Conor Targeting Year-End IDE Submission For Paclitaxel-Eluting Stent

The firm is preparing to submit an investigational device exemption for a pivotal trial supporting a premarket application for its CoStar cobalt chromium stent. However, a market launch could be hindered by intellectual property issues over use of the drug.

Conor Medsystems may realize a legal benefit from Boston Scientific's newly acquired right to sublicense the use of paclitaxel on coronary stents.

On Nov. 23, Boston Scientific acquired exclusive licensing rights from Angiotech Pharmaceuticals to coronary drug-eluting stent technology. In purchasing the rights, Boston Scientific exercised an option it held under a 1997 licensing deal with the Canadian firm.

In a release, Angiotech says it now can expect its royalty revenue on Boston Scientific's Taxus paclitaxel-eluting stent to leap roughly 14%, based on a 1% increase in the stent manufacturer's royalty rates under the amended agreement.

The drug company booked $40.4 mil. in Q3 Taxus revenue, stemming from a sales royalty rate of 8% in the U.S. and 5.3% in other countries.

If Boston Scientific chooses to sublicense the technology, Angiotech would receive "a percentage of any sublicensing consideration paid to Boston Scientific (subject to a minimum and maximum amount) and a royalty rate payable on any third party product sales," the drug company says.

Conor Medsystems could be a potential paclitaxel sublicensee. The firm is preparing to submit an investigational device exemption by year-end for a pivotal trial supporting a premarket application for its CoStar paclitaxel-eluting cobalt chromium stent. However, a market launch could be hindered by intellectual property issues over use of the drug.

The related U.S. and European patents, referred to as "Hunter" and "Kinsella," expire in 2013-2015, according to Conor. In addition, Boston Scientific already owns the "Kunz" U.S. patents, also related to the use of paclitaxel to treat restenosis via stents. The patents expire between 2011 and 2020.

Conor currently sources a generic form of paclitaxel from Phytogen International, which the firm has indemnified in case of litigation.

In an initial public offering prospectus, filed Sept. 22, Conor acknowledges it is "highly likely that one or more third parties will assert a patent infringement claim against the manufacture, use or sale of our CoStar stent based on one or more of these patents."

The prospectus says Conor deems it "highly unlikely" that a direct competitor would grant a sublicense to the fledgling vascular firm.

Nevertheless, if CoStar manages to demonstrate improvements over other next-generation DES delivery systems, then Boston Scientific eventually might see fit to sublicense paclitaxel to Conor. The Menlo Park, Calif. firm is eyeing a U.S. launch in 2006.

CoStar's design incorporates hundreds of reservoirs, enabling up to six times the drug dose capacity of other drug-eluting stents, according to Conor. The reservoirs can release a variety of drugs and polymers, either at once or gradually.

In its prospectus, Conor details an additional IP risk factor. Boston Scientific owns a patent that covers stents "with a plurality of cavities which are micro-holes or micro-slits that extend from the outer surface through the inner surface and which act as reservoirs for a substance," Conor notes.

Outside the U.S., Conor announced Nov. 23 that it inked a distribution deal with St. Jude Medical. The deal potentially gives St. Jude an additional flank of competition with cardiac rhythm management competitors Medtronic and Guidant.

Medtronic and Conor appear to share a commercialization schedule of EU introduction in 2005, with FDA approval targeted the following year.

Medtronic is trying to rebound from a disappointing second quarter (ended Oct. 29), which featured lower-than-expected sales from its implantable cardioverter defibrillator unit. The firm attributes the letdown to customer trialing of St. Jude's Epic HF and Atlas + HF CRT defibrillators, approved June 30. Epic competes with Medtronic's InSync and Guidant's Contak cardiac resynchronization therapy devices.

St. Jude will be CoStar's exclusive distributor in Japan, Korea, Australia and New Zealand, with management of Conor-related sales falling under the jurisdiction of St. Jude's international division. Biotronik will control European sales and marketing, while Interventional Technologies will launch the stent in India next year. Conor has announced plans to build its own U.S. sales force from IPO profits.

[Editors' note: This story originally appeared in the Nov. 29, 2004 issue of "The Gray Sheet."]

- Kathleen Connors-Michael