STJ ST. Jude Medical, Inc.

Medical devices major St. Jude Medical (STJ) has reached another important clinical landmark by registering the first implant of its next-generation Portico transcatheter aortic heart valve implant (“TAVI”) in a European clinical study.

The European trial has been designed to evaluate the safety and efficacy of the Portico valve in patients with severe aortic stenosis (abnormal narrowing of the aortic valve opening). Results from this pivotal study will support the device’s European CE Mark approval.

The randomized trial will be conducted at 5 European centers and will enroll at least 30 patients who will be monitored for a year. The primary endpoint of the study is the 30-day all-cause mortality while safety and efficacy are the secondary endpoints. 

The Portico valve, made of bovine tissue, has been geared to improve physicians’ control and accuracy in valve placement. The valve has the unique ability to be completely re-sheathed (the process of bringing the valve back into the delivery catheter), repositioned at the implant site and retrieved before it is released from the delivery system. St. Jude has designed the Portico valve to overcome several key limitations associated with the first-generation transcatheter valves.

The target market for the Portico valve is the estimated 400,000 patients with severe aortic stenosis considered to be at high-risk (or inoperable) for the legacy open-heart valve replacement surgery. The valve can be implanted using a transcatheter technique, rather than through open-heart surgery.

With several growth constraints in the mature legacy markets, medical devices makers are aiming to expand into the fast-growing emerging therapy areas. The TAVI market, a potential blockbuster prospect, is emerging as a substantial new growth opportunity for the top-tier MedTech companies.

St. Jude is optimistic about commencing a limited launch of the Portico valve in Europe before end-2012. The Portico valve is expected to be available in two delivery methods, namely, transfemoral (delivered through the femoral artery) and transapical (through a small incision in the left ventricle). St. Jude’s larger rival Medtronic’s (MDT) TAVI product CoreValve is currently approved for marketing in Europe.

We are impressed with St. Jude’s solid fundamentals, healthy growth trajectory, cost management initiatives, strong product mix and attractive growth prospects in a number of emerging markets. However, we remain wary about competition-driven pricing pressure and a soft CRM market. Our long-term Neutral recommendation on the stock is in tandem with a short-term Zacks #3 Rank (Hold).

 
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