Natick, MA-based Corindus has corralled $5.3 million of a proposed $10 million round of equity financing, according to an SEC filing. The firm is developing a robotic system that helps surgeons control the position of guidewires in veins in procedures to implant vascular stents, according to the firm’s LinkedIn profile. A call to company CEO David Handler was not immediately returned today, and it’s not stated in the SEC filing who participated in the financing. Prior to this financing, the firm raised $12.8 million in a Series B financing in spring 2008, according to a story I wrote about the deal for Mass High Tech.

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People who make a living creating innovative medical devices—whether it’s an ultrasound diagnostic tool, a stent to prop open clogged arteries, or an MRI machine—are an unhappy bunch these days.

Let us count the ways, as described in the second annual medical device industry analysis being released today by Ernst & Young. Because unemployment is up, people are losing their employer-sponsored health insurance. That means patients are postponing elective medical procedures, and hospitals and government payers are tightening their budgets. A powerful U.S. Senator, Max Baucus, wants to raise $40 billion in taxes on the medical device industry; healthcare reformers like President Obama are talking about comparative effectiveness studies that would add time and expense to device development; and lawmakers are considering whether to require companies to disclose all gifts and payments to doctors who help develop and buy their products.

Those are the megatrends medical device companies have to deal with in this recession, but what does the data say about how they’re being affected? Here are some highlights that caught my eye in this 60-page report:

—Despite the recession, revenues of publicly traded medical technology companies in the U.S. and Europe actually climbed 11 percent to $289 billion (although the growth was only about half that much when factoring out foreign-exchange rate fluctuations and acquisitions).

—While Johnson & Johnson, Medtronic, and Boston Scientific appear to be performing fine, that’s not so much the case for the smaller players that create most of the innovations the big boys acquire to keep growing. U.S. and European medical technology companies saw total industry financing drop 38 percent in 2008—although when E&Y subtracted two big European deals, the numbers looked a lot worse, with financing down 44 percent in Europe and 53 percent in the U.S. “One area where the growing chasm between medtech’s haves and have-nots is most visible is in fundraising,” the report says.

—Mergers and acquisitions, which are usually the only way medical device startups can make returns for their investors, showed a big-time decline in 2008. There were just 79 deals in 2008, down about 41 percent from the prior year.

—The IPO market was basically flat-lining, with medical device companies raising a puny …Next Page »

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Boston Scientific has agreed to pay $716 million to Johnson & Johnson to settle 14 lawsuits related to patent disputes in the field of interventional cardiology. Both companies make products in that field that seek to be less invasive alternatives for patients with cardiovascular disease, who otherwise might be headed toward open-heart surgery.

Natick, MA-based Boston Scientific (NYSE: BSX), said the money for the settlement will come out of its existing cash reserves, which stood at $1.19 billion at the end of June, when the company issued its most recent quarterly report with the Securities and Exchange Commission. The legal disputes go at least as far back as 1997, according to company filings. Despite the size of the payment, Boston Scientific didn’t get rid of all its legal issues with one fell swoop.

“We are pleased we have been able to significantly reduce the amount of outstanding litigation we have with Johnson & Johnson,” said Ray Elliott, Boston Scientific’s CEO, in a statement. “We continue to work with them to resolve other outstanding matters.”

Boston Scientific has been bracing itself for a big legal payout for some time. The company accumulated $1.27 billion as of June 30 for its estimated legal payments, after it lost a court ruling this year to J&J for an estimated $237 million and a $50 million settlement payment to inventor Bruce Saffran. Both of those disputes were related to stent products.

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Tom Steinke says he founded San Diego’s Minnow Medical out of an abiding conviction of the limitations of the medical stent, a mesh tube inserted in arteries to help prop open clogged blood vessels.

Steinke came to this view after spending 20 years developing medical devices in the cardiovascular industry. His previous startup was San Diego-based Reva Medical, which he founded in 1998 around a novel slide-and-lock design for a metal stent that does not deform as it expands. Before that, he was a product group director for Medtronic, director of engineering for Sonotek, and a development engineer at Advanced Cardiovascular Systems, which became Guidant, the maker of heart pacemakers and defibrillators.

