UPDATE: Shares Of Defibrillator Cos Rise On Positive Study

(Adds comments from doctor, analyst and shareholder and updated stock prices.)

   By Jon Kamp 
   Of DOW JONES NEWSWIRES 
 

Shares of companies in the $6 billion market for implanted heart defibrillators climbed on Tuesday after Boston Scientific Corp. (BSX) released preliminary findings from a major study that could increase industry sales by hundreds of millions of dollars.

The highly anticipated "Madit-CRT" study found that cardiac resynchronization defibrillators, or CRT-D devices, can slow the course of heart failure in patients with milder cases when compared with more basic defibrillators. This is important for the industry because the targeted devices cost about $30,000 each, or about $5,000 or so more than basic defibrillators.

Positive study results were expected, but shares of Boston Scientific still rose on the news and were recently up 4% to $9.61. Shares of St. Jude Medical Inc. (STJ) - which analysts believe could benefit more from the study because its overall sales are most closely tied to this market - were recently up 3.8% to $41.04.

Medtronic Inc. (MDT), a medical-devices heavyweight with the biggest defibrillator business, traded up 1.5% to $33.68.

The CRT-D devices provide power to synchronize beating in erratic hearts and also have defibrillators on board to provide jolts when needed to stop life-threatening arrhythmias.

Today only patients with more severe cases of heart failure are typically given CRT-D devices. But because this study showed benefits among patients with milder cases, and is a large study with more than 1,800 patients, it has potential to lead those patients to pricier devices instead.

Additionally, if still-unreleased results show CRT-D devices help improve quality of life for less sick patients, it could motivate doctors who are reluctant today to treat such patients based only on survival data, said Richard L. Page, who is head of cardiology at the University of Washington School of Medicine in Seattle.

Page, who does not have any conflicts with defibrillator companies, is also president of the Heart Rhythm Society, an association for doctors who treat rhythm problems and implant these devices.

Bernstein Research recently surveyed 51 U.S. doctors who specialize in heart-rhythm issues and found that 94% of them expected positive Madit-CRT results to increase the proportion of CRT-D devices used. Meantime, 41% of the surveyed doctors felt positive results would increase defibrillator volume as well.

Page cautioned that the Madit-CRT data have not been reviewed by peers in the medical community or released in full thus far, but called them "potentially exciting results."

"I think this is an important study and it will potentially expand indications and help us in developing guidelines," Page said.

The trial enrolled patients over four years who received either CRT-D devices or regular implanted defibrillators and showed a 29% reduction in death or heart-failure interventions among the CRT-D patients, trial-sponsor Boston Scientific said. Full-study results are expected to be published later this year.

JPMorgan analyst Michael Weinstein called Madit-CRT "the first meaningfully positive catalyst for the defibrillator market" since a major study released more than five years ago bolstered the market. At minimum, Weinstein said the study should drive a shift toward usage of more expensive devices while adding $260 million to his firm's market forecast by 2012.

He sees potential for a bigger $500 million to $600 million sales boost by then if publicity and positive press coverage is substantial enough to reaccelerate a market slowed in recent years by product troubles.

Matt Loucks, a portfolio manager with Sit Investment Associates, which owns shares of St. Jude and Medtronic, thinks the study could help the defibrillator market combat "reputational problems."

"It's a big deal in my mind in that it shows these things have a very real benefit," Loucks said.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com