Investors punish Given Imaging for FDA pathway, but analysts say 'relax'

PillCam 2 ESO capsule--image courtesy of Given Imaging

PillCam 2 ESO capsule--courtesy of Given Imaging">

Investors were angry, to say the least, at Given Imaging ($GIVN) last week. The Israeli company raised their ire after announcing it would seek FDA approval for its PillCam Colon 2 device to visualize the colon for patients who can't have or finish a colonoscopy, rather than pursuing a general screening indication.

As Bloomberg reports, investors drove the company's stock down 9.3% for the week to $13.60. In trading late Monday morning, the downward path continued, with the stock dropping to $13.33 (almost another 2% decline) in early trading.

But as cited in the Bloomberg story, some analysts are essentially telling its investors to relax about Given Imaging because it doesn't want to replace colonoscopies anyway. Maxim Group and Cantor Fitzgerald have also noted, according to the story, that the stated approval pathway won't reduce Given's long-term revenue target.

"The stock is oversold as a lot of people don't understand the entire story," Maxim analyst Bryan Brokmeier explained to Bloomberg. "They were going to have a number of hurdles to use the PillCam as a general screening tool and were anyway going to capture a share of the market in which they are focusing now."

Cantor Fitzgerald's Jeremy Feffer told Bloomberg that the product's revenue opportunity "has not changed" and it "was always going to come from this diagnostic patient population." Feffer said that Given had always viewed PillCam as complementary to a colonoscopy, rather than a replacement for the procedure. But the company hasn't communicated the message well, he noted to Bloomberg, "and that is why the stock has been punished."

PillCam Colon 2 first gained EU clearance in September 2009. PillCam Colon won EU clearance in 2006, and Israeli approval in February 2008. PillCam Colon generated $1.8 million of Given's $178 million in total sales during 2011, the article reminds us.

- read the Bloomberg story

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