All righty. We're going to get going. Good morning, everybody. Welcome. My name is Rick Wise, Stifel MedTech Analyst, and I'm thrilled to start off today with three outstanding individuals from Boston Scientific. I'd like to welcome and introduce to my left, Lance Bates. Lance is Boston's Executive Vice President and President of, today, Interventional Cardiology and Vascular Therapies, ICVT.
Thankfully, on January 1, Lance is going to lead an expanded ICVT, something now to be called Interventional Therapies. I think I'm saying it correctly, Lauren. I'm just glad for the name change, honestly. To Lance's left, Dr. Ken Stein. Ken is Boston's well-known Global Chief Medical Officer, a role he's held since 2023, and since he had the privilege and pleasure of working with my wife at Weill Cornell.
I'm very fond of Ken. Ken's been there since 2009, and he's an electrophysiologist by training, and a distinguished career in medicine. Also joining us is my favorite. I'm not supposed to say that. Head of Investor Relations, Lauren Tengler. Lauren, thank you for being here, and thank you for making this possible today.
Thank you, Rick.
I'm going to pick on. I'm going to start with Lance first. I mean, I warned him. Lance, thank you for doing this. As I look at Boston's portfolio today and reflect on it, as I was thinking about talking to you, I was appreciating that today you're running a, in round numbers, $5 billion business. It's about 25% of today's Boston Scientific, a portfolio that is growing more rapidly than the upper single-digit aspirational goals for the division. This year, it's growing a little more rapidly for a variety of reasons. But once Penumbra closes, that's going to be under your purview as well. So, you might be running. I haven't done careful math. Maybe it's 35% of the total Boston, which I assume will be growing even faster under your excellent leadership.
No pressure.
No pressure. Start us off by framing some of the key areas of growth in ICVT today. Maybe talk about some of the things you'd have us focus on as growth drivers, key growth drivers that you're most excited about.
Sure. Maybe I'll even take a step back and just frame what you said, like, effective January 1st, what we call Interventional Therapies. That'll include the legacy interventional cardiology business, which would include all the coronary stuff, structural heart, or interventional heart failure business is in that bucket. Then we have our vascular therapies business, which will include the TCAR business, a lot of the things for vascular surgery, plus peripheral procedures, as well as we've put our renal denervation business in our vascular division, just to clarify that. Then the other division that we should potentially talk about even more is our interventional oncology and embolization business.
So that's the third division within current Boston Scientific that will be part of Interventional Therapies with Penumbra. When you put all four of those together, you're right, it is a sizable piece.
There's a couple things maybe to touch on before I get to maybe some of the specific growth drivers, is we're very excited for two macro reasons, is that when you look at the four divisions, the overlap in terms of some of the R&D capabilities is significant. So an example would be from a drug-coated balloon perspective and the pharmacology that goes into that, and the overlap with our IO&E business and some of the things they're doing, like with the TheraSphere business, drug delivery. It's an exciting area that we've got a lot of expertise, and now we can pull them together from an R&D perspective. The other would be from a collaboration with our customers.
Very specifically, now we are going to have divisions that make a product, but they could be potentially sold across multiple channels that we can pull together under the world of Interventional. Imagine, you have IVL as an example. A vascular surgeon could use it, interventional radiologists could use it in the periphery, interventional cardiologists are going to use it, obviously, in the coronary.
That is just one example where there is going to be a product that is going to be used across multiple commercial segments. How we pull all that together to get leverage is going to be pretty exciting. I would say specifically for the growth drivers, it is the breadth of our portfolio. Sometimes we talk about that we have a lot of singles and doubles, but when you hit a lot of singles and doubles in a game, meaning, like a $50 million-$100 million a year product or $200 million, those add up to be runs scored in the game.
We have built everything around this idea, and I will just use Interventional Cardiology as an example. Everything around the idea of the clinical perspective that the physician goes through, which would be see, prep, and treat. See means you have to see inside the vessel. We have talked about this a lot with our IVUS portfolio. When you see what is happening in the vessel, then you need to decide how you are going to prepare.
That is the prep part. What type of calcium treatment or modification tool are you going to use? Then actually treat the vessel with one of our drug-eluting therapies. When you put all that together, it is really the breadth and depth of the portfolio that continue to give us reasons to believe that we are going to be accretive growth for Boston Scientific.
