On Jan 22, we issued an updated research report on Intersect ENT, Inc. XENT. While we are encouraged by the company’s prospects, driven by the favorable Chronic Sinusitis market, its difficult pricing scenario raises concerns. The stock has a Zacks Rank #3 (Hold).
In order to maintain its position in the ENT specialty market and widen its sales base, Intersect ENT is focusing on product development and innovation.
The SINUVA Sinus Implant (to treat nasal polyp in adult patients with no previous sinus surgery recorded) in the United States has been on the forefront since April 2018 following its FDA approval. In this regard, the company also completed its ENCORE study, a small 50-patient open label program designed to evaluate the safety of the repetitive use of SINUVA.
The latest offering from the SINUVA portfolio is specific J code — J7401 (which became operational in October 2019). However, the implementation of this code is still in process on the Medicare’s part as the Centers for Medicare & Medicaid Services (CMS) are yet to assign a specific reference price. Nonetheless, the company expects this to be resolved by this month.
Intersect ENT, Inc. Price
Regarding the company’s Propel line, the PROPEL suite became the standard of care for polyp patients undergoing sinus surgery and it grew over time through addition of users, expansion of usage frequency and adoption of products. In July 2019, the company received an FDA approval for a new Straight Delivery System (SDS), which will replace the PROPEL Ministeroid.
On the flip side, the company performed dismally in the last reported quarter with lower-than-expected numbers. Escalating selling, general and administrative as well as R&D expenses induced an operating loss in the period. Costs mainly flared up due to expansion of the SINUVA commercial and market access activities including headcount, marketing and consulting expenses plus the incremental stock-based compensation associated with leadership change.
Inadequacies in the overall product access process combined with physicians’ hesitancy to engage in buy-and-bill process are the main causes behind this company’s failure to provide proper treatment to patients. This apart, the pricing scenario has been persistently tough for Intersect ENT. Strong competitors in the large medical device market also pose a challenge.
Over the past year, shares of Intersect ENT have underperformed its industry. The stock has lost 17% against the industry’s 15.6% rally.
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