STJ ST. Jude Medical, Inc.

Medical technology giant St. Jude (STJ) reported that the U.S. Food and Drug Administration (“FDA”) has permitted the company to expand a study evaluating the effectiveness of its deep brain stimulation (“DBS”) system in treating severe depression.

The study dubbed “Brodmann Area 25 Deep Brain Neurostimulation (BROADEN)” is investigating whether stimulation of a region in the brain, called Brodmann Area 25 (BA25), with the company’s Libra DBS system, is safe and effective in treating patients with severe depression who have failed multiple therapies.

The FDA approval allows the BROADEN study to reach a maximum of 20 sites across the U.S. and enroll up to 125 patients. Prior to this, St. Jude conducted the study at only three sites in Chicago, New York City and Dallas. The company will later request approval to further expand the study to a total of 231 patients.

According to the National Institute of Mental Health (“NIMH”), more than 21 million people are affected by some type of depressive disorder. Roughly 4 million of these suffer from severe depression, who do not respond to commonly used treatments such as medications, psychotherapy and electroconvulsive therapy (“ECT”). DBS uses mild electrical pulses from a neurostimulator (an implanted device) to stimulate specific targets in the brain.

St. Jude’s Neuromodulation division, which was formed through its acquisition of Advanced Neuromodulation Systems in November 2005, offers various neurostimulation systems. The company is one of the three major manufacturers of neurostimulation devices along with Medtronic (MDT) and Boston Scientific (BSX). More than 75,000 patients across 40 countries have been implanted with St. Jude’s neurostimulation devices.

The neurostimulation market is growing at a healthy pace driven by growth in age-related neurological conditions and significant need for effective alternative therapies. This market is forecasted to grow 15% annually, offering a compelling opportunity for the incumbent players.

We believe that growth in St. Jude’s Neuromodulation franchise will be fostered by the adoption of DBS systems and sustained uptake of the Eon Mini system. The company is expected to receive the European approval for the DBS system for the migraine indication and U.S. approval for Parkinson’s disease in 2011, representing promising prospects. Currently, we have a Neutral recommendation on St. Jude, which is supported by a short-term Zacks #3 Rank (Hold).

 
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