Integra (IART) Strengthens Spinal Implant with Twin Launches - Analyst Blog

Medical technology developer Integra Lifesciences Holdings Corporation ( IART ) is on a roll with back-to-back product launches.

The company recently reported the controlled market release of its first expandable interbody device - the Integra Expandable Interbody System - in the U.S. This device is used in spinal fusion procedures to restore heights when fusion of one or two contagious levels (L2-S1) takes place.

The Expandable Interbody System, which won the 510(k) clearance from the U.S. Food and Drug Administration (FDA) earlier this year, is used to treat skeletally mature patients who suffer from degenerative disc disease (DDD). This system allows for 50% expansion from its original starting height while the fusion procedure occurs, thereby reducing the pain a patient has to suffer along with maintaining the patient-specific anatomical fit needed for proper treatment.

In a separate development, Integra reported the limited market release of its latest orthobiologic implant - the Demineralized Bone Matrix (DBM) Strip. This implant is primarily used in posterior lumbar fusion procedure, which involves promotion of bone fusion along the posterior elements of the spine.

The DBM implant is available in two forms - the Integra Shaped Strip and the Integra Pocket Strip. Both are 100% human allograft and provide a natural biologic scaffold with verified osteoinductive potential.

Management's View

Management at Integra is enthusiastic about the market releases of both the Interbody and the orthobiologic devices. Management believes the launch of the Interbody System has added yet another milestone product to the company's Integra lumbar interbody portfolio that will cater to a vast group of spine surgeons who perform posterior and transforaminal interbody fusions, including minimally invasive procedures. This device, coupled with Integra's expanding technology, is expected to result in market share gain for Integra in the evolving interbody market.

On the other hand, the launch of the DBM strip marks the first DBM implant that Integra has designed for a specific surgical procedure. Per management, this new implant expands Integra's biologics footprint and bolsters the company's overall position in the spine market.

Our Take

We believe the market release of both these devices will not only intensify the overall product portfolio of Integra, but will also usher in more profitability at the company. Both the launches are expected to drive a sequential increase in Integra's spine sales in the fourth quarter of 2014 and strongly position the spine business in the long term. We believe the twin releases will further bolster investor confidence in Integra.

However, Integra has plans to spin off its spine and orthobiologics businesses in 2015 to form a new, independent, publicly-held company - SeaSpine. Until SeaSpine is formed, Integra expects further growth in its spine business and believes that the orthobiologics platform will help it capture additional market share. We believe these twin device releases duly support this view of the management.

Zacks Rank

Currently, Integra retains a Zacks Rank #3 (Hold). Better-ranked stocks in the med-biomed/generic industry include Affymetrix Inc. ( AFFX ), AMAG Pharmaceuticals, Inc. ( AMAG ) and ANI Pharmaceuticals, Inc. ( ANIP ). All three stocks carry a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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