“I know the industry,” Steinke says. With a metal stent, he says, “you’re going to have an ongoing inflammation to a foreign body… Even a [stent with a] drug coating doesn’t last forever; eventually the coating dissolves.” As Denise has reported, drug-coated stents represented a major innovation for the industry, and one that caught Reva off-guard. As the industry shifted to drug-coated stents, Steinke helped Reva reinvent itself in 2003 by developing a bio-absorbable stent that fully dissolves over time.

By the end of 2003, though, Steinke had moved on.

Tom Steinke

He founded Minnow Medical that year, and tells me the company sprang from his “altruistic desire to improve health care for the masses.” Now, after six years of development, Steinke is working to commercialize the technology that sprang from his convictions.

Steinke tells me that during his first couple of years at Minnow, he searched for alternatives to vascular stents. The founder and CEO says he self-funded Minnow until he had identified a way to improve the medical device used in balloon angioplasty to treat arteries that have narrowed and hardened due to atherosclerotic disease, the build-up of waxy plaque along the inside walls of an artery. In the process, Steinke also focused on …Next Page »

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Back in February 2008, a Texas jury told Natick, MA-based Boston Scientific (NYSE: BSX) it would have to pay $431 million in damages to Dr. Bruce Saffran, who alleged that the company’s Taxus Express and Taxus Liberte drug-eluting stents infringed on patents he owns. Boston Scientific appealed the ruling, and a Federal Circuit panel reviewed the case in early March. In a late-afternoon filing with the SEC today, Boston Scientific said it settled the case with Saffran on March 16, and that as a result, it will record a pre-tax charge to earnings of $50 million this quarter.

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Boston Scientific (NYSE:BSX), the Natick, MA-based medical devices giant, reports that it has acquired drug-eluting stent developer Labcoat, headquartered in Galway, Ireland. Labcoat has developed technology to produce ultra-thin coatings of biodegradable polymers and drugs on the outer surface of coronary stents, which are designed to prop open arteries after surgeries to remove plaques. Financial terms of the deal weren’t disclosed.

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Natick, MA-based medical devices giant Boston Scientific has garnered market approval for a carotid artery stent, the company announced yesterday afternoon. The stent is a coiled metal tube intended to prop open the carotid artery in the neck that keeps blood flowing from the heart to the brain. When plaques cause the arteries to narrow, patients are at risk of stroke and death.

Boston Scientific’s (NYSE:BSX) carotid stent, which is already marketed in Europe and other foreign markets, is intended for used in conjuction with another of the company’s devices, a filter that captures plaques dislodged from the artery during the stent-insertion procedure. The company says the procedure is less invasive than surgery to remove buildups in carotid arteries.

The FDA has previously approved carotid stents for at least one other firm, Abbott Laboratories (NYSE:ABT), the Illinois-based medical products powerhouse. Still, insurance coverage for use of carotid stents is limited to patients for which the traditional surgical option would be risky, and in April researchers reported in the New England Journal of Medicine that a study of treating carotid artery disease with stents versus surgery saw no difference between the two.

News of Boston Scientific’s stent approval follows company CEO Jim Tobin’s announcement this week that the FDA had lifted part of a moratorium on new product approvals placed on the firm in January 2006 due to quality-control issues throughout the company, according to media reports.

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It appears that Natick, MA-based Boston Scientific (NYSE: BSX) will be forced to pay medical products giant Johnson & Johnson the full $703 million patent-infringement award finalized last week by the U.S. District Court of Delaware, after the U.S. Supreme Court declined yesterday to hear the company’s appeal of the case. Johnson & Johnson claimed that Boston Scientific infringed on a coronary artery stent patent owned by its Cordis division. A $521 million judgment against Minneapolis-based Medtronic will also stand, as Medtronic did not appeal the Delaware court’s judgment.

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Boston Scientific (NYSE:BSX), a Natick, MA-based medical devices maker, has been ordered to pay $703 million to the Cordis unit of medical products giant Johnson & Johnson for infringing on a Cordis patent on stents, according to J&J. The U.S. District Court of Delaware made a final judgment in the case that also involved Minneapolis-based medical devices firm Medtronic, which was ordered to pay Cordis $521 million.

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Boston Scientific said today it has won clearance from the FDA to market the Taxus Express2 Atom Stent System. The new device, which props open clogged heart arteries, emits a small dose of a chemotherapy drug designed to minimize scarring around the implant. It is the only device approved for vessels as small as 2.25 millimeters in diameter, the Natick, MA-based company (NYSE: BSX) said in a statement. The company plans to start selling the device immediately.

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An FDA application for a Boston Scientific (NYSE:BSX) coronary stent currently awaiting approval was supported by a flawed statistical equation, according to today’s Wall Street Journal. Citing its own review of a clinical study of the device, the paper said the Taxus Liberte stent, which is already approved for use abroad, would have been judged “a failure by the common standards of statistical significance in research,” even though the statistical method that Boston Scientific used is widely employed by other stent manufacturers as well. A Boston Scientific spokesman said the company used standard methodology. BSX stock was down more than 5 percent, to $12.69, in early trading today.

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Much has been written about Boston Scientific’s retrenching, in light of the decline in its business with stents, the tiny wire mesh devices that prop open clogged arteries. Now as Boston Scientific focuses on its core businesses, one of the units that has been spun off has a new name, Navilyst Medical. The company has 800 employees, and what its founding president calls a new focus on the opportunity for devices that can minimize infections in hospitals.

Before it had a name or logo, Navilyst officially left its parents’ nest on Valentine’s Day, when the private equity firm Avista Capital Partners paid $425 million to buy the venous access and fluid management businesses from Boston Scientific (NYSE: BSX). The divisions were projected to have $180 million in annual worldwide revenue, but not much beyond that has been said about its finances or prospects.

Here’s what I gathered yesterday from an interview with Dave McClellan, the president of Navilyst, and the former president of Boston Scientific’s oncology division. The new company is being headquartered in Marlborough, MA. The R&D, manufacturing, process engineering and other functions are in Glens Falls, NY, where about 680 of the 800 employees will be. Navilyst’s name comes from the root words “navi,” which is short for devices that navigate their way into patients arteries for IV drips or injections, combined with “-lyst,” as in catalyst for innovation, McClellan says. He didn’t want to say much about any plans for hiring or expansion, other than they will depend on how well the company performs.

McClellan repeated the word “focus” a couple of times in our conversation. He made it clear that the new organization can channel its energy and resources to the opportunities it sees with vein-access devices, instead of competing for resources with many other projects inside the larger company.

The opportunity for Navilyst is in hospitals. Anyone who remembers the fearful TV and Internet reports last year of the rise of the drug-resistant bacterium known as MRSA, and another called C. Diff, knows that hospitals are motivated to cut down on the risk of such infections. About 1.7 million people get these infections in hospitals, and almost 100,000 people die from them each year, according to the Centers for Disease Control and Prevention.

Navilyst aims to help hospitals deal with this problem through vein-access technology, which uses a pressurized safety valve that’s designed to keep blood from flowing back up into an intravenous line, an exchange of fluid that can cause infections. The products are used in hospitals routinely every day, for injecting things like chemotherapy drugs, antibiotics, or nutrient drips. Navilyst calls it the PASV Valve Technology, and the company is planning to build on the concept with new products from its internal R&D, as well as with strategic partnerships, McClellan says.

Navilyst’s main competitors are Murray Hill, NJ-based C.R. Bard (NYSE: BCR) and Queensbury, NY-based Angiodynamics (NASDAQ: ANGO). McClellan insists that his new company can go toe-to-toe with them, even without the backing of Boston Scientific. “We have the scale, we’ve got the R&D horsepower, the focus and the sales channel,” he says.

One line in yesterday’s press release from CEO Ron Sparks mentioned that the company will look very different in 2011 than it does today. I asked McClellan what that meant, and he avoided specifics. “The strategy here is to continue to identify innovative technologies that bring value to our customers. We’re not just talking about me-too products,” he said.

I guess we’ll have to wait to see specifically what he means by innovative, but my guess is Navilyst will have to make a compelling case to hospitals that its technology will decrease the risk that the next scary headlines about MRSA will emerge from their wards.

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Boston Scientific (NYSE: BSX) said today the FDA has approved a new type of stent for propping open clogged coronary arteries. The FDA cleared for sale the Promus stent that secretes everolimus, a drug designed to reduce scar tissue around the device and reduce blockages. Natick, MA-based Boston Scientific currently sells the Taxus stent coated with paclitaxel, so the approval means it can now offer stents in the U.S. with two different drugs. The Promus stent is manufactured by Abbott Laboratories, and distributed by Boston Scientific.

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