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Varian to Work with PSI on IMPT

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Oncology and X-Ray products company Varian Medical Systems (VAR) and Paul Scherrer Institute (“PSI”) recently revealed a collaborative effort to pursue further knowledge in advanced management of motion in the field of proton therapy. The two entities will focus on rationalizing treatment methodologies for different cancers and use a 4-D simulator (designed by PSI) useful for planning treatment.

In proton therapy, a regulated stream of highly focused protons is used to tackle tumors. Every effort is made to curtail damage to healthy cells.

The Paul Scherrer Institute based in Switzerland is a developer of Intensity Modulated Proton Therapy (“IMPT”) know-how. It pays special attention to the treatment of children. PSI’s techniques allow doctors to single out malignant growths for treatment deep within the body, while curtailing damage to healthy cells.     

Varian is a leading manufacturer of integrated radiotherapy systems for cancer treatment and a premier supplier of X-Ray tubes for diagnostic imaging applications. The company operates in a technology-driven environment where success depends on the use of new technology, product development and upgrades. In the radiation oncology market, Varian competes with Accuray Incorporated (ARAY).

The company is poised to increase its market share in radiation oncology. It currently enjoys a healthy demand for its coveted TrueBeam technology, which has meaningfully contributed to its net order oncology growth. Varian’s TrueBeam is designed to treat tumors with beams of high speed and precision. It incorporates several technological innovations such as patient positioning and the individual’s motion management. Given its high intensity nature, TrueBeam can dispense strong dosage over twice as fast as that possible with earlier equipment.

Moreover, Varian continues to post decent results despite the contagion of economic problems in Europe and sustained softness in certain end markets. It enjoys a strong balance sheet marked by low debt and sizeable cash. The company also periodically deploys capital to boost investor confidence via share repurchases.

However, Varian competes with larger players in a technology-intensive industry. Further, uncertainties stemming from health care reform and a still weak hospital capital spending environment across many developed countries, especially in Europe, are significant challenges.

The stock carries a Zacks Rank #3 (Hold). Cyberonics Inc. (CYBX) and Abiomed, Inc. (ABMD) are Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy) stocks, respectively, which are expected to do well.

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