Covidien Launches New PED to Treat Brain Aneurysm - Analyst Blog

Covidien Plc. COV announced the launch of Pipeline Flex embolization device – an advanced version of the company's first-generation Pipeline embolization device (PED) – in Europe. Featured under the company's neurovascular line of products, the device was unveiled at the annual Live Interventional Neuroradiology & Neurosurgery Course (LINNC), held in Paris, from Jun 23–25.

Covidien's Pipeline Flex is used to treat unruptured brain aneurysms in adults. An aneurysm is a weak, enlarged area in an artery which can rupture due to the force of normal blood pressure. A ruptured aneurysm can be life-threatening and can cause significant disability in survivors.

Pipeline Flex is designed to divert blood flow away from an aneurysm. It features a braided cylindrical mesh tube that is implanted across the base or neck of the aneurysm, cutting off blood flow to the aneurysm. The blood remaining in the blocked-off aneurysm forms a clot which reduces the likelihood that the aneurysm will grow bigger or rupture.
 
Combining Covidien's clinically-proven braid design with a new delivery system, Pipeline Flex offers enhanced accuracy and control while performing advanced surgical procedures on the brain. The device is repositionable and is integrated with an instant braid release system which makes it easier to place.   

This next-generation flow diversion device received CE Mark earlier this year and is intended for the endovascular embolization of cerebral aneurysms in Europe. However, it is not currently approved for use in the U.S.

Pipeline Embolization Device (PED)

Covidien's first-generation PED received CE Mark approval in Jul 2009 and has been used to treat patients in Europe since then. Since its approval by the U.S. Food and Drug Administration (FDA) in Apr 2011, PED has been the only flow diversion device commercially available in the U.S.

In Apr 2014, Covidien announced a voluntary recall to address an issue with certain lots of its PED. A total of 32 PEDs sold in the U.S., Australia, France, Germany and the U.K. were affected by the recall. Consequently, the recalls affected sales at the company's Neurovascular segment in the last reported quarter.

Though Neurovascular revenues were negatively impacted in the short term, Covidien expects this business to return to mid to high single-digit growth in early 2015, following the European launch of the new PED.

Merger with Medtronic

Earlier this month, medical technology giant, Medtronic Inc. MDT, announced its plans to acquire Covidien for $42.9 billion. Subject to certain customary conditions, the acquisition is expected to close in the fourth quarter of 2014 or early 2015. Medtronic's rationale behind this merger is to offset the impact of high U.S. corporate tax rate by shifting its tax base overseas, to Ireland.

Post-merger, the combined entity will be known as Medtronic plc and will boast a comprehensive product portfolio, a diversified growth profile and broad geographic reach. On successful completion of the transaction, Medtronic plc is expected to report at least $850 million of annual pre-tax cost synergies by the end of fiscal 2018.

Zacks Rank

Currently, Covidien carries a Zacks Rank #3 (Hold). Better-ranked stocks in the medical products industry include OraSure Technologies, Inc. OSUR and Cardica Inc. CRDC. While OraSure Technologies sports a Zacks Rank #1 (Strong Buy), Cardica carries a Zacks Rank #2 (Buy).

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