Dive Brief:

• Medtronic on Monday said it received FDA approval for what it contends is the market's smallest rechargeable neurostimulator to treat overactive bladder, fecal incontinence and non-obstructive urinary retention.
• With the new device, Medtronic is answering a challenge to its dominance of the sacral neuromodulation market from Axonics Modulation Technologies, which won FDA clearance in September for a competing system to treat fecal incontinence. Axonics also received approval for an overactive bladder and urinary retention indication in November.
• Medtronic's InterStim Micro sacral nerve stimulator gained FDA approval along with the company's SureScan leads that permit full-body MRI scans.

Dive Insight:

Several months into the launch of its r-SNM system, Axonics CEO Raymond Cohen in early March boasted of giving Medtronic a run for its money in the sacral neuromodulation marketplace. Axonics had beaten Medtronic to market with a rechargeable system while also gaining full-body MRI conditional labeling.

However, new orders for the product slowed in April as COVID-19 restricted elective procedures, before gradually recovering in May and June as states reopened, Axonics reported in mid-July.

Medtronic, which has led the sacral neuromodulation market for the past two decades, is now defending its turf with the approval and rollout of a device that it says is 80% smaller than its current InterStim II neurostimulator and 50% smaller than Axonics' rechargeable system. Medtronic's Micro device received CE mark approval in the EU in the fourth quarter and boosted the company's market share before the rollout was delayed due to COVID-19, the company said in recent investor presentations.

The implanted neuromodulation devices work by sending electrical impulses to the sacral nerves in the lower back, normalizing the connections between the brain, bladder and bowel. Medtronic said the Micro system, with a lifespan of 15 years, also could reduce the need for battery replacement surgeries. The device can be charged once a week or as infrequently as once a month.

SVB Leerink analysts, which rate Axonics shares "outperform," said they believe physicians and centers that made the switch to the company's system are unlikely to flip back to Medtronic and generally prefer to carry just one manufacturer. However, they contend that a second player on the market could help spur wider adoption overall, with both manufacturers now offering smaller, MRI-safe and rechargeable options.

Needham analysts took a similar view, arguing that some physicians are not satisfied with Medtronic's devices, but also noting the market is generally still untapped, with a potential upside to both companies.