Global medical device maker Medtronic (NYSE:MDT) will be revealing details of its unsuccessful renal denervation trial- Symplicity HTN-3 – on Saturday, March 29, at the American College of Cardiology (ACC) meeting in Washington DC.  Medtronic’s Symplicity was one of the leading renal denervation devices in the international market, and its failure to meet efficacy requirements in the U.S. prompted many experts to voice doubts about the effectiveness of this technology in treating drug-resistant hypertension patients. The much anticipated findings are likely to aid the medical device industry in understanding the shortcomings of Medtronic’s trial, as well as shed light on how effective renal denervation actually is.
In addition, we expect rival medical device maker Boston Scientific (NYSE:BSX) to be keeping a close eye on the ACC meeting. Soon after Medtronic announced that its trial had been unsuccessful (January 2014), Boston Scientific’s CEO stated that they were “very positive” about the future of their Vessix renal denervation platform and intended to extensively analyze Medtronic’s trial results to address any shortcomings.
We have a price estimate of around $59 for Medtronic, which is roughly in line with the current market price.
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Why Renal Denervation Trials In the U.S. Are Important
Renal denervation is a technique for treating high blood pressure in patients who are resistant to oral medication. It uses radio frequency through minimally invasive catheters to deactivate renal nerves (in the kidney) which reduces the patient’s blood pressure. Although renal denervation therapy is in use in international markets including Europe, its approval for commercial use in the U.S. is important because of two factors. Firstly, positive results in the U.S. are likely to have a spillover effect on sentiment in international markets. Thus, successful approval in the U.S. is likely to give a boost to this technology and improve its credibility and acceptance all over the globe. Secondly, the U.S. renal denervation market has the potential to be worth over $1.5 billion by 2020. In the U.S., one in every three people is hypertensive, which comes to around 78 million people.   Out of all hypertensive patients, roughly 10-15% can be assumed to be resistant to oral medication, in accordance with the global average. Therefore, the number of prospective patients who could benefit from renal denervation may be around 8-12 million. Considering that a regular renal denervation procedure is quite expensive, involving an upfront cost of about $12,500 and $1,000 in annual hypertension management costs, we estimate that about 1.5-2 million people could undergo this procedure in the U.S. by the end of the decade. 1.5-2 million people spending $1,000 annually would imply a market value of about $1.5-2 billion by 2020.Notes: