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Nevro's (NVRO) Senza System Approved by FDA for PDN Treatment

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Nevro Corp. (NVRO - Free Report) recently announced the receipt of the FDA’s approval for its Senza System for the treatment of chronic pain associated with Painful Diabetic Neuropathy (“PDN”). The approval is, however, specific to Nevro's unique 10 kHz stimulation.

Following the approval, Nevro currently has the only spinal cord stimulation (“SCS”) system approved by the FDA with a specific indication for the treatment of PDN.

For investors’ note, the company will immediately begin commercial launch activities in the United States under its recently launched HFX branding, as HFX for PDN. Internationally, the company will be carrying out phased launches in the U.K., Germany and Australia, with further planned expansion in 2022.

The latest regulatory clearance is expected to significantly strengthen Nevro’s foothold in the global SCS therapy business.

Background of the Approval

The FDA approval was based on favorable outcome of the SENZA-PDN randomized controlled trial (“RCT”). The six-month results of the RCT were previously published in JAMA Neurology in April and the 12-month follow-up results and six-month crossover patient data were recently presented at the American Diabetes Association’s session in June.

Further, these data will be used to support physician referrals as well as market access initiatives to expand payer coverage of this procedure.

Significance of the Clearance

Per management, the recent regulatory clearance provides a new breakthrough SCS treatment option for PDN patients. These patients are currently struggling with crippling pain, and are unable to find relief with currently available pharmacologic options. The company also believes that the initiation of the commercial launch activities in the United States and the new indication will be an important long-term growth driver of its business.

Financial Implications

Nevro expects a mid-single-digit million revenue contribution from PDN in 2021. However, the majority of revenues are expected to be generated in the fourth quarter, with wider penetration and a larger revenue contribution expected in 2022 and beyond.

The revenue contribution is expected to be gradually built during the initial months following the launch. This is expected on the back of rising awareness among referring physicians and patients, patients moving through the referral to trial to permanent implant pathway, and expanding access with insurance payers.

Industry Prospects

Per a report by Market Data Forecast, the global SCS market was estimated to be $1,871.6 million in 2020 and is anticipated to reach $2,827.4 million by the end of 2025 at a CAGR of 8.6%. Factors like rising cases of chronic and neuropathic pain, and growing adoption of SCS therapy are likely to drive the market.

Given the market potential, the latest FDA approval is expected to significantly boost Nevro’s business worldwide.

Notable Developments

Of late, Nevro has witnessed a few notable developments across its business.

The company, in May, announced its first-quarter 2021 earnings, where it reported modest year-over-year revenue uptick. The company also confirmed receipt of the FDA’s approval for the first major Omnia upgrade and new trial stimulator module.

Nevro, in April, announced the introduction of its new HFX brand and updated website, which has been designed to combine its products and services to optimize physician and patient experience.

Price Performance

Shares of the company have gained 13.1% in the past year compared with the industry’s 11.2% growth and the S&P 500's 31.6% rise.

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Zacks Rank & Key Picks

Currently, Nevro carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Henry Schein, Inc. (HSIC - Free Report) , AMN Healthcare Services Inc (AMN - Free Report) and Align Technology, Inc. (ALGN - Free Report) .

Henry Schein’s long-term earnings growth rate is estimated at 11.2%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AMN Healthcare’s long-term earnings growth rate is estimated at 6.5%. It currently carries a Zacks Rank #2.

Align Technology’s long-term earnings growth rate is estimated at 23.2%. It currently carries a Zacks Rank #2.

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