Good News for STJ's Durata - Analyst Blog
14 Mai 2013 - 10:50AM
Zacks
St. Jude Medical
Inc. (STJ) announced encouraging results regarding the
highly controversial Durata and Riata ST Optim implantable
cardioverter defibrillator (ICD) leads from an independent
research. The research was conducted by renowned health science
research institute Population Health Research Institute (PHRI) and
presented at the Heart Rhythm 2013.
PHRI analyzed more than 11,000 leads from the Optimum, Score and
SJ4 Post-Approval registries, sponsored by STJ. Initial results
from the study demonstrated that the Optim-insulated leads are
99.9% free from insulation abrasion and 99.4% free from mechanical
failure after 5 years of implant.
ICDs are used to treat abnormal heart rates, which might lead to
sudden cardiac deaths (SCD). St. Jude’s latest ICD offerings
include the FDA-approved Durata SJ4 and the Durata high-voltage
leads. These leads along with the Riata ST Optim lead feature St.
Jude’s exclusive Optim insulation, which has demonstrated a
statistically significant reduction in the incidence of insulation
abrasion in comparison to the previous generation silicone
insulated leads.
Our Take
St. Jude had received a warning letter from the FDA in Jan 2013 for
its Sylmar facility, which manufactures the Durata and Riata ST
Optim leads. The FDA is concerned that the newer generation
high-voltage Durata leads might face the same problem as the Riata
leads, which the company recalled in 2011 due to insulation
failure.
Positive data from the independent PHRI is encouraging as it
indicates that the high-margin Durata ICD leads from St. Jude’s
core Cardiac Rhythm Management (CRM) business are safe and
reliable.
St. Jude’s CRM division is still underperforming, reflecting
underlying end-market pressure. Revenues from the CRM division fell
8% year over year in the first quarter of 2013. ICD sales declined
5% in the first quarter but we believe that market trends will
stabilize soon on the back of new products.
St. Jude’s peer Boston Scientific (BSX) also
reported disappointing CRM sales in the first quarter of 2013,
indicating sustained softness in the CRM market.
The positive news regarding Durata and the recent CE Mark approval
of new products sparked market optimism as shares of this Zacks
Rank #3 (Hold) stock achieved a new 52-week high, touching $43.86
on Friday, May 10, above its previous 52-week high of $43.76.
Orthopedic major, Stryker Corporation (SYK) also
attained a new 52-week high of $67.36 on May 9.
Other medical stocks such as Conceptus (CPTS)
carrying a Zacks Rank #1 (Strong Buy), warrants a look.
BOSTON SCIENTIF (BSX): Free Stock Analysis Report
CONCEPTUS INC (CPTS): Free Stock Analysis Report
ST JUDE MEDICAL (STJ): Free Stock Analysis Report
STRYKER CORP (SYK): Free Stock Analysis Report
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