Was there anything to panic about? I chatted yesterday with Medtronic CEO Art Collins for his standpoints on that and a few other issues of importance to investors.
Collins explained that the trial results released yesterday related to a 100-person study conducted on its Endeavor drug-eluting stent. (Other Endeavor trials are forthcoming and should shed additional light on the issues, including a pivotal trial in Europe, involving 1,200 patients, and a confirmatory trial here in the U.S., involving about 440 patients. That last trial should be of particular interest, as it will directly compare Endeavor to Johnson & Johnson's
He contends that Medtronic's data were very strong, and in some points, stronger than those of competitors. He pointed to the fact that adverse events were recorded at a mere 2% rate. Collins indicated that "confusion" on the study was to blame for investors' reaction yesterday.
The confusion had to do with data that showed a "significant renarrowing of the arteries," also known as "late loss," in some patients. That number, Collins said, was a bit higher than many experts expected. However, the data showed that despite the "moderate" increase, it didn't have a "meaningful effect on clinical outcomes." Collins stated, "We still think we're in good shape on the late-loss study."
Meanwhile, Medtronic still feels it's on target for approval in Europe in late 2004; it expects it will be third to market with its drug-eluting stent offering, which it believes will be "the most deliverable stent on the market." (Boston Scientific's
As has been pointed out here before, sometimes it's easy to only think "stents" when thinking Medtronic. However, Collins described Medtronic's pipeline as strong, in fact, "as full as it's ever been."
Strong areas include cardiac rhythm management, which includes pacemakers and defibrillators. (Indeed, its cardiac rhythm management business reported a 22% revenue gain in fourth-quarter earnings.) Collins said four new implantable defibrillators are on the way, concluding that he's very excited about this area; the company has several other products from its other segments -- including diabetes, neurological disorders, and other ailments -- on the way as well.
Medtronic shares have vacillated along the same level for quite some time; trading at 25 times forward earnings, the stock may be worth a closer examination, with a close eye on upcoming Endeavor data, the pipeline, and tracking whether Medtronic can keep on growing revenues and grabbing market share.
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Alyce Lomax does not own shares of any of the companies mentioned.