Time to Invest in Stents?

It might make your head spin. It might make your heart pound. A glaze may start to creep over your eyes. Should you call your doctor? No way. The Fool's got what you need.

I can help you make sense of the plethora of data about stents that was released at this year's Transcatheter Cardiovascular Therapeutics scientific symposium. Open wide and let's take a look at the information to see whether this is a good time to invest in the devices that have seen slumping sales over the last few years.

The players
Stents are small metal tubes that are implanted into blood vessels to help keep open clogged arteries. The first bare-metal stent, developed by Johnson & Johnson (NYSE: JNJ  ) , was approved for use in 1994. The next development was stents that release (elute) drugs over time to keep the vessel open medicinally.

It's currently a two-horse race in the U.S. between J&J and Boston Scientific (NYSE: BSX  ) , which markets the TAXUS drug-eluting stent. Medtronic (NYSE: MDT  ) received European approval for its Endeavor Resolute on Monday and is trying to enter the U.S. market. Abbott (NYSE: ABT  ) has two stents in clinical trials.

In 2005, reports started coming out that in addition to keeping arteries open, the drug-eluting stents might be causing blood clots leading to heart attacks. The news has pushed the use of drug-eluting stents from a high of 89% of all stents used in the U.S. down to just 62% last month. The slumping sales have not only hurt the stent makers, but also Angiotech Pharmaceuticals (Nasdaq: ANPI  ) , which makes the paclitaxel coating for Boston Scientific's drug-eluting stents.

My stents are better than yours
Abbott probably had the most promising data at the conference. The XIENCE V drug-eluting stent continued to perform well against Boston Scientific's TAXUS, including a 43% reduction in major adverse cardiac events after one year and a 23% reduction in target vessel failure. The data will be used to bolster Abbott's case for a positive recommendation from the FDA advisory panel in November to try and get the stent approved in the U.S.

The news isn't all bad for Boston Scientific, though -- it sells the XIENCE under the name PROMUS in a deal with Abbott. However, J&J presented data that patients receiving its CYPHER stent were less likely to need a second procedure than those receiving a TAXUS stent.

Also jumping on the Boston Scientific-bashing bandwagon was none other than Boston Scientific. That's the problem with being the benchmark against which most new stents are compared, you have to prove superiority to yourself. The company presented results that its second-generation TAXUS Liberte reduced reclosing of the arteries and improved safety compared to its first generation TAXUS Express stent.

Time to invest?
Will the drug-eluting stent market ever return to its $6-billion-a-year level? Not until new stents are developed that are proven safer than their cheaper bare-metal counterparts. Abbott and Medtronic are both working on stents that have bioabsorbable polymers that hold in the drug. Those might offer the best hope for improved safety since the polymer breaking off from the stent may be responsible for increased blot clots.

But the real question is whether drug-eluting stent sales have bottomed out. Regardless of whether they can reach their heyday highs, when stent sales go back on the rise, the companies that make them are worth a look as potential investments. The problem is that predicting when drug-eluting stents will come back into favor with doctors is as hard as predicting the bottom of a bear market.

With the timing of the bottom uncertain, I'd suggest investors look at the larger companies -- J&J and Abbott -- that have a larger mix of products. The diversity they provide should temper any dips that may still be coming, unlike Boston Scientific, which recorded 22% of its revenue from drug-eluting stents in the third quarter.


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