Boston Scientific says Guidant plant problems fixed
NEW YORK (Reuters) - Boston Scientific Corp. (BSX.N) said on Monday it had resolved deficiencies that U.S. regulators had found at a plant that manufactures heart rhythm devices, sending its shares up more than 7 percent.
The resolution of the deficiencies will allow the company to win U.S. approvals for new heart-rhythm products, such as pacemakers and defibrillators.
Guidant, which Boston Scientific acquired last year, had owned the facility, and the U.S. Food and Drug Administration had issued that company a warning letter about the deficiencies on December 22, 2005. The FDA reinspected the St. Paul, Minnesota, plant between November 9 and December 7.
Boston Scientific still must resolve a second warning letter affecting other facilities.
The resolution of the FDA problems should put Boston Scientific in a better position to regain share in the market for implantable cardioverter defibrillators, or ICDs, said Bank of America analyst Glenn Novarro.
"However, the competitive dynamics have changed over the past year and it remains to be seen how successful and quickly (Boston Scientific) will be able to take back lost ICD market share," Novarro said in a research note.
Shares of Boston Scientific, which faces competitive threats to several top franchises, remain down about 6 percent this year. They were up $1.13 at $16.14 in midday New York Stock Exchange trading -- far off the $45-a-share levels they reached in 2004.
"The stock has been so beaten down and battered for so long, investors seem to be looking for any excuse to get involved at these levels," RBC Capital Markets analyst Phil Nalbone said.
The FDA issued the warning letter for production and quality problems after Guidant recalled thousands of defibrillators in 2005 when news reports revealed they could malfunction within patients' chests.
Boston Scientific acquired Guidant for $27 billion, winning a bidding war with Johnson & Johnson (JNJ.N).
"We are very pleased with the FDA's conclusion," Boston Scientific Chief Executive Jim Tobin said in a statement.
Boston Scientific still must resolve a second warning letter that cited quality control and systems problems at the company's facilities in Natick, Massachusetts, Maple Grove, Minnesota, and Spencer, Indiana.
Because of that letter, the company has faced a freeze on other product approvals, including its next-generation drug-eluting stent called Taxus Liberte.
Nalbone said Boston Scientific's stent business also faces pressure from rival products from Medtronic Inc. (MDT.N) and Abbott Laboratories Inc. (ABT.N).
