St. Jude Medical (NYSE:STJ) CEO Daniel Starks is an avid hunter, so perhaps it shouldn’t be surprising that he fired off a couple of rounds at Medtronic (NYSE:MDT) during a conference call with analysts yesterday.
Starks was discussing St. Jude’s strong third-quarter results when one researcher asked about recent reports of problems with the company’s Riata pacemaker leads. The question triggered a lengthy diatribe against the St. Paul, Minn.-based firm’s cross-town rival.
In a small Irish study of 212 patients with Riata defibrillator leads, 15 percent had confirmed cases of lead wires poking through the silicone rubber insulating cables and making contact with tissue at an average of about 4 years after implantation.
“Medtronic has recently started a campaign in the United States where they’re going to customers and they’re telling them [small leads like Riata] are too small and not safe, and they point to a study by one center in Northern Ireland that documented partial failures of ICD lead insulation,” Starks said, noting that the Irish study used larger-diameter leads than are used in the Riata.
The insulation used in the thinner Riata lead is just as thick as in St. Jude’s other leads, Starks added.
“So this is a peculiar situation where you’ve got a company where the data shows a statistically significant higher insulation failure rate on [a thicker lead], and you’ve got that company running around talking about insulation failures,” Starks said. “I’m reminded of B’rer Rabbit, talking about ‘don’t throw me into the briar patch.’ We’re a little bit like B’rer Rabbit, saying, ‘Oh my goodness, let’s not talk leads.'”
Starks, who inadvertently left some ammunition in a pair of hunting pants he took on an overseas trip – which landed him in an Indian jail for a brief spell – also fired at Medtronic’s try at a thinner ICD lead, the ill-fated Sprint Fidelis.
Medtronic spent $268 million a year ago to settle multiple lawsuits stemming from its recall of the Sprint Fidelis lead, which was prone to fracture after implantation.
Starks said the recall of devices that had been implanted in as many as 268,000 patients was a boon for St. Jude.
“[W]hen Medtronic pulled its Fidelis lead line off the market due to the catastrophic fractures and failures, that forced them to take the entire line off the market and never return it to market, that created a big advantage for us. And the question was how long was that advantage going to last, how long would it take for Medtronic to get back on the market,” he said during the call. “People may forget that, that was October 2007. At the time, the speculation was it might take Medtronic as long as two years to get a [smaller] lead line back on the market.
“Four years later, they don’t have one, and I would encourage everyone to go to Medtronic after this call and ask for an update on when will Medtronic get a [smaller] lead line back out on the market. And our understanding, which would be, of course, limited by the fact that Medtronic doesn’t really talk to us about this, but our market intelligence is that Medtronic has been unable to be successful in developing their [smaller] lead line and that they’re still years away. I don’t know if they’re going to give you a date or not, our intelligence is they’re still years away.”