Leading medical devices player,
), recently presented positive data from the Symplicity HTN-2
clinical trial that is evaluating the safety and efficacy of renel
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, the safety of renal denervation with this particular
system was also maintained at 18 months, without any device-related
serious adverse events and no newly reported vascular complications
from 12−18 months.
The company has been witnessing 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 along with a deep
pipeline/portfolio − which includes CoreValve, Resolute Integrity,
Atrial Fibrillation, renal denervation and peripheral businesses −
will be the driving factors for the company. This strategy of
portfolio diversification has been followed by its peers such as
St Jude Medical
) as well.
Of these driving factors, renal denervation, serving a significant
unmet clinical need in uncontrolled hypertension, deserves special
mention given its immense market potential. 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
While the Symplicity system has received both CE Mark and
Australia's Therapeutic Goods Administration (TGA) 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 complete during the first calendar quarter of 2013.
We have a Neutral recommendation on Medtronic. The stock retains
a Zacks #3 Rank (Hold) in the short term.
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