Medtronic plc MDT recently acquired Stimgenics, an IL-based company offering a new-generation spinal cord stimulation (SCS) waveform — Differential Target Multiplexed (DTM) Spinal Cord Stimulation. The DTM therapy will be now delivered through Medtronic’s Intellis platform and is believed to be a new alternative for the treatment of chronic pain.
For investor’s note, the buyout is expected to have a neutral effect on Medtronic’s fiscal 2020 earnings. However, further financial details have not been disclosed.
In the same press release, Medtronic announced plans to present outcomes of a three-month randomized control trial (RCT) at the upcoming North American Neuromodulation Society (NANS) Annual Meeting (to be held between Jan 23 and 26 in Las Vegas). The RCT evaluated the superiority of the DTM against the conventional SCS, followed by an evaluation of outcomes through a 12-month follow-up.
With these recent developments, Medtronic aims to fortify its position in the pain therapies segment of its Restorative Therapies Group business on a global scale.
Rationale Behind the Acquisition
Per Medtronic’s management, this buyout is of strategic importance as it believes that the integration of the DTM therapy will advance the treatment of chronic pain.
The DTM waveform, studied till now in animal models, has demonstrated impressive results by reversing pain behaviors compared to either low frequency or high frequency alone. Also, preclinical studies assessing the nerve-injured animals suggest DTM to have a better impact than other frequencies alone. With these favorable outcomes in sight, Medtronic feels that the acquisition is an important step toward strengthening its spinal cord stimulation systems of its Pain Therapies division.
Per a report by Market Data Forecast, the global spinal cord stimulation market was estimated at $1871.6 million for 2018 and is expected to reach $2827.4 million in 2023, at a CAGR of 8.6% between 2018 and 2023. Factors like aging population and increasing prevalence of chronic pain are expected to drive the market.
Given the rising potential of the market, the buyout has been timed well.
Recent Developments in Restorative Therapies Group
In December 2019, Medtronic received the FDA’s approval for its Stealth Autoguide system, which integrates with its enabling technology portfolio to develop an end-to-end procedural solution.
Medtronic announced the U.S. launch of its advanced Patient Programmer technology for Deep Brain Stimulation (DBS) therapy at the Samsung Developers Conference in San Jose, CA, in October 2019. Notably, the programmer received FDA approval in July 2019.
Further, the company submitted a pre-market approval supplement to the FDA in October to obtain clearances for its InterStim Micro neurostimulator and InterStim SureScan MRI leads.
Medtronic received the FDA approval for a prospective, randomized pivotal clinical trial for the use of Infuse Bone Graft in Transforaminal Lumbar Interbody Fusion spine procedures in September 2019.
Shares of Medtronic have gained 37.3% in the past year compared with the industry’s 15.9% growth.
Zacks Rank & Other Key Picks
Currently, Medtronic carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks from the broader medical space are Haemonetics Corporation HAE, Hill-Rom Holdings, Inc HRC and Vapotherm, Inc VAPO.
Haemonetics, currently flaunting a Zacks Rank #1 (Strong Buy), has a projected long-term earnings growth rate of 13.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hill-Rom’s long-term earnings growth rate is estimated at 11.7%. The company currently carries a Zacks Rank #2.
Vapotherm’s long-term earnings growth rate is estimated at 49.5%. It currently carries a Zacks Rank #2.
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