Medtronic Nerve-Burning Failure Stymies Industry Progress
Medtronic, the world’s biggest maker of heart rhythm devices, said today it will suspend patient enrollment in the U.S., Japan, and India, where studies were being conducted for regulatory approval. The procedure, called renal denervation, works by searing nerves in arteries near the kidney to quell the production of hormones involved in blood-vessel contraction.
The results may be devastating for one of the most anticipated new technologies in the medical-device industry that analysts estimated would generate as much as $3 billion annually. One billion people worldwide have high blood pressure, and about one-third don’t respond well to standard drug therapy.
“This is a colossal disappointment,” Mehdi Shishehbor, director of endovascular services at the Cleveland Clinic, said in a phone interview. “I think many companies are going to go back to the drawing board.”
Medtronic, Boston Scientific Corp. (BSX), St. Jude Medical Inc. (STJ) and others already sell the nerve-burning devices in Europe based on studies showing they slash blood pressure in patients not adequately helped by medications. More than 60 companies are developing similar technology, said Shishehbor.
“The efficacy miss is surprising and disappointing given the apparent strength of all the European non-randomized studies, and the initial enthusiasm of the clinical community,” Derrick Sung, an analyst at Sanford C. Bernstein & Co. said in an investment note today.
Medtronic’s trial differs from previous studies as it was the first to compare the actual treatment to a sham procedure, at the request of the U.S. Food and Drug Administration. The device failed to meet its efficacy target in that trial, the Minneapolis-based company said today in a statement. It was also the biggest study to date, with more than 600 patients in multiple countries. Similarly to a drug trial, the patients didn’t know whether they were receiving the real or sham treatment.
The failed trial also “creates anxiety from the standpoint of acquisition,” Shishehbor said. Medtronic acquired closely held Ardian Inc. for $800 million in January 2011 to develop the renal denervation device, while competitor Boston Scientific paid $125 million for closely held Vessix Vascular Inc. in November 2012.
Given the negative results from Medtronic’s trial, “nobody’s going to want to pay so much money” for similar technology, he said. “A lot of innovation is going to slow down.”
Medtronic fell 2.4 percent to close at $59.36 in New York, the biggest single-day loss since February. Sung said he expected “only limited impact to the stock” as the U.S. approval and market introduction wasn’t expected until 2016. He rates Medtronic as outperform, which is equivalent to a buy rating.
The suspension will probably result in a one-time impairment charge, Medtronic said in its statement.
“This course of action is the most prudent and will help us thoroughly evaluate these findings and determine the appropriate next steps for renal denervation therapy,” Rick Kuntz, chief medical officer of Medtronic, said in the statement.
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