That makes a lot of sense. It is a good perspective, and it frames the next question. One of the things that I struggle with as an analyst at times is, just to take peripheral IVL, let us just start there. You are going up against a well-established, excellent competitor in Shockwave, J&J. They have created the market from the ground up. They do not have stents, DCBs, imaging, etc .
You are talking about owning the whole procedure and every step of the procedure in a different kind of way. But help us think through, talking about the leverage, how do you see your ability to take share in this billion-dollar-plus opportunity? Is it portfolio? Is it this whole procedure concept? How do you win on a head-to-head device comparison?
Yeah, that's a great question. I'd say first and foremost, the Boston Scientific mantra is we need to be the category leader. You could answer that from the overall procedural perspective. Also, though, we believe we should be the category leader for each component of the procedure. I think it's really important to say we don't want to compete on price. We don't want to compete on bundling things from a contracting perspective.
That might be helpful, but we really want to make sure we've got the best clinical technology. Maybe a little bit of history. We developed our internal IVL program years ago. It was probably like 2017, 2018, when we put the engineers in a dark room, said, "Can you figure out maybe potentially a different way to do it?" That's how we came up with this optical laser approach.
It's very different than Shockwave and some of the other products coming to market. Simple way to explain is some of the electrical systems and current IVL technology is, they've done a great job. First of all, Shockwave has done a great job to really make that work well inside a balloon. I'd say some of the advantages of optical laser technology is it's smaller, it's tinier, it's more miniaturized.
Think about fiber optics that are smaller diameters than a strand of your hair. We can miniaturize, we can fine-tune this technology. We can do things with it that are going to be very competitive today, but also provide a great roadmap for the future. We want to compete on the technology and the clinical benefit for the technology that we're offering.
Makes sense. On the coronary side, you're also going to be facing the same competitor, but I think Abbott's entering the space soon as well. Are your thoughts there any different than peripheral?
No, I'd say some of the things we've seen with our peripheral launch and feedback from the physicians is that the emitters are very, very visible. So you can see it under fluoroscopy when they're trying to target where they want to treat the lesion. Also, you can select which emitters are on or off. You can then turn the catheter, you can aim the emitter, like put the emitter of the energy source right on the nodule of calcium, deliver high energy.
So those same benefits we see in peripheral are going to apply to the coronary, where you can deliver more power where you need to deliver it, very easy to use and deliverable. And the physicians are very comfortable because they can deliver a lot of energy directly where they want to deliver it.
More targeted, does this mean faster procedures and hopefully better outcomes? And what data on both the peripheral and the coronary side do you need to prove it?
Well, the trial data, we'll start to talk about that more and more as we go through, and we'll also continue to do other things like registries. But we want to basically make sure that we do the procedure right the first time, and depending how many pulses you have to use, we may be able to do the procedure slightly faster. Right now, the procedure times are already pretty fast. The biggest difference maybe is if you don't have to do an exchange of balloon, which so far, early days, we've seen that we have less balloon exchanges, that we can treat the vessel with one balloon during the procedure.
Okay. Turning to AGENT DCB, it's been an amazing story, the whole AGENT coronary DCB story. The world's been turned upside down and just stented may be gone, but now we're leaving nothing behind era is at hand a little bit. My doctor conversations suggest that AGENT's gone way beyond restenosis cases at this point, and folks are indication creeping higher into de novo cases as well. Where are we in the whole adoption? Where's the PCI field today with respect to coronary DCBs? Where could it be going, do you think?
That is a great question. I would say we are still early days, and potentially one of the reasons that the adoption is growing is because the other technology in the procedure is caught up. Meaning the use of IVUS continues to increase. So now the doctors know better what they are looking at, and then the treatment algorithms with the different calcium treatment.
So you are preparing the vessel in a better way to make it even more suitable for a DCB treatment, where in the past, maybe if you did not treat the calcium, you needed to put a stent in that had a metal strut to try to keep the vessel open. Now, if you treat it appropriately, treat it with a DCB, you leave yourself a lot of options. So I think directly to answer your question, could we see potentially up to 30% of the PCI market transitioning to a drug-coated balloon technology? That seems reasonable. Just to kind of remind everybody, 10% of the market today is in-stent restenosis.
That is the indication, and we are still relatively early in terms of the penetration rate within in-stent restenosis. The rest of the procedure volume we have made up of small vessels, like 2.5 millimeters or less, instead of putting a stent in, true de novo type lesions, distal lesions, where you are treating multiple vessel disease. Those are all areas that are being explored. We are running a large RCT to collect data for that, as well as a lot of real-world evidence to support indication expansion.
Help us think through the sirolimus versus paclitaxel debate. I have lived through this back to the drug-coated stent days or early days of debate on this. I do not know, my impression has been that sirolimus won the war on that side. But.
For stents?
For stents. Why is it different here, and are we going to go through the same kind of debate again? Why are you choosing paclitaxel?
That's a great question. So maybe to kind of go back. In the drug-eluting stent world, where you've got a metal scaffold, and in fact, SYNERGY is a good example, where we had a bioresorbable compound polymer that you apply the drug to. Limus works reasonably well adhering it to that compound to adhere to the stent. With a DCB, you don't have that other layer, so it's more complicated. It's different how you adhere a drug to a balloon.
And the secret sauce, so to speak, for making paclitaxel work so well with a DCB is that paclitaxel is very potent. The trick is to use the smallest amount of dose as you can. We have the secret sauce, this excipient that basically adheres the paclitaxel very efficiently to a balloon, keeps it on the balloon, because these drugs, whether it's Limus or paclitaxel, as soon as you put it in the body, interacts with the blood, it becomes diluted. It may not all deliver to the vessel by the time it gets there as it passes through your vascular system.
It is really important people understand that paclitaxel is the most studied drug by a factor of like nine to one in terms of DCB usage around the world, and the fact that we have got the best way to adhere it to a balloon. Very different technology than Limus to a stent. It is important that we do not mix and match the two, and we stay focused on the science and what is different.
Yeah, just to jump right in, you talked about the leave nothing behind, which is the big impetus behind the use of DCB. You have got to get something there in the first place.
Yeah.
Right? Just in terms of the pharmacokinetics, it is real problematic getting an adequate dose of the Limus technologies there using a balloon.
Yeah. No, thank you, Ken. Briefly, I wanted to touch on, selfishly, on TCAR outlook. I covered Silk Road, so I went on that journey. I know there are a number of issues right now. When are the problems resolved, and when does Silk start really contributing to growth, and what are the dynamics that make that better performance coming ahead?
Yeah, there are two things that I think you are referring to. One, we had some disruption. We are open and we admit some of the things that maybe we could have done better from a disruption standpoint with the sales force. We believe we are past that. The retention rate is super high. The other area was transitioning some of the manufacturing into our internal plant network.
Silk Road was an earlier stage company, and to scale it to the procedural volumes that we need, we wanted to internalize that at our main supply operations. We had some hiccups there, mainly with our neuroprotection device. We believe we are past that. We also had some cyber issues. Again, it is related to building up the supply, because to your point, the procedure was growing very rapidly in our portfolio, double digits, I think we disclosed in 2025.
We believe we are at the tail end of some of those headwinds. The sales force is retained, stable, got that behind us. They are definitely part of the Boston family, and the supply chain issues are rapidly being resolved. We expect that to get back to a very nice double-digit grower going forward.
Okay. Just in summing it up, I want to make sure we have time for some questions to Ken as well. When I look ahead, it feels like fundamentals basically in solid shape, early stage, and what is next for the, let us say, ICVT part of the portfolio, maybe improving Silk Road, et c, et c. How sustainable is this aspirational upper single-digit growth? Could it be even better as you become a bigger piece of Boston Scientific?
Well, of course, we always aspire and we aim to grow at least at market. To your point, high single digits, aspire to double digits, I think is very durable for us, not just a 2027 thing, but beyond. The reason I would say that, I will go back to what I said at the beginning, a lot of singles and doubles, maybe some triples, to where the depth and breadth of our portfolio and the cadence of launches that we have is something we have a lot to be proud of.
Our R&D team is amazing, and basically our commitment is every one of the key pieces of our portfolio should have a launch every 12 to 18 months. If we just talk about IVUS, we have another software launch with co-registration. We have another catheter. Both those are coming in 2027. Wolverine, our leading cutting balloon product, we have a Wolverine X, another more deliverable version coming in 2027.
We have also got another version of AGENT coming. We are going to keep iterating that every 12 months we have got another version of AGENT drug-coated balloon coming. TCAR, there is other enhancements we are doing there. We have got a Ranger 035 that is going to be fully launched for the SFA. I could go on. We could have a whole another session.
I invite you to.
About all the portfolio plays. It is not, all of our success is not just hinging on one major launch. It is the sum of all the parts and the fact that we are committed, we have got the engine running to keep delivering meaningful innovation to be the category leader across the full breadth of the portfolio. Not even talking about IO&E. We should give that a shout-out.
Please.
Because our TheraSphere business is growing. Now we are rolling out a single-use option for our customers because the radiation handling is very complex, but single-use version of TheraSphere. We have got a TruSelect catheter that is going to help deliver these therapies even better, and we have got a lot of stuff happening in the world of cryoablation. Across all the divisions, we have not even talked about Penumbra yet, which everybody historically knows they have been an innovation machine. Every 12 months, they have a cadence of products coming out across their portfolio, and they have done an amazing job. Some of the parts is quite compelling.
You are convincing me. I think I am raising my estimates on this. Lauren, I am leaving feeling very optimistic. Turning from growth could be even better to Ken. I am sorry, Ken. Let me talk about, when we speak about, in particular, the PFA and the WATCHMAN part of the portfolio. What changed, Ken? In the third quarter, you moved FARAWAVE Ultra to early 2028, FARAFLEX to 2029. Is there something challenging happening that is slowing down this next wave of important products? Is the complexity of building an integrated catheter mapping imaging? Is there something internally, or is this thoughtful, prudent conservatism?
Well, let me just start. We are frustrated and disappointed at having to push some of these things out. I think Mike was very clear about that frustration on the last quarter earnings call. It is not one systemic thing. The development of medical technology is complicated. It is different things across the portfolio. It is certainly the case that we honestly have not been as predictable as you all need us to be over the past couple of years. I think there is an aspect to this to want to make sure that we are predictable and do hit our commitments.
With, for instance, push on FARAWAVE Ultra, it was really related to taking more time for some design enhancements to enhance use of the catheter, whereas with FARADIGM, it was actually more an issue of just running more patients into the first human use study, make sure we optimize workflow. I think fair to say, a little more challenging interactions with regulators and payers. Summary, it is not one thing. We do not believe it is systemic. But on the one hand, we are doing our utmost to be as predictable as possible with what we put out there, and we are frustrated as you all are when we have delays.
I understand. FARAFLEX without RF, have you addressed the reasons why that physicians still want it, is my question. But FARAFLEX, the large focal catheter currently in the global FARADIGM IDE trial is PFA only. Every other player in the market seems to have a dual energy product. How do you deal with that? Have you addressed the limitations that are the mindset that is making doctors want the RF, the dual energy as well? How do you help them understand what you understand and catch up in this interim period?
Yeah. I think first of all, I think what we want to emphasize to you all and what we emphasize, when we are talking with physicians, is that dual energy on a large focal catheter, like FARAFLEX or like one of our competitors, is very different from dual energy on a point ablation catheter. We are all beginning to see accumulating evidence that there really is no safety advantage to having RF on a dual energy cath, on a large focal catheter. In fact, data that was just recently released and published from the VT Symposium, although it is an AF study, showed, for instance, coronary injury is at least as bad with RF in proximity to a coronary artery than it is with pulsed field ablation.
Our focus has been and continues to be at this time, what can we do in terms of evolution of waveforms to improve workflow, continue to improve safety, and continue to improve efficacy with PFA? Let us provide the world's best purpose-built PFA catheter. If someone needs RF for the very few edge cases where RF becomes important, we make some pretty good RF catheters. Let us just make it easy to pull a second catheter. That being said, we continue to keep an eye on the landscape. If the market says, "You need dual energy," we can always come out with a dual energy catheter. But again, our focus is let us make the world's best PF catheter. Let us continue to evolve the technology and the waveforms.
