Johnson & Johnson’s hopes for an early return on its recent $1.4 billion acquisition of Conor Medsystems have been dashed by the failure of Conor’s heart stent design in a pivotal medical trial comparing it with a Boston Scientific stent.
Johnson & Johnson announced the trial results before stock trading began yesterday, saying it would drop plans to seek federal approval to sell Conor’s stent, known as the CoStar, in the United States. Johnson & Johnson also said it would withdraw the stent from overseas markets where it has been approved and is being distributed by several partners.
Compared with patients in the trial who received a Boston Scientific drug-coated stent, the Taxus Express, patients given a Conor CoStar stent were more likely to die, have a heart attack, or need a repeat stenting procedure within eight months. CoStar patients were also significantly more likely to experience a narrowing of the repaired artery from formation of scar tissue in and around the stent.
And even in one major patient subset where the outcome was close enough that CoStar was not clearly inferior, the trends favored the Taxus Express.
Shares of Johnson & Johnson declined 22 cents, to $64.26; Boston Scientific shares rose 51 cents, to $16.67.
For Johnson & Johnson, the near-term financial impact is likely to be slight — a reduction of 2 or 3 cents a share in earnings this year, said the chief financial officer, Dominic J. Caruso.
That projection is based partly on lost overseas sales, which Glenn Reicin, an analyst at Morgan Stanley, had forecast to be $125 million this year. Mr. Caruso said it also included the estimated costs of handling devices returned by distributors and hospitals.
The bigger concern for Wall Street will be the potential effect on Johnson & Johnson’s long-term position in the lucrative stent market, which it shares with Boston Scientific in the United States. Several new drug-eluting stents are poised to reach the domestic market, which could turn Johnson & Johnson’s drug-coated Cypher, the pioneering drug-coated stent, into an also ran.
“To retain any market share, they need a new platform fast,” said Bruce Nudell, who follows the device companies for Sanford C. Bernstein & Company.
Stents are tiny mesh cylinders that are inserted in blood vessels to keep them propped open after plaque has been pushed aside. Drug coatings are placed on coronary stents to combat the tendency of arteries irritated by the stent to reclog with scar tissue in and around the device.
CoStar releases paclitaxel, the same drug as Taxus. But the two stents have different designs. CoStar releases the drug from a polymer in wells drilled in the metal struts of the stent, while the Taxus releases the drug from a layer of polymer on the stent’s surface.
Johnson & Johnson executives said that the CoStar trial failed because the design did not deliver an effective dose of paclitaxel, not because of any harm to the patients by the stent.
Boston Scientific executives said yesterday that based on their experiments with CoStar, they believed that Conor might have met its goal of delivering a similar amount of paclitaxel. But the CoStar design, they conjectured, delivered most of the drug many weeks after implantation when it was less useful in fighting the irritation of the artery.
Johnson & Johnson officers said in a conference call that the company would focus on using the more potent drug it delivers on the Cypher, a compound called sirolimus, in CoStar’s unique stent design.
Dr. Campbell D. K. Rogers, chief technology officer of Cordis, Johnson & Johnson’s stent-making subsidiary, said that the preliminary tests combining the CoStar design with sirolimus had produced “promising and extremely exciting data.”
Dr. Rogers said that in addition to halting sales of CoStar, the company was suspending a clinical trial called Genesis that Conor had begun for its Symbio stent, which delivers two drugs — paclitaxel and pimecrolimus, a chemical relative of sirolimus.
Dr. Rogers said Cordis expected to have its first tests of CoStar with sirolimus in humans early next year, which would mean that such a device would be unlikely to be approved in the United States before 2010 at the earliest.
The delay could be even longer if the Food and Drug Administration accepts recommendations that it require at least two years of follow-up data on patients who receive stents. That data would shed light on whether the design is prone to clots forming inside the stent long after it is implanted — a rare but potentially deadly problem that has been associated with both Taxus and Cypher.
Johnson & Johnson officials said that the comparison with Taxus was disappointing but that the potential of the CoStar design to work with other drugs — or combinations of drugs in different wells — had been the major reason the company acquired Conor.
