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Recently, AngioDynamics (ANGO - Analyst Report) announced that it has won the Investigational Device Exemption (IDE) approval from the U.S. Food and Drug Administration (FDA). The regulatory approval allows this provider of minimally invasive medical devices to carry out a clinical study of the NanoKnife System for the ablation of focal prostate cancer.

Following the approval, AngioDynamics is progressing with the institutional review board (IRB) submissions for the clinical study. The company plans to begin patient enrollment in the second quarter of fiscal 2014 (ending Nov 30, 2013).

Meanwhile, AngioDynamics forged a partnership with the Clinical Research Office of the Endourological Society (CROES). Subsequently, the company is carrying out a clinical study to demonstrate NanoKnife System's efficacy within the armamentarium for low-intermediate localized prostate cancer. The study – Multicenter Randomized Two-Arm Intervention Study Evaluating Irreversible Electroporation for the Ablation of Localized Unilateral Prostate Cancer will enroll 200 patients across six European countries.

AngioDynamics’ Oncology/Surgery business currently serves a $600 million market. While the company already has 7% market share, positive data on NanoKnife that improves the adoption rates should further support market share gain.

According to AngioDynamics, the demand for minimally invasive technology in the urology space is soaring. Given this backdrop, positive data from clinical studies that support the application of NanoKnife for treatment of focal lesion within the prostate should improve adoption of the company’s technology. Management will discuss this opportunity in details during the fourth-quarter conference call.

Revenues from NanoKnife shot up 35% year over year to $2.7 million in the third quarter of fiscal 2013. The company also witnessed considerable demand for its NanoKnife among urologists. On the other hand, management is also working on expanding the application of NanoKnife for focal treatment of pancreas cancer. The expansion of NanoKnife’s application to the large untapped potential markets should foster growth for AngioDynamics.

Our Take

Minimally invasive surgery is becoming increasingly popular in helping patients reduce recovery time, thereby reducing hospitalization costs. With an increasing number of patients and physicians introducing the latest technology for surgical procedures for cancer treatment, AngioDynamics is expected to capture a sizeable market share of the minimally invasive surgery market over the next few years.

However, AngioDynamics’ softness in elective procedures, delayed capital spending and persisting austerity measures in the market continue to affect its top line. Further, intense competition and pressure on gross margin remain matters of concern.

Currently, the stock carries a Zacks Rank #3 (Hold). While we remain on the sidelines for AngioDynamics, we believe that other medical stocks such as Natus Medical Inc. (BABY - Snapshot Report), carrying a Zacks Rank #1 (Strong Buy), warrants a look. CryoLife Inc. (CRY - Snapshot Report) and Heartware International Inc. (HTWR - Snapshot Report) are also worth considering. These stocks hold a Zacks Rank #2 (Buy).
 

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