A Securities and Exchange Commission filing from Aug. 6 disclosed that Boston Scientific ($BSX) received a subpoena from the U.S. Attorney for the District of New Jersey on July 11, regarding its acquisition of Bridgepoint Medical. The Wall Street Journal covered the subpoena that evening and since then Boston Scientific had fallen 6% by early trading on Aug. 8. That translates into a loss of about $1 billion in market cap for the medical device giant.
The subpoena also includes information related to the sale of Cross Boss catheter and Stingray CTO re-entry system as well as educational and training materials for those products. These are products that Boston Scientific gained in the Bridgepoint acquisition in October 2012; they are FDA-cleared devices designed to break through blocked coronary arteries and restore blood flow.
"We are cooperating with this request," the company said in the disclosure. Medical device and biopharma companies are under constant scrutiny from regulators regarding marketing practices; this subpoena likely points to the latest episode of that.
That's not the entirety of Boston Scientific's legal woes. It's headed to trial in November against Johnson & Johnson ($JNJ). The company had filed for a summary judgment in the case, but the motion was denied in July. The battle started in 2006, when Boston Scientific outbid Johnson & Johnson for Guidant and bought it for $28 billion. J&J sued Guidant, Abbott Laboratories ($ABT) and Boston Scientific that September for breach of contract; it said Guidant had leaked confidential information to Abbott that allowed Boston Scientific to make a successful bid. Ironically, the Guidant business has only proven problematic Boston Scientific; its valuation has plummeted more than 60% in the last decade.
"Guidant's breach appears to be a substantial factor in bringing about J&J's injury," a New York Times story last month quoted Judge Richard Sullivan of the Federal District Court in Manhattan as saying in court documents in the ruling against a summary judgment.
Also in May, Boston Scientific was served with a subpoena from the U.S. Department of Health and Human Services' Office of the Inspector General regarding the launch of Cognis and Teligen launch in 2008, as well as the learning programs associated with it and the performance of those devices from 2007 to 2009.