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Boston Scientific Corporation Message Board

  • noitalltoo noitalltoo Sep 21, 2003 8:58 AM Flag

    Another Reality Check

    Have the investors in this company really taken into account the risk of either an injunction against Express or the fact that eventually they will lose the Palmaz patent case regardless of how long they delay the outcome. The longer the delay the bigger the check written to JNJ for damages. Think about that risk combined with safety issue/failure to get FDA approval risk and you will realize a 60:1 P/E is a little pricey (i.e., essentially no upside and a big chance of a monstrous drop if Palmaz hits or FDA fails to approve quickly).

    "Of course, court battles could throw this into disarray. Boston Scientific and J&J, for instance, have a patent war going, with J&J asking a federal judge to enjoin Boston Scientific from making its Taxus Express stent. If things go J&J's way in court, that could have major adverse consequences for BostonScientific. "

    -By Daniel Rosenberg; Dow Jones Newswires; 312-750-4118;
    daniel.rosenberg@dowjones.com

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    • I think an injunction against BSX is a low-probability.

      Future damages for patent infringement are a high probability. However, my guess is that most of the people currently speculating in BSX believe that they can "get out" before this becomes widely known or factored into the stock price.

      Recently, BSX was ordered to pay hundreds of million$ of dollars in a patent infringement case. The analysts claimed this had "no material affect" on the company since Boston had cash and had been accruing for it.

      If Taxus is approved for sale it would be prudent of us to watch the balance sheet for accrued expenses or a growing balance in legal liabilities to get a feel for how the management team assesses this risk.

      • 1 Reply to mba_investor
      • Good points. If BSX is lucky enough (or unlucky enough depending on your perspective) to get into the DES market and take away $3-4 billion in Cypher sales from JNJ, the current shareholders should understand the risks, The risk is that in the end, when (notice I did not say if) BSX is found guilty of willful patent infringement this imposes treble (triple damages). Since both the jury and the judge have found them already guilty of infringing the Palmaz patent (NIR stent), they will soon be paying ~$500 million in damages for that case.The infringement case against Express (infringing both Palmaz and Schatz patents) is even clearer. Don;t forget recent appeals court has upheld Palmaz and Schatz patents very broadly. BSX knows they are infringing this patent. Damages may thus be tripled yielding a $5-7 billion dollar settlement against BSX by 2006 (if they are not re,moved from the stent market by the patent before this). Also, I believe that Schatz patent (which Express also infringes) is good for another 4 years (not 2 years like Palmaz) ! Most people are burying their heads in the sand on this one . But, watch out because the reckoning day will come and may bankrupt BSX. That is the risk they are taking by selling Taxus stents. Good luck longs!

    • "FDA approved Taxol about 18 years ago in a megadose versus the amount used in the stent for cancer"

      rhone,

      I've heard that invalid argument again and again. The systemic dose is not comparable to the DES dose! What matters is the local tissue concentration of Taxol in the tissue around the stent. This drug is very lipophilic and does not diffuse well in the blood. It stays put and accumulates near the site of release. Why don't you think they use systemic Taxol as a prophylaxis for restenosis?

    • This concern over residual Taxol keeps being raised, and possibly for good reason. However, the various regulatory agencies in Europe would also have quesioned this thoroughly. Since it is approved for sale one has to assume that BSX has convincing data regarding the device safety long term. While the FDA may want additional data, this shouldn't delay the review process. Unless you have accurate information otherwise, continually forecasting doom does not enhance you posts.

    • You have heard the argument many times before and you will hear it again. Why? Because it is probably a good description of reality. You are likely correct about using is systemically. It would take huge doses with most of it wasted. As a matter of policy, nnecessary exposure to drugs should always be avoided. Much better to concetrate the dose at the site of need. If most of the drug is permanently bound in the coating and just stays there is that a problem? Especially if the concentration is so low compared with a cancer dose? I do not see the harm. What about the JNJ stent does any of the Sirolimus stay bound in the coating or does the coating go away leaving a bare stent in place?

      I am hoping that we will have a dip before Oct.15 and I can buy more BSX.

    • I'm not forcasting doom for Taxus. I'm just saying that the residual dose on the stent is not trivial from a local tissue perspective. If the drug stays locked inside the polymer and hence away from the tissue "forever", then I can't see what harm it could do. IMHO.

    • "What about the JNJ stent does any of the Sirolimus stay bound in the coating or does the coating go away leaving a bare stent in place?"

      The JNJ Cypher stent has a non-erosive, non-biodegradable polymer coating, thus the stent stays coated. Most of the Sirolimus (>95%) is eluted within a month or so.

    • The problem for BSX with the FDA is that "forever" is a very, very long time. Imagine that you are a 35 year old patient who faces having this toxic waste site in his coronary artery for 30-40 YEARS! There is no conceivable way that BSX can prove to the FDA's satisfaction that this drug and this polymer are biostable for 5 years, let alone "forever" and is never altered by inflammation, balloon angioplasty or other interventions, etc. Since this is in the realm of the unknown and "unknowable," they may face a huge uphill battle for FDA approval. The fact that BSX got CE mark approval does not in any way mean that it will get FDA approval. The FDA examines these issues very closely and is fanatical about exactly these type of pharmacokinetic/safety issues. The other poster talking about how low a dose this is has no clue about this type of product. This is a highly toxic, highly lipophilic drug that is locally available to only a few grams of tissue surrounding the stent. This has nothing to do with the systemic dosing used in cancer patients.

    • So it appears that the jnj stent may retain some of its sirolimus in its coating. I had briefly wondered about this. The FDA allowed this why wouldn't they allow the Taxol retention?

      BSX is dipping probably a buying opportunity awaiting in a couple of days. People selling the news and taking their profits.

    • Is BSX doing a stock split.???? if so, when, tia....

    • Oct.16th for split

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