Boston Scientific Widens Stent Recall

Updated from 2:49 p.m. EDT

Boston Scientific ( BSX) announced that it was expanding a recall of Taxus stents, a heart treatment device and one of its biggest products, forcing it to delay the release of second-quarter earnings by a week and resulting in a large charge for inventory write-downs.

On July 2, Boston Scientific announced that it was recalling 200 Taxus stent systems, which are used after balloon angioplasty procedures to keep arteries open once blockages are cleared. But after some production runs of the Taxus Express 2 stent blocked the balloon's ability to deflate, the company announced that it was recalling 200 units and re-examined the manufacturing of the device, which was approved by the Food & Drug Administration in March.

After further analysis, the company said that other production lots of both its bare metal and drug-eluting versions of Taxus, which share the same kind of catheter, may have similar manufacturing defects. The company is now widening its voluntary recall to cover 85,000 Taxus systems and 11,000 Taxus Express 2 systems, all of which were made at factories in Galway, Ireland and Maple Grove, Minn.

"While the number of customer reports of balloon deflation difficulty is extremely small, patient safety is the company's paramount concern, and therefore it has chosen to initiate this broader recall," said Boston Scientific, in a statement.

While Boston Scientific downplayed the number of people affected by the stent malfunctions, the company said that the device was already responsible for one death and 18 serious injuries in the case of the drug-coated version of Taxus, with two deaths and 25 serious injuries for the bare-metal version.

The news is a major setback for Boston Scientific, whose stent was already beginning to seize market share from Johnson & Johnson after just four months on the market. In the second quarter, Johnson & Johnson said that sales of its Cypher stent had just 30% of the market it dominated a year earlier as the first treatment on the market. Already, Boston Scientific has shipped more than 500,000 Taxus stent systems and 600,000 Express 2 systems.

Going forward, the company said that current and future production runs would not be affected by the recall, but did say that the decision will reverse $45 million in sales already booked and force it to take a $50 million write-down for inventory. It will also be postponing its second-quarter earnings release, originally scheduled to be released this Monday, to July 26, a week later.

Boston Scientific shares remained halted after the release of the news, shortly after 2:30 p.m. EDT, but it boosted the shares of rivals.

Shares of Johnson & Johnson, which makes the Cypher stent, rose $1.85, or 3.3%, to $57.20, while shares of Guidant ( GDT), which is also working on a stent, were up $1.35, or 2.5%, to $54.60. Medtronic ( MDT), whose Endeavor stent is already on sale in Europe, rose 99 cents, or 2%, to $50.55.

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