Boston Scientific Corporation (BSX) Earnings Call Transcript & Summary

Good day, and welcome to the Boston Scientific Cardiology Business Update. [Operator Instructions] Please note, this event is being recorded. I would like now to turn the program over to Jon Monson, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Alan, and welcome, everyone, on the webcast. We have our Cardiology leadership team here today, including Joe Fitzgerald, Executive Vice President and Group President, Cardiology; Lance Bates, Senior Vice President and President, ICTx; Dr. Janar Sathananthan, Chief Medical Officer, ICTx; and Dr. Ken Stein, our Chief Medical Officer, who will join for the Q&A. Before we begin, we have a few housekeeping items. The duration of today's call will be approximately 1 hour. Q&A will follow our presentation, and we'll take questions through the webcast. We'll be making forward-looking statements. So you can see here our typical safe harbor and risk factors apply. You can see here our regulatory disclaimers and our financial disclaimers as well. So at this point, I'll turn the call over to Joe. Joe?

Thanks, Jon. Appreciate it, and thanks, everyone, for joining us. Just an update on our Cardiology served markets. Today, we call this nearly a $40 billion market of things that are happening in the cath lab, growing in our projection at about an 8% CAGR through the end of '27. What I particularly like about this is if I compare this to maybe 5 or 10 years ago, we have multiple large, fast-growing markets. You can see the growth rates on the bottom. And our dependency on things like DES and defibrillators has obviously been transformed with multiple growth pillars on this -- in this market. If you look at our year-to-date growth. U.S. has been growing at 27%, international at 18%. You can see the individual growth rates below and the growth drivers associated with each of those. One thing in particular I like about our Q3 in Cardiology is we saw accelerated growth in both ICTx and in our EP business and still very solid growth coming from our WATCHMAN franchise as well. So a lot to like about what's happening year-to-date and what we did in Q3 across our Cardiology franchises. I'm not going to spend -- Lance is going to cover our ICTx stuff on the left of this slide. You've heard most of this on the most recent Q3 earnings call. One new thing that I want to report happened in the EP business this week, yesterday, in fact. So as you know, we got approval for the FARAVIEW mapping software module on OPAL earlier in the quarter. And we received the PMA supplemental approval for our FARAWAVE NAV, both mapping and ablation catheter. And I'm really proud to announce that we went live in multiple accounts mid this week and glad to report that the benefit, being able to map and avoid pulling an expensive high-density mapping catheter and the lesion tagging and the anatomy and the workflow of FARAVIEW was well demonstrated in each of the sites where we went live earlier in the week. So with that, I'll turn it over to Lance Bates, our President of Interventional Cardiology Therapies.

