Medical devices major, St. Jude Medical, Inc. (STJ) recently won European CE Mark approval for its Eon family of neurostimulators used to treat intractable chronic migraine. The Eon family comprises the world’s smallest Eon Mini neurostimulator along with the Eon and EonC neurostimulators.
Earlier in September 2011, the company received CE Mark approval for its Genesis neurostimulation system. The Eon family and the Genesis neurostimulation system are designed for peripheral nerve stimulation (“PNS”) of the occipital nerve (spinal nerve) for managing pain and disability associated with chronic migraine. The devices work by delivering mild electrical pulses to leads placed under the skin at the back of the head, stimulating the occipital nerves.
Migraine is a debilitating condition which can last for hours or days. The condition is characterized by symptoms such as headache, sensitivity to light, noise and motion, nausea and vomiting. According to World Health Organization (“WHO”), chronic migraine ranks among the top 20 most disabling conditions in the world and represents a vastly unmet medical need.
Per WHO, 10% of adults across the world suffer from migraine and 1.7%—4% complain of headache 15 or more days in a month. Per the European Journal of Neurology, annual expenses on migraine treatment amount to $111 billion in the European Union.
The CE Mark approval is backed by a large-scale clinical study which evaluated the effectiveness of PNS to treat chronic migraine. The data presented at the International Headache Congress in 2011 revealed that 65% of the patients reported excellent or good pain relief. Hence, the Eon devices are safe and effective in reducing the number of migraine headache days per month and are capable of improving a patient's quality of life.
St. Jude recently realigned its Cardiac Rhythm Management (“CRM”) Division and Neuromodulation (“NMD”) Division to form the Implantable Electronic Systems Division (“IESD”). These latest Eon family of neurostimulators are expected to boost the IESD’s products portfolio.
The company’s Neuromodulation revenues are growing steadily, benefiting from new spinal cord and Parkinson's disease devices as well as sustained adoption of the Eon Mini implantable neurostimulator. In the last reported second quarter of 2012, Neuromodulation sales increased 2%, (up 5% in constant currency) year over year to $106 million.
St. Jude is a leading medical device manufacturer with a solid rate of growth over the past decade. We are impressed by its solid fundamentals, healthy growth trajectory, strong product mix, robust pipeline and cost management initiatives.
While a host of new growth drivers, including new products and cost saving measures, are expected to boost results in 2013 and beyond, we remain cautious about the increased competition, weakening Euro, the soft CRM market and the overall tough macroeconomic conditions.
A still choppy CRM space overhangs on St. Jude and its peers Medtronic (MDT) and Boston Scientific (BSX). We currently have a Neutral recommendation on St. Jude, which carries a short-term Zacks #3 Rank (Hold rating).
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