Medtronic this week launched the Penditure left atrial appendage (LAA) exclusion device, adding another system to a competitive space. AtriCure, Abbott and Boston Scientific all offer LAA devices, while Johnson & Johnson MedTech just made its own play in the market.
AtriCure took the biggest hit as a result of the Medtronic launch, with stock falling nearly 20%. The reaction comes as a result of AtriCure’s makeup, with the AtriClip LAA device making up around a third of its revenue, according to BTIG.
The Penditure and AtriClip are quite similar devices. Both are meant for accompanying use with another heart surgery procedure. The situation leads to question marks over how the former’s launch affects the latter.
BTIG analysts Marie Thibault and Sam Eiber noted that AtriCure’s management team said it welcomes competition. They also say the team expects it to help expand procedure volumes. Although they anticipate nearly all sites will try Penditure, the AtriCure team doesn’t expect a significant transition away from the company’s own product.
The analysts collected responses from 21 cardiac surgeons who use AtriClip to gauge the potential impact of the Penditure launch. They note that the small number of respondents reflects a sample of the range of potential reactions, not an exact indicator of market movement.
The analysts say that, based on estimates, they see a potential $48 million difference, or 9% reduction in total 2025 sales for AtriClip. Thibault and Eiber maintain their “Buy” rating for AtriCure.
“Though some caution on the competitive landscape is warranted as the launch unfolds, in our view, [AtriCure] shares are oversold at this point,” they wrote. “These survey results are extremely preliminary and we are not changing our ATRC forecast at this time.”
More on the survey
Surveyed doctors pointed out Penditure’s similarities to AtriClip, with several responses reflecting favorably on the Medtronic product. Some called it “interesting” and a “good concept,” according to BTIG. A couple of surgeons highlighted the ability to recapture, reposition and redeploy the device, too.
Nearly all (86%) said they intend to try Penditure, like AtriCure expects. BTIG says it expects Penditure to capture 24% of the market share in 2024 and 27% in 2025. However, in 2024, more than a third of respondents expect to move 5% or less of their volume to Penditure. Five doctors don’t expect to shift any volume and only two expect greater than 50% movement.
The analysts, however, saw some skepticism over how useful that feature could prove. They also say some doctors were unsure over what Penditure offers that they can’t already get with AtriClip.
BTIG’s analysts say they spoke to two AtriClip-using cardiothoracic surgeons who also have Penditure experience. Both saw similarities in the devices’ designs, but again highlighted the “unique” recapturing, repositioning and redeploying capabilities of Penditure. One said he “wishes he had the ability to reposition in as many as 5-10% of his AtriClip cases.”
AtriCure believes this is rare, the analysts wrote, and the company hasn’t heard doctor feedback asking for repositionability. The analysts still expect AtriClip to take the dominant share of concomitant LAA cases.
“AtriCure’s management team has been vocal in saying that this new device will not hurt the AtriClip business but that they instead expect new competition to help expand the market for left atrial appendage exclusion in patients undergoing concomitant cardiac surgery,” the analysts wrote.
Why analysts remain optimistic on AtriCure
AtriCure told BTIG that it sees a competitive entry as “good validation” of the LAA therapy area and approach. Additionally, instead of repositionability, the company hears clinicians ask for a smaller-profile device.
With AtriClip in its seventh generation, the company has plans to launch an eighth-generation device next year. It expects the smaller-profile Flex Mini to come in the second half of 2024. The company’s open ablation product also remains the only offering with FDA PMA labeling for treating AFib during concomitant cardiac surgery. Medtronic’s Cardioblate has 510(k) clearance.
Importantly, the analysts say, AtriCure management says the Penditure launch has no impact on its overall sales growth outlook.
The analysts said AtriCure has encouraged its salesforce to garner feedback on Penditure from clinicians. They also say pricing for Penditure appears consistent with AtriClip and one doctor claims he hasn’t seen discounting from Medtronic.
Altogether, the analysts’ view on AtriCure remains an optimistic one.
“We believe there continues to be strong potential for upside in the core business from improved open surgery volumes as training and awareness grow, ongoing momentum within the AtriClip franchise, and contribution from new verticals like cryoablation,” the analysts’ investment thesis on AtriCure says.