St. Jude Medical Inc.’s Unify Quadra became the first cardiac resynchronization therapy defibrillator system with a quadripolar pacing lead approved by FDA Nov. 29, at least six months behind the firm’s initial target date.

The product represents an important technological advancement in the cardiac rhythm management space, and it is likely to give St. Jude an advantage in the challenging market. But the business impact of the product may be diminished somewhat by the approval delay and other market challenges, analysts suggest. The predecessor Promote Quadra CRT-D launched in Europe last year.

The Quadra devices include the Quartet left-ventricular pacing lead, which features four electrodes spaced over 4.7 centimeters, enabling up to 10 pacing configurations, St. Jude says.

Because the lead contains two additional electrodes compared to standard bipolar left-ventricular leads, it offers electrophysiologists more flexibility in lead placement. This could potentially lead to a lower incidence of dislodgement and other adverse events, including phrenic nerve stimulation, and even may improve response rate to the resynchronization therapy.

The system “has the potential to redefine the standard of care in resynchronization therapy,” says Eric S. Fain, president of St. Jude’s Medical Cardiac Rhythm Management Division.

“It provides for simplicity and at the same time it allows for more flexibility, and we’ve been looking for that,” affirms Bruce Wilkoff, director of cardiac pacing and tachyarrhythmia devices at the Cleveland Clinic, in an interview.

“This is a very attractive alternative, and physicians will want to use it,” added Wilkoff, who is president of the Heart Rhythm Society.

“Quadripolar leads are arguably the biggest advancement in CRM technology since CRT-D devices were first introduced in the U.S. in 2002” – J.P. Morgan analyst Michael Weinstein

St. Jude says it will begin shipping Unify Quadra to its sales force to provide to customers immediately.

Industry analysts recognized the significance of the approval.

“Quadripolar leads are arguably the biggest advancement in CRM technology since CRT-D devices were first introduced in the U.S. in 2002,” states J.P. Morgan analyst Michael Weinstein in a March research note prior to approval.

“We expect Quadra/Quartet to be a driver for St. Jude by supporting both higher prices and unit market share gains,” Mizuho Securities analyst Michael Matson says.

Gaining technological advantages might be particularly important in the current CRM market, which is not growing. Medtronic, in an earnings call late last month, said the global ICD market is in fact declining at a rate of low-to-mid single digits in recent months.

But, Matson noted, “We expect St. Jude’s revenue growth to accelerate in 2012 due to new product launches and an improved ICD market.”

The Unify Quadra CRT-D’s Quartet lead features four electrodes, which allow 10 pacing configurations. Image: St. Jude Medical

Late, But Still A Big Win

St. Jude’s initial expectations were for a mid-year U.S. launch, but in July the company pushed back its approval timeline to year end. (See Also see "St. Jude Revises Timeline For Quadripolar CRT-D Device" - Medtech Insight, 25 July, 2011..)

The delay, some analysts say, diminishes the market gains St. Jude could have reaped from an earlier approval.

“It won’t be the game changer it could have been six months ago,” J.P. Morgan’s Weinstein notes.

“Quadra commanded overzealous attention at the outset of the year, but we now see it as less important to the St. Jude story,” notes David Lewis, a Morgan Stanley analyst.

“We’re skeptical Quadra will drive significant share in a struggling [CRM] market where price may become a more important differentiating factor, and it’s unclear to us whether the product has driven a discernable market share trend in Europe,” Lewis adds.

St. Jude would not disclose pricing information for Unify Quadra, though analysts expect the company will be able to charge a premium for the technology, given its status as the only quadripolar system in the U.S.

The device launched in Europe in September, where it has been “received favorably,” according to the company.

“In markets where the product already is available, St. Jude Medical is gaining meaningful market share,” insisted St. Jude CEO Daniel J. Starks back in October, during the company’s third-quarter earnings call.

Unify Quadra is expected to grant St. Jude “significant share gains” over the next 1-2 years and give it the upper hand in an otherwise contracting ICD market, Weinstein predicts.

While both Medtronic and Boston Scientific have quadripolar leads in the pipeline, each is believed to be a year or more behind St. Jude’s development cycle.

“St. Jude has a meaningful lead in our view,” says Larry Biegelsen, a Wells Fargo Securities analyst.

In the absence of a competing quadripolar lead, other manufacturers will likely make an effort to question the actual clinical advantage that St. Jude’s product will offer to patients.

In May, for instance, Boston Scientific announced a new warranty program for its CRT-D devices, offering a full refund for any devices that need to be replaced due to incidences of phrenic nerve stimulation, where a pacing electrode is placed close to the diaphragm-supporting phrenic nerve and causes patient discomfort. Boston, anticipating Quadra approval, cited data questioning the advantage to reducing the phrenic nerve complication with the new product’s four-electrode design.

Haunting Effect From Riata?

Another potential competitive challenge for St. Jude would be any spillover impact from elevated complication rates reported for the firm’s now-legacy Riata and Riata ST silicone-insulated defibrillator leads.

Last December, St. Jude phased out all models of theRiata and Riata ST due in part to data showing an elevated risk of abrasion of the silicone outer insulation material, which can cause lead failure. (See Also see "News In Brief" - Medtech Insight, 3 January, 2011..) But concerns about lead performance have reportedly had at least a slight dragging effect on adoption of St. Jude’s newer Durata leads, which are coated with a different insulation material (Optim).

The company provided updated failure estimates in a Nov. 28 “Dear Doctor” letter, showing an incidence rate of 0.63% within Riata and Riata ST leads, an increase from the previously reported rate of 0.47%.

The letter included a detailed analysis of the issue and a performance comparison between the older leads and Durata leads, which St. Jude said has exhibited zero cases of related failures.

“By openly addressing the issue, St. Jude can finally give electrophysiologists some comfort and allow clinicians to move on to bigger and better topics,” J.P. Morgan’s Weinstein says. But, “there will continue to be negative reports on Riata and competitors will do their best to paint Durata with the same issues.”

How the issue impacts uptake of Unify Quadra, which also employs a defibrillator lead, remains to be seen.

“We view the benefit from [Unify Quadra] being partly offset by concerns regarding the insulation failures seen in St. Jude’s Riata defibrillator lead and potential problems, real or perceived, with the newer Durata lead,” Wells Fargo’s Biegelsen noted.

However, Cleveland Clinic’s Wilkoff stresses that there is no reason to worry about the new Quartet lead, which has the same co-polymer Optim coating as Durata, based on the issues with Riata.

“There is nothing about this [Quartet] lead, except whatever connections people might make in their own minds, that should make you worry about this lead,” he says.

Regardless, some market watchers say St. Jude may have relatively more to gain from other new products in its pipeline. On Thursday, for instance, FDA’s Circulatory System Devices advisory panel will discuss a PMA for CardioMEMS’ CardioMEMS HF implantable sensor to guide treatment of congestive heart failure.

St. Jude holds a 19% ownership stake in the Atlanta-based manufacturer and is expected to exercise its option to buy the firm outright assuming the FDA process proceeds smoothly. (See Also see "St. Jude: CardioMEMS’ Heart Failure Data Reflects Major Opportunity" - Medtech Insight, 14 February, 2011..)

Compared to the Unify Quadra approval, “The CardioMEMS panel may be a more important [growth] catalyst,” Morgan Stanley’s Lewis forecasts.

FDA Approves St. Jude’s Quadripolar CRT-D Device Following Delay

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