Hi there, everybody. This is Lance Bates, and I will walk us through more details on the markets that we serve. Again, continue to be very compelling and growing around 8% in total through 2027, about $15 billion. And these are the markets and the devices that are the tools for the interventional cardiology community. To give a little more context around drug-eluting therapies, globally, drug-eluting therapies, which includes our drug-eluting stents and our drug-coated balloon, is now growing close to double digits with drug-eluting stents at now less than 5%. That's less than 5% of our total company sales, which continues to show how we're diversifying our portfolio away from drug-eluting stents. Really excited that our AGENT launch in the U.S. continues to be super successful, and we expect to have double-digit and actually double our global drug-coated balloon business in 2025 over 2024. If we move to the next column and talk about complex PCI. You can see it's a very compelling market, over $4 billion. And just as a reminder, when we characterize complex PCI, it includes several served markets, which means IVL is in this number along with guide extensions and crossing wires, et cetera. We are growing in line with the market despite not having IVL in our portfolio at this time. And overall, complex PCI is a business that's now larger than our drug-eluting therapies business. I'd also like to really highlight some of the success we're having with our broad calcium portfolio and business, which includes Rotablator and WOLVERINE. And an example of our growth is that in the U.S., we are now growing mid-teens in Q3, and we expect this momentum to continue into 2025. If we move over to PCIG, which also includes physiology. It includes capital equipment for IVUS and our [ SHV ] for IVUS. We continue to outpace the market in terms of growth. And I'd really like to focus here on our IVUS [ SHV ] market share, which is now over 50% as we continue to launch our latest AVVIGO+ platform globally. So we're really enjoying the success there with our physician partners. And if we move over to the TAVR space. You can see it continues to be a very compelling market, high single-digit growth. And what I'd like to do is highlight our ACURATE performance in EMEA, where we continue to have growth approaching the 20% range, and we've now crossed the $200 million mark in revenue in EMEA with our ACURATE platform. We've also recently launched our Prime platform, and we continue to see strong momentum in the last few weeks that we've had it launched with its clinical performance such as the ease of use for commissure alignment, coronary access, both of which are critical for lifetime management of the patient. Now as we wrap up this slide, I'd call your attention to the bottom of the slide, where we've called out before our investments in the mechanical circulatory support space. And that diversification in this high-growth market is compelling for us and that we're excited to announce that we completed our EFS for the VITALYST system. And we continue to invest that we will be in this space and hopefully start our IDE in the U.S. by the end of 2025. If we go to the next slide. I'll do a bit more highlight and details on the success of integrating the portfolio and the pull-through power of our portfolio with AVVIGO and our AGENT DCB. If you look at the left, this highlights the fact that we continue to add to the compelling amount of data supporting the clinical viability of using IVUS in your procedures. We're now launched in 45 countries. And the good news as well is that we have a Class 1A indication for IVUS imaging and ESC guidelines, which is the highest level of guideline recommendation that's achievable. And we continue to see the adoption of AVVIGO+, which is the next gen above our AVVIGO base platform. And AVVIGO+ has advanced features such as automatic lesion assessment and things that make real-time measurements possible in the cath lab and is built upon AI. We have a tremendous AI platform capability in AVVIGO+ that we continue to invest in. And what you could see is that physicians see that benefit because when we have the AVVIGO+, they actually are using our imaging at a factor of 2x in more procedures compared to the base AVVIGO platform. In the center portion of the slide, I just want to continue to reiterate our philosophy in terms of our clinical treatment pathway. And that is you need to see what you're treating. That has to determine what you use to prepare or to make that vessel ready for the treatment, whether that treatment is a drug-eluting stent, it could be a drug-coated balloon or in some cases, leave the vessel alone. We have a super compelling success rate of where IVUS is now being used in 96% of our AGENT cases. And this is really, really important because we want to make sure physicians see the vessel appropriately to make sure that they are choosing the right therapy for that particular pathology. And that's great to see that physicians are using it 96% of the time. And then another key factor, and this is getting to the pull-through power of the portfolio with our calcium portfolio, is that a device was used to prep the vessel, meaning using some sort of calcium prep like Rotablator or WOLVERINE in 100% of all AGENT cases. So AGENT is being used in combination with our calcium treatment and our IVUS portfolio. If you look to the right. This is just a little bit of what we're looking to continue to investing in our leadership position, is potentially having additional clinical trials to focus on potential growth through indication and matrix expansion. Some of those areas could be long and diffuse lesions, small vessel disease, bifurcation. We potentially could look at the ACS patients, basically looking for the clinical opportunities that could have a benefit versus just putting in a drug-eluting stent as the first-line therapy. We're also excited to announce that our AGENT IDE for the 40-millimeter long lesion has started. And we are underway with the first patient having been enrolled. So very excited about the full portfolio. And with that, I'd like to turn it over to Janar Sathananthan.

Thank you, Lance. So I'm going to take you through the ACURATE IDE trial. This was a trial that -- to remind the group what's presented today as a late-breaking clinical trial at TCT 2024 by Professor Michael Reardon from the Houston Methodist center. In terms of its study design, this was a large prospective randomized controlled trial, 1,500 patients that were randomized to 2 groups, one group being the test arm with ACURATE neo2 and the mix control group representing 2 commercial valves in the United States with the Evolut and Sapien platform in a 2/3:1/3 ratio. Composite endpoints was an endpoint of all-cause mortality stroke or rehospitalization at 1 year, which is the primary endpoint, and with planned follow-up out to 10 years. I'll reinforce that this is the largest head-to-head TAVR trial that has been done and an important data set. The trial was -- had some complexity related to it. That is one of the largest TAVR trials done in a head-to-head fashion with an all-risk patient population and was also impacted at time points by the COVID pandemic. There were also, as a result of that, issues with enrollment pace with a 4-year enrollment period at an average of approximately 3 months between cases at an individual site. There were issues with supply constraints and also low operator experience with approximately 3/4 of implanters implanting less than 5 ACURATE neo2 valves. And of course, we're all well aware of the staffing and case support concerns during the pandemic. On the left-hand side of the screen is the primary endpoint, which was a Bayesian endpoint. You can see here that we had a noninferiority median difference of 6.63 with a noninferiority margin of 8%, where our upper bound exceeds the prespecified noninferiority margin. So noninferiority of the ACURATE neo2 platform versus control, but the primary endpoint was not met in this study. On the right-hand side, you can see what was performed in a post-hoc analysis, which was a careful assessment of all the cases that were implanted with ACURATE. And as part of this work, there was clearly some inconsistencies that were identified with regards to procedural steps, specifically pre and post-dilatation, which were discorded from commercial practice that we see in other markets where the valve is commercial. As a result, there was an impact on valve expansion, which you can see on the images on the right-hand side. Through this post-hoc work, very easy binary way was assessed to identify severe valve under expansion, which is the image on the right. And that was seen in approximately 20% of cases with the other 80% of cases having adequate expansion. When specifically looking at that breakdown in this curve between ACURATE neo2 valves that were expanded versus those that were underexpanded relative to control, the outcomes with ACURATE neo2 valves that were expanded were better. And specifically on this next curve, I'll spend a little bit more time and detail on this because if you look at the hard endpoints of death and stroke, when you look at the breakdown of these 2 groups, and I'll focus on the left-hand side, you can see that purple represents ACURATE neo2 valves that were underexpanded, and the rates of events are much higher relative to neo2 -- ACURATE neo2 valves that are expanded relative to the control, where the rates are numerically the same or very similar, 3.7 versus 3.6. And similarly, that trend is also seen with relation to stroke, where ACURATE neo2 valves that are expanded have a very similar rate to control at 3.5% and 3.4% in comparison to the purple curve where you can see events of strokes are much higher when the valve is underexpanded. This is some work that has been done by our engineering team, which looks at mechanisms for this. I'll remind the cohort that when we looked at clinically relevant valve thrombosis, this was actually significantly less with the ACURATE platform versus control. However, when we looked at the impact of potential underexpansion, if I focus your attention to the images on the top, you can see that this is a valve that has expanded well. It has what looks to be a nice Mercedes-Benz sign, and the leaflets coapt and open in a very symmetrical way. The image on the right -- top right shows you what the flow looks like, which is a very lamina and column-like flow of blood. In comparison to the bottom image, you can see that, that Mercedes-Benz sign no longer exists. This results in impaired movement of that leaflet. And similarly, on the bottom right-hand corner, you can see that there's -- the red symbolizes very turbulent flow. And so this may lead from certainly our understanding on the bench mechanisms that may explain some of the events and why having an expanded valve is better, clearly demonstrated by the data. As Lance mentioned, we're encouraged by our ACURATE Prime platform that was launched in -- recently in the last few weeks. I remind the group that this also has incorporation of an additional size, which increases the potential eligible patient population to approximately an additional 20% for the available valve matrix. It also has some enhancements to the frame, which increases the radial force by about 20%. And the delivery system has been further enhanced to optimize ease of use. And here, you can see Professor De Backer with one of his successful first cases in Copenhagen in Europe. There were also some other important relevant data that was presented at TCT across our entire franchises. On the left-hand side, we also did have another late-breaking clinical trial looking at our SENTINEL device. This was a post-hoc analysis from the PROTECTED TAVR study, specifically looking at the U.S. cohort, which represented approximately 2/3 of the overall PROTECTED TAVR study cohort. And it demonstrated in this post-hoc analysis that there was a lower rate of overall stroke at 72 hours and also a significantly lower rate of disabling stroke at 72 hours in the U.S. cohort. And also patients did not -- also had much lower likelihood of needing additional services and were able to return home more likely, which, of course, is an important consideration for patients. And no major safety endpoints were identified. With regards to our AGENT drug-coated balloon, which we are in the midst of, of course, launching and continuing to expand across the United States, this is an important first-to-market drug-coated balloon. We have continued to also look at 3 subgroups from the AGENT IDE trial, which looks at 3 different focuses, particularly 2 patient groups, which are, of course, important for physicians, which is minorities versus white patients, males versus females and also vessel characteristics between small and large vessels. And in all 3 of those, we see consistent benefit of AGENT drug-coated balloon across those 3 groups. Turning your attention to the right-hand side of the slide with regards to our WATCHMAN FLX Pro device. This is -- the HEAL LAA clinical study was also presented, which was a post-market study. Important to stress that this study met its 6-month primary safety endpoint for all-cause mortality, stroke, systemic embolism and major bleeding. And what is encouraging is also that it met its 45-day primary efficacy endpoint with 0 cases of leak observed. And we remain reassured by the sealing ability of WATCHMAN FLX Pro. So in summary, that summarizes the ACURATE IDE data but also some of the other key data that was presented at TCT 2024.

Excellent. Well, thanks, everyone, and we will move now to Q&A for the next 40 minutes or so. And Alan, can you reiterate the instructions on how to submit a question?

[Operator Instructions]

All right. Well, great, everyone. We've got questions coming in. So I will read them out top to bottom, and the team can answer them here. So first one here from Robbie Marcus. Says, 2 for me. Do you expect these results to negatively impact sales in Europe? And actually, we've got a few of these questions that have come in. And so why don't we hit that one first, and then we'll answer [indiscernible].

All right. Thanks, Jon. I'd say it's -- at this point, we're still very pleased with the results of Prime and the ACURATE platform overall. And as many of you know, we've got a lot more experience in Europe, and that's why we've been enjoying a 20% growth rate. The physicians there had almost a decade of experience with the platform. And what I would say is that we're going to continue to monitor this closely and stay involved and make sure that the physicians in Europe have the learnings that we shared at TCT and continue to support the platform and continue to monitor the situation.

Great. Thanks. And then part 2 here from Robbie from JPMorgan. Why didn't physicians have better training and oversight in the trial? Underinflating the valve is normally something that we don't see in trials. Dr. Sathananthan?

Yes. So thank you, Robbie, for the question. I'll just clarify that underinflation or underinflating the valve refers to a balloon expandable valve and filling volume specific to the ACURATE platform. What was observed was the difference with regards to the sizing of a pre-dilatation balloon, which is a preparatory step required before ACURATE is implanted. I touched on some of the factors related to that, which I will remind the group that the study started enrolling in 2019, and the peak of the COVID pandemic occurred soon after. So as a result, as we're all well aware of, this prevented ability for outside groups or physician support to be presented in cases. And there were also significant supply chain issues with regards to available equipment that may have impacted the results.

All right. Thank you. Next question comes from Travis Steed at Bank of America. Actually, Travis had a similar question on the European business. I think I'll skip over that. And so then second question from Travis. When will we be able to see Prime data in the trial? Is it likely to have the same limitation as neo2?

So as part of the ACURATE IDE study, we did have a nested registry looking at Prime XL, which is the next-generation system, as you saw in the slide. There will be data presented at London Valves with the ACURATE -- or the first report of the ACURATE Prime system.

All right. And our next question comes from Vijay Kumar with Evercore. And several questions on the regulatory path from here. So when do you expect to file with the FDA? Do you anticipate the FDA calling for an Ad Comm? Dr. Reardon felt strongly about the FDA looking at the totality of the data. Could the FDA ask for a small follow-up study? So maybe Lance or Dr. Sathananthan, just your thoughts on the FDA path and Vijay's question.

Yes. Well, thanks for the question. We remain in active discussions with the FDA at this time with regards to our regulatory pathway forward.

I think as well with the questions on panel and what kind of trial, that panel is hard to predict for any sort of original PMA submission. So it's hard to answer that. And the exact question on is there additional data needed and what is that type of data, how large, what type of follow-up, we just -- we're still in active discussions. So need to take those further before we can really get granular on that.

