Leading medical devices player,
Medtronic
(
MDT
) has progressed with respect to its renal denervation program. The
company began a clinical trial with the system in Japan for
patients with treatment-resistant hypertension. The trial will be
conducted across 11 centers in Japan. Patients in the trial will be
equally divided to be treated with renal denervation versus no
denervation. All the patients will be receiving doses of
anti-hypertensive medications.
In August, Medtronic presented positive data from the Symplicity
HTN-2 clinical trial that is evaluating the safety and efficacy of
renal denervation. The 18-month data demonstrated that the
Symplicity system continues to provide superior and sustained blood
pressure reduction in patients with treatment-resistant
hypertension. In addition, this particular system has exhibited the
safety of renal denervation through 18 months without any
device-related serious adverse events and has not reported any new
vascular complications in 12-18 months. Hypertension is a primary
risk factor for stroke and is costing the global health care
economy $500 billion a year. The company estimated that with
optimal drug therapy, 30% of the patients remain uncontrolled.
Consequently, approximately 300 million patients would need some
sort of additional therapy by 2020.
According to Medtronic, this indication alone holds a $2−$2.5
billion market opportunity by 2020, excluding the other potential
applications of renal denervation. The Symplicity system was
inducted in the company's portfolio with the acquisition of
privately-held Ardian, in January 2011. During fiscal 2013, revenue
from this business is expected to almost double to $60-$70
million.
While the Symplicity system has received both CE Mark and
Australia's Therapeutic Goods Administration listing, it is yet to
receive approval in the US. However, adoption of the device depends
on the reimbursement status, which in turn depends on positive
clinical data. We expect the company to benefit from the 18-month
positive data. Medtronic's enrollment process for the Symplicity
HTN-3 US pivotal trial is in progress, and is expected to be
completed during the first calendar quarter of 2013.
Medtronic is also working on developing a next-generation renal
denervation system (with a firing multi-electrode catheter and
advanced radio-frequency generator) and recently completed the
first phase of the feasibility study. All nine patients were
treated with a 100% acute success rate in accessing the vessels and
delivering therapy.
We are encouraged with the company's focus on portfolio
expansion given disappointing performance from defibrillators and
spinal implants in the US market. However, we are optimistic that
over the long term, stability in the US defibrillator and spinal
market will be the driving factors for the company. The company's
peers,
St Jude Medical
(
STJ
) and
Boston Scientific
(
BSX
), are also following its strategy of portfolio
diversification.
We have a Neutral recommendation on Medtronic. The stock retains
a Zacks #3 Rank (Hold) in the short term.
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