J&J enters market for implants to prevent stroke via acquisition of Coherex Medical

WaveCrest Atrial Appendage Occlusion System--Courtesy of Coherex Medical

Johnson & Johnson's ($JNJ) Biosense Webster added to its antistroke offerings with the acquisition of Salt Lake City's Coherex Medical, maker of the CE-marked Coherex WaveCrest Left Atrial Appendage Occlusion System, for an undisclosed sum.

The purchase is a bold step into a med tech market that's plagued by uncertainty, at least in the U.S., where the only device in the class is dealing with a federal reimbursement setback and the advent of new blood-thinning medications to prevent stroke, as well as lingering questions about the safety of its implantation procedure.

Like Boston Scientific's FDA-approved Watchman, the WaveCrest is designed to prevent stroke by plugging the heart's left atrial appendage in patients with atrial fibrillation, making it a mechanical alternative to blood thinners like warfarin.

Wall Street expects Watchman sales of around $75 million in 2015, providing a sense of the scale of the market, though it's important to note that the WaveCrest won't enjoy any U.S. revenues.

Coherex says WaveCrest has the most anchoring points of any LAA occluder and a "distal injection port to assess device stability during the implant procedure," and is made of a material that minimized the formation of blood clots on the surface of the devices.

The device was CE-marked in 2013 enabling use in Europe, where it competes with Boston Scientific's ($BSX) second-generation Watchman FLX--which just earned a CE mark--and St. Jude Medical's ($STJ) Amplatzer Amulet.

"The addition of the Coherex WaveCrest System complements our comprehensive portfolio of therapeutic solutions for patients suffering from atrial fibrillation who not only suffer from reduced quality of life but also face a significantly greater risk of a stroke," said Shlomi Nachman, worldwide president of Diamond Bar, CA's Biosense Webster, in a statement. "As the exclusive distributor of this system in regions outside of the U.S. since 2013, we are confident it will be well-differentiated in the market."

The move is a foray into implantable devices for BioSense Webster, whose other offerings to treat atrial fibrillation are interventional devices like the nMARQ Circular Catheter to perform radiofrequency ablation (or the destruction of tissue) and the Soundstar Catheter to map cardiac anatomy using ultrasound. They have made Biosense Webster an engine of growth in Johnson & Johnson's device unit, which has been criticized for low aggregate revenue growth.

Coherex says on its website that it plans to conduct trials for Japanese and U.S. approval of the WaveCrest.

In the U.S., the Centers for Medicare & Medicaid Services recently sent Boston Scientific stock down 4% by proposing to reimburse the Watchman under the agency's Coverage with Evidence Policy. As such, the decision was expected, but CMS' plan to only cover patients who are contraindicated for the blood thinner warfarin was a surprise because the FDA's label specifically allows implantation in such patients.

The agency deemed reimbursement of the device "not reasonable and necessary," adding to doubts about the necessity of left atrial appendage devices given the effectiveness of warfarin and the advent of new blood thinners that have the potential to undermine the devices' positioning as an alternative to the standard of care medication.

CMS' reimbursement decision led Deutsche Bank's Kristen Stewart to write that St. Jude will likely decide against trying to bring its Amplatzer Amulet to the U.S. by seeking FDA approval.

But Johnson & Johnson's acquisition shows that the left atrial appendage occlusion market is still alive and kicking, at least outside the U.S.

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