Unsure About Biotech Gains Then Consider Medical Innovation Instead
(7 months ago)
LOS ANGELES: While biotech and pharmaceutical firms may be taking the focus right now, for those unsure about the risk, medical device companies continue to provide some truly innovative offerings.
Several companies in this space look very promising this year including Abbott Laboratories (NYSE: ABT), Medtronic plc (NYSE: MDT), Smith & Nephew plc (NYSE: SNN), and Imagin Medical Inc. (CSE: IME) (OTC: IMEXF).
The single hottest large-cap exchange-traded fund, the SPDR S&P Biotech (ETF), is up more than 40 percent since the start of 2017 and by 10 percent in the past two weeks alone. But the luster of biotech carries some very large risk as investors know all too well.
That is not the case with a leading group of medical device and technology companies that have been quietly making big gains.
Some of the best stocks in this space have provided excellent dividends, based largely on their ability to provide innovations and in some cases, displace conventional approaches in medicine.
Among these leaders are Abbott Laboratories (NYSE: ABT), which makes diagnostic devices and offers branded generic pharmaceuticals; along with Medtronic plc (NYSE: MDT) that manufactures and sells device-based medical therapies, and Smith & Nephew plc (NYSE: SNN), which provides joint repair products, robotics for surgery and imaging diagnostics, among other endoscopic devices.
Yet, still others companies are just under the radar enough to be really attractive based on early accomplishments.
Imagin Medical Inc., (CSE: IME.CN) (OTC: IMEXF) is forwarding a new system that is going into human testing. Imagin's i/Blue cancer imaging technology offers major promise for one of the most expensive cancers to treat. This could be a real advance because of its new, patented technology for use in medical imaging targeting bladder cancer.
In either scenario, medical device and technology companies could be the balance between innovation and real value without the risk inherent in biotech.
A CONSISTENT DRIVING FORCE
According to a report by strategic consulting and market research firm Lucintel, an aging population and increasing health awareness are two key factors that are expected to drive growth for the medical device industry in the next few years.
Spending on medical devices is expected to reach $176 billion this year in the Americas and roughly $360 billion worldwide. In the U.S., spending is expected to reach about $4.5 billion per year on the medical and diagnostic imaging segment.
According to analysts, the diagnostic imaging segment has seen continual growth based on the increasing number of patients, as well as an increasing demand for minimally invasive surgery, which requires precise imaging. This plays well into Imagin's product.
The U.S. healthcare market grows at a consistent rate of around 5.6 percent annually. It is expected to reach nearly 20% of the U.S. GDP by 2015. That represents total spending of $3.4 trillion for 2016.
With a large and consistently growing market, there appear to be plenty of real opportunities for innovators in the medical device and diagnostics field.
IMAGIN MEDICAL'S INITIAL MARKET: BLADDER CANCER
As many companies look to provide innovation in medical devices and imaging, some have laser focused on key markets.
Imagin Medical is one of these that is looking to emulate the success of the major providers by targeting the very large and expensive to treat bladder cancer area.
Imagin Medical has developed the i/Blue imaging system to help detect bladder cancer and reduce its recurrence by improving the urologist's ability to visualize, identify and then remove cancerous cells.
Little wonder Imagin is targeting bladder cancer. It is the most expensive form of cancer to treat, accounting for cumulative costs of $4 billion or about 3.2% of all cancer care each year. And despite being the sixth largest market for cancer treatment, innovation in treatment approaches have not really emerged in the past 25 years.
Imagin's system uses endoscopic technology combined with white light and video imaging to visualize the human bladder in order to detect cancer. By combining that with fluorescing drugs and specialized blue light imaging, the company is able to dramatically improve the visualization of tumors.
According to the Imagin, its i/Blue system increases sensitivity for detecting the cancer specific contrast agent by 5 orders of magnitude or 100,000X.
NOT JUST DIFFERENT - MORE LIKE DISRUPTIVE
There are technologies that usher in change and then those that transform an industry.
What Imagin's i/Blue is doing in medical imaging and diagnostics could well be classified as disruptive. Several aspects of the technology set it apart from anything available today.
First, Imagin's approach allows the system to accurately image in less than 15 minutes vs. the one-hour period required to metabolize drugs using conventional fluorescing systems.
Second, its computer application cleans, reprocesses, blends and displays the image of the bladder and cancer onto a single monitor. This allows for multiple perspectives of the bladder on a single system, as opposed to switching between white to blue light systems.
