Specialist
Former VP at Boston Scientific Corp
Agenda
- Recent trends and developments within the cardiology device space, focusing on Boston Scientific (NYSE: BSX)
- Boston’s Watchman market share defensibility vs Abbott’s (NYSE: ABT) Amplatzer Amulet
- Efforts to re-enter structural heart market by 2024 with Acurate Neo2
- Pricing dynamics and potential ASP erosion in drug-eluting stents
- Product pipeline outlook and R&D allocation
- 3-5-year outlook, potential M&A activity and expansion opportunities
Questions
1.
What are some major trends and drivers in the cardiovascular device space that might better inform our discussion today on Boston Scientific?
2.
The LAAC [left atrial appendage closure] is a big driver for Boston. What’s your comparative analysis of Boston’s Watchman FLX LAAC device vs Abbott’s Amplatzer Amulet treatment for left atrial appendage occlusions? Could you compare relative product capabilities, innovation and pricing?
3.
Could you expound on how the Watchman and the Amulet stack up from a safety and clinician deliverability standpoint? Which device has the edge here? How important are these factors to the clinician selection of an LAAC device?
4.
You mentioned that Abbott’s Amulet is better for certain patients. Could you expound on what those patient demographics look like? How big of a slice of the pie do you believe the Amulet is preferable for?
5.
Amulet patients historically could elect for a dual antiplatelet therapy with aspirin and an ADP receptor antagonist rather than oral anticoagulation or aspirin, which has been required for all Watchman FLX patients. However, Boston recently announced expanded FDA labelling that now gives clinicians the option of discharging patients receiving a FLX device with a 45-day dual antiplatelet regimen in lieu of anticoagulants or aspirin. To what extent does this erode Amulet’s moat from a patient preference standpoint? Is there any lag between the FDA therapeutic approval and patient treatments?
6.
What are your thoughts on Boston’s traditional commercial approach with the Watchman device, specifically tying Watchman sales to purchases of drug-eluting stents and other products? You mentioned there was some reputational fallout from this practice. Where does the company stand with clinicians right now? What does it have to do to repair some of those relationships?
7.
How long are typical hospital or IDN [integrated delivery network] contracts for Watchman devices? What are the switching costs of moving between manufacturers for LAAC devices?
8.
How aggressive will Abbott be on pricing to gain share for its Amulet device? How nimble or flexible can the company be on price as a lever to gain a commercial foothold?
9.
Amulet volumes have steadily increased since its launch in H2 2021. However, volumes from June to July 2022 flattened somewhat. How much would you read into that slowdown when evaluating Amulet’s potential market share plateau? Is it too premature to gauge an inflection point just from these summer volume data points?
10.
You mentioned Amulet is currently in the low-double-digits for market share. Where will it level out as supply contracts are renewed and Amulet gets included in more hospitals’ formularies? Is 20% US market share realistic for Amulet vs the Watchman? Why or why not?
11.
Looking at interventional cardiology more broadly, how is Boston strategically thinking about supporting the patient post-discharge? How is the company thinking about developing products for post-acute care management. For example, remote patient monitoring, products to extend into home setting and then supporting the patient through post-acute care and after?
12.
What are your thoughts on Boston’s clinical trial results on its Sentinel cerebral protection system, which were released September 2022 at the 34th TCT [Transcatheter Cardiovascular Therapeutics] symposium? Sentinel is designed to capture and remove embolic debris stemming from TAVR [transcatheter aortic valve replacement]. Do you think these results were a setback for the company?
13.
What are your thoughts on Boston being able to enter the aortic stenosis market and the overall structural heart market, especially in light of previous setbacks on the Acurate Neo2 and Lotus systems?
14.
Why do you think Boston continues to deploy resources in the structural heart market, especially given the limited upside if the Acurate Neo2 does return to the market?
15.
How would you juxtapose the barriers to entry for other areas of the structural heart market, such as tricuspid therapies, mitral regurgitation and interatrial shunt? Would these make more sense for Boston to try to make inroads in?