Got it. Thanks, Joe. And similar questions from Matt O'Brien, Piper. Matt, I'm just reading through your questions here. Similar on the FDA pathway. Maybe Lance or Joe, a question here. How much would you be saving if you decide against investing in a domestic TAVR program? So maybe just a question about the TAVR program in the U.S. Is it still compelling?

Yes. I think it's definitely a compelling market, as we showed on one of the slides I presented. It's also -- frankly, it's a space to -- that you have to be a complete structural heart player. And I think we've disclosed before that we've got investments in tricuspid and mitral and electrosurgery-type devices. TAVR is a critical component. So we view ourselves that, ultimately, we want to be a full portfolio player in structural heart to serve the interventional cardiologist. Just as we have on the coronary side of the business, we are committed to the interventional cardiology space. And we are continuing to invest in the full structural heart portfolio broadly.

I think it's a similar question that we faced with in EP for years, right? We literally executed about a 20-year strategy, multiple acquisitions, a lot of wins, some losses to be a meaningful player in what today is probably greater than a $9 billion market. Did it go as fast as I wanted? No. Was it as easy as I would have wanted? No. But we've talked about this, and you saw it in my first slide. We want to be the preeminent cardiology company. The SHV space is $6.7 billion, growing high single digits. So don't be surprised if we're really resilient even as we hit some adverse times like the outcome of this study. But as I have mentioned before, right, we have some questions to answer regarding pathway to the U.S. And we're active with FDA and getting those pathways identified.

Great. Thank you. All right. Next question from Danielle Antalffy with UBS. For the ACURATE IDE, how much of the valve underexpansion might be addressed by the larger valve size, Prime, and so did not having that in the trial impacts the outcome?

Yes. Thank you for the question. I guess I'll just clarify, firstly, that what we have launched in Europe is Prime across all the sizes. And so one thing that may potentially impact expansion is that the Prime design does have an increased radial force strength of approximately 20%. So we will continue to understand the impact of that moving forward. In terms of mitigation, we feel strongly, as was iterated in the presentation in the late-breaking trial, that this can be corrected with procedural factors and specifically the performance of adequate pre-dilatation with an appropriate-sized balloon, and also post-dilatation, we'll be able to address the majority of this underexpansion if and when it occurs.

Janar, can you also highlight -- because I think it was important at our symposium. The normal things that we look at PDL, EOA, can you just go through sort of like beyond that, what this alignment has done for our understanding for the ACURATE platform?

Yes, it's a good question, Joe. So I think as part of our deep dive, there was a theme that emerged that we're seeing more and more of these conversations about underexpansion in the entire TAVR space. This is a similar journey that was -- happened within the [ stent era ] where post-dilation and optimization with imaging also came about in the [ stent era ]. Some of the discussion that we've seen in the deep dive and certainly related to the TAVR space is that typically the 2 reasons that we think about ballooning a valve is to address paravalvular leak or elevated gradients. And what we saw in the ACURATE IDE trial was actually the gradients were actually better for ACURATE than balloon-expandable valve, and also leak was not a concern. And so this is a sign that -- and certainly, we've updated all of our training that identifying and correcting for expansion is also going to be a key part and I think an important point for the entire TAVR space.

All right. Thank you. And next question, another question here from Vijay from Evercore. I'll do my best for this one, definitely, Janar and Joe. So how can we explain why a normal echo finding at 30 days would underexpand at 1 year? Is this a sign of valve design, for example, not strong radial force? And do you want the second part or hit that one first?

Yes. I can start with that. So the use of an echo as follow-up times after TAVR, which are typically the next day afterwards or 30 days as it was done in this trial and also after 1 year, it's really to look predominantly at leak and gradients. Echo is a poor imaging modality to look at expansion. What we have found from our learnings from this trial is that we have identified a very simple fluoroscopic method to identify underexpansion of ACURATE that can be seen at the time of the procedure and also optimize with ballooning. And so it's -- and so I think that's the key message from the IDE findings.

Got it. And part 2. And if we do use post-dilatation, how do we know how much pressure one should be using? Is there a risk of higher pacemaker rates if you expand too much?