Covidien plc (COV) recently declared its plans to withdraw its OneShot Renal Denervation program. Covidien expects to record after-tax charges in the range of $20 million to $25 million as a result of exiting the program.
The OneShot system is a wire balloon-based irrigated catheter technology, designed for patients suffering from hypertension who failed to respond to other conventional medical therapy forms.
Covidien marked its entry into the renal denervation market with the purchase of Maya Medical and eventually unveiled the OneShot system.
Weak demand for the product as demonstrated by the slower-than-expected development of the renal denervation market, prompted the company for such a move. The exit decision is believed to be the outcome of the regular review of the strategic programs that were undertaken by the company to examine the growth aspects of its varied product portfolio.
Recently, medical devices maker Medtronic, Inc. (MDT) also announced that its U.S. pivotal trial in renal denervation for treatment-resistant hypertension, SYMPLICITY HTN-3, failed to meet its primary efficacy endpoint.
However, the voluntary move by the company will not stop it from exploring further opportunities in the hypertension market, which has strong potentials to accelerate future growth prospects of the company.
Following the decision to exit the market, Covidien will also not move ahead with its RAPID II study (Rapid Renal Sympathetic Denervation for Resistant Hypertension Using the OneShot Ablation System).
The company plans to collaborate with physicians and the renal denervation community in future to ensure that its existing OneShot patients are informed about its exit decision, and currently enrolling clinical trials receive a smooth transition.
Currently Covidien carries a Zacks Rank # 1 (Strong Buy).
Investors interested in the medical device industry can also look at other top-ranked stocks like Cardiovascular Systems Inc. (CSII), and NuVasive, Inc. (NUVA). Both these stocks carry the same Zacks Rank as Covidien.
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