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BSX Begins NECTAR-HF Trial

Zacks Equity Research

Boston Scientific Corporation (NYSE: BSX - News) began enrollment in its NECTAR-HF (NEural Cardiac TherApy foR Heart Failure) clinical trial. The randomized trial is designed to assess preliminary safety and effectiveness of chronic vagal nerve stimulation in heart failure patients.  The study will be conducted on 96 patients with vagal nerve stimulator implants at multiple centers in Europe.  

According to the Principal Investigator of the study, vagus nerve stimulation in the cervical region is generally used to treat epilepsy and depression. However, pre-clinical data have demonstrated that this therapy may also treat heart failure patients who are currently not candidates for heart failure device therapy. The trial will study whether vagal nerve stimulation can bring back autonomic balance resulting in improvement of heart function.

With the new therapy, Boston Scientific aims at evaluating an alternative treatment option for patients with heart failure. The therapy is a part of the company’s Priority Growth Initiatives targeting markets with high potential. It is estimated that congestive heart failure afflicts nearly 23 million people globally, with 2 million new patients diagnosed annually.  

Currently, Boston Scientific faces several challenges as its core businesses consisting of stents and defibrillators are witnessing significant pricing pressure and loss of market share. As a result, the company is trying out other alternatives to revive its top line. These include technological developments through acquisitions, restructuring program, debt reduction and a new $1 billion share repurchase program. The recently announced restructuring program aims to increase productivity through zero-based budgeting and implementation of Emerging Market Initiative. These restructuring efforts are estimated to shore up $225–$275 million of gross annual savings exiting 2013.

We currently have an Outperform recommendation on Boston Scientific, which corresponds with the Zacks #2 Rank (Buy) in the short term. The company faces stiff competition from players such as Medtronic (NYSE: MDT - News) and St Jude Medical (NYSE: STJ - News), both carrying Zacks #3 ranks (Hold) along with Neutral recommendations.

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