FDA okays Boston Scientific stent despite concerns

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(Global Markets) - The U.S. Food and Drug Administration has approved a Boston Scientific Corp heart stent, despite concerns about a rare but potentially serious problem, because its benefits still outweigh the possible risks.

The agency approved the Promus Element Plus drug-eluting heart stent late on Tuesday, seven months sooner than expected. Boston Scientific shares rose as much as 5.3 percent on Wednesday.

The decision followed a disclosure by the agency on Friday that it was investigating instances in which the stents - tiny tubular devices made of wire mesh - were found to shrink or lengthen after implantation.

The Promus Element is designed to be thinner and more flexible to make its delivery to the artery easier. Complaint reports about the device show it can become deformed in cases where there is calcification of the artery, a twisted blood vessel or faulty placement by the surgeon.

"While additional data collection is ongoing and will continue into the postmarket, the totality of the information available and considering the addition of appropriate information in the labeling led to the conclusion that the Promus Element provides a reasonable assurance of safety and effectiveness," an FDA spokeswoman said in an email response to Global Markets on Wednesday.

The FDA said the problem, known as longitudinal deformation, has occurred most frequently with Boston Scientific's Ion stent, approved in the United States earlier this year, and the Promus Element, which had been available outside the United States.

The FDA said it viewed both devices as safe when used for authorized indications, but added it was working with the manufacturers to understand the problem.

The approval for the Promus Element Plus stent is an important step that will allow Boston Scientific to replace the Promus stent it co-markets with Abbott Laboratories.

Boston Scientific plans to market the U.S. stent immediately and awaits approval in Japan by mid-2012. It expects the combined launches will add $200 million to its gross margin after 2012.

In response to a Global Markets query, Boston Scientific said an evaluation of worldwide complaints concerning the Promus Element, as of October 31, showed 136 longitudinal stent deformation events per 829,372 units sold.

Of a total of 133 patients in whom longitudinal stent deformation was reported, new stents were implanted in 76 patients and 4 patients underwent surgery.

The FDA action quelled concerns on Wall Street that regulatory approval of the Promus Element would be delayed due to concerns about the deformation cases.

Michael Matson, an analyst with Mizuho Securities, said the approval is key to the company's margin expansion efforts.

"While we continue to watch this issue closely, we think that the Promus Element approval may indicate that FDA is not overly concerned about longitudinal compression," Matson wrote in a research note. "We continue to believe that Boston Scientific is in the early stages of a turnaround in terms of both revenue growth and margins. The Promus Element approval should help on both fronts."

Boston Scientific shares were up 4 cents to $5.35 on the New York Stock Exchange after trading as high as $5.59 earlier in the session.

(Reporting by Debra Sherman; editing by Michele Gershberg, Dave Zimmerman and Andre Grenon)