The manufacturer of Essure permanent birth control system,
) recently received the US Food and Drug Administration (FDA) nod
for including 10-year data on effectiveness of Essure in the Essure
procedure US Instructions for Use (IFU) and Patient Information
Booklet (PIB). On top of that, FDA also allowed the company to
include full five-year clinical study results and effectiveness
rate of 99.83% in the IFU and PIB. With this approval, the clinical
trial for Essure, which was initiated in 1998 and showed zero
pregnancies over five years will close.
Amidst several recent headwinds, especially related to the tough
competitive landscape and difficult macroeconomic conditions, this
latest FDA approval came as a relief for Conceptus. Earlier, in
January 2012, the company received an unfavorable ruling in a
lawsuit related to its request to prohibit its competitor
) from selling its permanent birth control product Adiana system in
the US. Moreover, with such a verdict, Hologic will no longer be
required to pay any royalty to Conceptus on future sales of
Moreover, Conceptus remains challenged with limited revenue and
earnings visibility arising from tough macroeconomic conditions
including high unemployment rates that hampered the market for
non-urgent procedures like Essure. During the fourth quarter of
fiscal 2011, domestic sales of Essure plunged 5.6% year over year.
International sales also declined 18.8% on a year-over-year
Apart from these setbacks, Conceptus declared a 15% drop in its
US field sales organization, which resulted from its decision to
discontinue its Gynecare Thermachoice Uterine Balloon Therapy
System's promotion in the US. This decision was primarily based on
the company's intention to focus on driving sales of its key
product Essure. Also the company is presently working on new
product development which may supplement Essure procedure going
Besides, OB/GYN office visits slowed down leading to soft growth
in the trans-cervical sterilization market. Moreover, Conceptus is
facing severe challenges as Hologic's Adiana, which is a direct
competitor of Essure, is being trialed by many physicians. This has
become a real concern for Conceptus as it lacks the resource to
re-educate existing customers on the efficacy of Essure.
We are concerned about the penetration of Hologic's Adiana in
the US, which has increasingly cannibalized Conceptus' market
share. Although Conceptus is undertaking several initiatives to
recapture market share, the outcome remains unimpressive as growth
in the hysteroscopic sterilization market has been decelerating for
three consecutive quarters. We also believe that the current
hindrances will further deteriorate the already gloomy situation.
However, the recent FDA approval to include 10-year data is
expected to act in favor of Conceptus' regaining its position in a
still underpenetrated US hysteroscopicsterilization market.
Presently, Conceptus retains a Zacks #3 (short-term 'Hold'
Rank), which also corresponds to our long-term 'Underperform'
recommendation on the stock.
CONCEPTUS INC (
): Free Stock Analysis Report
HOLOGIC INC (
): Free Stock Analysis Report
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