To All,
AVEI broke thru all time high on heavy volume. Here is why?
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Dow Jones Newswires -- September 29, 1997
Arterial Vascular Up 15%; Stents
Praised At Medical Meeting
By Ted W. Kemp
NEW YORK (Dow Jones)--Shares of Arterial Vascular
Engineering Inc. (AVEI) leaped to a 52-week high Monday
after a company product used to treat coronary artery disease
received positive mention at a Washington cardiology
conference.
Arterial Vascular shares peaked at 57 3/8 Monday before
edging back recently to 55, up 7 1/8, or 14.9%, on Nasdaq
volume of 1.5 million, compared with average daily volume of
524,300. The intraday high passed the 52-week high of 48 3/8
set Sept. 22.
Arterial's GFX stent, a tube used to prop open occluded
arteries in the heart, has not yet received approval from the
Food and Drug Administration. However, it figured
prominently at the 9th annual Transcatheter Cardiovascular
Therapeutics conference that ended Sunday, analysts said. The
conference presented the results of randomized clinical trials of
several stents.
"What came out of this conference is that AVE has a darn
good stent," said analyst Kurt Kruger of Montgomery
Securities Inc.
Analysts said the Arterial Vascular stent is more flexible than
other stents now in use in the U.S. Arterial Vascular, based in
Santa Rosa, Calif., currently derives most of its revenue from
Europe, but analysts said the device will probably receive FDA
approval within the next couple of months.
Vector Securities International Inc. analyst David Gruber said
he believes new stents made by Arterial, Guidant Corp. (GDT)
and Boston Scientific Corp. (BSX) threaten Johnson &
Johnson's (JNJ) share of the domestic stent market. He thinks
the health-care giant's share of the U.S. stent market could
decline by as much as 75% over the next two to three quarters.
Gruber pointed out that Johnson & Johnson saw a dramatic
market-share decrease in Europe in 1996 when its stents came
into competition with newer, more flexible devices.
Analyst Sharon di Stefano of Josephthal Lyon & Ross Inc.
said that trials done at the Columbia Medical Center in Phoenix
found that Arterial's GFX stent had a "significantly higher
device success rate" than Johnson & Johnson's Palmaz-Schatz
stent.
But analysts differed on the effect the Arterial device would
have on the overall U.S. stent market.
"This stock is in a feeding frenzy. It's way ahead of itself," said
Robin Young, senior health-care analyst at Stephens Inc.
Young pointed out that the U.S. medical product market has
specific anomalies that make it different from the European
market, most notably a focus on cost-containment that makes
medical purchasing managers more likely to buy several
products from a single large source.
"Johnson & Johnson has been highly successful at negotiating
contracts for their entire product line with large hospital
chains," he said.
Young added that one-product companies face barriers
breaking into the market even if they have a superior product.
"AVE will be embarking on a bloody, bruising battle in this
country," he said.
Arterial officials were not immediately available for comment.
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