Medtronic stock dips on FDA stent report

FDA advisory panel to vote on Medtronic's drug-coated stent; to compete with Boston Scientific, J&J in crowded market.

By Aaron Smith, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Medtronic's stock price dipped 2 percent after the FDA released documents Friday that questioned the effectiveness of the company's experimental stent Endeavor.

The Food and Drug Administration advisory panel that studied the product is set to meet on Oct. 10 to vote on whether to recommend approving the drug-coated Endeavor. Some experts believe it has a good chance of winning a positive vote.

"That will certainly be an area of discussion at the [FDA] panel meeting, [but] at the end of the day I still believe that they will get a positive recommendation," said Keay Nakae, an analyst at Collins Stewarts.

The study compared Medtronic's (Charts, Fortune 500) Endeavor to the Taxus, a drug-coated stent from Boston Scientific (Charts, Fortune 500), which experienced a 2 percent gain in stock after the FDA document release.

FDA advisers will take a hard look at Medtronic's experimental drug-coated stent next week, and decide whether it's safe enough to enter a market dominated by Johnson & Johnson (Charts, Fortune 500) and Boston Scientific.

The Oct. 10 vote of FDA advisers will be non-binding but taken into consideration by FDA commissioners when they make a final decision.

Medtronic spokesman Rob Clark disputed the negative perception that some investors have about the Endeavor studies, insisting that "the stent has produced very strong safety, efficacy and deliverability data."

"We are going to the panel next week on Wednesday with the largest, most comprehensive dossier on a drug-coated stent that's ever been presented to an FDA panel," said Clark.

Medtronic already sells bare metal stents, which brought in $152 million in U.S. sales during the quarter ended July 27. Medtronic's Endeavor is sold overseas, and Johnson & Johnson and Boston Scientific have drug-eluting stents available in the U.S.

Stents are metal tubes that are inserted into arteries during angioplasty procedures to prop them open and keep them free from clogging. The older stents are made of bare metal. The newer drug-eluting stents, first approved by the FDA in 2003, are made of wire mesh and are coated with blood-thinning drugs to prevent clotting.

But the drug-eluting stents have come under suspicion for causing - not preventing - blood clots, though this has yet to be proven. Some analysts believe that data provided in large-scale, late-stage Endeavor studies could alleviate concerns about safety.

Sales for the drug-eluting stents have declined since safety concerns arose last year. The U.S. market for drug-coated stents will probably remain at its current level of $3 billion, even with the addition of the Medtronic's Endeavor, and another experimental stent that Abbott Laboratories (Charts, Fortune 500) is expected to launch next year, said Nakae of Collins Stewart.

Medtronic's stent might be seen as the safest one yet, while the stents from Boston Scientific and J&J have the best efficacy, said Nakae.

"If Abbott is viewed as the best of the lot, we could see them capture market share quickly," said Nakae.

But Nakae reiterated that this would be "just a reallocation of the pie," rather than an expansion of the market.

Nakae does not own stock in the companies mentioned here and Collins Stewart does not conduct financial services for them. Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.