Boston Scientific Inc. has received U.S. approval to launch its latest drug-coated stent for patients with clogged arteries, a key milestone that is expected to increase profitability for the medical device maker.
The Natick, Mass.-based company said late Tuesday its Promus Element stent was approved by the Food and Drug Administration for patients with coronary artery disease, which causes the dangerous buildup of plaque in the arteries leading to the heart.
The stent's approval came earlier than expected, with many analysts predicting a launch in early to mid-2012. Company shares rose 14 cents, or 2.6 percent, to $5.46 in morning trading.
Stents are mesh-metal tubes used to prop open arteries after they have been cleared of dangerous fatty plaque deposits. Stents are threaded into the artery on the tip of a catheter and then squeezed into place using an inflatable balloon. The device's drug coating is designed to prevent scar tissue from growing over the stent and reclogging the artery.
The company said it will begin marketing the stent in the U.S. immediately. The device replaces the older Promus stent, which is Boston Scientific's version of Abbott Laboratories' Xience stent. Boston Scientific currently pays a 40 percent royalty to competitor Abbott Laboratories on all sales of the stents. All revenue from the new stent will go directly to Boston Scientific.
The company said it expects Promus Element to add an annual $200 million to its gross margins after 2012. Boston Scientific said it would take a $35 million after-tax charge in the fourth quarter related to the early approval and inventory stocking of the product.
Like other medical device makers, Boston Scientific has struggled in recent years to make up for lower sales of key products, including heart defibrillators and stents, amid cost-cutting efforts by hospitals and medical studies suggesting the implants are overused.
Last week, researchers as a conference for cardiology specialists raised questions about deformation problems with Boston Scientific's Element, Omega and Ion stents. Element and Omega are approved in Europe, while Ion is available in the U.S. Physicians presented several medical cases where the stents failed to hold their shape, increasing the risk of heart attack for patients.
Wells Fargo analyst Larry Biegelsen said the company's "market share could be negatively impacted." He expects U.S. sales of Promus Element to reach $504 million in 2012, or about 6.5 percent of total company revenue.
Kaufman Brothers analyst Vivian Cervantes said Boston Scientific will face additional challenges converting doctors from Promus to its new stent, and competing against Medtronic Inc.'s next-generation Resolute stent, expected to launch next spring.
Promus Element was approved in Europe in October 2009, and Boston Scientific reported $110 million in sales for the last quarter. Approval is expected in Japan by mid-2012.
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AP Writer Marley Seaman contributed to this report from New York