Conceptus' New Essure in Trial

Conceptus ( CPTS - Snapshot Report ) , the manufacturer of permanent birth control system Essure, recently announced a 60-patient clinical trial with its next-generation Essure procedure. Patient enrollment for the clinical trial has just begun in the company’s two medical centers in Canada and Mexico.

The existing Essure procedure does not immediately provide permanent birth control. It instead requires the patient to wait for a period of 90 days, during which time the body grows over the inserted device, thus forming a barrier that prevents the entry of sperm. Therefore, the woman is not protected during this 90-day period and needs to use some other form of contraceptive.

The next-generation procedure, for which clinical trial has been initiated, uses more advanced technology, which the company expects will eliminate this 90-day waiting period to confirm permanent birth control. The new procedure requires a simple non-invasive transvaginal ultrasound, immediately following the insertion, which would confirm the success of the procedure. Conceptus performed the first placement on July 3, 2012 at Regina Central Hospital in Canada.

If the clinical trial is successful, Conceptus would be able to initiate the Investigational Device Exemption (“IDE”) and Conformité Européene (CE) Mark studies in 2013, which would take it a step closer to pre-market approval in the U.S. and approval in Europe, respectively.

Earlier, in April 2012, Conceptus received the US Food and Drug Administration (FDA) approval for including 10-year data on effectiveness of Essure in the Essure procedure U.S. Instructions for Use (IFU) and Patient Information Booklet (PIB). FDA also allowed the company to include full five-year clinical study results, mentioning the effectiveness rate of 99.83% in the IFU and PIB. With this approval, the clinical trial for Essure (initiated in 1998 and showed zero pregnancies over five years) closed.

The Essure procedure is elective in nature, and often gets delayed due to the economic uncertainty and high unemployment rate. Conceptus’ obstetrics and gynecology (OB/GYN) office visit trends remained mixed during the past few months due to macroeconomic pressure. Given the difficult economic situation, we think that a successful completion of the clinical trial could attract more users, helping the company to strengthen its foothold, not only in the U.S. but also abroad.

The recent exit of Hologic’s ( HOLX - Analyst Report ) Adiana from the permanent birth control market should also be highly beneficial for Conceptus. Notably, On April 30, Conceptus announced the settlement of its patent infringement litigation related to Hologic's competing product Adiana Permanent Contraception System. As per the agreement, Hologic agreed to withdraw its Adiana system from the market.

The Supreme Court’s decision on June 28, 2012 to uphold the Patient Protection and Affordable Care Act of 2010 (PPACA) (also known as Obamacare) is another positive, since it provided a huge impetus to Conceptus’ business. The company is upbeat regarding the fact that under the PPACA, the entire list of contraceptive methods approved by the U.S. Food and Drug Administration (FDA), including the Essure procedure, will be covered by all private insurance plans.

We believe that this Supreme Court ruling will emerge as a landmark development for women's health care. We also think that the recent tailwinds will largely benefit Conceptus’ sales performance as it will increase access and affordability of the Essure procedure worldwide.

Currently, Conceptus retains a Zacks #1 (short-term Strong Buy) Rank.