Abbott's Bioresorbable Stent is Successful in Asia as Market Absorbs Higher Prices

Abbott's success in emerging markets with its Absorb bioresorbable vascular scaffold and its potential for being a game-changing technology is leading an analyst to increase the company's 12-month stock price.

May 30, 2013

2 Min Read
Abbott's Bioresorbable Stent is Successful in Asia as Market Absorbs Higher Prices

Sometimes companies benefit from people willing to pay for what they consider game-changing technology. At other times, however, they may not be so lucky.

It appears as if Abbott experiencing the former phenomenon for its bioresorbable scaffold Absorb. The device is meant to dissolve into the system within a year to allow the previously blocked artery to return to normal functioning. The scaffold is made of polylactide, a material also used in dissolvable sutures, but Absorb has two pairs of tiny metal markers, which indicate to the physician where the device was placed. The drug-device combination product also delivers everolimus as the artery recovers and the scaffolding breaks down.

Bioresorbable scaffolds like Absorb is considered by company officials as the fourth revolution to alter the treatment landscape of coronary artery disease - following angioplasty, bare metal stents and drug-eluting stents. And Absorb, though not approved in the U.S., is already having an effect on the company's business internationally, especially in India

[Chat with experts in resorbable technologies at MDM East.]

On Tuesday, Glenn Novarro, an analyst with RBC Capital Markets, decided to raise the company's 12-month stock price target to $42 from $38 driven by the company's pipeline of devices, particularly Absorb. In emerging markets people are paying twice or three times as much as Abbott's regular drug eluting stent to use the bioresorbable product. Here is what Novarro wrote in his detailed note to investors about Absorb, which has two benefits - it reduces the occurrence of late-stent thrombosis as well as the need for anti-platelet therapy.

ABT fully launched Absorb in international markets and our checks indicate Absorb adoption is growing in international markets despite the premium price (~2-3x the price of a traditional DES). In our recent expert call, a high volume coronary operator noted that bioresorbable scaffolds could take as much as ~70-80% market share in the US. Given the pace of adoption in the US among interventional cardiologists, we believe such penetration could occur within 1-2 years of launch. In the US, we believe ABT can launch Absorb in 2016. Assuming that ABT prices Absorb at ~2x that of a traditional DES, we believe the US market should double by 2017. Assuming that ABT takes ~50% share of the DES market, this would add an incremental $1B+ in sales by 2017. What does this mean for EPS growth? Adding Absorb to the model raises our long term EPS CAGR [earnings per share compound annual growth rate] from ~8 to ~10%.

Earlier this year, Abbott launched a pivotal trial testing Absorb against its own drug eluting stent Xience, also a successful product in Asia. Novarro expects the company will submit a premarket approval in 2015 and will launch the product in 2016. 

Bioresorbable materials and its future applications will be discussed at length at the MD&M East Conference on June 18 in Philadelphia. 

-- By Arundhati Parmar, Senior Editor, MD+DI

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