The question I probably get asked more than any other about the PFA franchise is, when does, where does market share bottom stabilize? Lauren, we did not talk about this question in advance, but just listening, it is hard for me not to ask, as I reflect on it. Over to you, Ken. Help us.
I will start. Again, this is a very highly competitive space because it is such an attractive space to be in. There continue to be technologic innovation from our competitors, from new entrants. I think, on the other hand is, we are also continuing to innovate. So we already talked about the couple of new catheters, FARAWAVE Ultra and FARAFLEX. I think fair to say, our share is going to continue to be under pressure until those products come out. But our hope would be that once those products come out, you will be asking our competitors why their share is under pressure.
I look forward to that. Let me make sure we have time for WATCHMAN. What gets this market growing again, Ken? In the third quarter, yes, concomitant procedures grew 35%, standalone declined high teens. Help us separate or think through referral education problem from a fundamental negative change in how physicians are viewing appendage closure. What changes their behavior now?
Yeah. I think we need to take back control of the narrative. Again, very frankly, we lost control of it.
Sure.
With all of the data that came out over the past, call it year and a half. What I come back to, and you and I touched on this a little bit when we were sitting here before this started, is the fundamental problem is that 30%-40% of high-risk stroke patients with AF in this country are currently completely unprotected. They're not getting any therapy. Anytime one of those patients has an event, has a stroke, that's a preventable tragedy. There can be no doubt at this point, but that getting the atrial appendage closed with the WATCHMAN device is a far better alternative for those patients. I think what we need to do is just refocus attention on that really sizable population who stand to benefit.
For, I think, wasting a lot of time talking about whether WATCHMAN is better than the NOACs or as good or slightly worse, misses the point entirely. Again, the point is, if you're not going to take the drugs, what the heck can we do to prevent stroke? What can we do for you? The message, that WATCHMAN is the appropriate therapy for patients who either can't, won't, or shouldn't take long-term oral anticoagulants, I think is a message that resonates, and we just need to continue driving that message home with implanting physicians and with referring physicians.
Focusing on growing the market as a whole. We were touching on it as well before we started, just thinking about the twin pressures now and ahead from competing devices as a second-generation competing device on the market, and whatever is going to happen with Factor XI's coming down the pike. How should we think about those as threats to WATCHMAN?
Yeah, I think, again, we have been very clear. We certainly believe that we will cede share to the competitor when they come out with their next-generation device. We still, I think, firmly believe that we have got the better device and the better field force to support implant of the device and better clinical data. But what they have got is a better device than what they have got on the market right now.
The Factor XI's are interesting because, to me, again, the amount of money that pharma has put into developing the Factor XI's is what, to me, validates what I said earlier about the size of the unmet medical need and the population that needs access to something other than current therapies. Now, the one Factor XI trial that was completed in atrial fibrillation failed to meet its endpoint.
The second big one, LIBREXIA, we expect to be reported out early next year. So don't know whether that is going to be better or not than the prior trial. But those drugs are also going to be very expensive, right? asundexian just got approved. It is listing at $750 a month for the drug. Our view is population and need is large enough that both the Factor XI's and WATCHMAN can thrive in the long run, and that there will still be a lot of patients who, for a variety of reasons, will prefer a one-and-done approach to stroke prevention.
Thinking about the PFA challenges and WATCHMAN as well, and this is not a guidance question, but more, can these franchises bottom out and start to improve in 2027, or do we have to wait for 2028 when the new products are out and maybe the narrative, you have sufficient time to change the WATCHMAN narrative as you describe it?
Yeah, again, we are not going to give guidance. I think we have been very clear that they are going to continue to be challenging market dynamics through 2027, and that as we start to get new devices and potentially new labeling and revision, for instance, to the CMS National Coverage Determination, that that is what gives me optimism over the long run. But certainly over the short run, dynamics are going to be challenging.
Just in 30 seconds, are you less optimistic, more optimistic about the National Coverage Determination and the labeling for WATCHMAN?
I am optimistic, but I have always been optimistic, so no change in my optimism. I think there are certainly aspects of that decision that everyone understands need to be updated in view of all of the new data that has accumulated in the decade since that was first promulgated.
Great. We are out of time. Lance, Ken, Lauren, thank you so much. I really appreciate it. Thank you. Great to be here.
Thank you so much, Rick.