Boston Scientific discontinues Lotus Edge aortic valve system

Shares in Boston Scientific fell as much as almost 10% on Tuesday after the company issued a global voluntary recall of all unused inventory of its Lotus Edge aortic valve system due to "complexities associated with the product delivery system." There are no safety issues for patients who have an implanted Lotus Edge valve, but Boston Scientific said it is nevertheless withdrawing the entire Lotus product platform immediately "given the additional time and investment required to develop and reintroduce an enhanced delivery system." All related commercial, clinical, R&D and manufacturing activities will also cease.

"While we have been pleased with the benefits the Lotus Edge valve has provided to patients, we have been increasingly challenged by the intricacies of the delivery system required to allow physicians to fully reposition and recapture the valve," remarked CEO Mike Mahoney, citing manufacturing challenges, the continued need for technical adjustments and market adoption rates as reasons behind the company's decision. "We will instead focus our resources and efforts on our Acurate neo2 aortic valve system, Sentinel cerebral embolic protection system and other high growth areas across our portfolio," he said.

Up to $300 million in charges

Boston Scientific anticipates the move will result in estimated pre-tax charges of around $225 million to $300 million, of which roughly $100 million to $150 million will impact its adjusted results. The company indicated that the vast majority of these charges will be recorded during the fourth quarter. Meanwhile, the decision is expected to be accretive to earnings in 2021 by around $0.01 per share to $0.02 per share, and neutral thereafter.

In 2017, Boston Scientific issued a global recall of all Lotus valve heart devices due to reports of the premature release of a pin connecting the valve to the delivery system. The system was approved by the FDA last year for patients with severe aortic stenosis who are considered at high risk for surgical valve replacement via open heart surgery.

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