Accuray Inc’s (ARAY) TomoTherapy System recently started operating breast cancer patients at Fundacion de Cancer de Mama (FUCAM) in Mexico City. The first TomoTherapy system exclusively to operate breast cancer in Latin America has already treated 120 women within a short span of two months.
Globally, breast cancer is the second leading cause of cancer death in women, exceeded only by lung cancer. The chance that breast cancer will be responsible for a woman's death is about 1 in 36 (3%)., Breast cancer is diagnosed most commonly in Latin America and claims more lives than any other cancer type in the region.
Per a report from researchers of the Karolinska Institute, OptumInsight and Stockholm School of Economics, ageing is the principal risk factor of breast cancer. This along with changes in the demographical structure is expected to cause epidemiological shifts and by 2020, breast cancer will approach epidemic proportions in the Latin American region.
Per a report published by Latin American and Caribbean Demographic Centre (CELADE), people aged 65 and above will represent 19% of the population in Argentina, 21% in Uruguay, 21.4% in Mexico and 22.6% in Brazil by 2050.
However, effective treatment for breast cancer varies significantly from country to country in the region, depending on socio-economic condition and participation of the private sector. With only a small part of the patient population being able to access proper breast cancer treatments, the scope for market penetration and expansion is significant.
The TomoTherapy System – acquired by Accuray in 2011 – is the only system designed for image-guided intensity-modulated radiation therapy (IG-IMRT). Radiation therapy is often recommended to women, who have breast-conserving surgery, since it may reduce risk of recurrence by up to 70%.
In case the disease spreads to other parts of the body, it will also be treated with radiation therapy. The latest Tomo H series is designed to deliver radiation treatments with speed and precision while reducing radiation exposure to the surrounding healthy tissues.
We believe that TomoTherapy systems’ efficient delivery mode is expected to attract breast cancer centers in Latin America. We believe that the growing adoption of the system will boost Accuray’s top line over the long term.
However, the system involves significant capital spending, which many regional health care providers may be reluctant to spend in the near term. The recent fall in oil and commodity prices has negatively impacted the region’s macro-economic environment, which is a significant headwind for healthcare providers.
Moreover, strengthening of the U.S dollar against most of the Latin American currencies is a major concern. We believe that unfavorable foreign exchange will continue to negatively impact Accuray’s revenues in 2015. Meanwhile, gross margins are expected to remain under pressure owing to continuing investments in product and supplier quality, service and logistic system.
Zacks Rank
Currently, Accuray has a Zacks Rank #4 (Sell). Better-ranked stocks in the sector are Abiomed (ABMD), Inogen (INGN) and Luminex (LMNX). All the companies sport a Zacks Rank #1 (Strong Buy).
(We are reissuing this article to correct a mistake. The original article, issued on Feb 5, 2015, should no longer be relied upon.)
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