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Precision guided therapy tools provider, Volcano Corporation (VOLC - Analyst Report) recently announced positive outcome from a multi-center intravascular ultrasound ("IVUS") sub-study. Based on the data collected from 3,349 patients and as a part of the Cardiovascular Research Foundation's ("CRF") ADAPT-DES (Assessment of Dual AntiPlatelet Therapy with Drug-Eluting Stents) study, this sub-study reflected safer and better patient outcomes in stent procedures with IVUS at 30 days and 12 months compared to procedures without IVUS. The study results were demonstrated in the 24th Annual Transcatheter Cardiovascular Therapeutics ("TCT") scientific symposium.

The ADAPT-DES study is based on the multi-center registry of 8,583 patients with coronary artery disease undertaking percutaneous coronary intervention ("PCI") with drug-eluting stents ("DES"). The study reveals IVUS as an independent predictor in optimizing placement and improving patient outcomes by significantly reducing stent thrombosis (a 50% reduction) and myocardial infarction (a 33% reduction).

While discussing the study results, Volcano Corporation claimed that the IVUS guidance had helped the interventionalist to choose a more improved and personalized treatment path thereby encouraging them to change the therapy in more than two-thirds of the cases.

Volcano Corporation derives a major part of its revenues from its IVUS product portfolio. During the last reported quarter, the company witnessed mid-single-digit growth in IVUS disposable revenues in the US, although performance in Japan as well as in Europe were disappointing. However, we appreciate the company’s strategy of driving growth based on market penetration, share gain and pricing benefits with the introduction of more advanced IVUS catheters and related technology. Moreover, we believe that the low IVUS penetration rate in the US and Europe provides better scope to increase its market share.  

Volcano Corporation is also optimistic about new Visions PV .035 Digital IVUS (Intravascular Imaging) catheter, which received market approvals in both the U.S. and Europe earlier in October 2012. The company expects these clearances to act as major boosters in improving its IVUS disposable performance and will match its strategy to increase the market adoption of IVUS.

In addition, Volcano Corporation has high expectations from the next-generation IVUS technology called FACT (Focused Acoustic Computed Tomography), the commercial launch of which is slated for mid-2013 in the US and Europe, and a year later in Japan. The company is also progressing with respect to its Forward-Looking IVUS and Forward-Looking Intra-Cardiac Echo programs.

However, Volcano Corporation continues to face challenges in the form of tough macroeconomic environment, especially in Europe. Moreover, unfavorable currency movement continues to play as a major headwind for the company. For the IVUS range of products, the company faces tough competition from Boston Scientific Corporation (BSX - Analyst Report).

We have a Neutral recommendation on Volcano Corporation. The stock retains a Zacks #3 Rank (Hold) in the short term.

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