Positive Data for COV's Pipeline - Analyst Blog

Covidien ( COV ) has published the final results of the Pipeline for Uncoilable or Failed Aneurysms clinical study, designed to analyze its Pipeline Embolization device. The results have been published in the Radiology journal. The device is used for treating adults with large, giant and wide-neck cerebral aneurysms (a brain vascular disorder).

Cerebral aneurysms is a condition manifested by the dilation of blood vessels in the brain due to weakness in the wall of a cerebral artery/vein. According to the National Institute of Neurological Disorders and Stroke ("NINDS"), it is mostly prevalent in people aged between 30 and 60 years.

If left untreated, the bulging vessel can put pressure on the surrounding brain tissues/nerves or may leak or rupture, resulting in brain hemorrhage. Ruptured cerebral aneurysms affect roughly 30,000 Americans each year.

Currently, surgery and endovascular treatments are widely used to treat cerebral aneurysms. However, these are associated with risks such as potential damage to surrounding blood vessels, disease recurrence and post-operative stroke. As such, there remains a major unmet medical need for the treatment of cerebral aneurysms.

The Pipeline Embolization Device, following its implantation, works by diverting blood flow from an aneurysm. Based on the clinical study results, this device appears to be a safe and effective alternative to the existing treatment options for treating cerebral aneurysms. It was found that of the 106 cases treated with the Pipeline devices, 73.6% of the aneurysms completely closed out. Moreover, it had met the trial's preliminary end points, which led to the U.S. Food and Drug Administration (FDA) approval in Apr 2011.

Covidien obtained the Pipeline Embolization Device following its $2.6 billion acquisition of endovascular devices maker, ev3 Inc in Jul 2010. The device has CE Mark approval in Europe and has been marketed outside the U.S. since Jul 2009.

Our Take

Covidien remains committed to rolling out new products and technologies, focusing on emerging markets, and boosting market share in the core segments through acquisitions. The encouraging clinical data should boost sales of the Pipeline devices, which is a part of the company's Vascular products line under the larger Medical Devices segment.

Vascular product sales grew 4% to $404 million in the last reported quarter, backed by solid growth across neurovascular, peripheral vascular and chronic venous insufficiency offerings, offset by depressed compression products sale.

However, the company recently provided a dismal fiscal 2013 guidance, which complements its Zacks Rank #5 (Strong Sell). Further, uncertainty regarding divestment of the Pharmaceutical unit at the end of the company's third fiscal quarter of 2013, keeps us on the sidelines.

While we strongly recommend investors to avoid this stock, other medical stocks such as Haemonetics ( HAE ), Atricure ( ATRC ) and Baxano Surgical ( BAXS ) warrant a look. HAE carries a Zacks Rank #1(Strong Buy), while the other two stocks carry a Zacks Rank #2 (Buy).

ATRICURE INC (ATRC): Free Stock Analysis Report

BAXANO SURGICAL (BAXS): Free Stock Analysis Report

COVIDIEN PLC (COV): Free Stock Analysis Report

HAEMONETICS CP (HAE): Free Stock Analysis Report

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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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