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Vaginal Mesh Is Just One of Boston Scientific's Headaches This Year
A recent FDA decision on surgical mesh products, combined with ongoing concern regarding paclitaxel devices could represent a big headwind for Boston Scientific's 2019 revenue growth.

Vaginal Mesh Is Just One of Boston Scientific's Headaches This Year

The company is bracing for a $25 million revenue hit after FDA ordered two of its mesh products off the market, but a bigger concern may be lying in wait.

Boston Scientific expects to take a $25 million revenue hit after FDA ordered two of its surgical mesh products off the market this week, the company disclosed in an SEC filing. Unfortunately, that's not the only revenue headwind the company has to worry about this year.

Boston Scientific is one of about a handful of companies that develop paclitaxel drug-coated balloons and drug-coated stents. Paclitaxel devices received some bad press in January after a meta-analysis showed an increased risk of death for patients treated with these devices in the femoral and/or popliteal arteries of the lower limbs. Two drug-eluting device trials were paused after the analysis was published in the Journal of the American Heart Association and the data prompted FDA to investigate.

After conducting a preliminary analysis of long-term follow-up data (up to five years in some studies) of the pivotal premarket randomized trials for paclitaxel-coated products indicated for PAD, FDA sent a second letter to healthcare providers, urging physicians to seek alternatives to paclitaxel-coated devices. The agency said its preliminary review of the data identified "a potentially concerning signal of increased long-term mortality" in clinical trial patients treated with these drug-coated devices compared to patients treated with uncoated devices.

Of the three trials with five-year follow-up data, each showed higher mortality in the patients treated with paclitaxel-coated products. In total, among the 975 patients in these three trials, there was an approximately 50% increased risk of mortality in subjects treated with paclitaxel-coated devices versus those treated with control devices (20.1% versus 13.4% crude risk of death at five years).

FDA also said, however, that the data should be interpreted with caution because there is large variability in the risk estimate of death due to the limited amount of long-term data, and because these studies were not originally designed to be pooled. Also, the agency noted that the specific cause and mechanism of the increased risk of death is unknown.

The paclitaxel issue could be a revenue headwind for Boston Scientific because of the company's Eluvia drug-eluting stent, which was viewed as a key peripheral growth driver. Cook Medical, Medtronic, and Surmodics also stand to be negatively impacted this year by the paclitaxel concerns.

Mike Matson, a medtech analyst at Needham & Co., said in a recent note that FDA's latest paclitaxel letter could reduce Boston Scientific's 2019 Eluvia sales by roughly $50 million to $60 million. That, combined with being forced to take the Uphold LITE Vaginal Support System and the Xenform Soft Tissue Repair System off the market, could force the company to adjust its revenue projections for the year.

In the recent SEC filing regarding its vaginal mesh products, Boston Scientific said it plans to assess any potential additional impact to the business and provide an update during its first-quarter earnings call on April 24.

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