16.
How might Boston ameliorate some of these issues we just discussed inorganically? Could it actually purchase aortic regurgitation capabilities, perhaps looking at an upstart name such as a JenaValve?
17.
What are your thoughts on the impact of factor XI inhibitor drugs entering the market in the next couple of years and their impacts on patient care?
18.
You noted some commoditisation in your opening remarks. How stable will the growth be in drug-eluting stents for Boston over the next 2-3 years? What’s your net-net-growth outlook here, and why? The US drug-eluting stents business was down double-digits in Q2 2022, while the ex-US business increased in high single-digits.
19.
Could you expound on what you mean by cracking the code internationally? What might that look like? How would you assess the viability of the international market to preserve profitability for the drug-eluting stents business?
20.
What are your thoughts on Boston’s February 2022 acquisition of Baylis Medical? What are some particular synergies from this deal to help bolster the positioning of Watchman FLX and Boston’s electrophysiology business in particular?
21.
What further acquisitive appetite do you see for Boston in 2023? Where might the company look to bolster product lines or add synergistic margin-accretive offerings to some of its business lines?
22.
How do you assess the competitive landscape for Boston’s pulsed field ablation system vs Medtronic, J&J and others?
23.
What’s your assessment of Boston’s PCI [percutaneous coronary intervention] franchise? Complex PCI grew in high single-digits in Q2 2022. How do the company’s offerings stack up against the broader market?
24.
What kind of growth runway do you see in the broader PCI market, particularly for complex PCI? What would make sense over the next 3-5 years?
25.
Why do you think Boston had seemingly weathered the pandemic lockdowns in China better than other companies so far?
26.
Boston’s management projected optimism about the company’s ability to persevere through some of the macro headwinds in China. How do you assess its international positioning and continued growth ex-US?
27.
How do you assess Boston’s supply chain infrastructure? Why might the company fare better vs peers at managing some of the macro supply-chain issues?
28.
How exposed might Boston be to spikes in raw materials pricing, semiconductor shortages and other supply issues? What kind of cost hit could it take from such factors?
29.
Are there any key ex-US geographies to watch for Boston? Are there any areas where the company has further runway for penetration that it could be performing better in?
30.
What is a realistic growth clip for Boston’s interventional cardiology business over the next three years? The company expects the overall interventional cardiology market to grow at 7% between 2021 and 2024. Do you think Boston can beat the market over that span? If not, what might be a more attainable benchmark?
31.
What are the keys to accelerating adoption and capturing more patients for the Watchman? What’s Boston’s strategy to capitalise commercially there?
32.
How prolonged might some of the staffing pressures at US hospitals be? When might they normalise? How much of a lingering headwind could that be for Boston in 2023?
33.
We’ve seen an unprecedentedly strong dollar compared to historical levels. Could you guess the percentage of costs of sales that are in US dollars for Boston? Are you familiar with Boston’s Fx hedging programme at all?
34.
How do you assess Boston’s historical approach to R&D and its innovation efforts? What are you excited about on the innovation front to improve current technologies or even add new products or capabilities?
35.
Boston’s upper management raised full-year net sales guidance to 8-9% in its Q2 2022 earnings call despite some of the procedural headwinds we noted and Fx challenges endured by global medtech companies. What makes the company uniquely well-suited to manage some of these pressures? Why might Boston believe it’s more resilient vs peers, in addition to some of the manufacturing dynamics we discussed earlier?
36.
What are the biggest risks to Boston over the next 3-5 years, and why?
37.
As higher-growth businesses take a larger share of the sales mix, could we expect Boston to grow 8-9% rather than the guided 6-8%?
38.
Is there anything that we haven’t touched on, or worth highlighting about Boston?
39.
What’s your outlook for Boston over the next 12-18 months, perhaps touching on the most important factors to monitor over that time frame?
