Conor MedSystems Gets FDA OK to Expand Stent Trial

The Costar stent from Conor MedSystems Inc. (Menlo Park, CA) continues to gain traction in the medtech and financial press following encouraging early clinical trials. Those studies will expand further now that FDA has approved full enrollment in Costar II, which will include 1700 patients at 85 sites. Limited trials began in March.

In Costar II, Conor MedSystems’ stent will be compared with Taxus, the market-leading drug-eluting coronary stent manufactured by Boston Scientific Corp. (Natick, MA). According to Conor, the primary endpoint of the trial will be the incidence of major adverse cardiac events—including target vessel revascularization, heart attack, and death—during an eight-month period following stent implantation.

Costar: Unique by design.

Contrasting the chromium cobalt Costar with the drug-coated stents currently on the market, Conor says its stent represents a unique design that features hundreds of tiny holes, each acting as reservoir for improved flow, direction, and duration of the drug-polymer compound. Costar also uses a bioabsorbable polymer designed to leave no residue in the body following depletion of the drug compound.

Early reports indicate that some doctors see Costar as easier to implant and potentially safer and more effective than the two drug-eluting coronary stents currently on the U.S. market. In addition to Boston Scientific’s Taxus, the market’s other major player is the Cypher stent manufactured by Cordis Corp. (Miami Lakes, FL), a Johnson & Johnson company. At the Transcatheter Cardiovascular Therapeutics conference in October, some clinicians, reporting on earlier U.S. and European trials of Costar, raised concern that the nonresorbable polymers used in stents such as Taxus and Cypher might delay healing of the artery and lead to stent thrombosis or clotting.

But while the Costar stent’s prospects sound promising, the company has already been hit with several patent infringement suits and criticism over potential conflicts of interest. Also attracting attention is the reportedly controversial management background of the company’s chairman and CEO, Frank Litvack, MD.

Last February, Angiotech Pharmaceuticals Inc. (Vancouver), manufacturer of the drug paclitaxel, which is used in the Conor stent, initiated a suit against Conor in Europe. Boston Scientific, which licenses paclitaxel from Angiotech for use in its Taxus stent, joined the legal action. Conor responded with a countersuit, claiming that the unique design of Costar— particularly the way it releases the drug—does not infringe on either Angiotech or Boston Scientific patents.

The matter remains unresolved in the European courts. Both Angiotech and Boston Scientific have already gone on record as saying they will take similar action against Conor if and when Costar is approved for the U.S. market.

Another potential problem facing Conor is the company’s admission that a number of physicians on its advisory board, as well as others participating in Costar clinical trials, have received stock options or consulting fees from the company. Although not illegal, such arrangements are generally seen as unsavory and are increasingly avoided by companies not wanting to raise potential concerns about their credibility or bring additional scrutiny from industry watchdogs and government regulators.

Conor’s Litvack: Attracting scrutiny.

Conor CEO Litvack has been involved in at least three medtech start-ups and has an impressive resume in terms of education and professional affiliations. But analysts say his business ventures have not met initial expectations. One company, focused on laser technology to clear blocked arteries, quickly built market capitalization following its initial public offering only to collapse after losing a patent infringement challenge.

Litvack has not publicly commented on his previous business management history, but he says Conor MedSystems’ business plan is on track. Commenting on the company’s recently reported third-quarter results, he said, “The first half of this year was an especially productive one for us, and that trend continued into the third quarter. We continued to make progress in achieving our commercialization objectives with Costar—our lead product candidate.”

Founded in 1999, Conor went public last December at $13 a share, eventually raising more than $800 million. Conor MedSystems expects Costar to receive European approval in the second half of 2006 and is setting its sights on U.S. market entry in late 2007.

Since Conor is a development-stage company with no revenue, some analysts are wary that the positive buzz surrounding the company is another case of misplaced hype. However, others see Conor MedSystems as the real deal—the David of the drug-eluting coronary stent market ready to take on the Goliaths of Boston Scientific and Johnson & Johnson.

According to CIBC World Markets (Toronto), the global market for drug-eluting stents will reach $5.1 billion by the end of this year, up 30.8% from $3.9 billion in 2004.

© 2005 Canon Communications LLC

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