vessels in the heart. He added that 80% of such procedures in the U.S. and outside of the U.S. are done in patients with unstable angina or acute coronary syndromes.

"Many of the more complex and sick patients, for example, those with low ejection fraction, heart failure, left main coronary disease, end-stage renal disease, concomitant valvular heart disease, dilated cardiomyopathy, previous unstable angina now stable, are all ineligible for this trial. So in all, there are 28 major exclusions from the stable ischemic population in this study," according to Meredith.

The executive added that the translatability of this data set to patients in the stable ischemic population properly accounts for significantly less, which is why the company expects a lower impact.

SVB Leerink analyst Danielle Antalffy said in an Oct. 23 research note that results from the Ischemia trial could affect a portion of the company's drug-eluting stent sales, but this is unlikely to materially impact the company's organic sales growth from 2020 to 2022.

Boston Scientific's third-quarter earnings results should prompt a relief rally in the company's stock, which has been under pressure from concerns about the company's ability to exceed growth targets and skepticism about the Ischemia results, Cowen analyst Joshua Jennings said in a note.

Shares of Boston Scientific were up 5.49% to $40.28 as of 3:34 p.m. ET on Oct. 23.

2020 and beyond

Although Boston Scientific did not provide guidance for 2020, executives on the call said they are banking on "a lot of very positive things" that would help boost the company moving forward, including product launches and growth in its deep brain stimulation platform. Mahoney said the company has "very strong momentum across each region," which includes emerging markets, Europe and the U.S.

The company is also hoping to offset headwinds with its diversified business. "We've seen great growth in Latin America, great growth in China and really nice growth in the ASEAN countries as well as some parts of Europe, but it's really a combination of a couple of things," Mahoney said. "It's the diversification of the portfolio."

"Whereas eight years ago, it was drug-eluting stents, and now you're seeing complex coronary being larger than DES in those markets," Mahoney added.

Despite delays in the integration of its $4.2 billion acquisition of BTG International Ltd., Mahoney said the company is "comfortable with the double-digit growth scenario in 2020 and going forward with BTG Interventional," adding that the company expects "BTG will grow faster than the BSC composite in 2020 and beyond."