St. Jude Medical's CardioMEMS HF System Tests Positive - Analyst Blog

St. Jude Medical Inc. ( STJ ) has revealed a retrospective data analysis from its CHAMPION trial, conducted to evaluate the safety and efficacy of its CardioMEMS Heart Failure (HF) System on patients with New York Heart Association (NYHA) Class III HF. The latest evaluation shows a significant reduction in 30-day hospital readmission rates for patients aged 65 and above.

The CHAMPION trial demonstrated a 58% reduction in all-cause hospital readmissions (hospitalization for any reason) and a significant 78% fall in HF hospital readmissions when patients were treated with the CardioMEMS HF System compared to standard-of-care medical management.

The CardioMEMS HF System is a first-of-its-kind heart failure monitoring device that uses a miniature wireless sensor to track the level of pressure borne by heart-failure patients. The implantable device is designed to proactively detect early signals of rising pressure or any deterioration in the heart failure condition, helping to avoid a crisis that could result in hospitalization.

Under the U.S. Centers for Medicare and Medicaid Services' (CMS) Hospital Readmissions Reduction Program (HRRP), hospitals which reported an excess of all-cause 30-day readmissions for HF, heart attack and pneumonia discharges compared with the national average, were penalized $227 million in fiscal 2014. The penalty fees list in 2015 will also include chronic obstructive pulmonary disease (COPD), total hip and total knee replacement and the estimated penalties have been forecast at $428 million.

Thus, by incorporating proactive pulmonary artery pressure monitoring using the CardioMEMS HF system, hospitals can significantly reduce the risk of government-imposed penalties that are aimed at reducing patient readmissions within 30 days of treatment.

Future Potential

St. Jude Medical plans to pioneer an entirely new market with its innovative CardioMEMS technology and expects the same to become a major new growth driver for the company in 2015 and beyond.

Marking a significant accomplishment with respect to market development of the CardioMEMS system, CMS approved a New Technology Add-on Payment (NTAP) for the system in Aug 2014. Under the NTAP program, that took effect on Oct 1, 2014, Medicare patients will have timely access to CardioMEMS technology to proactively manage heart failure, improve patient outcomes and reduce hospital admissions.

St. Jude Medical plans to initiate the FDA mandated post-approval clinical trial for CardioMEMS in the fourth quarter. The protocol for the clinical trial received final approval from the FDA in Aug 2014 and patient enrollments for the same are expected to begin soon.

The company is also simultaneously beginning the process of establishing appropriate reimbursement for its CardioMEMS technology in key international markets. St. Jude Medical has not yet begun the launch of CardioMEMS in international markets and intends to do so only after the reimbursement procedures begin.

Meanwhile, St. Jude Medical has signed contracts and received orders for its CardioMEMS system from roughly 25 customers including some of the top heart failure centers in the U.S. Furthermore, the company has presented contract proposals to around 75 additional customers, reflecting significant momentum.

For fourth-quarter 2014, St. Jude Medical expects CardioMEMS to generate sales of roughly $12 million. For full-year 2014, revenue expectation from this product line stands at $15-$20 million while the same for 2015 is well over $50 million.

Though complete development of the CardioMEMS market will take time, the company believes that this technology has the potential to become a new blockbuster opportunity once the market has been developed on a worldwide basis.

Currently, St. Jude Medical carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the medical products industry include GW Pharmaceuticals ( GWPH ), ICU Medical ( ICUI ) and OraSure Technologies ( OSUR ). All three sport 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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