Boston Scientific upbeat on Watchman approval for 1H15, pegs 'conservative' $500M market

Boston Scientific CEO Mike Mahoney

Boston Scientific ($BSX) cited its controversial stroke-fighting device Watchman among the major drivers capable of sustaining its current revenue growth momentum into 2015. The cardiovascular medical device maker expects an FDA Watchman approval during the first half of next year coming off its third positive FDA panel, despite a checkered regulatory past that includes a 2010 rejection due to safety concerns.

Limiting the population on the label for the Watchman device is key to securing an FDA approval, Boston Scientific President and CEO Mike Mahoney said on the company's third-quarter conference call.

"From our standpoint, really, what the panel was asking us to do was to clarify what we have always said we believe to be the appropriate patient population," he said. Mahoney indicated that Watchman should not be a "broad replacement for oral anticoagulant therapy," but rather for patients who are eligible to take warfarin but who prefer for various reasons to have another long-term alternative. Watchman is a transcatheter implant that closes off the heart's left atrial appendage.

Mahoney continues to see Watchman as having a potential $500 million annual market; that would represent a 3% to 5% penetration of patients with elevated stroke risk who are eligible for warfarin. Mahoney added, "We feel like we've been quite conservative, candidly, in terms of size in the market." Watchman is already marketed in the EU.

He also expects to see continued revenue growth from its S-ICD (subcutaneous implantable cardiac defibrillator). He said he expected the device to reach $100 million in revenue during 2014, with a peak annual market of $750 million.

"We're encouraged by the uptake of the S-ICD in the U.S. and Europe, the adoption of therapies being driven by growing clinical experience for the system and continued flow of positive data. And we're really supporting it … with a lot of ongoing clinical work," said Mahoney on the call.

Sales of S-ICDs helped drive cardiac rhythm management up 7% year over year to $534 million during the third quarter. The two other businesses, Cardiovascular and Medical Surgery, gained 8% to $723 million and 4% to $588 million, respectively. That relatively balanced performance and distribution between the three groups resulted in a 6% total gain in revenue for the quarter to $1.8 billion.

Investors responded positively, driving Boston Scientific up about 4% in early trading on the news.

- here is the release

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