Boston Scientific dials back sales target for Eluvia stent

A clash of financial forces, both good and bad, largely offset one another Wednesday as executives at medical device maker Boston Scientific sought to emphasize a positive new product approval and downplay impacts of negative regulatory actions.

The stock closed the day down a little more than 1%, at $35.44, after recovering from a 3% dive shortly after the market opened Wednesday.

The stock initially tumbled after the device maker reported lower-than-expected adjusted quarterly earnings and revenue and dialed back sales expectations for one of its key future growth drivers — the Minnesota-designed Eluvia drug-eluting stent for the legs.

That was among a combination of factors that caused the company to inch down its revenue guidance for the rest of the year, while acknowledging that meeting those targets will require an acceleration of growth in the second half of the year.

"We obviously don't take this slight revenue miss in the first quarter lightly," Chief Executive Mike Mahoney told investors during an earnings call Wednesday morning. "I think it's the first time we've missed in close to a decade. And we pride ourselves on delivering on our commitments and we are very excited about the future."

Other setbacks included the unexpected closure of a plant that sterilizes men's health devices, an order from the U.S. Food and Drug Administration to stop selling surgical mesh kits for pelvic organ prolapse, and soft sales of neuromodulation devices that are seen as an alternative to opioid medications.

But executives on Wednesday pumped the news that the FDA has finally approved Boston Scientific's Lotus Edge replacement heart valve, giving the U.S. market its third transcatheter aortic valve — one whose design features have been highly refined to address shortcomings in earlier versions of TAVR valves, Global Chief Medical Officer Dr. Ian Meredith said.

"You have complete and utter control over the expansion in a very uniform way," Meredith said.

The Lotus Edge, which is approved only for the treatment of high-risk aortic stenosis patients at the moment, is expected to be introduced into the general U.S. market gradually.

Despite securing the key product approval, Boston Scientific ended up lowering the top end of its revenue outlook for the rest of the year. That comes after its first-quarter revenue of $2.49 billion fell short of the $2.54 billion that analysts expected. Adjusted earnings of 35 cents for the quarter came up a penny short of projections.

Expectations for organic revenue growth are now in a range of 7% to 8% (the company previously said it expected up to 8.5% growth). Adjusted full-year EPS guidance is in a range of $1.54 to $1.58 (previously, the lower EPS boundary was $1.53).

Executives confirmed Wednesday that "some" hospital systems have stopped using their new high-margin Eluvia stent for the legs because of concern over the anti-inflammation drug paclitaxel that the device slowly gives off after being implanted to open vessels above the knee.

Regarding vaginal mesh, Boston Scientific was one of two companies that sought to continue selling kits for transvaginal mesh insertion for treatment of pelvic organ prolapse (POP), along with Coloplast. The products have been targeted by thousands of lawsuits from women who say the plastic devices led to more pain and other problems. The companies stand behind the devices' safety and performance.

However, on April 16 the FDA announced that makers of transvaginal pelvic mesh products for POP would have to stop selling the products in the U.S. because they couldn't meet enhanced safety standards with data from ongoing clinical trials. The move affected Boston Scientific's Uphold Lite Vaginal Support System, Xenform Soft Tissue Repair Matrix, Pinnacle Lite Posterior and Polyform devices.

Boston Scientific said the decision would limit an important treatment option for women with POP. Meanwhile, more than 2,300 urogynecology specialists have signed a change.org petition urging the FDA to delay any final action until after the conclusion of an ongoing three-year clinical trial and consider evidence from other "highly relevant" clinical trials.

Finally, Boston Scientific is one of the companies whose product supplies were affected by the closure of the Sterigenics medical-device sterilization plant in Willowbrook, Ill.

Public health concerns prompted Illinois environmental officials to order the plant to seal all its containers of a carcinogenic chemical called ethylene oxide, used to sterilize medical devices that are too sensitive to be cleaned with heat or radiation. The seal order effectively closed the plant; litigation to overturn the order is pending.

"That issue has been resolved, that supply issue, so we will be back to full supply … in mid-June. So that will be strong for the second half of the year," Mahoney said Wednesday.