Most prominently, the i/Blue system's advancement in sensitivity improves surgeons' ability to detect even flat cancers and to visualize their margins for more complete removal. This can dramatically reduce the risk of recurrence, thereby slowing the progression of the disease.
In a nutshell, the i/Blue System has the proven ability to dramatically improve results, simplify procedures, save time and save money for providers and patients alike.
ROOM TO RUN
In light of recent advances in digital technology, imaging and their impact on diagnostics, there appears to be openings for companies with innovation to boom in the medical device market.
Investors should take note.
While these companies may not have seen the kind of meteoric rises taking place in the ecommerce tech sector, they continue to provide solid upside, even when markets are in turmoil.
Additionally, Washington has promised to deliver tax breaks for medical device and diagnostics companies but those have failed to materialize this year. If they do, it could add further fuel to the fire for this group as a whole.
Perhaps Abbott Labs, Medtronic and Smith and Nephew are above your current price tolerance level. If that's the case, Imagin Medical might be a fit: even though Imagin is taking its product into human testing, it appears undervalued with a paltry market cap of $5 million.
IME has already made great progress. Having just been launched in 2016, the company has finished prototyping and already advanced into human testing. That will be carried out at the renowned University of Rochester Laboratory for Laser Energetics (LLE).
Proven successful, the i/Blue could heading into commercialization very soon. That could be a significant step not only for IME as a medical innovator, but more importantly towards reducing the ravages of bladder cancer.
Abbott Laboratories (NYSE: ABT)
Abbott Laboratories manufactures and sells health care products worldwide. The company's Established Pharmaceutical Products segment offers branded generic pharmaceuticals to treat pancreatic exocrine insufficiency; irritable bowel syndrome or biliary spasm; intrahepatic cholestasis or depressive symptoms; gynecological disorders among others. Its Diagnostic Products segment provides immunoassay and clinical chemistry systems; assays used to screen and/or diagnosis cancer, cardiac, drugs of abuse, fertility, infectious diseases, and therapeutic drug monitoring; hematology systems and reagents; and a suite of informatics tools and professional services. The company's Nutritional Products segment provides pediatric and adult nutritional products. Its Vascular Products segment offers coronary, endovascular, vessel closure, and structural heart devices to treat vascular disease. It serves retailers, wholesalers, hospitals, health care facilities, laboratories, physicians' offices, and government agencies. The company was founded in 1888 and is headquartered in North Chicago, Illinois.
Medtronic plc (NYSE: MDT)
Medtronic plc manufactures and sells device-based medical therapies to hospitals, physicians, clinicians, and patients worldwide. The company's Cardiac and Vascular Group segment offers implantable cardiac pacemakers, cardioverter defibrillators, and cardiac resynchronization therapy devices; diagnostics and monitoring devices; mechanical circulatory support, TYRX, and AF products; and remote monitoring and patient-centered software. It also provides transcatheter heart valves, percutaneous coronary intervention stents, surgical valve replacement and repair products, endovascular stent grafts, peripheral vascular products, and products to treat superficial and deep venous diseases. Its Minimally Invasive Therapies Group segment offers surgical care, wound closure, electrosurgical, hernia mechanical device, mesh implant, ablation, interventional lung, and care solutions. It also provides image-guided surgery and intra-operative imaging systems; and therapies for vasculature in and around the brain. The company was founded in 1949 and is headquartered in Dublin, Ireland.
Smith & Nephew plc (NYSE: SNN)
Smith & Nephew plc designs, develops, and sells medical devices worldwide. The company offers sports medicine joint repair products for surgeons, including an array of instruments, technologies, and implants necessary to perform minimally invasive surgery of the joints; and arthroscopic enabling technologies for healthcare providers, such as fluid management equipment for surgical access, high definition cameras, digital image capture, scopes, light sources, and monitors to assist with visualization inside the joints, radio frequency wands, electromechanical and mechanical blades, and hand instruments for removing damaged tissue. It also provides trauma and extremities products consisting of internal and external devices used in the stabilization of severe fractures and deformity correction procedures; robotics-assisted surgery products and services, as well as various products and technologies to assist in surgical treatment of the ear, nose, and throat. It primarily serves the providers of medical and surgical treatments and services. Smith & Nephew plc was founded in 1856 and is headquartered in London, the United Kingdom.