Boston Scientific Corp., of Marlborough, Mass., has won the U.S. FDA’s nod for the Exalt Model D single-use duodenoscope for use in endoscopic retrograde cholangiopancreatography (ERCP) procedures. It is the first single-use duodenoscope on the market and earlier secured breakthrough device designation.
Jeff Shuren, director of the FDA’s Center for Devices and Radiological Health, noted that these devices are used in more than 500,000 procedures in the U.S. annually. “Unlike duodenoscopes that are used on multiple patients, a fully disposable duodenoscope doesn’t need to be reprocessed, eliminating the risk of potential infection due to ineffective reprocessing,” he said.
Wells Fargo’s Larry Biegelsen sees great potential for the product. “Depending on product availability, we estimate Exalt-D could ramp from about $44 [million] in global sales in 2020 to $328 [million] in 2025 and contribute about 40 bps to annual growth to BSX.” With that in mind, Wells Fargo raised its price target to $52 from $48.
Duodenoscopes in the news
The FDA’s action comes after many moves related to duodenoscopes, which is billed as a less invasive method vs. traditional surgery for draining fluids from blocked pancreatic and biliary ducts. Up to now, they have been used on multiple patients and then reprocessed. However, duodenoscopes have many small parts that have proven difficult to clean, leading to the potential transmission of infections.
In late August, the U.S. FDA said it was recommending that manufacturers and health care facilities move away from using duodenoscopes with fixed endcaps to those with disposable components or to fully disposable duodenoscopes – upon their availability.
At the time, Biegelsen saw the recommendation as a bonus for Boston Scientific, adding that its timing indicated the green light for Exalt Model D likely would come soon.
Alone for a while?
In his latest note, Biegelsen wrote that Boston Scientific may not face competition for a year, with Ambu A/S, of Ballerup, Denmark, expected to come in second with its offering. Initially, Cook Medical LLC, of Bloomington, Ind., and Ambu reported an agreement through which the former would distribute that duodenoscope in the U.S., following FDA clearance.
However, during Ambu’s full-year 2019 earnings call in November, CEO Juan-José Gonzalez said the pair would be evolving the partnership. “That basically means that Ambu in the U.S. and in all the other markets in Europe, Middle East and Africa and Asia-Pacific, we will commercialize that product directly,” he said, adding that the company still will benefit from Cook’s customer relationships and expertise via a marketing collaboration.
Ambu has been aggressive – at least in one analyst’s opinion – in its timeline for getting its product through the FDA. During the November call, Thomas Bowers from Danske Bank asked about the company’s early launch outlook for the duodenoscope.
Gonzalez pointed to his company’s track record related to getting products to the market in a timely manner.“So, we shouldn't be surprised that in the case of duodenoscopy, we are going through all of our development stages and increasing our level of confidence regarding when are we going to bring to market. And at this point, we have been saying before September 2020. Now I think we are confident to say early Q4.”
Christian Ryom from Nordea Markets had several follow-up questions related to the duodenoscope, including whether it already had been submitted for approval and if the company had planned to conduct clinical studies. Gonzalez reiterated the company’s fourth quarter 2020 launch plans. “And that at the time that we launch that we would have conducted human tests at the same time,” he added.
For his part, Niels Granholm-Leth from Carnegie asked whether the new collaboration agreement with Cook prevents the latter from developing its own single-use duodenoscope. “It does not,” Gonzalez replied.
Still, Boston Scientific should be in a good position. For his part, Biegelsen sees Exalt-D as boosting Boston Scientific’s endoscopy growth. “Exalt-D will be booked within BSX's Endoscopy segment which the company expects to grow from $2 [billion] in 2020 to $3 [billion] in 2024 or a CAGR of +9-10%. This is above the +7% CAGR [compound annual growth rate] we currently model, which implies upside to our estimates.”
Already, clinicians have praised the offering, which is expected to see a limited launch in the first quarter of 2020. "With the Exalt Model D duodenoscope, I can perform the same high-quality ERCP procedure with the added benefit of using a brand-new sterile device for each patient," said Raman Muthusamy, medical director of endoscopy, professor of clinical medicine, David Geffen School of Medicine at UCLA. "I believe the development of this device is a significant advancement in the evolution of endoscopy."
During the third-quarter earnings call in October, Boston Scientific CEO Mike Mahoney spoke highly of the offering, which he saw as contributing much to the company. “We continue to believe that our therapeutic imaging portfolio represents a significant opportunity in 2020 and beyond with an incremental $2 billion market opportunity by 2024,” Mahoney concluded.
Matthew Taylor of UBS followed up with a question about the company’s expectations related to a November FDA panel meeting, held in part to discuss recommendations to reduce the risk of infection from reprocessed duodenoscopes. During the meeting, the idea of disposable duodenoscopes being the answer to making these devices safe did not gain as much traction, despite development efforts.
Mahoney said there was no new commentary ahead of the meeting, reiterating the company’s expected timeline in terms of an FDA action. “[W]e've also initiated a postmarket clinical trial, which will start in first quarter 2020. But we expect to see our first revenue with Exalt near the end of the year here, and we think it'll be a significant growth driver for us in 2020,” he added.