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Intersect ENT Rides on Innovation Amid Pricing Concerns

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On Sep 16, we issued an updated research report on Intersect ENT, Inc. (XENT - Free Report) . While we are encouraged by the company’s growth prospects, driven by the favourable Chronic Sinusitis market, its tough pricing scenario raises concerns. The stock has a Zacks Rank #3 (Hold).

In order to maintain its position in the ENT specialty market and widen its sales base, Intersect ENT is focusing on product development and innovation.

The company recently completed the ENCORE Study, a small 50-patient open label program designed to evaluate the safety of the repetitive use of SINUVA. Further, it submitted a supplemental pre-market approval (PMA) for a new PROPEL Mini delivery system. Last November, the company announced publication of a pooled analysis of its PROPEL Contour and PROPEL Mini steroid releasing sinus implants, showing improved outcomes of the frontal sinus surgery.

Within a short period of time, the SINUVA business line has made a considerable advancement with market access and field force balance. Currently, the company is making concerted efforts to leverage the timing of J code availability for SINUVA in getting at least one new specialty pharmacy partner on board by 2019 end. The sales team will continue to support physicians currently using SINUVA and prepare a wider commercial rollout in early 2020.

Regarding its Propel line, the company is hopeful of its product making a progress on the addition of accounts and extensive uptake of Contour among both current and new physicians. The additional and strategic sales support deployed by the company is expected to fuel growth for the PROPEL franchise.

On the flip side, over the past year, shares of Intersect ENT have underperformed the industry it belongs to. The stock has lost 36.8% compared with a 4.6% fall of the industry. Escalating selling, general and administrative as well as R&D expenses have resulted in an operating loss in the second quarter.

While the company has seen increased SINUVA enrollments in the second quarter, inefficiencies in the overall product access process combined with physician hesitancy to buy bills caused the company’s failure to provide treatment for patients.  This apart, the pricing scenario has been persistently tough for Intersect ENT. Strong competitors in the large medical device market also pose a challenge. The slashed guidance for 2019 is indicative of this persistent dull trend as well.

Stocks Worth a Look

A few better-ranked stocks in the broader medical space are Haemonetics HAE, Baxter BAX and Amedisys AMED, each carrying a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Haemonetics’ long-term earnings growth rate is expected to be 7.13%.

Baxter’s long-term earnings growth rate is projected at 12.8%.

Amedisys’ long-term earnings growth rate is estimated to be 16.26%.

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