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MDT Works on U.S. Endovascular Biz

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In a bid to strengthen its endovascular portfolio, medical device major Medtronic Inc. (MDT - Free Report) submitted its foremost pre-market approval (PMA) module to the U.S. Food and Drug Administration (FDA) for the IN.PACT Admiral drug-eluting balloon. This is in line with Medtronic’s plan to submit the first module of the PMA to support the regulatory approval in a timely manner.

This is a significant landmark as the device is a major clinical advancement for the treatment of peripheral artery diseases (PAD). The IN.PACT Admiral drug-eluting balloon is a unique peripheral angioplasty device that will be used to treat atherosclerotic lesions in the superficial femoral artery (SFA).

The range of IN.PACT drug-eluting balloons are available in several countries outside the U.S. since it won the CE mark way back in 2008 and 2009. In the U.S., IN.PACT Admiral drug-eluting balloon is not yet commercially available. It is limited for investigational purposes under an investigational device exemption (IDE) granted by the FDA.

As per management, the company continues to work for the timely launch of the IN.PACT Admiral drug-eluting balloon in the U.S. Medtronic expects to launch the device (yet to gain FDA approval) in the second half of 2015.  

Medtronic expects to serve a vast market for IN.PACT Admiral drug-eluting balloon in the U.S. following the launch in the second half of 2015. PAD constricts the supply of oxygenated blood to the body, mainly the limbs as it obstructs the blood vessels. Major risk factors contributing to PAD are obesity, smoking, diabetes, high blood pressure, high cholesterol old age (over 50 years) and familial history.

According to a publication from medical journal The Lancet, the incidence of PAD has increased approximately 24% over the last decade i.e., from 164 million cases in 2000 to 202 million reported cases in 2010 worldwide. Thus, the commercialization of the drug-eluting balloon should expand Medtronic’s addressable market.

We also look forward to the expected launch of other lucrative Endovascular products like Endurant II in Japan in the ongoing fiscal.

However, headwinds such as macroeconomic weakness, slower sales recovery cycle, segment pressure and currency headwinds warrant caution. Currently, Medtronic carries a Zacks Rank #3 (Hold).

While we have a neutral stance on the medical device major, other stocks such as Alere Inc. , Hanger Inc. and Affymetrix Inc. are worth considering. These stocks carry Zacks Rank #1 (Strong Buy).

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