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Radiosurgery systems maker, Accuray Incorporated (ARAY - Analyst Report) published encouraging data about its CyberKnife Robotic Radiosurgery System, which provides stereotactic body radiation therapy (SBRT) to treat prostrate cancer.

Clinical findings from the 5-year long term study of 304 patients demonstrated the efficacy of the device in successfully treating patients with low and intermediate risks of prostrate cancer. It has been found that majority of the people with such risks recorded zero cancer rate during the five year median time period studied.

Additionally, the short duration of the treatment along with minimal side effects and the ability to maintain a healthy lifestyle post-treatment renders a competitive edge to the CyberKnife treatment. Moreover, the recently updated Model Policy of the American Society for Radiation Oncology (ASTRO), recommending SBRT for prostrate cancer treatment, is encouraging news for Accuray.

The CyberKnife system is a non-invasive alternative to traditional surgery and is the first and only commercially available intelligent robotic radiosurgery system designed to treat solid tumors anywhere in the body. The product faces stiff competition from Varian Medical System’s (VAR - Analyst Report) TrueBeam technology.

The company had also launched a new CyberKnife M6 System and a TomoTherapy H Series, featuring the TomoHDA System at the ASTRO meeting in 2012. We are impressed with Accuray’s achievement of improving product order momentum in the third quarter, on the back of healthy product adoption of these new products.

However, a lot needs to be done to bring the company back on track. We remain concerned over Accuray’s declining top and bottom line along with reduced full-year guidance. Management needs to improve its higher-margin product revenues and aggressively remediate its structural issues for new offerings to fully contribute to total sales.

Moreover, Accuray remains susceptible to the weak U.S. and European markets, reimbursement uncertainties and faces stiff challenges from competitive product offerings.

Currently, the company carries a Zacks Rank #3 (Hold). Other medical instrument companies such as Heartware International (HTWR - Snapshot Report) and  Intuitive Surgical (ISRG - Analyst Report) with a Zacks Rank #2 (Buy) are worth considering.

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