Global medical technology companies CR Bard Inc. (BCR) and Boston Scientific Corp (BSX) have recently entered into a limited distribution agreement under which the latter will distribute the former’s Lutonix 035 Drug Coated Balloon (DCB) in the U.S. However, the terms of the agreement have been kept under wraps.
With this agreement, CR Bard intends to expand the reach of Lutonix DCB and allow more patients suffering from Peripheral Arterial Disease (PAD) to benefit from this innovative technology. The Lutonix DCB combines the advantages of angioplasty balloons (a technique of mechanical widening of narrowed or obstructed arteries) and drug-releasing stents, to treat patients with PAD.
The device was cleared by the FDA for percutaneous transluminal angioplasty (PTA) in Oct 2014, making it the first and only FDA-approved DCB in the U.S.
We note that the early approval and launch of Lutonix drug-coated PTA balloon in the U.S. drove an organic sales growth of roughly 6.3% year over year in the recently concluded fourth quarter of 2014. Within the Endovascular business, peripheral PTA line sales jumped 49% year over year, also driven by the launch of Lutonix DCB.
The early market acceptance of the device has been impressive and we believe that the company will witness an expanded adoption of this technology as the market continues to mature.
Currently, Lutonix DCB is undergoing the Levant 2 Japan study. The company expects to submit clinical data from the study by late 2015 for approval in Japan. Notably, the device has been commercially available in Europe since 2012, where it has shown continued strength. Going forward, the company anticipates accelerated sales of the Lutonix DCB in other geographies to drive global growth in the peripheral PTA category.
Though the European response to Lutonix has been particularly remarkable in 2014, CR Bard apprehends several macroeconomic headwinds in the continent to hurt the top line in the near term.
Moreover, government-mandated healthcare reforms in the U.S. have led to a less flexible pricing environment, which is hurting domestic growth. Stiff competition and a soft hospital equipment purchase backdrop are added concerns.
Currently, CR Bard carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the medical/dental supply industry include Bio-Reference Laboratories (BRLI) and Halyard Health (HYH). Both these stocks sport a Zacks Rank #1 (Strong Buy).
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