Dive Brief:

• Medtronic's renal denervation system has failed to outperform sham treatment at an interim clinical trial analysis, quashing hopes of an early finish to the high blood pressure study.
• The independent data safety monitoring board found the clinical trial needs to continue to enroll patients and gather results to show if the treatment works. Medtronic expects to wrap up the follow-up of the full cohort of patients in the second half of next year.
• Many effective therapies are unable to clear the high bar needed to show efficacy at interim analyses, suggesting potential for Medtronic to go on to succeed, but investors drove down the stock by around 4% after the news. Medtronic's stock price continued to slide when the U.S. market opened Monday, dropping by over 5%.

Dive Insight:

The stock drop reflects the high expectations going into the interim analysis. With Medtronic finding the system lowers blood pressure in other trials and registry studies, the company had said "there is reason for optimism" and had begun to invest in launch preparations. Analysts had started assuming the analysis would come in positive. 

A successful interim analysis would have positioned Medtronic to file for FDA approval. Now, the submission for approval is delayed, at best. All we know at this stage is the independent experts that reviewed the interim data found the evidence supported continuation of the study but not its early completion. Data boards can stop trials early for positive and negative reasons.

The exact timing of the next look at the data is unknown but Medtronic estimates it will finish the follow-up of the full cohort of patients in the second half of next year. While the timeline will keep Medtronic off the U.S. market until at least 2023, the company continues to expect to build a $500 million business by 2026 and top $2 billion in sales by 2030. 

Those sales numbers would have looked implausible at times in the recent past, when the failure of a Medtronic clinical trial in 2014 threatened to bring down the whole renal denervation field. Medtronic and ReCor Medical have since posted data suggesting the approach can fulfill its early promise. 

Success in the ongoing clinical trial will position Medtronic to seek approval in the U.S. and build up its business in Europe. Medtronic brought its system to market in Europe before the failure of its U.S. study. The failure of the study caused sales to shrink in Europe. Medtronic is looking to positive data in the ongoing study to help reverse the process by winning over payers and changing guidelines.

SVB Leerink analysts wrote in a Monday report that the delayed trial endpoint does not mean that the "RDN dream" is over for Medtronic, saying a 2023 approval is likely. However, Medtronic may still have challenges ahead of it ensuring the product is successful.

"It may take some time for investors to warm back up to the RDN piece of the story with visibility pushed out a year, and — for now — we do remain a bit more skeptical on the successful commercialization of RDN once approved, as we believe the logistics might be more complicated than currently expected and could limit the full realization of what we acknowledge is an otherwise massive [total addressable market,]" the analysts wrote.