Recently, Medtronic Inc. (MDT) announced results from the IN.PACT drug-eluting balloon (DEB) clinical program. Although results of the randomized trial are yet to come, according to available clinical data, DEBs hold potential to treat both coronary and peripheral arterial diseases. This has become another platform for cardiovascular interventions besides traditional balloon angioplasty, bare-metal stents and drug-eluting stents (DES).
The IN.PACT superficial femoral artery (SFA) I trial is targeted at investigating the safety and efficacy of the IN.PACT Admiral paclitaxel-eluting percutaneous transluminal angioplasty (PTA) balloon catheter in the SFA compared with treatment with a standard PTA balloon. The study will be conducted with 150 patients at about 20 sites in Europe. In addition, the company will also perform IN.PACT SFA II trial in the US. Based on results from these two trials, Medtronic will be able to file for regulatory approval.
Medtronic’s cardiovascular segment, accounting for 19% of revenues, offers minimally invasive products and therapies to treat coronary artery disease, abdominal and thoracic aortic aneurysms, peripheral vascular disease and heart valve disorders. We believe successful commercialization of DEB in the US will drive revenue growth of this segment going ahead.
Medtronic’s cardiovascular segment has witnessed several acquisitions in the recent past. In August 2010, the company acquired ATS Medical for $370 million including its debt burden. Earlier in April 2010, Medtronic had acquired Invatec, whose portfolio consists of stents, angioplasty balloons and accessory products.
Medtronic has posted a disappointing first quarter with sales declining in two of its largest segments, CRDM and Spinal. However, we are encouraged by the growth of the cardiovascular and diabetes segment. Medtronic is increasing its focus on the emerging markets and is targeting at increasing revenue contribution from this region. Besides, acquisitions should enable the company to record higher revenues in the forthcoming period. However, the company operates in a highly competitive environment and is exposed to the risk of currency movement.
We maintain our Neutral recommendation on the stock.
MEDTRONIC (MDT): Free Stock Analysis Report
Zacks Investment Research
